1. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 1 Introduction / Stakeholders / Project Brief Lecturer: Dr. Revenio

2. Learning Objectives: -Identify the definitions of a project and the task of management within a range of projects. -Recognize the primary objectives of any projects and balancing the three objectives -Identify key stakeholders for project. -Identify the project brief and demonstrate its template.

3. What is Project? Project is a temporary endeavor undertaken to create unique product or service. Temporary means each project has a definite end. Unique means that the product or service is different in some distinguishing way form all similar products or services. Introduction:

4. -What is Project Management? Project Management is the application of knowledge, skills, tools and techniques to project activities in order to meet stakeholder’s needs and expectations from the project. (The project manager must do whatever is required to make the project happen). So, What is the purpose of project management?

5. A project is any activity that has: A unique task A specified target A set timescale A fixed budget.

6. The primary objectives of any project can be grouped under three headings: 1- Specification, performance and quality 2- Budget 3- Time to completion. - Balancing the primary objectives

7. Triangle of objectives: Version 1

8. The three primary objectives of quality, cost and time are interrelated - The time l cost relationship Remember that TIME IS MONEY! Any delays on project can easily cause additional costs (fixed, variable and finance costs).

9. - The quality l cost relationship The relationship between quality and project costs is not straightforward. Downgrading quality is not an option. (Total Quality Management) The word 'quality' is replaced by 'specification', 'specified standard', 'specified performance' or something equivalent. Don’t forget people!!! Level of specification' replaces 'quality‘. WHY?

10. Triangle of objectives: Version 2

11. Stakeholders: -Stakeholder is any individual or group with an interest in the project process or outcome. - External Stakeholders -Internal Stakeholders

12. Common Stakeholder Expectations Fit for purpose Aesthetically pleasing Free from defects Delivered on time Value for money Reasonable running costs Satisfactory reliability/durability Supported by worthwhile guarantee

13. Example of stakeholders and primary objectives:

14. Project Brief A document describing the nature of the work to be undertaken. Project Brief is generally short and provides an overview of the proposed project. When a Feasibility Study has taken place the Project Brief should refer to the Feasibility study rather than reproduce it. Project Brief will eventually be expanded into a Project Initiation Document (PID).

15. Project Brief Template 1- Outcomes 2- Objectives 3- Outline deliverables. 4- Scope 5- Approach 6- Exclusions 7- Constraints 8- Outline business case 9- Reasons for selecting this solution 10- Outline project plan/schedule 11- Quality expectations 12-Risk assessment

16. Tutorial 1- “A project manager should not have other managerial responsibilities.” Discuss 2- Discuss the importance of balancing the three primary objectives for Project.

17. Sources: -AlokRai and Ashutosh, M., (no date). Concept of Project & Project Management. FMSBHU. -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. - Lasa Information System Team, (2012), Project Management: The Project Brief, [online], URL: http://www.ictknowledgebase.org.uk/projectbrief, [date visited May 1st 2012]. -Lock, D., (2003), Project management, Eight Edition, Hampshire, Gower. -Maylor, H., (2010), Project Management,4 th editon, Pearson Education, Harlow, England.

18. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 2 Project Models and Frameworks/ Project Life Cycle Lecturer: Revenio

19. Learning Objectives: Use project models and frameworks to identify elements of a project Consider different approaches to the project life cycle. Identify the different stages of the project life cycle.

21. The Project Models The ICOM Model: The project is viewed as a conversion or transformation of input into output under a set of constraints and utilizing a set of mechanisms to make the project happen.

22. The ICOM model

23. Inputs: - Inputs include some form of want or need which is to be satisfied through the process. -Original needs - Emergent needs

24. Constraints: -Time - Cost - Quality - Legal - Ethical - Environmental - Logic - Activation - Indirect effects

25. Outputs: -Satisfied Needs Converted information A tangible product Changed people

26. Mechanisms: People Knowledge and expertise Financial resources Tools and techniques Technology

27. Project Framework

28. Project life Cycle

29. -The sequence of phases through which the project will evolve is a project life cycle. -A project life cycle is basically defined by its phases, according to which a project swims through & finally reaches to handover stage. -To start with, there is really no such thing as a typical life cycle, because all projects differ enormously.

