Project Management - MEM612 - Vietnam World Class ... · The Pure Project Organization ... Functional Project Organization ... A Coordination Structure Model for Project Management

MEM 612 Project Management

Chapter 1

The World of Project Management


WHAT IS A PROJECT?


Why the emphasis on project management?

• Many tasks do not fit neatly into business-as-usual.

• Need to assign responsibility and authority for achievement of organizational goals.


Characteristics of Projects

• Unique

• Specific Deliverable

• Specific Due Date


Other Common Characteristics of Projects

• Multidisciplinary

• Complex

• Conflict

• Part of Programs


PMI Definition

“A temporary endeavor undertaken to create a unique product or service”

Project Management Institute, 2000


PROJECT MANAGEMENT VS. GENERAL MANAGEMENT


Skill Requirements for Effective Project Management

• Conflict Resolution

• Creativity and Flexibility

• Ability to Adjust to Change

• Good Planning

• Negotiation

– win-win versus win-lose


WHAT IS MANAGED? THE THREE GOALS OF A PROJECT


Figure 1-1: Performance, Cost, and Time Project Targets


THE LIFE CYCLES OF PROJECTS


Figure 1-2 The Project Life Cycle


Figure 1-3 An Alternate Project Life Cycle


SELECTING PROJECTS


Nonnumeric Selection Methods

• The Sacred Cow

• The Operating/Competitive Necessity

• Comparative Benefits


Figure 1-4 The Q-Sort Method


Numeric Selection Methods

• Financial Assessment Methods

– payback period

– discounted cash flow

• Scoring Methods

– unweighted 0-1 factor method

– weighted factor scoring method


Payback Period

InflowsCash Net Annual

Investment Fixed Initial


Discounted Cash Flow

∑= +

+=

n

tt

t

k

F

1

0)1(

I- (project) NPV

where

I0 = the initial investment

Ft = the net cash flow in period t

k = the required rate of return or hurdle rate


The Weighted Scoring Model

∑=

=

n

j

jiji wsS1

where

Si = the total score of the ith project

sij = the score of the ith project on the jth criterion

wj = the weight or importance of the jth criterion


Confronting Uncertainty – The Management of Risk


What uncertainties are encountered in project management?

• Time required to complete a project

• Availability of key resources

• Cost of resources

• Timing of solutions to technological problems

• Actions taken by competitors


Can uncertainty surrounding projects ever be eliminated?

• No, but it can be managed


Risk Analysis

• Estimate probabilities or distributions associated with key parameters

• Develop analytic or simulation model

• Analyze distribution of outcomes generated by model


Risk Analysis with Crystal Ball

• Assumption Cells

• Distribution Gallery

• Forecast Cells


THE PROJECT PORTFOLIO PROCESS


The Project Portfolio Process

• Step 1: Establish a Project Council

• Step 2: Identify Project Categories and Criteria

• Step 3: Collect Project Data

• Step 4: Assess Resource Availability

• Step 5: Reduce the Project and Criteria Set

• Step 6: Prioritize the Projects within Categories

• Step 7: Select the Projects to be Funded and Held in Reserve

• Step 8: Implement the Process


The Aggregate Project Plan


Figure 1-12 An Example Aggregate Project Plan


Chapter 2

The Manager, the Organization, and the Team


THE PM’S ROLES


Facilitator

• Manager-as-supervisor versus manager-as-facilitator

• Systems approach versus analytical approach

– Suboptimization

• Must ensure project team members have appropriate knowledge and resources

• Micromanagement


Communicator

Figure 2-1 Communication Paths Between a Project’s Parties-At-Interest


Virtual Project Manager

• Geographically dispersed projects

• Communication via

– Email

– Web

– Telephone

– Video conferencing

• “Never let the boss be surprised!”


