As a project manager in a manufacturing organization, what will be your role in project management?PROJECT MANAGEMENT Project management is the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific engineering project goals and objectives. It is sometimes conflated with program management, however technically that is actually a higher level construction: a group of related and somehow interdependent engineering projects.PROJECT A project is a temporary endeavor, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables), undertaken to meet unique goals and objectives, usually to bring about beneficial change or added value. The temporary nature of projects stands in contrast to business as usual (or operations), which are repetitive, permanent or semi-permanent functional work to produce products or services. In practice, the management of these two systems is often found to be quite different, and as such requires the development of distinct technical skills and the adoption of separate management. The primary challenge of project management is to achieve all of the engineering project goals and objectives while honoring the preconceived project constraints. Typical constraints are scope, time, and budget. The secondaryand more ambitiouschallenge is to optimize the allocation and integration of inputs necessary to meet pre-defined objectives.

PROJECT MANAGER A project manager is a professional in the field of project management. Project managers can have the responsibility of the planning, execution, and closing of any project, typically relating to construction industry, manufacturing organization, architecture, computer networking, telecommunications or software development. Many other fields in the production, design and service industries also have project managers. A project manager is the person who has the overall responsibility for the successful initiation, planning, execution and closure of a project. This title is used in the construction industry, architecture, information technology and many different occupations that are based on production of a product or service. A project manager is the person responsible for accomplishing the stated project objectives. Key project management responsibilities include creating clear and attainable project objectives, building the project requirements, and managing the triple constraint for projects, which are cost, time, and quality (also known as scope). A project manager is often a client representative and has to determine and implement the exact needs of the client, based on knowledge of the firm they are representing. The ability to adapt to the various internal procedures of the contracting party, and to form close links with the nominated representatives, is essential in ensuring that the key issues of cost, time, quality and above all, client satisfaction, can be realized. The term and title project manager has come to be used generically to describe anyone given responsibility to complete a project. However, it is more properly used to describe a person with full responsibility and the same level of authority required completing a project. If a person does not have high levels of both responsibility and authority then they are better described as a project administrator, coordinator, facilitator or expeditor. The project manager must possess a combination of skills including an ability to ask penetrating questions, detect unstated assumptions and resolve interpersonal conflicts as well as more systematic management skills. A project manager is usually responsible for the success or the failure of the project. They first need to define the project and then build its work plan. If the scope of the project is not very clear, or the project is executing poorly, the manager is held accountable. However, this does not mean that the manager does all the work by himself (which is practically impossible). There is an entire team under the project manager, which helps to achieve all the objectives of the project. However, if something goes wrong, the project manager is ultimately accountable. Apart from this, depending on the size and the complexity of the project, they may need to take on multiple roles. The project manager may need to assist with gathering business requirements, help to design a database management system or may prepare project documentation. They may work full time on a large project, or may work part-time on various projects of a smaller nature; or may alternatively handle various projects as well as handle other responsibilities like business analysis and business development. At times, they may have accountability but not authority. For example, he or she may be using certain resources but might not have direct control over those resources. At such times, the manager might find certain limitations over task execution, which might not take place as they might have liked. Not having direct control over the state of finances and finance allocation might cause ambiguity.In order to be successful, the project manager must be given support and authority by senior management. Project managers use project management software, such as Microsoft Project, to organize their tasks and workforce. These software packages allow project managers to produce reports and charts in a few minutes, compared to the several hours it can take if they do not use a software package.ROLES AND RESPONSIBILITIES OF PROJECT MANAGERSProcess ResponsibilitiesOnce the project starts, the project manager must successfully manage and control the work, including: Identifying, tracking managing and resolving project issues Proactively disseminating project information to all stakeholders Identifying, managing and mitigating project risk Ensuring that the solution is of acceptable quality Proactively managing scope to ensure that only what was agreed to is delivered, unless changes are approved through scope management Defining and collecting metrics to give a sense for how the project is progressing and whether the deliverables produced are acceptable Managing the overall schedule to ensure work is assigned and completed on time and within budgetAgain, this does not mean that the project manager physically does all of this, but they must make sure it happens. If the project has problems, or scope creep, or faces risks, or is not setting expectations correctly, then the project manager is the person held accountable.

To manage the project management processes, a person should be well organized, have great follow-up skills, be process oriented, be able to multi-task, have a logical thought process, be able to determine root causes, have good analytical ability, be a good estimator and budget manager, and have good self-discipline.People ResponsibilitiesIn addition to process skills, a project manager must have good people management skills. This includes: Having the discipline and general management skills to make sure that people follow the standard processes and procedures Establishing leadership skills to get the team to willingly follow your direction. Leadership is about communicating a vision and getting the team to accept it and strive to get there with you. Setting reasonable, challenging and clear expectations for people, and holding them accountable for meeting the expectations. This includes providing good performance feedback to team members Team building skills so that the people work together well, and feel motivated to work hard for the sake of the project and their other team members. The larger your team and the longer the project, the more important it is to have good team-building skills. Proactive verbal and written communicator skills, including good, active listening skills.Again, you are responsible for the success of the project. If the team has poor morale and is missing deadlines, you need to try to resolve it. If team members don't understand exactly what they need to do and when it is due, then you are responsible.Multiple Roles Depending on the size and complexity of the project, the project manager may take on other responsibilities in addition to managing the work. For instance, the project manager may assist with gathering business requirements. Or they may help design a database management system or they may write some of the project documentation. Project management is a particular role that a person fills, even if the person who is the project manager is working in other roles as well. For instance, a project manager might manage the project for 45% of their time, perform business analysis for 25%, work on design for 15% and write documentation for 15%. This does not mean that one of the responsibilities of a project manager role is to spend 15% of their time on design. Instead, it just means that the project is not large enough to need a full-time project manager. The project manager spends the rest of their time in other project roles such as Business Analyst, Designer and Technical Writer. Depending on the size of your projects and the way your company is organized, a project manager time may be allocated one of three ways. They may have a full time role on a large project. They may have project management responsibilities for multiple projects, each of which is less than full time, but the combination of which adds up to a full-time role. They may fill multiple roles, each of which requires a certain level of skill and responsibility. On one project, for instance, they may be both a project manager and an analyst.

Having Project Management Accountability but not Responsibility In some organizations, the project manager is accountable for the success of the project, but does not have the right level of responsibility. Managing the team in a matrix organization is an example of that. You are asked to manage a project utilizing people that you do not have direct management responsibility for. In other cases, you may find that your ability to resolve issues is hampered because you are not high enough in the organization to get an issue resolved quickly. In other instances, you may find that your ability to be innovative and flexible is constrained by organizational policies and inertia. All of these cases can be cause for frustration. One way to deal with this is to define roles and responsibilities as a part of the Project Charter. This can help set and manage expectations. For instance, if you have no budget or expense approval authority, then note that up front, along with a process for expense approval. That way, if problems do arise later, everyone knows who has the right level of authority to resolve them. For most project managers, the frustration level is not caused so much by a lack of power as much as it is caused by ambiguity. If the project manager does not have the authority, it is important to know who does, and what process is needed to gain action.

Q. 1 (b)Discuss the phases of project life cycle.WHAT IS A PROJECT? A project is a unique endeavor to produce a set of deliverables within clearly specified time, cost and quality constraints. Projects are different from standard business operational activities as they: Are unique in nature. They do not involve repetitive processes. Every project undertaken is different from the last, whereas operational activities often involve undertaking repetitive (identical) processes. Have a defined timescale. Projects have a clearly specified start and end date within which the deliverables must be produced to meet a specified customer requirement. Have an approved budget. Projects are allocated a level of financial expenditure within which the deliverables are produced, to meet a specified customer requirement. Have limited resources. At the start of a project an agreed amount of labor, equipment and materials is allocated to the project. Involve an element of risk. Projects entail a level of uncertainty and therefore carry business risk. Achieve beneficial change. The purpose of a project is typically to improve an organization through the implementation of business change.

