Managing ProjectsLevel 1 Level 2 Level 3 Level 4 Level 5 Level 6

1. Introduction

What is a project

A complex, non-routine, set of activities, undertaken by an individual or group with the purpose of producing a defined and unique, non-repetitious result.

A project has a defined scope, with a finite life span, an agreed cost and quality.

The result or product can be both tangible or intangible.

Usually involves several departments or professionals and always involves a level of risk.

What is project management?

What is the role of a project manager?

What is the typical project life-cycle?

2. Organisational Strategy, Structure and Culture

Strategic Management Process

Review and Define the Organisations Mission

Create mission statement

Communicate mission statement throughout organisation

Must be company specific

Set Long-Range goals and objectives

Set at all levels of organisation

Outline direction of organisation

Objective must be SMART

Specific

Measurable

Assignable

Realistic

Time Related

Analyse and formulate strategies to reach objectives

Answers questions on 'what' needs to be done

Evaluate alternatives

Customers perspective is important

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Implement these strategies through specific projects

Answers question of 'how' it will be done

Includes the allocation of resources

Requires organisational structure that complements strategy

Include planning, control and measurement tools

Organisational Structure

Functional

Advantages

No change

Flexibility

In-depth expertise

Easy post project transition

Disadvantages

Lack of focus

Poor integration

Slow

Lack of ownership

Coordinated Matrix

Matrix

Advantages

Efficient

Flexible

Strong project focus

Relativly easy post project transition

Disadvantages

Dysfunctional conflict

Infighting

Stressful

Slow

Seconded Matrix

Pure Project - Integrated Project Teams

Advantages

Simple

Fast

Cohesive

Cross functional integration

Disadvanteges

Expensive

Internal strife

Limited technological expertise

Difficult post-project transition

Interface Management

Critical To Effective Project Management

Interface result whenever work is divided and allocate to teams or individuals

Types of Interface

Personal

Organisational

System

Interfaces and Communications

Main issue is ensuring effective communication

Be aware of both formal and informal channels

External interfaces usually managed formally in the form of reporting

Interface Management Tools

Specifically Designed Forms

Reports

Faxes

Change Control

Equipment Lists

Meeting Minutes

Information Management Systems

Responsibility Matrices

The Project Manager

PM The Role

Plan the project

Organise to carry out the plan

Implement the plan

Control to follow the plan

Lead the project team

Motivate staff

Keep perspective

Encourage group decision making

Maintain group behaviour

Aim for win-win outcomes

PM The Person

Provides integration

Varying level of authority depending on org structure

Always has responsibility for project

Does not need to be technical hot-shot but requires understanding for decision making

PM The Traits

Intelligence

Energy and Drive

Self-assuredness

Perspective

Communications ability

Ability to persuade and negotiate

Management skill and specialist knowledge (HR, Legal, Resource Management)

PM The Styles

Democratic

Autocratic

Bureaucratic

Laissez Faire

See Managing People Map, Leadership Section

3. Defining the Project

Define the Project Scope

Purpose of Scope Statement

To clarify the deliverables

To focus the project on these goals

Used by the project owner and planner a tool for measuring progress and success

Scope Statement

Project Objective

Deliverables

Milestones

Checkpoints in the project

Describes what the project should achieve, not how

Activities are carried to achieve milestones

Milestone plan

Develop from project objectives

Agree with customer

Identify dependencies

Form logical network

Identify results path

Technical Requirements

Limits and Exclusions

Reviews with Customer

Terms and Definitions

Scope Statement

Project Charter

Project Creep

Establish Project Priorities

Causes Project Trade-offs

Managing Priority Trade-offs

ConstrainThe parameter is a fixed requirement

Will affect performance

EnhanceOptimising a parameter over others

Will affect time

AcceptReducing (or not meeting) a parameter requirement

Will affect cost

Create Work Breakdown Structure (WBS)

Hierarchal

Hierarchal outline (map) that identifies the work elements of the project

Defines the relationships of the final deliverables to the sub-deliverable and their work packages

Best suited for design and build projects with tangible outcomes

Process of Defining

Identify products

Identify work needed for products

Identify work needed to integrate products

Identify any management or testing work

Construct Hierarchy

Work Package

Lowest Level of WBS

Provides dictionary of work involved

Used to measure Progress

A Good Work Package has:

WBS Element name and number

Work definition

Inputs / predecessors

Responsible groups

Explicit spec of outputs

Budgets, schedules and cost estimate

Labour and Resource Requirements

Example

Integrating WBS with the Organization Organisational Breakdown Structure (OBS)

Provides framework to summarise organization work unit performance

Identifies organizational units responsible for work packages

Ties organizational units to cost control accounts

Coding the WBS for the information system Subtopic

4. Managing Project Time and Costs

Introduction

There is inherent uncertainty in all project costs

Estimating the cost of a project is required for tender application

Estimating costs money, the more accurate the estimation the more expensive it will be

Items to Consider when Making Estimates

Elements for cost estimation

Labour

Subcontractors & Consultants

Materials

Travel

Equipment

Facilities Rental

Other items specific to type of project

Factors that influence quality of estimation

Planning Horizon

Project duration

People

Project structure & organisation

Padding

Organisational culture

Methods

Material Take-Offs (MTO)Involves high detail

Obtaining quotes for specific work

Factoring

Based on historical data and existing projects

Less detail and accuracy than MTO

Each industry has documented factors

List of factors

Time Factor

Scale Factor

Complexity Factor

Location Factor

Exchange Rates

Contingencies

Estimate Types

Screening Estimate

Purpose Project initiation, earliest economic appraisal, used for ranking of project and selecting which projects should be done.

