Project Management BMCF. Page 2 Eric Abhyankar - Instructor Agenda – Oct. – Dec. 2011 Instructor...

Project Management

BMCF

BMCF

Eric Abhyankar - Instructor

Agenda – Oct. – Dec. 2011 Instructor Introduction

Timetable and Syllabus

Group Setup

Session 1 : Projects in Contemporary Organizations; The Project Manager; Project Organization; Introduction; Defining the Project

Session 2 : Project Planning; Conflict and Negotiation; Budgeting and Cost Estimation; Scheduling; The Planning Process

Session 3 : Resource Allocation; Monitoring and Information Systems; Project Control; Controlling the Project

Session 4 : Risk Management; Project Auditing; Project Termination; Putting the Discipline to work

Session 5 : Future of project Management

Project/Oral Presentation

Final Exam

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Instructor Introduction – Eric Abhyankar

Consultant in Prague – customers include DHL, CSOB, US Hedge Funds

Teach at UNVA, VSFS, VSM, UJEP

Investment Banker at Swiss Bank (UBS)

10 years progressive Management Consulting experience at AT&T, IBM, UBS, DHL

PM experience in USA, Asia, Europe

Masters in CS, Masters in PM, MBA

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Overview of Course Activities Assignment and Credit

Overview of Required Assignments Credit

Class participation and full attendance 30%

Project Presentation in Class 70%

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Sessions

Session 3 : Controlling the Project

Resource Allocation; Monitoring and Information Systems; Project Control

Session 2 : The Planning Process

Project Planning; Conflict and Negotiation; Budgeting and Cost Estimation; Scheduling;

Session 1 : Defining the Project

Projects; The Project Manager; Project Organization; Introduction to Project Planning

Session 4 : Putting the Discipline to work

Project Auditing; Project Termination

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1.1 Projects in Contemporary Organizations

Why manage projects?

Need for Management of ever expanding Knowledge

Growing demand for customized solutions

Globalization and global competition

General direct objectives of any project – performance (scope), time (schedule), cost (under budget), quality

Indirect objectives – client satisfaction (impact), project efficiency, organizational improvement, business development (sales opportunities)

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1.2 Project Stakeholders

Project Manager

Project Team

Senior Management

The Client

The Client’s End Customers

Others?

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1.3 Project Management defined

PMI Definition of a Project: A project is a temporary endeavor undertaken to create a unique product or service. Temporary means that every project has a definite beginning and a definite end. Unique means that the product or service is different in some distinguishing way from all similar products or services.

PMI definition of Project Management: Project Management is the application of knowledge, skills, tools and techniques to project activities in order to exceed or meet stakeholder needs and expectations from a project.

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1.4 Project Lifecycle

All projects are divided into phases: A project phase is completed when a verifiable work product (deliverable) is completed. The completion of a project phase is marked by reviews to determine a) if project should continue and b) detect and correct errors cost effectively.

Collectively, the project phases are known as the project lifecycle.

Example : See power point slide

Completion & Closure

Build & Test

System Design

Project

Start up

Approve Plan

Architecture and Design document

Prototype Review

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1.4 Project Management Maturity

Project Management Maturity models are used to allow organizations to benchmark the best practices of successful project management firms.

Development of better project management practices is an evolutionary process involving a systematic commitment to continuous improvement.

Example CMMI (Capability and Maturity Model)

Level 4

Level 3

Level 2

Level 1

Level 5

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1.5 Project Organization

A hierarchy where each employee has one clear superior. Staff are grouped by specialty such as production, marketing, engineering etc.

Pure functional, pure project and Matrix co-exist

A pure project organization overlaid on the functional divisions of the parent firm.

Mixed

Matrix FunctionalPure Project

The project is a self contained unit with its own technical staff, own administration tied to the parent firm by tenuous strands of periodic progress reports and oversight.

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1.6 Group Exercise

Student Introductions

Project Experience/Background

Identify some typical projects in your company/organization

If you do not have typical projects in your organization think of a business you would like to do

Who are the stakeholders?

What is the Project Organization like?

In what part of the Project Lifecycle are they in?

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1.7 Project Selection – What are the criteria for model selection?