30. Four-stage Project Life Cycle D1: Define the project D2: Design the project process D3: Deliver the project D4: Develop the process The brief The proposal/PID The outcomes Process & product knowledge

31. Four phases in Project life cycle (4 Ds) 1- Define the Project Goals, feasibility study, specifications, tasks, responsibilities 2- Design the Project Management Schedules, budgets, resources, risks, staffing 3- Deliver the Project Status reports, changes, quality, forecasts 4- Develop the Process Train customers, transfer documents, release resources, release staff, reasons learned

32. Mayor’s four phase approach PhaseKey issuesKey questions Define the project Organisational & project strategy; goal definition What is to be done? Why is it to be done? Design the project process Modelling & planning; estimating; resource analysis; conflict resolution; business case How will it be done? Who will be involved in each part? When can it start and finish? Deliver the project Organisation; control; leadership; decision-making; problem-solving How should the project be managed? Develop the process Assessment of process & outcomes; evaluation; changes for the future How can the process be continually improved?

33. Tutorial Taking an example of a personal project that you have recently completed, identify the inputs, outputs, constraints and mechanisms for the project, what is the importance of defining the nature of constraints on a project prior to starting work on it?

34. Sources: - Field, M., and Keller, L., (2001). Project Management,The Open University, Thomson Learning, London. -Lock, D., (2003), Project management, Eight Edition, Hampshire, Gower. -Maylor, H., (2010). Project Management, Fourth edition, Pearson Education Limited, Harlow, England. -Project Cycle Management, A short training course in project cycle management for subdivisions of MFAR in Sri Lanka. -Westland, J. (2007), The Project Management Life Cycle, A book reviews by R. Max Wideman.

35. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 3 The Successful Project Management /The Project Management Knowledge Areas Lecturer: Dr. Revenio

36. Learning Objectives: -Identify the key activates of project manager -Demonstrate the successful project management factors -Identify the factors that cause project management to fail - Recognize project management knowledge areas to identify and describe best practice that are applicable to most project most of time

37. -Project management plays a role in project success but that role is affected by many other factors outside the direct control of the project manager.

38. Key Activities of Project Managers - Shaping goals and objectives – project goal inevitably changes - Obtaining resources – easy? - Building roles and structures for their team – “followers make their leader” - Establishing good communications - Seeing the whole picture –strategic vision - Moving things forwards (especially in difficult circumstances) - driver

39. The success of a project is dependent on having: A realistic goal Competition Client satisfaction A definite goal Profitability Third parties Market availability The implementation process The perceived value of the project

40. The factors which may cause the project management to fail include: Inadequate basis for project; Wrong person as project manager; top management unsupportive; Inadequately defined tasks; Lack of project management techniques; Management techniques misused; Project closedown not planned; Lack of commitment to project

41. Successful project management requires: -planning with a commitment to complete the project -careful appointment of a skilled project manager -spending time to define the project adequately -correctly planning the activities in the project - ensuring correct and adequate information flows

42. -changing activities to accommodate frequent changes on dynamic -accommodating employees' personal goals with performance and rewards. -Making a fresh start when mistakes in implementation have been identified.

43. -Applying effective Project Management provide organizations the following advantages Business advantage through timely achievement of goals, optimal resource utilization and information based decision making. Competitive advantage through workforce energized by culture of execution and collaboration and customer satisfied by getting the "right" results reliably

44. -Project Management can also bring in some tangible benefits for individuals at various levels in organizations. For example, through project management: Executives get accurate and timely information. so that they……………………….... People who execute understand their roles and responsibilities and how their work relates to the bigger picture. So…………………………………

45. Project management could be described under the following knowledge areas: *** The purpose of these knowledge areas is to identify and describe best practice that are applicable to most project most of time - Project integration: integrates the three main project management processes of planning, execution and control- where inputs from several knowledge areas are brought together.

