Project Management Notes

Module 1 Introduction 1/11.1 What Is a Project? 1/21.2 What Is Project Management? 1/81.3 Characteristics of Project Management 1/161.4 Potential Benefits and Challenges of Project Management 1/231.5 The History of Project Management 1/251.6 Project Management Today 1/27

Module 2 Individual and Team Issues 2/12.1 Introduction 2/22.2 The Project Manager 2/42.3 The Project Team 2/302.4 Project Team Staffing Profile and Operation 2/362.5 Project Team Evolution 2/462.6 Project Team Motivation 2/532.7 Project Team Communications 2/582.8 Project Team Stress 2/632.9 Conflict Identification and Resolution 2/68

Module 3 Project Risk Management 3/13.1 Introduction 3/23.2 Background to Risk 3/33.3 Risk Handling 3/113.4 Types of Risk 3/193.5 Risk Conditions and Decision making 3/253.6 The Concept of Risk Management 3/333.7 Risk, Contracts and Procurement 3/55

Module 4 Project Management Organisational Structures and Standards 4/14.1 Introduction 4/24.2 Organisational Theory and Structures 4/54.3 Examples of Organisational Structures 4/504.4 Project Management Standards 4/56

Module 5 Project Time Planning and Control 5/15.1 The Concept of Project Time Planning and Control 5/25.2 The Process of Project Time Planning 5/105.3 Project Replanning 5/605.4 Trade-off Analysis 5/725.5 Resource Scheduling 5/855.6 Project Planning Software 5/95

Module 6 Project Cost Planning and Control 6/16.1 Introduction 6/16.2 Project Cost Planning and Control Systems 6/26.3 The Project Cost Control System 6/27

Module 7 Project Quality Management 7/1

7.1 Introduction 7/27.2 Quality Management as a Concept 7/37.3 The Quality Gurus 7/207.4 The Quality Management ‘Six Pack’ 7/367.5 Total Quality Management 7/617.6 Configuration Management 7/707.7 Concurrent Engineering and Time-Based Competition 7/80

Module 8 Case Study 8/18.1 Aims and Objectives of the Case Study 8/18.2 Introduction (Module 1) 8/28.3 Individual and Team Issues (Module 2) 8/108.4 Risk Management (Module 3) 8/178.5 Case Study First Supplement 8/228.6 Organisational Structures (Module 4) 8/278.7 Case Study Second Supplement 8/308.8 Time Planning and Control (Module 5) 8/338.9 Cost Planning and Control (Module 6) 8/418.10 Quality Management (Module 7) 8/52

1 - Introduction1.1 What Is a Project? 1/2

Project – one-off process with single definable end-result or product.

Three key variables: Time, Cost, Quality.

1.1.1 Introduction 1/2

Production system takes resource inputs, passes through transformation, changes into desired outputs.

1.1.2 Projects and Other Production Systems 1/3

Mass production – large number of repetitive items, maximum efficiency, capital intensive, mechanistic, little managementBatch production – non-continuous demand, modifications at intervals, less mechanistic, more management, functional groupingsProject production – one-off, non-repetitive, no learning curve, complex management planning and control

1.1.3 Characteristics of Projects 1/5

Single definable purpose, product or result Defined constraints, targets Skills & talents from multiple professions Unique, unfamiliar Temporary Interlinked process; directed at achieving goal Secondary importance to organisation Complex

Project management plans, coordinates, controls complex & diverse activities in projects general management of an organisation requires skills

o financial awarenesso marketing appreciationo technical knowledgeo planning skillso strategic awarenesso quality management

Project types External (revenue source) Internal (improve operations)& Hardware (tangible physical result) Software (end result is system or process)

1.2 What Is Project Management? 1/81.2.1 Introduction 1/81.2.2 Definition of Project Management 1/8

Achieving time, cost, quality targets within context of overall strategic and tactical client requirements using project resources planning and controlling from inception to completion

Decide on success criteria (time, cost, quality) Run the project as single entity Drive the team to success

1.2.3 The Basic Project Management Structures 1/11

Internal (non-executive) Project Management Project members also part of functional structure Single designated responsible (the project manager) Acts independently (outside functional structure) Equal authority to functional managers Single leader coordinates resources to achieve objectives Multidisciplinary group Negotiates with functional managers

Two lines of authority for members Decision-making, accountability, rewards shared Temporary structure Can originate from any organisational level (product dev from Marketing; technology application from

R&D…) Require assistance from support structures

External Project Management Agent on behalf of client More flexible than internal system Instructions/communications cross organisational boundary Lower team allegiance PM has direct control Functional structure not relevant Requirement for risk transfer and contractual control No built-in knowledge of firm

1.3 Characteristics of Project Management 1/161.3.1 Introduction 1/16

Differences to traditional management International standards Industry benchmarks Full life-cycle

1.3.2 Multiple Objectives 1/16

Ensure project-success criteria are met within changing constraints of time-cost-quality continuum.

1.3.3 International Co-operation and Standards 1/19

International Project Management Association (IPMA)

National agencies allow for cultural and economic differences:- Association for Project Management (APM) (UK)- Project Management Institute (PMI) (US)

1.3.4 Multi-Industry/Multidisciplinary Practitioners 1/20

Largest membership groups in APM:- Information Technology (IT)- Process engineering- Construction

1.3.5 Generic Benchmarks 1/20

BS6079 – current UK standard for PM practiceISO10006 – European code of practicePRINCE2 – controlled environment industries and UK governmentBT, Construction Industry Council codes of practice

1.3.6 Specific Provisions 1/20

Professional project manager – specialist manager, trained in PM with relevant industry experience in PM

1.3.7 Project Life Cycle 1/21

- Inception – assemble basic proposal- Feasibility – validate the proposal (financial, time-dependent, technological, political perspectives)- Prototype- Full design development- Tendering and contractual arrangements- Manufacturing- Commissioning (turning system on)- Operation (may be longest part but not always, e.g. moon rockets)- Decommissioning (e.g. toxic processes)- Removal and recycling (legislative and environmental concerns)

1.4 Potential Benefits and Challenges of Project Management 1/231.4.1 Introduction 1/231.4.2 Potential Benefits of Project Management 1/24

- focus on objectives- efficient use of resources- accountability

- competition with functional units

- reduced disruption

- visibility- life-cycle costs- release speed

- communications- security or project

information

- team spirit/cohesion- innovation- skill development

1.4.3 Potential Challenges to Project Management 1/24

- Impact on functional performance- Detrimental effect of competition- Conflicting orders- Functional manager deprives resources

- Additional level of authority- Contingency on flexible approach/attitude- Readjustment to functional working after

project

1.5 The History of Project Management 1/25

Pyramids, Great Wall, Roman roads/aqueductsIndustrial Revolution: traditional management practices – batch/mass production1900s- Gantt chart1950 – Network diagrams for industrial processes1940s – Los Alamos – first complex, high-tech project1957 – DuPont – critical path method (CPM)1958 – US Navy – program evaluation and review technique (PERT)Late 1960s – Project Management Institute (PMI) & Association for Project Management (APM)1988 - APM Body of Knowledge (BoK) 1996 – BS60791997 – ISO10006

1.6 Project Management Today 1/27

2 - Individual and Team Issues2.1 Introduction 2/2

No urgent need for developing tools further. People make projects succeed or fail.

2.2 The Project Manager 2/4

2.2.1 Introduction 2/4

Term “project manager” means different things to different peopleWide variation in roles and duties

2.2.2 Selecting the Project Manager 2/4

- Charged with organising and managing a project team to meet objectives- Sole responsibility for outcome- Responsible to project sponsor- Temporary role without traditional hierarchical power- Authority to make decisions- No authority to issue direct orders- Sources of influence:

o Competencyo Professionalismo Reputationo Skillo Interpersonal skillso Alliances

- May manage across functional, departmental, organisational and geographic boundaries- Central position -> High volume of communications- Intellect to devise strategy and diligence to ensure execution- Primary requirements:

o Planningo Organising teamo Interfacingo Negotiatingo Managing resourceso Monitoring/controlling statuso Identifying issueso Finding solutionso Resolving conflicts

- Interface management – between managerial and technical functionso Maps each team member / stakeholder with clear lines and channels (A2/15)

Formal/contractual, verbal- Soft management skills

o Flexibilityo Parallel focuso Initiativeo Persuasivenesso Communicationso Organisationo Problem identificationo Time managemento Negotiation / diplomacy

- Hard skillso Team set-up and managemento Complex time/cost planso Contracts, procurement, purchasing, personnelo Technologyo Business strategy

- Best selection: good functional manager with PM skillso Should not retain functional role!

- External consultant is alternativeo Learning curveo Disparity of interest

2.2.3 Some Essential Project Manager Requirements 2/11

Functions:- Project planning- Authorising

- Team organising- Controlling- Directing- Team building- Leadership- Life-cycle leadership

Constraints:- Time- Cost- Quality- Safety

Project Planning- Time, cost, quality- Define authority linkages with Task Responsibility Matrix (TRM)

o Milestoneso Important activitieso General responsibilities

Approval Preparation Checking Making and input Authorising

o Specific responsibilitieso Dates

Authorising- Accumulate sufficient authority- Delegate to others- Authority: type of ability to control/direct given from above (Power is given from below)

Team organising- Classical theory

o People are merely components in processo E.g. automotive

- Empirical theoryo Essential similarities between systems and processeso Observation and interpretationo Correct process will materialise from sample and data seto E.g. trains

- Behavioural theoryo Human relations school

Interpersonal relationship between people and work Profit sharing Expectancy theory

o Social system school Social characteristics of organisations and individuals Evolution as people leave/join External influences E.g. smoking ban, health and safety regulations

- Decision theoryo Mathematical: Management science, operations research

- Systems management theoryo Organisation characterised by throughput of resourceso Input – processing – output

- Functional managers favour Classical, Empirical, Behavioural theory. Project managers favour decision and systems management theory.

