project management behnam faizabadi phd, pmp, ssbb imi training center behnam faizabadi phd,pmp,...

Project Management Behnam Faizabadi PhD, PMP, SSBB IMI Training Center Behnam Faizabadi PhD,PMP, SSBB1

Topics Main functions in an Enterprise Operations perspective Project definition Project Activity Project Management Behnam Faizabadi PhD,PMP, SSBB2

Main functions in an Enterprise Behnam Faizabadi PhD,PMP, SSBB3

Top-down Approach to OM Strategy Operations Strategy Decisions Strategic (long-range) Needs of customers (capacity planning) Tactical (medium-range) Efficient scheduling of resources Operational planning and control (short-range) Immediate tasks and activities Behnam Faizabadi PhD,PMP, SSBB4

Significant Events in Operations Management Behnam Faizabadi PhD,PMP, SSBB5

New Challenges in OM Local or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization Behnam Faizabadi PhD,PMP, SSBB6 Global focus Just-in-time Supply chain partnering Rapid product development, alliances Mass customization Empowered employees, teams FromTo From To

Competitive Priorities Quality Cost Time Delivery Diversity Behnam Faizabadi PhD,PMP, SSBB7

Dell Computer Company How can we make the process of buying a computer better? Sell custom-build PCs directly to consumer Integrate the Web into every aspect of its business Operate with six days inventory Build computers rapidly, at low cost, and only when ordered Focus research on software designed to make installation and configuration of its PCs fast and simple Behnam Faizabadi PhD,PMP, SSBB8

Operation Perspectives Behnam Faizabadi PhD,PMP, SSBB9 Process focus projects, job shops,(machine, print, carpentry) Standard Register Repetitive (autos, motorcycles) Harley Davidson Product focus (commercial baked goods, steel, glass) Nucor Steel High Variety One or few units per run, high variety (allows customization) Changes in modules Modest runs, standardized modules Changes in attributes (such as grade, quality, size, thickness, etc.) Long runs only Mass Customization (difficult to achieve, but huge rewards) Dell Computer Co. Poor strategy Low-Volume (Intermittent) Repetitive Process (Modular) High-Volume (Continuous)

Volume and Variety of Products Behnam Faizabadi PhD,PMP, SSBB10 Volume and Variety of Products Low Volume High Variety Process (Intermittent) Repetitive Process (Modular) High Volume Low Variety Process (Continuous) One or very few units per lot Projects Very small runs, high variety Job Shops Modest runs, modest variety Disconnected Repetitive Long runs, modest variations Connected Repetitive Very long runs, changes in attributes Continuous Equipment utilization5%-25%20%-75%70%-80% Poor Strategy (High variable costs) Mass Customization

Project Definition (H.Kerzner) A project can be considered to be any series of activities and tasks that: Have a specific objective to be completed within certain specifications Have defined start and end dates Have funding limits (if applicable) Consume human and nonhuman resources (i.e., money, people, equipment) Be multifunctional (i.e., cut across several functional lines) Behnam Faizabadi PhD,PMP, SSBB11

Project Definition (James P. Lewis) In recent years writers like Tom Peters have suggested that in typical organizations as much as 50 percent of the work is done in a project format A one-time, multitask job that has clearly defined starting and ending dates, a specific scope of work to be performed, a budget, and a specified level of performance to be achieved. Behnam Faizabadi PhD,PMP, SSBB12

Project definition (Harvey A. Levine) A Project Is A group of tasks, performed in a definable time period, in order to meet specific set of objectives. It is likely to be a one-time program. It has a life cycle, with a specific start and end. It has a work scope that can be categorized into definable tasks. It has a budget. It is likely to require the use of multiple resources. Many of these resources may be scarce and may have to be shared with others. It may require the establishment of a special organization, or the crossing of traditional organizational boundaries. Behnam Faizabadi PhD,PMP, SSBB13

Project Definition (PMI) A project is a temporary endeavor undertaken to create a unique product, service, or result. Behnam Faizabadi PhD,PMP, SSBB14

Project Characteristics Temporary Unique Progressive Elaboration Behnam Faizabadi PhD,PMP, SSBB15

Projects vs. Operational Work Organizations perform work to achieve a set of objectives. Generally, work can be categorized as either projects or operations, although the two sometimes overlap. They share many of the following characteristics: Performed by people Constrained by limited resources Planned, executed, and controlled. Behnam Faizabadi PhD,PMP, SSBB16

Projects vs. Operational Work Projects and operations differ primarily in that operations are ongoing and repetitive, while projects are temporary and unique. Behnam Faizabadi PhD,PMP, SSBB17

Examples of projects include Developing a new product or service Effecting a change in structure, staffing, or style of an organization Designing a new transportation vehicle Developing or acquiring a new or modified information system Constructing a building or facility Building a water system for a community Running a campaign for political office Implementing a new business procedure or process Responding to a contract solicitation. Behnam Faizabadi PhD,PMP, SSBB18

Projects and Strategic Planning Projects are a means of organizing activities that cannot be addressed within the organizations normal operational limits. Projects are, therefore, often utilized as a means of achieving an organizations strategic plan, whether the project team is employed by the organization or is a contracted service provider. Behnam Faizabadi PhD,PMP, SSBB19

Projects and Strategic Planning A market demand (e.g., an oil company authorizes a project to build a new refinery in response to chronic gasoline shortages) An organizational need (e.g., a training company authorizes a project to create a new course in order to increase its revenues) A customer request (e.g., an electric utility authorizes a project to build a new substation to serve a new industrial park) A technological advance (e.g., a software firm authorizes a new project to develop a new generation of video games after the introduction of new game playing equipment by electronics firms) A legal requirement (e.g., a paint manufacturer authorizes a project to establish guidelines for the handling of a new toxic material). Behnam Faizabadi PhD,PMP, SSBB20

What is Project Management? A BRIEF HISTORY OF PROJECT MANAGEMENT Although human history is marked by projectsfrom the Roman aqueducts to the American transcontinental railroadproject management was not developed as a separate discipline until the mid-twentieth century. Beginning with the nuclear weapons programs after World War II, specific techniques emerged for planning and managing their enormous budgets and workforce. Behnam Faizabadi PhD,PMP, SSBB21

What is Project Management? The most well-known, PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method), have become synonymous for project scheduling techniques. (Both PERT and CPM were much more than scheduling techniques, but the scheduling graphics they produced, called PERT charts and Critical Path charts, were so distinctive that many people have mistakenly equated project management with PERT and Critical Path charts.) Behnam Faizabadi PhD,PMP, SSBB22

What is Project Management? PERT and CPM evolved through the 1950s and 1960s to become commonplace on major space and defense programs, but they saw limited use beyond those industries. From the mid-1960s through the mid-1980s, project management methods grew and matured but still found a relatively limited audience. Even at universities, project management was usually taught on a limited basis in some engineering schools. Behnam Faizabadi PhD,PMP, SSBB23

What is Project Management? However, in the 1990s, interest in project management soared because of a convergence of several factors. Computer technology was making a huge difference in the way we worked. More powerful computers and software also made it easier to use the classic project management techniques. Project management methods today are not that much changed from a generation ago, but they have become commonly accepted in every industry. Behnam Faizabadi PhD,PMP, SSBB24

What is Project Management? Project management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. Project management is accomplished through the application and integration of the project management processes of initiating, planning, executing, monitoring and controlling, and closing. The project manager is the person responsible for accomplishing the project objectives. Behnam Faizabadi PhD,PMP, SSBB25

Project Management Knowledge Areas Behnam Faizabadi PhD,PMP, SSBB26

Project Life Cycle Project life cycles generally define: What technical work to do in each phase (for example, in which phase should the architects work be performed?) When the deliverables are to be generated in each phase and how each deliverable is reviewed, verified, and validated Behnam Faizabadi PhD,PMP, SSBB27

