PM Blockseminar Siegen2. Vgl. PMI Inc., Making project management indespensable for business results, 2008 1. Individual effort 2. New methods and data visualization 3. Optimizing

PM I / PMG I / PM V

block seminar Siegen

Dipl.-Wirt.-Ing. Matthias Dannapfel

Dennis Meelkop B.Sc. RWTH

Page 2

Appendix12

Summary11

Project Financing10

Multi-Project-Management9

Agile Project Management8

Project Completion7

Project Controlling6

Project Planning5

Project Stakeholder & Risk Management4

Project Organization3

Project Definition2

Introduction: History & Definition1

Agenda

Page 3

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2

Group Exercise I: Marshmallow1.5

Definition of "Project" and "Project Management"1.4

Project Management: History and Development1.3

Project Examples1.2

Who am I?1.1


Agenda

Page 4

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2




Project Examples1.2

Who am I?1.1


Agenda

Page 5

Who am I?

Page 6

Timetable & Organization

Datum Raum Uhrzeit Kurs [Teilnehmer]

10.1.19 AH-B 002 08:00-12:00 PMG I/ PM V/ PM I [19+80+25]

11.1.19 AR-B 2104/05 08:00-18:00 PMG I/ PM V/ PM I [19+80+25]

12.1.19 AR-D 5105 08:00-18:00 PMG I/ PM V/ PM I [19+80+25]

https://unisono.uni-siegen.de/qisserver/pages/cm/exa/searchRoomDetail.xhtml?_flowId=searchRoom-flow&_flowExecutionKey=e1s15



Page 7

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2




Project Examples1.2

Who am I?1.1


Agenda

Page 8

Examples of different types of projects

Introduction of new currency AID Project Öresund Bridge

Telescope Hubble International Sport Event Software Development

A380 Berlin Brandenburg Airport Venice M.O.S.E.

Page 9

Examples of good and bad Project Management

Source: bild.de / Foto: Christian Lohse

Page 10

Examples of good and bad Project Management

Source: theguardian.com // Video: https://www.youtube.com/watch?v=AhLk7L1B_fE

Page 11

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2




Project Examples1.2

Who am I?1.1


Agenda

Page 12

History of Project Management

First hints to project management approaches in history:

– Colosseum (80 A.D.), Chinese Wall (from 12th century), etc.

– Planning and coordination:

Man power (mostly slaves)

Material

Money and time

Basic elements of today´s project management

http://upload.wikimedia.org/wikipedia/commons/2/26/Panorama-Chinesische-Mauer-Mutianyu_Martin.jpg

http://upload.wikimedia.org/wikipedia/commons/5/53/Colosseum_in_Rome,_Italy_-_April_2007.jpg

Page 13


Transcontinental Railroad, USA (1869):

– official project plan (Theodor D. Judah)

Page 14

Source: Vgl. c. Smith, F. Alemi, L. Baliton, History of Project Management (Part I, II)

Vgl. Bilder u. Jahreszahlen aus Wikimedia Foundation Inc., http://www.wikipedia.com


Official Project Plan (Theodor D. Judah)

Mid-19th century developments in organization of work in industry (industrialization)

Frederic Taylor (1856-1915):

– Taylorism (division of labor)

– Origin of the Work Break Down Structure

Henry Gantt as the forefather of project management (1861-1919):

– known for planning and control techniques: Gantt chart (1910)

Page 15


1900-1950:

– Project management mainly in construction industry, engineering and defense

After 1950:

– Development of many methodologies and instruments of project management

1969:

– Foundation of the PMI (Project Management Institute) Objective: Promotion and dissemination of

knowledge, methods and standards

– Other organizations with similar objectives:

International Project Management Association (IPMA) with country organizations

e.g. in Germany: GPM German Society for Project Management e.V.

since 1980s/90s

– new models how projects can be executed more effectively and understood better stronger

interdisciplinarity (see: social sciences, business studies, etc.)

Page 16

Video: Introduction to Project Management

https://www.youtube.com/watch?v=BOU1YP5NZVA

https://www.youtube.com/watch?v=BOU1YP5NZVA

Page 17

Evolution of Project Management1:

Current importance of project management2:

– approx. 20% of the world's GDP is generated in project form

– approx. 30% of the project managers retire within 10 years

– 2008: >380 PM degrees at >275 universities worldwide

– Study: Salary difference of PM-certified vs. non-certified: 90,000 US dollars

(average accumulated over 12 years)

Source: 1. Vgl. c. Smith, F. Alemi, L. Baliton, History of Project Management (Part I, II)

2. Vgl. PMI Inc., Making project management indespensable for business results, 2008

Individual effort1.

New methods and data visualization2.Optimizing methods3.

General acceptance4.

New management and leadership methods5.


Page 18

Professionalization of project management

Current role of project management:

– ca. 20% world GDP is achieved in projects

– ca. 30% of project managers will retire within next 10 years

– 2008: >380 PM-degrees at >275 universities worldwide

– Study: difference in earnings between PM-certified vs. non-certified: 90.000 US-Dollar

(accumulated over 12 years)

Project management institutions

Source: Vgl. PMI Inc., Making project management indespensable for business results, 2008

Page 19

Source : Abbildung: http://www.gpm-

ipma.de/qualifizierung_zertifizierung/ipma_4_l_c_zertifikate_fuer_projektmanager/grundlage_ncb_30.html

Deutsche Gesellschaft für Projektmanagement (GPM)

Basis of the GPM certification

program:

– The NCB 3.0

http://www.gpm-ipma.de/qualifizierung_zertifizierung/ipma_4_l_c_zertifikate_fuer_projektmanager/grundlage_ncb_30.html

Page 20



Project Management Institute (PMI)

Basis of the certification program of the PMI:

– PMBOK

– Framework of project management (definitions)

– Standard for project management (5 process groups = phases)

– Knowledge areas in project management (incl. processes, tools)

Certifications:

– Certified Associate in PM (CAPM)

– Project Management Professional (PMP)

– Program Management Professional (PgMP)

Some special certifications (e.g. Risk, Scheduling)

Professional Development Units (PDU) must be collected

regularly to extend the validity of the certificates (valid for 3

years, for CAPM 5 years).


Page 21Source : Abbildung: http://www.gpm-

ipma.de/qualifizierung_zertifizierung/ipma_4_l_c_zertifikate_fuer_projektmanager.html

*as of: 31.12.2012

Qualification Program

Certification program of the GPM:

– internationally coordinated and recognized four-

level system of the IPMA International Project

Management Association

Certificate Number of

certified people

in Germany *

1. Level A Ca. 57

2. Level B Ca. 1.060

3. Level C Ca. 3.130

4. Level D Ca. 23.900

http://www.gpm-ipma.de/qualifizierung_zertifizierung/ipma_4_l_c_zertifikate_fuer_projektmanager.html

Page 22



Qualification Program

PRINCE2 (Projects in Controlled Environments)

– Office of Government Commerce, a British government agency has released first version 1996,

2009 the current version

– Generic project management model, focusing on tailoring to any situation (tailoring)

– 4 Perspectives of the PM are distinguished:

7 Basic principles

7 Topics

7 Processes

– Certifications:

PRINCE2 Foundation (Basic Exam, 1h Multiple Choice)

PRINCE2 Practitioner (for project manager, 3 h exam)


Page 23

Project Management Development

Reading: Waves of Project Management

(Morris, Geraldi, 2011: Managing the Institutional Context

for Projects. In: Project Management Journal. Vol. 42, No.

6, pp. 20-32)

Describe characteristics of 3 waves of Project

Management (bullet points)

– Group 1: The Technical Level (p. 20-21)

– Group 2: The Strategic Level (p. 21-22)

– Group 3: The Institutional Level (p. 22-24)

Page 24

What makes a good project manager?

Which qualities should he/she have?

Page 25

Project Leadership Competencies

Quelle: Turner, Müller (2005): The Project Manager‘s Leadership Style as a Success Factor on Projects: A Literature Review. In:

Project Management Journal; Vol. 36, No. 1, pp.49-61.

Page 26

Project management as leadership task

https://www.youtube.com/watch?v=5vStHoQJSvc

https://www.youtube.com/watch?v=5vStHoQJSvc

Page 27

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2




Project Examples1.2

Who am I?1.1


Agenda

Page 28

“a piece of planned work or an activity that is finished over a

period of time and intended to achieve a particular purpose:.”Cambridge Dictionary

Definition: Project

What is a project?

– Latin word origin: proiectum = the thrown forward

– Several definitions, e.g:

DIN 69901 of the German Institute for Standardization e.V.

IPMA Competence Baseline of the International Project Management Association

There are others...

Definition:

Page 29

Source : 1. Vgl. Projektmanagement, F.X. Bea, et. al., S. 31-32, 2008;

und Vgl. PMBOK Guide, PMI, S. 5, 2008

Definition of "Project" and "Project Management"

Characteristics of projects1 (see definition)

– Temporary

Defined start and end dates

End when goal reached or project aborted

Not to be confused with product life cycle

– Novel

Novel product, although parts of it can have a repetitive character (e.g. construction projects:

often the same materials, tools and techniques, but always under new conditions and according

to new plans)

– Unique

One-off project - in contrast to routine tasks

Although individual activities within the project framework have a routine character

– (complex)

Page 30

Regularly performed work

Work plan is known in detail

and clear

Neither new nor unique, and

not complex work processes

High planning reliability

Time-bound work with starting

point and deadline

Defined project goal must be

fulfilled: Work plan must be

developed

Work progress due to available

instruments and resources

(Know How)

Low planning reliability, un-

certainty due to many

influencing factors

Working Time

Work Plan

Working Process

Planning-

certainty

Project Work

Software Development

Routine Work

Shift on assembly line

vs.

Difference between Routine and Project Work

Page 31

“Project management is the application of processes, methods,

knowledge, skills and experience to achieve the project objectives.”association of project management


What is Project Management?

– Latin word origin: proiectum = the thrown forward

– Latin word origin: manum agere = lead by the hand

– Several definitions, e.g:

DIN 69901 of the German Institute for Standardization e.V.

IPMA Competence Baseline of the International Project Management Association

There are others...

Page 32

Source : 1. Vgl.Handbuch Projektmanagement, J. Kuster et. al., 2008, S.8


Tasks of project management1:

– Planning

– monitoring

– Coordinate

– Taxes

– Redesign or redesign of processes or problem solutions

Page 33

Source : 1. Vgl. PMBOK Guide, PMI, S. 5, 2008

Programs and projects will be grouped, evaluated and

aligned with strategic corporate goals.

Coordination and planning of related projects.

Execution of a concrete project (see definition).Project Management

Program Management

Description

Portfolio Management

3. Management Level

1. Management Level

2. Management Level

Project Management Levels

Project Management as part of company operations1:

Page 34

Various leadership competences

Page 35

Project management as a control mechanism:

The role of the project manager is similar to that of a controller.

– w = reference value (project objective)

– y = controlled variable (project status)

– e = w - y = Control difference (setpoint/actual comparison)

– u = manipulated variable (influence possibilities, activities)

– z = disturbance variable (obstructive events)

ControllerControlled

System

w ye u

z

Project Management in sense of control engineering

Page 36

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2




Project Examples1.2

Who am I?1.1


Agenda

Page 37

Group Exercise I: Marshmallow

Team up in groups of 5

Take the material and try to build a tower that lasts 30

seconds in the end with a Marshmallow at the top

18 min when every group is ready

https://mlhoefer.files.wordpress.com/2014/04/bmoir6wimaa3ieu.jpg

Page 38

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 39

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 40

Project Definition:

Environment

Project success depends on many internal / external influencing factors (project

environment)

– Business influences (e.g. cost development)

– Organizational influences (e.g. relationship to superiors)

– Personnel influences (e.g. personnel policy)

– Social influences (e.g. society)

– Psychological influences (e.g. mentality)

– Technical influences (e.g. innovations)

– Ecological influences (e.g. climate)

– Legal influences (e.g. planned legal situation)

– Political influences (e.g. change of government)

– Economic and macroeconomic influences (e.g. exchange rate)

Page 41

Project environment analysis to understand the influence elements on the project

Derivation of measures for the design of environmental relations

Project environment affects project stakeholders

Source: Vgl. Projektmanagement, F.X. Bea, et. al., S. 99, 2008

Project Definition:

Environment

Project environment

Project

Client Project-manager

Project team

Corporation

SuppliersPolitical

Institutions

Authorities

Nature

Society

EconomicSituation

FinancialMarket

Technological Innovations

Stakeholders

Page 42

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 43

Project Definition:

Stakeholder

Projects are not isolated but highly dependent on environmental influence

Initiation PlanningMonitoring & Control

ClosingExecution

External Environment Home (parent) Environment

Page 44

Type of influence Examples

Managerial cost cutting program, expansion

Organizational boundaries, mergers & acquisition

Human resources hiring freeze, capacity limitations

Social society, traditions, religion

Economic currency rate, crisis

Ecological climate

Juridical law, changes in law

Political change in government

Project Definition:

Stakeholder

Page 45

Type of influence ProjectStake-

holder 1

Stake-

holder 2

Stake-

holder 3…

Managerial

Organizational

Human resources

Social

Economic

Ecological

Juridical

Political

…

negative neutral positive

Project Definition:

Stakeholder

Page 46

The stakeholder approach in strategic management

Corporation

Sponsor

Consumer organization

Unions

Employees

Trade organizations

Financial Community

Pressure groups

Clients

GovernmentCompetitors

Suppliers

Political groups

Source: Freeman, R. Edward (1984): Strategic management. A stakeholder approach.

Boston: Pitman., S. 25

Page 47

Different stakeholders – different perspectives on project

47

Page 48

Stakeholder management process model

Who are the relevant stakeholders?

What are their goals and interests?

How to win their support for my project?

Stakeholder-Management

1. Identification of stakeholders

2. Analysis and evaluation of stakeholder

3. Development of engagement strategies

4. Implementation and control of engagement

strategies

Page 49

Phase 1: Identification of stakeholders

Who are my stakeholders?

Helpful questions:

– Who profits most from the project?

– Which conflicts do exist? Amongst whom?

– Who is cooperating with whom?

– What are the drivers motivating the client, the team, etc.?

Stakeholders are persons or organizations, who are actively involved in the

project or whose interests may be positively or negatively affected by the

performance or completion of the project.PMBOK-Guide, Fourth Edition, PMI 2008, p.23

Page 50

Phase 2: Analysis and evaluation of stakeholders

Important aspects to analyze:

– Power

– Influence

– Competence

– Concern

– Personal agenda

Page 51

Phase 2: Stakeholder classification model

Source: Mitchel et al. (1997), S. 874

Power

Legitimacy

Urgency Non- Stakeholder

Dormant

Dominant

DiscretionaryDependent

Definitive

Dangerous

Demanding

How much control might the stakeholder exert over your actions?

How much of claimmight the stake-

holder have over you?

How much of a clamormight the stake-holder make to get your attention?

