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1
Fundamentals of Project Management
Dr. George F. JergeasProject Management
SpecializationUniversity of Calgary
2
ScheduleDay 1 Game Introduction
PMI stuff Step 1 - Define phase Step 2 - Plan phase
Sequence activities
Time estimate
Day 2 Cost estimate
Step 3 - Organize phase
Select team and PM Step 4 - Control
phase Step 5 - Close out
phase
3
5 Step Project ManagementPLANNING IMPLEMENTATION
DEFINE
Identifyproject activities
Estimate time and cost
Sequence Project Activities
Identify Critical Activities
Write Project Proposal
ORGANIZE CONTROL PLAN CLOSE
State the State the ProblemProblem
Identify Identify ProjectProjectGoalsGoals
List theList theObjectivesObjectives
Determine Determine PreliminaryPreliminaryResourcesResources
Identify Identify AssumptionsAssumptions and Risksand Risks
Determine Personnel Needs
Recruit Project MangerRecruitProject Team
Organize Project Team
Assign Work Packages
Define Management Style
Establish Control ToolsPrepare Status Reports
Review ProjectSchedule
Issue Change Orders
Obtain ClientAcceptance
Install Deliverables
Document theProject
Issue Final Report
Conduct Post-ImplementationAudit
Project overview WBS Recruit Criteria Variance Reports Final Report Project network Define Work packages Status Reports Audit Reports Critical Path Assign Work Packages Staff Allocation Reports
4
Step 2 – Plan the project: Basics of Cost Estimating
5
Agenda
Introduction What is an estimate Estimating process What constitutes a good estimate Basic types of cost estimates
Order of Magnitudes Definitive Estimates
6
Introduction Cost estimates
Key to successfully conceived, managed and completed projects
Not limited to construction An approximation procedure Mistakes can be very costly!
7
What is a Cost Estimate? AACE Definition
“A compilation of all the costs of the elements of a project or effort included within an agreed upon scope”
To the contractor “To forecast cost required to complete a project in
accordance with the contract, plans and specifications”
To the owner cost includes: Administering the contract Contractor's charges, consultants and suppliers fees Price of land, financing and operating costs
8
What Constitutes a Good Estimate? A clear, sound basis An agreed upon realistic execution
plan A sound plan for estimating
development Good estimating methods and data
base Well documented basis of estimate Good experienced estimator
9
Order - of - Magnitude Estimates A quick method of determining an
approximate probable cost of a project due to the following specific situations: Time constraints High cost of a detailed estimate
10
Order - of - Magnitude Estimates Prepared without detailed engineering
data Square feet of floor area Cubic feet of volume Plant capacity for input and output Km of road surface type
Use: In feasibility studies of a project and screening several types of alternatives or proposals
Accuracy: +/- 30%
11
Definitive Estimates
Prepared from very defined engineering data
Requires as a minimum: Plans and elevations Piping and instrument diagrams Single line electrical diagrams Equipment data sheets and quotations Architectural and structural details Soil data and sketches of major foundations A complete set of specifications
Accuracy: +/- 5%
12
Components of a Cost Estimate Direct Cost
Labor: actual amount paid to field personnel
Materials: essential to constructing and operating a facility including equipment installed permanently
Equipment: used to perform a contract Subcontracts
13
Components of a Cost Estimate Indirect Costs
Overhead Home office overhead Job site overhead (general conditions)
Taxes Risks
Contingency Profit
Escalation
14
Site Overhead (General Conditions) Cost of items that cannot be charged to
a specific element of work: Supervision Temporary facilities Office trailers Toilets Utilities Permits Photographs Clean-up
15
Profit Is the amount of money included by the
contractor in its price as compensation for risk, effort and endeavor in undertaking a project. It is the money left after a contractor has met
all costs (both indirect and direct). Profit amount included is very subjective and
depends on: Size of project Extent of risk involved Need for work Extent of competition
16
Contingency An amount added to cover any
additional costs that may occur during construction. To determine the amount of
contingencies desirable, an estimator should rely on:
Personal judgment, or Through statistical analysis of past
project costs
17
Estimated Conference Planning BudgetCONFERENCE PLANNING
$243,325
Program
$41,100
Site
$170,425
Marketing
$31,800
Theme
$600
Materials
$13,300
Speakers
$27,200
Date
$1,000
Location
$169,425
Lists
$2,000
Brochure
$29,800
Registration
3 conf calls with pgm comm
Travel/expenses for 16 speakers @ $500 per speaker
Deposit3 site visits @ $800/visit food @$50 per person/day for 3 days for 1100 meeting rooms @ $225/day/room for 3 days for 3 rooms
25,000 labels @ $80/1000
Obtain Speaker Materials $800
Prepare Conference Notebook $12,500
Design Brochure $12,800
Mail Brochure $17,000
Edit/format @ $50/speaker
1100 binders @ $5/binder photocopy materials 350,000 pages @ $0.02/page
Layout: 16 pages @ $50/page
Printing: 30,000 copies @ $0.40/copy
25,000 pieces @ $0.68/piece
18
PM ANNUAL CONFERENCE REVENUE & EXPENSE BUDGETRevenuesRegistrations - 1100 @ $335……………………………………………………………..$368,500
ExpensesSalary
Graphic artist………………………………………………………………………………………………...800Total Salary……………………………………………………………………………………………..800Non-Salary
Travel……………………………………………………………………………………………………...21,600Printing…………………………………………………………………………………………………….19,000Postage…………………………………………………………………………………………………...17,000Mailing Lists……………………………………………………………………………………………….2,000Telephone…………………………………………………………………………………………………….600Supplies…………………………………………………………………………………………………….6,300Speaker Honoraria……………………………………………………………………………………….8,000Site Deposit………………………………………………………………………………………………..1,000Food………………………………………………………………………………………………………165,000Meeting Room Rental…………………………………………………………………………………..2,025
Total Non-Salary………………………………………………………………………………..242,525Total Expenses………………………………………………………………………………………$243,325Gross Profit…………………………………………………………………………………………$125,175Indirect (@ 40% of Total Expenses)……………………………………………………$97,330Net Profit………………………………………………………………………………………………$27,845
19
Estimating Issues Underestimating
Don’t be overly optimistic about time and costs
Cause problems in the long run and produce unsatisfactory product
Overestimating Danger that project will not get approval Over compensating for unexpected
delays/problems
20
Estimating Issues Use your WBS: Define the lowest level
of activities to estimate the time and dollars required
Check activities costs on previous projects
Take into account circumstances during implementation, weather, transportation costs, availability of materials and labour etc.