WHAT IS PROJECT MANAGEMENT? Project Management is the skills, tools and management processes required to undertake a project successfully. It incorporates: Figure 1.1 Project management components A set of skills. Specialist knowledge, skills and experience are required to reduce the level of risk within a project and thereby enhance its likelihood of success. A suite of tools. Various types of tools are used by project managers to improve their chances of success. Examples include document templates, registers, planning software, modeling software, audit checklists and review forms. A series of processes. Various processes and techniques are required to monitor and control time, cost, quality and scope on projects. Examples include time management, cost management, quality management, change management, risk management and issue management.THE PROJECT LIFE CYCLE The project manager and project team have one shared goal: to carry out the work of the project for the purpose of meeting the projects objectives. Every project has beginnings, a middle period during which activities move the project toward completion, and an ending (either successful or unsuccessful). A standard project typically has the following four major phases (each with its own agenda of tasks and issues): initiation, planning, execution, and closure. Taken together, these phases represent the path a project takes from the beginning to its end and are generally referred to as the project life cycle (Figure 1.2).

Figure 1.2 The four phases of the project life cycle

1. PROJECT INITIATION The first phase of a project is the initiation phase. During this phase a business problem or opportunity is identified and a business case providing various solution options is defined. Next, a feasibility study is conducted to investigate whether each option addresses the business problem and a final recommended solution is then put forward. Once the recommended solution is approved, a project is initiated to deliver the approved solution. Terms of reference are completed outlining the objectives, scope and structure of the new project and a project manager is appointed. The project manager begins recruiting a project team and establishes a project office environment.Approval is then sought to move into the detailed planning phase.2. PROJECT PLANNING Once the scope of the project has been defined in the terms of reference, the project enters the detailed planning phase. This involves creating a: Project plan outlining the activities, tasks, dependencies and timeframes; Resource plan listing the labor, equipment and materials required; Financial plan identifying the labor, equipment and materials costs; Quality plan providing quality targets, assurance and control measures; Risk plan highlighting potential risks and actions to be taken to mitigate those risks; Acceptance plan listing the criteria to be met to gain customer acceptance; Communications plan describing the information needed to inform stakeholders; Procurement plan identifying products to be sourced from external suppliers.At this point the project will have been planned in detail and is ready to be executed.3. PROJECT EXECUTION This phase involves implementing the plans created during the project planning phase.While each plan is being executed, a series of management processes are undertaken to monitor and control the deliverables being output by the project. This includes identifying change, risks and issues, reviewing deliverable quality and measuring each deliverable produced against the acceptance criteria. Once all of the deliverables have been produced and the customer has accepted the final solution, the project is ready for closure.4. PROJECT CLOSURE Project closure involves releasing the final deliverables to the customer, handing over project documentation to the business, terminating supplier contracts, releasing project resources and communicating the closure of the project to all stakeholders. The last remaining step is to undertake a post-implementation review to quantify the level of project success and identify any lessons learnt for future projects.Now that you have an overall appreciation of the project life cycle, I will explain each life cycle phase in the following sections.

1. PROJECT INITIATION Within the initiation phase, the business problem or opportunity is identified, a solution is defined, a project is formed and a project team is appointed to build and deliver the solution to the customer. Figure 1.3 shows the activities undertaken during the initiation phase:

Figure 1.3 Project initiation activitiesa) Develop a business case The trigger to initiating a project is identifying a business problem or opportunity to be addressed. A business case is created to define the problem or opportunity in detail and identify a preferred solution for implementation. The business case includes: A detailed description of the problem or opportunity; A list of the alternative solutions available; An analysis of the business benefits, costs, risks and issues; A description of the preferred solution; A summarized plan for implementation.The business case is then approved by an identified project sponsor, and the required funding is allocated to proceed with a feasibility study.b) Undertake a feasibility study At any stage during or after the creation of a business case, a formal feasibility study may be commissioned. The purpose of a feasibility study is to assess the likelihood of each alternative solution option achieving the benefits outlined in the business case.

The feasibility study will also investigate whether the forecast costs are reasonable, the solution is achievable, the risks are acceptable and the identified issues are avoidable.c) Establish the terms of reference After the business case and feasibility study have been approved, a new project is formed. At this point, terms of reference are created. The terms of reference define the vision, objectives, scope and deliverables for the new project. They also describe the organization structure, activities, resources and funding required to undertake the project. Any risks, issues, planning assumptions and constraints are also identified.d) Appoint the project team The project team is now ready to be appointed. Although a project manager may be appointed at any stage during the life of the project, the manager will ideally be appointed prior to recruiting the project team. The project manager creates a detailed job description for each role in the project team, and recruits people into each role based on their relevant skills and experience.e) Set up a project office The project office is the physical environment within which the team is based.Although it is usual to have one central project office, it is possible to have a virtual project office with project team members located around the world. A project office environment should include: Equipment, such as office furniture, computer equipment, stationery and materials; Communications infrastructure, such as telephones, computer network, e-mail, Internet access, file storage, database storage and backup facilities; Documentation, such as a project methodology, standards, processes, forms and registers; tools, such as accounting, project planning and risk modeling software.f) Perform a phase review At the end of the initiation phase, a phase review is performed. This is basically a checkpoint to ensure that the project has achieved its objectives as planned.

2. PROJECT PLANNING By now, the project costs and benefits have been documented, the objectives and scope have been defined, the project team has been appointed and a formal project office environment established. It is now time to undertake detailed planning to ensure that the activities performed during the execution phase of the project are properly sequenced, resourced, executed and controlled. The activities shown in Figure 1.4 are undertaken.

Figure 1.4 Project Planning Activitiesa) Create a project plan The first step in the project planning phase is to document the project plan. A work breakdown structure (WBS) is identified which includes a hierarchical set of phases, activities and tasks to be undertaken to complete the project. After the WBS has been agreed, an assessment of the level of effort required to undertake each activity and task is made. The activities and tasks are then sequenced, resources are allocated and a detailed project schedule is formed. This project plan is the key tool used by the project manager to assess the progress of the project throughout the project life cycle.b) Create a resource plan Immediately after the project plan is formed, the level of resource required undertaking each of the activities and tasks listed within the project plan will need to be allocated.Although generic resource may have already been allocated in the project plan, a detailed resource plan is required to identify the: Type of resource required, such as labor, equipment and materials; Quantity of each type of resource required; Roles, responsibilities and skill-sets of all human resource required; Specifications of all equipment resource required; Items and quantities of material resource required.A schedule is assembled for each type of resource so that the project manager can review the resource allocation at each stage in the project.c) Create a financial plan A financial plan is created to identify the total quantity of money required to undertake each phase in the project (in other words, the budget). The total cost of labor, equipment and materials is calculated and an expense schedule is defined which enables the project manager to measure the forecast spend versus the actual spend throughout the project. Detailed financial planning is an extremely important activity within the project, as the customer will expect the final solution to have been delivered within the allocated budget.d) Create a quality plan Meeting the quality expectations of the customer can be a challenging task. To ensure that the quality expectations are clearly defined and can reasonably be achieved, a quality plan is documented. The quality plan: Defines the term quality for the project. Lists clear and unambiguous quality targets for each deliverable. Each quality target provides a set of criteria and standards to be achieved to meet the expectations of the customer. Provides a plan of activities to assure the customer that the quality targets will be met (in other words, a quality assurance plan). Identifies the techniques used to control the actual quality level of each deliverable as it is built (in other words, a quality control plan).Not only is it important to review the quality of the deliverables produced by the project, it is also important to review the quality of the management processes which produced them. A quality plan will summarize each of the management processes undertaken during the project, including time, cost, quality, change, risk, issue, procurement, and acceptance and communications management.e) Create a risk plan The next step is to document all foreseeable project risks within a risk plan. This plan also identifies the actions required to prevent each risk from occurring, as well as reduce the impact of the risk should it eventuate. Developing a clear risk plan is an important activity within the planning phase, as it is necessary to mitigate all critical project risks prior to entering the execution phase of the project.f) Create an acceptance plan To deliver the project successfully, you will need to gain full acceptance from the customer that the deliverables produced by the project meet or exceed requirements.An acceptance plan is created to help achieve this, by clarifying the completion criteria for each deliverable and providing a schedule of acceptance reviews. These reviews provide the customer with the opportunity to assess each deliverable and provide formal acceptance that it meets the requirements as originally stated.