Realism

Capability

Flexibility

Ease of Use

Cost

EXERCISE: What is your criteria in selecting a project? See Examples on Page 92, 93

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Sessions




Project Planning; Conflict and Negotiation; Budgeting and Cost Estimation; Scheduling


Projects in Contemporary Organizations; The Project Manager; Project Organization


Risk Management; Project Auditing; Project Termination

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2.1 The Project Planning process

Also known as Project Scope Management (PMI)

Initiation or Initial Project Coordination – committing the organization to begin the next phase of the project.

Scope planning – developing a written scope statement as the basis for future project decisions.

Scope definition – subdividing the major project deliverables into smaller more manageable components

Scope Verification – formalizing acceptance of the project scope

Scope Change Control – controlling changes to project scope

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2.2 Work Breakdown Structure (WBS) *****

Definition – A WBS is a deliverable oriented grouping of project elements that organizes and defines the total scope of the project. WORK NOT IN THE WBS IS OUTSIDE THE SCOPE OF THE PROJECT.

A WBS is presented in chart form (similar to a spreadsheet) where each descending level represents an increasingly detailed description of the project elements.

Each item in the WBS is assigned a unique identifier; these identifiers collectively are known as code of accounts. The items at the lowest level of the WBS are referred to as work packages.

In very complex projects, work element descriptions are often collected in a WBS dictionary. A WBS dictionary will typically include work package descriptions as well as other planning information such as schedule dates, cost budgets, staff assignments.

EXERCISE: WBS

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2.3.1 Inputs to Initiation

Product description

Strategic plan

Project selection criteria

Historical information

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2.3.2 Inputs to Scope planning

Product description

Project charter

Constraints

Assumptions

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2.3.3 Inputs to Scope Definition

Scope statement

Constraints

Assumptions

Other planning outputs


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2.3.4 Inputs to Scope Verification

Work results

Product documentation

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2.3.5 Inputs to Scope Change Control

Work breakdown structure

Performance Reports

Change Requests

Scope Management plan

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2.4 Project Planning

What is Project Integration Management? – includes the processes required to ensure that the various elements of the project are properly coordinated.

Project plan development

Project plan execution

Overall Change control

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2.4.1 Elements of a Project Plan (PMI) Project Charter

A description of the project management approach or strategy (a summary of the individual management plans from the other knowledge areas).

Scope statement which includes project deliverables and the project objectives

Cost estimates, scheduled start dates and responsibility assignments to the level of the WBS at which control will be exercised.

Performance measurement baselines for schedule and cost

Major milestones and target dates for each

Key or required staff

Key risks, including constraints and assumptions, planned responses for each management plans, including scope management plan, schedule management plan, etc.

Open issues and pending decisions

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2.4.2 Group Exercise

Each Group should pick one project from the list of typical projects in their organization or companies

Write the Project Plan incorporating the elements of the project plan (Assume that the project has not yet started).

Hint: Use the WBS you have prepared earlier

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2.4.3 Project Plan Execution What are the tools and techniques required for Project plan execution?

General Management skills

Product skills and knowledge

Work authorization system

Status review meetings

Project Management information systems

Organizational procedures

QUESTION: What percentage of a project’s budget will be expended in Project Plan execution?

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2.4.4 Overall Change Control ***** Overall Change Control is concerned with (a) influencing the factors which create changes to

ensure that changes are beneficial, (b) determining that a change has occurred and (c) managing the actual changes when and as they occur.

Inputs to Overall Change control System: (a) Project Plan (b) Performance Reports (c) Change Requests

Tools and Techniques for overall change control

Change Control Systems

Configuration Management

Performance measurement

Additional planning

Project Management Information system

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2.5 Conflicts and Negotiation

Under what circumstances do conflicts arise on projects?

When should the PM use negotiation to resolve conflicts?

Project Team conflicts

Customer conflicts – Scope creep

Change Control conflicts

Vendor/Sub contractor conflicts

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2.5.1 Categories of Conflict

Groups working on projects may have different goals and expectations

There is considerable uncertainty about who has the authority to make decisions

There are interpersonal conflicts between people who are parties-at-interest in the project

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2.5.2 Conflicts in the Project Team

Dynamics of team formation

Forming

Storming

Norming

Performing

Adjourning

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2.5.3 Principled Negotiation

Separate the people from the problem

Focus on interests, not positions

Before trying to reach agreement, invent options for mutual gain

Insist on objective criteria

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2.5.4 Why do Project Teams fail?