Page 52

Phase 3: Development of engagement strategies

Source: B. McElroy, C. Mills, in Gower Handbook of Project Management, 2000, S. 770

do nothing, ignorance

newsletters, memos

discussions, team meetings

consulting, feedback,

arguments

willingness to compromise, trust,

common solution

commitment and involvement in

project control

Stak

eh

old

er

Enga

gem

en

t

Stakeholder Management

Leve

l of

Act

ivit

y,

pro

ject

su

pp

ort

Page 53

Phase 3: Communication matrix

Stakeholders Frequency Detail range Importance Needs

Board members Summary

Staff Detailed summary

Team members Technical

summary

Client Technical

summary

Media

• X

• Y

• Z

Summary

Summary

Summary

Neighbors Summary

…

low moderate high

Page 54

Phase 4: Implementation and control of engagement strategies

Power / influence

Attitude to project

neutral supportivenegative

strong

medium

weak

Page 55

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 56Source : Adidas: http://www.pressrelations.de/presseservice_material/presse

mitteilungen /pics/312561_20082870986111111.jpg;

Sony: http://www.letsgodigital.org/images/artikelen/55/sony_t50_limited_zoom.jpg

Dr. Oetker: http://www.marketing-blog.biz/uploads/pudding-oetker.gif

Lufthansa: http://www.tagmotion.de/wp-content/uploads/2008/11/lufthansa-deckblatt.jpg

4 P‘s des Marketings:

• Product

• Price

• Place

• Promotion

Project Definition:

Marketing

What is Marketing all about?

http://www.pressrelations.de/presseservice_material/pressemitteilungen/pics/

Page 57

Project Definition:

Marketing

What does that mean in concrete terms? What is the goal of project marketing?1

– To gain project support or at least a positive mood among the interest groups.

– Creating acceptance and trust among the stakeholders of the project by communicating the

meaning and advantages of the project, but also the disadvantages.

– Preparing the introduction of project results into the organization, e.g. by removing and preventing

emotional barriers

– Motivation of internal employees through expectations of third parties and transparency regarding

project progress

Marketing is the activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value

for customers, clients, partners, and society at large“

American Marketing Association

Source : 1. Vgl. Projektmanagement, F.X. Bea, et. al., S. 264, 2008

Page 58

Project Definition:

Marketing

Why Project Marketing?

– Because the project is new / unknown at the beginning

– Because the project (partly) depends on the support of the environment / stakeholders

– Because project marketing provides valuable feedback

Important elements of project marketing?

– Naming the project with a project name

– Introduction of a project logo / uniform design

– Establishment of a project room

– kick-off meeting

– Presentation of the project progress in an appealing form

– regularly inform decision-makers about the progress of the project

Page 59

Source : Vgl. Spol AG Projektmanagement: Projektmarketing, www.projekt-marketing-ch

Project Definition:

Marketing

Further tasks of project marketing?

– Communicate the project vision emotionally; this creates enthusiasm and a positive attitude

towards the project.

– introduce important persons of the project, so that contact persons are known

– Cover information gaps and explain next steps

– The right amount of information and how to communicate it - not only about decisions and results,

but also:

Which advantages it offers for which target group

Why they decided to do it this way

How the process developed before the outcome

What were the alternatives and why they were not chosen?

– Celebrate project successes

Page 60

Instruments of project marketing:

– Key players of your own organization

– company magazine

– intranet

– "bulletin board"

– project brochures

– Presentations,

– fact sheets

– Events / Workshops

– Events (e.g. "Open day")

– Media (press, television,

homepage, webcam, etc.)A

pp

licati

on

Project Definition:

Marketing

Source: Vgl. Projektmanagement, F.X. Bea, et. al., S. 99, 2008

Project

Client Project-manager

Project team

Corporation

SuppliersPolitical

Institutions

Authorities

Nature

Society

EconomicSituation

FinancialMarket

Technological Innovations

Page 61

Source: 1. Vgl. Projektmanagement, F.X. Bea, et. al., S. 264-265, 2008

Project Definition:

Marketing

Dangers of project marketing:

– Marketing is understood as "self-praise

– Problems in the project must be "nicely talked about

– Communication instruments are not accepted

– Marketing measures are discontinued due to lack of time or personnel

– Feedback is not processed - affected people feel ignored

Successful project marketing:

– if the project is accepted by the target groups

– and is supported

– if the working climate is also improved

– When the feedback is processed

Page 62

Source: www.yuanda.com.cn/.../Airports/20071105438.asp

Project Definition:

Marketing

Example for Project

Marketing

– Airrail Center Frankfurt

http://www.youtube.com/watch?v=258ajLw4lj0

http://www.youtube.com/watch?v=258ajLw4lj0

Page 63

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 64

Companies with many project offers must check their project worthiness before they are

included in the project portfolio.

Schematic representation of a company's project pipeline:1

Source : Vgl. GPM-Magazin PMaktuell - Heft 2/2005, Seite 16 - 23

?

Not identified Project

Ideas Selection

criteria

Official decision

paths are ignored

Projects in the fast

lane

Stopped ProjectsU-Boot Projects

Old, abandoned

projects are taken

up again

Project Definition:

Portfolio

Page 65

Project Definition:

Portfolio

In addition to the technical and economic analysis of the project portfolio, a strategic

evaluation must also be carried out.

– Comparison/adjustment to corporate strategy

– Prioritization for resource allocation

– synergy management

Page 66

Project Definition:

Portfolio

Decision and evaluation criteria for project selection:

– Product life cycle

What is the life expectancy of the project result?

– Technology life cycle

What is the life cycle of the applied technology? When will the next generation come?

– Technology position

Is the applied technology new / proven / obsolete? Competition?

– Probability of technical success

Are the technical risks acceptable? Is the desired durability realistic?

– Probability of commercial success

Are the economic risks covered? When is the break-even point reached?

– Revenue potential

Can the project earn money? How high is the return?

Page 67

Instruments for the presentation of decision-making and evaluation criteria

– Feasibility Study

– market survey

– profitability calculation

– benefit analyses

– Analytic Hierarchy Process (AHP)

– Special Tools for Product Development: Quality Function Deployment (QFD)

– From decision and evaluation criteria follows:

Project Portfolio

Assignment of development budgets and priorities

Project Definition:

Portfolio

Page 68

Develop. Phase Growing Phase Maturity Phase Age Phase

Technologielebenszyklus

Reven

ue

Mark

et

satu

rati

on

level

Project Definition:

Portfolio

Criterion "Turnover and market saturation depending on technology life cycle".

Page 69

Criterion "Turnover depending on the time of technology introduction".

Company A

with Product X

Time of technology introduction

Re

ve

nu

e

Company B

with Product X

Price advantage

of the market leaderA

A

Higher market

share

B

B

Project Definition:

Portfolio

Page 70

Criterion "Market growth and relative market share" (BCG matrix)

AQUESTIONMARK STARS

cause high development and

market launch costsbring growth, but cost a lot of

money for market cultivation

bring a high return on capital,

require little effort

are lost in the product

program dragged along

POOR DOG CASH-COWSmark

et

gro

wth

Relative market share

low

hig

h

low high

BC

D

E

Project Definition:

Portfolio

Page 71

Project portfolio according to potential and probability of success:p

ote

nti

al

for

su

ccess

probability of success

hig

hm

idd

lelo

w

20% 40% 60% 80% 100%100%

The diameter of the

circles corresponds

To Development

budget

C

D

E

A

B

Project Definition:

Portfolio

Page 72

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 73

How is a project created?

Example: Sagrada Familia by

Antoni Gaudí (1852-1926)

Source : Vgl. Bilder u. Jahreszahlen aus Wikimedia Foundation Inc., http://www.wikipedia.com

Sagrada

Familia

Vision / Idea

PROCESS

Project Definition:

Phases

Page 74

5. Phase4. Phase3. Phase2. Phase

completion realizationplanningPreliminary

study

1. Phase

initialization

Source : 1. Vgl. Projektmanagement, F.X. Bea, et. al., S. 39-41, 2008

Project Definition:

Phases

Advantages of a project phase concept:1

– Basic approach serves as structural basis

– step-by-step, schematic approach

→ Complexity reduction

→ Process becomes more transparent

→ Basics for division of labor / project planning

– There are different phase designations and concepts

– We use the following phase concept:

Page 75

Phase description (1/2):

ProjektentwicklungProject development

Planning

• Create detailed planning

• Create Budget

• Create cost plan

• Planning Resources

• Developing solution variants

• Create detailed concept

• Set Up Change Management

• Create implementation plan

Specifications adopted /

feasibility proven

initialization

• Determine requirements

• Sketch project scope

• Create a rough estimate

• formulate results

• Superior milestones

• Describe success criteria

• Estimate economic efficiency

• Identify risks

Need / Requirement

recognized

Preliminary study

• Create rough plan

• Verify project scope

• Analyzing the Start Situation

• Structure target catalog

• Superior solutions

• Clarify feasibility

• Checking economic efficiency

• assess risks

Order passed

Milestones

(phase

begins with)

Activities

Project Definition:

Phases

Page 76

Phase description (2/2):1

Source : 1. Vgl.Handbuch Projektmanagement, J. Kuster et. al., 2008,

Projektmanagement-Kompass aus dem Inhaltsverzeichnis

completion

• Organize handover

• Create final report

• Create final invoice

•"Lessons learned" work out.

Achieved results

verified

realization

• Plan introduction

• Perform Controlling

• Communicate deviations

• Plan your training

• Create maintenance concept

Concept approved,

resources assured

Activities

Milestones

(phase

begins with)

(Use)

Acceptance

completed, final report

accepted

Project implementation

Project Definition:

Phases

Page 77

Activities by Project Phases:

Project Definition:

Phases

Page 78

Monitoring & Controlling

initiation Planning Execution Completion1

Inquiry / Demand

recognized

Project order

approved

Concept / planning

approved; resources

assured

Results checked

Technical / functional

acceptance, final report

accepted

2 3 4 5

Project Definition:

Phases

Page 79

• Identification of needs

• Estimate project scope

• formulate results

• Suggest milestones

• Describe success criteria

• Host. Estimate feasibility

• Identify risks

• Develop a detailed plan

• assess risks

• Work out a time schedule

• Develop cost plan

• Develop resource plan

• Control of project execution

• Perform quality assurance

• Building and developing the project team

• ensure information flow

• Managing stakeholders

• Implement procurement

• Guarding and controlling risks

• carry out quality controls

• Report Performance

• Control progress, quality and schedule

• Check procurement

• Final customer acceptance received

• Perform project review

• Document Lessons learned

• Preparing project / technical documentation

Monitoring & Controlling

Initiation CompletionPlanning Execution

Project Definition:

Phases

Page 80

"S" curve: cumulative resource input

Slow Start

Slow End

Fast Middle

Time

100 %

Sta

ge o

f C

om

ple

tio

n

0 %

Project Definition:

Phases

Page 81

Cause of costs for project changes (time-dependent): 10 rule of error costs

Mag

nit

ud

eHigh

LowProject duration

Project Definition:

Phases

Page 82

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Initialization2.6

Phases2.5

Portfolio2.4

Marketing2.3

Stakeholder2.2

Environment2.1

Project Definition2


Agenda

Page 83

Project Definition:

Initialization

Content items that are defined in the project order:

a) Objectives, scope, risks, framework conditions

– Project objectives, non-objectives of the project, prerequisites and framework conditions, Object /

system description, function, components, scope, limits, Project risks and opportunities

b) Client, organization, stakeholders

– Client or project sponsor and key organizations, project stakeholder analysis, project leader and

core team incl. competence and responsibility, assigned resources and priority rules, performance

evaluation criteria, coordination mechanisms, reporting

(c) timetable and budget

– General schedule, milestones, budget and cost planning

Page 84

2. Projektdefinition

Bsp. Projektauftrag:

2.6 Projektinitialisierung

Project Definition:

Initialization

Page 85

Definition of Project Objectives:

Purpose of the definition of project objectives:

– in the definition of controllable variables that can also be measured

– in the definition of the parameters for the acceptance of the object (device, product)

– in the motivation of project participants and team members

– opening up opportunities to search for alternative solutions to problems in a timely manner

„ Project objectives are results that are permanently monitored and

anticipated during project implementation by observing and evaluating

process objectives (time, costs, resources), etc..“

Project Definition:

Initialization

Page 86

Goals that limit the scope for solutions are regarded as framework conditions and should

not be defined as goals.

Project goals are a

– Orientation aid,

– Decision support,

– Control instrument,

– Motivation aid.

Project goals should be of high quality:

– Statements on time, budget and quality

– unambiguous statements

– do not anticipate any proposed solutions

Time

Quality Cost

Project Definition:

Initialization

Page 87

Stetting S.M.A.R.T. project goals

S – Specific:

– Who? What? When? Which? Why?

M – Measurable:

– How much? How many? How will I know when it is

accomplished?

A – Attainable:

– Ask yourself, “Is this realistic and attainable?”

R – Relevant:

– A goal with importance and meaning – is the effort is

worth it

T – Time-bound:

– Commit to a deadline

Page 88

Imagine you are the project leader of one of the three projects shown below. Set three S.M.A.R.T. goals for your project.

Öresund BridgeInternational Sport Event Berlin Brandenburg Airport

Exercise: S.M.A.R.T. goals

Page 89

Project Definition:

Initialization and the importance of communication

Frequent communication difficulties with the project objective description

Page 90

Video: What‘s the goal?

An order clarification discussion: what exactly does the customer want? (07:34 minutes)

https://www.youtube.com/watch?v=BKorP55Aqvg

https://www.youtube.com/watch?v=BKorP55Aqvg

Page 91

Assignment of responsibilities: Practical example

Page 92

Project order

Content items that are defined in the project order:

a) Objectives, scope, risks, framework conditions

– Project objectives, non-objectives of the project, prerequisites and framework conditions, Object /

system description, function, components, scope, limits, Project risks and opportunities

b) Client, organization, stakeholders

– Client or project sponsor and key organizations, project stakeholder analysis, project leader and

core team incl. competence and responsibility, assigned resources and priority rules, performance

evaluation criteria, coordination mechanisms, reporting

(c) timetable and budget

– General schedule, milestones, budget and cost planning

Page 93

Exemplified agenda of a project kick-off meeting

1. Introduction of participants (experiences, expectations)

2. Introduction of project: project order with important conditions –discussion on project goals

3. Possible: first project environment and risk analysis

4. Presentation of (preliminary) project phases, milestones and deadlines

5. Introduction of organizational and technical requirements

6. Teambuilding: rules, decision-making, information and communication systems

7. Approximation to project tasks and rough project structure plan; preparation of next phase and allocation of task

Kick-off

Page 94

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5


Different Organizational Structures3.3

Organizational Unit´s3.2

Organizational Basic´s3.1


Project Definition2


Agenda

Page 95

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5






Project Definition2


Agenda

Page 96

Why Organization?

As much regulation as necessary, not as much as possible!

Not every individual case has to be dealt

with individually

Good transparency and coordination

Thorough consideration of a factual situation

leads to cost-effective, efficient and qualitatively

favorable solutions.

Slow response to change

Advantages ++ Disadvantages- -

Independence from persons

The organization is a system of rules created by the company in order to

pursue common goals, but in which order can also arise by itself.

All unforeseen special cases are treated equally

Loss of motivation due to constriction

Service by the rule, even if the rule no longer fits

Result

Project Organization:

Organizational Basic´s

Page 97

Emergent Processes

Structuring of tasks Integration of individual

and organization

Organization and

environment

Change in/of organizations

Source: Schreyögg (2008): Grundlagen moderner Organisations-

gestaltung, Gabler Verlag

Challenges of organizational design:

Page 98

98

Source : Vgl. Handbuch Projektmanagement, J. Kuster et. al.,96-97, 2008

Project objectives vs. company objectives:

Corporate departments are optimized for their specialist tasks/daily business, not for new,

unique and comprehensive tasks.

– Too little flexibility

– Too slow to react to problems and changes

Projects demand it:

– Objectives and framework conditions (scope, guard rails)

– Decision-making authority and leadership responsibility of project management

– Professional representation and expertise in the team

– Available Resources

– Anchoring in company organization, preferably with decision-makers

Page 99

Source : 1. Vgl. Handbuch Projektmanagement, J. Kuster et. al.,96-97, 2008

Interaction and dependencies between company organization and project

organization:

Organizational possibilities of projects1:

a) b)

A

B

C

Company

GF

FIN PRO VER HR

Competence, resources, etc.