Project Life Cycle Who is involved in each phase (for example, concurrent engineering requires that the implementers be involved with requirements and design) How to control and approve each phase. Behnam Faizabadi PhD,PMP, SSBB28

Project Life Cycle Behnam Faizabadi PhD,PMP, SSBB29 Typical Project Cost and Staffing Level Across the Project Life Cycle

Portfolio and Program Management 30Behnam Faizabadi PhD,PMP, SSBB

What Is a Portfolio? A portfolio is a collection of projects (temporary endeavors undertaken to create a unique product, service, or result) and/or programs (a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually) and other work that are grouped together to facilitate the effective management of that work to meet strategic business objectives. The components of a portfolio are quantifiable; that is, they can be measured, ranked, and prioritized. 31

Behnam Faizabadi PhD,PMP, SSBB What Is a Portfolio? 32

Behnam Faizabadi PhD,PMP, SSBB33

Behnam Faizabadi PhD,PMP, SSBB What Is Portfolio Management? Portfolio management is the centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work, to achieve specific strategic business objectives. (project portfolio management) 34

Behnam Faizabadi PhD,PMP, SSBB What Is Portfolio Management? Portfolio management combines : (a)the organizations focus of ensuring that projects selected for investment meet the portfolio strategy with (b)the project management focus of delivering projects effectively and within their planned contribution to the portfolio. 35

Behnam Faizabadi PhD,PMP, SSBB The Link With Organizational Strategy 36

Behnam Faizabadi PhD,PMP, SSBB The Link Between Portfolio Management and Organizational Governance 37

Behnam Faizabadi PhD,PMP, SSBB Cross-Company Portfolio Management Process Relationships 38

Behnam Faizabadi PhD,PMP, SSBB Role of the Portfolio Manager Playing a key role in project prioritization, making sure there is a balance of components and that the components align with strategic goals Providing key stakeholders with timely assessment of portfolio and component performance, as well as early identification of (and intervention into) portfolio-level issues and risks that are impacting performance Measuring the value to the organization through investment instruments, such as return on investment (ROI), net present value (NPV), payback period (PP), meeting Congressional or legislative mandates, achieving the educational needs of current or future students, etc. 39

Behnam Faizabadi PhD,PMP, SSBB Role of the Portfolio Manager Ensuring timely and consistent communication to the stakeholders on progress, impacts, and changes associated with the management of the portfolio, in order to maintain stakeholder understanding and support of the objectives and approach Participating in program and project reviews to reflect senior level support, leadership, and involvement in important matters. 40

Behnam Faizabadi PhD,PMP, SSBB Typical criteria for Project Selection Business criteria Strategic alignment Productivity Process improvement Competitive advantage Business impact Employee satisfaction Customer satisfaction Intellectual property Impact of not undertaking the project. 41

Behnam Faizabadi PhD,PMP, SSBB Typical criteria may include Financial benefits criteria Revenue growth Cost savings Cost avoidance Internal Rate of Return (IRR) See IRR excel file Net Present Value (NPV)- See NPV excel file Return on Investment (ROI)- See ROI excel file Payback period see Payback period excel file Cost Cash flow generation 42

Behnam Faizabadi PhD,PMP, SSBB NPV Net present value (NPV) is a standard method for the financial appraisal of long-term projects. NPV = Present value of net cash flows. If NPV > 0 the investment would add value to the firm the project may be accepted NPV < 0the investment would subtract value from the firm the project should be rejected NPV = 0 the investment would neither gain nor lose value for the firm We should be indifferent in the decision whether to accept or reject the project. This project adds no monetary value. Decision should be based on other criteria, e.g. strategic positioning or other factors not explicitly included in the calculation 43

Behnam Faizabadi PhD,PMP, SSBB Typical criteria may include Risk-related criteria Business risks Technology risks Project management risks Implementation risks Market acceptance risks Public relation risks Brand image risks 44

Behnam Faizabadi PhD,PMP, SSBB Typical criteria may include Legal/Regulatory compliance criteria Human Resource (HR)-related criteria Specific competency Employee satisfaction Resources availability HR capacity HR capacity to integrate the solution Impact on working condition 45

Behnam Faizabadi PhD,PMP, SSBB Typical criteria may include Marketing criteria Market impact Probability of success Time to market Impact on existing product lines Estimated product life 46

Behnam Faizabadi PhD,PMP, SSBB Typical criteria may include Technical criteria Architectural alignment Information delivery Success probability (inverse of risk) System RAS Reliability Availability Supportability Conformity to standards 47

Methods of Project Selection Mathematical methods Scoring Models Behnam Faizabadi PhD,PMP, SSBB48

Behnam Faizabadi PhD,PMP, SSBB Multiple Criteria Weighted Ranking 49

Behnam Faizabadi PhD,PMP, SSBB Single Criterion Prioritization Model 50

Behnam Faizabadi PhD,PMP, SSBB What is a Program? A program is a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Programs may include elements of related work (e.g., ongoing operations) outside the scope of the discrete projects in a program. 51

Behnam Faizabadi PhD,PMP, SSBB What is Program Management? Program management is the centralized coordinated management of a program to achieve the programs strategic benefits and objectives. In addition, it allows for the application of several broad management themes to help ensure the successful accomplishment of the program. These themes are: benefits management, stakeholder management,and program governance. 52

Behnam Faizabadi PhD,PMP, SSBB What is Program Management? Managing multiple projects by means of a program allows for optimized or integrated cost, schedules, or effort; integrated or dependent deliverables across the program, delivery of incremental benefits, and optimization of staffing in the context of the overall programs needs. Projects may be interdependent because of the collective capability that is delivered, or they may share a common attribute such as client, customer, seller, technology, or resource. 53

Behnam Faizabadi PhD,PMP, SSBB Program Management in Organizational Planning 54

Behnam Faizabadi PhD,PMP, SSBB Project Management Office Program Management Office Project Office or Program office Some of the key features of a PMO include, but are not limited to: 56

Behnam Faizabadi PhD,PMP, SSBB PMO Shared and coordinated resources across all projects administered by the PMO Identification and development of project management methodology, best practices, and standards Clearinghouse and management for project policies, procedures, templates, and other shared documentation Centralized configuration management for all projects administered by the PMO Centralized repository and management for both shared and unique risks for all projects 57

Behnam Faizabadi PhD,PMP, SSBB PMO Central office for operation and management of project tools, such as enterprise-wide project management software Central coordination of communication management across projects A mentoring platform for project managers Central monitoring of all PMO project timelines and budgets, usually at the enterprise level Coordination of overall project quality standards between the project manager and any internal or external quality personnel or standards organization. 58

Behnam Faizabadi PhD,PMP, SSBB Structure 59

Behnam Faizabadi PhD,PMP, SSBB Structure Organizations are structured into one of six models, the organizational structure of which will affect the project in some aspect. In particular, the organizational structure will set the level of authority, the level of autonomy, and the reporting structure that the project manager can expect to have within the project. 60

Behnam Faizabadi PhD,PMP, SSBB Structure Functional Weak matrix Balanced matrix Strong matrix Projectized Composite 61

Behnam Faizabadi PhD,PMP, SSBB Functional Organization 66

Behnam Faizabadi PhD,PMP, SSBB Projectized Organization In a projectized organization, team members are often collocated. Most of the organizations resources are involved in project work, and project managers have a great deal of independence and authority. Projectized organizations often have organizational units called departments, but these groups either report directly to the project manager or provide support services to the various projects. 67

Behnam Faizabadi PhD,PMP, SSBB Projectized Organization 68

Behnam Faizabadi PhD,PMP, SSBB Matrix organization Matrix organizations, are a blend of functional and projectized characteristics. Weak matrices maintain many of the characteristics of a functional organization and the project manager role is more that of a coordinator or expediter than that of a manager. In similar fashion, strong matrixes have many of the characteristics of the projectized organization, and can have full-time project managers with considerable authority and full-time project administrative staff. While the balanced matrix organization recognizes the need for a project manager, it does not provide the project manager with the full authority over the project and project funding 69

