COORDINATION AND CONTROLME751 Project Management CHAPTER 5

5 STEP PROJECT MANAGEMENTPLANNING IMPLEMENTATION

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DEFINE

Identifyproject activities

Estimate time and cost

Sequence Project Activities

Identify Critical Activities

Write Project Proposal

ORGANIZE CONTROL PLAN CLOSE

State the Problem

Identify ProjectGoals

List theObjectives

Determine PreliminaryResources

Identify Assumptions and Risks

Determine Personnel Needs

Recruit Project MangerRecruitProject Team

Organize Project Team

Assign Work Packages

Define Management Style

Establish Control Tools

Prepare Status Reports

Review ProjectSchedule

Issue Change Orders

Obtain ClientAcceptance

Install Deliverables

Document theProject

Issue Final Report

Conduct Post-ImplementationAudit

Project overview WBS Recruit Criteria Variance Reports Final Report Project network Define Work packages Status Reports Audit Reports Critical Path Assign Work Packages Staff Allocation Reports

1.EVERY PROJECT HAS ITS OWN BOUNDARIES AND LIMITS

2.PROJECT WILL FACE ROUGH WEATHER IN THE BEGINNING

3.PROJECT WILL TAKE QUITE A LONG TIME TO ACQUIRES ANY SEMBLANCE OF STABILITY

4.IT HAS TO LOOK FOR HELP FROM EXTERNAL INTERVENTION

5.IF NOT, THEN THE WORK SYSTEM WILL DISINTEGRATE

6.THE SUPPORT WILL NOT BE AVAILABLE AT CRITICAL MOMENTS

TYPES OF EXTERNAL INTERVENTION

1. PROJECT DIRECTION

2.PROJECT COORDINATION

3.PROCT CONTROL

CHARACTERISTICS

1.IT CARRIES A STAMP OF AUTHORITY

2.IT FORCE TO GET RESULT

3.IT NEEDS AT DIFFERENT PROPORTIONS AT DIFFERENT PHASES OF PROJECT

4.THESE ARE THE ESSENCE OF PROJECT MANAGEMENT

WHAT IS PROJECT DIRECTION?

PROJECT DIRECTION REFERS TO THE USE OF AUTHORITY TO CHANNELISE THE VARIOUS ACTIVITIES OF THE PROJECT ON DESIRED LINES….

1. IT IS MAINLY CONCERNED WITH THE IMPLEMENTATION PHASE OF THE PROJECT

2.WHEN SCHEDULES ARE AUTHORISED, THEY BECOME WORKING DOCUMENTS

3.EXECUTIVE AGENCIES OR INDIVIDUALS WILL THEN STRICTLY FOLLOW THE PLANS AND SCHEDULES

PROJECT INITIATION PERIOD

1.SCOPE OF WORK2.SPECIFICATION OF RESULTS OF COMPLETED WORK3.BASIS OF WORK4.DIVISION OF WORK5.SCHEDULE OF WORK6.BUDGET OF WORK7.SYSTEM AND PROCEDURE FOR WORK8.COORDINATION OF WORK8.AUTHORITY AND ACCOUNTABILITY OF WORK9.CONTROL OF WORK