Poorly developed or Unclear goals

Poorly defined Project Team roles and interdependencies

Lack of Project Team motivation

Poor communication

Poor Leadership

Turnover Among Project Team Members

Dysfunctional behavior

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Group A - Customer

Group B – Project Team

Group C – Sub contractor

Identify areas of potential conflict. How will you use Principled Negotiation to resolve conflicts?

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2.6 Project Cost Estimation

Project Cost Estimation and Management includes the processes required to ensure that the project is completed within the approved budget.

Resource Planning – determining what resources (people, equipment, materials) and what quantities of each should be used to perform project activities.

Cost Estimating – developing an approximation (estimate) of the costs of the resources needed to complete project activities.

Cost Control – controlling changes to the project budget

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2.6.1 Inputs to Resource Planning



Scope statement

Resource pool description

Organizational policies

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2.6.2 Inputs to Cost Estimating


Resource Requirements

Resource Rates

Activity duration estimates


Chart of accounts

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2.6.3 Inputs to Cost Budgeting

Cost Estimates


Project schedule

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2.6.4 Inputs to Cost Control

Cost Baseline

Performance Reports

Change requests

Cost management plan

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2.7 Scheduling

Also known as Project Time Management. What does Scheduling consist of?

Activity Definition – identifying the specific activities that must be performed to produce the various project deliverables

Activity sequencing – identifying and documenting interactivity dependencies.

Activity Duration Estimating – estimating the number of work periods which will be needed to complete individual activities

Schedule Development – analyzing activity sequences, activity durations and resource requirements to create the project schedule

Schedule control – controlling changes to the project schedule.

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2.7.1 Inputs to Activity Definition

Work Breakdown structure

Scope statement


Constraints

Assumptions

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2.7.2 Inputs to Activity Sequencing

Activity List

Product description

Mandatory dependencies

Discretionary dependencies

External dependencies

Constraints

Assumptions

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2.7.3 Inputs to Activity Duration Estimating

Activity List

Constraints

Assumptions

Resource requirements

Resource capabilities


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2.7.4 Project Network Diagrams - Homework

Find the Network, expected activity time and critical path

Modern PM software such as Microsoft Project can automatically generate CPM networks

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2.7.5 Inputs to Schedule Development

Project Network Diagram

Activity duration estimates

Resource requirements

Resource pool description

Calendars

Constraints

Assumptions

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2.7.6 Inputs to Schedule Control

Project Schedule

Performance reports

Change requests

Schedule management plan

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Develop a project schedule and project network diagram for the Project you have chosen for earlier exercises.

Develop a budget for your project keeping in mind the resource requirements and the Project schedule.

Hint: Use the Project Plan and WBS you developed earlier

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Sessions




Project Planning; Conflict and Negotiation; Budgeting and Cost Estimation; Scheduling;





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3.1 Resource Allocation

The Resource Allocation problem – The problem of managing the trade offs among time, performance and cost utilizing the available resources.

The extreme points of relationship between time use and resource use are:

– Time Limited – The project must be finished by a certain time, using as few resources as possible. It is time, not resource usage that is critical.

– Resource limited – The project must be finished as soon as possible, but without exceeding some specific level of resource usage or some general resource constraint.

The points between these two extremes represent time/resource use trade offs

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3.1.1 Critical Path Method - Definitions

Crashing definition – Taking action to decrease the total project duration after analyzing a number of alternatives to determine how to get the maximum duration compression for the least cost.

Critical Path definition – In a scheduling diagram, the series of activities which determines the earliest completion of projects.

Critical Path method definition - A technique used to predict project duration by analyzing which sequence of activities (or path) has the least amount of scheduling flexibility. Early dates are calculated by means of a forward pass using a specified start date. Late dates are calculated by means of a backward pass starting from a specified completion date.

Critical activities in real world projects typically constitute less than 10% of the total activities

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3.1.2 Resource loading and Resource levelling - definitions

Resource loading describes the amounts of individual resources an existing schedule requires during specific time periods. It gives the demands a project or a set of projects will make on a firm’s resources.

