Project Management Training

Prof. Muazzam Khan PMP®

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 What is a Project?

A project is a temporary endeavor undertaken to

create a unique product, service or result’ (Source PMBOK® Guide)

 Temporary indicates – Definite beginning & end

 Outcome of project – Can be tangible or intangible

 Generally addresses: strategic objectives of the business and can arise out
of diverse needs

 Projects usually involve Progressive elaboration / Rolling Wave planning

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 What is Project Management?

 “Project Management is the application of Knowledge, Skills, Tools

and Techniques to Project activities to meet Project requirements”
(Reproduced from PMBOK® Guide)

 Accomplishment of objectives through appropriate application and

integration of 47 logically grouped processes categorized into 5
Process Groups.

 Apart from Technical and Soft skills, Ethical areas of Project

Management are important to be followed

 Project Lifecycle is a part of Product Lifecycle, Projects may get

divided into Subprojects

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Theory of Project Constraints

Budget

Scope

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Project – Program – Portfolio

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Key differences between Project /Program and
Portfolio Management

Theme Project Program Portfolio

A well defined scope - Portfolios have a Business

Program’s scope is more
usually gets progressively scope which change with
Scope attuned towards Benefits
elaborated throughout the strategy of the
Management
the Project Life cycle Organisation

Program managers – ready Portfolio Managers are

Project Manager tries to
to manage changes coming open to changes driven by
Change keep Changes to
from both Inside/Outside Internal and external
minimum
program environment

Project Managers use Program Managers create Portfolio Managers institute

“Rolling wave” planning the Plan at the high-level necessary processes and
Planning through progressive and guide the Project communication structures
elaboration throughout Managers relative to the aggregate
project lifecycle Portfolio

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Key differences between Project /Program and
Portfolio Management contd..

Theme Project Program Portfolio

Program managers Portfolio Managers

Project Managers oversee the Project mostly provide direction
Management manage the Project managers/ associated and alignment to
team operations to provide Organisational
leadership strategies

Delivery style /
Benefits realization
Success Task oriented Value oriented
oriented
measurement

Aggregate
Project objectives Benefit/
Monitoring Style Performance/Value
related Governance related
indicators driven

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 Project Manager’s Role

 Responsibilities and competencies of PM

 Knowledge : Knowhow of Project Management
 Performance : Accomplishments while applying knowledge
 Personal : Behavior, attitude, core personality characteristics, leadership style

 Interpersonal skills
 Leadership
 Team building
 Motivation
 Communication
 Influencing
 Decision making
 Political and cultural awareness
 Negotiation
 Trust building
 Conflict management and coaching

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Typical Project Lifecycle

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Typical Cost & Staffing levels in Project Life Cycle

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Impact of Variable Based on Project Time

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Project Stakeholders

“Stakeholders influence a Project or get influenced by the Project”

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Influence of Organizational structures on projects

Org Structure Matrix

Project Functional Projectized
Characteristics Weak Balanced Strong

Low to Moderate to High to

PM’s Auth Little / None Low
Moderate High almost Total

Resource Low to Moderate to High to

Little / None Low
Availability Moderate High almost Total

Functional Functional
Budget Mgt Mixed PM PM
Mgr Mgr

PM’s Role Part-Time Part-Time Full-Time Full-Time Full-Time

PM’s Admin
Part-Time Part-Time Part-Time Full-Time Full-Time
Staff

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PM – Process Groups & Knowledge Areas Mapping
Table taken f rom ©2013 Project Management institute’s PMBOK® Guide - Fif th Edition

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 Process Group Interactions

 Initiating

 Planning
Monitoring and
Controlling
 Executing

 Closing

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Project Management Process Groups

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Examples of single / multiple phase projects

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Example of Predictive Life Cycle

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Process Groups Interact in Phase or Project

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 Project management process interactions

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 Project SOW/Business case

 Statement of Work is a narrative description of products and

services to be delivered by the Project

 The SOW can reference the following:

 Business Need
 Product Scope description
 Strategic Plan

 The Business need and the Cost-benefit analysis are

contained in the Business case to justify the Project

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 Business case contents

 Description:
- project outline
- plan
- constraints
 Project success:
- success criteria
- deliverables
- benefits
 Justification:
- financial appraisal
- risk and opportunities
- stakeholders and sponsorship

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 Return on Investment (ROl)

 ROl is also referred to as Accounting or Average Rate of

Return (ARR) and provides a way to compare the net
profitability to the investment required
 Most common formula to calculate ROl % is
 (Average Annual Profit/Total Investment)100

Cash Inflow Cash Outflow Returns

Cash Invested 40000
Year 1 10000 2000 8000
Year 2 13000 3000 10000
Year 3 14000 2000 12000
Average Profit 10000
ROI=(10000/40000)*100 25%

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 Payback Period Analysis

 Payback period is the time taken to “break even” or pay back

the initial cash outlay on the project
 According to the payback criterion, the shorter the payback
period, the more desirable the Project.
Year Cash flow Project I Cash Flow Project II

0 -100,000 -100,000
1 30,000 20,000
2 30,000 20,000
3 *40,000 40,000
4 10,000 *20,000
5 10,000 50,000
6 - 60,000

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 Payback

Z Ltd have a cost of capital of 12%. A new press costs £120,000. Income
netted from costs from the new press are expected from year 1. At the end of
year 4 the press will be scrapped with no significant residual value.