Behnam Faizabadi PhD,PMP, SSBB Weak Matrix Organization 70

Behnam Faizabadi PhD,PMP, SSBB Balanced Matrix Organization 71

Behnam Faizabadi PhD,PMP, SSBB Strong Matrix Organization 72

Behnam Faizabadi PhD,PMP, SSBB Composite Organization Most modern organizations involve all these structures at various levels, For example, even a fundamentally functional organization may create a special project team to handle a critical project. Such a team may have many of the characteristics of a project team in a projectized organization. The team may include full-time staff from different functional departments, may develop its own set of operating procedures and may operate outside the standard, formalized reporting structure. 73

Behnam Faizabadi PhD,PMP, SSBB Composite Organization 74

Project Processes Groups Behnam Faizabadi PhD,PMP, SSBB75

Behnam Faizabadi PhD,PMP, SSBB Plan-Do-Check-Act 76

Project Authorization Behnam Faizabadi PhD,PMP, SSBB77

Behnam Faizabadi PhD,PMP, SSBB Project Charter Developing the project charter is primarily concerned with documenting the business needs, project justification, current understanding of the customers requirements, and the new product, service, or result that is intended to satisfy those requirements. 78

Behnam Faizabadi PhD,PMP, SSBB Project Charter The project charter, either directly, or by reference to other documents, should address the following information: Requirements that satisfy customer, sponsor, and other stakeholder needs, wants and expectations Business needs, high-level project description, or product requirements that the project is undertaken to address Project purpose or justification Assigned Project Manager and authority level Summary milestone schedule 79

Behnam Faizabadi PhD,PMP, SSBB Project Charter Stakeholder influences Functional organizations and their participation Organizational, environmental and external assumptions Organizational, environmental and external constraints Business case justifying the project, including return on investment Summary budget. 80

Behnam Faizabadi PhD,PMP, SSBB Project Integration Management What does integration means in project management? 83

Behnam Faizabadi PhD,PMP, SSBB Scope Definition Project Scope Statement: The project scope statement describes, in detail, the projects deliverables and the work required to create those deliverables. The project scope statement also provides a common understanding of the project scope among all project stakeholders and describes the projects major objectives. It also enables the project team to perform more detailed planning, guides the project teams work during execution, and provides the baseline for evaluating whether requests for changes or additional work are contained within or outside the projects boundaries. 89

Behnam Faizabadi PhD,PMP, SSBB Project objectives Project objectives include the measurable success criteria of the project. Cost Technical Performance Schedule Quality 90

Behnam Faizabadi PhD,PMP, SSBB Product scope description Describes the characteristics of the product, service, or result that the project was undertaken to create. Less detail vs. More detail 91

Behnam Faizabadi PhD,PMP, SSBB Project requirements Conditions or capabilities that must be met or possessed by the deliverables of the project to satisfy a contract Standard Specification Formally imposed documents Stakeholder analyses of all stakeholder needs, wants, and expectations are translated into prioritized requirements. 92

Behnam Faizabadi PhD,PMP, SSBB Project boundaries What is included within the project Explicitly what is excluded from the project 93

Behnam Faizabadi PhD,PMP, SSBB Project deliverables Outputs that comprise the product or service of the project As well as ancillary results, such as project management reports and documentation Summary level or in great detail. 94

Behnam Faizabadi PhD,PMP, SSBB Product acceptance criteria Criteria for accepting completed products 95

Behnam Faizabadi PhD,PMP, SSBB Project constraints Conditions limits the teams options Predefined budget or Imposed dates (schedule milestones) that are issued by the customer or performing organization Contractual provisions will generally be constraints. 96

Behnam Faizabadi PhD,PMP, SSBB Project assumptions Any conditions without proofing. Frequently identify, document, and validate assumptions True, real, or certain without proof or demonstration 97

Behnam Faizabadi PhD,PMP, SSBB Initial project organization The members of the project team, as well as stakeholders, are identified. The organization of the project is also documented. 98

Behnam Faizabadi PhD,PMP, SSBB Initial defined risks Identifies the known risks. 100

Behnam Faizabadi PhD,PMP, SSBB Schedule milestones The customer or performing organization can identify milestones and can place imposed dates on those schedule milestones. These dates can be addressed as schedule constraints. 101

Behnam Faizabadi PhD,PMP, SSBB Fund limitation Describes any limitation placed upon funding for the project, whether in total value or over specified time frames. 102

Behnam Faizabadi PhD,PMP, SSBB Cost estimate Overall cost Conceptual Definitive. 103

Behnam Faizabadi PhD,PMP, SSBB Project configuration management requirements Describes the level of configuration management and change control to be implemented on the project. 104

Behnam Faizabadi PhD,PMP, SSBB Project specifications Identifies those specification documents with which the project should comply. 105

Behnam Faizabadi PhD,PMP, SSBB Approval requirements Identifies approval requirements that can be applied to items such as project objectives, deliverables, documents, and work. 106

WBS 107Behnam Faizabadi PhD,PMP, SSBB

108Behnam Faizabadi PhD,PMP, SSBB

Overview Successful project management relies on thorough planning. This begins by defining the project objectives with sufficiently detailed information. The Work Breakdown Structure (WBS) provides the foundation for defining work as it relates to project objectives. The WBS also establishes the framework for managing the work to its completion. 109Behnam Faizabadi PhD,PMP, SSBB

Concept To define the projects scope of work in terms of deliverables and to further decompose these deliverables into components. To provide the project management team with a framework on which to base project status and progress reports. To facilitate communication between the project manager and stakeholders throughout the life of the project. As a key input to other project management processes and deliverables. 110Behnam Faizabadi PhD,PMP, SSBB

WBS Characteristics Supports the definition of all work required to achieve an objective, tangible result. Is constructed to illustrate and define the hierarchy of deliverables. This hierarchy is organized into parent-child relationships. Has an objective or tangible result that is referred to as a deliverable. In a sense, the WBS can be thought of as a deliverable breakdown structure. 111Behnam Faizabadi PhD,PMP, SSBB

WBS Benefits Clarify ambiguities, Bring out assumptions, Narrow the scope of the project, Raise critical issues Effective schedule Better cost estimation and budget plans Resource assignment and accountability 112Behnam Faizabadi PhD,PMP, SSBB

WBS The WBS assists project leaders, participants, and stakeholders in the development of a clear vision of the end products or outcomes produced by the project. To be more precise, the WBS provides a clear vision of the work of the project. The WBS divides the project scope into hierarchical, manageable, definable packages of work that balance the control needs of management with an appropriate and effective level of detailed project data. The WBS provides the framework for all deliverables across the project life cycle. 113Behnam Faizabadi PhD,PMP, SSBB

WBS Definition A WBS is: A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. It organizes and defines the total scope of the project.(PMI) 114Behnam Faizabadi PhD,PMP, SSBB

Work Breakdown Structure Work: Sustained physical or mental effort, exertion, or exercise of skill to overcome obstacles and achieve an objective. Commonly used to refer to a specific activity, duty, function, or assignment often being a part or phase of some larger undertaking; something produced or accomplished by effort, exertion, or exercise of skill. In this context, work refers to work products or deliverables that are the result of effort and not to the effort itself. 115Behnam Faizabadi PhD,PMP, SSBB

Types of Work Discrete effort Apportioned effort Level of effort 116Behnam Faizabadi PhD,PMP, SSBB

Work Breakdown Structure Breakdown: Division into parts or categories; separation into simpler substances; decomposition. 117Behnam Faizabadi PhD,PMP, SSBB

Behnam Faizabadi PhD,PMP, SSBB WBS Dictionary Code of account identifier, Statement of work, Responsible organization, List of schedule milestones Associated schedule activities, Resources required, Cost estimates Quality requirements, Technical references, and Contract information. 121