Resource levelling aims to minimize the period by period variations in resource loading by shifting tasks within allowances.

Homework - Solved problem on Page 443 of the text

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3.2 Monitoring and Information Systems

Planning, Monitoring, Controlling cycle – key things to be planned, monitored and controlled are time (schedule), cost (budget) and performance/quality (specifications)

PM must examine the project plan in order to extract performance, time and cost goals

These goals should relate in some fashion to each of the different levels of detail e.g. activities, tasks, work packages etc.

Data must be identified that measure achievement against these goals and mechanisms designed that gather and store such data.

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3.2.1 How should Data be Collected? Frequency counts – For example, number of missed milestones (project is delayed), number of

defects in the project per week etc. Reported as events per unit time or events as a percent of a standard number.

Raw Numbers – Actual project data such as dates, dollars spent, hours worked on activities, physical amount of resources used etc. These numbers are reported in a wide variety of ways but often as direct comparisons with an expected or standard number. Variances are reported either as the difference between actual and standard or as ratio of actual to standard.

Subjective numeric ratings – These numbers are subjective estimates usually of a quality such as risk made by knowledgeable individuals or groups.

Indicators – When the PM cannot measure some aspect of system performance directly, it may be possible to find an indirect measure or indicator. For example, the speed with which change orders are processed and changes are incorporated into the project is an indicator of team efficiency.

Verbal measures – Measures for such performance characteristics such as “quality of team member cooperation”, “morale of team members” or “quality of interaction with the client” take the form of verbal characterizations. They may sometimes be measured by surveys.

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3.2.2 Project Reporting

Communications Planning – determining the information and communications needs of the stakeholders: who needs what information, when will they need it, and how will it be given to them.

Information Distribution – making needed information available to project stakeholders in a timely manner.

Performance Reporting – collecting and disseminating performance information. This includes status reporting, progress measurement and forecasting.

Administrative Closure – generating, gathering and disseminating information to formalize phase or project completion.

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3.2.3 Common Reporting Problems

Too much detail – Unnecessary and too much detail both in the reports themselves and in the input being solicited from workers usually results in the reports not being read.

Poor interface between the Project information system and the parent system – The parent organization’s information system must serve as a definitional prototype for the project’s information system. Reports should be built from standard and system available data as much as possible.

Poor correspondence between the planning and the monitoring systems – If the monitoring system is not tracking information directly related to the projects’ plans, control is meaningless.

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3.2.4 Earned Value Analysis

An aggregate performance measure for measuring the overall performance of the project.Earned Value Analysis is important in PMI examinations but in actual practice used in highly technical organizations such as Airbus or Boeing.

Formulae:

EV – AC = CV (Cost Variance, Cost overrun is negative)

EV – PV = SV (Schedule Variance, Behind Schedule is negative)

ST – AT = TV (Time Variance, Delay is negative)

EV = Earned Value

AC = Actual Cost

PV = Planned Value

ST = Scheduled Time

AT = Time Variance

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3.3 Project Control

Fundamental objectives:

– The regulation of results through the alteration of activities

– The stewardship of organizational assets

Physical Asset Control – Project assets must be controlled

Human Resource Control - Controlling and maintaining the growth and development of project staff

Financial Resource Control – Project budget and capital investment control

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3.3.1 Types of Project Control Processes

Cybernetic Control – Automatic negative feedback system to prevent deviation from standard.

Go/No-go control – To determine if next activity can be started based on current information. Often represented by Traffic Lights.

Postcontrol - Also known as “lessons learned”. Also reported through project performance analysis of Milestones, checkpoints, budgets, Final report on project results and concludes with recommendations for performance and process improvement.

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3.3.2 Critical Ratio Control Charts

The Critical Ratio is made up of two parts : Ratio of actual progress to scheduled progress and the ratio of budgeted cost to actual cost:

Critical Ratio = (Actual Progress/Scheduled Progress) X (Budgeted Cost/Actual Cost)

A Critical Ratio of > 1 usually indicates no problems but a Critical Ratio < 1 usually predicts trouble in the project

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3.3.3 Formal Change Control System

To review all requested changes to the project (both content and procedures)

Identify all task impacts

Translate these impacts into project performance, cost and schedule

Evaluate the benefits and costs of the requested changes

Identify alternative changes that might accomplish the same ends

Accept or reject the requested changes

Communicate the changes to all concerned parties

Ensure that the changes are implemented properly

Prepare monthly reports that summarize all changes to date and their project impacts

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3.3.4 Implementation of Change Control Systems ***** All project contracts or agreements must include a description of how requests for a change in

the project’s plan, budget, schedule, and/or deliverables will be introduced and processed.