Year Annual cash flow Cumulative income

0 -120,000 -120,000
1 +40,000 -80,000
2 +50,000 -30,000
3 +60,000 30,000
4 +70,000 100,000

Payback in year 3

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 Time Value of Money

 Present Value (PV) of money received “x” years from now is

always less.
 The reason for this is because of the Time Value of Money
 The Future Value of money Is calculated by compounding the
present value with the prevailing interest rate
 Future Value (FV) = PV*(1+r)n
 FV = Future Value of an investment
 PV = Present Value
 r =Investment Interest rate
 n = Number of years

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Present Value

If investment A yields $100,000 in 2 years and investment B

yields $110,000 in 3 years and Cost of Capital 15%, which
investment is better?

PV(A) = $75,614 (worth more)

PV(B) = $72,327
PVs of various investments can be compared to arrive at the
appropriate decision.

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 How to read a PV Table?

 Present Value Table ($1)

No. of Years 5% 10% 15% 20%
1 0.9524 0.9091 0.8696 0.8333
2 0.9070 0.8264 0.7561 0.6944
3 0.8638 0.7513 0.6575 0.5787
4 0.8227 0.6830 0.5713 0.4823
5 0.7835 0.6209 0.4972 0.4019
6 0.7462 0.5645 0.4232 0.3349
7 0.7107 0.5132 0.3759 0.2791
8 0.6768 0.4665 0.3269 0.2326
9 0.6446 0.4241 0.2843 0.1938
10 0.6139 0.3855 0.2472 0.1615

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 Net Present Value

 Net Present Value (NPV) is the difference of discounted cash

flows and discounted expenses occurring over the Product’s
Lifecycle:
 If NPV <=0 No real profit is accruing to the Project
 If NPV> 0 Profitable Venture
 Is also the difference between the present value of the cash
flows generated by a Project and its capital cost.

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 NPV - an illustration

 Consider an investment with the following income-expense

profile:
 (assumed rate of interest - 10%) PV=FV/(1+r)n
Expected Expected
Ye
Income (‘000 PV Inc @ 10% Expenditure PV Exp @ 10%
ar
$) (‘000 $)
0 _ 0 100 100
1 50 45 20 18
2 70 58 10 8
3 50 45 10 7.5

 Determine if the investment is likely to be profitable by the

NPV criteria. : NPV = 148-134=14

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 Net present value
Z Ltd have a cost of capital of 12%. A new press costs £120,000.
Income netted from costs from the new press are expected from year 1.
At the end of year 4 the press will be scrapped with no significant
residual value.
Undiscounted
Year Annual cash flow DFs at 12% Net present value
£ £ £
0 -120,000 1 -120,000 -120,000
1 +40,000 0.893 +35,720 +40,000
2 +50,000 0.797 +39,850 +50,000
3 +60,000 0.712 +42,720 +60,000
4 +70,000 0.636 +44,520 +70,000

+£42,810 +£100,000
NPV says DO IT

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 Internal Rate of Return (IRR)

 IRR represents the rate of interest that will make the NPV for
an investment zero.
 The rate (“interest rate”) at which the project inflows
(“revenues”) and project outflows (“costs”) are equal.

 It Is calculated by finding IRR internally in the equation:

 Initial Outlay = Sum(Discounted Cashflows with IRR)
 Requires iterative calculation using different Interest rates
 It is useful in comparing alternative investments
 IRR has to be greater than the ‘Cost of Capital’ or ‘Hurdle
rate’ for it to be taken up for further consideration.

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 Internal rate of return

Select discount factor higher than 12% to drive NPV negative – use 40%

Year Annual cash flow DFs at 40% Net present value

£ £
0 -120,000 1 -120,000
1 +40,000 0.714 +28,560
2 +50,000 0.510 +25,500
3 +60,000 0.364 +21,840
4 +70,000 0.260 +18,200

-£25,900

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IRR – by graphical means

NPV

£60,000

£42,810
£40,000
IRR
Total NPV

£20,000
IRR

£0
12% 20% 30% 40%

-£20,000

-£40,000 -£25,900

Rate

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 ® ®

PROJECT SCOPE MANAGEMENT

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 Scope Management

 Scope Management includes the processes to perform the

Project successfully and controlling the Scope

 Defining what is In Scope and what is out of Scope is an

integral component of Scope Management- also as a part of
- ‘Necessary and Sufficiency’ concept

 Product Scope and Project Scope are Interlinked

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Project Scope Management

-Plan Scope Management

-Collect Requirements Planning Process Group
-Define Scope
-Create WBS

Monitoring and
-Validate Scope Controlling Process
-Control Scope Group

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 Project Management Plan

 Project Management Plan is the document that describes how the

project will be executed, monitored and controlled. It integrates and
consolidates ALL subsidiary plans and baselines from planning
processes –
 Project Baseline includes BNLT  Subsidiary plans includes BNLT
 Scope Baseline  Scope Mgt Plan
 Schedule Baseline  Requirements Mgt Plan
 Cost Baseline  Schedule Mgt Plan
 Cost Mgt Plan
 PM Plan may also include
 Quality Mgt Plan
 Life cycle selected
 Process Improvement Plan
 Change Mgt Plan
 HR Mgt Plan
 Configuration Mgt Plan
 Communications Mgt Plan
 Requirements of Communi.
 Risk Mgt Plan
 Description of how integrity of
how project baselines will be  Procurement Mgt Plan
maintained 38
 Stakeholder Mgt Plan
Differentiate between PM Plan & Project Documents
Project Management Plan
Change Management Plan
Communication management plan
Configuration management plan
Cost baseline
Cost management plan
HR management plan
Process Improvement plan
Procurement management plan
Scope baseline
>Project scope statement
>WBS
>WBS Dictionary
Quality management plan
Requirements management plan
Risk management plan
Schedule baseline
Schedule management plan
Scope management plan
Stakeholder management plan
Project Documents
Activity attributes Project staff assignments
Activity cost estimates Project statement of work
Activity duration estimates Quality checklist
Activity list Quality control measurements
Activity resource requirements Quality metrics
Agreements Requirements documentation
Basis of estimates Requirements traceability matrix
Change log Resource breakdown structure
Change requests Resource calendars
Forecasts Risk register
>Cost forecast
>Schedule forecast
Issue log Schedule data
Milestone list Seller proposals
Procurement documents Source selection criteria
Procurement statement of work Stakeholder register
Project calendars Team performance assessments
Project Charter Work performance data
Project funding requirements Work performance information
Project schedule Work performance reports
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Project schedule network diagrams
 Create WBS – Work Breakdown Structure