THE PM’S RESPONSIBILITIES TO THE PROJECT


Three Overriding Responsibilities

• Acquiring resources

– Getting necessary quantity and quality can be

key challenge

– “Irrational optimism”

• Fighting fires and obstacles

• Leadership and making trade-offs


Negotiation, Conflict Resolution, and Persuasion

• Necessary to meet three overriding responsibilities


SELECTION OF A PROJECT MANAGER


Key Criteria

• Credibility - The PM is believable

– technical credibility

– administrative credibility

• Sensitivity - Politically astute and aware of interpersonal conflict

• Leadership, Style, Ethics - Ability to direct project in ethical manner


PROJECT MANAGEMENT AS A PROFESSION


Project Management as a Profession

• Project Management Institute

– More than 64,000 members

• Project Management Body of Knowledge (PMBOK)

• Project-oriented organization


FITTING PROJECTS IN THE PARENT ORGANIZATION


More on “Why Projects?”

• Emphasis on time-to-market

• Need for specialized knowledge from a variety of areas

• Explosive rate of technological change

• Accountability and control


Figure 2-2 The Pure Project Organization


The Pure Project Organization

• Advantages

– Effective and efficient for large projects

– Resources available as needed

– Broad range of specialists

– short lines of communication

• Drawbacks

– Expensive for small projects

– Specialists may have limited technological depth

– May require high levels of duplication for certain

specialties


Figure 2-3 Functional Project Organization


Functional Project Organization

• Advantages

– technological depth

• Drawbacks

– lines of communication outside functional

department slow

– technological breadth

– project rarely given high priority


Figure 2-4 Matrix Project Organization


Matrix Project Organization

• Advantages

– flexibility in way it can interface with parent

organization

– strong focus on the project itself

– contact with functional groups minimizes projectitis

– ability to manage fundamental trade-offs across

several projects

• Drawbacks

– violation of the unity of command principle

– complexity of managing full set of projects

– conflict


Figure 2-5 Mixed Project Organization


THE PROJECT TEAM


Characteristics of Effective Project Team Members

• Technically competent

• Politically sensitive

• Problem orientation

• Goal orientation

• High self-esteem


Matrix Team Problems

• Weak (functional) matrix

– PM has no direct reports

– Ability to communicate directly with team

members important

• Matrix projects

– Important to maintain good morale

– Project office


Intrateam Conflict

• Life cycle phase and source of conflict

• Name-only team

• Interpersonal conflict


Chapter 3

Planning the Project


Two Extremes

• “Ready, Fire, Aim”

• “Paralysis by Analysis”


CONTENTS OF A PROJECT PLAN


Elements of Project Master Plan

• Overview

– brief description of project

– deliverables

– milestones

– expected profitability and competitive impact

– intended for senior management

• Objectives

– detailed description of project’s deliverables

– project mission statement


Elements of Project Master Plan continued• General approach

– technical and managerial approaches

– relationship to other projects

– deviations from standard practices

• Contractual aspects

– agreements with clients and third parties

– reporting requirements

– technical specifications

– project review dates


Elements of Project Master Plan continued• Schedules

– outline of all schedules and milestones

• Resource requirements

– estimated project expenses

– overhead and fixed charges

• Personnel

– special skill requirements

– necessary training

– legal requirements


Elements of Project Master Plan concluded

• Evaluation methods

– evaluation procedures and standards

– procedures for monitoring, collecting, and

storing data on project performance

• Potential problems

– list of likely potential problems


THE PLANNING PROCESS


PM’s First Job

• Understand the expectations that the organization has for the project.

• Identify who among senior managers has a major interest in the project.

• Determine if anything about the project is atypical.


Developing Invitation List

• At least one representative from senior management.

• Managers from functional areas that will contribute to the project.

• Perhaps highly specialized technical experts.


The Launch Meeting

• Senior management introduces PM

• PM chairs meeting

– develop general understanding of the functional

inputs the project will need

– may brainstorm the problem

– may develop preliminary plan

• Important results

– scope understood and temporarily fixed

– functional managers understand their responsibilities

and have committed to developing the initial plan


Sorting Out the Project

• Hierarchical planning process

– begin with project’s objectives

– list major activities needed to achieve

objectives (level 1 activities)

– delegate level 1 activities to individuals or

functional areas to develop list of level 2

activities …

– degree of detail should be same within a given

level


Three Levels of Detail in Hierarchical Planning


The Project Action Plan

• Project activities identified and arranged in

successively finer detail (by levels).

