Managing Projects

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Level 3

Level 4

Level 5

Level 6

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.
What is a project
1. Introduction

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?
Create mission statement
Review and Define the Organisations Mission

Communicate mission statement throughout organisation

Must be company specific
Set at all levels of organisation
Outline direction of organisation
Specific

Set Long-Range goals and objectives

Measurable
Objective must be SMART

Assignable
Realistic
Time Related

Strategic Management Process

Answers questions on 'what' needs to be done

Evaluate alternatives
Customers perspective is important
Analyse and formulate strategies to reach objectives

Strengths
SWOT Analysis

Weaknesses
Opportunities
Threats

Answers question of 'how' it will be done

Implement these strategies through specific projects

Includes the allocation of resources

Requires organisational structure that complements strategy
Include planning, control and measurement tools
No change
Advantages

Functional

Flexibility
In-depth expertise
Easy post project transition
Lack of focus

Disadvantages

Poor integration
Slow
Lack of ownership

Coordinated Matrix
Efficient
Advantages
Organisational Structure

Matrix

Flexible
Strong project focus
Relativly easy post project transition
Dysfunctional conflict

Disadvantages

Infighting
Stressful
Slow

Seconded Matrix
Simple
Advantages
2. Organisational Strategy, Structure and Culture

Pure Project - Integrated Project Teams

Fast
Cohesive
Cross functional integration
Expensive

Disadvanteges

Internal strife
Limited technological expertise
Difficult post-project transition

Critical To Effective Project Management

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

Organisational
System
Main issue is ensuring effective communication

Interfaces and Communications

Interface Management

Be aware of both formal and informal channels

External interfaces usually managed formally in the form of reporting
Reports
Faxes
Specifically Designed Forms

Interface Management Tools

Change Control
Equipment Lists
Meeting Minutes

Information Management Systems

Responsibility Matrices
Plan the project
Organise to carry out the plan
Implement the plan
Control to follow the plan
PM The Role

Motivate staff
Keep perspective
Lead the project team

Encourage group decision making

Maintain group behaviour
Aim for win-win outcomes

Provides integration
PM The Person
The Project Manager

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
Intelligence
Energy and Drive
Self-assuredness

PM The Traits

Perspective
Communications ability
Ability to persuade and negotiate
Management skill and specialist knowledge (HR, Legal, Resource Management)
Democratic
Autocratic

PM The Styles

Bureaucratic
Laissez Faire
See Managing People Map, Leadership Section
To clarify the deliverables

Purpose of Scope Statement

To focus the project on these goals

Used by the project owner and planner a tool for measuring progress and success
Project Objective
Deliverables
Checkpoints in the project
Describes what the project should achieve, not how
Activities are carried to achieve milestones

Define the Project Scope

Scope Statement

Develop from project objectives

Milestones

Agree with customer

Milestone plan

Identify dependencies
Form logical network
Identify results path

Technical Requirements
Limits and Exclusions
Reviews with Customer
Scope Statement
Terms and Definitions

Project Charter
Project Creep

Causes Project Trade-offs

Constrain
Establish Project Priorities

Managing Priority Trade-offs

3. Defining the Project

Enhance
Accept

The parameter is a fixed requirement

Will affect performance
Optimising a parameter over others
Will affect time
Reducing (or not meeting) a parameter requirement
Will affect cost

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

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
Identify products
Identify work needed for products

Process of Defining

Identify work needed to integrate products

Identify any management or testing work
Construct Hierarchy
Lowest Level of WBS

Create Work Breakdown Structure (WBS)

Provides dictionary of work involved

Used to measure Progress
WBS Element name and number
Work definition

Work Package

Inputs / predecessors
A Good Work Package has:

Responsible groups
Explicit spec of outputs
Budgets, schedules and cost estimate
Labour and Resource Requirements

Example
Provides framework to summarise organization work unit performance
Integrating WBS with the Organization

Organisational Breakdown Structure (OBS)

Identifies organizational units responsible for work packages

Ties organizational units to cost control accounts

Coding the WBS for the information system

Subtopic
There is inherent uncertainty in all project costs

Introduction

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
Labour
Subcontractors & Consultants
Materials
Elements for cost estimation