- Organising throughout the life-cycle but greatest organisational development at beginning. Clarify:o Individual responsibilitieso Organisational breakdown structureo Task responsibility matrixo Communication linkso Authority linkso Configuration management systemo Project programme

Controlling- Targeting

o Correspond to success criteriao Cost, output, quality

- Measuringo Formal, informal

- Evaluating

o Identification/isolationo Alternative optionso Corrective actiono Variance analysis in conjunction with forecasting

- Correctingo Identify source of problemo Correct ito Monitor actual and planned correction performance (2nd level variance analysis)

Directing- Setting up project team- Training and development- Supervision

o Individual targets, evaluation, discipline, definition of objectives and responsibilities- Motivation (team and individual)

o Rewards, evaluation, feedback, reconciliation of individual/organisational goals- Co-ordination

o Classification of work; monitoring resources

Team building- Early stages most critical (initial culture often continues)- Individual and team commitment

o Common objectives, reward system, motivation drivers- Team spirit (not same as commitment)- Obtaining necessary resources

o Number of people, mix of skills- Clear team/individual goals and success criteria- Formalisation of visible manager support (attendance at key meetings)- Effective programme leadership

o Accuracy of planning, efficiency of monitoring/control. Ownership of large problems- Open formal/informal communications

o Complex projects have greater communication requirements- Rewards and retribution systems (good performers rewarded, poor performers reprimanded)- Identification /management of conflict

o High pressure is common sourceo Sudden change in energy levels can be a sign

- Heterogeneity and cohesiveness

Leadership- Decision-making ability- Problem-solving ability- Integration of new members (flexibility, provision of sufficient learning time)- Interpersonal skills (comradeship and trust)- Identify and manage conflict (when objectives/limitations are changed)- Communication skills (most important tool)- Interface management (upward, downward, horizontal)- Factor-balancing skills

Life-cycle leadership- Project teams last relatively short period of time- Project team changes to meet needs/challenges

Phase Characteristic Task People Effect1 Inception High Low Telling2 Development High High Persuading3 Stabilisation Low High Participating4 Maturity Low Low Delegating

2.3 The Project Team 2/30

2.3.1 Introduction 2/302.3.2 Project Teams within Functional Organisations 2/30

- Allocated to most appropriate department- Using resources from one function or across several- Contrast with Pure project organisation for relatively large one-off projects (e.g. Millennium Dome)- Advantages of projects within functional organisation

o Flexibility and full use of employeeso Employees gain new experience/skillso Cross-functional working attitudeo Experts create new synergies outside rigid functional structureo Employees may follow primary career path in function or new career path through projecto Less costly than external consultants

- Disadvantageso Function is depleted of resourceso Functional managers offload less efficient peopleo Adaptation difficulty to demands of project environmento Prioritisation of simultaneous projectso Communication barriers (compared to established channels of functional units)o Motivation (unless senior management support)

2.3.3 Team Multi-disciplinary and Heterogeneity Issues 2/33

Sentience – tendency to identify with own profession/background rather than with project and organisationInterdependency – tendency for teams to depend on input from more than one individual

- Pooled interdependency (sections/divisions make contributions)- Sequential interdependency (input from multiple individuals required to move to next phase)- Reciprocal interdependency

Differentiation (specialism) contributes to sentienceIntegration – process of defining responsibilities and control, ensuring everyone adheres to same definition

Multidisciplinary nature tends to increase sentience and interdependencyGreater range of backgrounds reduces overall bias (but more discussion and conflict)

2.3.4 Group and Team Processes 2/34

Group – collection of individuals with common objectiveTeam – group working under direction of team leader

Organisation contains many formal and informal groups. Informal tend to form quickly and voluntarily for social reasons.Groups better at problem solving than individuals. Tend to:

- Brainstorm- Consider wider range of factors- Enhanced logic flow- Generate more original ideas- More potential solutions- Solve problems more accurately ad quickly

2.3.5 Project Team Performance 2/36

Most important factors contributing to performance:- Heterogeneity – in qualifications, experience, outlook…- Cohesiveness – alignment of personal and team goals; commitment and morale of members

2.4 Project Team Staffing Profile and Operation 2/36

2.4.1 Introduction 2/362.4.2 Project Team Staffing 2/36

Balance of skills:- Technical- Management- Administrative- Interpersonal

Other considerations:- Immediate and long-term availability- Ability- Continuity requirements- Teamworking skills- Special skills

Trade-off between continuity and abilityMix of internal and external staff

Guidelines:- Voluntary staffing- Staffed to add value to project- Operated less formally than functional teams- Lead by example- Flexible and responsive- Interface across organisational boundaries- Teams innovate and evolve- Functional managers receive recognition for resources- Conflict promoted during staffing (the sooner the better)

2.4.3 Project Team Profile 2/40

Widest interpretation of project team:- Contractor’s personnel- Subcontractors- Clients- In-house staff- Other interested bodies (inspectors, government, lobby groups…)

In almost everyone’s interests to meet objectives in timely and cost-effective manner

Project office – focal point, physical hub of project

Three specials project-management positions:- Project manager (“managing director”)- Project planner (“operations director”)- Project controller (“financial director”)

2.4.4 Project Team Operation 2/42

Establish measureable objectives- Identify and acknowledge stakeholders- Establish dimensions of success- Agree on criteria for success

Stakeholder management- “Invisible team” can provide great source of support.- Protect image of team- Develop network of useful contacts- Exploit network for quality project resources

Establish/plan measureable targets- Understandable and practicable- Multi-level- Plan for unknown (contingencies)- Realistic milestones

Plan and establish processes- Firm ground rules- Create open environment to be creative and take responsibility- Develop relationships- Flexible environment when needed

Leadership- Clear direction, stimulate high performance- Reward good performance

Membership and identity- Members must trust PM- Active followership more valuable than passive- Temporary drafts must be seen in positive light- Clear understanding of roles- Members recognise their own value

Communication systems- Formal/informal meetings to confirm identity, provide opportunities, reinforce rules, celebrate success- Accept and address conflict- Efficient communication with external bodies- Meetings result in actions, documented with time scales and responsibilities

Team separation- Members can rely on fellow team members- Commitment and momentum maintained even when physically separated- Regular contact enables clear communications

Information technology- Reduced need for specific facilities (video…)- Reduced direct interaction – fewer personality clashes- Record keeping, simplified accountability and audit- Less direct supervision- Less control bureaucracyDisadvantages- Expensive remote support- Loneliness- Loss of managerial control- Time difference – coordination- IT can go wrong- Cohesion severely restricted

Teams in general (optimal when)- Regular face-to-face meetings- Performance measures and criteria are clear- Members have responsibility and accountability- Clear time commitments established

2.5 Project Team Evolution 2/46

2.5.1 Introduction 2/462.5.2 Project Life Cycles 2/46

- Conception and feasibility- Outline proposals and definition- Tooling up- Operation and production- Decommissioning

2.5.3 Project Change Control and Management 2/49

Historically little attempt to standardise life-cycle phasesBS6079 proposes strategic project plan (SPP)

2.5.4 Project Team Evolution 2/49

Forming- Task responsibility matrix- Organisational breakdown structure- Project staff register- Baseline set of team and project objectives

Storming- Establish cohesiveness- Increasing tendency of conflict- Attempts to depose leader

Norming- Formal/informal- Behaviour- Performance

Performing- Team members satisfied that team is balanced- New conflicts dealt with by team

2.5.5 Groupthink 2/51

Typical symptoms:- Absolute commitment to the project- Lack of respect for competitors- Intolerance of dissent- Fear (of authority or majority)- Self-delusion (invincibility) – common in successful teams with high cohesion and commitment- Selective reporting

2.6 Project Team Motivation 2/532.6.1 Introduction 2/532.6.2 McGregor and Maslow 2/53

Theory X – operatives are basically lazy and unmotivated. Require threat and punishment. (Often espoused by autocratic functional managers)Theory Y – operatives are willing to work and complete job without close supervision. Want to success because it generates greater self-respect. (typically preferred by project managers)

Maslow’s hierarchy of needs- Self-actualisation- Esteem- Belongingness- Safety - Physiology

Implications:- Relative importance of needs- Time-based requirements (higher levels require more time)- Unsatisfied needs (no “guarantee”)- Complex needs (higher level needs more subjective)- Anticipation (fulfilled needs become hygiene factors rather than motivators)

2.6.3 Equity Theory and Expectancy Theory 2/56

Equity theory – perceived fairness compared to othersChoices during perceived inequity

- Seek promotion- Seek increased reward level- Reduce contribution- Increase other inputs

Expectancy theory

2.7 Project Team Communications 2/582.7.1 Introduction 2/58

Inward and outwardFormal and informal

2.7.2 Project Communication 2/58

Quality and quantity importantAccess to meetings should be open to all team members - encouraged to attend.