g) Create a communications plan Prior to the execution phase, it is also necessary to identify how each of the stakeholders will be kept informed of the progress of the project. The communications plan identifies the types of information to be distributed to stakeholders, the methods of distributing the information, the frequency of distribution, and responsibilities of each person in the project team for distributing the information.h) Create a procurement plan The last planning activity within the planning phase is to identify the elements of the project to be acquired from external suppliers. The procurement plan provides a detailed description of the products (that is, goods and services) to be acquired from suppliers, the justification for acquiring each product externally as opposed to from within the business, and the schedule for product delivery. It also describes the process for the selection of a preferred supplier (the tender process), and the ordering and delivery of the products (the procurement process).i) Contract the suppliers Although external suppliers may be appointed at any stage of the project, it is usual to appoint suppliers after the project plans have been documented but prior to the execution phase of the project. Only at this point will the project manager have a clear idea of the role of suppliers and the expectations for their delivery. A formal tender process is undertaken to identify a short-list of capable suppliers and select a preferred supplier to initiate contractual discussions with. The tender process involves creating a statement of work, a request for information and request for proposal document to obtain sufficient information from each potential supplier and select the preferred supplier. Once a preferred supplier has been chosen, a contract is agreed between the project team and the supplier for the delivery of the requisite products.j) Perform a phase review At the end of the planning phase, a phase review is performed. This is a checkpoint to ensure that the project has achieved its objectives as planned.

3. PROJECT EXECUTION The execution phase is typically the longest phase of the project in terms of duration. It is the phase within which the deliverables are physically constructed and presented to the customer for acceptance. To ensure that the customers requirements are met, the project manager monitors and controls the activities, resources and expenditure required to build each deliverable. A number of management processes are undertaken to ensure that the project proceeds as planned. The activities shown in Figure 1.5 are undertaken.

Figure 1.5 Project execution activitiesa) Build the deliverables This phase involves physically constructing each deliverable for acceptance by the customer. The activities undertaken to construct each deliverable will vary depending on the type of project being undertaken. Activities may be undertaken in a waterfall fashion, where each activity is completed in sequence until the final deliverable is produced, or an iterative fashion, where iterations of each deliverable are constructed until the deliverable meets the requirements of the customer. Regardless of the method used to construct each deliverable, careful monitoring and control processes should be employed to ensure that the quality of the final deliverable meets the acceptance criteria set by the customer.b) Monitor and control While the project teams are physically producing each deliverable, the project manager implements a series of management processes to monitor and control the activities being undertaken by the project team. An overview of each management process follows.c) Time Management Time management is the process of recording and controlling time spent by staff on the project. As time is a scarce resource within projects, each team member should record time spent undertaking project activities on a timesheet form. This will enable the project manager to control the amount of time spent undertaking each activity within the project. A timesheet register is also completed, providing a summary of the time spent on the project in total so that the project plan can always be kept fully up to date.d) Cost management Cost management is the process by which costs/expenses incurred on the project are formally identified, approved and paid. Expense forms are completed for each set of related project expenses such as labor, equipment and materials costs. Expense forms are approved by the project manager and recorded within an expense register for auditing purposes.e) Quality management Quality is defined as the extent to which the final deliverable conforms to the customer requirements. Quality management is the process by which quality is assured and controlled for the project, using quality assurance and quality control techniques.Quality reviews are undertaken frequently and the results recorded on a quality review form.f) Change management Change management is the process by which changes to the project scope, deliverables, timescales or resources are formally requested, evaluated and approved prior to implementation. A core aspect of the project managers role is to manage change within the project. This is achieved by understanding the business and system drivers requiring the change, identifying the costs and benefits of adopting the change, and formulating a structured plan for implementing the change. To formally request a change to the project, a change form is completed. The status of all active change forms should be recorded within a change register.g) Risk management Risk management is the process by which risks to the project are formally identified, quantified and managed. A project risk may be identified at any stage of the project by completing a risk form and recording the relevant risk details within the risk register.h) Issue management Issue management is the method by which issues currently affecting the ability of the project to produce the required deliverable are formally managed. After an issue form has been completed and the details logged in the issue register, each issue is evaluated by the project manager and a set of actions undertaken to resolve the issue identified.

i) Procurement management Procurement management is the process of sourcing products from an external supplier. Purchase orders are used to purchase products from suppliers, and a procurement register is maintained to track each purchase request through to its completion.j) Acceptance management Acceptance management is the process of gaining customer acceptance for deliverables produced by the project. Acceptance forms are used to enable project staff to request acceptance for a deliverable, once complete. Each acceptance form identifies the acceptance criteria, review methods and results of the acceptance reviews undertaken.k) Communications management Communications management is the process by which formal communications messages are identified, created, reviewed and communicated within a project. The most common method of communicating the status of the project is via a project status report. Each communications message released is captured in a communications register.l) Perform a phase review At the end of the execution phase, a phase review is performed. This is a checkpoint to ensure that the project has achieved its objectives as planned.

4. PROJECT CLOSURE Following the acceptance of all project deliverables by the customer, the project will have met its objectives and be ready for closure. Project closure is the last phase in the project life cycle, and must be conducted formally so that the business benefits delivered by the project are fully realized by the customer.

Figure 1.6 Project closure activitiesa) Perform project closure Project closure, or close-out, essentially involves winding up the project. This includes: Determining whether all of the project completion criteria have been met; Identifying any outstanding project activities, risks or issues; Handing over all project deliverables and documentation to the customer; Cancelling supplier contracts and releasing project resources to the business; Communicating the closure of the project to all stakeholders and interested parties. A project closure report is documented and submitted to the customer and/or project sponsor for approval. The project manager is responsible for undertaking each of the activities identified in the project closure report, and the project is closed only when all the activities listed in the project closure report have been completed.b) Review project completion The final activity within a project is the review of its success by an independent party. Success is determined by how well it performed against the defined objectives and conformed to the management processes outlined in the planning phase. To determine how well it performed, the following types of questions are answered: Did it result in the benefits defined in the business case? Did it achieve the objectives outlined in the terms of reference? Did it operate within the scope of the terms of reference? Did the deliverables meet the criteria defined in the quality plan? Was it delivered within the schedule outlined in the project plan? Was it delivered within the budget outlined in the financial plan? To determine how well it conformed, an assessment is made of the level of conformity to the management processes outlined in the quality plan. These results, as well as a list of the key achievements and lessons learnt, are documented within a post implementation review and presented to the customer and/or project sponsor for approval.

Q. 2 (a)In a services organization, what would be the possible objectives and possible causes of conflict in project management?CONFLICT Conflict is a clash of interests, values, actions, views or directions. Conflict refers to the existence of that clash. Conflict is initiated the instant clash occurs. Generally, there are diverse interests and contrary views behind a conflict, which are revealed when people look at a problem from their viewpoint alone. Conflict is an outcome of organizational intricacies, interactions and disagreements. It can be settled by identifying and neutralizing the etiological factors. Once conflict is concluded it can provoke a positive change in the organization.