Accuracy Around 40%

Estimate Method Factoring

Feasibility Study

Purpose More detailed techno-economic analysis of preferred alternative project schemes

Accuracy Around 25%

Estimate Method Factoring

Budget Estimate

Purpose Preparation of project development plan; approval of budget for further front-end engineering

Accuracy Around 15%

Estimate Method Factoring and some MTO

Control Estimate

Purpose For use in project implementation plan, checking bids, cost control and reporting, performance appraisal, trend analysis, forecasting and budget revisions

Accuracy Between 8% and 10%

Estimate Method Full MTO

Estimate Problems

Ommision of scope

Misinterpretation of scope

Poorly defined or over optimistic schedule

Over optimistic estimating

Risk and uncertainty not adequately condidered

Escalation not considered

5. Developing a Project Plan

Introduction Project Networks

Used for planning, scheduling and monitoring project progress

Developed from the WBS

Shows the logical sequence, and interdependencies of the tasks

Gives the task durations, longest path is known as the 'critical path'

Gives a good overview of the project that the PM uses for decisions in cost, time, quality

Gantt Charts Limitations

Do not show relationships and dependencies well

Do not indicate slack well

Do not show resource requirements well

Network Diagrams Limitations

Show relationships and dependencies well

Show slack well

Provide Analysis information

Do not show time graphically

Do not show resource requirements

Can be very large and complex

Critical Path

One of the most useful tools

Any event with zero float is critical

Any

Summary

Project Network is very useful tool

Easily understood by others

Can provide estimate of project duration

It provides the basis for budgeting and cash flow

It identifies the critical path and critical activities

6. Managing Risk

Introduction

Due to the unique nature of a project, there is an inherent level of risk.

In project environment risk is an uncertain event

No amount of planning can remove risk entirely, but only manage it

DefinitionsRisk Management: The culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects.

Risk: The chance of something happening that will have an impact on the objectives. Measured in terms of consequence and likelihood

Risk Management Plan

The Risk Management Process

Risk Identification

Analyse the project and identify the possible risks

Create a list as comprehensive as possible, be creative and imaginative. These are filtered at the next stage

A useful tool is the WBS, as a guide for the cause of a risk to the project

Some professionals may be needed depending on the technical nature of the project, or particular area of expertise

Risk Assessment

The list created in the previous stage is assessed by the project manager. A useful methods are Scenario Analysis and Risk Response Matrix

Scenario Analysis

Severity and outcome

Likelyhood

When in the project the event may occur

The effect on other aspects of the project

Risk Response Matrix

Risks are listed in a table

Likelihood and Consequence are graded 1 - 5

Risk Exposure is calculated by multiplying these two measures

Detection DifficultyThird factor: Detection Difficulty can be used.

This gives the Risk Priority, and gives the order in which the risks should be handled

Ratio/Range Analysis

Probability Analysis

Scenario Analysis

Risk Response Development

Develop strategy to minimise damages

Mitigating

AvoidingImpossible to avoid all risk

Good for small problems, early in project

Transferring

Very common

Will cost more

Fixed price contracts

Suitable selection of third party is required

Communicate risk

Sharing

Retaining

Large risks with low likelihood

Contingency plan is vital

Risk should be planned in the budget so it can be absorbed if it does occur

Risk Response Control

Implement risk strategy

Monitor and adjust for new risks

Risk reporting should be part of all progress reports.

Document responsibility, of risk, 'owner' and response

Risk Process Diagram

Contingency Planning

Alternative plan to be used if a risk become a reality, the best alternative plan

Should answer questions of what, where, when, and how much action should be taken

The conditions under which the contingency plan must be clearly documented. As well as the source of funding

7. Scheduling Resources

Introduction

Project Constraints

Technical or Logic ConstraintsCommon

Unavoidable

Resource Constraints

Parallel tasks

Add more resources

Take priority over technical constraints but do not violate them

Physical Constraints Rare

Types of Resource

People

Materials

Equipment

Working Capital

Rules for Resource Levelling

1. Minimum Slack

2. Minimum Duration

3. Task ID

Summary

Resource availability is huge problem for PMs

Resource bottlenecks must be identified as early as possible.

Resource levelling ALWAYS reduced total slack, increasing risk!!