• Type and quantity of each required

resource identified for each activity.

• Predecessors and durations estimated for

each activity.

• Milestones identified.

• Individual or group assigned to perform the

work identified for all activities.


Using the Project Action Plan

• Project master schedule created by combining milestones, durations, and predecessors

– used to compare actual and planned

performance

• Use of templates


THE WORK BREAKDOWN STRUCTURE


Simple Approach for Creating the WBS

• Gather project team

• Provide team members with pad of sticky-notes

• Team members write down all tasks they can think of.

• Sticky-notes placed and arranged on wall


A Partial WBS (Gozinto Chart) for an Annual Tribute Dinner Project


A Linear Responsibility Chart


MULTIDISCIPLINARY TEAMS -- BALANCING PLEASURE AND

PAIN


Concurrent Engineering

• Carrying out steps concurrently rather than sequentially

– also referred to as simultaneous engineering

• Key advantages

– helps minimize conflict across functional

groups

– reduces project duration


Interface Coordination --Interface Management

• Key challenge facing PM is coordinating work of different functional groups.

• One approach is to identify and map the interdependencies between members of the project team.


An Interface Mapping of a Silicon Chip Design Project


A Coordination Structure Model for Project Management


Design Structure Matrix (DSM)

• Traditional project management tools tend to focus on which tasks have to be completed in order for other to start

• Another important question is what information is needed from other tasks to complete another task


Example DSM for Project with Six Activities

a b c d e f

a

b X X

c X X

d X X X

e X

f X X X

X -- information flow


Modified DSM to Show Activities to Be Completed Concurrently

a b c d e f

a

b X O

c X O

d X X X

e X

f X X X

tasks to be completed concurrently

X -- information flow

O -- potential rework situation


Comments on Empowerment and Work Teams

• Participatory management

• Success of empowered teams depends heavily on how team program implemented


Advantages of Empowerment

• High quality solutions

• Avoid micromanagement

• Team has accountability for part of project deliverable

• Synergistic solutions

• Tool for timely evaluation and feedback


Chapter 4

Budgeting the Project


Introduction

• Budgets are plans for allocating organizational

resources to project activities.

– forecasting required resources, quantities needed,

when needed, and costs

• Budgets help tie project to overall organizational

objectives.

• Budgets can be used as tool by upper

management to monitor and guide projects.


METHODS OF BUDGETING


Top-Down Budgeting

• Based on collective judgements and experiences of top and middle managers.

• Overall project cost estimated by estimating costs of major tasks

• Advantages

– accuracy of estimating overall budget

– errors in funding small tasks need not be

individually identified


Bottom-Up Budgeting

• WBS or action plan identifies elemental tasks

• Those responsible for executing these tasks estimate resource requirements

• Advantage

– more accurate in the detailed tasks

• Disadvantage

– risk of overlooking tasks


COST ESTIMATING


Work Element Costing

• Determine resource requirements and then costs for each task

– costs (e.g., materials)

– labor time

– labor rate

– equipment time

– equipment rate

– overhead

– GS&A


The Impact of Budget Cuts

Two project life cycles


Activity Versus Program Budgeting

• Activity oriented budgets are based on historical data accumulated through an activity-based accounting system.

– expenses assigned to basic budget lines

• With program budgets, each project has its own budget.

– expenses by task and time period are shown


IMPROVING COST ESTIMATES


Learning Curves

r

n nTT 1=

where

Tn = the time required to complete the nth unit

T1 = the time required to complete the first unit

r = log(learning rate)/log(2)


Tracking Signals

• Used to determine if there is a systematic bias in cost or other estimates


Other Factors

• Changes in resource prices

– Increase all estimates by same percentage

– Estimate rate of price change individually

for inputs that have significant impact on

costs

• Waste and spoilage

• Team member turnover

• “Mythical man-month”

• Organization climate


BUDGET UNCERTAINTY AND RISK MANAGEMENT


Estimate of Project Cost: Estimate Made at Project Start


Three Basic Causes for Change in Projects

• Errors made by cost estimator about how to achieve tasks.