21
Summary There are different types of estimates Each type used for specific purpose
but no substitute of definitive estimates
An estimate information data base is essential
Good estimates come from looking at the details
22
Important Points Order-of magnitude estimating important
to owner: Owner examines the estimate before
continuing with further development of project.
Liability issue: based on the information contained in your estimate, major decisions are often made by the owner
This places a responsibility and liability on you as an estimator
23
Important Points Acquaint yourself with
terminology, elements of cost which include labor, equipment and material costs
Develop habits of thoroughly reviewing contract documents
Remember to document and maintain the data base
24
Step 2 - Plan the Project: Writing a Project Proposal
25
Agenda Writing a proposal The purpose Format
Executive summary Background Project manager Activity Schedule Budget/project cost
26
5 Phase Project Management PLANNING IMPLEMENTATION
DEFINE
Identifyproject activities
Estimate time and cost
Sequence Project Activities
Identify Critical activities
Write Write Project Project ProposalProposal
ORGANIZE PLAN CLOSE
State the Problem
Identify ProjectGoals
List theObjectives
Determine PreliminaryResources
Identify Assumptionsand Risks
Determine Personnel Needs
Recruit Project Manger
RecruitProject Team
OrganiseProject Team
Assign Work Packages
DefineManagementStyle
Establish Control Tools
Prepare Status Reports
Review ProjectSchedule
Issue Change Orders
Obtain ClientAcceptance
Install Deliverables
Document the Project
Issue Final Report
Conduct Post-ImplementationAudit
CONTROL
27
Writing a Project Proposal Represents the transition from the
planning (define, plan) to implementation (organising, control, close)
Used as an information source to decide whether the project should proceed to the implementation phase
Different terminology used DBM, Brief, Scope Definition Statement
28
Purpose The project proposal provides: A statement of the need, the approach
being taken and the expected benefits Description of project activities,
timelines and resources required Documentation for project control Briefing document for new team
members and others in the organisation
29
Purpose Tool for decision making,
managing, controlling, training and reporting
Written for: Senior management Project team Other managers who are indirectly
involved Consultants
30
The remainder of this section should be reviewed by attendees.
Please go to slide #43
31
Format Executive summary States the fundamental nature of proposal
and benefits that are expected Should deal with:
Nature and approach to technical problem Plan for implementation of project if approved Plan for logistic support and administration Description of team that will complete the work
and their experiences on other projects
32
Technical Approach
General description of the problem to be undertaken
Organisational approach Provides sufficient detail for the
reader to understand what is intended
Method for resolving critical problems outlined
33
Technical Approach
Proposal to meet clients requirements identified
Procedures for testing and inspections to assure performance, quality, reliability and compliance
34
Implementation Plan
Contains estimate of time, cost and materials to be used
Lists sub-systems of project in cost estimate
Estimates of personnel, equipment and resources are provided by period
Major milestones are indicated
35
Logistics Plan
Description of how skills, facilities, equipment will be supplied
Administration strategy Nature and timing of reports
budget, progress, evaluations and audits
Handling and costing of change orders
36
Past Experiences
How the proposed team has performed?
Who the key personnel are and their qualifications?
Keep in mind - the purpose of the proposal is to convince the funder that the project should be supported
37
Format: Example Proposal components Project name Project manager responsible Activities Schedule Budget
38
Format Project Name Label to identify the project Should reflect uniqueness of the project Project Manager Person responsible for project Must be able to manage budgets,
schedules, team and meet specifications
39
Format Activity Identified by number, description
and name Method for team to refer to an
activity Should be short, but reflect task to
be undertaken Description states in precise terms
the work to be done
40
Format Schedule Based on the analysis of the
network Provides anticipated start and
finish dates. Dates may change
41
Format Budget Information provided at an aggregated
level Details attached if requested by senior
management Includes:
Labour cost estimates Financing costs Materials and equipment costs (See Figures )
42
Project Definition Report
PROJECT DEFINITION Project Name Project Manager DateActivity Schedule Budget
No. Name Description Start End Money Labor Matis Time(hrs)
Manager
Prepared by Date Approved by Date Sheet __of__
43
Any Questions?