Communication mechanisms:- Meetings- Telephone- Letters/memos

- Email- Notice boards- Chats

- Seminars- Project plans and reports- Newsletters

2.7.3 Formal and Informal Communication 2/59

Sections defined by power and functional boundaries called organisational islandsFormal lines essential for collecting and disseminating project informationTools include:

- Frequent reports on all aspects with clearly defined distribution lists- Regular project meetings (debate encouraged)- Project memos- Newsletters- Notice-board- Away-days and events

Informal communications exposes issues (unhealthy “grapevine” harbours resentment)- Lunch and dinner- Telephone- Coffee breaks- Evenings in the bar- Social events

2.7.4 Internal and External Communications 2/62

Typically internal are informal --- open communication encouragedExternal is formal, explicit – require absolute control on dissemination of information

2.8 Project Team Stress 2/632.8.1 Introduction 2/632.8.2 Origins and Symptoms of Team Member Stress 2/63

Sources of project stress:- Dual reporting- Strict time, cost and quality limits- Short life span of teams- Project complexity- Frequently changing environment

Main sources of stress:- Personal- Work (project and functional)- Environment

Symptoms- Psychological- Physiological- Behavioural

2.8.3 Stress Management 2/66

Individual stress management- Diet- Reduced alcohol, tobacco- Exercise- Physiological awareness- Communication (most important single element)- Realignment of goals and self-limits- Psychological self-examination- Breaks/holidays

Project-team stress management- Deregulation- Reasonableness- Fairness- Open-mindedness

- Flexibility- Approachableness

2.9 Conflict Identification and Resolution 2/68

2.9.1 Introduction 2/682.9.2 Sources of Conflict 2/68

- Onerous constraints- Pressure to increase speed/reduce costs- Imposition of new aims/objectives- Change and realignment- Function/project conflicting demands- Personality clashes- Different interpretations of requirements- Incorrect /late information/communication- Perceived inequalities

2.9.3 Conflict Characteristics 2/69

Potential for conflict increased by:- Heterogeneity, multidisciplinary nature- Lower PM authority in functional organisation- Lower degree of specified/quantifiable objectives- Lower communication and accountability- Greater degree of change- Lower perceived prestige of project

2.9.4 Approaches to Conflict 2/70

Areas of conflict- Onerous deadlines- Change occurs- Errors/omissions discovered- Resources reduced- Personality clash- Agreeing on areas for concentration- Agreeing on priorities- High uncertainty

Questions to ask- What is source- Why?- Impact?- How to reduce or eliminate- How to foresee and avoid in future

Project objectives should be SMART, and also:- Compatible with strategic plan- Agreed by senior management- Communicated to team- Communicated to stakeholders

2.9.5 Conflict Management 2/72

- Conflict avoidance- Conflict absorption- Conflict resolution imposition- Negotiated conflict resolution

3 - Project Risk Management3.1 Introduction 3/2

Risk inherent in every human endeavour, may be subconscious

3.2 Background to Risk 3/3

3.2.1 Introduction 3/33.2.2 The Concept of Risk 3/3

Risk management evolved from design of nuclear reactors (1950s), Energy source is inherently dangerous, consequences catastrophic, no point in examining single events

Risk – measure of probability and consequence of not achieving specific goal.1st level equation for risk: f (event, uncertainty, consequence)2nd level equation for risk: f (event, hazard, safeguard)Hazard – source of dangerSafeguard – mitigation against the hazard

Exposure – vulnerability of parts of organisation to risk impactsSensitivity to risk composed of three elements: significance (severity/impact), likelihood, ability to manage implications

Effective Risk Exploitation makes use of non-balance-sheet assets (SCM, IP, KM)Risk is distribution of possible outcomes in performance over time due to changes in key variables (greater range = greater risk)

Considerations:- World is uncertain; Risk cannot always be eliminated- Risk is a function of opportunity- Risk can be an advantage (intimidates competition)- Risk management is set of analytical tools; operates at all levels- Risks may be foreseeable, partially foreseeable and wholly unforeseeable.- No risk management is infallible

3.2.3 The Human Cognitive Process 3/8

Cognitive process in risk assessment:- Pattern recognition- Attention- Memory- Bounded Rationality

o Generally opt for rational behaviour within constraintso Examine possible actions and possible outcomeso Risk forecasting

Based on experience, extrapolated Combination of subjective and complex modelling (chaos theory) Success factors:

Accurate data Time limits Cost (effort) Vision

o Intuition – combination of experience and extrapolationso Bias – tendency to misinterpret data because of own

perceptions/preferences

3.3 Risk Handling 3/113.3.1 Introduction 3/113.3.2 Risk Assessment and Control 3/11

Risk analysis – determination of probability of risk events and establishing measure of consequence together with monitoring and control system.Risk handling – dealing with risk Risk feedback – occurred risks are analysed and results fed back to system for future strategiesRisk control: risk analysis, handling and feedbackTypically risk management considered: risk assessment and risk control.

Risk assessment – iterative process identifying and assessing all potential risksRisk – combination of uncertainty and constraint (e.g. legislative deadline)

Risk control – investigation of entire project (project plans, scrutiny of critical path)

Risk identification – source and effects. Individual perception of risks will vary according to:

- Organisational position- Power level- Area of authority- Responsibilities

3.3.3 Project and Strategic Risk 3/16

Project risk – limited to risk considered entirely within project (delays, errors, cost increases…)Strategic risk – long-term, complex, difficult to model (economy, competition…)

Variance envelope – allows divergence to a certain limit

3.4 Types of Risk 3/193.4.1 Generic Risk Headings 3/19

Strategic risk – long-term performance of organisationOperational risk – process itself, asset base, project members, legal controls (e.g. project risk)Financial risk – market, credit, capital structureKnowledge risk – IT HW/SW, IM, KMCatastrophic risk – cannot be predicted or quantified, usually covered with reserve/contingency sum

3.4.2 Market Risk and Static Risk 3/20

Market risk – potential gains/lossesMarket business risk (MBR) company trading with its assets – concern to all stakeholders (shareholders, creditors, employees…)Market financial risk – gearing ratio, concern to equity holdersCannot be reduced or controlled – only diversified

Static risk – losses only; potential losses and safeguards. (fire insurance, tortuous liability insurance…)

3.4.3 External Risk and Internal Risk 3/22

External risks- Competitor risk- Market demand risk- Innovation risk- Exposure risk (e.g. gearing ratio)- Shareholder risk- Political risk- Statute risk- Impact risk

Internal risk- Operational processes risk

o Resource availabilityo Production capacityo Process failure

- Financial risko Borrowingo Cash flowo Exchange rate

- Management risko Management erroro Strategy implementationo Communications

- IT and Technology risko System obsolescenceo Breakdown and failureo Malicious viruso Capacity limit

3.4.4 Predictable and Unpredictable Risks 3/25

3.5 Risk Conditions and Decision making 3/25

- Conditions of certainty (gravity)- Conditions of risk (weather/rain)- Conditions of uncertainty (earthquake, hurricane)

3.5.1 Conditions of Certainty 3/27

Example: when same strategy optimal for all possible states/conditions

3.5.2 Decision Making under Conditions of Risk 3/28

Typically: higher profits implies higher potential risks/losses

Payoff-matrix: Profit-matrix for strategy x state, whereby each state has assigned probability. Multiply payoff by probability; sum for each strategy.

3.5.3 Decision making under Conditions of Uncertainty 3/28

Uncertainly: assigned probabilities are not known. Sources of uncertainty can be - externally driven (environment: inflation, interest rates, demographic changes)- internally driven (process: motivation, loyalty, new products, innovation)- decision-driven (information: strategy planning, R&D, investment)

Maximax - Hurwicz criterion – always optimistic, maximise profits in best-case scenarioMaximin - Wald criterion – minimise losses (minimum profits in worst-case scenario)Minimax – Savage criterion – minimise maximum regretLaplace criterion – assign equal probabilities to all outcomes (assumes Bayesian theory)

3.5.4 The Need for a Risk Management Strategy 3/33

Total Strategic Risk Management (TSRM) must be holistic and pre-emptive (similar to TQM)

3.6 The Concept of Risk Management 3/333.6.1 Introduction 3/33

Risk management system must be:- practical- realistic- compliant (internal/external standards)- cost-efficient

Risk Management areas:- identification- classification- analysis- attitude- response, control, policy and reporting

3.6.2 Risk Identification 3/34

Detailed and thorough, identify source of riskRisk attitudes:

- risk seeking – AGAP – all goes according to plan- risk averse – WHIF – what if

Internal risks - use WBS to identify most obvious risk areasExternal risks – e.g. interest rates, economic activity --- difficult to identify and evaluateProject risks – project administration and control techniques – OBS, team membership, leadership, communications

Objective sources – sum total of past experienceSubjective sources – sum total of current knowledge (e.g. PERT analysis)

Brainstorming- Creative phase- Evaluation phase-

3.6.3 Risk Classification 3/38

Portfolio theory – considers from a financial point of view (beta coefficient)Classify as market risk or static risk

Three-level classification- Risk type- Risk extent- Risk impact

o Maximum probably losso Most likely cost of losso Cost of covering losso Cost of insuring against evento Reliability of predictions about event

3.6.4 Risk Analysis 3/40

1. Evaluate all option2. Consider risk attitude3. Consider characteristics of risks (internal/external, controllable)4. Establish measurement system5. Interpret results6. Make decision

Alternative methodology1. Identify source2. Identify threats/opportunities, map risk drivers3. Assess probably and impact (Actual Risk map)4. Consider all options; develop target risk map5. Assess added value with recommended risk response6. Set up monitoring and reporting

Risk mapping (aka risk profiling) – four quadrants reflecting high/low probability and impactRisk migration – from actual to target riskShape (e.g. ellipse) versus point reflects variation limitsRisk grid – table

- Dimensions: multiple levels of probability and severity- Cell: indicates action (e.g. Retain, Part insurance, Full insurance, Cease activity)

3.6.5 Risk Attitude 3/46

Individuals more risk averse than teamsInclination to risk increases with age of team (time since formed)Multidisciplinary teams seek more risk than unidisciplinary teams.

3.6.6 Risk Response 3/48

Considerations- Company policy- Missing information on cause/effect- Time of exposure- Individual/team interests- Involuntary/voluntary risk- Alternatives

Risk distributionContract – tool to allocate/share riskConsiderations

- Is the outcome worth the risk?- Who controls most risk- Who is most liable?- Incentives?