Revenue, profit, etc.

CompanyGF

VW A B C

CompanyGF

FIN PRO VER HR

A B C

Company optimal,

projects ineffective

Projects optimal,

companies disturbed !!!Dilemma!!!

Company structure

adapted to projects

Projects within a

company structure


Organizational Basic´s

Page 100

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5






Project Definition2


Agenda

Page 101

Projects are carried out by people, often without a precise idea of their actual task.

Consequence: roles / tasks unclear unnecessary discussions / loss of time

Therefore important: clear and transparent assignment of tasks and roles1

Customer

Lead Partner

(Steering Committee)

What?

decision-making competence

Preliminary decision authority

Link project line

Project Lead

Project Team

How?

Process Competence

Professional Competence

Role Competence

Define at the latest at project start

Source : 1. Vgl. Handbuch Projektmanagement, J. Kuster et. al.,98, 2008


Organizational Unit´s

Page 102

Customer

Lead Partner

(Steering Committee)

Selects project managers, defines strategic goals,

defines framework conditions, awards contracts, releases

funds and resources, control and steering function,

represents project interests at higher levels externally,

supports project managers in all unexpected problems

of a larger scale.

General control and preliminary decision,

interface between project and line organization

Project Lead

Project Team

Operational responsibility, interface between project

team and client, facilitation, conflict management,

team development and leadership, etc.

Technical processing of tasks for project

realisation, support of the project manager

Role Tasks

Source : 1. Vgl. Handbuch Projektmanagement, J. Kuster et. al.,52-60, 2008

Typical task and role assignment:1

Page 103

Features of a team?

– small number of people working together

– complementary capabilities

– common purpose / performance goals /

procedure

– individually as well as collectively responsible

Team is more than just the sum of team

members

Influences through: Personalities,

hierarchy, conflicts, motivation

Typical performance development of a

project team:

New project team first has to "get used to"

the task

Forming

Storming

Norming

Perf

orm

ance

Time

Performing

Source : 1. Vgl. F.X. Bea, S. Scheurer, S. Hasselmann Projektmanagement, S.58-60, 2008



Page 104

Leadership styles of project managers

Project manager must find suitable (authentic) leadership style

Decision-making

scope of the superior

Decision-making

scope for the group

authoritarian patriarchal advisory consultative participative delegative

Supervisor

decides

and orders

superior decides,

but is anxious to

convince his

subordinates of

this before he

orders them

The

supervisor

decides,

but also

allows

questions

to be

asked in

order to

convince

supervisor

informs

about the

intended

decision,

gives the

possibility

to include

an opinion

Group

develops

proposals,

between

the

accepted

solutions

decides the

superior

Supervisor

shows limits

and room

for decision,

the group

decides

Group

decides,

superior acts

as internal

and external

coordinator

Source : 1. Vgl. F.X. Bea, S. Scheurer, S. Hasselmann Projektmanagement, S.57, 2008



Page 105

Source : 1. Vgl. Handbuch Projektmanagement, J. Kuster et. Al, S.110, 2008

Task assignment to organizational units:

Page 106

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5






Project Definition2


Agenda

Page 107

Product-oriented departmental structure:

Each product group represents its own organizational group.

e.g: Chemical group: materials, pharmaceuticals, fertilizers, etc., e.g:

Telekom: T-Home, T-Mobile, T-Systems

Marketing Finanzen

GF

Engineering

ProduktionEinkauf

Produkt A

Division

Vertrieb Engineering

ProduktionEinkauf

Produkt B

Division

Vertrieb Engineering

ProduktionEinkauf

Produkt C

Division

Vertrieb


Different Organizational Structures

Page 108

Source: Merck Geschäftsbericht 2014

Example of product-oriented departmental structure: Merck

Page 109

Territorial division of departments:

Each region / country / continent represents its own organizational group.

e.g: Federal Republic of Germany (no company!): by country e.g: Coca Cola,

Airbus

Beschaffung

Produktion

Personal

GF

VertriebFinanzen

U.K.

Division

Deutschland

Division

USA

Division

Engineering EngineeringEngineering ProduktionProduktion

VertriebFinanzenVertriebFinanzen

Marketing Finanzen

Project Organization:Different Organizational Structures

Page 110

Source: The Coca Cola Company Annual Review 2011

Example of territorial division: Coca Cola Company

Page 111

Functional derivation structure:

e.g: Automobile manufacturers, many medium-sized production companies

Marketing &

Vertrieb

Entwicklung

und Konstr.

GF

Personal Finanzen

Rechnungs-

wesenControlling

Einkauf Fertigung

Vormontage Endmontage

Wareneingang

Lager und

Logistik

Prod.steuerung

Drehen,

Fräsen

Umformen

Q SStabsabteilung

Fertigwaren

Produktion

Lager


Page 112

Source: http://aktie.bvb.de/var/ezflow_site/storage/images/media/images/aktie/struktur/bvb-

geschaeftsbereiche-2014/29443-1-ger-DE/BVB-Geschaeftsbereiche-2014.png

Examples of functional derivation structures: Borussia Dortmund

http://aktie.bvb.de/var/ezflow_site/storage/images/media/images/aktie/struktur/bvb-geschaeftsbereiche-2014/29443-1-ger-DE/BVB-Geschaeftsbereiche-2014.png

Page 113

GF

B

A

C

D

PM

Formation of the project organization from the company

organization:

Page 114

Secondary organization

(project organization)

Projects are coordinated

by a superior project

manager

different characteristics:

weak, neutral, strong

Project team is removed

from the line

Staff Project Organization matrix project organization Pure project organization

Company organizes itself

through projects: each

employee is assigned to a

project

Secondary organization is divided into three different types:

Page 115

• High degree of flexibility in terms

of personnel deployment

• easy exchange and collection of

experiences about different projects

• No organizational change

• Responsibility of the project

remains as far as possible in the

line

Advantages

Disadvantages

++

- -

• Nobody feels responsible for the

project

• low reaction speed

• cross-organizational

• View made more difficult

• no real project team


Staff Project Organization

Page 116

• Project manager and team feel

responsible for the project

• Clear responsibility and decision-

making authority for the project

manager

• flexible personnel deployment, no

utilization problems

• Continuity of the professional

further education, no loss of contact

to the line

• target-oriented coordination of

different interests

• Promotion of a holistic,

interdisciplinary approach.

Advantages

Disadvantages

++

- -

• Risk of conflicts of competence between line and project authorities

• Uncertainty among managers and employees ("servants of two masters")

• high demands on the readiness to inform and communicate


Matrix Project Organization

Page 117

• efficient organization for major

projects

• clear responsibility and decision-

making authority of the project

manager

• fast reaction in case of

malfunctions

• high identification of the project

team with the project

• regardless of the influence and

arbitrariness of the line.

Advantages

Disadvantages

++

- -

• little personnel flexibility

• Recruitment and reintegration

after completion of the project

• Risk of authoritarian or non-team-

oriented leadership by the project

manager rather possible

Source : 1. Vgl. Handbuch Projektmanagement, J. Kuster et. Al, S.105-6, 2008

Pure Project Organization

Page 118

Projekt 1

MA 1

Projekt 2

Projekt 3

MA 1 MA 2 MA 3

MA 1 MA 2 MA 3

weak

neutr

al

str

ong

Projekt 2

MA 1 MA 2 MA 3

Differences between the characteristics of the weak, neutral and

strong matrix organization:

Page 119

Source : Vgl. PMBOK Guide, PMI, S. 28, 2008

Staff-Project-

Organizationweak neutral strong

Matrix OrganizationOrganization

Project

Features

Pure Project

Organization

Authority of the

project manager

Low /

none at alllimited

little /

medium

middle /

high

high /

nearly total

Resources Availability

Who controls the

project budgetLine Manager Line Manager mixed Project Lead Project Lead

Role of the project

managerpart-time

Administrative

employee for PM

limitedLow /

none at all

little /

medium

middle /

high

high /

nearly total

part-time full-time full-time full-time

part-time part-time part-time full-time full-time

Organizational models define the relationship between

primary and secondary organization

Influences of company organization on project organization forms:

Page 120

Source : 1. Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, S.62+67, 2008

2. Vgl. Handbuch Projektmanagement, J. Kuster et. Al, S.109, 2008

Degree of independence of the project:1

0% 100%

Staff-Project

Organization

Matrix-Project

Organization

Pure-Project

Organization

Example: Decision-making authority in a matrix organization:2


Page 121

Trend recommendations for forms of project organization by type of project:

Staff-Project-

OrganizationMatrix Organization

Pure Project-

Organization

• smaller, time-uncritical

projects with low risk

• Organizational

development projects or

interdepartmental

projects

• Many simultaneously

running and

interdisciplinary projects

• if several similar

projects are running

• Very complex, strategic,

risky and time-critical

projects

Suggestion

Criteria for selecting an organizational form

environmental dynamics

Qualification of personnel

corporate culture

Number and type of projects to

be processed simultaneously

Project specifics: type, novelty,

complexity, size, duration, etc.

There's no such thing as "the right solution."


Page 122

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5

Risk Management: Identification & Assessment4.1



Project Definition2


Agenda

Page 123

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5

Risk Management: Identification & Assessment4.1



Project Definition2


Agenda

Page 124

Purpose of project risk management

– (not only to) avoid risk

– recognize it

– price it and

– sell it

Project risk management

1. Identification

2. Assessment

3. Response

4. Documentation

Project Stakeholder & Risk Management

Risk Management: Identification & Assessment

Page 125

Imagine you are the project leader of one of the three projects shown below. Make a list of the risks which could occur.

Öresund BridgeInternational Sport Event Berlin Brandenburg Airport

Exercise: Risk Identification

Page 126

Step 1: project risk identification

Country Risk– Import restrictions, destruction,

technical restrictions– Political instability

Contract Risk– Risk sharing customer - client– Risk sharing with consortium

Customer Risk– Payment inability– Payment delay– Refused inspection approval

Administration Risk– Authorization– Customs, import– Visa, labor permit

126

Procedure Risk– New technologies– Licensing Procedure – System suppliers

Handling Risk– Work extent– Capacity / HR-qualification– Time limits– Engineering hours– Assembly– Logistic demands

Procurement Risk– Time limited parts– Quality critical parts– Interfaces– Quantities

Page 127

Step 2: project risk assessment

All project risks are characterized by the following three risk factors:

1. Risk event: precisely what might happen to the detriment of the project

2. Risk probability: how likely the event is to occur

3. Amount at stake: the severity of the consequences

Risk event status* = risk probability x amount at stake

*criterium value or ranking

Page 128

Step 2: project risk assessment through Delphi-method

Assess

• Representative expert team

• Risk quantification• Risk discussion• Cost assessment

Response

• Avoid• Reduce• Transfer• Accept

deliberately

Analyze

• Checklist• Morphologic Matrix• Hazop• Fault Tree (Cause

Identification)• FMEA (Failure Mode and

Effect Analysis)• Cause Consequence

p = probabilityv = value of loss or damageR = risk categories

Ri = p x v

Page 129

• Probability x Impact = Risk Hazard Rating

Step 2: project risk assessment

Page 130

Rating Percentage Cognition Ranking

Certain

AlmostCertain

Likely

Moderate

Unlikely

Rare

P1

P2

P3

P4

P5

P61%-10%

10%-30%

30%-50%

50%-70%

70%-90%

90%-99%

1

111

111

11

11

1

2 2

2

2

2

2

2

2

2

3

3

333

3

4

4

444

5

6

5

5

pro

bab

ility

1 Very High

2 High

3 Significant

4 Moderate

5 Low

6 Very Low

Risk Score Ranking

Impact6 5 4 3 2 1

Percentage 1%-10% 10%-

30%

30%-

50%

50%-

70%

70%-

90%

90%-

100%

Rating Insignifi

cant

Low Minor Mode-

rate

Major Catastro

phic

Costs < 1% 1%-3% 3%-7% 7%-15% 15%-

25%

>25%

Schedule < 7d 7-30d 30-90d 90-120d 120-

365d

> 365d

Quality

Scope

increasing consequences

increasing consequences

Qualitative Analysis Probability x Impact Matrix

Page 131

Step 3: response strategies to project risks (1/2)

Response Strategy Description

1. Avoid

Prevent

Avoid

• Protect project targets from risk impacts

• Avoid stipulations and conditions that create risks

• Add resources (personnel, equipment, consultants)

• Change schedule, procedures, study scenarios

2. Reduce

Mitigate

Neutralize

• Reduce probability and impact of risk

• Preventive measures instead of corrective

• Changes in processes

• Get third parties and other additional resources

involved

• Reduce complexity, perform additional tests

• Choose adequate partners and suppliers

Page 132

Step 3: response strategies to project risks (2/2)

Response Strategy Description

3. Transfer

Cover by insurance

Pass on to third

party

Divide and shift

• Consortium partners: establish penalties due to non-

performance or other contractual clauses

• Reconfigure suppliers‘ and subcontractors‘ contracts

4. Accept deliberately

• Accept the risk, following the LoA only when it is not

possible to eliminate, change or eliminate

• Monitoring of risk, allocation of contingencies

Page 133

Step 4: documentation of project risks

Risk ID XYZ

Type of risk

Classification

Work

package /

activity

Risk owner

Last update

Mitigation

Approaches

Trigger

Events

Contingency

plan

Project risk management

1. Identification

2. Assessment

3. Response

4. Documentation

Page 134

Appendix12

Summary11

Project Financing10



Project Completion7


Group Exercise II: Tower5.5

Cost Planning5.4

Ressource Planning5.3

Scheduling5.2

Structuring5.1

Project Planning5



Project Definition2


Agenda

Page 135

Appendix12

Summary11

Project Financing10



Project Completion7



Cost Planning5.4


Scheduling5.2

Structuring5.1

Project Planning5



Project Definition2


Agenda

Page 136

(Large) projects include a number of work packages that are difficult to manage

The purpose of structural planning is to avoid chaos

Clear project structure helps the project to become transparent

Project structuring is a prerequisite for:

– process planning

– scheduling

– resource planning

– cost planning

Task of project structure planning: Splitting the overall task into individual elements and

determining the relationships between these elements1 (hierarchies); but not sequences

(sequences).

Source : 1. Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, S.139, 2008

Project Planning

Structuring

Page 137

The classic approach is the "work package structure" - also known as "Work Breakdown

Structure" (WBS) or "Division of Work" (DOW).

– Basis for project planning

– Backbone for many project implementation activities:

Coding

reporting

assessment of progress

cost tracking

forecasts

job description

Responsibilities and contact information

Important: completeness, because it is the "plan of plans”

Bsp.: A380_TU_MA_SCH

Project Planning

Structuring

Page 138

Various structure plans:

Cost elementBOM element Project staff

overall project

Activity,

dependency

Top structuring level

Lowest structuring level

inte

rme

dia

te le

ve

ls

A: Object structure (by product)

B: Process structure (according to work packages, processes)

C: Cost structure (by accounts)

D: Organizational structure (by responsibility)

A B C D

Project Planning

Structuring

Page 139


Example: Object-oriented project structure plan

Page 140


Example: process-oriented project structure plan

Page 141

Program / Portfolio

Project 1

Subtask 1

Subtask 2

…

Work Package 1

Activity 1

Activity 2

Activity 3

…

Work Package 2

…


Project hierarchies comparable with the file structure of the PC:

Page 142

Program

Project

Subproject

Task

Subtask

1

2

3

4

5

Work Package6

Program (Apollo)

Project (Trägerrakete, etc.)