46. - Project Scope Management: includes the processes required to ensure that the project includes all the work required to complete the project successfully. Its primarily concerned with defining and controlling what is or is not included in the project, to meet sponsors’ and stakeholders’ goals and objectives. It consists of authorization, scope planning, scope definition …

47. -Project Time Management: includes the process required to ensure timely performance of the project. It consists of activity definition, activity sequencing, duration estimating, establishing the calendar, schedule development and time control. -Project Cost Management: includes the process required to ensure that the project is completed within the approved budget. It consists of resource planning, cost estimating, cost budgeting, cash-flow and const control.

48. -Project Quality Management: includes the process required to ensure that the project will satisfy the need for which it was undertaken. It consists of determining the required condition, quality planning, quality assurance and quality control. -Project Human Management: includes the process required to make the most effective use of the people involved with the people involved with the project, it consists of organization planning, staff acquisition and team development.

49. - Project Communication Management: includes the process required to ensure proper collection and dissemination of project information. It consists of communication planning, information distribution, project meetings, progress reporting and administrative closure. - Project Risk Management: includes the process concerned with identifying, analyzing, and responding to project risk. It consists of risk identification, risk quantification and impact, response development and risk control.

50. - Project Procurement Management: includes the process required to acquire goods and services from outside the performing project team or organization. It consists of procurement planning, solicitation planning, solicitation, source selection, contract administration and contract closeout.

51. Tutorial - Choose one of new projects in Sultanate of Oman and discuss the successful factors for this project.

52. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. -Goetz, R., (no date). Defining Project Goals and Objectives, PROJECT SAMART.CO.UK. -Maylor, H., (2010). Project Management, Fourth edition, Pearson Education Limited, Harlow, England. -Munns, A., and Bjeirmi, B., (1996), The role of project management in achieving project success, International Journal of Project Management, Vol. 14, No. 2

53. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 4 Strategy and Project Management / Phase 1 (D1): Project Definition Lecturer: Dr. Revenio

54. Learning Objectives: -Recognize the role of organizational strategy in projects and generic Project Strategies and their typical strategic focus. -Explore the various definitions and characteristics of a project. -Demonstrate the uses of feasibility study

55. Strategy: What is Project Strategy? -Project Strategy is the project perspective, direction, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best project results.

56. Selecting the right strategy at project initiation, making it compatible to the business strategy. Strategy will contribute to project success and overall business results

57. Generic Project Strategies and Their Typical Strategic Focus

58. Defining a project is a process of selection and reduction of the ideas and perspectives of those involved into a set of clearly defined objectives, key success criteria and evaluated risks. - The Purpose (or Mission) This is the reason for doing the project - What is the project about in broad terms? - Who wants it done and why? - What is its title?

59. - The Goals These are the targets we want to meet. Goals are board statements applied to the project; goals are the “what” of the process. Project may have more than one goal but many objectives per goal. Don’t confuse goals with objectives. Example: Insurance Company Goal: the medical insurance Department will increase provide options by 10%. - What is it we want to achieve? - When do we want to achieve it? - What are our specific aims? - Why are these goals essential to the project?

60. - The Beneficial Gains or Scope This is how our organization will gain. Here we define our performance criteria and set our quality standards for the project. - How will things be different if the project is successfully completed? - Is there a clear need and can it be quantified? - Who will benefit, how will they benefit and what will they gain? - Do the beneficiaries agree about the need and the proposed solution?....etc

61. - Objectives From our list of specific goals for the project we must develop a set of measurable objectives that will confirm that we have reached certain project milestones (or way points) including the final one of project completion. The measurable objectives (when achieved) demonstrate the extent to which the beneficial gains have been achieved, the goals have been met and that the purpose of the project has been achieved. Always start an objective with the action verb.