CONFLICT IN PROJECT MANAGEMENT Conflict in project management is inevitable. The potential for conflict in information systems development projects is usually high because it involves individuals from different backgrounds and orientations working together to complete a complex task. The cause of conflict in team projects can be related to differences in values, attitudes, needs, expectations, perceptions, resources, and personalities. Proper skills in dealing with conflict can assist project managers and other organization members to handle and effectively resolve conflicts which can lead to a more productive organization as a whole. When we recognize the potential for conflict, we implicitly indicate that there is already a conflict of direction, even though it may not have yet manifested itself as a clash. Confliction is the process of setting up, promoting, encouraging or designing conflict. It is a willful process and refers to the real effort put into generating and instituting conflict. De-confliction is the annihilation of conflict. WHY CONFLICTS ARISE In most organizations, conflicts increase as employees assert their demands for an increased share in organizational rewards, such as position, acknowledgment, appreciation, monetary benefits and independence. Even management faces conflicts with many forces from outside the organization, such as government, unions and other coercive groups which may impose restrictions on managerial activities. Conflicts emanate from more than one source, and so their true origin may be hard to identify. Important initiators of conflict situations include: 1. People disagree. People disagree for a number of reasons.a) They see things differently because of differences in understanding and viewpoint. Most of these differences are usually not important. Personality differences or clashes in emotional needs may cause conflicts. Conflicts arise when two groups or individuals interacting in the same situation see the situation differently because of different sets of settings, information pertaining to the universe, awareness, background, disposition, reason or outlook. In a particular mood, individuals think and perceive in a certain manner. For example, the half-full glass of one individual can be half-empty to another. Obviously both individuals convey the same thing, but they do so differently owing to contrasting perceptions and dispositions. b) People have different styles, principles, values, beliefs and slogans which determine their choices and objectives. When choices contradict, people want different things and that can create conflict situations. For example, a risk-taking manager would be in conflict with a risk-minimizing supervisor who believes in firm control and a well-kept routine. c) People have different ideological and philosophical outlooks, as in the case of different political parties. Their concepts, objectives and ways of reacting to various situations are different. This often creates conflicts among them. d) Conflict situations can arise because people have different status. When people at higher levels in the organization feel indignant about suggestions for change put forward from their subordinates or associates, it provokes conflict. By tolerating and allowing such suggestions, potential conflict can be prevented. e) People have different thinking styles, which encourage them to disagree, leading to conflict situations. Certain thinking styles may be useful for certain purposes, but ineffectual or even perilous in other situations f) People are supposed to disagree under particular circumstances, such as in sports. Here conflict is necessary, and even pleasurable.2. People are concerned with fear, force, fairness or funds a) Fear relates to imaginary concern about something which might happen in the future. One may fear setbacks, disgrace, reprisal or hindrances, which can lead to conflict situations. b) Force is a necessary ingredient of any conflict situation. Force may be ethical or emotional. It could be withdrawal of cooperation or approval. These forces are instrumental in generating, strengthening and terminating conflicts. c) Fairness refers to an individual's sense of what is right and what is not right, a fundamental factor learnt in early childhood. This sense of fairness determines the moral values of an individual. People have different moral values and accordingly appreciate a situation in different ways, creating conflict situations. d) Funds or costs can cause conflict, but can also force a conclusion through acceptable to the conflicting parties. The cost of being in conflict may be measurable (in money terms) or immeasurable, being expressed in terms of human lives, suffering, diversion of skilled labor, neglect or loss of morale and self esteem.CONDITIONS CREATING CONFLICT SITUATIONS According to Kirchhoff and Adams (1982), there are four distinct conflict conditions, i.e., high stress environments, ambiguous roles and responsibilities, multiple boss situations, and prevalence of advanced technology. Filley (1975) identified main conditions which could initiate conflict situations in an organization. These are: 1. Ambiguous jurisdiction, which occurs when two individuals have responsibilities which are interdependent but whose work boundaries and role definitions are not clearly specified. 2. Goal incompatibility and conflict of interest refer to accomplishment of different but mutually conflicting goals by two individuals working together in an organization. Obstructions in accomplishing goals and lack of clarity on how to do a job may initiate conflicts. Barriers to goal accomplishment arise when goal attainment by an individual or group is seen as preventing another party achieving their goal. 3. Communication barriers, as difficulties in communicating can cause misunderstanding, which can then create conflict situations. 4. Dependence on one party by another group or individual. 5. Differentiation in organization, where, within an organization, sub-units are made responsible for different, specialized tasks. This creates separation and introduces differentiation. Conflict situations could arise when actions of sub-units are not properly coordinated and integrated. 6. Association of the parties and specialization. When individuals specialized in different areas work in a group, they may disagree amongst themselves because they have different goals, views and methodologies owing to their various backgrounds, training and experiences. 7. Behavior regulation. Organizations have to have firm regulations for individual behavior to ensure protection and safety. Individuals may perceive these regulations differently, which can cause conflict and negatively affect output. 8. Unresolved prior conflicts which remain unsettled over time create anxiety and stress, which can further intensify existing conflicts. A manager's most important function is to avoid potential harmful results of conflict by regulating and directing it into areas beneficial for the organization.Effects of conflicts Conflict situations should be either resolved or used beneficially. Conflicts can have positive or negative effects for the organization, depending upon the environment created by the manager as she or he manages and regulates the conflict situation. Conflict is not the same as discomfort. The conflict isn't the problem - it is when conflict is poorly managed that is the problem. Positive effects of conflicts 1. Conflict can be constructive and healthy for an organization.2. It can aid in developing individuals and improving the organization by building on the individual assets of its members. 3. Conflict can bring about underlying issues.4. It can force people to confront possible defects in a solution and choose a better one.5. The understanding of real interests, goals and needs is enhanced and ongoing communication around those issues is induced. In addition, it can prevent premature and inappropriate resolution of conflict.6. Helps to raise and address problems.7. Energizes work to be on the most appropriate issues.8. Helps people "be real", for example, it motivates them to participate.9. Helps people learn how to recognize and benefit from their differences.Some of the positive effects of conflict situations are (Filley, 1975): Diffusion of more serious conflicts. Games can be used to moderate the attitudes of people by providing a competitive situation which can liberate tension in the conflicting parties, as well as having some entertainment value. In organizations where members participate in decision making, disputes are usually minor and not acute as the closeness of members moderates belligerent and assertive behavior into minor disagreements, which minimizes the likelihood of major fights. Stimulation of a search for new facts or resolutions. When two parties who respect each other face a conflict situation, the conflict resolution process may help in clarifying the facts and stimulating a search for mutually acceptable solutions. Increase in group cohesion and performance. When two or more parties are in conflict, the performance and cohesion of each party is likely to improve. In a conflict situation, an opponent's position is evaluated negatively, and group allegiance is strongly reinforced, leading to increased group effort and cohesion. Assessment of power or ability. In a conflict situation, the relative ability or power of the parties involved can be identified and measured.Negative effects or Causes of conflicts Causes or sources of organizational conflict can be many and varied. The most common causes are the following:1. scarcity of resources (finance, equipment, facilities, etc) 2. different attitudes, values or perceptions 3. disagreements about needs, goals, priorities and interests 4. poor communication 5. poor or inadequate organizational structure 6. lack of teamwork 7. lack of clarity in roles and responsibilities Destructive effects of conflicts include: 1. Impediments to smooth working,2. Diminishing output,3. Obstructions in the decision making process, 4. Formation of competing affiliations within the organization.The overall result of such negative effects is to reduce employees' commitment to organizational goals and organizational efficiency (Kirchhoff and Adams, 1982). Types of Managerial Actions that Cause Workplace Conflicts 1. Poor communicationsa) Employees experience continuing surprises, they aren't informed of new decisions, programs, etc.b) Employees don't understand reasons for decisions, they aren't involved in decision-making.c) As a result, employees trust the "rumor mill" more than management. 2. The alignment or the amount of resources is insufficient. There is:a) Disagreement about "who does what".b) Stress from working with inadequate resources.3. "Personal chemistry", including conflicting values or actions among managers and employees, for example: a) Strong personal natures don't match.b) We often don't like in others what we don't like in ourselves.4. Leadership problems, including inconsistent, missing, too-strong or uninformed leadership (at any level in the organization), evidenced by: a) Avoiding conflict, "passing the buck" with little follow-through on decisions.b) Employees see the same continued issues in the workplace.c) Supervisors don't understand the jobs of their subordinates.Key Managerial Actions / Structures to Minimize Conflicts1. Regularly review job descriptions. Get your employee's input to them. Write down and date job descriptions. Ensure: a) Job roles don't conflict.b) No tasks "fall in a crack". 2. Intentionally build relationships with all subordinates.a) Meet at least once a month alone with them in office.b) Ask about accomplishments, challenges and issues.3. Get regular, written status reports and include:a) Accomplishments.b) Currents issues and needs from management.c) Plans for the upcoming period.4. Conduct basic training about:a) Interpersonal communications.b) Conflict management.c) Delegation.5. Develop procedures for routine tasks and include the employees' input.a) Have employees write procedures when possible and appropriate. b) Get employees' review of the procedures.c) Distribute the procedures.d) Train employees about the procedures.6. Regularly hold management meetings, for example, every month, to communicate new initiatives and status of current programs.7. Consider an anonymous suggestion box in which employees can provide suggestions.