System (Ebene 1, 2, n, etc.)

Subsystem (Antrieb, etc.)

Sub-subsystem (Motor, etc.)

Component (Düse, etc.)

DescriptionLevel Example: Appollo-Program NASA

Structure further subdivided:

Page 143

Rocket

Lauch-

ning

plat-

form

Load

capa-

city

Oper-

ationPM PA SE

1.

stage

2.

stage

3.

stage

Machine

unit

Cove-

ring

Soft-

ware

Check-

out

Test

satelliteMALE EALE

Integr.

testing

device

AITIntegr.

testsPM PA SE

Miscel-

laneous

Tools MALE EALETesting

deviceAIT Tests PM PA SE

Miscel-

laneousStruct.

Propu-

sionModule

Engine Fuel

Pres-

sure

system

Command

systemPM PA SE

Miscel-

laneousEALE

Testing

deviceAIT TestsLiquids

Other

devicesTools MALE

Water

reservoir

Engine

frame

Control

system

Thrust

frame

1.

2.

3.

4.

Abbreviations:

PM – Project Management

PA – Product Assurance

SE – System Technology

MALE – Mechanical ancillary launch equipment

EALE – Electrical ancillary launch equipment

AIT - Assembly / Integration / Testing

Elements of structure plans:

Page 144


Responsi-

bility

Precon-

ditionalactivity list

Subproject 1 TPL1

Work package 1

Subtask 1 AG

Subtask 2 RL

Subtask 3

KM

1

RL 1,2

CodingDuration

in weeksNr.

1

2

3

4

5

… …7

A4T1M

2

7

3

2

Work package 2 HB6 8

Cost

[EUR]

Use of a structure plan:

Page 145

Mgmt.

Abt. A

Abt. B

Abt. C

AP

Subproject 1 Subproject 2

Project

AP AP AP AP AP AP AP AP AP

WBS as basis for project organization: Task structure and

organizational structure of a project

Page 146

Example: Plant construction project

del_ID title del_date

M.101 pump 01/07/01

M.201 coupling 03/07/01

M.204 gear box 05/07/01

M.206 air suction syst. 10/07/01

M.401 steel structure 05/07/01

M.031 control van 12/07/01

object plan

act_ID title start finish

W0712M01 installation pump 03/07/01 15/07/01

W0712M02 installation crane 10/07/01 20/07/01

process plan

del_ID act_ID

M.101 W0712M01

M.201 W0712M01

M.204 W0712M01

M.206 W0712M01

M.401 W0712M02

M.031 W0712M02

Install. Pump

01/07/96 08/07/96 15/07/96 21/07/96

Installation Crane

pump

coupling

gear boxair suction syst.

steel structure

control van

Assignment of objects

and processes

Example

Page 147

Example: Relationship WBS and Gantt-Chart

Page 148

A new mobile phone is to be produced. Split the project into a

– object-oriented (group 1)

– process-oriented (group 2)

Structure plan (with at least 25 elements)

Example: iPhone 10

Exercise "Project Structuring":

Page 149

Appendix12

Summary11

Project Financing10



Project Completion7



Cost Planning5.4


Scheduling5.2

Structuring5.1

Project Planning5



Project Definition2


Agenda

Page 150

Source : Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, S.161, 2008

Project Planning:

Scheduling

Scheduling (project flow planning) provides an overview of the organizational and

technical relationships within a project.

be examined:

– Dependencies between activities

– Possibilities for parallelizing activities

– necessary time intervals between the activities

– Interfaces between the work packages

Possible restrictions on scheduling

– Dates & Events

– resources

– expenses

Page 151


Project Planning:

Scheduling

The basis for scheduling is project structuring or the Work Breakdown Structure (WBS).

Work packages are put in an organizational and logical order

Depending on size and complexity, there are 3 different methods for scheduling:

– Lists

simple tools for easily manageable projects; project processes are arranged in logical sequence

– Gantt chart

Project processes linked to time axis; clear display of task dependencies, suitable for

manageable projects

– Network planning technique

known method for the analysis, description, planning, control and management of complex

project processes; activities are arranged in a meaningful order.

Page 152

Typical scheduling tools

• 3 typical tools for scheduling:

List Gantt Chart network plan

Activity networks Event network

Activity on node Activity on arrow Event on node

Page 153


2. Foto: Wikimedia Foundation Inc., http://www.wikipedia.com

Scheduling with the help of lists - Example:

Page 154


2. Foto: Wikimedia Foundation Inc., http://www.wikipedia.com

Scheduling using the Gantt chart (1910) - Example:

Page 155

Network planning technique: 3 main types of network plans

Operation node (AoN)

Operation arrow (AoA)

Event node (EoN)

network plans

Activity Net plan Event Net plan

process nodes process arrow event node

• Planning, time schedule and project progress

graphically clear (management information)

• Easy to understand

• Easy way to plan small projects with little effort

• Possibility to create overview plans of detailed

• Show routings

Advantages Disadvantages++ - -

• Simultaneous scheduling and scheduling

• Parallelization of activities and delay effects

not immediately apparent

• Flow logic not sufficiently represented

• Unsuitable for large projects.

Advantages and disadvantages of the bar chart:

Page 156

Source : Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, S.167+168, 2008

Project Planning:

Scheduling

Activity nodes (AoN)

– Activities are displayed as nodes, the relationships as arrows between the nodes; possibility to

record important information about activities (no., description, duration, FAZ, SAZ, FEZ, SEZ,

buffer, etc.)

Operation arrow (AoA)

– Operations are displayed as arrows (are the center), events as nodes; most important example:

"Critical Path Method" (CPM)

Event nodes (EoN)

– Events are displayed as nodes and relationships as arrows; events in the foreground (e.g.

milestones), clarity high, suitable if detailed information on the project is missing.

Basic concepts:

– Event

Description of a state (time), e.g: Milestones

– Activity

Sequence element (time span), e.g: Work package

Page 157

Relationships: Dependencies between activities

– Normal sequence (NF)

Operation B cannot start until operation A has been completed.

– Start sequence (AF)

Operation B cannot be started until operation A has been started.

– End sequence (EF)

Operation B cannot be completed until operation A has been completed.

– Jump sequence (SF)

Operation B cannot be completed until operation A has been started.

Source : Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, S.164-166, 2008

A

B

A BNF

- +A

B

A

B

NF - 3

A

B

NF + 3

A BAF A

B

A

B

AF - 3

A

B

AF + 3- +A

B

A BEF A

B

A

BEF - 3

A

B

EF + 3

- +A

B

A

B

A BSF A

BSF - 3

A

BSF + 3

- +A

B

Scheduling

Page 158


Project

Subproject 1

Subproject 2

Work package

Work package

Work package

Work package

process

process

process

process

process

project structure plannetwork

activities

process

Project Planning:

Scheduling

Procedure for creating a network:

– Design of logical relationships, splitting a

project into activities and/or events

Time analysis

– Estimation of process durations or durations

between events Critical path

Optimization

– usually not an optimal solution, iterative

process, because sometimes complex

interrelationships are not recognizable in the

first draft.

Page 159


Project Planning:

Scheduling

Time analysis:

– Earliest possible start time (FAZ)

– Earliest possible end time (FEZ)

– Latest possible start time (SAZ)

– Latest possible end time (SEZ)

Relative date calculation:

– Step 1: Forward calculation

Calculation of FAZ, FEZ

– Step 2: Backward calculation

Calculation of SAZ, SEZ

Page 160

Aktivität i Aktivität j

AF

SF

EF

NF

FAZ Frühester Anfangszeitpunkt

FEZ Frühester Endzeitpunkt

SAZ Spätester Anfangszeitpunkt

SEZ Spätester Endzeitpunkt

D Dauer (Tage)

GP Gesamtpuffer (Tage)

Z Verzögerung

NF Normalfolge

AF Anfangsfolge

EF Endfolge

SF Sprungfolge

backward

NF: SEZi = min(SAZj - Zij)

SAZi = SEZi - Di

AF: SAZi = min(SAZj - Zij)

SEZi = SAZi + Di

EF: SEZi = min(SEZj - Zij)

SAZi = SEZi - Di

SF: SAZi = min(SEZj - Zij)

SEZi = SAZi + Di

forward

NF: FAZj = max(FEZi + Zij)

FEZj = FAZj + Dj

AF: FAZj = max(FAZi + Zij)

FEZj = FAZj + Dj

EF: FEZj = max(FEZi + Zij)

FAZj = FEZj - Dj

SF: FEZj = max(FAZi + Zij)

FAZj = FEZj - Dj

Forward and backward scheduling (calendar-independent / date-

related):

Page 161

Aktivität i Aktivität j

AF

SF

EF

NF

backward

NF: SEZi = min(SAZj - Zij)-1

SAZi = SEZi – Di+1

AF: SAZi = min(SAZj - Zij)

SEZi = SAZi + Di-1

EF: SEZi = min(SEZj - Zij)


SF: SAZi = min(SEZj - Zij)+1

SEZi = SAZi + Di-1

forward

NF: FAZj = max(FEZi + Zij)+1

FEZj = FAZj + Dj-1

AF: FAZj = max(FAZi + Zij)

FEZj = FAZj + Dj-1

EF: FEZj = max(FEZi + Zij)

FAZj = FEZj – Dj+1

SF: FEZj = max(FAZi + Zij)-1

FAZj = FEZj – Dj+1





D Dauer (Tage)


Z Verzögerung

NF Normalfolge

AF Anfangsfolge

EF Endfolge

SF Sprungfolge

Forward and backward scheduling (calendar-dependent / day-

based):

Page 162

Forward Calc.:

Backward Calc.:

1

D = 3

2

D = 54

D = 4

Process -Nr.

Dauer (D)

Legende:

D = 6

3

Process 1

Process 2

Process 3

Process 4

1 2 3 4 5 6 7 8 9 10 11 12 130

Process 1

Process 2

Process 3

Process 4

1 2 3 4 5 6 7 8 9 10 11 12 130

FAZFAZ

Puffer

Puffer SAZ SAZ

SAZ

forward (NF)

FAZj = max(FEZi + Zij)+1

FEZj = FAZj + Dj-1

backward (NF)

SEZi = min(SAZj - Zij)-1


Example for forward and backward calculation:

Page 163

buffer times :

total buffer (GP)

How far can an activity be postponed without delaying the end of the project

difference between earliest start time (FAZ) and latest start time (SAZ)

Free buffer (FP)

Time span by which an operation can be shifted from its earliest position without

affecting the earliest position of other operations.

GP

GP

FP

FP

t

Aktivität i, Dauer (D)




FAZi=FEZh SEZh SAZi FEZi FAZj SEZi=SAZj

GPi = SAZi - FAZi

= SEZi – FEZi

FPi = min (FAZj - FEZi)

Project Planning:

Scheduling

Page 164

Market Research

Working day

Saturday or Sunday

(non working day)

May 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 29 30 31

SS 5

R =

C E

R =

Prototyping

FS -4

R =

Brief B

R =

Planning and Cost

G

R =

Marketing

I

R =

Design

H

J

R =

Design Approval

R =

Production 1st lot

K

ABasic Research

R =

DSpecification

R =

FDevelopment

R =

LSoD

R =

FS -4 SS 14

Project Planning:

Scheduling





D Dauer (Tage)


Alle Anordnungsbeziehungen = NF 0 (Normalfolge),

wenn nicht anders vermerkt.

Basic Research

R = Ressourcen

FAZ D FEZ

SAZ GP SEZ

Vorgang

Page 165

Optimization possibilities of a network:

– Overlapping Work Packages (Fast Tracking)

– Compaction (Crashing)

– Technological measures

– Organizational measures

Advantages and disadvantages of network planning technology:

• Transparency of complex projects

• Realistic time planning, since calendar-

independent

• "Critical path" shows optimization potential

• Basis for project management / control

• Improved coordination through visualization

• Checking the flow logic

• Project complexity becomes visible

• Basis for resource and cost planning

Advantages Disadvantages++ - -

• Complex instrument - practice necessary

• Difficult to find the "right" level of detailing

• It must be possible to distinguish between

different species

• Networks do not represent an optimal solution

of the project flow and must be changed if

necessary.


Project Planning:

Scheduling

Page 166

Example 1 of a network (activity node):

Page 167

Example 2 of a network (activity node):

Page 168

Critical Path Method (CPM)1

– Optimization method for time and cost planning

– Representation using activity arrow network plan: ²


2. Vgl. Handbuch Projektmanagement, J. Kuster et. Al, S.329, 2008

Critical path:

Where no free buffer

planed

Project Planning:

Scheduling

Page 169

Planning Milestones

Milestones2nd level planning

Network planning

Milestones1st level planning

Sett

ing

mile

sto

nes

Page 170

Source : http://globalwarmingissues.files.wordpress.com/2006/07/south-pacific-hammock.jpg

Hammock activities:

Simplified grouping of several activities between two processes or events;

e.g.: between 2 milestones

No relationships or hierarchies from WBS

Priority used for project reporting for management

Hammock Activity: Engineering

A

CE

F

D

B

Project Planning:

Scheduling

Page 171

Exercise "Network diagram technique" (1/2):

For a project with activities A to L, a schedule is to be developed with the help of an

activity node network. When does the project end (at the earliest, at the latest) if it begins

on September 1 (Monday) and no public holidays are taken into account? How large is

the total buffer? (day-related)

#ID D FAZ FEZ SAZ SEZ GP

A 7

B 1

C 10

D 7

E 10

F 10

G 15

H 7

I 15

J 5

K 20

L 1

Page 172

AF +5

NF -4

ABasic Research

R =

NF -4

AF +14

BBasic Research

R =

CBasic Research

R =

DBasic Research

R =

EBasic Research

R =

FBasic Research

R =

GBasic Research

R =

HBasic Research

R =

IBasic Research

R =

JBasic Research

R =

KBasic Research

R =

LBasic Research

R =





D Dauer (Tage)


Alle Anordnungsbeziehungen = NF 0 (Normalfolge),

wenn nicht anders vermerkt.

Basic Research

R = Ressourcen

FAZ D FEZ

SAZ GP SEZ

Vorgang

NF Normalfolge

AF Anfangsfolge

EF Endfolge

SF Sprungfolge

Exercise "Network diagram technique" (2/2):

Page 173

Solution for the exercise "Network diagram technique" (2/2):

Page 174

Appendix12

Summary11

Project Financing10



Project Completion7



Cost Planning5.4


Scheduling5.2

Structuring5.1

Project Planning5



Project Definition2


Agenda

Page 175


Project Planning:

Resource Planning

Resource planning is closely related to scheduling

– efficient resource planning enables efficient scheduling

The tasks of resource planning include:

– Determination of resource requirements

– Optimization of the use of resources

...in terms of quantity and quality, with the aim of

bottlenecks

peak

loads

underloads

...be uncovered and eliminated.

The 4 M's belong to the resources:

– Man, Machine, Material, Money

Page 176

Quantitative and qualitative resource planning:

Typical process of resource planning:

Determination of resource requirements

Determination of available capacities

Comparison of capacity and demand

resource optimization

• Calculation of capacities in relation to resource

time (e.g. person-hours, machine hours, man-

days)

• Resource Usage Profile: Resources may be

required evenly across the entire activity or along

a profile.

Quantitative Qualitative

• What qualifications are required to perform this

task ?

• Who possesses this qualification ?

• Must the work take place in a team ? If yes,

does the team already exist (e.g. as a

department or as a project team) ?

• Which machines, which materials and aids are

required ?