8. Reducing Project Duration

Introduction

Crashing projects increases risk

The amount a project can be crashed depends on the sensitivity

A sensitive network has many critical paths

Reasons for reducing project duration

Changed duration times

Time to market considerations

Incentive contract

Key resource needs

High overhead costs

Unforeseen delays

Indirect Costs

Overheads such as administration, consultants and loan interest

Can not be associated with any work package or activity

Vary directly with time

Are a large part of total project cost

Changing duration can have a big effect

Direct Costs

Costs related to work, materials, equipment

Assigned to specific work packages

Vary indirectly with time

Relationship Between Costs Graph

Options for Accelerating Project Completion

Adding resources

Most common method for shortening project time

Doubling resources will not halve duration

Depends on the complexity of the task

Training may be needed

Outsourcing project work

Another common method

Contractors may be more experienced

Also frees the resource for something else

Costs more

Scheduling overtime

Easiest way to add more resources

Avoids additional costs of coordination

Intangible costs to staff lifestyle

Motivational problems

Establishing a core project teamAssigning specialists full-time deduces the

They will devote all their attention

Do it twice - fast and correctlyShort term solutions to critical paths

Can re-visit later when pressure is on

Fast-trackingRe-arrange the project network so that critical activities are done in parallel

Change relationships to start-start

Critical-chain

Method of management to reduce project duration

Critical chain is the longest sting of dependencies that run through the project.

Depends on resources and technical constraints

See stand alone topic

Brainstorming time saversUse entire team for ideas

Tap different experience and skills

Reduce project scope

Another widely used method

Leads to a reduction in the functionality of the project

Required careful consideration and communication with client

Phase project delivery

Split the deliverables into smaller items

Something useful is achieved earlier

Some value has already been recovered

As long as the client wants it

Compromise qualityLast option

Use on tasks that are on critical path

Summary

There is always the need to reduce project duration

Time spent on during the definition and planning

Contingency plans and alternatives are valuable

9. Leadership: Being an Effective Project Manager

10. Project Management Contract Law

Contracts

Legally enforceable document

Either betweenPrinciple and Contractor

Contractor and Subcontractor

Provides

Risk sharing

Responsibility assignment

Objectives

Administrative procedures

Rewards

Penalties

Types of Contract

Lump Sum

Schedule of Rates

Cost plus Fixed Fee

Cost plus Percentage Fee

Percentage Fee

Special Forms of Contract

Novated ContractsAssigned to specialists in initial stages

Then transfers to other contractors during later stages

Design and Construction Turnkey'

Partnering and Alliance

Involves setting up dispute resolution procedures

Parties undertake work cooperatively

Long term partnering contracts

Elements of a Contract

Agreement

A meeting of the minds

Usually a response to tender documents

Acceptance must be without qualification

ConsiderationGives the value of the transaction

Usually financial reward on completion

IntentionParties mus be intent on filling the agreement

Including the rights and responsibilities

Other Legal Elements

Genuine Consent

Action must be taken in 6 years

Unless 'under seal', which then increases to 12 years

Waiver and EstoppelWaiver Describes the circumstances where one party indicates that the contract is no longer valid

Estoppel Arises from the conduct of a party and usually results in a waiver

Practical Completion

Stage in the contract when the product can taken over by the principle and used safely

The defect liability period will still apply

Final payment, less security is released

Ownership is formally transferred

Responsibility for insurance is transferred

Final certificate is issued once defect removed and remedial work is complete

Tort Law

The 'duty of care' of an organisation

Ingredients to per sue action in a Tort case

Breach of duty of care

Injury or damage following from the act

A reasonable connection between act and injury

Injured party must not have contributed to the loss

The injured pary has the duty to mitigate the loss

Tort in Contracting

Job Changes

Variations

Different methods used

Different equipment used

Changes to planned layout

Contractor must show that additional costs were incurred even though the final result is the same

Extras

Changing quantity of work

Wrongly rejecting work, increasing cost

Changing quality of work

Having to demolish or re-do work

Usually more identifiable than variations

Program Changes

Changes to sequence of work

Acceleration of contract prgram

Prolongation of contract program

Usually increases the cost of contract

Extension of Time

Most common job change

Depend on situation and type of contract

Events resulting in extensions usually listed in contract

Formal extensions are required

Good Practise Legal Tips

Keep al forms

Correspondence files

Daily diaries

Progress reports

Photographs

Records of meetings

Emails

11 Project Audit and Closure

Finishing the Work

Checklists of remaining work

Planning and Controlling at low levels of WBS

Planned run-down of project team

Use task forces

Changing the PM

Closing contracts with suppliers

Transferring the Product

Planning the transition

Ensureing the user acceptance

Training the user

Recording the 'as-built' design

Ensuring the maintenance is planned

Obtaining the Benefits

Setting a measure

Monitoring performance against measure

Calculate variancies

Taking action to correct large variances

Disbanding the Team

Must maintain motivation

Returning resources to line managers

Hold a wrap party - success or failure

Hold debriefings

Rewarding achievement

Disciplining under-achievement

Counselling staff

Post-Completion Review

Record 'as built' design

Compare achievement to plan

Record technical data

Learn successes and failures for future

Critical Chain Project Management

PERT: Program Evaluation and Review Technique