 Project Scope statement and Requirements Documentation

are used to break down the Scope elements to Team level
deliverables

 The Project team uses Templates etc during this

Decomposition process

 The Scope Baseline (including WBS/ WBS Dictionary/ Basic

Scope Statement) gets created and Project Documents get
updated in this process

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 WBS

 WBS details out the Project scope and subdivides the Project
work into smatter, more manageable pieces of work

 The first level decomposition may relate to Project Phases,

deliverables or sub-projects.

 The lowest level of WBS is called the Work Package with

Control Accounts placed as required in between

 The Project Manager keeps decomposing the WBS, until at

the Work Package level, desired clarity is obtained for Scope,
Time and Cost as well as for Management of Risk and
Quality
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 Specimen WBS - Automotive

A.
Automotive

A.3.
A.1. Chassis A.2. Engine Electrical
Assembly

A.2.1 Fuel A.2.2 A.3.2

A.1.1 Main A.3.1 Starter
A 1.2 Panels Injection Transmission Lighting
Frame Assembly
System System circuits

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 Specimen WBS - Software Product

A. Software
Product

A.2.
A.1. Project Product A.4. A.5.
Manageme Requireme A.3. Design Constructio Deploymen
nt nts n t

A.5.1 User
A.1.1 A 1.2 A.2.1 A.2.2 Acceptanc A.5.2
Project A 1.2 Training Functional Training A.4.1 Deploymen
Project Developed A.4.2 Test e
Manageme Documenta Requireme Documenta A.3.1 HLD A.3.2 LLD Cases t and
Reviews Code Documenta
nt Plan tion nts tion tion Integration

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 Some Useful Pointers: Requirements Traceability Matrix

 Requirements Traceability Matrix

◦ A grid linking product requirements from their origin to the deliverables
that satisfy them
Requirements Traceability Matrix
Project Name
Cost Center
Project Description
Business Needs,
Associate Project WBS Product Product
ID Requirements Description Opportunities, Test Cases
ID Objectives Deliverables Design Development
Goals, Objectives
1.0
1.1
001
1.2
1.2.1
2.0
002 2.1
2.1.1
3.0
003 3.1
3.2
004 4.0
005 5.0

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WBS Dictionary : How does it look?

WBS Dictionary
Control Account ID # Work Package Name / Date of Update Responsible
Number Organization/Individual

Work Package Deliverable Description

Work involved to Produce Deliverable
Acceptance Criteria (How to know if the deliverable/work is acceptable)
Assumptions and constraints
Quality Metrics
Technical Source Document
Risks
Resource Assigned
Duration
Schedule Milestones
Cost
Due Date
Interdependencies
Before this work package ______________________
After this work package ________________________
Approved By: Project manager ________________________________________ Date: ___________

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 Some Useful Pointers: Elements of PC and PSS

 Project Charter  Project Scope Statement

Project purpose or justification Project scope description
Measurable objectives & success criteria Acceptance criteria
High-level requirements Project deliverables
High-level risks Project exclusions
Summary milestone schedule Project constraints
Summary budget Project assumptions
Stakeholder list
Project approval requirements (what
constitutes success, who decides it,
who signs off)
Assigned PM, Responsibility & Authority
Name & authority of sponsor

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 ® ®

PROJECT TIME MANAGEMENT

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 Project Time Management

 Project Time Management has following processes

 Define Activities
 Sequence Activities
 Estimate Activity Resources
 Estimate Activity Durations
 Develop Schedule
 Control Schedule

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 Understanding the flow.

 Plan Schedule Management: Establishing policies, procedure,

documentation to plan, develop, manage, execute and control the
project schedule
 Define Activities: Definition of Activities to produce Project Deliverables
 Sequence Activities: Incorporating Logical dependencies amongst the
defined Activities
 Estimate Activity Resources: Estimating the types and quantities of
Resource requirements of various activities
 Estimate Activity Durations: Estimating the likely durations (elapsed
times) of various activities
 Develop Schedule: Combining the prior processes to produce the
overall Project schedule
 Control Schedule: Monitoring the Project and Controlling changes to
the Project schedule

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Scheduling Overview

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 Critical Path Method

 Finding the Critical Path in a project network diagram

 FORWARD PASS - Step I

 Calculate Early Start(ES) and Early Finish (EF) dates by navigating
 through the network from left to right (carry the largest value forward if
more than one choice Is available)
 EF= ES +Activity Duration
 ES of succeeding activity = MAX (EF of preceding activities adjusted by
constraints)

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 Critical Path Method

 BACKWARD PASS - Step 2

 Using the final project Early Finish date as the Late Finish (LF)
date, calculate Late Start (LS) and Late Finish dates by navigating
through the network from right to left (carry the smallest value
backward if more than one choice is available)
 LS = LF - Duration
 LF of preceding activity = MIN (LS of succeeding activities adjusted
by constraints)
 Calculate Float LS-ES (or) LF - EF
 Identify the critical path
 ES = LS
 Free Float Is calculated as min (ESs of Succeeding activities) - EF
of Current activity

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 Critical Path Method

 The critical path is not the one with all the critical activities; it
only accounts for time

 There can be more than one critical path - the more they are
- more risky it is for the Project Manager

 The critical path can change as the Project progresses.