• New knowledge about the nature of the performance goal or setting.

• A mandate.


Risk Management

• Risk Management Planning

• Risk Identification

• Qualitative Risk Analysis

• Risk Response Planning

• Risk Monitoring and Control


Failure Mode and Effect Analysis (FMEA)

• List ways project might fail

• Evaluate severity (S) of each failure

• Estimate likelihood (L) of each failure occurring

• Estimate ability to detect each failure (D)

• Calculate Risk Priority Number (RPN)

• Sort potential failures by their RPNs


Other Approaches

• Game theory

• Expected value

• Simulation


Chapter 5

Scheduling the Project


PERT AND CPM NETWORKS


History

• Late 1950s

– Program Evaluation and Review Technique

(PERT)

• U.S. Navy, Booz-Allen Hamilton, and Lockeheed

Aircraft

• Probabilistic activity durations

– Critical Path Method (CPM)

• Dupont De Nemours Inc.

• Deterministic activity durations


The Language of PERT/CPM

• Activity

– task or set of tasks

– use resources

• Event

– state resulting from completion of one or more

activities

– consume no resources or time

– predecessor activities must be completed


The Language of PERT/CPM continued

• Milestones

– events that mark significant progress

• Network

– diagram of nodes and arcs

– used to illustrate technological relationships

• Path

– series of connected activities between two

events


The Language of PERT/CPM concluded

• Critical Path

– set of activities on a path that if delayed will

delay completion of project

• Critical Time

– time required to complete all activities on the

critical path


Building the Network

• AOA Network

• AON Network


Table 5-1 A Sample Set of Project Activities and Precedences

Task Predecessor

a --

b --

c a

d b

e b

f c, d

g e


Figure 5-1 Stage 1 of a Sample AON Network


Figure 5-2 Stage 2 of a Sample AON Network


Figure 5-3 A Completed Sample AON Network


Figure 5-4 Stage 1 of a Sample AOA Network


Figure 5-5 Stage 2 of a Sample AOA Network


Figure 5-6a A Completed Sample AOA Network


Figure 5-6b A Completed Sample AOA Network Showing the Use of a Dummy Task


Table 5-2 A Sample Problem for Finding the Critical Path and Critical Time

Activity Predecessor Duration

a -- 5 days

b -- 4

c a 3

d a 4

e a 6

f b, c 4

g d 5

h d, e 6

i f 6

j g, h 4


Figure 5-7 Stage 1 of a Sample Network


Figure 5-8 A Complete Network


Figure 5-9 Information Contents in an AON Node


Figure 5-10 The Critical Path and Time for Sample Project


Calculating Activity Slack

• Slack or Float

LST - EST = LFT - EFT = Slack


Figure 5-11 An MSP Version of PERT/CPM Network


Figure 5-12 A Modified Version of MSP Network


PROJECT UNCERTAINTY AND RISK MANAGEMENT


Calculating Probabilistic Activity Times

• Three Time Estimates

– pessimistic (a)

– most likely (m)

– optimistic (b)


Figure 5-13 The Statistical Distribution of all Possible Times for an Activity


Activity Expected Time and Variance

2

2

E

6

)(Var

6

)(

6

)4(T

−==

−=

++=

ab

ab

bma

σ

σ


95 Percent Level

• Task will be a or lower 5 percent of the time

• Task will be b or greater 5 percent of the time

3.3

)( ab −=σ


90 Percent Level

• Task will be a or lower 10 percent of the time

• Task will be b or greater 10 percent of the time

6.2

)( ab −=σ


95 Percent Level (Alternative Interpretation)

• Task will be between a and b 95 percent of the time

92.3

)( ab −=σ


90 Percent Level (Alternative Interpretation)

• Task will be between a and b 90 percent of the time

29.3

)( ab −=σ


Figure 5-14 An AON Network


Figure 5-15 An MSP Version of a Sample Problem Network


Figure 5-16 A Pert/CPM Network for the Day Care Project


Figure 5-17 An MSP Calendar for the Day Care Project, 4/16/00 to 5/27/00


The Probability of Completing the Project on Time

2

)(

µσ

µ−=

DZ

=NORMDIST(D,µ,σµ,TRUE)