62. Example: Insurance Company Goal: the medical insurance Department will increase provide options by 10%.

63. Objectives: -Identify provider options and costs -Survey the customer to find out each options value. -Compare options to competitors.

64. Project Constraints Every project has constraints. The primary ones are the tradeoff between Time, Resources and Performance Criteria. We must define our project so that we can manage these constraints.

65. Feasibility studies What is a Feasibility Study? A Project Feasibility Study is an exercise that involves documenting each of the potential solutions to a particular business problem or opportunity. Feasibility Studies can be undertaken by any type of business, project or team and they are a critical part of the Project Life Cycle.

66. When to use a Feasibility Study? - The purpose of a Feasibility Study is to identify the likelihood of one or more solutions meeting the stated business requirements. In other words, if you are unsure whether your solution will deliver the outcome you want, then a Project Feasibility Study will help gain that clarity. During the Feasibility Study, a variety of 'assessment' methods are undertaken. The outcome of the Feasibility Study is a confirmed solution for implementation.

67. -A good feasibility study report can do much to point a project in the right direction and define its risks and achievable objectives.

68. Tutorial 3 - According to the (mission statements: vision and quality policy) for Bank X; write some objectives that could be use toward this vision and policy: Vision Statement “Over one million satisfied customers by 2012 through continuous enhancement of stakeholder value” Quality Policy Our Quality Policy is to achieve and sustain a reputation for quality in the national and international markets by offering products and services that exceed the requirements of our customers. We strive to remain the bank of first choice in all our product and services.

69. - What are the objectives for the Ministry of Higher Education in Sultanate of Oman?

70. Sources: -Burke, R., (2008), Project Management Techniques (College Edition), Burke Publishing. -Goetz, R., (no date), Defining Project Goals and Objectives, PROJECT SAMART.CO.UK. -Maylor, H., (2010) Project Management, fourth edition, Pearson Education Limited, Harlow, England. - Shenhar, A., Poli, M., and Lechler, T., (2002), A New Framework for strategic Project Management, Wesley J.Howe School of Technology Management, Hoboken, NJ

71. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 5 Phase 2 (D2) : Design the project /Time Planning Lecturer: Dr. Revenio

72. Learning Objectives: -Identify the Work Breakdown Structure (WBS) for a project -Demonstrate the time planning and scheduling. - Recognize the uses of time planning methods and their limitations.

73. -Most projects are too complex to be estimated, planned and controlled effectively unless they are first divided into smaller portions of more manageable size. -Each project or sub-project must then itself be further divided into smaller work packages and tasks. - Developing the work breakdown structure (WBS) for a project is therefore a necessary step in the chain of project management activities.

74. Work Breakdown Structure (WBS) Total Project Part of second level of project breakdown (Mining Complex) Workshop and stores Winder house Refinery Concentrator Mine office Messing and wash house First level of project breakdown Hospital School Power generation Mining complex Shops Housing Part of third level of project breakdown (concentrator) Ore bins Main building Tailing disposal Cranes Flotation cells Piping and pumps And so on

75. Time Planning Whenever any job has to be accomplished according to a time or date deadline, it is advisable to have at least some idea of the relationship between the time allowed and the time needed.

76. Project Time Management: includes the process required to ensure timely performance of the project. It consists of activity definition, activity sequencing, duration estimating, establishing the calendar, schedule development and time control.

77. Planning and scheduling environment:

78. Planning and Scheduling - Factors affect project’s planning and scheduling: External Factors: Working Factors: Contribution results:

79. Matrix charts Matrix charts list one set of factors in a column at the extreme left-hand side of a tabulation, and align factors directly associated with them across columns to the right in a matrix display.