44
Step 3: Organize the Project
Implement the Project and Organize the Team
45
Agenda Organize the team Determine the personnel
requirement and skills Select the Project Manager Select the Project Team Characteristics of PM and team What makes teams work
46
5 Step Project ManagementPLANNING IMPLEMENTATION
DEFINE
Identifyproject activities
Estimate time and cost
Sequence Project Activities
Identify Critical activities
Write Project Proposal
ORGANIZE PLAN CLOSE
State the Problem
Identify ProjectGoals
List theObjectives
Determine PreliminaryResources
Identify Assumptionsand Risks
Determine Determine Personnel Personnel NeedsNeeds
Recruit Recruit Project MangerProject Manger
RecruitRecruitProject Project TeamTeam
OrganiseOrganiseProject TeamProject Team
Assign Work Assign Work PackagesPackages
DefineManagementStyle
Establish Control Tools
Prepare Status Reports
Review ProjectSchedule
Issue Change Orders
CONTROL
Obtain ClientAcceptance
Install Deliverables
Document the Project
Issue Final Report
Conduct Post-ImplementationAudit
Obtain Client
Acceptance
Install Deliverables
Document the Project
Issue Final Report
Conduct Post-Implementation
Audit
CLOSE
47
Implementation Phase Start once the project has been approved Project team for the implementation is
formed/procured In-house and external Procurement procedures
Work package assignments can commence Deliverables are agreed upon and clearly
understood Control systems are established
Time, Quality, Cost, Safety ….
48
Organising the Project Team Projects are only as successful as
the project manager and team who implements them
Building an effective team takes a lot of work
Must consider more than just a person’s technical skills
49
Organising the Project Team The selection of team members is
based on skills, availability and personality
There needs to be a commitment and chemistry among the team members
Team building is not a perfect art, there is always the risk of conflict
50
Organising the Project Team Organized and located to facilitates
open continuous communication This does not mean they have to be
physically located together
Team members may be reallocated for the duration of the project or remain in their function areas
51
Organising the Project Team Large projects
Dedicated core team Structured More defined roles Need for open and continuous
communication lines Self contained
52
Organising the Project Team Small projects
Part-time commitment from team members
Team members remain in their functional units
Conflicting priorities/demands exist Conflicts may arise from having more
than one boss or more than one team involvement
53
Organising the Project Team Be sure all parties understand the
need to: Build the team, What the priorities are within in the
organisation and Their assistance is appreciated
Project manager to ensure that the cross functional relationships are maintained and supported
54
Characteristics of an Effective Project Manager
Understands purpose of the project
Has the necessary background and experience
Effective leader with proven managerial ability
55
Characteristics of an Effective Project Manager Has credibility with team and client Sensitive to project and corporate
politics Excellent communication skills Consistent behaviour Facilitator rather than a dictator
56
Selection of Project Manager Key position on the project
Selection of appropriate individual is essential to success of the project
Selection criteria should be established based on the skills required to carry out project
57
Project Manager Selection Criteria
1. Background and Experience Should be consistent with the nature
and needs of the project Education should be compatible with
nature and expectations of the project
Look for a individual with a mix of conceptual, analytical, operational and practical experience
58
Project Manager Selection Criteria
2. Leadership Ability to design, co-ordinate, control
and implement project plan Stay the course until completion Ability to see the big picture and
understand the details
59
Project Manager Selection Criteria
3. Technical expertise Ability to direct, evaluate, and make
decisions on technical alternatives Does not and can’t be an expert in all
areas of the project Should have expertise in project
management, team management and training
60
Project Manager Selection Criteria
4. Interpersonal skills Should be able to:
Motivate, inspire, and coach Actively listen, give and receive feedback Empathise, relate feelings, needs and
concerns in a positive manner Prevent and resolve conflicts, negotiate Keep team, senior management and
stakeholders informed through effective communication channels
61
Project Manager Selection Criteria
5. Proven Managerial Ability Good track record, excellent indicator of the
future Knowledge of the organisation and its
operation Ability to effectively interface with all levels
of the organisation Ability to link project goals to corporate
mission and goals
62
Selecting the Team Selection of team members
depends on a number of factors: Nature of the technical work to be
done Level and type of expertise required
at each phase of the project Availability of staff in the organisation
and reporting relationships
63
Team Selection Criteria Similar to those of the project
manager More emphasis on the technical
skills Interpersonal skills essential Ability to function as a team
member with shared goals and objectives (us instead of me)
64
Effective Team Characteristics Commitment to the project goals and
completion Ability to communicate, share responsibility
and power Flexible willing to change or try some new
methods Technically competent Willing to:
Admit mistakes Admit not have all the answers Accept feedback
65
Effective Team Characteristics Politically astute Team players Creative and open to suggestions High self esteem, can do attitude Willing to work for more than one
boss, across formal structure and authority system
Results oriented
66
What Makes Teams WorkSuccessful Projects: The team has fun Have the support of senior
management Everyone understands the reason for
the project Conflicts are addressed and dealt
with The entire organisation is committed
67
What Makes Teams Work
Successful projects: Team understands the
organisation’s mission and how the project fits within that mission
Team understands what is to be achieved and when it is achieved
Trust and communication
68
Step 4 - Control the Project
69
5 Step Project ManagementPLANNING IMPLEMENTATION
DEFINE
Identifyproject activities
Estimate time and cost
Sequence Project Activities
Identify Critical activities
Write Project Proposal
ORGANIZE PLAN CLOSE
State the Problem
Identify ProjectGoals
List theObjectives
Determine PreliminaryResources
Identify Assumptionsand Risks
Determine Determine Personnel Personnel NeedsNeeds
Recruit Recruit Project MangerProject Manger
RecruitRecruitProject TeamProject Team
OrganiseOrganiseProject TeamProject Team