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Float

Float Latest start - Earliest start for the activity

(Total Float) or Latest finish - Earliest finish for the activity

Independent Float The least difference between the latest finish of

any preceding activity and the earliest start of
any dependant activity, minus the activity
duration.

Free Float The least difference between the earliest finish of

the activity and the earliest start of any dependant
activity.

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 Key points

 Schedule Duration Compression

 Crashing - How to obtain the greatest schedule compression with Least
incremental cost, by analysing the cost and schedule tradeoffs
 Feasible for ‘effort-driven’ activities
 Fast Tracking - Doing activities in parallel by relaxing dependencies

 What-If scenario Analysis: What-if analysis. Calculating

multiple Project durations with different sets of activity
assumptions - using techniques such as ‘Monte-Carlo’
analysis.

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 Resource Levelling

 Often, Critical resources pose a problem in scheduling

 Resource Levelling is used:

 When specific schedule activities have to be completed within a
specific time, using critical resources- it may involve shifting of
resources from non-critical to critical activities
 To address the issue of shared resource ‘over-stretching’
 To keep resource usage at a constant Level during specific time
durations

 Resource Based Scheduling is applicable when Activity

scheduling is critically dependent on availability (timing or
quantities) of key resources

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 Critical Chain method

 After the original critical path is determined without resource

constraints, a modified path is determined by applying
resource related constraints

 Non-work schedule activities are added as duration buffers to

protect the planned activity durations

 The focus is on managing the buffer activity durations by

applying resources appropriately.

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 ® ®

PROJECT COST MANAGEMENT

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 Project Cost Management

 Cost Management is concerned with defining Cost baselines

and controlling the costs

 Costs are typically loaded for staff, labour, material,

equipment, facilities and services

 The PM needs to consider the controllable and uncontrollable

costs separately

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Project Budget Components

* Source – PMBOK® Guide Fifth Edition

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Cost baseline, Expenditures & funding requirements

* Source – PMBOK® Guide Fifth Edition

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Earned Value, Planned Value and Actual Costs

* Source – PMBOK® Guide Fifth Edition

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 EV Elements Explained

 The Planned Value (PV)

 the approved Cost Performance Baseline for an activity or WBS
component
 Contains details of authorised work allocated by Phases across the
Project Lifecycle as per Performance Measurement Baseline
 The Actual Cost(AC)
 the total cost incurred up to a specific point in time for the activity or a
WBS component
 The Earned Value (EV)
 the budgeted amount of completed work, at a given time period for an
activity or WBS component
 signifies the value of the work performed.
Schedule Variance: SV = EV – PV Schedule Performance Index: SPI = EV/PV

Cost Variance: CV = EV – AC Cost Performance index: CPI = EV / AC

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 Some more EV Elements Explained...

 The Budget at Completion (BAC)

 Is the sum of all the budgets allocated to the Activity/ WBS
component
 The Estimate to Complete (ETC)
 It is the additional cost/funds required to complete or close an Activity/
WBS component.
 The Estimate at Completion (EAC)
 It is the estimated likely cost at the end of the Activity/ WBS
component
EAC = AC + ETC ETC = BAC – EV
EAC = AC + (BAC – EV)
 Variance at Completion (VAC)
 The difference between BAC and EAC

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 Cost Variance calculations

 Cost Performance index (CPI) - a measure of financial

efficiency : CPI=EV/AC
 CPI is an indication of the efficiency with which the Project is
utilizing the cost budget
◦ If CPI> 1.0 we have favourable performance. Productivity is more than
what was expected
◦ If CPI <1.0, performance is poor, productivity is Less
 (General Interpretation - The Project is realizing x% of value
for every 100% of the $ spent)
 Cost Variance (CV): CV = EV - AC
◦ A negative variance indicates a cost overrun condition, positive variance
is favourable to the Project.

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 Schedule Performance Index

 Schedule Performance Index (SPI): SPI = EV/PV

◦ SPI Is an Indication of the efficiency with which the Project is utilizing
scheduled resources.
◦ If SPI> 1.0 we have favourable performance. Project is ahead of
schedule
◦ lf SPI < 1.0, less has been completed than what was scheduled, so
Project Is behind schedule.
 General Interpretation - the Project is progressing at x% of
the schedule originally planned
 Schedule Variance (SV): SV = EV - PV
◦ A negative variance indicates a schedule overrun condition, positive
variance is favourable to the Project.