PROJECT KICK-OFF MEETING

1. COORDINATION OF THE PROJECT REQUIREMENT AND THAT OF THE PARTICIPATING AGENCIES

2.ESTABLISHMENT OF DIRECTIVES AND CONTROL

3.TEAM BUILDING

4.COMMUNICATION

DIRECTION DURING PRODUCTION PHASE

1.DIRECTION IS PROVIDED ON A CASE TO CASE BASIS THROUGH FORMAL DOCUMENT

2.DESIGN REVIEW MEETING

3.VALUE ENGINEERING REVIEW

DESIGN REVIEW MEETINGS

1.REVIEW MEETINGS PROVIDE A FORUM FOR PARTICIPATIVE DECISION MAKING AND COMMUNICATION OF DIRECTION2.A DESIGN REVIEW MEETINGS ARE HELD TO CRITICALLY EXAMINE AND AUTHORISE THE BASIC DESIGN WHICH HAS TO TAKE OF ALL SUBSEQUENT WORK ON PROJECT HARDWARE3.SINCE THE BASIC DESIGN IS SO IMPORTANT FOR THE PROJECT, A CRITICAL REVIEW BY TOP SPECIALISTS AND APPROVAL FROM APPROPRIATE AUTHORITIES ARE ESSENTIAL BEFORE IT IS ISSUED DOWN THE LINE FOR IMPLEMENTATION

CONTINUED:

4.A DESIGN REVIEW MEETING CHECKS THE PROJECT DESIGN FROM ALL ANGLES (FUNCTIONAL UTILITY, ENERGY OPTIMISATION, HANDLING MINIMISATION, CONSTRUCTABILITY, SAFETY, ENVIRONMENTAL IMPACTS AND ECONOMY)

5.THE RESULTANT EFFECT OF ANY GOOD OR BAD DESIGN IS COST, THE DESIGN FINALLY TO BE RELEASED FOR IMPLEMENTATION MUST BE COST EFFECTIVE

VALUE ENGINEERING REVIEW

1.A VALUE ENGINEERING REVIEW USES COST AS THE BASIS OF REVIEW AND ENSURES THAT VALUE IS INCLUDED IN DESIGN

2.VALUE OF AN ITEM, IN THIS CONTEXT WOULD MEAN THE MINIMUM COST AT WHICH THE FUNCTION PROVIDED BY THE ITEM UNDER REVIEW COULD BE OBTAINED FROM ANY OTHER ITEM. THUS WHEN NON FUNCTIONAL COST IS REMOVED FROM AN ITEM, ITS VALUE INCREASES

3.IN VALUE ENGINEERING REVIEW ONE WOULD COMPARE THE HARDWARE COST OF AN ITEM WITH ITS VALUE

MAJOR FUNCTIONS

1. OPERATION

2. TRANSPORTATION

3.PERMANENT STORAGE

4.TEMPORARY STORAGE

5.INSPECTION/CONTROL

STAGES OF VALUE ENGINEERING REVIEW

1.BASIC PACKAGE REVIEW

2.TENDER OR WORK PACKAGE REVIEW

3.POST CONTRACT ENGINEERING REVIEW

PURCHASE ORDERS AND WORK ORDERS

1.TECHNICAL DIRECTIONS

2.COMMERCIAL DIRECTION

3.MANAGERIAL DIRECTION

4.ADMINISTRATIVE DIRECTION

ONGOING DIRECTIONS

1.UNDERSTANDING THE DECISION ENVIRONMENT.

2.ESTABLISHING THE DECISION ALTERNATIVES.

3.EVALUATION OF ALTERNATIVES AND SELECTION.

4.COMMUNICATING THE DECISION .

5.CHECKING UP IF THE DECISION IS WORKING OR NOT.

COMMUNICATIONS MANAGEMENT

Develop the project communication plan Stakeholder analysis Information to be shared (to who, what, how,

when, why) Technology

Distribute information Project databases, filing system, software /

hardware Report up, down and across the firm

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COMMUNICATIONS MANAGEMENT

Report performance Project plan, work results Project performance reports

Variance reports, trend analysis, change requests Report the Good, Bad & Ugly

Administrative closure Knowledge management

Archives Acceptance forms Lessons learned

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SAMPLE COMMUNICATION FORMATS

Status reports Team meetings Project files PR initiatives Newsletters E-mail Databases Website RACI

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Posters Coffee room chats Milestone celebrations Kickoff meeting Close out meeting Lessons learned

sessions Paraphrase & Validate Drawings Schedule update

COMMUNICATIONS MANAGEMENT TIPS If you think you have communicated

enough…go back and do it again Use different formats Frequently use modes of

communication that allow you to “see the whites of their eyes”

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Role of MIS in Project Management

Why Do People Need Information?