Assign Work Assign Work PackagesPackages
DefineManagementStyleEstablish Control Tools
Prepare Status Reports
Review ProjectSchedule
Issue Change Orders
CONTROL
Obtain ClientAcceptance
Install Deliverables
Document the Project
Issue Final Report
Conduct Post-ImplementationAudit
Obtain Client
Acceptance
Install Deliverables
Document the Project
Issue Final Report
Conduct Post-Implementation
Audit
CLOSE
70
Project Control Schedule control
Cost control
Team performance evaluation
Change control
71
Schedule Control
72
Incorporating Project Changes into the Schedule When a change is requested or needed,
you should: Estimate the impact on the schedule by
incorporating any additional tasks and revised duration estimates
Add activities that were overlooked when the original plan was developed
Add new activities due to unanticipated events Obtain client approval before proceeding A new baseline plan is established and used
as the benchmark for comparison
73
Approaches to Schedule ControlSchedule control involves four steps: Analyse the schedule to determine
which areas may need corrective action Decide what specific corrective actions
should be taken Revisit the plan to incorporate the
chosen corrective actions Recalculate the schedule to evaluate the
effects of the planned corrective actions
74
Approaches to Schedule Control If the planned corrective actions do
not result in an acceptable schedule, repeat the previous steps
75
Approaches to Schedule Control Each time a schedule is recalculated:
Identify the critical path Identify any activities that have a negative slack Compare paths where slippage have occurred
(Slack got worse) with the previously calculated schedule
Apply acceleration to the paths with negative slack:
The most negative slack should be given top priority Focus on activities that are in progress or to be started
in the immediate future Focus on activities that have long duration estimates
76
AccelerationTo reduce schedule: Apply more resources to speed up an activity
Add more people Increase hours per day or increase days per week Assign person(s) with greater expertise or more
experience Reduce the scope or eliminate the activity if
possible Increase productivity through improved
methods or technology
77
Acceleration Trade-off in the form of an increase in
costs or a reduction in scope This could jeopardise elements of the overall
project objective: scope, budget, schedule, and/or quality
There may be a dispute over who should absorb any increased cost to accelerate
Bonus provision if project is completed early Liquidated damages
Project meetings are a good forum for addressing schedule control issues
78
Evaluation of Delays in the Work
Questions to determine that a delay in the work is compensable: Was the cause of the delay beyond the
contractor’s control? Did the contractor fail to take normal
precautions? Was the contractor ready and able to
work?
79
Evaluation of Delays in the Work
Did the contractor submit a detailed schedule projecting project completion within the allotted time? Was the schedule updated regularly? Did the updated schedule justify time extension?
Did this schedule contain a critical path analysis or equivalent?
Has the contractor maintained sufficient forces in those operations along the critical path where needed to meet target dates?
80
Evaluation of Delays in the Work
How have causes, other than normal weather, beyond the control and without the fault or negligence of the contractor affected target dates along the critical path?
Has the contractor proven “unusually severe weather” with such information as climatological data, return probability of severe storms, or flood depth data?
81
Evaluation of Delays in the Work
Did the weather phenomenon actually delay operations along the critical path or in secondary operations?
Was the contractor shut down for other reasons?
82
Cost Control
83
Cost Control System Any cost control system should
enable a project manager to observe current perfomance (productivity) levels, compare them with budget levels and institute corrective actions to keep productivity, and ultimately costs, within acceptable range
84
Elements of Effective Cost Control System Observation Comparison of observation with budget Corrective action to take if necessary Can also serve as:
A basis for a productivity improvement program
A measure of productivity loss caused by adverse factors and changed conditions such as winter work, acceleration, design changes, etc.
85
Cost Control System Compares actual man-hours
expended to earned hours Actual work hours come from
contractor’s daily time sheets Earned hours are calculated by
multiplying the completed quantities during a period by estimated man-hours per unit quantity
See figure following as an example
86
Labour Productivity Report
(1) Cost Code
(2)Code Description
(3) Estimated Quantity
m *m
(4) Estimated Man-hours per unit Quantity
(5) Budget Man-hours
(4 x 3)
(6) Actual hours
(7) Completed Quantity
(8) Earned Man-hours
(4 x 7)
(9) Variance
(8 - 6)
(10) Productivity
(6/8)
(11) Forecast to Complete (5-8) x 10
100Form walls utility shaft 4,000 0.5 hr/m*m 2,000 1,800 1,500 m 750 -1050 2.4 3,000
200
Form structural
slabs 1,500 0.6 hr/m*m 900 230 500 300 70 0.77 462
300Exterior
wall form 750 2 hr/m*m 1,500 900 400 800 -100 1.13 791
400Interior wall
form 750 1.9hr/m*m 1,425 500 300 570 70 0.88 752
500Wall infills and form 600 0.64 hr/m*m 384 250 100 64 -186 3.91 1,251
600Scaffold
slabs 770 1.3 hr/m*m 1001 800 650 845 45 0.95 148
700Install void
form 100 2.0 hr/m*m 200 - - - - - 200TOTAL 7,410 4,480 3,329 -1,151 6,604
Actual hours expended…………………………..4,480.0Add Forecast to complete hours…………………6,604.0Revised prediction……………………………….11,084.0Less budgeted man-hours…………………………7,410.0Forecasted overrun………………………………..3,674.0 Man-hours
87
Money
Delay
Budget
Time Now
Earned Value Time
Actual
Expenditure
Cost overrun
88
Budget
Time
Actual
Earned
Value
Ahead of
schedule
Making Money
Money
89
ACTIVITY VARIANCE REPORT Activity Name Date___Cost ___Labor ___Time ___Other
Task Budget This Period Budget To DateNum
berName Responsibility Plan Actual Var Plan Actual Var
TotalsPrepared by Date Approved by Date Sheet __of__
Example: Activity Variance Report
90
Conclusion You can draw immediate attention to
significant deviations from what was planned
Indicate what corrective action is necessary and by whom
Dependent on accurate reporting and
correct allocation of hours expended
91
Performance Evaluation
92
Joint Evaluation Progress meeting Forum for identifying a problem Specific criteria to evaluate effectiveness
Teamwork Timely problem resolution
Periodic survey Comparisons of survey responses identify
areas of improvement and potential problems
93
Measuring Success Met target price, quality and
schedule Goals achieved Benchmarking Positive client feedback Great safety record Disputes resolved effectively
94
Joint Evaluation1. Communications between the owner/contractor personnel are…………