Travel
Equipment
Facilities Rental

Items to Consider when Making Estimates

Other items specific to type of project

Planning Horizon
Project duration
Factors that influence quality of estimation

People
Project structure & organisation
Padding
Organisational culture

Material Take-Offs (MTO)

Involves high detail

Obtaining quotes for specific work
Based on historical data and existing projects
Less detail and accuracy than MTO
Each industry has documented factors

Methods
4. Managing Project Time and Costs

Time Factor
Factoring

Scale Factor
List of factors

Complexity Factor
Location Factor
Exchange Rates
Contingencies

Screening Estimate

Feasibility Study
Estimate Types
Budget Estimate

Control 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

Purpose

More detailed techno-economic analysis of preferred alternative project schemes

Accuracy

Around 25%

Estimate Method

Factoring

Purpose

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

Accuracy

Around 15%

Estimate Method

Factoring and some MTO

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

Ommision of scope
Misinterpretation of scope
Estimate Problems

Poorly defined or over optimistic schedule

Over optimistic estimating
Risk and uncertainty not adequately condidered
Escalation not considered
Used for planning, scheduling and monitoring project progress
Developed from the WBS

Introduction

Project Networks

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
Do not show relationships and dependencies well

Gantt Charts

Limitations

Do not indicate slack well

Do not show resource requirements well
Show relationships and dependencies well
Show slack well

5. Developing a Project Plan

Network Diagrams

Limitations

Provide Analysis information

Do not show time graphically
Do not show resource requirements
Can be very large and complex

One of the most useful tools

Critical Path

Any event with zero float is critical

Any
Project Network is very useful tool
Easily understood by others

Summary

Can provide estimate of project duration

It provides the basis for budgeting and cash flow
It identifies the critical path and critical activities
Due to the unique nature of a project, there is an inherent level of risk.
In project environment risk is an uncertain event

Introduction

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

Definitions

Risk 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

Analyse the project and identify the possible risks
Risk Identification

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

Likelyhood
When in the project the event may occur
The effect on other aspects of the project
Risks are listed in a table

Risk Assessment

Likelihood and Consequence are graded 1 - 5

Risk Response Matrix

Risk Exposure is calculated by multiplying these two measures

Detection Difficulty

Ratio/Range Analysis
6. Managing Risk

Probability Analysis
Scenario Analysis
The Risk Management Process

Develop strategy to minimise damages

Mitigating
Avoiding

Impossible to avoid all risk

Good for small problems, early in project
Very common
Will cost more

Risk Response Development

Transferring

Fixed price contracts

Suitable selection of third party is required
Communicate risk

Sharing
Large risks with low likelihood
Retaining

Contingency plan is vital

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

Implement risk strategy

Risk Response Control

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

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

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

Introduction
Technical or Logic Constraints
Project Constraints

Common
Unavoidable
Parallel tasks

Resource Constraints

Add more resources

Take priority over technical constraints but do not violate them

Physical Constraints

Rare

People
7. Scheduling Resources

Types of Resource

Materials
Equipment
Working Capital
1. Minimum Slack

Rules for Resource Levelling

2. Minimum Duration
3. Task ID
Resource availability is huge problem for PMs

Summary

Resource bottlenecks must be identified as early as possible.

Resource levelling ALWAYS reduced total slack, increasing risk!!
Crashing projects increases risk

Introduction

The amount a project can be crashed depends on the sensitivity

A sensitive network has many critical paths
Changed duration times
Time to market considerations

Reasons for reducing project duration

Incentive contract
Key resource needs
High overhead costs
Unforeseen delays
Overheads such as administration, consultants and loan interest
Can not be associated with any work package or activity

Indirect Costs

Vary directly with time

Are a large part of total project cost
Changing duration can have a big effect
Costs related to work, materials, equipment

Direct Costs

Assigned to specific work packages

Vary indirectly with time

Relationship Between Costs Graph

Most common method for shortening project time
Adding resources

Doubling resources will not halve duration

Depends on the complexity of the task
Training may be needed
Another common method