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 Estimate at Completion - Forecasting Techniques

 EAC - Calculated by multiple ways - to get a range of

estimates, like:
◦ EAC = AC + ETC (judgmental)
 ‘Sunk costs’ + revised future costs
◦ EAC = AC + (BAC - EV) when current variances are seen
to be atypical and the Project Management expectations
are that similar variances will not occur in future.
◦ EAC = BAC/CPI -future spending Will continue in a
predictable way as was observed so far for Cost Variance
◦ EAC = AC + ((BAC-EV)/(CPI*SPI))- when the Project
Performance is impacted both by Schedule and Cost
variations

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 To-Complete Performance Index (TCPI)

 TCPI is the Target projection of the Cost Performance to be

achieved on the remaining work to meet a specific Cost
objective - as a Target BAC or a Target EAC

 If BAC is not a viable figure, these forecasts are better done

with EAC

 TCPI (based on BAC) is calculated as

TCPI = (BAC-EV)/(BAC-AC)

 On the other hand, if a new EAC has been approved by

Management, then TCPI = (BAC-EV)/( EAC-AC)

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 Milestone Rules for Progress Reporting

Percentage (%) of value taken when definitive milestone

reached:
 0-100 Rule of Progress Reporting .
 0% taken when activity started and 100% of value when activity
completed.
 50-50 Rule of Progress Reporting
 When beginning a task, charge 50% of its PV to its account; when the
task is completed, charge the remaining 50% to its account.
 Rule of Thumb: 20-80 Rule
 Remaining Duration (RDU) is a good way to measure the
extent of uncompleted work

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 ® ®

PROJECT QUALITY MANAGEMENT

70
Are we getting the quality we asked for? OR
Are we giving the quality the customer asked for?

71
Nano vs Mercedes? Which is a good quality product?

72
Which one is a good Quality road?

73
Project Quality Management processes

What is quality?

QUALITY is the degree to which the project fulfils requirements.
Quality and Grade are distinct themes
◦ Quality refers to meeting customer Requirements
◦ Grade refers to intrinsic features of the Product
 Thrust for Quality has to come from Top Management

 Quality Management – includes creating & following policies

& procedures to ensure a project meets the defined needs it
was intended to meet from the customer’s perspective.
Ensure a project is completed with no deviations from the
project requirements.

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Some Important concepts

 Gold Plating: Giving customer extras – neither does advanced quality

thinking nor does PMI recommend this.
 Prevention over Inspection: QUALITY MUST BE PLANNED IN, NOT
INSPECTED IN!
 Marginal Analysis: Look for a point where the benefits achieved from
improving quality equals the incremental cost to achieve that quality.
 Continuous Improvement (Kaizen) – Kai: alter & zen: improve
Continuously look for small improvements in quality.
 JIT (Just in Time) – When using JIT, must achieve a high level of quality
else there will not be enough raw materials required for rework or waste!
 TQM – Total Quality Management: This Philosophy encourages employees
to focus on continuous improvement in quality of products / processes AT
EVERY LEVEL OF THE ORGANIZATION.

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Fundamental relationship of QA & Control Quality
to IPECC, PDCA, COQ and PM Process Groups

76
 Plan Quality - Tools and Techniques

 Cost-Benefit Analysis: The Project team has to balance the costs of deployment of
incremental quality vis-a-vis corresponding incremental benefits (Marginal benefit
analysis principle)

 Cost of Quality: Includes all costs incurred over the life of the product by
investment in preventing nonconformance to requirements, appraising the product or
service for conformance to requirements and failing to meet requirements (rework).

 Benchmarking: Comparing actual or planned Project practices to ‘best in class’ or

competitors

 Design of Experiments (DOE): A Statistical tool to analyse the various input-output

combinations giving the best Project performance ( especially during Testing)

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Plan Quality - Tools and Techniques
Cost of Quality
Cost of Conformance Cost of Nonconformance
Prevention Costs Internal Failure
[Build a quality product] [Failures found by the project]
•Training •Rework
•Document processes •Scrap
•Equipment
•Time to do it right
External Failure Costs
Appraisal Costs [Failures found by the customer]
[Assess the quality] •Liabilities
•Testing •Warranty work
•Destructive testing loss •Lost business
•Inspections

Money spent during the project Money spent during & after the
to avoid failures project because of failures

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Cost of Quality / Non Quality - components
Cost of Cost of
Quality Non-Quality

Cost of Cost of Non- *Market Share

Conformance Conformance *Brand Image

Internal External
Prevention Appraisal
Failure Failure

*Warranty/
*Institution *Inspection *Cost of
maintenance
of Quality *Testing fixing
*Recall/
Systems *Documenta defects
Replacements
*Training tion and *Rework
*Litigation
*Review actions *Scrap

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 Plan Quality - Tools and Techniques
Seven Basic Quality Tools

 Cause-and-effect diagrams  Histograms

 Flowcharts  Control charts

 Checksheets  Scatter diagrams

 Pareto diagrams

80
Cause and Effect Diagrams (Ishikawa/Fishbone Diagrams)

Material People
Quality
Training
Attitude
Mix
Defective
Piece
Voltage
Setup
Maintenance
Pressure
Environment Methods

81
Control Charts

82
 Control Chart - key points

 Facilitates determination if a process is under statistical control and

if it has a predictable performance

 Few Control chart interpretations

◦ Trend - a steadily increasing or decreasing set of data points
indicates a ‘trend”

◦ Rule of 7 - 7 or more consecutive data points on either side of

the mean indicating that the calibration of the mean requires
review

◦ Cyclical fluctuations - a rhythmic pattern of data points (Sine

curve types)- indicates ‘Non-random’ causes operating.

83
 Histograms

 Can be used to organize data collected for measurements

done on a product or process

 Shows frequency of occurrence of items within a range of

activity

 Involves “grouping” of data

 Shows “count” per interval

84
 Pareto Charts/ Diagrams

 It ranks the defects in order of frequency of occurrence

 Defects with most frequent occurrence should be targeted for
corrective action
 80-20 rule:80% of problems are found in 20% of the work
 Does not account for severity of the defects directly.

85
 Quality Movements – Edward Deming – ‘PDCA’

 Advocated Plan-Do-Check-Act (PDCA) cycle as the basis for

quality improvement.