2. Top management support of partnering process is………………………
3. Problems, issues or concerns are……
4. Cooperation between owner and contractor personnel is……………………
5. Responses to problems, issues, or concerns frequently become…………
1 2 3 4 5Difficult, guarded
Easy, open, up front
1 2 3 4 5Not evidentInconsistent
Obvious, consistent
1 2 3 4 5IgnoredAttacked promptly
1 2 3 4 5Cool, removed,
detached,
Genuine, unreserved, complete
1 2 3 4 5Personal issues
Treated as project problems
95
Change Control:Changes and Extra Work
96
This Session Definition Impact costs Basic principles in handling change
orders Types of changes Elements of a change order Recommendations for good practice
97
Change Order Is a written agreement to modify, add to, or
otherwise alter the work from that set forth in the contract documents at the time of opening bids, provided that such alteration can be considered to be within the scope of the original project; otherwise, a contract modification may be required
It is the only legal means available to change the contract provisions after the award of contract
98
Change Order Could be addition to or deletion from the
work Changes in the method of execution or manner
of work performance Change in owner-furnished materials or facilities Change in the contract time or order of the work Correct errors in the plans or specifications Direct results of contractor suggestions that are
approved by the owner and its agents
99
Change Order Changes may involve
A price change in the contractor’s favor
Cash credit to the owner No price change at all
Make sure payment covers Impact costs & Loss of productivity Time extensions
100
Basic Principles in Handling Change Orders No work should be included beyond the
scope of the base contract The identity of the individuals
authorized to request and approve change orders should be established early
During the start up meeting the change order handling procedures must be established/discussed
101
Basic Principles in Handling Change Orders All changes in the work must be
authorized in writing prior to the execution
The scope of a change order must be clear
A request for a change proposal should contain enough information to enable the contractor to make a realistic estimate
102
Basic Principles in Handling Change Orders The contractor should submit its proposal
to execute a change order as soon as possible after receiving the request
The owner’s approval or rejection should follow as soon as possible
The Change Order should be fair. It should recognize the contractor’s right to include: Overhead and profit percentages Compensation for legitimate time-delay claims Compensation for legitimate impact costs if
any
103
Types of Changes Directed changes
Owner directs the contractor to perform work that differs from that specified in the contract
Easy to identify and mutually recognized Disagreements tend to center on
questions of financial compensation and the effect of change on the schedule
104
Types of Changes Constructive Changes
Is an informal act authorizing or directing a modification to the contract caused by an act or failure to act
Defective plans and specifications Engineer’s interpretation Higher standard of performance than specified Improper inspection and rejection Change in method of performance Owner nondisclosure Impossibility/impracticability of performance
105
Types of Changes Constructive Changes
Must be claimed in writing within time specified in the contract
Major source of disputes
106
Change Order Form Description of change Reason for change Change in contract price Change to contract time Statement that secondary impacts
are included Approvals by owner’s and
contractors representatives
107
Sample of a Change OrderPROJECT TITLEPROJECT NO. CONTRACT NO. CONTRACT DATECONTRACTORThe following changes are hereby made to the Contract Documents:Construction of access bridge abutment No. 1 drainage system; andReset two penstock bearing plates. All in accordance with revised DWG S-17209Revision 4, dated August 29, 2000 JUSTIFICATION:Unforeseen soil conditionsCHANGE TO CONTRACT PRICEOriginal Contract Price: $Current contract price, as adjusted by previous change orders: $The Contract Price due to this Change Order will be (increased) (decreased) by: $The new Contract Price due to this Change Order will be: $CHANGE TO CONTRACT TIMEThe Contract Time will be (increased) (decreased)by calendar days The date for completion of all work under the contract will be Requested by datedRecommended by datedOrdered by datedAccepted by dated
108
Recommendation for Good Practice Percentages for overhead and profit
to be applied Determination of the individual
representative of the owner who is authorized to approve change orders
Procedures to be followed in the submittal of change order proposals
Change order forms to be used
109
Recommendation for Good Practice Time extensions required, if any The detail required of contractors when
submitting change order proposals - Will a complete breakdown of all costs be
required? Brief description - Descriptive drawings
Overtime necessary due to change orders - consideration of decreased productivity
Responsibility for record drawings brought about due to the change orders
110
Dealing with Disputes: Keys to Project Control
111
Agenda Causes Obstacles to resolution Successful settlement
112
Causes of Disputes Design changes, errors/omissions
and extras Late owner-supplied equipment Lack of co-ordination Changed soil/site conditions Access to site
113
Causes of Disputes Delays and acceleration Insufficient bid preparation time Inadequate bid information Underestimation by contractors Inadequate management
114
Resolving Disputes Face to face by parties themselves
By appointing a mutually acceptable third party
By accepting the jurisdiction of the
courts
115
Obstacle to Resolution Owner’s bias
Contractor’s bias
Total cost claims
116
Successful Settlement Get the facts
Keep good records Know your contract Preserve your rights
Show: Cause-Effect-Entitlement-Quantification
117
Settlement of Disputes The following options are available: Negotiation Mediation Dispute Resolution Board Mini-trial Arbitration Litigation
118
Mediation Voluntary Non-binding Economical Assist negotiation
119
Arbitration Binding 1 or 3 arbitrators Selection of arbitrators
Each party selects one arbitrator Both select a chairperson
Could be expensive
120
Dispute Resolution Board DRB consists of three members
and is established at the beginning of project
Non-binding
121
Mini-trial Presentation of both sides’
arguments before an advisory panel and executives of both sides. May include a judge
Predict the likely outcome and the
strength and weakness of the case
Voluntary and non-binding
122
Litigation Adversarial Costly Voltaire: “I have only been ruined
twice in my life. The first time was when I lost a lawsuit: the second, when I won one!”