Outsourcing project work

Contractors may be more experienced

Also frees the resource for something else
Costs more
Easiest way to add more resources

8. Reducing Project Duration

Scheduling overtime

Avoids additional costs of coordination

Intangible costs to staff lifestyle
Motivational problems

Establishing a core project team

Do it twice - fast and correctly
Options for Accelerating Project Completion

Fast-tracking

Assigning specialists full-time deduces the

They will devote all their attention
Short term solutions to critical paths
Can re-visit later when pressure is on
Re-arrange the project network so that critical activities are done in parallel
Change relationships to start-start
Method of management to reduce project duration

Critical-chain

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 savers

Use entire team for ideas

Tap different experience and skills
Another widely used method

Reduce project scope

Leads to a reduction in the functionality of the project

Required careful consideration and communication with client
Split the deliverables into smaller items

Phase project delivery

Something useful is achieved earlier

Some value has already been recovered
As long as the client wants it

Compromise quality

Last option
Use on tasks that are on critical path

There is always the need to reduce project duration

Summary

Time spent on during the definition and planning

Contingency plans and alternatives are valuable

9. Leadership: Being an Effective Project Manager

Legally enforceable document
Either between

Principle and Contractor

Contractor and Subcontractor
Risk sharing

Contracts

Responsibility assignment
Provides

Objectives
Administrative procedures
Rewards
Penalties

Lump Sum
Schedule of Rates
Types of Contract

Cost plus Fixed Fee

Cost plus Percentage Fee
Percentage Fee
Novated Contracts

Special Forms of Contract

Design and Construction

Assigned to specialists in initial stages

Then transfers to other contractors during later stages
Turnkey'
Involves setting up dispute resolution procedures

Partnering and Alliance

Parties undertake work cooperatively

Long term partnering contracts
A meeting of the minds

Agreement

Usually a response to tender documents

Acceptance must be without qualification

Elements of a Contract

Consideration
Intention

Gives the value of the transaction

Usually financial reward on completion
Parties mus be intent on filling the agreement
Including the rights and responsibilities

Genuine Consent
Action must be taken in 6 years
Other Legal Elements

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

Waiver and Estoppel

Waiver

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

Stage in the contract when the product can taken over by the principle and used safely
The defect liability period will still apply
10. Project Management Contract Law

Practical Completion

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
The 'duty of care' of an organisation
Breach of duty of care
Injury or damage following from the act

Tort Law

Ingredients to per sue action in a Tort case

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
Different methods used
Variations

Different equipment used

Changes to planned layout
Contractor must show that additional costs were incurred even though the final result is the same
Changing quantity of work
Wrongly rejecting work, increasing cost

Extras

Changing quality of work

Having to demolish or re-do work

Job Changes

Usually more identifiable than variations

Changes to sequence of work
Program Changes

Acceleration of contract prgram

Prolongation of contract program
Usually increases the cost of contract
Most common job change

Extension of Time

Depend on situation and type of contract

Events resulting in extensions usually listed in contract
Formal extensions are required

Keep al forms
Correspondence files
Daily diaries
Good Practise Legal Tips

Progress reports
Photographs
Records of meetings
Emails
Checklists of remaining work
Planning and Controlling at low levels of WBS

Finishing the Work

Planned run-down of project team

Use task forces
Changing the PM
Closing contracts with suppliers
Planning the transition
Ensureing the user acceptance

Transferring the Product

Training the user

Recording the 'as-built' design
Ensuring the maintenance is planned
Setting a measure

11 Project Audit and Closure

Obtaining the Benefits

Monitoring performance against measure

Calculate variancies
Taking action to correct large variances
Must maintain motivation
Returning resources to line managers
Hold a wrap party - success or failure

Disbanding the Team

Hold debriefings
Rewarding achievement
Disciplining under-achievement
Counselling staff
Record 'as built' design

Post-Completion Review

Compare achievement to plan

Record technical data
Learn successes and failures for future

Critical Chain Project Management

PERT: Program Evaluation and Review Technique

Third factor: Detection Difficulty can be used.

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