Q. 2 (b)Critically discuss the conflict resolution modes.CONFLICT RESOLUTION Conflict resolution is a range of methods of eliminating sources of conflict. The term "conflict resolution" is sometimes used interchangeably with the term dispute resolution or alternative dispute resolution. Processes of conflict resolution generally include negotiation, mediation, and diplomacy. The processes of arbitration, litigation, and formal complaint processes such as ombudsman processes, are usually described with the term dispute resolution, although some refer to them as "conflict resolution." Processes of mediation and arbitration are often referred to as alternative dispute resolution.CONFLICT RESOLUTION MODESIn Project Management: A Systems Approach to Planning, Scheduling, and Controlling, five modes for conflict resolution is explained and the situations when they are best utilized are identified. These modes are 1. Confronting2. Compromising3. Smoothing4. Forcing5. Avoiding

1. CONFRONTING (COLLABORATING) Confronting is also described as problem solving, integrating, collaborating or win-win style. It involves the conflicting parties meeting face-to-face and collaborating to reach an agreement that satisfies the concerns of both parties. This style involves open and direct communication which should lead the way to solving the problem. Confronting should be used when: Both parties need to win. You want to decrease cost. You want create a common power base. Skills are complementary. Time is sufficient. Trust is present. Learning is the ultimate goal. 2. COMPROMISING Compromising is also described as a "give and take" style. Conflicting parties bargain to reach a mutually acceptable solution. Both parties give up something in order to reach a decision and leave with some degree of satisfaction. Compromising should be used when: Both parties need to win. You are in a deadlock. Time is not sufficient. You want to maintain the relationship among the involved parties. You will get nothing if you do not compromise. Stakes are moderate.

3. SMOOTHING (ACCOMMODATING) Smoothing is also referred to as accommodating or obliging style. In this approach, the areas of agreement are emphasized and the areas of disagreement are downplayed. Conflicts are not always resolved in the smoothing mode. A party may sacrifice its own concerns or goals in order to satisfy the concerns or goals of the other party. Smoothing should be used when: Goal to be reached is overarching. You want to create obligation for a trade-off at a later time. Stakes are low. Liability is limited. Any solution is adequate. You want to be harmonious and create good will. You would lose anyway. You want to gain time. 4. FORCING Forcing is also known as competing, controlling, or dominating style. Forcing occurs when one party goes all out to win its position while ignoring the needs and concerns of the other party. As the intensity of a conflict increases, the tendency for a forced conflict is more likely. These results in a win-lose situation where one party wins at the expense of the other party. Forcing should be used when: A "do or die" situation is present. Stakes are high. Important principles are at stake. Relationship among parties is not important. A quick decision must be made. 5. AVOIDING Avoiding is also described as withdrawal style. This approach is viewed as postponing an issue for later or withdrawing from the situation altogether. It is regarded as a temporary solution because the problem and conflict continue to reoccur over and over again. Avoiding should be used when: You cannot win. Stakes are low. Stakes are high, but you are not prepared. You want to gain time. You want to maintain neutrality or reputation. You think problem will go away. You win by delaying. Researchers examined the impact of the conflict resolution styles used by individuals in shaping their work environment and affecting the level of ongoing conflict and stress. Results of the study showed that individuals who use a certain style to conflicts can create environments with varied degrees of conflicts. Individuals who use more of a confronting style create an environment with lower levels of task conflict, which reduces relationship conflict and stress. Whereas, individuals who use more of the forcing or avoiding styles tend to create an environment with more task conflict, which increases relationship conflict and stress. The study suggests conflict develops not only in environmental circumstances but in the styles used by individuals when confronted with a conflict. The manner in which a person responds to organizational dissension and uncertainty will influence the responses of others and the individual's work experience.

Q. 3Differentiate between the following:(a)GERT and PERT (b) PERT and CPM In todays highly competitive environment, management is continually seeking new and better control techniques to cope with the complexities, masses of data, and tight deadlines that are characteristic of many industries. In addition, management is seeking better methods for presenting technical and cost data to customers. Since World War II, scheduling techniques have taken on paramount importance. The most common of these techniques are shown below:1. Gantt or bar charts2. Milestone charts3. Line of balance4. Networks I. Program Evaluation and Review Technique (PERT)II. Arrow Diagram Method (ADM) [Sometimes called the Critical Path Method (CPM)]III. Precedence Diagram Method (PDM)IV. Graphical Evaluation and Review Technique (GERT)

An Introduction to CPM, PERT and GERT How do project teams determine a project's duration? Is it an exact science? The answer is no, it is not an exact science. It is more a process of estimating activity durations, which can be made easier by utilizing mathematical analysis. Mathematical analysis is used in project schedule development to determine early and late start dates, as well as early and late finish dates for all project activities. The outcome indicates the time period in which the activity should be scheduled. Note that this analysis phase does not take into account any resource pool limitations or constraints. The most widely known mathematical techniques used by project management teams are the: 1. Critical Path Method (CPM)2. Program Evaluation and Review Technique (PERT)3. Graphical Evaluation and Review Technique (GERT)

1. Critical Path Method (CPM) The most common mathematical technique is the Critical Path Method (CPM). The CPM is used to predict project duration by analyzing which sequence of activities, or path, has the least amount of scheduling flexibility.

Once you have determined the early and late start and finish dates, you can determine float. Float is equal to the difference between the late finish and early finish dates, or the difference between the late start and early start dates. The next step in the CPM is to determine the critical path (CP), which is the longest path for the project that has little or no float. To determine the critical path, you begin with the first activity in the network. Look at its successors, compare the successors' float values, and select the one with zero float. This is the second activity on the critical path.

Next, you would continue from the second activity on the critical path and compare float for its successors, selecting the activity that has zero float and including it in the critical path. You continue this process to the final activity for a complete critical path. The project can finish no sooner than the time it takes to complete the activities on the critical path. To calculate an activity's duration, you subtract the early start from the early finish or the late start from the late finish. In example that follows, the numbers indicate days. Activity A - 1 day Activity B - 2 days Activity C - 3 days Activity D - 2 days Adding the total of the activity durations will give you the duration of the critical path. In this example, the duration of the critical path would be 8 days.Critical Path activities are, indeed, critical to a project's success. They need management's careful attention. The order and duration of these activities are important because any delays will result in the project going over the anticipated completion date. In addition, project improvements are most effective when made along the critical path.Program Evaluation and Review Technique (PERT)

Have you ever performed activity duration estimates, and then questioned your findings? There is a technique available for checking your findings.