Once a project is approved, any change in the project will be in the form of a change order that will include a description of the agreed upon change together with any changes in the plan, budget, schedule and/or deliverables that result from the change. For any but the most minor changes, a risk identification and analysis study should be performed. In order to study the potential impact of change, a simulation study may be conducted.

Changes must be approved in writing by the clients agent as well as by an appropriate representative of senior management of the firm responsible for carrying out the project.

The project manager must be consulted on all desired changes prior to the preparation and approval of change order. The project manager’s approval is not required.

Once the change order has been completed and approved, the project master plan should be amended to reflect the change, and change order becomes a part of the master plan.

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3.3.5 Group Discussion

Homework – Airbus A380 – read up on what is the latest on Airbus A380

Each Group has developed the WBS, Project and Budget cost estimate

Class discussion on:

– How the Project Resources will be allocated

– How will the Project be controlled

– What type of Project Reports should be generated

– How will Project Change Control be implement

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Sessions




Project Planning; Conflict and Negotiation; Budgeting and Cost Estimation; Scheduling





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4.0 Risk Management Projects have uncertainty regarding project funding, the availability of necessary resources,

potential technical problems, etc.

Project Risk can be defined as any possible event that can negatively affect the viability of a project.

– Risk = (Probability of event) (Consequences of Event)

Risk Management is the art and science of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interest of its objectives.

Risk management consists of anticipating at the beginning of the project, unexpected situations that may arise that are beyond the project manager’s control.

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4.0.1 Risk Management - Process Risk Management comprises of four distinct process:

– Risk Identification – process of determining the specific risk factors that can reasonably be expected to affect your project.

– Analysis of probability and consequences – the potential impact of these risk factors, determined by how likely they are to occur and the effect they would have on the project if they did occur.

– Risk mitigation strategies – steps taken to minimize the potential impact of those risk factors deemed sufficiently threatening to the project.

– Control and documentation – creating a knowledge base for future projects based on lessons learned.

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4.0.2 Risk Identification Financial risk

Technical risk

Commercial risk

Execution risk

Contractual or legal risk

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4.0.3 Analysis of probability and consequences Reasonable estimate of the likelihood of each of these risk events occurring

Probability combined with consequences provides a sense of overall project risk

Risks classified as having both high likelihood of occurring (probability) and high potential for harming the project (impact) are most relevant to project planning

Risks that fall into this category require detailed contingency planning in order to adequately protect the project’s development cycle.

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4.0.4 Risk mitigation strategies Accept Risk – in situations where we either have no alternative or we consider the risk small

enough to be acceptable.

Minimize risk – lower exposure to risk through partnerships or joint ventures

Share risk – with stakeholders or other organizations

Transfer risk – to other project stakeholders

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4.1 Project Auditing The project audit is a thorough examination of the management of a project, its methodology

and procedures, its records, its properties, its budgets and expenditures, and its degree of completion

The minimum six parts of a Project Audit Report:

– Current Status of the project: Does the work actually completed match the planned level of completion?

– Future status: Are significant schedule changes likely? What are the likely changes?

– Status of crucial tasks: What progress has been made on tasks that could decide the success or failure of the project?

– Risk assessment: What is the potential for project failure or monetary loss?

– Information pertinent to other projects: What lessons learned from the project being audited can be applied to other projects being undertaken by the organization?

– Conclusion: What assumptions or limitations affect the data in the audit?

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4.2 The Project Audit Life Cycle

Project Audit Initiation: Starting the audit process, defining the purpose and scope of the audit, gathering information to determine proper audit methodology.

Project Baseline Definition: Identifying performance areas to be evaluated, determining standards for each area and determining management performance expectations.

Establishing an Audit database: Note: The required database for project audits should be specified in the project plan.