Individuals - Entertainment and enlightenment

Businesses - Decision making, problem solving and control

Information system allows managers to make effective and timely decisions.

will supply the managers, information from which to base their decision on.

These are known as Management Information Systems (MIS).

MIS - DEFINITIONS

Definitions – vary in the literature

“…MIS is an integrated computer based user-machine system that provides information for supporting operations and decision making functions”

Awad (1988)

MIS DEFINED

“..It [MIS] is a system using formalised procedures to provide management at all levels in all functions with appropriate information based on data from both internal and external sources, to enable them to make timely and effective decisions for planning, directing, and controlling the activities for which they are responsible..”

Lucey (1997)

MIS DEFINED

“..Organized approach to the study of information needs of management at every level in making operational, tactical, and strategic decisions. Its objective is to design and implement man-machine procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner..”

www.Businessdictionary.com (2009)

Terminology Confusion

MIS = the study of information technology in business settings

But, MIS is also a term often used to refer class of systems which support operational and tactical decision making

Basic Requirements for a Project Management Information System:

Each project header must be able to update his project on a monthly basis.

The project leader must be able to manually device the information needed to measure the progress of the project.

The analysis reports must be then typed up for distribution.

MIS COMPONENTS

Backup dataRestart jobVirus scan

HardwareSoftware

People ProceduresData

Components of MIS

Scheduled reports Produced periodically, or on a schedule (daily,

weekly, monthly)

Key-indicator report Summarizes the previous day’s critical activities Typically available at the beginning of each day

Demand report Gives certain information at a manager’s request

Exception report Automatically produced when a situation is unusual

or requires management action

Optimum Project MIS may be described as follows:

The existing information system are reduced to three elements

human resources financial resources material resources Direct entry of data is via terminals with CRT’S

Individual reports may be generated for other than project needs.

Information is formulated along with estimates supplied by the project leader to display a current summary.

Additional reports could be generated from this information such as facilities scheduling , work planning , manufacturing engineering etc…..

Project plans can be transferred by project leaders to line management via a CRT.

The system will have the capability to access central pertinent files.

The system will have the capability for data correction at the original source, thus reducing the labour required.

MIS Should be..

Flexible: for different ways of analysing data, and evaluating information.

Range of skills and knowledge catered for.

Assist the operational process through communication between staff.

Easy to extract the relevant information i.e., it is presented in an appropriate way.

PERFORMANCE CONTROL

• When do we say that the performance of any project is good or not ?

The performance of a project is good when it is completed based on time constraints, specified budget and project specifications.

Otherwise the project ends up with failure.

Some of the reasons for the poor performance of a project are:

If it is abandoned at half the way. If it is not producing a specified

quality of a product. If it becomes sick soon after going in

to the commercial production.

PERFORMANCE INDICATORS:

The investor, project manager and also the public must be given with some indications about the management while the project is still in progress.

Some of the performance indicators are:

Time over-run Cost over-run Project sickness Productivity Value

1) TIME OVER-RUN: This basically means not sticking to a pre-planned time schedule

of the project. In order to get the job cleared through the approving authorities, a schedule may be fixed which can be far away from realistic.

The vendors and contractors may just add to the confusion by promising deliveries which can make anything possible on paper.

Besides, some subsequent modifications or changes have to be made to suit the project requirements which in turn increases time and cost.

2)COST OVER-RUN: Anything done to a project including time over-run would be

reflected in the cost. Cost estimates in a project are to be revised at various stages to

improve their accuracy. Cost over-run is used to represent the variance between the

original cost and the final cost incurred.

Project control

Time cost

Performance

3)PROJECT SICKNESS: An efficient project manager is the one who makes the best

possible use of resources for achieving the project objectives. What ever the project manager does w.r.t the resources will be

reflected in the cost and what the project manager provides in return to justify this cost is a plan which is to be called successful and must provide a saleable output.