Options:- Retention – ignore risk (low-probability, low-impact)- Reduction- Transfer

o Insurability of risk (not all are insurable)o Cost of insuranceo Maximum probable losso Likely losso Likely cost of covering loss

- Avoidanceo Pre-contract negotiationso Rescissiono Exemption clauseso Scope redefinition

- Seeking further information

3.6.7 Risk Control, Policy and Reporting 3/53

Risk handbook – documents experience with risk and risk managementRisk reports should be regular and integral to strategy

Risk policy:- Overall aims and objectives- Accountability for managers- Formalised reporting channels- Risk tolerances

- Authorisation

3.7 Risk, Contracts and Procurement 3/553.7.1 Introduction 3/55

Contract is tool for risk transfer and mitigation. Transfers liability.- To insurance company for premium- Between suppliers/subcontractors- Tender price reflects risk absorption

Reasons for conflict:- Defective documentation- Inappropriate arrangements- Incorrect estimating/pricing- Unreasonable risk allocation- Communications breakdown- Insolvency- Ambiguity

Contract defines rights, dues, obligations, liabilities.

Commensurate risk – inability to fulfil obligation due to own inadequacyUberrimae fidei (utmost good faith) obligation to disclose all relevant information to contract

3.7.2 Basic Contract Theory 3/56

Contract items- Signature block & project title- Definition of terms and scope- Information/facilities provided by client- Project approvals- Payment systems- Working drawing- Specification- Schedules- General conditions (sector-generic)- Specific conditions- Provisions for change- Form of tender- Dispute resolution- Bonds and warranties

Contract requisites- Offer and acceptance- Consideration (e.g. deposit) – depending on legal system- Capacity- Legal relations- Communication (acceptance to offeror)

Performance – all parties complete all duties and liabilitiesAlternatives:

- Breach – one party in contravention to terms- Frustration – cannot be fulfilled although both parties wish to- Rescission – error or misunderstanding, rescinded by court if terms are not acceptable (e.g. contradiction)- Rectification- Void (e.g. if goods are illegal)- Termination/determination – in accordance with provisions of contract

3.7.3 Procurement 3/59

Most large organisations have “Legal Services” for procurement of contractsStrategic versus project procurement

Procurement phases:- Objective phase- Exposure phase (advertisement, investigation into possible sources)- Alternatives phase- Documentation (of requirements)- Tendering- Award- Contract administration

3.7.4 Characteristics of Contracts 3/63

Controllable (e.g. human error) vs. uncontrollable (adverse weather)

Fundamental risks:- Design defects: (latent and patent)- Project cost- Safety and indemnification- 3rd party insurance- Fire, flood…- Completion deadlines: Damages may be punitive, liquidative (cash) or ascertained (actual)

Express/implied terms (e.g. professional indemnity/liability insurance)

3.7.5 Transfer of Risk in Contracts 3/65

Indemnity clause transfers riskCourts unsympathetic to excessive transfer

3.7.6 Variation Orders and Change Notices 3/65

Variations – allow for changes to contract without invalidating itMust be possible to price to compensate affected party

3.7.7 Claims Risk 3/66

Client risks- Failure to provide information- Late instructions- Errors/omissions in contract documents- Delays by nominated subcontractors or client consultants- Non-availability of labour- Civil commotion, war, natural disasters- Determination of contract by contractor

Obligation of client to insure against:- Fire- Flood- Lightning- Radiation- Impact of aerial devices

Contractor insurance- Employer liability for employees- Liability for damage to 3rd party persons and property- Escape of hazardous materials

4 - Project Management Organisational Structures and Standards4.1 Introduction 4/2

Internal (operational, non-executive) project managementExternal (executive) project managementInternal with external specialist support

4.2 Organisational Theory and Structures 4/5

People make projects succeed or failPeople are more difficult to predict/control than schedule/cost

4.2.1 Introduction 4/54.2.2 The Project within an Existing Organisation 4/6

Most common form of PM groupingFundamental consideration is relationship between organisation and project; dependent on:

- Relative size, status and importance of project- Resources available- Strategic fit

Functional organisational structure- Most common; preferred by inflexible organisations, examples:

o Governmento Police forceso Militaryo Most large private companies

- Power/status defined by vertical hierarchy- Horizontal communications only at top levels- Projects may be contained within function- Benefits:

o Clear reporting, rules, responsibilitieso Mirrors traditional authority structureso Simple; intuitiveo Specialisation & focus

- Disadvantageso Inflexibleo Cross-functional activity discouragedo Boundaries, barrierso Greater need for central supporto Development of organisational and operational islands

Pure project structure- Can exist within functional structure- Often have complete freedom within limits of final accountability- Set up to deliver very visible projects- Benefits

o Flexible & responsive to changeo Encourages innovation and evolutiono Operational costs can be adjusted to workload variationso No need to negotiate with functional manager for resourceso Shorter formal communication lineso Authority contained within projecto Team members not distracted by functional loyaltyo Easier to incorporate external consultantso Easier to execute related projects as programmeo In summary, best structure for a project

- Disadvantageso Concurrent projects may lead to duplication of efforto High initial operating costs (until any projects are completed)o Increased early operating costs if PMs “think ahead” to resources neededo Team members’ concern about long-termo Prolonged absence from function can dilute specialisation

Matrix structure (internal, Non-executive)- Blend of mechanistic (pure functional) and innovative (project)- Very popular for organisations undertaking projects- Generally restricted to large organisations with predictable workload- Main characteristics

o Functional (vertical) boundarieso Power/status (horizontal) boundarieso Organisational islandso Project sponsor

Adjudicate disputes Allocate resources Make executive decisions

o PM chair Four legs: PM, sponsor, functional manager, team Three interfaces for PM Three levels of control (subordinate, peer, superior)

o Interfaceso Biddingo Time-recording and cost-centre charging

Most internal structures make at least some use of external resources

4.2.3 The Project External to the Existing Organisation 4/28

Project team may comprise- All internal resources managed by external PM- All external consultants managed by consultant PM- Mixture of internal and external resources

Surrogacy – extent to which client wishes to delegate control/authorityRisk transfer – normally cover non-performance/negligence but not supplier breaches

Executive PM – means PM has full authority (does not need to negotiate over resources)

Distinctive characteristics- Multidisciplinary nature / shared loyalty- Open and competitive fee structures

o Fee bid packageo Tranches

Pre-contract works Post-contract works Final account

o Percentages based on measured works totals- External contractual linkages

o Primary types Completion contracts Term contracts (long-term agreements) Service-level agreements

o Competitive contracts (tender) versus negotiated contractso Pricing forms

Fixed-price Cost/cost-plus Reimbursement Target-price

o Forms Standard form (clear terms and conditions) Professional services (implied terms) Supply contracts (supply of goods) Subcontract agreements

Domestic subcontractor (free choice by contractor) Nominated subcontractor (stipulated by client) Pro-forma contracts

o Links Client to PM and design team Client to main contractor Client to service authorities Client to nominated subcontractors Client to local authority

- External non-contractual linkageso Authority linkso Communications

Advantages- Flexible, responsive- New ideas/approaches- Outsource where no internal expertise- Quick ramp-up / easy disbanding- Internal risks (resources) avoided

Disadvantages:

- Expense- Lack of loyalty- Difficult recourse over poor performance- Risk profile changes- Arbitration and litigation possibility- Complexity for PM

4.2.4 Criteria for Selecting the Organisational Structure 4/46

- Authority (project has shorter accountability lines)- Communication (matrix reduced barriers)- Knowledge transfer (e.g. between function and project)- Loyalty- Technology/innovation- Cost (pure project has lower running costs, function has large fixed costs)- Coordination (function has formal reporting, therefore low coordination requirement)- Support functions (pure project requires less)

Function Matrix Pure projectWorkload Constant Variable Significant varianceProject Frequency Low Frequent Frequent / dominantFocus Functional objectives Project focusInformal Communications Not required AcceptableR&D Some HighCentralised support Required Present Little or noneClear authority Required Split authority ok Devolved to PMChange propensity Unlikely Some HighProject size Small Small to medium Large, resource intensiveProject response time Not fast Not generally fast Fast

4.2.5 Summary 4/50

4.3 Examples of Organisational Structures 4/50

4.3.1 Introduction 4/504.3.2 Example of an Internal Project Management Structure 4/504.3.3 Example of an External Project Management Structure 4/54

4.4 Project Management Standards 4/56

4.4.1 Introduction 4/56

For any given industry/profession there are three standards:- IPMA/APM/PMI (BoK)- BS6079 / ISO10006- Industry-specific (e.g. PRINCE2)

4.4.2 The APM and the APM Body of Knowledge 4/59

Objectives:- 1st point of contact (national authority on PM)- Lead professional development- Champion interest representation- Standardise qualifications- Develop national branch network- Establish practice and procedures for training

BoK Profile- Project Management

o Project life cycleso Project strategyo Project environments

- Organisation and peopleo Leadership, communication and team building

- Techniques and procedureso Planning, estimating, control, monitoring

- General managemento Finance, law

4.4.3 BS6079 4/63

Focus is standardisation- E.g. different methods of planning and control measurement

Most important section is standard strategic project plan (SPP)- Preliminaries

o Title page, project description, contents list, introduction, nameso Security levels for different team members

- Project aims and objectiveso Time, cost, quality…health and safety, environmental

- Subject-specific sectionso BS6079 proposes standard numberingo Scheduling, cost control, project history, project policy, certification procedures

Acts as both a document and benchmarkClients may use SPP (up to baseline stage) as basis for competitive bids

4.4.4 PRINCE2 4/66

Project management in a controlled environment (v2)Alternative to BS6079 – developed by Central Computer Telecommunications Agency (CCTA) in 1989 for IT PM in UK governmentBased on process model of project

- Decomponentises model specifying key inputs /outputs and aims/objectives- Driven by project business case

Advantages- Standard project structure- Regular detailed reviews

o Measured against business case and planned progress- Flexible decision points- Automatic control of deviations- Optimises involvement of stakeholders- Encourages communications

4.4.5 Summary 4/68

5 - Project Time Planning and Control5.1 The Concept of Project Time Planning and Control 5/2