 Deming’s major points for implementing quality

◦ Participative approach

◦ Cease mass inspection

◦ Institute Leadership Plan Do

◦ Education and training

86
 Quality Movements – Joseph Juran – ‘fitness for use’

 Developed 80/20 principle, advocated top management involvement,

defined quality as “fitness for use”
 People Oriented Quality Movement
◦ Set Goals *Attitude breakthrough
◦ Plan the approach projects
◦ Educate employees *Identify vital new Projects
◦ Report progress *Knowledge breakthrough
◦ Recognize achievers
◦ Communicate results *Conduct the analysis
◦ Improve Goals
* Institute change

 Overcome resistance and institute controls !

87
 Quality Movements – Philip Crosby – ‘Zero Defects’

 ‘Quality is Free’

 Aim for ‘Zero Defects’

 Better Quality facilitates increasing profits without increasing

sales, buying new equipment or hiring new people

 Among the first to draw attention to the concepts of Cost of

Quality and Cost of Non-Quality.
 Application of Kaizen/ CIP-Continuous Improvement
Process/FTR-First time right, etc.

88
 ® ®

PROJECT HR MANAGEMENT

89
 HR Management - overview

 HR Management includes the processes that organise,

Manage and lead the Project team

 The Project management team assists the Project Manager

in Planning onwards

 The PM team also assists in discharge of Professional and

Ethical behaviour of team members

90
 Role and Responsibility Assignments

 Project roles (who does what) and responsibility assignments

(who decides what) need to be depicted

 Produced with a combination of WBS/ Activity list and OBS

 A Responsibility Assignment Matrix (RAM) is used for this

purpose, showing the Roles and the Activities.
 The nomenclature used in RAM :
 R- Responsible
 A- Accountable
 C-Consult
 I-Inform

91
 RAM - role illustrations

 R - Is Responsible - owns the Activity/ problem

 A - To whom R is Accountable for the Activity

 C - To be Consulted - who has got the information & / or

capabilities to complete the Activity

 I - To be Informed- of the results - but need not be Consulted

◦ Each Activity should have only one A (and at least one R)

◦ Multiple Roles can overlap for an activity (such as CI)
◦ Some Projects may have multi level RAMs

92
 Stages of Team Performance (Tuckman model)

 Forming:
 Team members getting to know each other
 Members cautiously explore the boundaries of acceptable group
behaviour
 Is a stage of transition from individual to member status
 Involves testing the leaders guidance both formally and informally.

 Storming:
 The Team members begin to address the Project work
 Team members vie for positions of authority / Power struggle
 Have their own ideas on ‘how’ a task is to be done
 Leader needs to ‘sell’ her ideas

93
 Stages of Team Performance...

 Norming:
 Team members get to know each others’ strengths and weaknesses
 Agreement and Consensus/ Goal clarity
 Leader - facilitating role
 Performing:
 Team has a shared vision
 Conflicts are resolved productively
 Leader - delegating and overseeing role
 Adjourning
 The work is completed and the team breaks up.
 Many relationships formed within these teams continue long after the
team disbands

94
 Conflict Management

 Conflicts should be addressed early, using a direct participative

approach

 Disruptive conflicts can call for increasingly formal procedures

including possible use of disciplinary actions

 In a team level environment, following aspect need to be

recognised
 Team Level conflicts may follow a process of adjustment and alternatives
solutions definition
 Conflict resolution should be issue focused on current problems

95
 Conflict Management – Withdrawing / Avoiding or
Smoothing / Accommodating

Withdrawing / Avoiding
 Retreating from actual or potential disagreements and conflict
Situations
 Appropriate only in certain situations such as when a ‘cooling off’
period is needed
 Is a temporary tactic and does not resolve the conflict - only delays it.

Smoothing / Accommodating
 De-emphasizes differences and emphasizes commonalities
 Keeps the atmosphere friendly
 It does not resolve the conflict - only delays it

96
 Conflict Management Compromising or Forcing

Compromising
 Considers various issues and searches for solutions which bring
some degree of satisfaction to both parties
 Both parties must give up something that is Important to them
 This method usually provides some acceptable form of resolution.

Forcing
 Exerts one’s view point at the potential expense of another party
 This method sometimes provides a resolution
 Could be of use during emergencies or unpopular actions.

97
 Conflict Management - Collaborating

 Incorporates Multiple view points from all the affected stakeholders

 Facilitates Consensus and Commitment

 The team should be able to accommodate varying viewpoints towards

searching for a solution

98
 Conflict Management - Confronting (Problem Solving)

 Directly addresses disagreements

 Considered the best because both parties can be satisfied if they

work together to solve the problem

 Both parties must want to solve the problem and be willing to work
together

 Provides a resolution but is time consuming.

99
 Leadership

 Is based on kind of authority or power - although Leaders

might not necessarily have much formal authority

 The power comes from:

 The person’s perceived position
 The person’s individual qualities
 A mix of both these types

100
 Project Manager’s Positional Power

 DE-FACTO POWER
 Formal / Legitimate
 Based On a person's formal position in the Company

 Reward
 Refers to positive consequences or outcomes that a person can offer

 Coercive (Penalty)
 Refers to negative consequences or outcomes that a person can offer

101
 Project Manager’s Personal Power

 PERSONAL POWER

 Charisma : earned power when people admire a person and want to

follow the person as a role model

 Expert : earned power that a person acquires based on expertise

 Information Power : the holder of information - that others do not have

 Referent Power : Powers exhibited by referring to a common powerful

stakeholder

102
 Leadership Styles

 Autocratic (Directing Authority)

