PROJECT MANAGEMENT

CHE 620
Summary of Chapter 1
Project is a temporary endeavour undertaken to create a unique product or service. Projects are unique, have specific deliverable and have specific due date. Their additional characteristics are multidisciplinary as they require input from different people. They are complex which compose of many interconnected elements. Project also involves conflict which is the needs and desire of client. They are also part of program, they are subdivision of program. Project Management is an application of knowledge, skills, tools and techniques to abroad range of activities in order to meet the requirements of a particular project. Trends in Project Management: i) Achieving strategic goals growing use of projects to achieve an organizations strategic goals ii) Achieving routine goals growing use of project management to accomplish routine departmental tasks iii) Improving project effectiveness efforts are being pursued to improve process iv) Virtual projects project involving global teams v) Quasi-Projects led by the demands of information tech/system departments Major differences of General management and Project management: No. General management 1 Success depend on good planning 2 Budgets are primarily modifications of budgets for the same activity in the previous period 3 The sequence in which various things are done is set when the production line is designed 4 Routine work takes place within a welldefined structure of divisions, departments, sections and similar subdivisions of the total unit 5 Management team always established on site 6 Reasonably well defined managerial hierarchy, superior subordinate relationships are known, lines of authority are clear Project management Planning much more detailed Budgets are newly created for each project, often cover several budget period in the future Each project has a schedule of its own

The need for technical knowledge, information and special skills almost always requires that departmental lines be crossed Individual member of project teams may be spread and speak bilingual PM may be low in the hierarchical chain of command, responsibility without the authority of rank or position is common

PROJECT MANAGEMENT

CHE 620
Projects have three interrelated objectives which are to meet the budget, finish on schedule and generate deliverables that satisfy the client. The ability need for effective PM is ability to resolve conflict which meets clients deliverables. Second is creativity and flexibility as the projects travel a rough road. Third is ability to adjust to change as the projects fall behind schedule may because of bad weather. PM also should have a good planning skill. Lastly, a PM should have negotiation skills as they may have to negotiate for late delivery date Projects life cycle measures project completion as a function of either time (schedule) or resources (budget). Three stages of project life cycle, the early stage the PM have to make sure project parallel with clients wish, abilities of project team and designed to be consistent with firms goals and objectives. As for the second stage, the implementation stage is keeping project on budge and schedule, and to negotiate the appropriate trade-offs to correct or minimize damage. As for the end stage, to assure the specifications of the project are truly met. They are 3 types of project, which are: i) ii) S-shaped type slow start, develop momentum and then finish slowly J-shaped type start slowly, proceed slowly and then finish rapidly

Project selections are based on project profitability of the project, the chance of meeting ROROI. Secondly is the requirement of law or rules of an industrial association (mandate). Next is the acknowledgement and skills to carry out project and the consistency of the project with the firms strategic plan. The project also has to fulfil the capacity to carry out the project on schedule. In case of R&D, the requirement for the project to be economically successful. Nonnumeric selection methods: i) The sacred cow potential product or service offered by a senior executive of the firm ii) The operating/competitive necessity selects any project that is necessary for continued operation of a group, facility or firm iii) Comparative benefits select from a list of projects that are complex, difficult to assess and often noncomparable Numeric assessment methods: i) Financial assessment methods select projects on the basis of their expected economic value to the firm a) Payback period initial investment in the project divided by the estimated annual net cash inflows from the project

PROJECT MANAGEMENT

CHE 620
b) Discounted cash flow consider the time value of money, inflation rate, and firms ROROI for projects NPV (project) = Io + Scoring methods: i) ii) Developed to overcome some of the disadvantages of the simple financial profitability methods Weighted factor scoring method was developed, number of criteria, n are considered for evaluating each project, and their relative importance weights, w are estimated Projects are all about confronting uncertainties (the management of risk), and effective project management requires an ability to deal with uncertainty. The uncertainties are the time required to complete a project, the availability and cost of key resources. Timing of solutions to technological problems also needs to be taken care. Macroeconomic variables and the whims of clients should be prioritising. Lastly the action taken by competitors should be estimated. Project portfolio process: Step 1 Establish a project council (articulate a strategic direction for projects) Step 2 Identify project categories and criteria a) Derivative projects (objectives/deliverables that are only incrementally different in both product and process from existing offerings) b) Platform projects (major departure of existing offerings in terms of either the product/service itself or the process used to make and deliver it, or both c) Breakthrough projects (involve newer technologies than platform projects) d) R&D projects (visionary endeavours, oriented in using newly developed technologies, or existing technologies in a new manner Step 3 collect project data (assemble the data appropriate to that categorys criteria) Step 4 Assess resource availability (assess the availability of both internal and external resources, by type, department and timing Step 5 Reduce the project and criteria set (multiple screens are employed to reduce the number of competing projects) Step 6 Prioritize the projects within categories (apply the scores and criterion weights to rank the projects within each category) Step 7 Select the projects to be funded and those to be held in reserve Step 8 Implement the process (make the results of the PPP widely known, including the documented reasons for project cancellations, deferrals, ad nonselection