5.1.1 Introduction 5/2

Time-planning intrinsically linked to life cycle (separate from implementation)Not static – replanning in parallel with implementation

Variance – comparison of actual with planned performance – basis of management reportingAlso feedback for future projectsExtrapolation allows prediction of future performance

5.1.2 Aims and Objectives of the Planning Process 5/4

- Plot course from current position to end position- Establish variance limits- Allow contingencies and resources for divergences- Ensure correction of divergences

More specifically- Consider strategic objectives- Establish project objectives- Compartmentalise work- Determine interdependencies- Determine resources- Determine cost/duration/sequence of packages- Establish communications system- Define responsibilities, deadlines- Set up organisational structure- Identify/highlight critical activities- Motivation- Produce Strategic Project Plan

5.1.3 Project Time Planning and Control and the Generic Project Plan 5/6

SPP includes time, cost, quality and planning for:- Organisational and authority- Risk management- Communications system- Finance- Conflict and stress management- Authorisation and compliance- Health and safety- Change management

5.1.4 Project Time Planning and the Project Life Cycle 5/7

Continuous planning/replanning throughout the life cycle but intensity varies- Most intense in early stages- Critical changes increase replanning- Replanning process critical in large projects- Becomes more complex as project progresses

Examples of replanning reasons:- Internal (optional) change – client-initiated- External (imposed) change – e.g. supplier/subcontractor fails- Sequential disruption – resource reallocation (within project)- Miscalculation

5.2 The Process of Project Time Planning 5/10

5.2.1 Factors Affecting the Time Planning Process 5/10

Sources of time planning data- Knowledge, experience, environmental conditions, form of contract

Project uniqueness- Extent of knowledge transfer- Geographical location- Objectives- Availability of contractors, suppliers- Contractual conditions- Client characteristics- Time of year

- Local conditions, government regulations, environmentPeople issues

- Stakeholder buy-in- View as fair, reasonable and achievable

Complexity; analyze components for:- Position in sequence- Importance of package- Criticality of package- Acceptable time/cost overrun- Resources required

Uncertainty/change- Not possible to eliminate risks completely- Not cost-effective to eliminate some risks- Eliminating some risks may give rise to others- Difficult to assess some risks- Relative importance may change over time

Accuracy/reliability- Unfamiliarity with software- Misguided assumptions- Insufficient data- Incomplete understanding of implications and linkages

Communication- Software promotes tendency to issue too much information

5.2.2 The Planning Process 5/17

1. Statement of Work (SOW)2. Work breakdown structure (WBS)3. Project Logic Evaluation (PLE)4. Separate time, cost, quality planning5. Network analysis (CPM, PERT…)6. Trade-off analysis to replan7. Project Master Schedule (PMS)

Statement of Work – defines overall content and limits of work; all required information for tender/bid- Signature block, project title- Terms and scope- Information/facilities provided by client- Approval requirements- Payment terms- Working drawings- Specification, schedules- General and specific conditions- Variations procedures- Dispute resolution- Bonds/insurance

Work Breakdown Structure- Purpose

o Improve accuracy of estimateso Define baseline for performance measurement and controlo Identify tasks and responsibilities

- Levels of definition (typically six)- Logical numbering system

o Align with Cost Accounting Codes (CAC) in useo Typically generated by Computerised Database Estimating System (CDES)

- Dividing the WBSo Work typeo Responsibilityo Location

Project Logic Evaluation- Define sequence of individual packages

o Resource driveno Logic driven

Sequential, parallelo Precedence diagrams with resource sheet

Draft Master Schedule (DMS)- Purposes/uses

o Project completion dateo Supply order/delivery dateso Subcontractor notification dateso Milestones for progress planningo Risk management systemo Logic incompatibilitieso Contractual compatibilities

o Basis for replanning/trade-off analysis, resource levelling , earned value analysis- Critical Path Method (CPM) – deterministic- Program Evaluation and Review Technique (PERT) – probabilistic- Gantt Charts- Network Diagrams (precedence diagram with activity durations)

o Activity on arc (AOA) Activities shown as arcs Events shown as nodes (circles) with duration Dummy activities required to represent dependencies (shown as broken line)

o Activity on node (AON) Activities as nodes (rectangles) Temporal relationship dependent on placement of arrow end-points

Finish to start (most common, simplest) Finish to finish Start to start Start to finish

- Critical Path Method (CPM – DuPont 1960)o Assign durations for each activity

Modular technique (decompose activities) Benchmark technique (recorded time for similar works) Modelling technique (generate formula/model from previous activities) Computerised Database Estimating System (CDES) Parametric technique (dependent/independent variables e.g. time& length of digging

tunnel)o Identify start/finish window for each activity

Forward pass: Identify Earliest Event Times (EET) Earliest Start time Earliest Finish time

Backward pass: Identify Latest Event time (LET)o Critical path (no float window i.e. EET=LETo Replan/ rationalise resources

Import new activities Decrease work (cut corners) Reshuffle resources Re-evaluate sequence Overlap phases Speed up approvals Smooth resource utilisation Prioritise activities (allocate resources to critical path…)

o Form Draft Master Schedule / refine into Project Master Schedule (PMS)- Program Evaluation and Review Technique (PERT)

o Assign three durations to each activity optimistic, most likely, pessimistic

o Calculate mean duration and standard deviation for each activity (Beta distribution)

Duration: T=a+4m+b6

Standard Deviation: s=b−a6

o Calculate project mean duration and standard deviation Project Mean Duration: ∑T Project Standard Deviation: √∑ s2

o Identify target completion date and variance about target (Normal distribution) Number of standard deviations between Project Mean Duration and Target (client-

requested) Duration E.g. 1 standard deviation ~ 68%; 2 stddev ~ 95%; 3 std dev ! 99% probability of meeting

deadline

5.3 Project Replanning 5/60

Quality = performance in following sections. Elsewhere it may refer to specific measureable aspect of quality

5.3.1 Introduction 5/60

Crash analysis – how much can project be accelerated and at what cost?

5.3.2 Crash Analysis 5/61

Trade-off between time and cost. Assumes Quality is fixed.

Process:- Define project logic- Add durations to each activity

- Establish critical path- Calculate crash cost per activity- Calculate crash cost per unit time- Determine most cost-effective crash sequence- Check critical path- Crash network to limit

o Optimum cost point (starting point) --- additional time beyond this will accrue fixed overheado First crash point (using cheapest critical path component to crash)o Maximum crash point

5.3.3 Crash Example 5/67

5.4 Trade-off Analysis 5/72

5.4.1 Introduction 5/725.4.2 Methodology for Trade-off Analysis 5/74

1. Identify reason for problem- Pre-execution (during DMS)

- Change in client requirements; strategic objectives- Design incompatibilities- Subcontractors/suppliers/ external consultants- Misunderstandings/miscommunications

- Execution- Client requirements- Human error- Execution problems- Emerging risk

Project-specific2. Re-evaluate objectives

- Competitor behaviour, customer demand, economy, technology, legislation…3. Allow for other relevant factors

- Strategic and/or operational4. Shortlist solutions5. Select/test alternative6. Implement

5.4.3 Trade-off Classification 5/78

Type 1: Time is fixedType 2: Cost is fixedType 3: Performance is fixed(Order of chapters are fixed)

Type 4: Time and Cost are fixedType 5: Time and Performance are fixedType 6: Cost and Performance are fixed(Reverse order of chapters are variable)

Type 7: Everything is fixed- Unusual; typically in small, simple projects- Unlikely change

Type 8: Nothing is fixed- Also unusual.- Emergency works- Stop-loss (fulfil contractual obligations as soon as possible)

5.4.4 Example Trade-off Curves 5/81

5.5 Resource Scheduling 5/855.5.1 Introduction 5/85

Seven types of resources:- People- Materials- Equipment- Funds- Information- Technology- Space

Considerations: - Resource productivity

o Project productivity not a simple sum of individual productivity- Resource availability

5.5.2 Resource Aggregation 5/86

Large variations may lead to periodic idle time if resources cannot be easily redeployed

5.5.3 Resource Utilisation 5/89

ResourceUtilisation= ¿of persondays workedon project¿of persondays available for project

5.5.4 Resource Levelling (or Smoothing) 5/89

Levelling out peaks and troughs in resource demand so utilisation approaches averageDepends on:

- Flexibility of completion date- Availability of resources

Benefits:- Reduced peaks in demand means fewer people on project => reduces coordination and control- Individuals work for longer period of time (learning curve)- Reduced float times lead to greater continuity- Reduce overall time subcontractors are required

5.6 Project Planning Software 5/95

5.6.1 Introduction 5/955.6.2 Advantages of Computer-based Project Planning and Control 5/96

SpeedCostCapacityReliabilityCombined analysis (e.g. simultaneous planning for time and cost)

5.6.3 Disadvantages of Computer-Based Project Planning and Control 5/97

Reliance (backup)Over-emphasis on time-consuming detailInformation dumpPotential misdirection (Excessive trust in well-presented material if based on erroneous data)

5.6.4 General Factors for Consideration 5/98

Lead-in timeTransitionTrainingSoftware UpdatesNetworking (security and access implications)Wider compatibility (in linking the configuration management system to external consultants/contractors/suppliers)

Critical success factors- Usability- Familiar displays- CMS compatibility- Extensibility

5.6.5 General Features of Project Planning and Control Software Systems 5/100

- Project planning (Gantt charts, network diagrams, critical path analysis)- Resource management (resource loading, conflicts, costs, budgets, forecasts)- Tracking and monitoring (compared to baseline)- Report generation (status, budget, cash flow, resources, schedules)- Analysis and decision aiding (what-if analysis; or at least straightforward analysis to be used in decision

making)

5.6.6 Common Commercial Project Planning and Control Software 5/101

High-end:

- Power project professional- Primavera Project Planner- Artemis Views- Open Plan- Cobra- Enterprise PM