The 100% Rule The 100% rule (Haugan, 2002, p 17) is a core characteristic of the WBS. This rule states that the WBS includes 100% of the work defined by the project scope and captures ALL deliverables internal, external, and interimin terms of work to be completed, including project management. The 100% rule is one of the most important principles guiding the development, decomposition and evaluation of the WBS. The rule applies at all levels within the hierarchy: the sum of the work at the child level must equal 100% of the work represented by the parent and the WBS should not include any work that falls outside the actual scope of the project, that is, it cannot include more than 100% of the work. It is important to remember that the 100% rule also applies at the activity level. The work represented by the activities in each work package must add up to 100% of the work necessary to complete the work package. 122Behnam Faizabadi PhD,PMP, SSBB

WBS Definition Deliverable. Any unique and verifiable product, result, or capability to perform a service that must be produced to complete a process, phase, or project. Often used more narrowly in reference to an external deliverable, which is a deliverable that is subject to approval by the project sponsor or customer. Oriented. Aligned or positioned with respect to a point or frame of reference; focused toward the concerns and interests of a specific group. Hierarchical. Classified according to various criteria into successive levels or layers. Decomposition. A planning technique that subdivides the project scope and project deliverables into smaller, more manageable components, until the project work associated with accomplishing the project scope and providing the deliverables is defined in sufficient detail to support executing, monitoring, and controlling the work. 123Behnam Faizabadi PhD,PMP, SSBB

WBD Definition Activity. A component of work performed during the course of a project Apportioned Effort. Effort applied to project work that is not readily divisible into discrete efforts for that work, but which is related in direct proportion to measurable discrete work efforts. Contrast with discrete effort. Discrete Effort. Work effort that is separate, distinct, and related to the completion of specific work breakdown structure components and deliverables, and that can be directly planned and measured. Contrast with apportioned effort. 124Behnam Faizabadi PhD,PMP, SSBB

WBS Definition Level of Effort (LOE). Support-type activity (e.g., seller or customer liaison, project cost accounting, project management, etc.), which does not produce definitive end products. It is generally characterized by a uniform rate of work performance over a period of time determined by the activities supported. Task. A term for work whose meaning and placement within a structured plan for project work varies by the application area, industry, and brand of project management software. 125Behnam Faizabadi PhD,PMP, SSBB

WBS Definition Work Breakdown Structure Component. An entry in the work breakdown structure that can be at any level. Work Package. A deliverable or project work component at the lowest level of each branch of the work breakdown structure. The work package includes the schedule activities and schedule milestones required to complete the work package deliverable or project work component. WBS Element. Any single work breakdown structure (WBS) component and its associated WBS attributes contained within an individual work breakdown structure. 126Behnam Faizabadi PhD,PMP, SSBB

How WBS created I.Review scope definition II.Use WBS templates (if exist) III.Create PBS IV.Decomposition V.Consider assumptions and constraints VI.Prepare WBS dictionary (SOW) 127Behnam Faizabadi PhD,PMP, SSBB

WBS Development Tools Outlines and organization charts Fishbone Brainstorming Top down and bottom up development strategies WBS templates, and Corporate standards can be referenced or copied for quick-starting WBS development. 128Behnam Faizabadi PhD,PMP, SSBB

A ship in a harbor is safe, but thats not what ships are built for. William Shedd 136Behnam Faizabadi PhD,PMP, SSBB

Project risk management is the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives. Risk management is often overlooked in projects, but it can help improve project success by helping select good projects, determining project scope, and developing realistic estimates. 137 The Importance of Project Risk Management Behnam Faizabadi PhD,PMP, SSBB

KPMG study found that 55 percent of runaway projectsprojects that have significant cost or schedule overrunsdid no risk management at all. Also another studies show risk has the lowest maturity rating of all Project Management knowledge areas. 138 Research - Need to Improve Project Risk Management Behnam Faizabadi PhD,PMP, SSBB

Project Management Maturity by Industry Group and Knowledge Area* 139 KEY: 1 = LOWEST MATURITY RATING 5 = HIGHEST MATURITY RATING Knowledge Area Engineering/ Construction TelecommunicationsInformatio n Systems Hi-Tech Manufacturing Scope3.523.453.253.37 Time3.553.413.033.50 Cost3.743.223.203.97 Quality2.913.222.883.26 Human Resources 3.183.202.933.18 Communications3.53 3.213.48 Risk2.932.872.752.76 Procurement3.333.012.913.33 Behnam Faizabadi PhD,PMP, SSBB

Project Risk Project Risk Management Negative Risks Positive Risks Residual Risks Secondary Risks Contingency Plan SWOT Root Cause Analysis Definition 140Behnam Faizabadi PhD,PMP, SSBB

Scope of Risk Management 141Behnam Faizabadi PhD,PMP, SSBB

1.New South Wales 2.ALARM 3.PRAMA MODEL 4.Integrated RM Framework- Canada 5.Iso 31000 Risk Management 6.PMBOK 7.Treasury Board of Canada 8.SHAMPU 9.G.Smith 10.Leach 11.Pitchard 12.Wideman 13.Boehm 14.Fairly 15.Kilem & Ludin Project Management Risk Models 142Behnam Faizabadi PhD,PMP, SSBB

Project Risk Management Model Risk Management Planning Stakeholders Analysis Risk Identification Qualitative and Quantitative Risk Analysis Risk Response Risk Monitoring and Control 143Behnam Faizabadi PhD,PMP, SSBB

Risk analysis 144Behnam Faizabadi PhD,PMP, SSBB

Risk Management Planning Risk management planning is about making decisions. The risk management process is in relation to the scope of the project, the priority of the project within the performing organization, and the impact of the project deliverables. Referring to the Project Charter Relying on Risk Management Policies Considering Roles and Responsibilities Examining Stakeholder Tolerance Using a Risk Management Plan Template Revisiting the Work Breakdown Structure 145Behnam Faizabadi PhD,PMP, SSBB

Creating the Risk Management Plan Methodology The methodology is concerned with how the risk management processes will take place. The methodology asks What tools are available to use for risk management? What approaches are acceptable within the performing organization? What data sources can be accessed and used for risk management? What approach is best for the project type, the phase of the project, and which is most appropriate given the conditions of the project? How much flexibility is available for the project given the conditions, the timeframe, and the project budget? 146Behnam Faizabadi PhD,PMP, SSBB

Creating the Risk Management Plan RBS Roles and Responsibilities Budgeting Scheduling Risk Analysis Scoring Thresholds Reporting Formats Tracking 147Behnam Faizabadi PhD,PMP, SSBB

Applying Probability and Impact 149Behnam Faizabadi PhD,PMP, SSBB

Applying Probability and Impact 150Behnam Faizabadi PhD,PMP, SSBB

Risk Identification Relying on Project Planning Effective risk identification requires an understanding of why the project exists. The people doing the risk identification have to understand the projects purpose in order to recognize risks that could affect the project. These risk identifiers should understand the customers objectives, expectations, and intent. Project planning outputs referenced here can include: The project charter The work breakdown structure Duration estimates 151Behnam Faizabadi PhD,PMP, SSBB

Identifying the Project Risks Reviewing Project Documents Brainstorming the Project Using the Delphi Technique Identifying Risks Through Interviews Analyzing SWOT Utilizing Diagramming Techniques 152Behnam Faizabadi PhD,PMP, SSBB

Preparing for Risk Identification The network diagram The project schedule Cost estimates The project budget Quality plans Resource requirements The resource management plan Procurement issues Communication requirements Assumptions Constraints 153Behnam Faizabadi PhD,PMP, SSBB