Project Planning:

Resource Planning

Page 177

Requirements for resource planning:

– A number of activities

– A quantity of available resources

– a set of restrictions (constraints)

– a set of objectives (optimization criteria)

Resource Planning Restrictions:

– predefined flow logic

– specified deadlines

– Resource availability per time unit / total

– Divisibility of resources

– priority rules

– budgets

Allocate resources

to activities so

that restrictions

are met and

objectives are

met.

Project Planning:

Resource Planning

Page 178

Project Planning:

Resource Planning

Resource Planning: Personnel (Man)

– Don't forget: individual differences in performance

– team performance development

Rough planning: estimation of man days, without quality consideration

Detailed planning: Resource assignment on the basis of work packages (note

restrictions)

Special restrictions on personnel planning:

– Downtimes (vacation/illness)

– Organizational form (freedom of use)

Orientation of resource planning to capacity limits

– if exceeded → Time limit at risk in the event of

– underutilization → Economic viability hazard

Page 179

Resource optimization

– Deadline-oriented optimization: adherence to the deadline in the foreground; budget of secondary

importance

– Resource-oriented optimization: adherence to capacity limits and minimum budget; deadline shift

accepted

Resource optimization measures:

– Move Work Package

– Stretch work package

– Compress work package

– Share work package

Not always all measures possible!

Project Planning:

Resource Planning

Page 180

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

(1)

(1)

(2)

(2)

weeks

weeks weeks

weeks

Before optimization: After optimization:m

an-d

ays

ma

n-d

aysCapacity

limit

Capacity

limit

Examples of resource optimization measures: (here: compressing)

Page 181

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

(1)

(1)

(2)

Before optimization: After optimization:

(2)

Examples of resource optimization measures: (here: move)

weeks

weeks weeks

weeks

Capacity

limit

Capacity

limit

ma

n-d

ays

ma

n-d

ays

Page 182

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

(1)

(1)

(2)


(2)

Examples of resource optimization measures: (here: stretch)

weeks

weeks weeks

weeks

Capacity

limit

Capacity

limit

ma

n-d

ays

ma

n-d

ays

Page 183

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

1 2 3 4 5 6 7

1 2 3 4 5 6 7

6

5

4

3

2

1

(1)

(1)

(2)


(2)

Examples of resource optimization measures: (here: share)

weeks

weeks weeks

weeks

Capacity

limit

Capacity

limit

ma

n-d

ays

ma

n-d

ays

Page 184

100%

80%

60%

40%

20%

0% 20% 40% 60% 80% 100%

crew size increase above optimum

0%

efficiency

gross labor

cost increase production increase

total crew

unproductive labor cost

Effects of team enlargement:

Page 185

Relationship between the duration of an activity, the use of resources and the costs

incurred.

Acceleration costs:

Costs

TimeDmin Dn-2 Dn-1 Dn Dn+1 Dn+2

CDmin

CDn

Project Planning:

Resource Planning

Page 186

Manual Resource Planning: tabular resource plan

Page 187

Manual Resource Planning: Resource Plan as Gantt Chart

Page 188

Source : Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, 2008

Manual Resource Planning: Resource Usage Chart

Page 189

Start

A

B

C

D

E

F

G

H Ende

Aktivität Dauer Res. FAZ SEZ GP

A 5 3 0 12 7

B 4 2 0 4 0

C 6 4 0 11 5

D 7 4 4 11 0

E 4 1 5 16 7

F 5 3 11 16 0

G 7 5 11 22 4

H 6 2 16 22 0

Res.: Ressourcen (Manntage)

FAZ: Frühester Anfangszeitpunkt

SEZ: Spätester Endzeitpunkt

GP: Gesamtpuffer

Exercise: Resource Optimization

A network and the corresponding appointment data are given.

Page 190

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Wochen

Ma

nn

tag

e

Optimize the use of resources on the basis of the network (in several

steps).

Page 191

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

12

34

56

78

91

011

12

13

14

15

B HF

D

A

C

EG

Wochen

Ma

nn

tag

e

Solution: before optimization

Page 192

Appendix12

Summary11

Project Financing10



Project Completion7



Cost Planning5.4


Scheduling5.2

Structuring5.1

Project Planning5



Project Definition2


Agenda

Page 193

Tasks of cost planning:

– Ensuring economic efficiency

– Basis for target/actual and target/actual cost comparisons

– Cost planning determines the "target”

– Data basis for calculation of the project value contribution

The following terms play a role:

– Cost centers (where costs are incurred: for example, department X)

– Cost objects (for which costs are incurred: e.g. production of a product)

– Cost types (which costs are incurred: e.g. development, marketing, etc.)

– Direct / indirect costs (for example, costs with / without reference object; direct / overhead costs)

– Fixed / variable costs (independent / dependent on output quantity)Translated with


Project Planning:

Cost Planning

Page 194

L

$

fixed

costsvariable costs

total cost

L

$

variable costs

profits

contribution margin

contribution margin

variable costs

profits

fixed

costs

total cost

critical batch size

earnings

Break-even-point

L

$ variable costs are assigned to the

cost objects

Revenues that reduce the

variable costs are used for the cost

recovery of fixed costs

Further principles of cost accounting: contribution margin

accounting

Page 195

→ different times and

evaluation criteria

Start End Disposal

Project Operation

A B C D

t

A

B

C

D

before / at the beginning of the project: preliminary cost estimate / initial

calculation

during the project execution: interim calculation / current

project controlling

to / after the end of the project: historical cost analysis / final investment cost

analysis / evaluation

with consideration of operating costs and disposal costs:

Life Cycle Costing

Consideration of the project costs over the entire project life cycle:

Page 196

Calculation / planning of project costs:

– Cost estimation

– Parametric Calculation (top down)

– Detailed Calculation (bottom up)

Estimation methods:

– experienced experts,

– often surprisingly realistic

Parametric methods:

– Costs are often proportional to physical parameters, e.g.: m², m³, kg, etc., to check statistical

values!

Detailed methods:

– for detailed project planning (WBS), the calculation is based on cost types, in particular personnel,

material, machine, transport and other costs.

Start End Disposal

Project Operation

A B C D

t

Project Planning:

Cost Planning

Page 197

Ideally, the cost structure and WBS

are identical:

– Work package = cost center

Cost structure forms the basis for

detailed cost monitoring Project

Subproject 1

Subproject 2

work package

work package

work package

work package

250 T€

130 T€

20 T€

110 T€

8 T€

project structure plan cost plan

75 T€

Project Planning:

Cost Planning

Page 198

Cost breakdown structure (CBS)

Project

Part A

Part B

Engineering

Manufacturing

Transport

Assembly

250 T€

130 T€

20 T€

110 T€

8 T€

Project structure

plan

Cost plan

75 T€

man-hours Engineering Part A

material costs manufacturing Part A

direct labor costs manuf. Part A

overheads manufacturing Part A

freight costs

customs

Other expenditures for transport

labor costs assembly Part B

overheads assembly Part B

project management costs

contingencies

overheads Engineering Part A

project overheads

Project

Manufacturing

Engineering

Transport

Assembly

Page 199

60 000

40 000

20 000

120 000

100 000

80 000

140 000

160 000

engineering costs

material costs

Manufact. costs

test costs

total costs

month

15 000

0

0

0

15 000

1

25 000

10 000

0

0

35 000

2

5 000

30 000

20 000

0

55 000

3

0

5 000

25 000

5 000

35 000

4

0

0

0

10 000

10 000

5

45 000

45 000

45 000

15 000

150 000

60 000

40 000

20 000

Project Planning:

Cost Planning

Cost Structure Plan: Time

of occurrence of the

expenses

Cost curve (above): Costs

incurred per Month

Cost Cumulative Curve

(bottom): Accumulated Cost

Values over project duration

(S-curve)

Page 200

-

+

TIME SCHEDULE WITH

PAYMENT MILESTONES

100

80

60

40

20

JAN APR JUL OCT JAN APR JUL OCT JAN APR

Mio US$

1st Shipment

2nd shipment

CASH - IN

CASH - OUT

PROFIT

Foreign Currency

Portion

70% of shipment value

against documents

PAYMENT SCHEME

PRICE BREAKDOWN

... Screw pumps with

variable speed motors

3 units .... $ 70.000 ...

Cash Flow Management

Page 201

Different S-curve progressions show the dependency of the cost progression

on the scheduling (also with regard to earliest and latest dates).

Important information for project financing

$

t

a)

b)

Possible consequences:

Case a)

→ higher interest

→ lower deadline risk

Case (b)

→ lower interest

→ higher forward risk

Date of expenditure

Page 202

Example of cost planning visualization:

Page 203

Example: Project cost planning

Page 204

Appendix12

Summary11

Project Financing10



Project Completion7



Cost Planning5.4


Scheduling5.2

Structuring5.1

Project Planning5



Project Definition2


Agenda

Page 205

Group Exercise II: Tower

1. Team up in groups of 5

2. Get your Material (same as in EX. 1 but with more Spaghetti and without Marshmallow)

3. Task: “You should build a tower that is as high as possible (desired >100cm) and

beautiful as possible, that remains free for at least 20 seconds, and you should

make as much profit as possible. For this you are given basic conditions with the

respective costs and proceeds, so that you can make considerations.

4. Planning Phase (max. 20 min)

– How many Spaghetti’s?

The less the better

– Planned height?

– Planned building time?

– Drawing of the future tower!

5. Building Phase (max. 7 min)

6. Examination

Page 206

Appendix12

Summary11

Project Financing10



Project Completion7

Monitoring & Reporting6.4

Cost6.3

Schedule6.2

Performance6.1


Project Planning5



Project Definition2


Agenda

Page 207

Appendix12

Summary11

Project Financing10



Project Completion7


Cost6.3

Schedule6.2

Performance6.1


Project Planning5



Project Definition2


Agenda

Page 208


"Planning without control is pointless, control without planning impossible."

Control is a systematic process for determining deviations between planned

and comparative values.

w = reference value (project objective)

y = controlled variable (project status)

e = w - y = Control difference (setpoint/actual comparison)

u = manipulated variable (influence possibilities, activities)

z = disturbance variable (obstructive events)

controllerControlled

System

w ye u

z

Project Controlling:

Performance

Page 209


Performance

Performance monitoring comprises two fundamental aspects:

– Quantity

– Quality → Quality management in projects

Percentage evaluation of the performance progress on the basis of work packages:

– Work package completed / not started = 100% / 0%.

– Evaluation is problematic with intermediate status

Various procedures for assessing the progress of work:

1. Fixed percentage assignments

2. Subjective estimate (%)

3. Measurement based on a quantitative quantity (time, cost, quantity)

4. milestone method

Page 210


Performance

1. Fixed percentage assignments:

– 0 / 100 %: A work package is not valuated with 100% until it has been completed.

– 50 / 50 %: As soon as a work package is started, it is valuated with 50%, at completion with

100%.

– 15 / 85 %: As soon as a work package is started, it is evaluated with 15%, at completion with

100%.

Inaccuracies in evaluation are balanced across the work packages as a whole

Particularly suitable for short work packages with relatively low project risk

Recording effort: low

Method suitability must be checked on a project-dependent basis.

Page 211


Performance

2. subjective estimation (%):

Responsible person estimates cumulative percentage of total planned work

"Socially desirable" answer

Evaluate your own performance

– Risk of overoptimistic valuation is high

– “90% syndrome”

3. measurement using a quantitative quantity (time, cost, quantity):

Quantity: suitable quantities, e.g.: m³, tons, meters (countable results)

Costs: Suitable if costs are directly assigned to activities.

Time: suitable if continuous activities, without subdivision

– Proportionality evaluation, does not always correspond 100 % exactly to performance progress

– Applicability strongly depends on the concrete design of the work package

Page 212


Performance

4. Milestone method:

Agreement of milestones and corresponding percentage of progress development to evaluate

performance progress

Further method: Number of milestones achieved in relation to number of milestones still

outstanding (caution: relations)

– Exact procedure must be defined before project start

– Depending on the project, degree of differentiation individually adjustable

Page 213

Source : Vgl. Handbuch Projektmanagement, J. Kuster et. Al, S.161, 2008

The 90% syndrome.

Page 214

Appendix12

Summary11

Project Financing10



Project Completion7


Cost6.3

Schedule6.2

Performance6.1


Project Planning5



Project Definition2


Agenda

Page 215



Schedule

A realistic estimate of the expected remaining duration is possible on the basis of the

services still to be rendered.

Relationship between time and power not always proportional (25% of time ≠ 25% of

power)

Therefore, time progress (deadline control) necessary

→ Question about the remaining duration of the project

The three methods of scheduling form the basis of schedule control:

– Lists

– Gantt chart

– network

Another possibility:

– Milestone trend analysis

Page 216


Date control by means of date lists:

This method is only suitable for manageable projects, just as it is for

scheduling and deadline control.

List 1 Planned Duration Actual Reman.- Planned Probable

Duration durat. End date End date

Process 101 30 days 40 days 5 days 31.12.09 15.01.2010

Process 102 … … … … …

Process 103

…

continue in List 2,3


Schedule

Page 217


% Work Completed

100%

80%

50%

0%

50%

0%

← additional column

Clear presentation in the event of any delays in

deadlines

Schedule control by means of a bar chart:

Page 218

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

1.1.

15.1.

1.2.

15.2.

1.3.

15.3.

1.4.

15.4.

1.5.

15.6.

1.7.

15.8.

1.9.

15.9.

1.10.

reporting periods →

milesto

ne d

ate

s

Deadline for milestone A

is met

A A A A A

BB

BB

B

CC

C

C

C

C

A

BDate for milestone B is

brought forward

Deadline for milestone C

Is delayed


Schedule

Milestone trend analysis

– development of milestones

over the reporting periods in

terms of deadlines

Page 219

Milestone trend analysis:

– the delay of mile stone

A will probably also shift B B B B B

A AA

A


Schedule

Page 220

B B B B

A A AA

BC C C C

C


Schedule

Milestone Trend Analysis:

– Problems have either surfaced

suddenly or have not been

seen before.

Page 221

B BB

A

A AA

B

C

C C C

C

B


Schedule

Milestone trend analysis:

– Problems were detected early on and

corrective measures had a positive

effect.

Page 222

Interpretation of milestone trend analysis

B B B B

AA

A

AB B

B B

A AA

A

BC CC C

C

BB B

B

AA A

A

B

C

C CC

C

Milestone A delays without influence on milestone B

Milestone A delays and causes delays of milestones

B and C

Corrective actions brought back milestone A on target

and thus B and C

Page 223

Appendix12

Summary11

Project Financing10



Project Completion7


Cost6.3

Schedule6.2

Performance6.1


Project Planning5



Project Definition2


Agenda

Page 224

Source : Vgl. F.X. Bea, S. Scheurer, S. Hasselmann, Projektmanagement, S. 296, 2008


Cost

Cost control serves to ensure project profitability in the course of the project

Cost variances should be detected as early as possible

The fundamental component of cost control is a comparison of the actual costs (actual

costs) with the planned costs (planned costs).

– Actual costs: as prompt as possible recording of the costs according to cost type per work

package; a large part of the actual costs results from the workload of the employees.

– Planned costs: include calculated costs + additional costs from possible contract changes

Frequent challenge: early cost transparency → decisive for controlling measures

Page 225

Source : Vgl. Handbuch Projektmanagement, J. Kuster et. Al, S.157, 2008

Comparison diagram of actual and target costs:

Page 226

ConclusionAll reasons for deviation are realistic and can therefore

never be ruled out. Therefore: Always keep an eye on

cost control!