- Micro Planner X-Pert

Mid-range (up to 2000 tasks)- Microsoft Project- Micro-Planner Manager- Primavera Suretrak

Low-end (less than £100)- Milestone Simplicity- Project Vision- Quick Gantt

6 - Project Cost Planning and Control6.1 Introduction 6/16.2 Project Cost Planning and Control Systems 6/26.2.1 Introduction 6/2

Cost planning – breaking down project into elements, assigning realistic estimate of cost and rolling up costsCost control – ensuring adherence to cost limits

- Monitoring expenditures- Identifying variances- Determining reasons for variance- Corrective action- Monitoring to ensure resolution- Taking further corrective action if necessary

6.2.2 Cost Planning and Control as a Concept 6/3

Target costs identified by account code systemNo direct time measurement but time does affect cost

Cost variances from internal sources easier to control than from external sources

General requirements- Project schedule must be accurate- Estimating system must be reliable

o Typically electronic estimating system; some still use price books- Clear project scope (unambiguous, non-overlapping tasks)- Realistic budget (fair and reasonable)- Clear authorisation system (multi-layer approvals filter)- Flexible and responsive system- Reliable approach to tracking variance- Time-dependent variance sensitivity (diminishes over time)- Flexible use of reserves and contingencies

6.2.3 Types of Control System 6/10

- Cybernetic- Analogue- Feedback

Cybernetic- Most common approach- Automatic response mechanism- Used by animals and some plants to make decisions- Set of inputs establish context- Outputs subject to monitoring system- Bounded rationality- Multi-level cybernetic control

o Low-level: e.g. shower control with temperature sensor, instrument controls, animals Most cost-control systems Detecting time and cost variances Adjusting likely final time/cost estimates Re-programming schedule change

o Mid-level: greater flexibility, complexity; automobile engine management Adjusting estimates for individual cost rates Establishing cost of change notices Releasing contingency sums

o High-level: introduces intelligence, memory, experience, original thought Tactical solutions to programming problems Updating risk profile Developing negotiation strategy

o Human mind operates at all three levels

Analogue- Appropriate for smaller elements/packages- Series of yes/no questions

o Basis of human reasoning processo Eliminate unfeasible solutions and break feasible solutions into subsections

- Can be used on almost every aspect of project to determine if preconditions have been met

Feedback control- Post-project evaluation and feedback

[6/105]

Cybernetic most common- Key feature automatic response mechanism- Cost-control primarily low-level- High-level for controlling overall project performance

Analogue system- Every aspect – determine if preconditions met

Cybernetic are automatic and therefore continuous; Analogue are invoked as neededCybernetic and analogue for ongoing use. Feedback applied after project completion

6.2.4 Costs and Allowances 6/16

[6/106] Factory costs – total fixed/variable costs without any mark-up

Classification:- Fixed and variable costs (with regard to level of activity of project)- Direct and indirect costs- Measured works (individual and unit prices)- Contingencies and reserve (empirically calculated)- Fluctuations- Prime cost (pass-through) and provisional sums (foreseen but undefined work)- Direct payments (e.g. government or utilities)- Bonds and warranties- Exchange rates and currency fluctuations- Insurance

6.2.5 Life Cycle Costs 6/21

Life-cycle costing (LCC) – attaching costs to individual stages of life cycleConsiders long-term implications of early design decisions

Typical Life-Cycle Phases- Inception- Feasibility- Detailed development- Production- Project termination, system operation, maintenance- System divestment

Additional (optional) phases and costs- Research and development- Prototype- Design- Production- Commissioning- Operation- Maintenance- Decommissioning- Product retirement / phase-out

LCC Process- Establish life-cycle characteristics- Build process cost model- Calibrate model (benchmark with standard)- Input relevant data- Generate LCC and define strategy (balance between long-term and project ramp-up)

Advantages- Long-range considerations- Life-cycle viability- Strategic decision making- Future awareness- Market position- Compliance

Disadvantages- Prediction accuracy (invalid assumptions)- Cost (Full LCC is expensive)- Sensitivity (to change may produce inaccuracy)- Competition (in case of unbalanced analysis)- Risk (implications of inaccuracy)

6.3 The Project Cost Control System 6/276.3.1 Introduction 6/27

Two cycles- Cost planning cycle- Cost control cycle

o Phase 1: Cost planningo Phase 2: Work initiationo Phase 3: Cost data collectiono Phase 4: Variance generationo Phase 5: Cost reporting

6.3.2 The PCCS Planning Cycle 6/28

Estimating procedure:- Professional estimator

o Trained, experienced, unbiased- Project team

o Estimators are responsibleo “on the ground”, best knowledge of resources and requirementso Aware of system limitationso Can confer, negotiate on resourceso May cost low to win or high to succeed

- Other considerationso Project success criteria (consistent with estimating assumptions)o Project linkages (synergies)o Standardised approach (leverage central data and systems)o Feedback

Estimating elements- Labour- Materials- PlantAlso many others, e.g.- Fuel- Maintenance- waste

Additional considerations for materials and equipment- Packaging and shipping costs (also insurance, duties…)- Availability (may need to pre-order or find alternate source)- Detailed specifications may not be available on first issue of estimate

Data gathering- Standard tables- Company-specific tables- Previous project data- Estimator skill and knowledge; estimator categories (increasingly dangerous):

o Accurateo Pessimistico Optimistico Inconsistent

Presenting the Estimate- The order-of-magnitude estimate (feasibility assessment)- Indicative estimate (based on known information and published data)- Definitive estimate

Project Estimating- Top-down

o Strategic alignmento More stable/statico Less local influence and biaso Executive commitmentBut:o Senior management disconnect from operational costs o Team may feel budget is unrealistic => reduced motivationo Politics

- Bottom-upo More team commitment if they own decisionBut:o Less statuso Difficult to adapt to strategic changeso Easily overridden by senior managemento Tendency to over-estimate

- Iterative (interactive between task managers and senior managers)o Prepared by operational managero Aligned to strategic objectiveso Maintains market influenceBut:o Timely and costly negotiation

o Requires control procedureso Dependency on negotiation skill of operational manager (more important than estimating skill)

Bidding strategy and Estimate reporting- Formulate estimating strategy- ROM estimates- Carry out preliminary refinement- Indicative estimate- Add for profit and risk- Compare to cost limit- Subjective evaluation of bid success probability- Final/definitive estimate

Consider difference between type x acquisitions (one-off with no follow-on) and type y acquisitions (follow-on likely)

Computerised Database Estimating System- Scan or digitise quantity information directly from drawings- Description library – collection of standard descriptions (arranged in same format as WBS)- Price codes and unit rates- Other database elements

o Digitised drawingso Bill preparation systems

Bill with tender, bill with estimated prices… budget plan

Project Budget Plan- Viewed as most important project plan- Standard Method of Measurement (SMM) – standard form to measure and quantify costs

o How to measure worko What descriptions to useo What to include/excludeo Units of measuremento Assembly in to bill of quantities for tenderer

Role of project budget- Forecast costs to particular project tasks- Budget baseline- Projected cost curves (for each element)- Reference for variance analysis- Moderation of spending- Data for trade-off analysis- Estimate effects of change notices- Psychological effects (motivation, demotivation)

Budget Development and Layout- Objectives and activities (measurable outputs)- Financial resources allocated- Start/finish points of each activity- Facility to compare actual and planned performance

- Preliminary items – general project overheads- Prime cost sums – work is sublet to nominated subcontractor- Provisional sums – exact extend of works in not known (e.g. excavation)- Direct Payments – payments made through project but not to project team- Dayworks – unforeseen and unmeasuirable works (e.g. specialist to debug software)- Measured works – physically measured from specifications- Contingencies, fees and taxes

Budget changes- Transparency important – visibility of original budget, all changes, current budget- Change control system (CCS) – monitors all changes and predicts implications before authorising- Cost account variation notice (CAVN) – formalised process using CMS (for large projects)

6.3.3 The PCCS Operating Cycle 6/58

Phase 1: Cost planningPhase 2: Work initiationPhase 3: Cost data collectionPhase 4: Variance generationPhase 5: Cost reporting

Phase 2: Work initiation

Controlled release of work:- Project works order (PWO)- Variation Order (VO)- Describe work, standards, cost-centre to charge

Phase 3: Cost data collection- Earned Value analysis (EVA) required by APM, PMI, ISO10006, BS6079- End result is generation of cost variance and schedule variance values

o Basis for evaluating performance and, if necessary, corrective action- Mile stone monitoring

o Milestone – definitive stage of project; appropriate point to measure performanceo Most suitable when plans not very detailedo Disadvantages

Reaction time lag (Intervals to great) Residual accumulated overspend (in case of late detection) Replanning issues (milestones rescheduled easily) Time scale issues (do not allow for work in progress)

o Earned Value Analysis (EVA) Dynamic Combined time/performance assessment Frequent reporting Demonstrates value as well as cost Accurate assessment of cost implications of delays Easier trade-off analysis

Earned Value AnalysisEarned Value – cost of work originally estimatedCost variance – difference between budgeted cost and actual cost of works

- Measurable effort – separate elements within defined schedule with tangible results- Support effort – project actions difficult to quantify (Project support, administrative services)

Variance analysis- Identify / validate variance- Quantify variance- Determine source- Determine impact on project- Determine impact on other elements- Determine extent of ongoing tactical response- Determine range of possible outcomes of corrective actions

Earned Value Analysis variables- Actual cost of works performed (ACWP)- Budgeted cost of works performed (BCWP) (Actual earned value)- Budgeted cost of works scheduled (BCWS) (Planned earned value)- Scheduled time for work performed (STWP)- Actual time for work performed (ATWP)- Cost variance (CV) CV = BCWP – ACWP- Schedule Variance (SV) SV = BCWP – BCWS- Time variance (TV) TV = STWP – ATWP- Budget at completion (BAC)- Estimate to complete (ETC)- Estimate at completion (EAC) EAC = BAC + ETC- Variance at completion (VAC) VAC = BAC - EAC