Preparing for Risk Identification Creating Risk Categories Technical, quality, or performance risks Project management risks Organizational risks External risks Referring to Historical Information 154Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Scope Management Effective sponsor? Differing needs/expectations of stakeholders? Priorities lack clarity? Limitations/Constraints questionable? Schedule, resources, & solution dictated and not in balance? Layoffs, cutbacks, or unexpected absence? 155Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Scope Management Requirements baselined but continue to change? Requirements/features added without going through scope control? Work performed thats not within approved scope? Client asks for extra functions (Gold plating) & extends the project? 156Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Time Management Will the client: Be included where needed? Attempt to micro-manage the project, resulting in slower progress than planned? Require more design or testing than anticipated? Take longer to complete their tasks than planned? Tasks/Deliverables: Unclear or need more definition? Appropriately sequenced, estimated, scheduled and assigned? Missing? Other projects & support activities require more time than expected? 157Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Time Management Unexpected issues & incidents jeopardize milestones? Upcoming events or large # of variables outside the teams control? Revised estimates, in response to schedule slips, overly optimistic or ignore project history? Will productivity be affected by: Excessive schedule pressure (overtime)? Tools that dont yield expected productivity gains? Low motivation and morale? 158Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Time Management Delays on task prerequisites or critical path tasks? Schedule based on team member(s) who may not be available? Will management ask for: Anything that results unnecessary, time consuming overhead? Management-level progress reporting that take more team members time than expected? 159Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Time Management More time needed than estimated because: Working with unfamiliar, complex or error-prone modules? Interfacing with complex systems or systems not under the teams control? Pushing the computer science state-of-the-art lengthens the schedule unpredictably? 160Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Cost Management Budget cuts likely? Increased dependency on other business units or vendors? Uncertain costs/expenses? 161Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Human Resources Management Staff acquisition take longer than expected? Critical skills needed, but not available? Politics prevent most qualified personnel from working on the project? Part-time availability, but needed full-time? Need to include other affected groups/departments? 162Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Human Resources Management Team members leave before project completes? Tasks match team members strengths? Inefficient team structure reduces productivity? Other work load on team members? 163Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Quality Management Complexity? Scope/requirements lack sufficient detail? Size/Time constraints necessitate short-cuts? New standards & procedures available when needed? Designs produced by someone other than person(s) responsible for design implementation? Government regulations subject to change? Integration of separately developed components require rework? 164Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Quality Management Team members needs? Work with unfamiliar software applications/programs, hardware, or programming languages? Knowledge of policies, standards & procedures? Additional tools, training, or expertise? Reviews? Time allowed to do reviews of major deliverables? Qualified personnel involved? Performed for baselined deliverables? Issues/Incidents recorded & assigned for follow-up? 165Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Quality Management Will the Client: Mandate use of tools that dont perform/integrate well? Furnish components that are defective or a poor match for product? Not accept the project results even though the results meet all specifications? Be knowledgeable in subject areas they represent? 166Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Quality Management Technology? Test environment sufficiently secured? Depend upon technology/standardization still under development? User and software interfaces work as expected? Solution must work on multiple operating systems or equipment types? Service level agreements in jeopardy? Changes necessitated by active or upcoming projects? 167Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Communications Management Team meetings effective & an efficient use of team members time? Client expertise solicited where needed? Approved changes to controlled documents communicated timely to the right people? Team members know theyre using the current version of project documents? Status information provided timely? Conflict among team members? 168Behnam Faizabadi PhD,PMP, SSBB

Risk Questions - Procurement Management Computer software/hardware/network resources be available when needed? Disaster recovery resources still adequate? Will vendor-furnished components be of acceptable quality & on time? Need anything else from other departments or support vendors? 169Behnam Faizabadi PhD,PMP, SSBB

Qualitative Risk Analysis Ranking Prioritizing Lead to more in-depth quantitative risk analysis 170Behnam Faizabadi PhD,PMP, SSBB

Planning for Risk Response Risk response planning is all about options and actions. It focuses on how to decrease the possibility of risks from adversely affecting the projects objectives, and on how to increase the likelihood of positive risks that can aid the project. Risk response planning assigns responsibilities to people and groups close to the risk event. Risks will increase or decrease based on the effectiveness of risk response planning. 171Behnam Faizabadi PhD,PMP, SSBB

Preparing for Risk Response To successfully prepare for risk response, the project manager, project team, and appropriate stakeholders will rely on several inputsmany of which stem from qualitative and quantitative risk analysissuch as: The risk management plan A list of prioritized risks Risk ranking A prioritized list of quantified risk A probabilistic analysis of the project The probability of the project meeting the cost and schedule goals The list of potential responses decided upon when risks were first identified Any risk owners that have been identified A listing of common cause risks to address multiple risks with an achievable solution Trends from qualitative and quantitative analysis 172Behnam Faizabadi PhD,PMP, SSBB

Negative Risk Response Strategies Avoidance Transference Mitigation Acceptance 173Behnam Faizabadi PhD,PMP, SSBB

Avoiding the Risk Avoidance is simply avoiding the risk. This can be accomplished many different ways and generally happens early in the project when any change will result in fewer consequences than later in the project plan. Examples of avoidance include: Changing the project plan to eliminate the risk. Clarifying project requirements to avoid discrepancies. Hiring additional project team members that have experience with the technology that the project deals with. Using a proven methodology rather than a new approach 174Behnam Faizabadi PhD,PMP, SSBB

Transferring the Risks Transference is the process of transferring the risk (and the ownership of the risk) to a third party. The risk doesnt disappear, its just someone elses problem. Transference of a risk usually costs a premium for the third party to own and manage that risk. Common examples of risk transference include: Insurance Performance bonds Warrantees Guarantees Fixed-priced contracts 175Behnam Faizabadi PhD,PMP, SSBB

Mitigating the Risk Mitigating risks is an effort to reduce the probability and/or impact of an identified risk in the project. Examples of mitigation include: Adding activities to the project to reduce the risk probability or impact Simplifying the processes within the project Completing more tests on the project work before implementation Developing prototypes, simulations, and limited releases 176Behnam Faizabadi PhD,PMP, SSBB

Accepting the Risks Risk acceptance is the process of simply accepting the risks because no other action is feasible, or the risks are deemed to be of small probability, impact, or both and that a formal response is not warranted. Passive acceptance requires no action; the project team deals with the risks as they happen. Active acceptance entails developing a contingency plan should the risk occur. 177Behnam Faizabadi PhD,PMP, SSBB

Exploit Enhance Sharing Acceptance Positive Risks response strategies 178Behnam Faizabadi PhD,PMP, SSBB

Contingency plan & fallback plan A contingency plan is a predefined set of actions the project team will take should the risk event occur. A contingency plan has also been called a worst-case scenario plan. A similar plan, a fallback plan, instructs the project team on how to unravel the project work back to an acceptable point in the project. Both fallback plans and triggers or thresholds within the project conditions instigate the plans. 179Behnam Faizabadi PhD,PMP, SSBB

Results of Risk Response Planning A description of the risk, what area of the project it may affect, the causes of the risk, and its impact on project objectives The identities of the risk owners and their assigned responsibilities The outputs of qualitative and quantitative analysis A description of the response to each risk, such as: avoidance, transference, mitigation, or acceptance The actions necessary to implement the responses The budget and schedule for risk responses Both the contingency and fallback plans 180Behnam Faizabadi PhD,PMP, SSBB

Working with Residual Risks The risk response plan also acknowledges any residual risks that may remain after planning, avoidance, transfer, or mitigation. Residual risks are typically minor and have been acknowledged and accepted. Management may elect to add both contingency costs and time to account for the residual risks within the project. 181Behnam Faizabadi PhD,PMP, SSBB

Accounting for Secondary Risks Secondary risks, however, are risks that stem from risk responses. For example, transference may elect to hire a third party to manage an identified risk. A secondary risk caused by the solution is the failure of the third party to complete their assignment as scheduled. Secondary risks must be identified, analyzed, and planned for, just as any another identified risk. 182Behnam Faizabadi PhD,PMP, SSBB