Cost

Possible reasons for higher actual costs:

– Higher costs than originally planned

– Use of significantly more expensive employees than planned

– Additional services in the form of early completion of scheduled work

Possible reasons for lower actual costs:

– lower costs than originally planned

– Use of employees with lower hourly rates than planned

– a reduction in output compared with the plan

Page 227


Report dates:P

lan

ned

co

sts

in

TE

UR

:

1 2 3 4 5 6 7 8

900

800

700

600

500

400

300

200

planning

concept

analysis

Three possible cases:

Horizontal

Decreasing

Rising

Cost trend chart:

Page 228

140 %

120 %

100%

80%

60%

40%

20%

0%

0% 20% 40% 60% 80% 100% 120% 140%

time consumption

co

st

co

nsu

mp

tio

n

Planned costs

actual costs


Time/cost trend diagram:

Page 229


Earned Value Method

Previously control tools for each:

– Performance progress

– Tim e progress

– Development of costs

With the Earned Value method, these 3 variables are analyzed on a certain key date

The result of the analysis describes the actual project status achieved in relation to the

planned goal.

The method also makes it possible to forecast target achievement by the deadline.

Advantage:

– Analysis results can be evaluated graphically and displayed well

Disadvantage:

– Appropriate training and conversion measures must be introduced and enforced.

Page 230



Cost

For the Earned Value method, 3 cost parameters are initially important:

(Note: Application of the analysis on a key date t)

– Planned Value (PV) = Budgeted Cost of Work Scheduled (BCWS)

Planned costs for the planned activity according to the schedule

– Earned Value (EV) = Budgeted Cost of Work Performed (BCWP)

Planned costs for actual activity on key date

– Actual Cost (AC) = Actual Cost of Work Performed (ACWP)

Actual costs for the actual activity on the key date.

Page 231

Example 1 to illustrate the 3 cost parameters PV, EV and AC:

Process 1

Process 2

Process 3

Process 4

1 2 3 4 5 6 7 8 9 10 11 12 130

50€

Reporting date t of the Earned Value Analysis

250€

500€

100€

This results in the sizes PV, EV and AC:

PV = 50€ + 150€ + 250€ = 450€ = BCWS

EV = 50€ + 100€ + 125€ = 275€ = BCWP

AC = 60€ + 170€ + 100€ = 330€ = ACWP

PV

25%

100%

40%

EV

100€

60€

170€ AC


Cost

Page 232

Example 2 to illustrate the 3 cost parameters PV, EV and AC:

– The painter should paint the 4 walls of the office.

– Plan: 1 wall per day; 50 € (material costs + effort)

– At the end of the second day:

3 walls finished

Cost at 120€

This results in the sizes PV, EV and AC:

– PV = 50€ + 50€ = 100€ = BCWS

– EV = 50€ + 50€ + 50€ = 150€ = BCWP

– AC = 40€ + 40€ + 40€ = 120€ = ACWP

Difference between EV and AC (EV - AC) = Cost Variance (CV) = ∆ K

Difference between EV and PV (EV - PV) = Schedule Variance (SV) = ∆ L

Office


Cost

Page 233

Cost Variance (CV)

PDProject

Duration

Time

Costs

reference

date

PVBudgeted Cost of Work

Scheduled (BCWS)

ACActual Cost of Work

Performed (ACWP)

EVBudgeted Cost of Work

Performed (BCWP)

∆ t

∆ L

∆ K

Schedule Variance (SV)

BAC

Budgeted Cost

at Completion

performance

progress

Graphical representation of the Earned Value Method:

Page 234

Cost and performance variance:

– SV = EV - PV = BCWP – BCWS

– CV = EV – AC = BCWP – ACWP

Cost and performance index:

– Schedule Performance Index (SPI)

– Relation of the actual work performed to the planned work performed.

SPI = EV / PV = BCWP / BCWS

– Cost Performance Index (CPI)

– Relation of actual costs incurred to planned costs

CPI = EV / AC = BCWP / ACWP

≥ 0 OK!!!


≥ 1 OK!!!

≥ 1 OK!!!


Cost

Page 235

Clarification of the 3 cost variables PV, EV and AC on the 1st example:

Process 1

Process 2

Process 3

Process 4

1 2 3 4 5 6 7 8 9 10 11 12 130

50€

Reporting date t of the Earned Value Analysis

250€

500€

100€

PV = 450€ EV = 275€ AC = 330€

Calculation of SV, CV as well as SPI and CPI:

SV = EV – PV = -175€

CV = EV – AC = -55€

PV

25%

100%

40%

EV

100€

60€

170€ AC

SPI = EV / PV = 0,61

CPI = EV / AC = 0,83

Interpretation:

Over Budget

Behind Schedule


Cost

Page 236


(=Planabweichung)

Co

st

Va

ria

nc

e (

CV

)

(=K

oste

nab

we

ich

un

g)

- 1000

- 2000

- 3000

- 4000

- 5000

- 6000

1000

- 500- 1000 500 1000 1500- 1500- 2000

1.

Values in TEUR

2.

3.

4.

Example: Monitoring

Page 237

Exp.:

Monitoring1.20

1.16

1.12

1.08

1.04

0.82

0.84

0.88

0.92

0.96

1.00

CPI

SPI

0.98 1.02 1.06 1.10 1.140.920.88

Behind Schedule and

Underspent

Ahead of Schedule and

Underspent


Overspent

Behind Schedule and

Overspent

CP

I =

Co

st

Pe

rfo

rma

nc

e In

de

x =

BC

WP

/AC

WP

SP

I =

Sc

he

du

le P

erf

orm

an

ce

In

de

x =

BC

WP

/BC

WS

1. 2.


Cost

Page 238


Cost

Forecast of further development:

– Estimate at Completion (EAC):

EAC = BAC / CPI

EAC = ACWP + (BAC-BCWP)

EAC = ACWP + PF*(BAC-BCWP)

Sample calculation for EAC:

– Assumptions:

BAC = 200.000 €; CPI = 0,9; ACWP = 120.000 €; BCWP = 100.000 €; PF = 0,9

EAC = BAC / CPI = 200.000 € / 0,9 = 222.222,22€

EAC = ACWP + (BAC-BCWP) = 120.000€ + (200.000€ - 100.000€) = 220.000€

EAC = ACWP + PF*(BAC-BCWP) = 120.000€ + 0,9*100.000€ = 210.000€

(PF = estimated “Performance Factor”)

Page 239

Planned end

of project

Time

Costs

reference date

PVAC

EV

BAC

EAC

EACt

Graphical representation of the Earned Value Method:

Page 240

BAC = Budgeted Cost at Completion

BCWS = Budgeted Cost of Work Scheduled

ACWP = Actual Cost of Work Performed

BCWP = Budgeted Cost of Work Performed

(= Earned Value EV)

AV = Accounting Variance = BCWS - ACWP

CV = Cost Variance = BCWP – ACWP

(negative value means budget overrun)

CPI = Cost Performance Index = BCWP/ACWP

EAC = Estimate At Completion*)

VAC = Variance At Completion = BAC – EAC

PD = Project Duration

SV = Schedule Variance = BCWP – BCWS

(negative value means behind schedule)

SPI = Schedule Performance Index = BCWP/BCWS

EPD = Estimated Project Duration = PD/SPI

*) frequently used Formulas for EAC

EAC = BAC / CPI

EAC = ACWP +(BAC-BCWP)

EAC = ACWP + PF *(BAC - BCWP)

(PF = estimated “Performance Factor”)

All abbreviations and terms in English:

Page 241



Cost

Critical Notes on the Earned Value Method:

– Proportionality of service and costs is assumed, therefore the project must be checked to see

whether the services to be rendered are (approximately) proportional to the costs.

– Frequent revision of plans makes analysis using the Earned Value Method more difficult

However, these challenges also apply to other methods of project control and

management

Page 242

Exercise on the Earned Value Method: see worksheet

#

ID

Duration

in days

Resources

(men days per

time unit)

Cost of

Resource

per unit in €

Budgeted

Cost/in €

(BAC)

% complete

planned at

day 48 BCWS

% complete

actual at day

48 BCWP

Actual

Cost

(ACWP)

A 7 3 100 100 100 2100

B 1 1 100 100 100 100

C 10 3 100 100 100 4000

D 7 2 100 100 100 1400

E 10 5 100 100 100 7000

F 10 5 100 100 100 5500

G 8 3 100 25 0 4000

H 15 1 100 80 20 0

I 15 2 100 0 0 0

J 5 1 100 0 0 0

K 20 10 100 0 0 0

L 1 0 100 0 0 0

Total Cost

Page 243

Appendix12

Summary11

Project Financing10



Project Completion7


Cost6.3

Schedule6.2

Performance6.1


Project Planning5



Project Definition2


Agenda

Page 244


Project Controlling

Monitoring & Reporting

The success of a project depends to a large extent on its success:

– the right people

– the right information

– at the right time and at the right intervals

– in the right quality and to the right extent / level of detail

– with the help of the right medium to make the information available to the Commission.

The main objectives of information management are:

– Support of the cooperation of all persons involved

– Detection of changes / problems as early as possible

– Basis for delegation / coordination of project tasks

– Timely provision of decision-relevant information

Page 245


purposeMonitoring the

Activities and

overall project

Report on

Conclusion of a

Activity / Phase

/Overall project

Information about

problem cases

Public and

Authorities, internal

Project Marketing,

motivation

reporting periodsP-Team: weekly;

Management and

Customer: monthly

report recipient

final reportstandard report

(Status Report)special report PR report

not regular

but

event-driven

For serious

Problems and

upon request

quarterly or for

special events

P-manager,

project team,top-

Management,

client

P-Management,

Top management,

client

P-Management,

possibly top-

Management,

Internal or

public

Project Controlling


The main objectives of information management are: (continued)

– Creation of acceptance and participation of those affected by the project

– Securing the acquired project knowledge for further projects

Overview of possible report types:

Page 246

Use of information

by CEO, customer, PM team,

etc.

TYPE

Information, such as costs,

dates, resources, etc.

FORMAT

the information, such as selection,

sorting, aggregation, etc.

Status Project 2007

Schedule:

Budget:

Quality:

+-

Trend

Project view

1 2 3 4 5 6 7 8 9 10

Phase 1Project 1

Project 2

Phase 2

Phase 3

1. identification of the need for information: 2. definition of monitoring & reporting

Monitoring & Reporting procedure:

Page 247

Project Controlling


Selecting data means:

– show only selected data, e.g.: only engineering activities, or activities of supplier XY, or only

milestones

Sorting data means:

– show all data, but sorted by

ascending start dates (earliest start date)

Activities ascending by total buffer

The project structure, such as by phase or product structure

Aggregating data means:

– Display only totals values for a group of data, such as engineering activities in only one bar, or all

production costs only as one number.

Page 248

Project Controlling


Aspects of project monitoring:

– Technology and performance parameters (do the achieved values of the performance parameters

correspond to the specification?)

– Deadlines (are milestones and deadlines met?)

– Costs (can the project be realized with the planned budget?)

– Resources (will there be bottlenecks, will all resources be needed?)

Success criteria:

– "technically in order".

– "on time" and

– "on budget"

Page 249

Milestones

2nd level planning

Network planning

Milestones

1st level planning

Planning levels and report levels

Page 250

Status Project 2000

Schedule:

Budget:

Quality:

+-

Trend

1.1. 1.2. .... ....

M T A.:

M 1

M 2

Bemerkungen:

Project view1 2 3 4 5 6 7 8 9 10

Phase 1 Project

1

Project 2

Project 3

Phase 2

Phase 3

RessourcenData date

Dep.: 1

Dep.: 2

Dep.: 3

Example: Monitoring

traffic light report

Milestone Trend Analysis

Project progress overview

use of resources

Page 251


(=Planabweichung)

Co

st

Va

ria

nc

e (

CV

)

(=K

oste

nab

we

ich

un

g)

- 1000

- 2000

- 3000

- 4000

- 5000

- 6000

1000

- 500- 1000 500 1000 1500- 1500- 2000

1.

Values in TEUR

2.

3.

4.

Example: Monitoring

Page 252

1.20

1.16

1.12

1.08

1.04

0.82

0.84

0.88

0.92

0.96

1.00

CPI

SPI

0.98 1.02 1.06 1.10 1.140.920.88

Behind Schedule and

Underspent


Underspent


Overspent

Behind Schedule and

Overspent

CP

I =

Co

st

Pe

rfo

rma

nc

e In

de

x =

BC

WP

/AC

WP

SP

I =

Sc

he

du

le P

erf

orm

an

ce

In

de

x =

BC

WP

/BC

WS

Bu

dg

ete

d C

ost o

f W

ork

Pe

rfo

rme

d (

BC

WP

)

Actu

al C

ost o

f W

ork

Pe

rfo

rme

d (

AC

WP

)

1. 2.

Example: Monitoring

Page 253

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

Page 254


Introduction to project completion

By definition, a project has a beginning and an end.

In practice, a systematically planned project end is less common than an orderly project

start due to the following possible factors:

– Project team members are usually directly involved in new projects.

– Systematic project completion is perceived as formalism

– Project is tacitly transferred into line (especially if further support plays a major role)

– If the project fails, no one wants to talk about it much yet.

– No clear closing milestone set to begin

– Internal clients postpone final meeting until project "dissolves

Page 255


Overview of project completion

Systematic approach to project completion:

– An analysis of the entire project process; it provides insights for future projects of this kind.

– enable participants to conclude the event both emotionally and in terms of content

– Giving project staff appreciation and feedback for their work, which has a positive effect on

motivation for the next project

Page 256


Processes of the project completion phase

Sub-processes of project completion (1/4):

– Transition and maintenance plan:

Future use of resources (MA, material resources, computer equipment, offices, copiers, unused

material)

Maintenance plan: systematic support of the product or project result (e.g.: software ->

maintenance, further development)

– Final acceptance of the project results:

Acceptance test (verification of function/requirements)

Product acceptance report (description of results and possible additional demands)

Arrangements/agreements for future deployment phase (possible further services will be

regulated)

Page 257




– Project evaluation:

To what extent were project objectives achieved? (data evaluation, questionnaires)

key figures

Causes of plan variances

Page 258




– Final discussion within the team:

Strategic and operational project goals achieved?

Customer or client

Project management or project

Possible consequences of the experiences

Open tasks

– Final discussions with key stakeholders:

Discussion of project results and target achievement

Review of project progress

Exchange of experience regarding cooperation

Possible follow-up activities

Page 259




– Final report and completion of the project documentation

Distribution to the most important project participants (project management, client,

management)

Project completion report is not sufficient for final documentation: Project management/project

progress and project results incl. accompanying documents

Possible structure of the final documentation:

1. Introduction

2. Diagnosis of project management

3. Diagnosis of the project results

4. Overall assessment

5. Transition and maintenance plans

6. Findings and consequences for the future

Page 260

Lessons Learned - practical example

Page 261

Appendix12

Summary11

Project Financing10


Group Exercise III: Scrum8.4

Real Life Example8.3

Factory Scrum8.2

Basic`s8.1


Project Completion7


Project Planning5



Project Definition2


Agenda

Page 262

Appendix12

Summary11

Project Financing10




Factory Scrum8.2

Basic`s8.1


Project Completion7


Project Planning5



Project Definition2


Agenda

Page 263

High dynamics and complexity require a new management approach

for the efficient control of factory planning projects.

Framework for factory planning project

Factory Scrum for efficient project

planning & control

Dynamics & complexity in projects

Iterative instead of sequential planning

Frequent changes in premises

Dynamic

Interdisciplinarity of planners

Several subproject teams

Complexity

Rough structuring of a factory

planning project

The Factory Scrum process represents the transfer of the agile project management

framework "Scrum" to factory planning.