123
Problem Resolution Lowest level with time limit
Escalated to the next level of management
No action is not an option
124
Problem Resolution
Stage One
Problem becomesapparent
Solution to problemoffered by those whoare directly involvedwith it.
If problem notresolved, go to stagetwo.
If solution agreed, donot go to stage two. Ifchanges affect otherproject parties, recordthem onto a proformafor circulation.
Start
Stage Two
Problem discussed atprogress meeting.
Solution to problemoffered by projectteam.
If solution to problemcannot be agreed atprogress meting, goto stage three.
If solution agreed, donot go to stage three.Solution to problemrecorded in meetingminutes.
Stage Three
A resolutioncommitteecomprising arepresentative fromeach of the projectparties is formed.
Problem resolutionmeeting called forcommittee.
Mutual way forwardfor project agreed byresolution committee.
Statement of wayforward recorded andissued.
Finish FinishFinish
If any projectparty is notcontent withthe wayforwardagreed by theresolutioncommitteethen they maytake normalrecoursethrough thecontract
125
Problem Resolution Systematic approach Seek solutions Increased and higher quality
discussion Win-win solutions Equality of rights among parties Agree on no adversarial relations
126
Problem Resolution: Negotiation Separate the people from the
problem Focus on interests, not positions Invent options for mutual gain When possible, use objective
criteria
127
Step 5 – Close the Project
128
Agenda
Purpose Prerequisite activities Project termination process Final project report Rewarding successes and learning
from failures
129
DEFINE
Identifyproject activities
Estimate time and cost
Sequence Project Activities
Identify Critical activities
Write Project Proposal
ORGANIZE CONTROL PLAN CLOSE
State the Problem
Identify ProjectGoals
List theObjectives
Determine PreliminaryResources
Identify Assumptionsand Risks
Determine Personnel Needs
Recruit Project Manger
RecruitProject Team
OrganiseProject Team
Assign Work Packages
DefineManagementStyle
Establish Control Tools
Prepare Status Reports
Review ProjectSchedule
Issue Change Orders
Obtain Obtain ClientClientAcceptanceAcceptance
Install Install DeliverablesDeliverables
Document Document the Projectthe Project
Issue Final Issue Final ReportReport
Conduct Post-Conduct Post-ImplementationImplementationAuditAudit
Project overview WEBS Recruit Criteria Variance Reports Final Report Project network Define Work packages Status Reports Audit Reports Critical Path Assign Work Packages Staff Allocation Reports
5 Phase Project Management PLANNING IMPLEMENTATION
130
Purpose To ensure all deliverables are installed
or implemented according to time, budget and specification
131
Purpose To ensure that the works have
been completed as specified, and that all facilities work properly
To provide a record of the actual execution, together with operating instructions
To train staff in the use of the works
132
Purpose To formally close out contractual relationships
Obtain sign off on final report to show contracted deliverables have been successfully implemented
To formally terminate project team assignments To ensure adequate project
documentation and baseline information for changes that may need to occur in the future
To obtain client’s acceptance of project work and deliverables
133
Activities Test the engineering performance Search for non-operational defects, e. g. those
that affect only the appearance Inspect the facilities thoroughly and have defects
remedied Prepare as-built drawings and record Start up, test and adjust all services Prepare operational instructions and maintenance
manuals Train staff Monitor performance of work against original
requirements
134
Deficiency Lists These are lists of required repairs or
completion of deficient/incomplete items.
Schedule for completion of deficiencies. Need a sign-off procedure. Need a handover process to turn
project over to Owner in organized way.
135
Records During implementation, difficulties
may arise which result in changes to the original design. Records of these changes will be kept during implementation, mainly for financial reasons. These must be brought together to make a complete record of the actual execution.
136
As-built Drawings Mandatory on some projects. Should be provided on all projects. Reflect what was actually built. Contract documents must set a date for
completion of as-built drawings. Make sure they are worked on as the
project is built . . . do not wait for the end of the job.
137
Warranties, Spare Parts and Manuals
Watch for differing warranty starts and durations.
Recommended parts list. Operations and Maintenance
Manuals. Service and warranty contacts and
service agreements/expectations.
138
Termination Process Project termination can be complicated A systematic approach is required to
successfully cover all bases in terminating contracts and relationships.
Stay in close contact with the client and administration to ensure close down meets with the client’s satisfaction.
