Project Management, Unit 6

Project Management, Unit 6

Managing Project Time, Cost, and Procurements

Component 19/Unit 6 Health IT Workforce Curriculum Version 1.0/Fall 2010 1

Unit ObjectivesAt the end of this unit the learner will be able to:

1.Define project time management activities2.Define project cost management activities3.Define project procurement activities


Unit OutlineThis unit consists of the following lesson topics:

1.Unit Introduction and Overview2.Define project activities and develop project schedule 3.Develop project cost and develop the project budget 4.Develop a project procurement management plan and evaluate make-or-buy decisions


Unit Introduction and Overview


.

PROJECT

INITIATION PROJECT

PLANNING

PROJECT

EXECUTION

PROJECT CLOSURE

MONITOR & CONTROL

PROJECT

PLANNING

5Health IT Workforce Curriculum Version 1.0/Fall 2010Component 19/Unit 6

Process Group Sequence

Essential Planning Processes

1. Collect Requirements Process2. Define Scope Process 3. Create WBS Process 4. Define Activities Process5. Developing Schedule, Determining Budget &

Making Procurement Decisions


TIME MANAGEMENT

COST MANAGEMENT PROCUREMENT MANAGEMENT

Define activities Estimate costs Plan procurements

Sequence activities Determine budget Conduct procurements

Estimate activity resources

Control costs Administer procurements

Estimate activity durations

Close procurements

Develop schedule

Control scheduleComponent 19/Unit 6 Health IT Workforce Curriculum

Version 1.0/Fall 2010 7

Project Activities by Process Group

Collect Requirements Process

Project Charter+ Requirements Documentation

Stakeholder Register


Define the Scope Process

Requirements Documentation

Project Scope Statement


Create the WBS Process

Project Scope Statement Work Breakdown Structure

+ +

Requirements Documentation Scope Baseline


Work Breakdown Structure (WBS)

PROJECT

1.1 1.2 1.3

1.1.1

1.1.2 1.2.1 1.2.2

1.1.1.1

1.1.1.2

1.1.1.3

WORK PACKAGE LEVELdiscrete activities w/definable

end results

Level 1

Level 2

Level 3

Component 19/Unit 6 11Health IT Workforce Curriculum Version 1.0/Fall 2010

PLAN PURCHASES & ACQUISITION

QUALITYPLANNING

RISKMANAGEMENT

PLANNING

HR PLANNING

COST ESTIMATING

WBSWORK PACKAGE

Work Breakdown Structure (WBS)

ACTIVITYDEFINITION

& ACTIVITY

RESOURCE PLANNING

COMMUNICATIONPLANNING


Define Activities Process

Scope Baseline Activity List


Developing Schedule, Determining Budget & Making Procurement Decision

Develop ScheduleActivity List Determine Budget

Make-or-Buy Decisions


Schedule and Cost Constraints

Early in the project it is important for the project team to work with the key stakeholders to identify project constraints related to scope, time, cost and other (technical, legal, etc).


Class Exercise

1. Ask the students to list project constraints inherent in their organization (2 minutes)

2. Ask the students to list unique constraints they have encountered on individual projects (2 minutes).


PROJECT MANAGERManages the Project Constraints


Project Constraints


Triple Constraint: Basic Foundation of Project

Management

Competing demands on projects:

1. Scope 2. Time3. Cost

Consider all constraints equal unless otherwise stated

Cost Time

Scope

Strategies to Manage Schedule and Cost Constraints

Questions to ask:•Importance of each constraint?•Is possible to prioritize the constraints (rank order)? •What is the flexibility of a constraint?•Can the deadline or budget be negotiated?•What is the customers’ risk tolerance?