Risk Monitoring and Control Risks must be actively monitored and new risks must be responded to as they are discovered. Risk monitoring and control is the process of monitoring identified risks for signs that they may be occurring, controlling identified risks with the agreed responses, and looking for new risks that may creep into the project. Risk monitoring and control also is concerned with the documentation of the success or failure of risk response plans, and keeping records of metrics that signal risks are occurring, fading, or disappearing from the project. 183Behnam Faizabadi PhD,PMP, SSBB

Goals of Risk Monitoring and control To confirm risk responses are implemented as planned To determine if risk responses are effective or if new responses are needed To determine the validity of the project assumptions To determine if risk exposure has changed, evolved, or declined due to trends in the project progression To monitor risk triggers To confirm policies and procedures happen as planned To monitor the project for new risks 184Behnam Faizabadi PhD,PMP, SSBB

Risk Response Audits A risk response audit examines the planned risk response, how well the planned actions work, and the effectiveness of the risk owner in implementing the risk response. The audits happen throughout the project to measure the effectiveness of mitigating, transferring, and avoiding risks. The risk response audit should measure the effectiveness of the decision and its impact on time and cost. 185Behnam Faizabadi PhD,PMP, SSBB

T heres an old joke when it comes to project management time: The first 90 percent of a project schedule takes 90 percent of the time. The last 10 percent takes the other 90 percent of the time. Project Time Management 186Behnam Faizabadi PhD,PMP, SSBB

Considering the Inputs to Activity Definition: WBS Scope statement Historical information Constraints Assumptions Expert judgment Decomposing the Project Work Packages Relying on Templates Compiling the Activity List Organizing the Supporting Detail Updating the Work Breakdown Structure Rolling wave planning Defining the Project Activities 187Behnam Faizabadi PhD,PMP, SSBB

A template can include several elements to make a project managers life easier and the new project more successful: Required actions to complete the project scope Required resources and skills Required hours of duration for activities Known risks Outputs of the work Descriptions of the work packages Supporting details Template 188Behnam Faizabadi PhD,PMP, SSBB

Ways of Mapping the activities: Computer driven Manual process Blended approach Considering the Inputs to Activity Sequencing Activity list Product description Mandatory dependencies Discretionary dependencies External dependencies Milestones Mapping the Activities 189Behnam Faizabadi PhD,PMP, SSBB

Creating Network Diagrams Precedence Diagramming Method Arrow Diagramming Method Conditional Diagramming Methods Utilizing Network Templates Mapping the Activities 190Behnam Faizabadi PhD,PMP, SSBB

I.Finish-to-start (FS) This relationship means Task A must complete before Task B can begin. This is the most common relationship. Example: The foundation must be set before the framing can begin. II.Start-to-start (SS) This relationship means Task A must start before Task B can start. This relationship allows both activities to happen in tandem. For example, a crew of painters is painting a house. Task A is to scrape the flecking paint off the house and Task B is to prime the house. The workers scraping the house must start before the other workers can begin priming the house. All of the scraping doesnt have to be completed before the priming can start, just some of it. Precedence Diagramming Method 191Behnam Faizabadi PhD,PMP, SSBB

III.Finish-to-finish (FF) This relationship means Task A must complete before Task B does. Ideally, two tasks must finish at exactly the same time, but this is not always the case. For example, two teams of electricians may be working together to install new telephone cables throughout a building by Monday morning. Team A is pulling the cable to each office. Team B is connecting the cables to wall jacks and connecting the telephones. Team A must pull the cable to the office so Team B can complete their activity. The activities need to complete at nearly the same time, by Monday morning, so the new phones are functional. Precedence Diagramming Method 192Behnam Faizabadi PhD,PMP, SSBB

IV.Start-to-finish (SF) This relationship is unusual and is rarely used. It requires that Task A start so that Task B may finish. Such relationships may be encountered in construction and manufacturing. It is also known as just in time (JIT) scheduling. An example is a construction of a shoe store. The end of the construction is soon, but an exact date is not known. The owner of the shoe store doesnt want to order the shoe inventory until the completion of the construction is nearly complete. The start of the construction tasks dictates when the inventory of the shoes is ordered. Precedence Diagramming Method 193Behnam Faizabadi PhD,PMP, SSBB

AOA 195Behnam Faizabadi PhD,PMP, SSBB

Conditional diagramming methods are more complex and structured than ADM or PDM. Conditional diagramming methods include system dynamics and the graphical evaluation and review technique (GERT). These models allow for loops and conditional branching. For example, GERT may require that tests of the product be performed several times before the project may continue. Based on the outcome of the testing, the project may use one of several paths to enable its completion. In addition, GERT allows for probabilistic clarification of work package estimates. Conditional Diagramming Methods 196Behnam Faizabadi PhD,PMP, SSBB

Only the required work should be scheduled. Finish-to-start relationships are the most common and preferred. Activity sequencing is not the same as a schedule. Scheduling comes after activity sequencing. Examining the Sequencing Outputs 197Behnam Faizabadi PhD,PMP, SSBB

Considering the Activity Duration Estimates Inputs: Activity lists Constraints Assumptions Resource requirements Effort vs. duration Resource capabilities Historical information Identified risks Estimating Activity Durations 198Behnam Faizabadi PhD,PMP, SSBB

Analogues estimating : Analogous estimating relies on historical information to predict what current activity durations should be. Analogous estimating is also known as top-down estimating and is a form or expert judgment. To use analogous estimating, the activities from the historical project are similar in nature and are used to predict what the similar activities in the current project will take. Estimating Activity Durations 199Behnam Faizabadi PhD,PMP, SSBB

Quantitative Estimates Quantitatively-based durations use mathematical formulas to predict how long an activity will take based on the quantities of work to be completed. For example, a commercial printer needs to print 100,000 brochures. The workers include two pressman and two bindery experts to fold and package the brochures. Notice how the duration is how long the activity will take to complete, while the effort is the total number of hours (labor) invested because of the resources involved Estimating Activity Durations 200Behnam Faizabadi PhD,PMP, SSBB

Parkinsons Law states: Work expands so as to fill the time available for its completion. This little nugget of wisdom is oh-so-true. Consider a project team member that knows an activity should last 24 hours. The team member decides, in his own wisdom, to say the activity will last 32 hours. This extra eight hours, he figures, will allow plenty of time for the work to be completed should any unforeseen incidents pop-up. The trouble is, however, that the task will magically expand to require the complete 32 hours. Why does this happen? Consider the following: Factoring in Reserve Time 201Behnam Faizabadi PhD,PMP, SSBB

Hidden time : Hidden time, the time factored in by the project team member, is secret. No one, especially the project manager, knows why the extra time has been factored into the activity. The team member can then enjoy the extra time to complete the task at leisure. Procrastination : Most people put off starting a task until the last possible minute. The trouble with bloated, hidden time is people may wait through the additional time theyve secretly factored into the activity. Unfortunately, if something does go awry in completing the activity, the work result is later than predicted. Factoring in Reserve Time 202Behnam Faizabadi PhD,PMP, SSBB

Demands: Project team members may be on multiple projects with multiple demands. The requirement to move from project to project can shift focus, result in loss of concentration, and require additional ramp-up time as workers shift from activity to activity. The demand for multitasking allows project team members to take advantage of hidden time. On schedule :Activities are typically completed on schedule or late, but rarely early. Users that have bloated the activity duration estimates may finish their task ahead of what they promised, but have a tendency to hold the results until the activity was due. This is because workers arent usually rewarded for completing work early. In addition, workers dont want to reveal the inaccuracies in their time estimates. Workers may believe future estimates may be based on actual work durations, rather than estimates, so theyll sandbag the results to protect themselves and finish on-schedule. Factoring in Reserve Time 203Behnam Faizabadi PhD,PMP, SSBB

Solutions : I.First off, the project manager should strive to incorporate historical information and expert judgment to predicate accurate estimates. II.Second, the project manager should stress a genuine need for accurate duration estimates. III.Finally, the project manager can incorporate a reserve time. Factoring in Reserve Time 204Behnam Faizabadi PhD,PMP, SSBB