139
Termination Process Generally the termination phases include:
1. Prepare termination logistics2. Document project3. Conduct post implementation audit
and prepare and submit final report4. Obtain client approval5. Close operation
140
Close Operation
PrepareTerminationLogistics
Document The ProjectProject
TerminationPhases
Conduct Post- ImplementationAudit: Prepare and Submit Final Report
Obtain ClientApproval
PROJECT TERMINATIONPHASES
141
1. Prepare termination logistics
Establish project termination design Assign a termination manager Assign a termination team to assist
manager Conduct a termination meeting to
review process Assign close-out tasks
142
2. Document the Project Prepare personnel termination
reports Close down project office and
reporting system Terminate all financial documents
Complete all payments and expenses Collect all debts prepare the financial
project close out report
143
2. Document the Project Terminate all work orders, contracts,
assignments and outstanding supplier and customer obligations.
Document completion and compliance with all vendors and contractors.
Close all project sites and return all project equipment.
144
3. Conduct Post -Implementation Audit
Complete Final Report
Submit report to client Evaluation of project’s goals and activity
achievement. Measured against the project plan,
budget, time deadlines, quality of deliverables, specifications and client satisfaction.
145
Final Report Should answers the following questions:
Was the project goal achieved? Was the project work done on time? Was it done within budget? Was it done by specifications? Was the client satisfied with the project
results? Memory or history of the project. File others can refer to, study progress and
impediments of the project. Can follow many formats.
146
Final Report Usually includes the following elements:
Overall success and performance of the project Organisation and administration of the project Techniques used to accomplish project results Assessment of project strengths and weaknesses Recommendation of project manager and team
for continuation or extinction of project
147
4. Client Approval
Obtain Client approval.
5. Close Operation
Close all physical sites and terminate remaining project staff.
148
Rewarding Successes and Learning From Failures Closing a project is a celebration of effort. Brings resolution to the process. Project manager should bring the team
together to review their journey. Way of closing formal and informal
relationships. Way to re-enforce learning that occurred. Final get together brings project full
circle.
149
Summary All projects must be closed off. Project should meet with client
acceptance. Provide installed deliverables. Document the process and
achievements. Provide closure for the team and
client.
150
Critical Factors in Successful Project Implementation
Mission Senior Management Schedule Client Consultation Personnel
Pinto, J. K. and D. P. Slevin (1987). IEEE Transactions on Engineering Management EM34(1): 22-28.
Technical Tasks Client Acceptance Monitoring &
Feedback Communication Troubleshooting
151
Project Management Education / Training Online resources (websites and list
servers) Each other (sharing knowledge and
experiences) Balance experience with education Project Management Institute:
PMBOK Guide, http://www.pmi.org
152
Additional Online Resources in Project Management http://www.gantthead.com http://www.allpm.com http://www.4pm.com http://www.ipma.ch http://appl.nasa.gov/pmdp/handbook/guide.ht
m http://www.pmforum.org http://www.projectconnections.com http://www.tenstep.com http://listserv.uts.edu.au/mailman/listinfo/pmn
et http://www.spottydog.u-net.com/
153
Concluding Remarks Projects - an increasingly important way
of working Project management is challenging,
rewarding Keep it simple, use aspects of project
management that make sense Don’t be an Accidental Project Manager Its OK to make mistakes…learn from
them to improve project management practices
154
That’s all and thank you
Good luck in managing your projects
155
Sample Templates and Forms
156
5-Step Project Management PLANNING IMPLEMENTATION
DEFINE
Identifyproject activities
Estimate time and cost
Sequence Project Activities
Identify Critical activities
Write Project Proposal
ORGANIZE CONTROL PLAN CLOSE
State the Problem
Identify ProjectGoals
List theObjectives
Determine PreliminaryResourcesIdentify Assumptionsand Risks
Determine Personnel Needs
Recruit Project MangerRecruitProject Team
OrganizeProject Team
Assign Work Packages
Project overview WBS Recruit Criteria Variance Reports Final Report Project network Define Work packages Status Reports Audit Reports Critical Path Assign Work Packages Staff Allocation Reports
DefineManagementStyle
Establish Control ToolsPrepare Status Reports
Review ProjectSchedule
Issue Change Orders
Obtain ClientAcceptance
Install Deliverables
Document the Project
Issue Final Report
Conduct Post-ImplementationAudit
157
Project Overview Project Name - PM Conference Project Manager
Problem/OpportunityMembership in PM Association has declined in the past four years and attendance at
conferences has declined in past three years. The viability and financial stability of the organization depends on maintaining membership and successful annual conference.
Goal Reverse downward trend in membership and annual conference attendance.
Objectives1. Develop the Program2. Set the Conference Site and Date3. Design and Implement the Marketing Plan
Success Criteria1. At least 50 of previous years conferences attendees will attend2. At least 150 of 450 PMI Canada members will attend3. At least 1.5% of the non-members receiving conference brochure will attend4. At least 5% of the non-member attendees will join PM Association
Assumptions and Risks1. Interest in PM can be renewed through the annual conference2. A quality professional program will attract members and non-members3. Key speaker(s) fail to show up or submit written paper.