Time Management Process Sequence

20Health IT Workforce Curriculum Version 1.0/Fall 2010Component 19/Unit 6

PROCESS GROUP

PROCESS NAME KEY OUTPUTS

1 Planning Define Activities Activity listMilestone list

2 Planning Sequence Activities Project schedule network diagrams

3 Planning Estimate Activity Resources Activity resource requirements Resource breakdown structure

4 Planning Estimate Activity Durations Activity duration estimates

5 Planning Develop Schedule Project scheduleSchedule baseline

6 Monitor & Control

Control Schedule Work performance measurements, Change requests


Time Management Processes and Outputs

Developing a Project Schedule

1) Activities are sequenced (predecessors and successors are determined)

2) Activity paths are determined 3) Duration of each path is calculated4) Critical path is identified (longest path &

determines the soonest the project will complete)


Schedule Terminology


• Duration• Effort• Project schedule

network• Activity relationships• Schedule

Activity Duration Estimates

The project team can estimate the likely number of work periods required to perform an activity by using any of the following techniques:

•Analogous•Expert Judgment•Parametric•Three point estimate•PERT (three point estimate with weighted average)


Dependency Determinations

The project team must determine the existence of dependencies between activities when preparing a schedule. There are three types of dependencies or relationships between activities.

•Mandatory•Discretionary•External


Activity Sequencing - Precedence Diagramming Method (PDM)


B 5

E 5

C 12

F 14

D 2

G 17

H 11

A 8

FINISHSTART

Student exercise:(5 minutes)

Identify other paths thru the above network, calculate the duration of the paths, and then determine which path is the critical path.


PATHS DURATION CRITICAL PATH

ABCDH 8 + 5 + 12 + 2 + 11= 38

Duration Compression Techniques

• Crashing - involves adding additional resources to perform an activity to compress the schedule, but may result in increased cost to the project

• Fast tracking - involves over lapping activities which normally are performed in sequence. Compressing the schedule by performing activities at the same time or in parallel may result in increased project risk and rework.


Project Cost Management - Develop Estimates for Project Cost and Budget

• The project team aggregates the estimated costs of individual activities or work packages to establish a cost baseline.

• A cost management plan is developed by the project team and describes how project costs will be planned, managed and controlled (i.e. cost estimates, cost budgeting, cost baseline, cost variances).

• During project execution the project team uses the cost performance baseline to monitor and control project costs.


Project Cost Management - Develop Estimates for Project Cost and Budget

Project Cost Management Processes which Occur in Project Planning, Execution, and Monitor & Control: • Estimate costs• Determine budget• Control Costs


PROCESS GROUP


1 Planning Estimate Costs Activity cost estimates,Basis of estimates

2 Planning Determine Budget Cost Performance Baseline,Project funding requirements

3 Monitor & Control

Control Costs Work Performance Measurements,Budget Forecasts,Change requests


3 project cost management processes and key outputs

Types of Project Costs1. Direct cost 2. Indirect cost 3. Fixed cost 4. Variable cost


How are Costs Estimated?• Analogous• Parametric• Bottom-up


How are Costs Controlled?• Cost management plan• Project performance• Change request


Project Procurement Management Processes


Project Procurement Management Processes which occur in Project Planning, Execution, Monitor & Control, and Closing:1. Plan Procurements2. Conduct Procurements3. Administer Procurements4. Close Procurements

Project Procurement Management Processes and Key Outputs

PROCESS GROUP


1 Planning Plan ProcurementsProcurement management planProcurement statements of workMake-or-buy decisionsProcurements documentsSource selection criteria

2 Executing Conduct ProcurementsSelected SellersProcurement contract awardResource calendars

3Monitor & Control

Administer Procurements Procurement documentation

4 Closing Close Procurements Closed procurements


Types of ContractsThere are three main types of contracts. The type of contract selected may be based on the good or service to be purchased or level of scope of work definition.

1. Fixed-Price or Lump-Sum Contracts2. Cost-Reimbursable Contracts 3. Time and Material Contracts


What are Procurement or Bid Documents?

• Invitation for Bid (IFB)• Request for Proposal (RFP)• Request for Quotation (RFQ)



Contracting Environments: Centralized & Decentralized

Advantages Disadvantages

Centralized • Greater contracting expertise• Economical and more efficient

• Working multiple projects

Decentralized

• Greater focus on a specific project• PM has authority to execute and control contract • Greater loyalty to a project

• Duplication of effort • Inconsistent contracting practices


Administer Procurements Process & Close Procurements Process

Administering the procurement process involves monitoring and controlling the contract performance, managing procurement relationships, and making changes and corrections when required.

A procurement audit is performed at the completion of each contract.

Contracts must be closed before the project can be closed.

Summary• Developing a realistic schedule and budget and

accurately making procurement decisions is based on having well defined project scope

• The project manager must continually monitor and control the schedule, budget, and procurements to ensure project success.