EAC = BAC-CV

EAC=( ACWPBCWP ) x BACCost Variance IndexCVI= BCWP

ACWP

ScheduleVariance Index SVI=BCWPBCWS

TimeVairance IndexTVI= STWPATWP

Multi-level Earned Value Analysis- Allows roll-up analysis- Diagnostic analysis

Phase 4: Generation of VariancesVariance and Variance envelope

Earned Value AnalysisEarned Value – cost of work originally estimated

Critical ratio=( actual progressscheduled progress )x ( budget costactual cost

)

Zone A: take no action E.g.: .9-1.0Zone B: record and monitor E.g: .75-.9Zone C: Act immediately E.g.: .6-.75Zone D: Emergency response required E.g. .5-.6

Zone A1: Observe and note E.g. 1.0-1.25Zone A2: Investigate and correct (excessively pessimistic estimating or other errors)

Phase 5: Cost reporting

Guidelines:- Punctual reporting- Include only relevant information- Highlight important information- Allow interrelationships- Honest and accurate- Issued to everybody involved- Where appropriate

o Propose solutionso Clarify responsibilities

Basic report types- Routine reports

o Cost, schedule, quality, risk- Development review reports

o Common for R&Do Assessment of progress in relation to success criteria

- Exception reportso Issued to highlight anomalieso Initial report highlights exceptiono Subsequent reports describe progress of corrective actions (audit trail)

- Subject-specific reportso Monitor and control areas of concern

- Project variance and analysis reports (PVAR)

Project Variance Analysis Reporting (PVAR)- Common reporting tool for EVA- Shows variance (and all EVA metrics) for whole project and all levels of WBS- For each cost centre

o WBS identifierso CAC identifiers and budget limitso Current metricso Previous (Month) metricso YTD metricso Differences between current and previous metricso Summary of significant differenceso Current EAC, ETC, ECTC, ETTCo May show graphic curves in appendixo Can calculate

Earned value Earned value hours Anticipated final hours Project efficiency Project progress

7 - Project Quality Management7.1 Introduction 7/2

Projects non-repetitive therefore standard sampling techniques for batch production are insufficient

7.2 Quality Management as a Concept 7/3

7.2.1 Introduction 7/3

Through 1960s low-cost was the primary priority in protected economies1970s the Japanese entered market at higher-quality and equal or better cost

Quality control standards (BS5750, ISO9000, BS6079, ISO10006) give equal importance to quality as to time and cost.

7.2.2 The Traditional Japanese View 7/4

Considers:- Overall value of quality

o Curvilinear relationship to cost (linear at some range but asymptotic at ultra-high-qualityo Must be balanced with cost of defects which can be also addressed through warranties

Not always an option (high-speed tyre blow-out)o Apparent value of quality – what people will pay for a good-quality producto True value of quality – also includes premium based on prestige/goodwill or reputation for

reliability/qualityo Overall value = apparent value + true value

- Overall cost of defectso True cost is not only replacement costo Loss of customers (churn)o Bad reputationo Overall cost = apparent cost + true cost

- Quality dividendso Employee motivationo Better productivityo Industry respect/relationso Prospects in M&A, partnerships and allianceso Share price, risk profile…

- Involving peopleo Japanese culture linked employee interest with companyo Motivated employees to proactively ensure quality without expensive quality control systems

- Proactive planningo Preventive rather than responsive actiono Cheaper and more effective quality systemso Difficult / expensive for Western companies to emulate

- Involving whole organisationo Extended to non-production activities (sales, marketing, R&D)

- Educating customer to expect qualityo Differentiation in a competitive market

7.2.3 Quality Standards 7/15

2000 BC – Egyptian quality control for funeral goods; imprint from government inspector

1963: MIL-Q-9858A U.S. Military

1974: BS5179BS5750 first UK Quality Management standardNow superseded by ISO 9000

ISO9000: Quality Management and Quality Assurance Standards – Guidelines for Selection and UseISO9001: Quality Systems – Model for Quality Assurance in Design, Development, Production, Installation and ServicingISO9002: Quality Systems – Model for Quality Assurance in Production and InstallationISO9003: Quality Systems – Model for Quality Assurance in Final Inspection and TestISO9004: Quality Management and Quality System Elements – Guidelines

Main drawbacks:- Bureaucratic- Measures performance at one point in time- Attempts generic measure across countries with different standards, process and cultures

Twenty main parts:

- Management responsibility and quality policy- Quality system- Contract review- Design control- Document control- Purchasing- Purchaser-supplied product- Product identification and traceability- Process control- Inspection and testing- Inspection measuring and test equipment- Inspection and test status- Control of non-conforming products- Corrective action- Handling, storage, packing and delivery- Quality records- Internal quality audits- Training- Servicing- Statistical techniques

7.3 The Quality Gurus 7/20

Common agreement:- Quality processes must be enterprise-wide- Process defects should be considered before employee defects- Quality processes must be structured- Processes must ensure that product exceeds customer expectations (Market research)- Must rely on commitment

7.3.1 Deming 7/23

W Edwards Deming – 1950sIntrinsic link between quality management and production15% control by workers, 85% by managementWorker-oriented, statistical analysisAppeal to democratic-type of manager

14-point plan- Create common sense of purpose- New mind-set- Build quality into system- Procurement strategy

o Prequalification and partnering- Research and innovate- Invest in staff development- Enhance supervision (leadership & support)- System of open communications

o Problem detection and correction- Enterprise-wide open communications- Output standards- Careful use of standards- Encourage pride- Training- Encourage commitment

7.3.2 Juran 7/30

Active in Japan after Deming

Highly structured and coordinated based on complex planning and implementation control – appeals to boss-type managers who like a rigid control system.

Ten steps- Necessity of evolution and improvement- Strategic plan- Operational system- Staff training- Address problems as projects- Regular reporting system- Recognise/reward performance- Open communications- Published performance records- Maintain momentum & constantly innovate

Juran trilogy

- Quality planningo Rank customerso Identify requirementso Develop solutiono Plan developmento Establish goalso Implement productiono Ensure accuracy/reliability

- Quality control- Quality improvement

7.3.3 Crosby 7/32

Philip B Crosby

Quality must be universal goalSenior management must provide leadership to uncompromising qualityCaters to HR-type manager

Fourteen-stage process- Commitment at all management levels- Specific quality teams- Measurement and evaluation system- Cost implications- Promote quality awareness- Corrective actions- Zero-defect planning (central to Crosby approach)- Education programmes- Zero-defect day (milestone)- Achievable quality improvement goals- Remove defect sources- Recognise/reward good performance- Quality forums (between senior management and operational managers)- Ensure evolution and feedback

7.3.4 Imai 7/35

Aimed at structured production-type managers

Continuous improvementFocus on production system (and environment) rather than products

- P-approach (process approach) rather than R-approach (results approach)- R-approach is based on MBO- P-approach is aka Kaizen

o Change is slow and consistento Long-term viewo Less financial focus

7.4 The Quality Management ‘Six Pack’ 7/367.4.1 Introduction 7/36

Quality management – process of managing quality to ensure certain standards are achievedWestern (this section) separate processJapanese view – fully integrated

Define quality level, monitor and control – analogous to EVA for cost variance

Six primary areas- Quality policy (starting point)- Quality objectives (feeds into quality plan for production system)- Quality assurance- Quality control- Quality audit (whole system)- Quality assurance plan and review (tools & techniques to set & monitor performance)

7.4.2 Quality Policy 7/38

Organisational vision on qualityFull support of senior management

Primary components- Organisational objectives- Performance levels- Reconciliation with strategy- Consequences for non-compliance

- Measurement procedure- Responsibility and ownership

7.4.3 Quality Objectives 7/39

Individual ramifications of policy

7.4.4 Quality Assurance 7/41

Tools and processes to ensure quality management produces results compliant with specificationsProactively sets standardsCollects external information for comparative purposes and feedbackUsually involves benchmark/target

- May be backed up by customer refunds/compensationMultifunctional, continuous improvement

- Identifies minimum standards of performance- Proactive where possible- Reactive where necessary- Applicable across all relevant sections- Procedures for collection and analysis of performance data- In context of audit and review procedures

7.4.5 Quality Control 7/42

Tools to create specific quality performance levelsQuality assurance – proactively establish drivers and performance standardsQuality control – evaluate achievement of standards and react to deviations (reactive)

- Includes continuous sampling- Statistical analysis of results

Requirements- Measure and confirm actual performance- Compare target and actual- Identify significant variance- Identify sources of variance- Initiate corrective action- Assign ownership and responsibilities- Monitor effectiveness of correction- Generate reports

Analogous to generation of cost and schedule variances

7.4.6 Quality Audit 7/45

Independent check by impartial personnel to determine if standards are being metExternal audit stronger and more reliable than internal

Provides independent confirmation that:- QA procedures have been observed- Quality control performance figures are correctly assembled- All relevant issues are included- Compliance with internal and external standards

o Processeso Analysis and reportingo Corrective actionso Monitoring and control systems o Reporting systems

- areas for improvement identified- plans for improvement assembled- free of corruption

7.4.7 Quality Assurance Plan and Review 7/46

Strategic plan analogous to Project Master Schedule (PMS) and Project Cost Plan- breaks down quality objectives- establishes basis of monitoring and control systems- sets times scales and cost limits for implementation and review

General requirements- establish clear targets- ensure achievability- allow interdependencies- allow provision for changes

- include contingency planning- specify success criteria- establish risk profiles- provision for corrective actions- ownership and responsibilities- monitoring and control of effectiveness of corrective actions- reports- fully accountable for overall performance improvement