Prepared by Date Approved by Date
Project Overview - Sample
158
Project Name Project Manager
Problem/Opportunity
Goal
Objectives
Success Criteria
Risks and Assumptions
Prepared by Date Approved by Date
Project Overview
Stakeholders
159
STAKEHOLDER and External Issues
Their Objective/Purpose
Their Strategy
How They Operate
Where they gain Support
Their Potential Impact onthe project
How to Manage them and your plan for
mitigation
Stakeholder and External Issues Analysis
160
Risk Management Template
Monitoring Schedule
Response Plan
OwnerImpactProbabilityRisk
161
CONFERENCE PLANNING
SITE MARKETINGPROGRAM
DATE PLACETHEME MATERIALS SPEAKERS LISTS BROCHURE REGISTER
OBTAIN MATERIALS
PREPARE KITS
DESIGN BROCHURE
MAIL BROCHURE
WBS - Sample
162
Estimated Project Planning Budget
Cost __________
Description __________
Cost __________
Description __________
Cost __________
Description __________
Cost __________
Description __________
Cost __________
Description __________
163
Estimated Conference Planning BudgetCONFERENCE PLANNING
$243,325
Program
$41,100
Site
$170,425
Marketing
$31,800
Theme
$600
Materials
$13,300
Speakers
$27,200
Date
$1,000
Location
$169,425
Lists
$2,000
Brochure
$29,800
Registration
3 conf calls with pgm comm
Travel/expenses for 16 speakers @ $500 per speaker
Deposit3 site visits @ $800/visit food @$50 per person/day for 3 days for 1100 meeting rooms @ $225/day/room for 3 days for 3 rooms
25,000 labels @ $80/1000
Obtain Speaker Materials $800
Prepare Conference Notebook $125,500
Design Brochure $12,800
Mail Brochure $17,000
Edit/format @ $50/speaker
1100 binders @ $5/binder photocopy materials 350,000 pages @ $0.02/page
Layout: 16 pages @ $50/page
Printing: 30,000 copies @ $0.40/copy
25,000 pieces @ $0.68/piece
164
Project Schedule - Sample
ID Task Name Duration
1 Develop the Program 0 days
2 Theme 1 wk
3 Obtain Material 4 wks
4 Speakers 3 wks
5
6 Conference Site 0 days
7 Set date 1 day
8 Select site 1 day
9 Confirm Arrangements 1 day
10
11 Marketing 0 days
12 Obtain lists 2 wks
13 Design brochure 2 wks
14 Mail brochure 4 days
15 Register participants 8 days
3/1
3/1
3/1
2/27 3/5 3/12 3/19 3/26 4/2 4/9 4/16 4/23 4/30 5/7March April May
Project: ____________________ Project Manager: ____________________ Date: _____________
165
Project Schedule
ID Task Name Duration 12/03 19/03 26/03 02/04 09/04 16/04 23/04April
Project: ____________________ Project Manager: ____________________ Date: _____________
166
Deliverable:_____________________ Manager:___________________ Project:_________
ACTION DATES
ActivityAnother activityBuild something
Another ItemYet anotherDesign a bitDesign moreSneezeGesundheitAnother thingWait for itemMore stuffFinish
A C G C F M J W B D M H F W L S W ER A A C I I - I C 120 400- R C I A A I A - 50 50R - A C I I - C - 345 1,500- R C I A A I A - 127 -R A A C I I - I C 90 9,000R - A C I I - C - 55 1,700
- A R I C C A I I 455 875R C A A I C I - - 200 7,785- R I I C - - - - 65 -
A C R - C I C - - 20 100,000- I C A A R I A I 655 -R A - I C I A A A 80 -A I C I I A A A R 12 100
Budget Actual Budget ActualW/Hrs. W/Hrs. Cost Cost
2.4.5 Major Element Amelia Drover Fred 2-5
RACI Charts (F.T Hartman)
167
RACI ChartsDeliverable:_____________________ Manager:___________________ Project:_________
ACTION DATES------People involved ----- Other Info. (e.g., Cost)
168
RACI Chart
2
1
InformCoordinate with
Accountable to
Responsible party
Task
169
PM ANNUAL CONFERENCE REVENUE & EXPENSE BUDGETRevenues
Registrations - 1100 @ $335……………………………………………………………..$368,500Expenses
Salary
Graphic artist………………………………………………………………………………………………...800Total Salary……………………………………………………………………………………………..800Non-Salary
Travel……………………………………………………………………………………………………...21,600Printing…………………………………………………………………………………………………….19,000Postage…………………………………………………………………………………………………...17,000Mailing Lists……………………………………………………………………………………………….2,000Telephone…………………………………………………………………………………………………….600Supplies…………………………………………………………………………………………………….6,300Speaker Honoraria……………………………………………………………………………………….8,000Site Deposit………………………………………………………………………………………………..1,000Food………………………………………………………………………………………………………165,000Meeting Room Rental…………………………………………………………………………………..2,025
Total Non-Salary………………………………………………………………………………..242,525Total Expenses………………………………………………………………………………………$243,325Gross Profit…………………………………………………………………………………………$125,175Indirect (@ 40% of Total Expenses)……………………………………………………$97,330Net Profit………………………………………………………………………………………………$27,845
170
Project Definition Report
PROJECT DEFINITION Project Name Project Manager DateActivity Schedule Budget
No. Name Description Start End Money Labor Matis Time(hrs)
Manager
Prepared by Date Approved by Date Sheet __of__
171
Sample of a Change OrderPROJECT TITLEPROJECT NO. CONTRACT NO. CONTRACT DATECONTRACTOR
The following changes are hereby made to the Contract Documents:Construction of access bridge abutment No. 1 drainage system; andReset two penstock bearing plates. All in accordance with revised DWG S-17209Revision 4, dated August 29, 2000.
JUSTIFICATION:Unforeseen soil conditions
CHANGE TO CONTRACT PRICEOriginal Contract Price: $Current contract price, as adjusted by previous change orders: $The Contract Price due to this Change Order will be (increased) (decreased) by: $The new Contract Price due to this Change Order will be: $
CHANGE TO CONTRACT TIMEThe Contract Time will be (increased) (decreased)by calendar days.The date for completion of all work under the contract will be
Requested by datedRecommended by datedOrdered by datedAccepted by dated