Program Evaluation and Review Technique (PERT) is used when there is a high level of uncertainty about how long it will take to perform a given task. PERT uses network logicthe collection of activity dependencies that make up a project network diagramto determine duration. In PERT, network logic is used by applying the critical path method to a weighted average duration estimate. Although very similar, there is one significant difference between PERT and CPM. CPM uses the most likely estimate instead of the expected value of the estimate that PERT uses.PERT time estimating requires the following three estimates for each activity. TM = most likely time TO = optimistic time TP = pessimistic time To determine the expected activity time you must insert the previous estimates into the PERT weighted average formula, which is optimistic (TO) + 4 x most likely (TM) + pessimistic (TP) all divided by 6.Once you have calculated the estimated times for your project you can plot those values on an s-curve. The s-curve allows you to easily see all three timesoptimistic, most likely, and pessimistic.

Graphical Evaluation and Review Technique (GERT)

There is one additional mathematical analysis method that is rarely used today because it has been proven to be less accurate than PERT and CPM. This method is the graphical evaluation and review technique (GERT). GERT allows for probabilistic treatment of both network logic and activity duration estimates. GERT is mainly used on project activities that are only performed in part, as well as those activities that may be performed more than once (loop). The above graphic illustrates a GERT diagram with a simple loop. For example, on a high-rise development project, the electrical outlets for each floor may be installed as each floor is completed instead of waiting for the completion of the entire building. Since this activity will be performed more than once, using GERT will enable you to calculate the entire duration of this activity.

Differences Between PERT and CPM: Note that the principles that we have discussed so far apply not only to PERT, but to CPM as well. The nomenclature is the same for both, and both techniques are often referred to as arrow diagramming methods, or activity-on-arrow networks. The differences between PERT and CPM is as follows: PERT uses three time estimates (optimistic, most likely, and pessimistic). From these estimates, an expected time can be derived. CPM uses one time estimate that represents the normal time (that is, better estimate accuracy with CPM). PERT is probabilistic in nature, based on a beta distribution for each activity time and a normal distribution for expected time duration. This allows us to calculate the "risk" in completing a project. CPM is based on a single time estimate and is deterministic in nature. Both PERT and CPM permit the use of dummy activities in order to develop the logic. PERT is used for Research and Development projects where the risks in calculating time durations have a high variability. CPM is used for construction projects that are resource dependent and based on accurate time estimates. PERT is used on those projects, such as Research and Development, where percent complete is almost impossible to determine except at completed milestones. CPM is used for those projects, such as construction, where percent complete can be determined with reasonable accuracy and customer billing can be accomplished based on percent complete.Q. 4(a)Explain the types of estimates and discuss the estimating pitfalls.

ESTIMATION Estimation is the calculated approximation of a result which is usable even if input data may be incomplete or uncertain.WHY ESTIMATE? Estimation is an essential part of our project methodology. Estimation is used for a number of purposes: To justify the project, particularly at the proposal stage, enabling the costs to be compared with the anticipated benefits and to enable informed comparisons to be made between different technical or functional options. To enforce the disciplines needed to make the project succeed. To secure the resources required to successfully deliver the project. To ensure that the support impact of the project is fully understood. To inform and improve our software development process. ESTIMATIONS IN PROJECT MANAGEMENT In essence, estimates are forecasts of the future; unfortunately, people are not very good at forecasting. While it is difficult to make forecasts of natural phenomena such as the weather; it is even harder to make forecasts of any processes that include people, their knowledge and behavior. Project management is one of these processes.Estimation is a very important step in modeling and decision analysis. Without proper assessments of project duration, finish time, cost, resources, success rate and other parameters, it is almost impossible to select a proper alternative and ultimately make a good decision. Project managers are under a lot of pressure to produce estimates of time and cost for systems development very early in a project, typically in the first two weeks. However, estimating a development project from outline requirements and not from a physical design is like a home buyer saying, Quote me a price for building a house, but I am not sure where I want the house located, or about the number of rooms, or whether it should be of brick or wood. It is not surprising that project estimates are as bad as they are, but that they can be made and met at all. Three approaches can be taken to estimating: Estimates are not blind luck. They are well-thought-out decisions based on the best available information, some type of cost estimating relationship, or some type of cost model. Cost estimating relationships (CERs) are generally the output of cost models. Typical CERs might be: Mathematical equations based on regression analysis Costquantity relationships such as learning curves Costcost relationships Costnon cost relationships based on physical characteristics, technical parameters, or performance characteristicsTYPES OF ESTIMATES:Note that projects can range from a feasibility study, through modification of existing facilities, to complete design, procurement, and construction of a large complex. Whatever the project may be, whether large or small, the estimate and type of information desired may differ radically.

1. Order-Of-Magnitude The first type of estimate is an order-of-magnitude analysis, which is made without any detailed engineering data. This is an approximate estimate made without detailed data, that is usually produced from cost capacity curves, scale up or down factors that are appropriately escalated and approximate cost capacity ratios. This type of estimate is used during the formative stages of an expenditure program for initial evaluation of the project. Other terms commonly used to identify an Order of Magnitude estimate are preliminary, conceptual, factored, quickie and feasibility. The order-of-magnitude analysis may have an accuracy of 35 percent within the scope of the project. This type of estimate may use past experience (not necessarily similar), scale factors, parametric curves or capacity estimates (that is, $/# of product or $/KW electricity). 2. Approximate Estimate Next, there is the approximate estimate (or top-down estimate), which is also made without detailed engineering data, and may be accurate to 15 percent. This type of estimate is prorated from previous projects that are similar in scope and capacity, and may be titled as estimating by analogy, parametric curves, rule of thumb, and indexed cost of similar activities adjusted for capacity and technology. In such a case, the estimator may say that this activity is 50 percent more difficult than a previous (i.e., reference) activity and requires 50 percent more time, man-hours, dollars, materials, and so on.3. Definitive Estimate The definitive estimate, or grassroots buildup estimate, is prepared from well-defined engineering data including (as a minimum) vendor quotes, fairly complete plans, specifications, unit prices, and estimate to complete. The definitive estimate, also referred to as detailed estimating, has an accuracy of 5 percent. A definitive estimate is prepared from well defined data, specifications, drawings, etc. This category covers all estimate ranges from a minimum to maximum definitive type. These estimates are used for bid proposals, bid evaluations, contract changes, extra work, legal claims, permit and government approvals. Other terms associated with a Definitive Estimate include check, lump sum, tender, post contract changes.4. Learning Curves Another method for estimating is the use of learning curves. Learning curves are graphical representations of repetitive functions in which continuous operations will lead to a reduction in time, resources, and money. The theory behind learning curves is usually applied to manufacturing operations.ESTIMATING PITFALLS: There are several pitfalls that can impede the pricing function. Probably the most serious pitfall, and the one that is usually beyond the control of the project manager, is the "buy-in" decision, which is based on the assumption that there will be "bail-out" changes or follow-on contracts later. These changes and/or contracts may be for spares, spare parts, maintenance, maintenance manuals, equipment surveillance, optional equipment, optional services, and scrap factors. One of the most difficult tasks for many people in IT is providing estimates for project or development work. However, its one of those necessary evils that must be performed often at different times throughout the project. Theres estimating done up front to price the project and scope out timeframes, theres estimates for change orders throughout the project, and theres often times ballpark estimates given to customers periodically on work they may want performed. Its that ability to think somewhat abstractly on given tasks and figure out with some degree of accuracy what the level of effort will be. Of course, there needs to be a certain level of experience and expertise but that experience does not always ensure that youll give good estimates. Over time, one can learn to be a good estimator, but it helps to have that gift.With all that said, there are many things that can undermine the accuracy or validity of your estimates. Some you have control over and many that you cant really control.Other types of estimating pitfalls include: Misinterpretation of the statement of work Omissions or improperly defined scope Poorly defined or overly optimistic schedule Inaccurate work breakdown structure Applying improper skill levels to tasks Failure to account for risks Failure to understand or account for cost escalation and inflation Failure to use the correct estimating technique Failure to use forward pricing rates for overhead, general and administrative, and indirect costs.Unfortunately, many of these pitfalls do not become evident until detected by the cost control system, well into the project.Here are nine common pitfalls that can often negatively impact project estimates:1. Poorly defined scope of work. This can occur when the work is not broken down far enough or individual elements of work are misinterpreted.2. Omissions. Simply put, you forget something.3. Rampant optimism. This is the rose-colored glasses syndrome, when the all-success scenario is used as the basis for the estimate.4. Padding. This is when the estimator (in this case almost always the task performer) includes a factor of safety without your knowledge, a cushion that ensures that he or she will meet or beat the estimate.5. Failure to assess risk and uncertainty. Neglecting or ignoring risk and uncertainty can result in estimates that are unrealistic.6. Time pressure. If someone comes up to you and says, Give me a ballpark figure by the end of the day and Dont worry, I wont hold you to it, look out! This almost always spells trouble.7. The task performer and the estimator are at two different skill levels. Since people work at different levels of efficiency, sometimes affecting time and cost for a task significantly, try to take into consideration whos going to do the work.8. External pressure. Many project managers are given specific targets of cost, schedule, quality, or performance (and often more than one!). If youre asked to meet unrealistic targets, you may not be able to fight it, but you should communicate what you believe is reasonably achievable.9. Failure to involve task performers. Its ironic: an estimate developed without involving the task performer could be quite accurate, but that person may not feel compelled to meet the estimate, since its your number, not mine, so the estimate may appear wrong.