 PM solicits Little or no information from the team
 PM is the sole decision maker
 Consultative Autocrat (Persuading Leader)
 PM solicits intensive information from the team
 PM is still the sole decision maker
 Consensus Manager (Participative Leader)
 Problem posed to team for open discussion and information gathering
 Team makes the decision
 Shareholder Manager (Delegating Manager)
 Little or no information exchange takes place in the group
 The team has ultimate authority for the final decision

103
 Motivation Theories Maslow’s Need based Pyramid

Frederick Herzberg’s Model

 Work itself
 Achievement
 Possibility of growth
 Responsibility Motivators
 Advancement
 Recognition
 Status
 Relations with subordinates
 Peer relations
 Relations with subordinates
 Quality of supervision Hygiene
 Company Policy & Admin Needs
 Job Security
 Working conditions
 Pay

104
 McGregor’s Theory X

 Most people dislike their work and WILL avoid it if they can

 Most people Lack ambition and have Little capacity for problem solving
and creativity

 Workers prefer direction and avoid taking responsibility and initiative

 Workers are motivated by Maslow's Lower level needs (Physiological

and Security)

 Workers are self-centred, indifferent to the needs of the organization

and resistant to change.

105
 McGregor’s Theory Y

 Most people meet high performance expectations if appropriately

motivated

 Most people are creative, imaginative and committed to meeting

organizational goats

 Most people are self disciplined, can direct and control themselves,
desire responsibilities, and accept them willingly

 Workers are motivated by Maslow's higher Level needs (Self

Esteem and Self-actualization)

106
 Theory Z - William Ouchi

 Japanese Management Style

 Lifetime Commitment
 Collective Decision making
 Individual Responsibility
 Informal control with formalized performance measure
 Holistic concern for the Employee

107
 Models of Victor Vroom , Mcclelland

 Victor Vroom - Expectancy Theory

 Behaviour results from conscious choices amongst alternatives
whose purpose Is to maximize pleasure and minimize pain
 Employees should believe that there is a positive correlation with
good effort with good performance (Expectancy)
 Good performance will lead to good reward (Instrumentality)
 The reward should be truly meaningful (valence)

 McClelland's ‘Need based model’ revolves around three

themes Achievement, Affiliation and Authority. Different
people get motivated differently by these three needs.

108
 ® ®

PROJECT COMMUNICATIONS MANAGEMENT

109
 Project Communications management

 Project Communications Management deals with the Project

Information Lifecycle

 Project teams typically spend considerable amount of time in

communications

 Is very closely Linked to HR Management

110
 Project Communications

 PM’s Communication Skills are a part of overall Project

Communication Management

 Choice of Media – written / oral, formal / informal

 Type of media – visual / oral / text

 Internal (within the Project) or external

 Vertical or Horizontal

111
 Communication Channels

 Communication channels can be calculated as

N(N-1) / 2 N = the number of people

 Hence for a team of 4

No of communication channels = 4 * 3 / 2 = 6

 For a team of 5 it is 5 * 4 / 2 = 10

112
 Sender-Receiver Communication Model

 Most of the Sender Receiver communications are subject to Noise

 ‘ Noise could be due to ‘Physical’ or ‘Non-Physical’ factors

 A return acknowledgement is the best way of addressing this Issue

*************************************************************************
Sender Receiver Model is also called ‘Shannon-Weaver’ model — originally used in the
context of transmission of Telecom/ Morse code related signals
Noise
Physical Factor Non-Physical Factor
Deficiency in the medium Culture, Linguistic difference, Attitude
Static , Distance Unfamiliarity to Technology, lack of background info.

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Basic Communication Model

* Source – PMBOK® Guide Fifth Edition

114
 Communication Methods

 Interactive Communication – Reciprocal method, can involve two

or many people. One person provides information, others receive it
and then respond to the information. E.g. Conversations, meetings,
instant messaging, conf calls.

 Push Communication – One-way stream of information. Sender

does not expect feedback. E.g. Status report, e-mailed updates,
blogs, company memos

 Pull Communication – Information placed at a central location.

Recipients are responsible for retrieving or “pulling” the information.

115
 ® ®

PROJECT RISK MANAGEMENT

116
 What is Risk Management?

 Risk management is concerned with management of the

Risks of the Project

 Risks can be positive or negative

 The objective of Risk Management is to increase the

Likelihood/impact of positive risks and decrease the
likelihood/impact of negative risks

117
Risk Categories – Risk Breakdown Structure An Example

* Source – PMBOK® Guide Fifth Edition

118
Definition of Impact Scales for four project objectives

* Source – PMBOK® Guide Fifth Edition

119
 Risk Event / Impact matrix

Contingency Management
Unknown

Reserve ‘kept’ Reserve

Impact

Known

Planning N.A.

Known Unknown

Event

120
 Identify Risks - Tools and Techniques

 Brainstorming Sessions
 Delphi Technique
 Interviewing
 SWOT Analysis
 Root cause identification
 Checklist analysis
 Assumptions analysis
 Diagramming techniques

121
Probability - Impact Matrix

Severe
III II I
Likely Impact

Medium

IV III II

V IV III
Low

Low Medium High

Likely Probability of occurrence

122
Probability - Impact Matrix

* Source – PMBOK® Guide Fifth Edition

123
Range of Project cost Estimates – Risk Interview

* Source – PMBOK® Guide Fifth Edition

124
 Strategies for Negative Risks

 Avoid
◦ Changing the Project management plan or alternatives to eliminate the
risk or condition.
 Some of the risks can be avoided by clarifying requirements,
acquiring expertise, Trainings, better communications etc.
 The PM can also reduce Scope! Change Strategy and maybe extend
the Schedule
 Transfer
◦ Transfer the Risk to a third Party
◦ Measures: use of Insurance, contracts, warranties, guarantee etc
 Mitigate
◦ Reduce the probability and/or consequences of an adverse risk event to
an acceptable threshold.
◦ Measures : Prototyping, adoption of more reliable! less complex
processes, building in redundancy, Testing etc.