Start Date & Finish Date Iterative Revisiting the Project Network Diagram Soft Logic Hard Logic Relying on Activity Duration Estimates Considering the Resource Requirements Considering the Resource Pool Availability Considering the Calendars ( Project Calendar and Resource Calendar) Developing the Project Schedule 205Behnam Faizabadi PhD,PMP, SSBB

Evaluating the Project Constraints Reevaluating the Assumptions Considering Leads and Lags Evaluating the Risk Management Plan Examining the Activity Attributes Developing the Project Schedule 206Behnam Faizabadi PhD,PMP, SSBB

Start No Earlier Than (SNET) Start No Later Than (SNLT) Finish No Later Than (FNLT) Finish No Earlier Than (FNET) Evaluating the Project Constraints 207Behnam Faizabadi PhD,PMP, SSBB

Considering Leads and Lags 208Behnam Faizabadi PhD,PMP, SSBB

Activity attributes are the characteristics of the work to be completed, including Person(s) responsible for completing each work package Where the work will take place (building, city, outdoors) Type of activity (electrical, technical, supervised, and so on) When the activity must take place (business hours, off-hours, more unusual times) Examining the Activity Attributes 209Behnam Faizabadi PhD,PMP, SSBB

Applying Mathematical Analysis Program Evaluation and Review Technique (PERT) Graphical Evaluation and Review Technique (GERT) Critical Path Method (CPM) Calculating Float in a PND Creating the Project Schedule 210Behnam Faizabadi PhD,PMP, SSBB

PERT uses a weighted average formula to predict the length of activities and the project. Specifically, PERT uses a pessimistic, optimistic, and most likely estimate to predict when the project will be completed. Note that PERT is rarely used in todays project management practices. Program Evaluation and Review Technique (PERT) 211Behnam Faizabadi PhD,PMP, SSBB

GERT uses conditional advancement, branching, and looping of activities and is based on probable estimates. Activities within GERT are dependent on the results of other upstream activities. For example, the results of a work package may determine if additional testing is needed, rework is required, or the project may continue as planned. Graphical Evaluation and Review Technique (GERT) 212Behnam Faizabadi PhD,PMP, SSBB

This is the most common approach to calculating when a project may finish. It uses a forward and backward pass to reveal which activities are considered critical. Activities on the critical path may not be delayed; otherwise, the project end date will be delayed. The critical path is the path with the longest duration to completion. Activities not on the critical path have some float (also called slack) that allows some amount of delay without delaying the project end date. The following illustration is an example of the critical path Critical Path Method (CPM) 213Behnam Faizabadi PhD,PMP, SSBB

The following sections explain how to manually calculate the early start, early finish, late start, late finish, float, and critical path. CPM 215Behnam Faizabadi PhD,PMP, SSBB

A forward pass calculation is used to determine the early start and early finish times for activities. The calculations, which are expressed as units of time (such as hours, days, or weeks), do not represent scheduled dates. Calculate the early start and finish times as follows: 1.Write 0 for the early start time for the first activity. 2.Add the duration to the early start time to calculate the early finish time. Write these calculations in each box. The early finish time of one activity becomes the early start time for the next activity. 3.Repeat Step 2 for each activity working from the beginning of the network to the end. Calculating Early Start and Early Finish 216Behnam Faizabadi PhD,PMP, SSBB

A backward pass through the network computes the late start and late finish times for activities as follows: 1.For late finish of the last activity, write the latest time you want the project to finish (generally, this would be the early finish time for the last activity computed from the forward pass). 2.Subtract the duration from the late finish to calculate the late start time. Write these calculations in each box. The late start time of one activity becomes the late finish time for the previous activity. 3.Repeat Step 2 for each activity working from the end of the network to the beginning. Calculating Late Start and Late Finish 217Behnam Faizabadi PhD,PMP, SSBB

Float, or slack, is the amount of time a delayed task can delay the projects completion. Technically, there are three different types of float: Free float This is the total time a single activity can be delayed without delaying the early start of any successor activities. Total slack This is the total time an activity can be delayed without delaying project completion. Project slack This is the total time the project can be delayed without passing the customer-expected completion date. Calculating Float in a PND 220Behnam Faizabadi PhD,PMP, SSBB

The critical path is typically the path with the longest duration and will always have zero float. The critical path is technically found once you complete the forward and backward pass. Start with the forward pass, after the backwards pass you can identify the critical and near critical path, as well as float. Calculating Float in a PND 221Behnam Faizabadi PhD,PMP, SSBB

Calculating Float Float (slack) is calculated for each activity by subtracting the early finish from the late finish. Float is the amount of time the activity can slip without delaying the project finish date. Calculating Float in a PND 222Behnam Faizabadi PhD,PMP, SSBB

Picnic at the lake: critical path. 223Behnam Faizabadi PhD,PMP, SSBB

Applying Duration Compression : Crashing Fast Tracking Using Resource Leveling Heuristics Creating the Project Schedule 224Behnam Faizabadi PhD,PMP, SSBB

Project Network Diagram Outputs of Schedule Development 225Behnam Faizabadi PhD,PMP, SSBB

Measuring Project Performance Returning to Planning ( Planning is iterative,so it should be correct) Examining the Schedule Variance Updating the Project Schedule Applying Corrective Action Writing the Lessons Learned Controlling the Project Schedule 229Behnam Faizabadi PhD,PMP, SSBB

Project Cost Management Have you ever worked with a client who had a huge vision for a project, but had little capital to invest into the vision? Or have you worked with a client who gasped when you revealed how much it would cost to complete their desired scope of work? Or have you been fortunate and had a customer who accepted the costs for the project at face value, made certain the funds were available, and sent you on your way to complete the work? As a general rule, management and customers are always concerned with how much a project is going to cost in relation to how much a project is going to earn. 230Behnam Faizabadi PhD,PMP, SSBB

Project Cost Management Most likely there is more negotiating, questioning, and evaluating for larger projects than for smaller ones. The relation between the project cost and the project scope should be direct: you get what you pay for. Think its possible to buy a mansion at ranch home prices? Not likely. Think its possible to run a worldwide marketing campaign at the cost of a postcard mailer? Not likely. A realistic expectation of what a project will cost will give great weight to the projects scope. Costs associated with projects are not just the costs of goods procured to complete the project. The cost of the labor may be one of the biggest expenses of a project. The project manager must rely on time estimates to predict the cost of the labor to complete the project work. In addition, the cost of the equipment and materials needed to complete the project work must be factored into the project expenses 231Behnam Faizabadi PhD,PMP, SSBB

Planning the Project Resources As part of the planning process, the project manager must determine what resources are needed to complete the project. Resources include the people, equipment, and materials that will be utilized to complete the work. In addition, the project manager must identify the quantity of the needed resources and when the resources are needed for the project. The identification of the resources, the needed quantity, and the schedule of the resources are directly linked to the expected cost of the project work, as shown here: 232Behnam Faizabadi PhD,PMP, SSBB

Planning the Project Resources Consider a project to fully automate a new home: the lights, heating and cooling, appliances, and home security are all connected through a central computer operating system. The resources to complete the project work would include technicians, HVAC experts, electricians, and other people with the knowledge to install and configure the components. The resources in this case, however, would also include the network cabling to connect the components, diagnostic tools to monitor and test the installation, and the equipment and tools to physically install the components. In addition, services and sites are considered resources as well. Your project may require a vendors service, such as a commercial printer, a carpenter, or other service. If these services are not available for the project as planned, the project will suffer. Some projects require you to lease space; the leased space is considered a resource. In some instances, it most cost effective to hire a consultant or subject matter expert (SME) to identify details unique to the project work, such as mandates, laws, standards, and so on. The expense of relying on the SME may be far less than the cost of the time to research the unique details and requirements of the project. The knowledge gained from the SME can offset the expenses that would otherwise result from not having specialized knowledge of the project work. 233Behnam Faizabadi PhD,PMP, SSBB