Preliminary Analysis of the project: The auditor must analyze the data and then present the analysis to Senior managers. The auditors duty is to brief the PM on all findings and judgments before releasing the audit reports.

Audit Report Preparation: The audit report as discussed in last slide.

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4.3 Project Termination

Why is Project Termination important?

How are projects typically terminated?

– Termination by Extinction – normal completion of the project

– Termination by Addition – when projects are spun off as independent new sub projects

– Termination by Integration – When projects are successfully completed, the resources and project output is returned to the parent organization.

– Termination by Starvation – Project closes on its own due to lack of funding, disinterested Senior Management etc.

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4.4 How should Project Termination be handled?

Ensure completion of the work, including tasks performed by subcontractors.

Notify the client of project completion and ensure that delivery is accomplished. Acceptance of the project must be acknowledged by the client.

Ensure that ALL documentation is complete including project Final Report.

Clear for final billings and oversee preparation of final invoices sent to the client.

Redistribute personnel, materials, equipment, and any other resources to the appropriate places.

Clear project with legal counsel or consultant. File for patents and record NDAs.

Ascertain product support requirements, decide how such support will be delivered and assign responsibility.

Oversee the closing of the project’s books.

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4.5 Why do Projects fail?

A Project based organization is not required.

Insufficient support from Senior Management.

Appointing the wrong person as Project Manager.

Poor planning.

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Sessions

Session 5 : The Future of Project Management (Extra)

Types of Roles; Portfolio Management; Knowledge Management; Oral Presentations

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5.1 Current Project Management methodologies

Project Management Institute (PMI) – www.pmi.org

PRINCE (PRojects IN Controlled Environments) www.prince2.org.uk

.

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5.2 Tool Set

What are some of the tools used in Project management?

Microsoft Project (universal)

Planview (Portfolio Management Tool)

Project Work Bench (PWB)

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5.2 Project Portfolio Management ****

Project portfolio management groups projects so they can be managed as a portfolio, much as an investor would manage his stocks, bonds and mutual funds

It gives executives a bird's-eye view of projects so they can spot redundancies, spread resources appropriately and keep close tabs on progress

Previously, projects were approved and then managed independently. They were evaluated as a whole at the executive level only when it came time to put together annual reports. A company needs that overall view so it can keep an eye on projects in real time to make sure that all of them are working together to meet core business goals

Focus on projects as a portfolio of investments - how much a project will cost, its anticipated risks and returns in relation to other projects. This way, entire portfolios can be managed to produce the highest returns based on current conditions

Managed by a Portfolio Manager or Program Manager

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5.3 Knowledge Management Anecdotes

”I call my field knowledge management but you can’t really

manage knowledge. What a company can do is manage the

environment that optimizes knowledge.”

(Larry Prusak, Managing Partner, IBM Global Services)

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5.4 What is Knowledge Management?

Knowledge is the information that adds value and helps make the right choices

Knowledge Management is the management of this added value information.

We define added value information as industry info, competitor info, IT-info, experience, individual and departmental specific information

Wisdom

Knowledge

Information

Data Add context

Add understanding

Add judgment (values)

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5.5 Types of Knowledge

Explicit:

Formal and systematic

Knowledge of rationality (mind)

Can be expressed in words and numbers

Easily communicated and shared in form of hard data,

formula, codified procedures, or universal principles

Can be expressed in computer code, chemical formula, sets of

general principles

Tacit:

Insights, intuitions, and hunches

Knowledge of experience

Not easily visible and expressible numbers

Highly personal, hard to formalize, difficult to communicate or share with others

Rooted in individual’s actions and experiences, including ideals, values, or emotions

Managed by toolsManaged by Mentoring, Q&A and practises

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5.6 Knowledge management implementation strategy

Are the people in the organization enabled and motivated to share knowledge? Is the management exemplary in sharing knowledge? Do the experts have the feeling of transparent decisions?

How does the organization support their knowledge workers with IT-Infrastructure?

What is measured? Does it really match to the managements expectations?

TECHNOLOGY

MGT systemsCultureProcesses

Are the implemented processes supporting the accumulation and preparation of data as well as the distribution and use of explicit knowledge?

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Best Wishes

Many thanks for your participation and Good Luck !

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