Figure 5-18 The Statistical Distribution of Completion Times of the Path a-b-d-g-h


Selecting Risk and Finding D

2

µσµ ZD +=

NORMINV(probability,µ,σµ,TRUE)


SIMULATION


Traditional Statistics Versus Simulation

• Similarities

– must enumerate alternate paths

• Differences

– simulation does not require assumption of

path independence


THE GANNT CHART


Figure 5-23 A Gantt Chart of a Sample Project


Figure 5-24 A Gantt Chart of Sample Project Showing Critical Path, Path Connections, Slack, EST, LST, EFT, and LFT


Figure 5-25 A Gantt Chart of a Day Care Project Showing Expected Durations, Critical Path, Milestone, and Resource Requirements


Figure 5-26 A Progress Report on a Day Care Project Showing Actual Progress Versus Baseline


EXTENSIONS TO PERT/CPM


Precedence Diagramming

• Finish-to-start linkage

• Start-to-start linkage

• Finish-to-finish linkage

• Start-to-finish linkage


Figure 5-27 Precedence Diagramming Conventions


Other Methods

• Graphical Evaluation and Review Technique (GERT)

– combines flowgraphs, probabilistic networks,

and decision trees

– allows loops back to earlier events and

probabilistic branching


Chapter 6

Allocating Resources to the Project


Introduction

• Projects Compete With One Another for

Resources

– resources that are not consumed

– resources that are consumed

• Goal of Resource Allocation is to Optimize Use

of Limited Supply

• Requires making trade-offs

– time constrained

– resource constrained


EXPEDITING A PROJECT


The Critical Path Method

• Normal Duration Estimates

• Normal Costs

• Crash Duration Estimates

• Crash Costs

• Crash Cost Per Day

Cost Normal -Cost Crash

DurationCrash -Duration Normal


Figure 6-1(a) Gantt Chart Crash Problem -- 21-Day Project


Figure 6-1(b) AON Network for Sample Crash Problem -- 21-Day Project


Figure 6-2 Gantt Chart for 20-Day Solution to Crash Problem








Figure 6-6 Project Cost Versus Project Duration for Sample Crash Problem


Probabilistic Activity Durations

• Three time estimates made for both normal resource loading and crash resource loading

• Variance of normal activity may be different than variance of crash time


Using Excel’s Solver to Crash a Project

• Target Cell

– minimize crashing costs

• By Changing Cells

– amount to crash activities

– time events occur

• Constraints

– amount each activity can be crashed

– precedence relationships

– complete project by specified time

– nonnegativity


Figure 6-7 AOA Network of Sample “Crash” Problem


Figure 6-9 Cost/Duration Graph for Sample Crashing Project


Fast-Tracking a Project

• Used Primarily in Construction Industry

• Building phase started before design and planning phases completed

• Particularly appropriate when large proportion of work is routine


RESOURCE LOADING


Resource Loading

• Amount of specific resources that are scheduled for use on specific activities or projects at specific times.

• Usually a list or table.


Figure 6-10 Action Plan and Gantt Chart for Production of a Videotape


The Charismatic VP

• Subordinates have hard time saying no to well liked boss.

• Leads to overcommitted subordinates.

• Problem further compounded because more experienced workers tend to be most over worked.

• One solution is to set specific limits on amount of overscheduling permitted.