80. Example: Matrix charts for allocating activities to people or other resources: Gymnasium project

84. Planning Projects Methods 1- Simple tabular planning (timetables) - The easiest and simplest approach.

85. Case study: How not to plan a project A prototype for a small electromechanical device needed to be designed and built. The company's chief engineer was asked to oversee the project, and was given a total of 19 weeks in which to have a completed and tested prototype ready for appraisal. The plan When asked to prepare a plan, the chief engineer agreed the following timetable with fellow managers: Start Finish Design and draw 7 Jan 2002 15 Mar 2002 Purchase components 18 Mar 2002 19 Apr 2002 Manufacture prototypes 15 Apr 2002 3 May 2002 Assemble and test 6 May 2002 10 May 2002

86. -Progress meetings -Too late - What went wrong?

87. 2- Bar charts (Gantt charts) - American industrial engineer Henry Gantt (1861- 1919). -Bar charts are easy to draw or construct and interpret, and can be used for a great variety of planning requirements. -Use for all levels of supervision and convenient as day to day controlling tools. Limitations of bar charts -Rescheduling -Inflexibility -Interpretation and scaling -Linked bar charts

89. 3- Line of balance charts -Line of balance charts are more complex than bar charts, need more effort to design, and are more difficult to interpret. They are rarely used. -The method is suitable for projects in which a number of identical items have to be produced singly in a planned sequence. Such as: construction project

90. Example: Five house construction project Bar chart for the construction of five similar houses

91. Line of balance charts

92. What is buffer? A buffer is additional time to complete a task. A buffer is a block of time which protects a deliverable from being affected by delays upstream. The Completion Buffer protects the Project completion date.

93. Tutorial Use the Matrix charts for allocating activities (jobs) to the following people in a Farm Project for five days in a week and each of them has two days as a holiday. Note: each one will not do the same job during the week. People: Jack, Andy, Mike, William, George and Sam Activities (Jobs): Irrigation, Trim trees, Guarding, Plowing, and Livestock grazing. 1- Assigning people for jobs 2- Assigning Jobs for People ( prepare the table by yourself)

94. SaturdaySundayMondayTuesdayWednesdayThursdayFriday Jack Andy Mike William George Sam 1- Assigning people for jobs

95. Sources: -Lock, D. (2003), Project management, Eight Edition, Hampshire, Gower. -Maylor, H., (2010), Project Management, 4 th edition, Pearson Education Limited, Harlow, England. - Schwalbe, K., (2005), Information Technology Project Management, 4 th edition, Course Technology Inc.

96. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 6 Time Planning Techniques Lecturer: Revenio

97. Learning Objectives : -Describe the principles of the critical chain approach. - Calculate the critical path method (CPM) and (PERT) -Demonstrate software in assist time management.

98. Critical Chain Project Management Critical chain project management (CCPM): is a method of planning and managing projects that puts the main emphasis on the resources required to execute project tasks. Critical Path Method and Programme Evaluation and Review Technique (PERT) are powerful tools that help you to schedule and manage complex projects.

99. Benefits of using CPM and PERT Techniques: -Identify task that must be completed on time for the whole project to be completed on time. -Identify which tasks can be delayed for a while if resources need to be reallocated to catch up on missed tasks. - Help to identify the minimum length of time needed to complete a project. - Help to identify which project steps should accelerate to complete the project within the available time. This helps you to minimize cost while still achieving your objective.

100. Critical Path Method (CPM) CPM is a network diagramming technique used to predict total project duration. A critical path for a project is the series of activities that determines the earliest time by which the project can be completed. The critical path is the longest path Slack or float is the amount of time an activity can be delayed without delaying a succeeding activity or the project finish date.

101. Calculating the Critical Path - Develop a good network diagram. - Add the duration estimates for all activities on each path through the network diagram. - The longest path is the critical path. - If one or more of the activities on the critical path takes longer than planned, the whole project schedule will slip unless the project manager takes corrective action.