Page 264

Ob

jec

t

Analogy: Factory Planning - Software Engineering

Factory for the transformation of

material

Resources or organizational units

networked to form a process chain

Sequence of operations that manipulate

data

Factory Planning Software Engineering

Re

qu

ire

me

nts

for

the

ob

jec

t

Ch

ara

cte

ris

t

ic's

of

Pla

nn

ing

Data transformation software

High adaptability

Exact dimensioning of capacities

Reconfigurable software that can be

adapted to changing requirements

Alignment of the software to user

requirements

Large scope of planning objects

Strong interdependencies of planners

Project-specific procedure

Distributed Planning

Successive concretization

Use case based approach

Many interfaces between the planning

objects

Distributed Creation

Successive concretization

Source: Dissertation Bergholz, 2005

Challenges in factory planning projects and in the area of software

engineering are comparable

Page 265

Classic project procedures lack the flexibility to react to

unpredictable events.

"Experience shows that it is usually utopian to

complete projects as planned."

"A closer look at projects that encounter significant

problems [...] reveals that complex problems can no

longer be solved with routine knowledge or classical

project management methods.

"The environment is dynamic and developments can

hardly be foreseen with conventional, linear thinking,

as proven patterns and constellations are usually

missing.

Example: Waterfall model

Further examples

• Rational Unified Process

• V-model

Traditional Process Models in Software Development

A highly complex development process and a highly dynamic project environment required

a new project management approach in the area of software engineering.Source: Litke, 2004

Page 266

Highly complex development processes require the right

management style: Empirical process control as a solution?

Stacey matrix as decision aid

What is the right

management style in a

complex world?

The best fit for complex questions is empirical process control, with which decisions are

made on the basis of experience.Source: Stacey, 2002

Empirical

process control

(e.g. Scrum)

chaotic

simpelcomplicated

com

plic

ate

d complex

known unknown

kn

ow

nu

nkn

ow

n

What-AxisObjectives & Requirements

So

lutions

How

-Axis

„Triage“

„Just do it!“

Page 267

Basic principles of agile software development

Transparency:

– The progress and obstacles of a project are recorded daily and are visible to all.

Review:

– Product functionalities are delivered and evaluated at regular intervals.

Adaptation:

– The product requirements are not defined once and for all, but are reassessed after each delivery and

adapted as required.

The basic principles of agile software development have been

derived from the agile manifesto.

Agile Manifesto (u.a. Ken Schwaber, Jeff Sutherland – 2001)

1. People and interactions are more important than processes and tools.

2. Functioning software (problem solving) is more important than comprehensive

documentation.

3. Cooperation with the customer (in project) is more important than contract negotiations.

4. Responding to change is more important than adhering to a plan.

Basics of agile software development

Page 268

Scrum is a simple project management framework based on three

pillars of empirical process control

Sprint Sprint Sprint Sprint Sprint

Self-organizing Scrum

Team

Transparency

Time

Create transparency

Minimize risks

Time

Risk

Customizability

Time

Being able to adjust in

short iterations

transpa

rency

revie

w

custo

miz

ation

Scrum

Trust

Scrum theory

Page 269

Appendix12

Summary11

Project Financing10




Factory Scrum8.2

Basic`s8.1


Project Completion7


Project Planning5



Project Definition2


Agenda

Page 270

Page 271

Navigator ~ Scrum Master

Captain ~ Chief

Helmsman ~ Product Owner

Self-organizing team

Page 272

The Scrum Framework consists of three elements: Team, Events and

Artifacts

Task board

Scrum-Events

Sprint

Sprint Planning

Daily Scrum

Sprint Review

Sprint Retrospective

Product Owner

Planning team

Scrum Master

(Stakeholder)

Scrum-Team

Factory Scrum

Product Backlog

Sprint Backlog

Increment

Scrum ArtifactsIncrement

改善

Kaizen

Sprint

Backlog

VisionSprint

Review

Sprint

Planning

Sprint

Retrospective

Product

Backlog

Page 273

In the Scrum process of agile factory planning, three main roles are

distinguished

Tasks and responsibilities of the roles in the Scrum team

Responsible for the end product

(value maximization)

Responsible for the

requirements of the customer

Deputy of the client

Management of the Product

Backlog

Definition and prioritization of

the product characteristics to be

developed in each case

Product Owner

Self-organizing, interdisciplinary

team

3-9 members

Execution of the tasks defined in

the sprint backlog Finished

increment at the end of a sprint

("done")

Independent planning of the

product features to be delivered

incl. capacity estimation

Planning Team

Ensures that Scrum is applied

correctly

Serves the planning team as

moderator (Servant Leader)

Works with the Product Owner

to promote the interests of the

customer and mediates

between team and stakeholders

Scrum Master

Can also be part of the planning

team at the same time

Page 274

Five events structure the way of working in the Scrum process and

are a formal opportunity for review & adjustment

Sprint

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

At the heart of Scrum: Enables empirical, iterative process

Time frame in which a finished ("Done") product increment is

developed (usable and potentially deliverable to customers)

Time-Box: Maximum one month

Includes all other events that provide a formal opportunity for

review and adjustment:

Sprint Planning

Daily Scrums

Development and planning work

Sprint Review


New sprint starts immediately after completion of the previous

one

Page 275



Sprint Planning

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Determination of the sprint target (orientation for the planning

team)

Planning the work for the upcoming Sprint

Time-Box: Maximum 8 hours (for one month sprint)

Input for the meeting:

Product Backlog & Planning Module Map

Current product increment

Capacity & efficiency of the planning team

Planning team creates Sprint Backlog by selecting

Requirements from the Product Backlog

Planning information from the planning module map

Planning team develops implementation plan (planning tasks)

Product Owner describes target and product backlog entries

Scrum Master acts as moderator

Product

Backlog

Sprint

Planning

Sprint

Backlog

Planungs-

module

Page 276



Daily Scrum

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Daily meeting of the planning team to synchronize and

schedule work for the next 24 hours.

Time box: 15 min

Always at the same time in the same place

Three key questions to review progress in the team:

What did I do yesterday to help the planning team achieve the sprint

goal?

What will I do today to help the planning team achieve the sprint goal?

What obstacles do I see that are preventing the planning team from

reaching the sprint goal?

Critical review and customization meeting

Scrum Master coaches the planning team in the

implementation of the Daily Scrum

Taskboard

Page 277



Sprint Review

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Final meeting of a sprint to review the achieved results and

adjust the product backlog if necessary


Checking the finished ("Done") product increment

Joint discussion of the results and elaboration of what to do

next

Participants:

Scrum Team

Important stakeholders invited by the product owner

Result: Over processed Product Backlog

Inkrement

Product

Backlog

Sprint

Review

Page 278




Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Meeting for the Scrum team to check itself out


Between Sprint Review and Sprint Planning

Scrum-Team reflects what went well or bad in the past sprint

regarding people, relationships, processes and tools.

Identification of improvement measures (Kaizen-Item) and a

plan for their implementation

Scrum Master participates as a full team member (responsibility

for continuous improvement)

Inkrement

Sprint

Planning

改善

Kaizen

Sprint

Retrospektive

Page 279

Artifacts serve to plan and prioritize tasks in the project and create

transparency about essential information.

Item Detail Priority

As a worker, I don't want to have to walk more

than 10 m between provision and machine.

… 2

As a production supervisor, I always want to know

where an order is currently located.

… 1

… … …

Product Backlog (catalogue of requirements)

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Prioritized and estimated list of factory requirements:

Prioritized: Most important requirements with clearer wording and greater

depth of detail first

Estimated: Each requirement is estimated with an effort

Description in the form of user stories

e.g. "As a user of the app, I want to be able to pay by credit card."

Stakeholder Vision and Planning Modules as Essential Input

Continuous review and adjustment in the course of sprints on the

basis of newly gained knowledge (living document)

Responsible: Product Owner

Product

Backlog

Vision

Planungs-

module

Page 280

Artefacts serve to plan and prioritize tasks in the project and create


Sprint Backlog (planning task catalog)

Item Sprint Task

As a worker, I don't want to

have to walk more than 10 m

between provision and

machine.

Dimensioning of the staging areas

Arrangement of the provisioning areas in

relation to machines

…

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Contains the product backlog entries selected for the sprint and the

planning information to be generated (planning module map).

Additional detailed implementation plan (planning tasks) to achieve

the sprint target and progress control (task board)

Planning team selects in Sprint-Planning depending on available

capacity

prioritized requirements from product backlog and

from the planning module map.

1 KAIZEN item for process improvement from a sprint retrospective.

Central document to review progress in the Daily Scrum

Continuous adaptation in sprint mode

Responsible: Planning team

Task board

Sprint

Backlog

Page 281

Artefacts serve to plan and prioritize tasks in the project and create


Increment

Inkrement

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Taskboard

Sprint

Review

改善

Kaizen

Sprint

Retrospektive

Finished result from the planning tasks completed in the sprint and

the results from previous sprints

Finished ("Done") product feature, which is in principle usable

Increment can be inspected and thus supports empiricism.

Vision of the factory is implemented step by step

Increment

Page 282

The Scrum Framework consists of three elements: Team, Events and

Artifacts

Factory Scrum

Increment

Product

Backlog

Sprint

Planning

Sprint

Backlog

Vision

Task board

Sprint

Review

改善

Kaizen

Sprint

Retrospective

Planning

modules

Planning

modules

Page 283

Appendix12

Summary11

Project Financing10




Factory Scrum8.2

Basic`s8.1


Project Completion7


Project Planning5



Project Definition2


Agenda

Page 284

Practical Example 1: Factory Planning for a Fun Car

ProducerComplex Processes Efficiently Managed

Project description and tasks

Development of the long-term vision for the company

headquarters in Canada

Visualization of the vision in a 3D film

Baseline situation

Team of 2 scientific staff members and 10 student, decentralized

staff members, changing team members

High degree of dependency and interface of the individual trades

(e.g. topography and lower edge of building)

Frequent adaptation requests of the client (high dynamics) and

time pressure

© WZL Projektbeispiel


Page 285

The 3D model was constructed decentral and in parallel in individual

trades with numerous interfaces to each other.

topography

Roads and paths

buildings

connections

Gates and entrances

pathways

Machines

Height offsets


Page 286

An agile project management approach enables efficient processing

in a turbulent project environment

Definition of the

specifications sheet

Specifications sheet

of the Sprint

Project

Organization

Definition of two subproject teams; identification and definition of interfaces to

each other

Clarification of the client's general expectations of the result

Definition of deliverables that must be "passed" at the end of each sprint.

Sprint

Weekly distribution and autonomous processing of tasks on a weekly basis

within the sub teams

Scrum Daily coordination within the subproject teams (in persona or via TeamViewer)

Scrum of Scrums

Half-weekly synchronization of the subproject teams (in persona) incl. project

management

Sprint Review Joint review of the results after one week

Page 287

Practical example 2: Innovative production strategy OEMHigh speed

and fast adaptation in an agile team

Objective

Process design and implementation of an innovation-promoting

organizational and work structure

Development of an innovative, trend-setting production strategy

including disruptive technologies

Challenges

Development and adaptation of a Scrum-based working model in

a hardware environment

Agile change in the project team and at interfaces in the company

organization (classic line structure)

Development of a production system is complex

An interdisciplinary team of specialists is required

High speed required for fast implementation

Development in a dynamic environment of disruptive

technologies must be flexibly adaptable.

Future production system

Time

Technology

performance

Sprint Sprint

Page 288

The agile working mode Scrum was introduced and established for

the methodical approach of the project.

Scrum Master

Responsible for the understanding and

correct implementation of Scrum methods

Support in setting up a concept team

Moderator for Scrum events

Removal of obstacles

Synchronization of concept team and

environment

Concept team

Experts from various specialist

departments

Interdisciplinary, autonomous team

Conceptual work on content

Develops "turnkey" results in each sprint

(concepts, enablers...)

Sprint Review

Scrum Master

Konzeptteam

Product Owner

Legende:

Rolle

Artefakt

Prozess

Information

Product

Vision

Product

Backlog

Sprint

Backlog

Product

Increment

Product Backlog

Definition Product Backlog

Refinement

Daily Scrum

(15 min)

Sprint Planning

Sprint

(4 Wochen)

Product Owner

(Scrum Master) Product Owner

(Scrum Master)

Konzeptteam

(Scrum Master)

Konzeptteam

Scrum Master

Konzeptteam

Product Owner

Implementation of Scrum-Framework in the project

Page 289

The development of the production system was developed, checked

and adapted in 4-week sprints.

bre

ak

thro

ug

h g

oa

ls

pro

du

cti

on

sys

tem

Product Backlog (list of requirements)

Stakeholders (various top management bodies)

Dis

rup

tio

n

Development of production system

Industrialization on test area

Inn

ova

tio

n

Page 290

Sprint

(4 Wochen)Konzeptteam

Review & Adjustment is a core element of the Scrum methodology to

quickly gain experience

Idea

Use of a promotion concept analogous to an "Airport

& Parcel" system for the logistics backbone

Sprint backlog

Draft rough concept logistics backbone in the project

Identification of possible suppliers

Inquiry of systems

Evaluation of the systems with regard to area, costs

and flexibility

Outcome

Review of the concept idea after a 4-week sprint

Concept rejected in a qualified manner, as targets

not sufficiently met

Page 291

Lessons learned - The Scrum process must be internalized by all

parties involved.

Progress visible to all at all times

Obstacles & conflicts are recognized early

Transparency

Short, iterative planning cycles

Fast, visible results

Knowledge through experience (empiricism)

Fast adaptation to changes (fail fast)

Self-organizing teams

Parallel planning in decentralized teams possible

Responsibility empowers employees and

improves results

Only the team result counts, no competition

among team members

But...

... Rethinking and discipline in

implementation are required.

... Employees have to get

involved with Scrum and take

responsibility.

... Communication at the

interfaces of the planning

teams is crucial.

Page 292

Agile Project management

Key Learnings

The changing environment of factory planning places increasing demands

on project management.

Successful project management requires extensive planning prior to

project implementation.

When setting up project teams, numerous factors must be considered

(structural, situational, group dynamic, personal).

Roles and responsibilities must be clearly defined in the project

A project charter regulates the basic cooperation within the project and

provides support in conflict situations.

Schedule and cost control are elementary components

Agile project management is a software development approach whose

principles can be well applied in factory planning.

The use of Factory Scrum enables efficient management of complex

projects

Self-organizing teams achieve project goals in less time with lower

planning costs and improved planning results.

Page 293

Appendix12

Summary11

Project Financing10




Factory Scrum8.2

Basic`s8.1


Project Completion7


Project Planning5



Project Definition2


Agenda

Page 294

Group Exercise III: Scrum

1. Team up in groups of 5

2. Try to roll as many paper beads in 1,5 min as you can

3. Than

– Guess how many of these paper beads you can transport

through all team member hands in 2 min

4. Try it out

– Beads that fell to the ground are rejects

5. Asses your result and start the next circle from point 1. to

5. within 4 min after the counting

Repeat this 3 times

Page 295

Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

Page 296

* Source. Bea, et. Al. (2011): Projektmanagement. 2. überarbeitete und erweiterte Aufl., UVK

Verlagsgesellschaft, Konstanz mit UVK / Lucius München. S.39

Multi-project

management

(management through

projects)

Lead control loops of the project management*

Page 297

Multi-project management:

"organizational and procedural framework for the management of several

individual projects" ( cf. DIN 69901-5)

Source.: vgl. Dammer, Gemünden (2005): Studie zum Multiprojekt-Management 2005. TU Berlin.