RESOURCE LEVELING


Figure 6-11 Gantt Chart for Videotape Project, Adjusted for Client Availability


Figure 6-12 Resource Overallocation Report for Scriptwriter Showing all Activities


Figure 6-13 Graphic Resource Overallocation Report for Scriptwriter


Figure 6-14 Resource Leveled Report for Scriptwriter Showing all Activities


Figure 6-15 Graphic Resource Leveled Report for Scriptwriter


Figure 6-16 Daily Resource Loading Chart for Videotape Project, Scriptwriter Leveled


Figure 6-17 Final Videotape Project Gantt Chart Schedule, With Two Scriptwriters and Producer Leveled


Resource Loading/Leveling and Uncertainty

• 28,282 Hours Needed

• Group Capacity

– 21 (people) × 40 (hrs/wk) × 34 wk = 28,560 labor hrs

• Correction for Holidays

– 21 × 3 (days) × 8 (hours) = 504 labor hrs

• Vacations

– 11 × 2 (weeks) × 40 = 880 labor hrs


Resource Loading/Leveling and Uncertainty continued

• Hours Available

– 28,560 - 504 - 880 = 27,176

– about 1100 less than needed

– 28,282/27176 = 1.04

• What about

– Workers getting sick?

– Task not ready when worker is ready?

– Change orders?


Figure 6-18 Thirty-Four-Week Resource Loading Chart for a Software Engineering Group


ALLOCATING SCARCE RESOURCES TO PROJECTS


Use of Software

• Begin with Pert/CPM Schedule

• Activities examined period by period and resource by resource

• In cases where demand for resource exceeds supply, tasks considered one by one and resources assigned to these tasks based on priority rules


Some Comments about Constrained Resources

• Scarcity of resources rarely applies to resources in general

• “Walts”


Some Priority Rules

• As soon as possible

• As late as possible

• Shortest task duration first

• Minimum slack first

• Most critical followers

• Most successor

• Most resources first


Choosing a Priority Rule

• Schedule Slippage

– amount project or set of projects delayed

• Resource Utilization

– extent that resources are over or underworked

• In-Process Inventory

– amount of unfinished work in the system


ALLOCATING SCARCE RESOURCES TO SEVERAL

PROJECTS


Pseudoactivities

• Used to link several project together

• Have duration but do not require any resources

• This approach allows a set of projects to be dealt with as though it were a single project

– use of MSP’s resource loading and leveling

charts and tables


Figure 6-19 Multiple Projects Connected with

Pseudoactivities Shown on a Time Line


Resource Allocation and the Project Life Cycle

Figure 6-20 Project or task life cycles


GOLDRATT’S CRITICAL CHAIN


Introduction

• Similar issues that trouble people about

working on projects regardless of type of

project

– unrealistic due dates

– too many changes

– resources and data not available

– unrealistic budget

• These issues/problems related to need to

make trade-offs

• To what extent are these problems caused by

human decisions and practices?


Figure 6-21 Three Project Scenarios


Table 6-6 Project Completion Time Statistics Based on Simulating Three Projects 200 Times

Scenario 1 Scenario 2 Scenario 3

Average 50.4 51.9 53.4

Std Dev 7.1 6.3 5.3

Max 69.4 72.7 69.3

Min 30.1 36.1 39.3

Median 50.0 51.8 53.1


Observations

• Average Completion Times

• Implications of Assuming Known Activity Times

• Shape of the Distribution

• Worker Time Estimates

• Impact of Inflated Time Estimates

• Student Syndrome


Multitasking

Figure 6-24 Two Small Projects


Figure 6-25 Alternative Gantt Charts for Projects A and B


Common Chain of Events

• Underestimate time needed to complete project

– assumption of known activity times and

independent paths

• Project team members inflate time estimates

• Work fills available time

– student syndrome

– early completions not reported


Common Chain of Events continued

• Safety time misused

• Misused safety time results in missed deadlines

• Hidden safety time complicates task of prioritizing project activities

• Lack of clear priorities results in poor multitasking


Common Chain of Events concluded

• Poor multitasking increases task durations

• Uneven demand on resources also results due to poor multitasking

• More projects undertaken to ensure all resources fully utilized

• More projects further increases poor multitasking


Reversing the Cycle

• Reduce number of projects assigned to each

individual

• Schedule start of new projects based on

availability of bottleneck resources

• Reduce amount of safety time added to

individual tasks and then add some fraction back

as project buffer

– activity durations set so that there is a high probability the task will not be finished on time