Quality Assurance Plan (QAP) Functions- Strategic focus:

o strategic initiative with long-term aims and objectives; align with strategy- Formal procedures and processes

o Network of procedures acts as overall coordinating mechanism- Internal performance targets and benchmarking- Support for tendered/bid resource allocation

o States level of resourcing required to achieve time and cost requirements- Data for trade-off analysis

o States the time/cost for each element- Standardisation of procedures (to produce consistent quality level)

o Optimism may give rise to undervaluing QA in early stageso Time/cost constraints dominate decision makingo Performance concerns increase in middle and later stageso Beware of assumption that more time/money must improve performanceo Performance management is subjective; not always possible plan and implement in direct and

structured fashiono More customer-related than cost/scheduleo No advanced software availableo Tends to suffer from inadequate planning

- QAP can be transformed into Quality Assurance Matrix by combining with OBS and WBS analogous to Task Responsibility Matrix

7.4.8 Quality Control Tools 7/51

Identification tools- Identify where problems are occurring- Pareto Analysis – histogram illustrating number of quality problems for each area/module

o Basic Pareto analysis – identifies which elements account for highest proportiono Comparative Pareto analysis – compares range of processes to determine league table of problem

causeso Weighted Pareto analysis – considers other non-obvious factors (such as time and cost)

- Brainstormingo Creative phaseo Evaluation phase

- Delphi: anonymous: individual identification of risks and responses, committee collects, redistributes, next cycle

- Nominal Group Technique: individual idea generation, merge, individual ranking, collective ranking- SWOT analysis

Analysis tools- Analyse why problem is occurring- Scatter diagrams

o Highlight correlation between two variables (axes)- Control charts

o Preventive approacho May be based on standard normal distributiono Concordance analysis – identify correlation between two variables

Identification and analysis tools- Identify and analysis root cause- Cause and effect - Six major stages

o Identify source of problems (EVA, SWOT, Cause and effect …)o Brainstorm source of problemo Establish problem box (to isolate problem) and primary arrow (total inputs)o Enumerate all possible causes and effectso Identify all possible cause and effect componentso Develop proposed course of corrective actions

- Trend analysiso Linear regression analysis

7.5 Total Quality Management 7/61

7.5.1 Introduction 7/61

Japanese invention (1960s), popular in West in 1980s and 1990s)Production process and organisational structure considered integrated whole

7.5.2 Definition of TQM 7/62Combines enterprise-wide quality management with organisational controlNeeds committed employeesAssumes problems originate from process rather than operatives

7.5.3 TQM Structure 7/63

Eight phases- Commitment (developing internal resolve)- Mission (defining SMART objectives and strategy)- Customer (identifying what customer wants)- Process (tactical analysis – matching customer needs with feasible production options)- Vision (Generation of eventual outcomes)- Risk management (risk assessment and management strategy)- Planning (expensive and complex, multilevel, strategic project plan)- Breakthrough and implementation (tactical move and monitoring)

7.5.4 TQM Implementation 7/65

Breakthrough – first part of implementation- Fundamental quality improvements- Quick-win activities

Daily application management (DAM)- Long-term implementation of system- Continues process of establishing objectives and monitoring the results

Interdepartmental (Cross-functional) management (CFM)- Integration of team activities across functional divisions to achieve organisational goals

7.5.5 Advantages and Disadvantages of TQM Systems 7/68

Advantages- Increased organisational awareness- Increased appreciation of links between processes and performance- Increased efficiency- Improved communications- Improved employee performance- Improved operational systems (after detailed analysis)- Improved external relationships- Improved reputation- Opening new markets (customer requirements for TQM)

Disadvantages- Cost- Inconvenience- Selling (scepticism)- Distribution (geographical)- Training- Dilution

7.6 Configuration Management 7/707.6.1 Introduction 7/70

Configuration Management / Configuration Change Control – controls information that relates to changeChanges all involve time, cost or quality

Configuration Management – control technique for formal review and approval of proposed changes

7.6.2 Configuration Management System Components 7/72

Format and layout- Topology - Segmentation along privilege / authorisation levels

Identification and specification- System characteristics

o Limiting approach (e.g. cost limits)o Cost-effectiveness approach (ratio between cost of solution and its effectiveness)

- Project-relevant informationo E.g. for a drawing

Date, revision number, author, authoriser, checker, action flags…o User informationo PCso Companieso Drawings, schedules, letters, instructionso Project change orders and history

- Data analysis and classificationo Simple code for each componento Manufacturer codeso Organisational (e.g. reporting) and personal information

Change control system- Three steps

o Identification/submission of requiremento Approval/rejectiono Authorisation and implementation

- Special considerationso Proceduralo Authority clearance

Change control review board (CCRB)o Schedule constraintso Gateways and checkpoints

Status Accounting and reporting (CSAR)- Keep history of all changes in project- Bill of variations

o Item identity (WBS element, or package identity)o Dateo History of change requestso History of approvals/rejectionso History of Estimated impacto History of any previous monitoring outcomes

Audit and Feedback

7.6.3 Configuration Management Baselines 7/79

Baseline – windows that shows project performance at any moment in time

Five main baselines1. Inception - Project life cycle (functional objective)2. Scheme design - Detailed design3. Detailed design - Production information4. Production cycle - Tender stage5. Operational cycle - Execution

7.6.4 Summary 7/80Configuration management is process by which information is communicated around project

7.7 Concurrent Engineering and Time-Based Competition 7/807.7.1 Introduction 7/80

Time-based competition (TBC) – competitive advantage by being first to market

7.7.2 The Concept of Concurrent Engineering 7/81

US – phased and fast-track approaches (John Deere and Boeing)

Concurrent engineering – overlapping and blurring of traditional life cycle phases- Parallel rather than sequential scheduling- Multiple and concurrent use of resources- Very careful monitoring and control- Immediate response to delay- Efficient communications systems, extensive information sharing- Good CMS- Clear objectives for all levels of OBS- Detailed understanding of all linkages and interdependencies- Immediate authorisations- Multidisciplinary/cross-functional working- Fast, accurate reporting

Also called time compression

7.7.3 Phased and Fast-Track Concurrent Engineering 7/85

Phased concurrent engineering- Separate project into work packages with separate design and execution phases- Split design and execution

- Begin design of package as soon as design of precursor has finished (before execution has competed)

Fast-track- Same as phased but additionally

o Begin execution of each package before design has completed

Risk approachOnly works if people have used it before and know the risks

Requires detailed risk assessment and risk-management system

7.7.4 Advantages and Disadvantages of Concurrent Engineering 7/88

Advantages:- Achievement of earlier completion dates- Compliance with change- Change control flexibility- Earlier launch- Improved innovation- Improved break-even and revenue generation- Improved control of creeping (shorter opportunity windows)- Improved design and execution integration- Improved performance (more control)

Disadvantages:- Requirement for close internal control- Requirement for multi-functional working- Increased risk- Close external control

8 - Case Study8.1 Aims and Objectives of the Case Study 8/1

8.2 Introduction (Module 1) 8/28.2.1 Issue and Supplements 8/28.2.2 The Oldcastle Station Development: Initial Project Information 8/38.2.3 Assignment 1. Oldcastle Station Project: Preliminary Evaluation 8/9

8.3 Individual and Team Issues (Module 2) 8/10

8.3.1 Assignment 2. Oldcastle Station Project: Primary Responsibilities of the Project Manager 8/10

8.4 Risk Management (Module 3) 8/17

8.4.1 Assignment 3. Oldcastle Station Project: Contracts and Risk 8/17

8.5 Case Study First Supplement 8/22

8.5.1 Introduction 8/228.5.2 Change Information 8/228.5.3 Supplement Appraisal 8/26

8.6 Organisational Structures (Module 4) 8/27

8.6.1 Assignment 4. Oldcastle Station Project: OBS 8/27

8.7 Case Study Second Supplement 8/30

8.7.1 Introduction 8/308.7.2 Change Information 8/308.7.3 Supplement Appraisal 8/33

8.8 Time Planning and Control (Module 5) 8/33

8.8.1 Assignment 5. Oldcastle Station Project: Schedule 8/33

8.9 Cost Planning and Control (Module 6) 8/41

8.9.1 Assignment 6. Oldcastle Station Project: Cost Planning and Control 8/41

8.10 Quality Management (Module 7) 8/52

8.10.1 Assignment 7. Oldcastle Station Project: Quality Management and Control 8/52

Key Points Project Management

Chapter 1: Project versus Mass, batch production.

Chapter 2: Functional versus project structure; motivation, communications, stress

Chapter 3: Risk (probability, consequence)Risk handling: analysis, handling, feedback; external versus internalMaximax (Hurwicz), Maximin (Wald), Minimax (Savage), LaplaceClassificationContract theory

Chapter 4: Internal (Functional, Pure project, Matrix)External (surrogacy, risk transfer)IPMA, APM, PMIBS6079 (SPP) / ISO 10006PRINCE2 (industry specific: IT in UK Government)

Chapter 5: Data sourcesSOW, WBS, PLE (Precedence diagram)Network analysis (Network diagrams: AOA, AON: usually finish to start)Critical Path method (Forward pass EET, Backward pass LET)PERT (duration: T=(a+4m+b)/6; standard deviation s=(b-a)/6), project mean: sum (T), sd: sqrt(sum(s2))Crash analysis, Trade-off analysis (8 types)

Chapter 6: Control system (cybernetic, analogue, feedback)Const planning cycle; cost operating cycle (5 phases)Cost Variance BCWP-ACWPSchedule Variance BCWP-BCWSTime Variance STWP-ATWPCritical ratio: (Actual-progress/Scheduled-progress) x (Budgeted-cost/Actual-cost)

Chapter 7: Deming (democratic), Juran (autocratic), Crosby (HR), Imai (production-oriented)QM Six pack: Policy, Objectives, Assurance, Control, Audit, Assurance planTQM, Configuration ManagementConcurrent engineering (phased, fast-track): Time-based competition