102. Example:

103. Using Critical Path Analysis to Make Schedule Trade-offs: - Free slack or free float is the amount of time an activity can be delayed without delaying the early start of any immediately following activities. - Total slack or total float is the amount of time an activity can be delayed from its early start without delaying the planned project finish date. - A forward pass through the network diagram determines the early start and finish dates. - A backward pass determines the late start and finish dates.

104. Early and Late Start and Finish Dates:

105. Program Evaluation and Review Technique (PERT) PERT is a network analysis technique used to estimate project duration when there is a high degree of uncertainty about the individual activity duration estimates. PERT uses probabilistic time estimates Duration estimates based on using optimistic, most likely, and pessimistic estimates of activity durations, or a three-point estimate.

106. PERT Formula

107. Example: Find the PERT weighted average Where: Optimistic time= 8 days Most likely time = 10 days Pessimistic time = 24 days

108. - The calculation is repeated on all activities in the network, and used to predict the probability of completing the project within the scheduled time. - PERT will produce a critical path in the same way as any other network analysis method

109. Using Software to Assist in Time Management - Software for facilitating communication helps people exchange schedule-related information. - Decision support models help analyze trade-offs that can be made. - Project management software can help in various time management areas.

110. Tutorial -Calculating Early and Late Start and Finish Dates for Project X:

111. Solution: Network for calculating ES, LS, EF and LF

112. Task NameStartFinishLate startLate finishFree slackTotal slack A B C D E F G H I J Table

113. Sources : -Lock, D., (2003), Project management, Eight Edition, Hampshire, Gower. -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. -Maylor, H. (2010) Project Management, 4 th edition, Pearson Education Limited, Harlow, England. - Schwalbe, K. (2005), Information Technology Project Management, 4 th edition, Course Technology Inc.

114. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture / Week 7 The Cost Lecturer: Dr. Revenio

115. Learning Objectives : -Identify elements of cost and process for construction of cost plans. -Recognize methods for the development of a business case. - Identify causes of failure in cost and benefit analysis.

116. Cost and benefit planning - The challenges for the business case include the estimation of costs and the identification of benefits. Basics of a cost planning process - Changes in cost over time as a result of currency fluctuations, inflation and base material costs. -Relationship between cost, price and profit in the project. The role of costing: Price = cost + Profit Cost = price – profit Profit = price – cost

117. Approaches to costing: Two basic approaches to the preparation of costing information: 1- Ground- up costing: - Costs set by the project>>> project manager collates estimates. 2- Top - down costing: - Costs fixed externally to project>>> project manager allocates budgets to sub-projects.

118. Work breakdown structure (WBS) - Developing the work breakdown structure (WBS) for a project is therefore a necessary step in the chain of project management activities.

119. Total Project Part of second level of project breakdown (Mining Complex) Workshop and stores Winder house Refinery Concentrator Mine office Messing and wash house First level of project breakdown Hospital School Power generation Mining complex Shops Housing Part of third level of project breakdown (concentrator) Ore bins Main building Tailing disposal Cranes Flotation cells Piping and pumps And so on Work Breakdown Structure (WBS)

120. Elements of cost: - Time - Materials - Capital equipment - Indirect expenses - Overheads - Contingency

121. Estimating techniques: Some techniques used in estimating cost -Parametric estimating : considerable experience of a particular type of project, the project is broken down into a unit that can be readily estimated -As…but…s : are where you or your organization has experience of doing similar job previously. - Forecast: when there is a degree of uncertainty.

122. Example: A course coordinator wishes to advertise the course but needs to know how much will have to be charged in order to make profit: The programme requires a consultant to do three day’s training which costs £250 per day, supported administrator time cost £ 90 per day, administrative time arranging for course ( eight days at £ 90 per day), materials (variable cost) us £ 60 per delegates (15 delegates), overhead rate is 60 per cent.