The Critical Chain

• Longest chain of consecutively dependent events

– considers both precedence relationships and

resource dependencies

• Project Buffer

• Feeding Buffer


Figure 6-26 Sample Network Diagram


Figure 6-27 Project and Feeder Buffers


Chapter 7

Monitoring and Controlling the Project


Introduction

• Monitoring and Control are opposite sides of selection and planning

– bases for selection dictate what to monitor

– plans identify elements to control

• Monitoring is collection, recording, and reporting of information

• Control uses monitored information to align actual performance with the plan


THE PLAN-MONITOR-CONTROL CYCLE


Plan-Monitor-Control Cycle

• Closed loop process

• Planning-monitoring-controlling effort often minimized to spend time on “the real work”


Figure 7-1 Project Authorization and Expenditure Control System Information Flow


Designing the Monitoring System

• Identify special characteristics of performance,

cost, and time that need to be controlled

– performance characteristics should be set for each

level of detail in the project

• Real-time data should be collected and

compared against plans

– mechanisms to collect this data must be designed

• Avoid tendency to focus on easily collected data


DATA COLLECTION AND REPORTING


Formats of Data

• Frequency Counts

• Raw Numbers

• Subjective Numeric Ratings

• Indicators and Surrogates

• Verbal Characterizations


Data Analysis

• Aggregation Techniques

• Fitting Statistical Distributions

• Curve Fitting

• Quality Management Techniques


Figure 7-2 Number of Bugs per Unit of Test Time


Figure 7-3 Percent of Specified Performance Met During Successive Repeated Trials


Figure 7-4 Ratio of Actual Material Cost to Estimated Material Cost


Reporting

• Reports

– Project Status Reports

– Time/Cost Reports

– Variance Reports

• Not all stakeholders need to receive same

information

• Avoid periodic reports

• Impact of Electronic Media

• Relationship between project’s information

system and overall organization’s information

system


Report Types

• Routine

• Exception

• Special Analysis


Meeting Guidelines

• Meetings should be help primarily for group decision making

– avoid weekly progress report meetings

• Distribute written agenda in advance of meeting


Meeting Guidelines continued

• Ensure everyone is properly prepared for meeting

• Chair of meeting should take minutes

– avoid attributing remarks to individuals in the

minutes

• Avoid excessive formality

• If meeting is held to address specific crisis, restrict meeting to this issue alone


Virtual Reports, Meetings, and Project Management

• Use of the Internet

• Use of Software Programs

• Virtual Project Teams


EARNED VALUE


Earned Value

• Percent of task’s budget actually spent not good indicator of percent completion