Q. 4 (b)What are the different steps of pricing out the work? Also discuss the special problems having severe impact on pricing effort.PRICING OUT THE WORK: Logical pricing techniques are available in order to obtain detailed estimates. The following thirteen steps provide a logical sequence in order to better control the company's limited resources. These steps may vary from company to company. Step 1: Provide a complete definition of the work Step 2: Establish a logic network with checkpoints. Step 3: Develop the work breakdown structure. Step 4: Price out the work breakdown structure. Step 5: Review WBS costs with each functional manager. Step 6: Decide on the basic course of action. Step 7: Establish reasonable costs for each WBS element. Step 8: Review the base case costs with upper-level management. Step 9: Negotiate with functional managers for qualified personnel. Step 10: Develop the linear responsibility chart. Step 11: Develop the final detailed and PERT/CPM schedules. Step 12: Establish pricing cost summary reports. Step 13: Document the result in a program plan. Although the pricing of a project is an iterative process, the project manager must still burden himself at each iteration point by developing cost summary reports so that key project decisions can be made during the planning.

Detailed pricing summaries are needed at least twice: in preparation for the pricing review meeting with management and at pricing termination. At all other times it is possible that ''simple cosmetic surgery" can be performed on previous cost summaries, such as perturbations in escalation factors and procurement cost of raw materials.The list identified below shows the typical pricing reports: A detailed cost breakdown for each Work Breakdown Structure (WBS) element. If the work is priced out at the task level, then there should be a cost summary sheet for each task, as well as rollup sheets for each project and the total program. A total program manpower curve for each department. These manpower curves show how each department has contracted with the project office to supply functional resources. If the departmental manpower curves contain several "peaks and valleys," then the project manager may have to alter some of his schedules to obtain some degree of manpower smoothing. Functional managers always prefer manpower-smoothed resource allocations. A monthly equivalent manpower cost summary. This table normally shows the fully burdened cost for the average departmental employee carried out over the entire period of project performance. If project costs have to be reduced, the project manager performs a parametric study between this table and the manpower curve tables. A yearly cost distribution table. This table is broken down by WBS element and shows the yearly (or quarterly) costs that will be required. This table, in essence, is a project cash-flow summary per activity. A functional cost and hour summary. This table provides top management with an overall description of how many hours and dollars will be spent by each major functional unit, such as a division. Top management would use this as part of the forward planning process to make sure that there are sufficient resources available for all projects. This also includes indirect hours and dollars.

Monthly labor hour and dollar expenditure forecast. This table can be combined with the yearly cost distribution, except that it is broken down by month, not activity or department. In addition, this table normally includes manpower termination liability information for premature cancellation of the project by outside customers.

A raw material and expenditure forecast. This shows the cash flow for raw materials based on vendor lead times, payment schedules, commitments, and termination liability.

Total program termination liability per month. This table shows the customer the monthly costs for the entire program. This is the customer's cash flow, not the contractor's. The difference is that each monthly cost contains the termination liability for man-hours and dollars, on labor and raw materials. This table is actually the monthly costs attributed to premature project termination.It is important to note that these tables are used by both project managers and upper-level executives. The project managers utilize these tables as the basis for project cost control. Top-level management utilizes them for selecting, approving, and prioritizing projects.

Special Problems Having Severe Impact on Pricing Effort It is essential to note that there are always special problems that, although often overlooked, have a severe impact on the pricing effort. As an example, pricing must include an understanding of cost control specifically, how costs are billed back to the project. There are three possible situations:1. Work is priced out at the department average, and all work performed is charged to the project at the department average salary, regardless of who accomplished the work. This technique is obviously the easiest, but encourages project managers to fight for the highest salary resources, since only average wages are billed to the project.2. Work is priced out at the department average, but all work performed is billed back to the project at the actual salary of those employees who perform the work. This method can create a severe headache for the project manager if he tries to use only the best employees on his project. If these employees are earning substantially more money than the department average, then a cost overrun will occur unless the employees can perform the work in less time. Some companies are forced to use this method by government agencies and have estimating problems when the project that has to be priced out is of a short duration where only the higher-salaried employees can be used. In such a situation it is common to ''inflate" the direct labor hours to compensate for the added costs.3. The work is priced out at the actual salary of those employees who will perform the work and the cost is billed back the same way. This method is the ideal situation as long as the people can be identified during the pricing effort.In this regard, some companies use a combination of all three methods. In this case, the project office is priced out using the third method (because these people are identified early), whereas the functional employees are priced out using the first or second method.Q. 5(a)Why effective management of a program requires a well organized cost and control system?COST MANAGEMENT AND CONTROL IN PROJECTSCost Management It is widely used in business today and is the process whereby companies use cost accounting to report or control various costs of doing business. Cost Management generally describes approach and activities of managers in short range and long range planning and cost decisions that incorporate value for customer and lower costs of product and services. Manager make decisions on amount and kind of material used, changes of plant processes, changes in product designs and information from accounting system helps managers make such decisions, but information and accounting system not cost management project cost management broad focus includes continuous control of costs. Planning and cost is usually linked with revenue and profit planning. Cost management involves overall planning, co-ordination, and control and reporting of all cost-related aspects from project initiation to operation and maintenance. Process of identifying all costs associated with investment, making informed choices about options that will deliver best value for money and managing those costs throughout life of project. Techniques (value management) help to improve value and reduce costs.