Consider the Inputs to Resource Planning Work breakdown structure Historical information Scope statement Resource pool description Organizational policies Activity duration estimates Expert Judgment Identifying Alternative Solutions Relying on Project Management Software 234Behnam Faizabadi PhD,PMP, SSBB

Identifying Resource Requirements Once the project manager and the project team have completed resource planning, the required resources to complete the project will have been identified. The resource identification is specific to the lowest level of the WBS. The identified resources will need to be obtained through staff acquisition or through procurement. 235Behnam Faizabadi PhD,PMP, SSBB

Cost Estimating Using the Work Breakdown Structure Relying on the Resource Requirements Calculating Resource Rates Estimating Activity Durations Using Estimating Publications Using Historical Information Referencing the Chart of Accounts Acknowledging the Cost of Risk 236Behnam Faizabadi PhD,PMP, SSBB

Calculating Resource Rates The estimator has to know how much each resource costs. The cost should be in some unit of time or measuresuch as cost per hour, cost per metric ton, or cost per use. If the rates of the resources are not known, the rates themselves may also have to be estimated. Of course, skewed rates on the estimates will result in a skewed estimate for the project. There are four categories of cost: Direct costs These costs are attributed directly to the project work and cannot be shared among projects (airfare, hotels, and long distance phone charges, and so on). Variable costs These costs vary depending on the conditions applied in the project (number of meeting participants, supply and demand of materials, and so on). Fixed costs These costs remain constant throughout the project (the cost of a piece of rented equipment for the project, the cost of a consultant brought onto the project, and so on). Indirect costs These costs are representative of more than one project (utilities for the performing organization, access to a training room, project management software license, and so on). 237Behnam Faizabadi PhD,PMP, SSBB

Estimating Project Costs Analogous Estimating Parametric Modeling Using Bottom-Up Estimating Using Computer Software 238Behnam Faizabadi PhD,PMP, SSBB

Estimating Project Costs Analogous Estimating : Analogous estimating relies on historical information to predict the cost of the current project. It is also known as top-down estimating. The process of analogous estimating takes the actual cost of a historical project as a basis for the current project Heres an example of analogous estimating: the Carlton Park Project was to grade and pave a sidewalk around a pond in the community park. The sidewalk of Carlton Park was 1048 feet by 6 feet, used a textured surface, had some curves around trees, and cost $25,287 to complete. The current project, King Park, will have a similar surface and will cover 4,500 feet by 6 feet. The analogous estimate for this project, based on the work in Carlton Park, is $$108,500. This is based on the price per foot of material at $4.021 note that $4.021 is not the same as $4.21. 239Behnam Faizabadi PhD,PMP, SSBB

Estimating Project Costs Parametric Modeling : Parametric modeling uses a mathematical model based on known parameters to predict the cost of a project. The parameters in the model can vary based on the type of work being completed. A parameter can be cost per cubic yard, cost per unit, and so on. A complex parameter can be cost per unit with adjustment factors based on the conditions of the project. In addition, the adjustment factors may have additional modifying factors depending on additional conditions. 240Behnam Faizabadi PhD,PMP, SSBB

Estimating Project Costs To use parametric modeling, the factors the model is based on must be accurate. The factors within the model are quantifiable and dont vary much based on the effort applied to the activity. And finally, the model must be scalable between project sizes. The parametric model using a scalable cost-per-unit approach is depicted here:. 241Behnam Faizabadi PhD,PMP, SSBB

Types of parametric estimating Regression analysis This is a statistical approach to predict what future values may be, based on historical values. Regression analysis creates quantitative predictions based on variables within one value to predict variables in another. This form of estimating relies solely on pure statistical math to reveal relationships between variables and predict future values. Learning curve This approach is simple: the cost per unit decreases the more units workers complete; this is because workers learn as they complete the required work. The more an individual completes an activity, the easier it is to complete. The estimate is considered parametric, as the formula is based on repetitive activities, such as wiring telephone jacks, painting hotel rooms, or other activities that are completed over and over within a project. The cost per unit decreases as the experience increases because the time to complete the work is shortened. 242Behnam Faizabadi PhD,PMP, SSBB

Analyzing Cost Estimating Results The output of cost estimating is the actual cost estimates of the resources required to the complete the project work. Cost Categorization: Labor costs Material costs Travel costs Supplies Hardware costs Software costs Special categories (inflation, cost reserve, and so on) 243Behnam Faizabadi PhD,PMP, SSBB

Cost Estimating Results Rough order of magnitude This estimate is rough and is used during the Initiating processes and in top-down estimates. The range of variance for the estimate can be 25 percent to +75 percent. Budget estimate This estimate is also somewhat broad and is used early in the Planning processes and also in top-down estimates. The range of variance for the estimate can be 10 percent to +25 percent. Definitive estimates This estimate type is one of the most accurate. It is used late in the Planning processes and is associated with bottom-up estimating. The range of variance for the estimate can be 5 percent to +10 percent. 244Behnam Faizabadi PhD,PMP, SSBB

Cost Estimating Results Supporting Detail : Information on the project scope work This may be provided by referencing the WBS. Information on the approach used in developing the cost estimates This can include how the estimate was accomplished and the parties involved with the estimate. Information on the range of variance in the estimate For example, based on the estimating method used, the project cost may be $220,000 $15,000. This project cost may be as low as $205,000 or as high as $235,000. 245Behnam Faizabadi PhD,PMP, SSBB

Cost Budgeting Cost budgeting and cost estimates may go hand-in-hand, but estimating should be completed before a budget is requestedor assigned 246Behnam Faizabadi PhD,PMP, SSBB

Consider the Inputs to Cost Budgeting Cost estimates Work breakdown structure Project schedule Risk management plan 247Behnam Faizabadi PhD,PMP, SSBB

Developing the Project Budget Analogous budgeting. This is a form of expert judgment that uses a top down approach to predict costs. It is generally less accurate than other budgeting techniques. Parametric modeling. This approach uses a parametric model to extrapolate what costs will be for a project (for example, cost per hour and cost per unit). It can include variables and points based on conditions. Bottom-up budgeting This approach is the most reliable, though it also takes the longest to create. It starts at zero and requires each work package to be accounted for. Computerized tools The same software programs used in estimating can help predict the project budget with some accuracy. 248Behnam Faizabadi PhD,PMP, SSBB

Creating the Cost Baseline 249Behnam Faizabadi PhD,PMP, SSBB

Cost Control Cost control is concerned with understanding why the cost variances, both good and bad, have occurred. The why behind the variances allows the project manager to make appropriate decisions on future project actions. Ignoring the project cost variances may cause the project to suffer from budget shortages, additional risks, or scheduling problems. When cost variances happen they must be examined, recorded, and investigated. Cost control allows the project manager to confront the problem, find a solution, and then act accordingly. Specifically, cost control focuses on these activities: Controlling causes of change to ensure the changes are actually needed Controlling and documenting changes to the cost baseline as they happen 250Behnam Faizabadi PhD,PMP, SSBB

Cost Control Controlling changes in the project and their influence on cost Performing cost monitoring to recognize and understand cost variances Recording appropriate cost changes in the cost baseline Preventing unauthorized changes to the cost baseline Communicating the cost changes to the proper stakeholders Working to bring and maintain costs within an acceptable range 251Behnam Faizabadi PhD,PMP, SSBB

Cost Control Cost Control Inputs Creating a Cost Change Control System Measuring Project Performance Calculating the CPI Calculating Estimate at Completion 252Behnam Faizabadi PhD,PMP, SSBB

Cost Control Inputs Cost baseline Performance reports Change requests Cost management plan 253Behnam Faizabadi PhD,PMP, SSBB

Creating a Cost Change Control System 254Behnam Faizabadi PhD,PMP, SSBB

Measuring Project Performance Earned Value Management (EVM) is the process of measuring performance of project work against a plan to identify variances. It can also be useful in predicting future variances and th