∑ ×

tasksall

oncompletiti % task cost budgetedtask


Conventions Used to Estimate Progress on Tasks

• 50-50

– 50% complete when task started and other

50% added when task finished

• 100%

– 100% complete when finished and zero

percent before that

• Ratio of Cost Expended to Cost Budgeted


Variances

• Cost/Spending Variance

EV - AC

• Schedule Variance

EV - PV

• CPI

EV/AC

• SPI

EV/PV


Additional Items of Interest

• Estimated (Remaining Cost) to Completion

ETC = (BAC - EV)/CPI

• (Total Cost) Estimated at Completion

EAC = ETC + AC


PROJECT CONTROL


Background

• Acts which seek to reduce differences between plan and actuality

• Difficult Task

– human behavior involved

– problems rarely clear cut


Purposes of Control

• Stewardship of Organizational Assets

– physical asset control

– human resources

– financial control

• Regulation of Results Through the Alteration of Activities


DESIGNING THE CONTROL SYSTEM


Background

• Purpose is to correct errors, not punish the

guilty

• Investments in control subject to

diminishing returns

• Must consider impact on creativity and

innovation

• Be careful not emphasize short-run results

at the expense of long-run objectives

• Dangers of across the board cuts


Primary Mechanisms by Which PM Exerts Control

• Process Reviews

• Personnel Assignments

• Resource Allocations


Components of a Control System

• Sensor

• Standard

• Comparator

• Decision Maker

• Effector


Types of Control Systems

• Go/No-Go Controls

– predetermined standard must be met for

permission to be granted to continue

• Post-Control

– done after project completed

– purpose is to allow future projects to learn

from past project experience


Figure 7-7 Sample Project Milestone Status Report


Tools for Control

• Variance Analysis

• Trend Projections

• Earned Value Analysis

• Critical Ratio

cost actual

cost budgeted

progress scheduled

progress actual×


Figure 7-8 Trend Projection


Figure 7-9 Critical Ratios with Control Limits


Figure 7-10 Cost Control Chart


SCOPE CREEP AND CHANGE CONTROL


Scope Creep

• Coping with changes frequently cited by PMs as the single most important problem

• Common Reasons for Change Requests

– Client

– Availability of new technologies and materials


Purpose of Change Control System

• Review all requested changes

• Identify impact of change

• Evaluate advantages and disadvantages of requested change

• Install process so that individual with authority may accept or reject changes


Purpose of Change Control System continued

• Communicate change to concerned parties

• Ensure changes implemented properly

• Prepare reports that summarize changes made to date and their impact


Rules for Controlling Scope Creep

• Include in contract change control system

• Require all changes be introduced by a change order

• Require approval in writing by the client’s agent and senior management

• Consult with PM prior to preparation of change order

• Amend master plan to reflect changes


Chapter 8

Evaluating and Terminating the Project


EVALUATION


Background

• A project evaluation appraises the progress

and performance relative to the project’s initial or

revised plan.

• Also appraises project against goals and

objectives set for it during selection process.

• Projects should be evaluated at a number of

crucial points.

• Purpose is to improve process of carrying out

project.


Evaluation Criteria

• Original criteria for selecting and funding project

• Success to date

• Business/Direct Success

• Future Potential

• Contribution to Organization’s Goals

• Contribution to Team Member Objectives


Measurement

• Measuring performance against planned budgets and schedules straightforward

• Earned value analysis more complicated


PROJECT AUDITING


The Audit Process

• Timing depends on purpose

• Three Levels

– general audit

– detailed audit

– technical audit


Steps in Project Audit

• Familiarize audit team with requirements of project

• Audit project on-site

• Write up audit report

• Distribute report


Behavior Aspects

• Audit team must have free access to anyone

with knowledge of the project

• Project team members rarely trust auditors

• Audit team must understand politics of project

team

• Information must be confirmed

• Project team should be made award of in-

process audit

• No judgmental comments


The Audit Report

• Introduction

– description of project and its goals

• Current Status

– comparison of work completed and planned

• Future Project Status

– conclusions regarding project progress

– recommendations for changes


The Audit Report continued

• Critical Management Issues

– issues senior management should monitor

• Risk Analysis and Risk Management

– potential for project failure and monetary loss

• Final Comments

– caveats, assumptions, limitations


PROEJCT TERMINATION


When to Terminate a Project

• Sunk Cost Approach

– whether organization is willing to invest the

time and cost required to complete the project

• Two Other Criteria

– the degree to which the project has met its

goals

– the degree to which the project qualifies

against a set of factors associated with

success or failure


Types of Project Termination

• Project Extinction

– project activity suddenly stops

– either successfully completed or high

expectation for failure

• Termination-By-Addition

– becomes a new formal part of organization

• Termination-By-Integration

– becomes standard part of operating

systems


Types of Project Termination continued

• Termination-By-Starvation

– a project in name only


The Termination Process

• Decision made by broad based committee of senior managers

• Termination process should be specified in project plan

• Termination manager


Figure 8-3 A Termination Project


The Project Final Report

• Project Performance

– what was achieved and reasons for resulting

performance

• Administrative Performance

– review of how well administrative practices

worked

• Organizational Structure

– identify modifications to help future projects


The Project Final Report continued

• Project Management Techniques

– recommendations for improvements in future

projects

Documents

Project Management - MEM612 - Vietnam World Class ... · The Pure Project Organization ... Functional Project Organization ... A Coordination Structure Model for Project Management