Cost Control: Cost control is equally important to all companies, regardless of size. Small companies generally have tighter monetary controls, mainly because of the risk with the failure of as little as one project, but with less sophisticated control techniques. Large companies may have the luxury to spread project losses over several projects, whereas the small company may have few projects. Cost control is not only "monitoring" of costs and recording perhaps massive quantities of data, but also analyzing of the data in order to take corrective action before it is too late. Cost control should be performed by all personnel who incur costs, not merely the project office. Cost control implies good cost management, which must include: Cost estimating Cost accounting Project cash flow Company cash flow Direct labor costing Overhead rate costing Others, such as incentives, penalties, and profit-sharing

Management Cost and Control System (MCCS): Cost control is actually a subsystem of the Management Cost and Control System (MCCS) rather than a complete system per se. The Management Cost and Control System (MCCS) are represented as a two cycle process: a planning cycle and an operating cycle. The operating cycle is what is commonly referred to as the cost control system. Failure of a cost control system to accurately describe the true status of a project does not necessarily imply that the cost control system is at fault. Any cost control system is only as good as the original plan against which performance will be measured. It is more common for the plan to be at fault than the control system.Almost all project planning and control systems have identifiable design requirements.These include: A common framework from which to integrate time, cost, and technical performance Ability to track progress of significant parameters Quick response Capability for end-value prediction Accurate and appropriate data for decision making by each level of management Full exception reporting with problem analysis capability Immediate quantitative evaluation of alternative solutionsManagement Cost and Control System (MCCS) planning activities include: Contract receipt (if applicable) Work authorization for project planning Work breakdown structure (WBS) Subdivided work description Schedules Planning charts BudgetsManagement Cost and Control System (MCCS) planning charts are worksheets used to create the budget. These charts include planned labor in hours and material dollars. Management Cost and Control System (MCCS) planning is accomplished in one of these ways: One level below the lowest level of the Work Breakdown Structure (WBS) At the lowest management level By cost element or cost accountA well-disciplined Management Cost and Control System (MCCS) will produce the following results: Policies and procedures that will minimize the ability to distort reporting Strong management emphasis on meeting commitments Weekly team meetings with a formalized agenda, action items, and minutes. Top-management periodic review of the technical and financial status Simplified internal audit for checking compliance with procedures Furthermore, for Management Cost and Control System (MCCS) to be effective, both the scheduling and budgeting systems must be disciplines and formal in order to prevent inadvertent or arbitrary budget or schedule changes. This does not mean that the baseline budget and schedule, once established, is static or inflexible. Rather, it means that changes must be controlled and result only from deliberate management actions. Disciplined use of Management Cost and Control System (MCCS) is designed to put pressure on the project manager to perform exceptionally good project planning so that changes will be minimized. As an example, government subcontractors may not: Make retroactive changes to budgets or costs for work that has been completed. Re-budget work-in-progress activities Transfer work or budget independently of each other Currently, two new programs are being used by the government and industry in conjunction with the Management Cost and Control System (MCCS) as an attempt to improve effectiveness in cost control. The zero-base budgeting program was established to provide better estimating techniques for the verification portion of control. The design-to-cost program assists the decision-making part of the control process by identifying a decision-making framework from which re-planning can take place.Understanding Control: Effective management of a program during the operating cycle requires that a well-organized cost and control system be designed, developed, and implemented so that immediate feedback can be obtained, whereby the up-to-date usage or resources can be compared to target objectives established during the planning cycle. The requirements for an effective control system (for both cost and schedule/performance) should include: Thorough planning of the work to be performed to complete the project Good estimating of time, labor, and costs Clear communication of the scope of required tasks A disciplined budget and authorization of expenditures Timely accounting of physical progress and cost expenditures Periodic re-estimation of time and cost to complete remaining work Frequent, periodic comparison of actual progress and expenditures to schedules and budgets, both at the time of comparison and at project completion It is essential that the management must compare the time, cost, and performance of the program to the budgeted time, cost, and performance, not independently but in an integrated manner. Being within one's budget at the proper time serves no useful purpose if performance is only 75 percent. Likewise, having a production line turn out exactly 200 items, when planned, loses its significance if a 50 percent cost overrun is incurred. All three resource parameters (time, cost, and performance) must be analyzed as a group, or else we might ''win the battle but lose the war." The use of the expression "management cost and control system" is vague in that the implication is made that only costs are controlled. This is not true an effective control system monitors schedule and performance as well as costs by setting budgets, measuring expenditures against budgets and identifying variances, assuring that the expenditures are proper, and taking corrective action when required. The Work Breakdown Structure (WBS) as the element that acts as the source from which all costs and controls must emanate. The Work Breakdown Structure (WBS) is the total project broken down into successively lower levels until the desired control levels are established. The Work Breakdown Structure (WBS) therefore serves as the tool from which performance can be subdivided into objectives and sub-objectives. As work progresses, the WBS provides the framework on which costs, time, and schedule/performance can be compared against the budget for each level of the WBS.The first purpose of control therefore becomes a verification process accomplished by the comparison of actual performance to date with the predetermined plans and standards set forth in the planning phase. The comparison serves to verify that: The objectives have been successfully translated into performance standards. The performance standards are, in fact, a reliable representation of program activities and events. Meaningful budgets have been established such that actual versus planned comparisons can be made. In other words, the comparison verifies that the correct standards were selected, and that they are properly used. The second purpose of control is that of decision making. Three useful reports are required by management in order to make effective and timely decisions: The project plan, schedule, and budget prepared during the planning phase. A detailed comparison between resources expended to data and those predetermined. This includes an estimate of the work remaining and the impact on activity completion. A projection of resources to be expended through program completion.Afterwards, these reports are then supplied to both the managers and the doers. Three useful results arise through the use of these three reports, generated during a thorough decision-making stage of control: Feedback to management, the planners, and the doers. Identification of any major deviations from the current program plan, schedule, or budget. The opportunity to initiate contingency planning early enough that cost, performance, and time requirements can undergo corrected action without loss of resources.

Q. 5 (b)Write short notes on the following:I. Variances analysisII. Essentials of Material Accounting CriterionVARIANCE A variance is defined as any schedule, technical performance, or cost deviation from a specific plan. Variances are used by all levels of management to verify the budgeting system and the scheduling system. The budgeting and scheduling system variance must be compared together because: The cost variance compares deviations only from the budget and does not provide a measure of comparison between work scheduled and work accomplished. The scheduling variance provides a comparison between planned and actual performance but does not include costs.There are two primary methods of measurement: Measurable efforts: Discrete increments of work with a definable schedule for accomplishment, whose completion produces tangible results. Level of effort: Work that does not lend itself to subdivision into discrete scheduled increments of work, such as project support and project control.Variances are used on both types of measurement: In order to calculate variances we must define the three basic variances for budgeting and actual costs for work scheduled and performed. Archibald defines these variables: Budgeted cost for work scheduled (BCWS) is the budgeted amount of cost for work scheduled to be accomplished plus the amount or level of effort or apportioned effort scheduled to be accomplished in a given time period. Budget cost for work performed (BCWP) is the budgeted amount of cost for completed work, plus budgeted for level of effort or apportioned effort activity completed within a given time period. This is sometimes referred to as "earned value." Actual cost for work performed (ACWP) is the amount reported as actually expended in completing the work accomplished within a given time period.Variance Analysis Variance means difference while analysis means breakdown. In Cost or Management Accounting, variance would relate to difference between Standard and Actual Costs. Analysis would break this difference into various parts like quantity, price and capacity. Any wide variation would be thoroughly investigated and persons responsible (purchase manager, human resource manager, factory manager or marketing manager) would be asked to explain. If it proved avoidable or controllable, someone would be penalized or reprimanded else measures would be taken to avoid in future as far as possible.In short, variance analysis helps the management in decision-making. In addition1. It is used in cost-control,2. Gives early warning for corrective action3. Useful in accountability.

Understanding variance analysis Many businesses, especially the small, entrepreneurial kind, ignore or forget the other half of the budgeting. Budgets are too often proposed, discussed, accepted, and forgotten. Variance analysis looks after-the-fact at what caused a difference between plan vs. actual. Good management looks at what that difference means to the business. Variance analysis ranges from simple and straightforward to sophisticated and complex. Some cost-accounting systems separate variances