The ratio of this output to the cost incurred for putting up the plan could be an indicator of a project management performance.

4)PRODUCTIVITY: A productivity indicator reflects how the resources have been

utilized either for production of goods and services or for creation of facilities for the same.

Productivity is mainly measured to ensure the profitability of the plant and to ward of the sickness.

5)VALUE: Value in this context, indicates the quality of the

products or services that are the final outcome of a project.

If the product or services do not meet customers requirement, then the ideas such as time over-run, cost over-run, high productivity, all become redundant.

PROGRESS CONTROL: It requires a continuous monitoring during the

production phase. There must be a right contractual stipulations

regarding warranties and guarantees.

PERFORMANCE PARAMETERS: These are the parameters which are required to

be identified in a project.• Some of the critical performance parameters

are; Raw materials Power consumption per unit of production Outcome etc…. How ever the design and specifications must be

made to meet these performance requirements. Thus the critical performance parameters must

be tracked through all the stages of project execution till the final performance guarantee confirms the achievement of the performance.

COST OF A PROJECT This includes the total amount spent on all items associated with a project

which are supported by funds, investments etc..

The amount spent on the following

constitutes the project cost: Land and site development Building and civil works Plant and machinery Technical know-how & engineering

fees Pre-operative costs Maintenance costs & others

COST CONTROL

This involves the monitoring of costs, recording information in different areas and analyzing these massive quantities of data – in order to take the corrective action before it is too late.

Anything done to a project including time & performance factors, will be reflected in the cost - they are interrelated.

Hence, the cost control is of prime importance in the success of a project.

If the project cost can be brought down

without compromising on the time and performance parameters, then that would indicate an excellent cost management.

It includes the following factors- Cost estimation

When creating a budget for a job, project management must be able to engage properly in the process of cost estimating. This is a calculated projection of the cost for the materials required by the project. The materials considered in cost estimating can be any resources required for the job such as raw materials or employee wages. Too high an estimate, and the bid could be lost to another company.

Cost accounting “ The language of business “it is the art of recording, classifying and summarizing the transactions of money and different events in a significant manner. Maintenance of project ledgers - showing WBS budget-line items - expenditures & forecasts.

Direct costs

The costs that are directly attributed to the project work. These are also called variable costs because their rate of expenditure depends on the intensity of the project activity.

If no work is done, then no direct costs.

Indirect costs

-these are the costs that must be incurred by the organization to provide heat, light, rent, insurance, maintenance costs and others. These costs do not vary from day to day, hence they are called Fixed costs, also known as Overhead costs.

Cost escalation

- increase in all costs above their original estimate in case of national cost inflation and increase in wages & salaries.

This is expressed as a percentage and only significant in times of high inflation and for projects planned to last for several years.

COST CONTROL METHODS:- cost can be controlled under the following stages of a project (ex:construction project)

At zero date - control estimate, budgeting & network

plan should be implemented. Time control and hence cost control by budgetary restrictions.

During detailed engg. - the cost control estimates prepared

before zero date will soon overrun unless design & engineering procedures are cont. reviewed. It includes-

- Over all plot plan- Building designs-Specifications & drawings

During procurement phase : - competitive bidding is the most common practice for procuring a technically feasible item at lowest cost. In addition to this, following steps are taken for cost control :

1. Vendor association in specification2. Detailed scope and specifications3. General conditions of contract (GCC)4. Delivery in erectable sequence

During construction:- less scope for cost reduction. However there are certain items for cost control:

1. Extra items2. Idle charge3. Inventory costs4. Cash flow planning5. Cost of operating staff and

administrative expenses.

-10 -5 0 5 10 15 20 25 30 350

20

40

60

80

100

120 SCOPE DIAGRAM

Zero date

Elapsed months

PROJECT COST

COST CONTROL CURVE

Engg.

Procurement & const.