Program management:

Management of several

projects with a common,

overarching goal

(temporary character)

Project Portfolio Management:

Analysis and optimal mixture of

projects within the given

conditions (such as customer

concerns, strategic goals or

available resources)

(permanent character)

Definition and delimitation of multi-project management

Page 298

* Source: Roland Gareis & Martina Huemann, Project Management Group,

WU Vienna University of Economics & Business

Optimized & continuous

process improvement:

delivering business strategy

& adding value

Initial

Repeatable

Defined

Managed

Optimized

Level 1

Level 2

Level 3

Level 4

Level 5

Instilled PM-discipline /

Institutionalized processes: consistent

project outputs, portfolio

planning & control

Organizational infrastructure:

processes, standards,

methodology

Localized Standards

Individualized Processes

Project Management Maturity Model (PMMM)*

Page 299

multi-project planning

multi-project implementation multi-project control

• Strategic multi-project planning

• Operational multi-project planning

• Creation of organizational

prerequisites

• Concrete implementation

measures

• Strategic multi-project control

• Operational multi-project control

MULTIPROJECT-

MANAGEMENT



Tasks and phases of multi-project management*

Page 300



Company

managem

ent Project Management Office (PMO)

Multi Project Steering Committee

(MPL)

primary organization secondary organization

Project

A Project

B

Project

C

Project

D

operations manager

divisional head

senior head of

department

department heads

master

staff

Unlimited time available organizational unit and permanent coordination connections

Temporary organizational unit and permanent coordination links

Organizational implementation by MPL and PMO*.

Page 301



Tasks and function of the PMO*

multi-project planning

– Method supplier for project selection and project prioritization

multi-project implementation

– Coordination between projects and parent organization

– synergy management

– Coordination between projects

multi-project control

– Conception and structure of the framework conditions

– Development of the control infrastructure

– Role clarification in control process

– Data collection and preparation

Creation of social arrangements for constructive conflict resolution

Performance of PM audits to optimize the PM system

Page 302



Analysis of the strategic suitability of

the individual project on the basis of

its classification in the Balanced

Scorecard

Calculation of the project value

contribution of the individual project

Qualitative evaluation of the entire

project network with the help of

portfolios

Quantitative evaluation of the entire

strategic project network with the help

of project network value contributions

Selection of the individual projects

with the help of a utility value analysis

Selection of the individual projects

with the help of a utility value analysis

sin

gle

pro

ject

pro

ject

netw

ork

Qualitative Analysis Quantitative analysis

Selection of the strategic project

network

Strategic multi-project planning

Page 303


Verlagsgesellschaft, Konstanz mit UVK / Lucius München. S.615 ff.

Operational multi-project planning

Operational multi-project planning:

– Multi-project resource planning

– Multi-project synergy planning

Tasks of multi-project resource planning:

1. Effectiveness assurance

2. efficiency assurance

Success conditions of multi-project resource planning

– project prioritization

– Uniform system for the implementation of projects

– Currently available project data

– IT infrastructure (also global!)

Page 304



Effect on Influenced projectsTotal

Influenceeffect of Project A Project B Project C Project D

Influ

encin

g p

roje

cts

Project A - 0

Project B 1 - 1 1 3

Project C 1 - 1

Project D 1 1 - 2

Total Influence 3 1 1 1 6

Multi-project synergy planning

Consideration of possible dependencies between projects:

– Strategic, technological, scheduling, economic dependencies

– the same customer or vendor

– Possible projects in the same economic or cultural environment

Influence matrix for the identification of synergy potentials

Page 305



Extended influence matrix for the identification of synergy potentials

effect of Effect on Influenced projects Total

Influence

Project influencing variables Project A Project B Project C Project D

Project A Common goal

Dates & Events

resources

technology

X

Y

Z

0

0

0

0

0

0

0

1

0

2

1

0

0

0

0

2

0

0

0

0

0

3

0

2

3

0

0

0

4

2

4

3

0

0

0

Total Influence 0 4 2 7 13

Derivation of measures:

e.g.: joint planning/agreement on technological development, etc.

Multi-project synergy planning

Page 306



Company

managem

ent Project Management Office (PMO)

Multi Project Steering Committee (MPL)

Project

A Project

B

Project

C

Project

D

(1) Company

management

formulates

strategic project

network and sets

priorities

(2) PMO supports the MPP and specifies

consequences from strategic project

network

(3) MPL decides on project approvals and

on PMO proposal on project managers

(4) PMO assumes coordination tasks and

forms the interface to project implementation.

Interaction of the Organizational Units at MPU

Page 307



Tasks of multi-project implementation

1. Development of uniform project management standards

– e.g: Standards, PM manual, tools, forms, etc.

2. Provision of a uniform and up-to-date database

– e.g: Project data, allocations, risks, stakeholders, ratios, etc.

3. Project support and coordination

– e.g: Project documentation, kick-off, workshops, milestones, etc.

4. Development of project management know-how

– e.g: PM competencies, certifications, development concepts, final reports and knowledge

management, etc.

5. Multi-project synergy and multi-project change management

– e.g: Communication between line and project management, safeguarding the overall corporate

goals, dependencies in the event of changes, etc.

Page 308



Tasks of multi-project implementation

6. implementation of project management assessments

– e.g: Professionalization of the PM in the company: Maturity level models, etc.

Page 309



Preliminary considerations for multi-project control

Object of control: entire project portfolio

Control data of the individual projects (above all: deadlines, costs, performance/quality)

forms the basis for aggregating the data on the project portfolio.

multi-project control:

1. Operational and

2. Strategic multi-project control

Page 310



Strategic monitoring

Project

A

Cost

Time Performance

Project

B

Cost

Time PerformanceProject C

Cost

Time Performance

Multi-project

resource

control

Multi-project

performance

control

Multi-project

deadline

control

Multi-project

cost control …

Multi-project control information as aggregation of the individual project

control information and as basis for the strategic execution control

activities

Operational

single project

control

Operational

multi-project

control

Strategic multi-

project control

Relationship between single and multi-project control

Page 311



Tasks of multi-project control

Task of strategic multi-project control:

To identify events that could jeopardize the development of the company and, if

necessary, to work towards a change in the development direction of the company.

cf. with radar or early warning system

Task of operational multi-project control:

1. Multi-project reporting

2. deviation analyses

3. Responsibilities in the multi-project control process

Page 312



Tasks of the operational multi-project control

1. Multi-project reporting:

Elements of the reporting system

– Goal of the reporting, addressees, information providers, rules for the preparation of the report,

survey process (collection and delivery debt)

Contents of the report

– Master data, current status, milestones, next steps, key figures, etc.

2. Multi-project deviation analysis

Basically: Adjustment of set point/actual values (e.g.: along code numbers)

– Resource variance

– Cost variance

– Power deviation

– Economic efficiency deviation

– schedule variance

Page 313



project portfolio

Strategic corporate

development

Managem

ent

sta

ff

depart

ments

GF

multi-project steering committee

PM - Office Department

U-Strategy

U-Controlling

Department

Project

A

Project

C Project

B

Organization of multi-project control

Page 314

Appendix12

Summary11

Financing Contract´s & Project Risk´s10.2

Basic´s, Reasons and Requirements10.1

Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

Page 315

Appendix12

Summary11



Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

Page 316

Source : Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck,

München. Source : http://www.muenster.de/~gberg/AEisenbahn.html

1835 Ceremonial opening of the first German railway

line from Nuremberg to Fürth

Origin and significance of project financing

Important projects since the 19th century:

Railways, Suez and Panama Canals,

mining companies, etc.

The forerunner of "BOT" projects: the

Prussian Law for Railway Construction

Companies (1838): to set tariffs so that 6-

10% profit for the company, after 30 years

of transfer of the company to the State

Increasing importance today, e.g. in PPP

projects

Germany is a leader in project financing

Significant political influence in major

international projects (e.g.: sanctions,

embargoes, customs duties, etc.)

Page 317

“Financing of a self-sustaining business entity (Project)”

Uekermann*

* Source: Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck, München., S.3

Definition, Characteristics

Characteristics of project financing:

– Establishment of a project company (Special Purpose Vehicle - SPV) of project sponsors with

equity participation

– When granting a loan, it is not the creditworthiness of the borrower that counts, but the expected

cash flow from the operation.

– After defined project completion, banks have no (non-resource financing) or limited recourse

possibilities (limited-resource financing).

– Risks are structured and distributed in such a way that they are assigned to those project

participants who are best placed to manage the corresponding risk.

Typically, the following also applies: Loan and debt financing

Page 318

Sponsor Bank

project company

Completion guarantee

(until completion)

Source : Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck, München., S.

158

Prerequisites & basic structure

Starting point is the expected output of the project: e.g. raw material, electricity,

throughput of pipelines, roads, tunnels and bridges (= safety).

Frequently also state commitments: contractual assurance of import and export licenses,

tax concessions, customs exemption, or construction of necessary infrastructure

Basic construct of the SPV

Page 319

Reasons for project financing (1/2)

1. Limitation of sponsors' liability by setting up a corporation

2. Off-balance-sheet financing through accounting of the project in the project company

(after elimination of the completion guarantees)

Page 320

Source : Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck,

München., S. 162-165

Reasons for project financing (2/2)

3. Expansion of financing options based on cash-flow-oriented assessment of

creditworthiness

4. Risk sharing through the participation of various stakeholders in the equity of the

project company

5. Flexibility with regard to loan design (grace periods, adjustment of interest payments to

cash flow, longer repayment periods than for corporate financing)

6. Higher return on equity possible (if total return on capital exceeds return on debt)

7. Lower capital costs (e.g. purchase agreements with customers of better credit

standing, favorable financing option via project bonds via the capital market)

Page 321

Project Typology

Contract structures are geared to project risks in order to minimize them

Project financing plays a decisive role in infrastructure projects - change from public to

private service provision (Public Private Partnerships - PPP)

Typology of infrastructure projects:

– energy supply

– intercourse

– message transmission

– Water supply / sewage disposal

– Recreational facilities

– educational and research institutions

– healthcare sector

Page 322

“A public-law power by virtue of which any entrepreneur is entitled to exercise

an economic activity for which there is no state reservation but for which the

public administration has a lending right.”

Huber*

* Source: Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck, München., S.26

State concessions

In contrast to the freedom of trade, the State confers an economic power for certain

activities

A concession can be:

– Market access permit

– Permit to explore and exploit resources

Page 323

Source: Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck, München., S.26

Source : http://www.warum-smartgrid.de/blog/uploads/2010/06/03.jpg

Requirements for energy industry projects

Typically power plant projects - advanced development of the model of state-licensed

private infrastructure projects

Implementation in accordance with the Electricity Internal Market Directive (EU) and the

Act on the New Regulation of Energy Industry Law (1998, BGBl. I,730)

Responsibility for energy generation, distribution and marketing formerly with the state,

today transition to private-sector investors

Long-term Power Purchase Agreement is characteristic

Duration typically 10-15 years (remuneration for energy supplied + stored)

Page 324

Typical construction contract (EPC

contract: Engineering, Procurement

and Construction) - test runs and

warranties incl. → Partners of the

project company are liable only to a

limited extent

In the event of insolvency, the

concessions also expire - financiers

often agree transfer right to hive-off

vehicle

Price fluctuations of the raw material

are passed on to the end consumer →

increased security for investors

Electricity from Austria, France and

Germany is traded on the electricity

exchange EEX in Leipzig

Source: Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck, München., S.26

Source : http://www.warum-smartgrid.de/blog/uploads/2010/06/03.jpg;

http://de.wikipedia.org/wiki/Stromb%C3%B6rse

Requirements for energy industry projects

http://www.warum-smartgrid.de/blog/uploads/2010/06/03.jpg

http://de.wikipedia.org/wiki/Stromb%C3%B6rse

Page 325

Example: Trianel coal-fired power plant Lünen GmbH & Co.KG

Trianel coal-fired power plant Lünen GmbH & Co.KG

Trianel AG

(sponsor)

31 Municipal utilities

(Participating investors)

bank consortium of

approx. 30 banks

(financiers)

Inve

stm

en

t

&

Op

era

tio

n

pro

fit

1,2 Mrd. EUR

Example: Project financing in the energy sector

Page 326

?

? %

Shareholders

MF Partner MF PC N.N.

? % ? % ?%

EPC

MAN FS AG

Gas

Legend:

Intended Partner

Gas

Gas In Talks

In Negotiations

Intake

? to/year

? MW

Electricity

N.N.

sugar cane

N.N.

WaterN.N.

? m³/h

? m³/year

? MW

Offtake

Ethanol

ElectricityN.N.

Debt Financiers

N.N.

Pre-Feasibility

N.N.

Consultants

Feedstock Analysis

N.N.

O&M

N.N.

Offtake logistics

N.N.

N.N. N.N. N.N. N.N. N.N.

Example: Project financing in the energy sector

Page 327

Appendix12

Summary11



Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

Page 328

Source. Siebel, U.R. (2001): Hanbuch Projekte und Projektfinanzierung. Verlag C.H. Beck,

München., S.166-275

project risk General risk limitation possibilities

Legal structuring possibility

1. credit risks

Credit risk (late payment, default)

Analysis of the following individual risks

(1) Equity ratio, (2) Personnel collateral, (3) Collateral in rem, (4) Credit derivatives (swaps, options, etc.), transfer of loan receivables to third parties

Credit risk of a contractual partner

(1) Analysis of intra-year payments and financial statements, (2) Bank internal or external rating by agencies

(1) Obligation in the loan agreement to submit the corresponding figures, (2) Guarantee, surety or letter of credit of a company / bank with a first-class credit rating

Financing contracts and project risks (1/3)

Project risks have to be minimized, distributed, postponed or insured.

The following project risks and the associated legal structuring options for project

financing

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2. Technical risks

General: (1) Feasibility study, (2) review by bank's own engineer or (3) independent technical consultant

(1) Contract with independent technical consultant, (2) Contractual obligation (in the loan agreement) to submit project reports.

Completion risk (timely completion)

(1) Track record of the general contractor (GU), (2) Credit rating of the GU

(1) General contractor contract (turn-key contract, fixed date, contractual penalties, lump-sum damages), (2) Sponsors' completion guarantee, performance bond, (3) Technical completion test

Technical risk

(1) Proven technology, (2) Manufacturer's track record, (3) Manufacturer's technical assistance

(1) General contractor contract (especially warranty), (2) completion guarantee of the sponsors, guarantee of the general contractor, (3) technical and performance-based completion test, (4) technical assistance agreement between project company and manufacturer


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Raw material risks (presence of raw materials)

(1) Internationally recognized classification of raw materials, (2) sample analysis by internationally recognized laboratory, (3) raw material reserves extend beyond financing period

(1) Quantity of raw materials as a prerequisite for disbursement in the loan agreement, (2) Sufficient term of the concession

Mining risk in mining, oil and gas projects

(1) Proven mining method

(1) Tried and tested mining method(1) General contractor contract (turn-key contract, fixed date, contractual penalties, lump-sum damages), (2) Sponsors' completion guarantee, performance bond, (3) Technical completion test

Risk of a suitable soil condition (e.g. when constructing large facilities / roads)


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Transport risk (replenishment and sales)

Safe transport routes

Other infrastructure risks e.g. electricity, water, qualified workers


And many more…

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Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

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Summary

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Appendix12

Summary11

Project Financing10



Project Completion7


Project Planning5



Project Definition2


Agenda

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Backup: New Agenda

Documents

PM Blockseminar Siegen2. Vgl. PMI Inc., Making project management indespensable for business results, 2008 1. Individual effort 2. New methods and data visualization 3. Optimizing