125
 Strategies for Positive Risks

 Exploit: Exploiting the Opportunity for best response forward

 E.g. - utilization of better resources, putting higher quality systems,
providing a competitive quote etc. to achieve Project objectives

 Share: Allocating ownership to a third party, who can assist in a win- win
situation

 Enhance: Maximising the ‘size’ of the opportunity

 Accept: This strategy is used when the Project team has not been able to
find a way for resolution of this risk and has kept a contingency fund to
deal with this risk, if it occurs, as an active acceptance strategy
◦ Accept strategy is used for the positive and negative risks

126
 ® ®

PROJECT PROCUREMENT MANAGEMENT

127
 What is Project Procurement Management?

 Processes to purchase or acquire products, services or results from

outside the Project team

 Administer any contracts issued by an outside organisation, in the

context of Project performance by the Seller

 Applicable In diverse scenarios:

◦ In Engineering & construction and automotive sectors, materials
cost bulk of the Product
◦ Large IT Projects see Service Procurement.

128
 Contract Types

 Firm Fixed Price or Lump sum

 Fixed price incentive fee
 Fixed price with Economic price adjustment
 Cost-plus percentage of Cost
 Cost-plus fixed fee
 Cost-plus incentive fee
 Cost plus Award Fee
 Time & Material
 Joint ventures
 Unit Price Contracts
 Diverse combinations

129
 Contract Types & associated Risks

100%
Buyer

Risk

Seller
0
CPPC CPAF T&M FPIF
CPFF CPIF FPEPA FP

130
Comparison of various types of Contracts
Contract
Pros Cons
Type
-Scope needs to be defined unambiguously —
else the buyer may not receive the right product
- Total likely cost known at the outset
-Seller can try to make profit on ‘non-Tender’
FFP - Transfers maximum risk to the
items
Seller
-Seller’s motivation generally low for good quality
work

-Easier Scope mgt

-Total price unknown at the outset
CPFF/ CPIF
- Seller gets an incentive for meeting
-Need to audit seller’s invoices
Project objectives (in CPlF)
- Seller has no Incentive to control Project Costs

-Easy to administer - Total cost is unknown If the scope is not well-

T&M defined
- Can ‘mix-match’ resources
-Requirements of record keeping/ monitoring of
seller activities

131
Typical weighting system

Seller ABC
Criteria Weight Rating (1-100) Score
No of years in Industry 5% 50 2.5
Requirement understanding 25% 80 20
Total Cost 10% 90 9
Technical competency 25% 40 10
Capability to complete work 20% 40 8
on time
PM Framework 15% 50 7.5
Total score for the seller 57

132
 Contract contents

 SOW
 Schedule/ period of performance
 Roles and responsibilities
 Pricing and Payment criteria
 Acceptance criteria
 Warranty and product support clauses
 Limitation of liability
 Fees, penalty, incentive related clauses
 Change request handling procedures
 Payment procedures
 Termination, exit clauses and dispute handling mechanism

133
 ® ®

PROJECT STAKEHOLDER MANAGEMENT

134
 What is Stakeholder Management?

 Includes the processes required to identify people, groups or

organizations who could impact or get impacted by the
project.

 This is necessary to analyse expectations from stakeholders

and their impact on the project.

 Based on analysis provides direction towards developing

appropriate management strategies for effective stakeholder
engagement.

 Stakeholder satisfaction is usually a key project objective.

135
 Identify Stakeholders

 Identify Stakeholders – Identifies people, group organizations

impacting or getting impacted during the project lifecycle.
Analysing and documenting information such as stakeholder
interests, interdependencies, influence and impact on project
success.

136
Power / Interest Grid with Stakeholders

137
Stakeholder Engagement Assessment Matrix

Stakeholder Unaware Resistant Neutral Supportive Leading

Stakeholder1 C D

Stakeholder 2 C D

Stakeholder 3 DC

C: Current Engagement D: Desired Engagement

138
 Stakeholder management wheel

identify
implement stakeholders
stakeholder
gather
management
information on
strategy
stakeholders
project
predict
manager
stakeholder identify
behaviour Stakeholder’s
mission
identify
determine
stakeholder
stakeholder
Source : strategy
Association for
strengths and
Project weaknesses
Management

139
Stakeholder map

Primary
High
Secondary
influence
Joe Tom
Positive relations
Negative relations

Level of power Ali

Pam

Bob Sue

Low High
Level of interest

140
 THANK YOU !!!
&
ALL THE BEST !!!

141
 Functional Organisation

 Clear Reporting Hierarchy – each person has a reporting manager

 Each Department specialises in a specific function or skill
knowledge & Projects are local to departments

142
 Projectized Organization

 All Activities carried out as Projects

 Departments provide support to Projects
 Team members are usually collocated
 Projectized structure: most team members are full time members.

143
Weak Matrix

144
Balanced Matrix

145
Strong Matrix

146
Matrix Pros & Cons
PROS
Organisation remains stable
regardless of projects
High technical competence
concentrated within departments
Staff able to be switched between
projects as workload demands
Staff perceive continuity and
career development
CONS
Functional managers have
power over resources
Dual reporting
Confidentiality problems with
work spread over whole
organisation
Difficult for staff to see big
picture
147