123. Financial Appraisal for Projects: -Consider the potential rewards of carrying out a project against the predicted costs. 1- Payback analysis - The payback period: is the number of years it is expected to take to recover the original Project or Investment form the net cash flows resulting from a capital investment project - The payback method of investment appraisal is to accept a project if it’s payback period is equal to or less than a predetermined target value.

124. Example: Consider an investment project with the cash flows in the following table: Year01234 Cash flow (£) (450)100200100

125. Cumulative cash flows Year Cash flow (£) Cumulative cash flow (£) 0(450) 1100(350) 2200(150) 3100(50) 410050

126. The advantages of the payback method - Simple and easy to apply - Straightforward to understand as a concept - Take into account of risk (Implicitly assumes that shorter payback period is superior to a longer one) The disadvantages of the payback method - Ignores the time value of money - Ignores the size and the timing cash flows within the payback period. - Ignores all cash flows outside the payback period and does not consider the project as whole.

127. 2- Net Present Value (NPV): -The NPV method uses discounted cash flows to evaluate capital investment projects -Uses cost of capital or target rate of return to discount all cash inflows and outflows of their present values, then compares them - A positive NPV indicates that an investment project is expected to give a return in excess of the cost of capital and lead to increase in shareholder wealth.

128. Net Present Value (NPV) equation

130. Project A: has a positive NPV of £355,000 Project B:has a positive NPV of £619,500 Project C:has a positive NPV of £211,900 So, project B should be undertaken, since it has the highest NPV and will lead to the largest increase in shareholder wealth.

131. Advantages of NPV Method -Takes account of the time value of money -Uses cash flows rather than accounting profit -Takes account of both the amount and timing of project cash flows, and takes account of all relevant cash flows over the life of an investment project.

132. Disadvantage of NPV Method -It is difficult to estimate the values of cash inflows and outflows over the life of a project. -It’s possible to accept all projects with a positive NPV in a perfect capital market (no restriction on the amount of finance available). -The cost of capital of a company may be difficult to estimate -Discount rate is not straightforward - The cost of capital change over the life of the project.

133. 3- The Internal rate of return (IRR) method IRR is the cost of capital or required rate of return which, when used to discount the cash flows of a project, produces a net present value of zero. The internal rate of return decision rule is to accept all independent investment projects with an IRR greater than the company’s cost of capital or target rate of return.

134. Where: : is the initial investment : the project cash flows occurring in years 1,2,…, n : is the cost of capital or required rate of return.

135. Example: A company is evaluating three investment projects, whose expected cash flows are given in the following table, calculate the internal rate of return of each project, if the company’s cost of capital is 10 per cent, which project should be selected?

136. PeriodProject A (£000)Project B (£000)Project C (£000) 0(5000) 111008002000 211009002000 3110012002000 411001400100 511001600100 611001300100 71100 100

137. 990 + 893 + 804 + 725 + 653 + 588 + 530 - 5000 =183 Project A: NPV = 355 when r = 10% To fine IRR, NPV = zero

138. Try r* =12%,so 982 + 876 + 782 + 699 + 624 + 557 + 497 - 5000 = 17 So IRR = 12 per cent, any number more than 12% the NPV will be negative.

139. -The internal rate of return of project B is approximately 13.9 percent. -he internal rate of return of project C is approximately 12.3 per cent. - The decision on project selection: All three projects have an IRR greater than the company’s cost of capital 10 percent, so all are acceptable if there is no restriction on available capital

140. 4- The return on capital employed method (ROCE) or return on investment (ROI):

141. - A decision rule: to accept an investment project if its return on capital employed is greater than a target or hurdle rate of return set by the investing company. (project with higher return on capital employed should be accepted).

142. Example: A company is considering the purchase of a new machine and has found two which meet its specification. Each machine has an expected life of five years. Machine 1 would generate annual cash flows (receipts less payments) of £210,000 and would cost £570,000. Its scrap value at the end of five years would be £70,000. Machine 2 would generate annual cash flows of £510,000 and would cost £1,616,000. The scrap value of this machine at the end of five years would be £301,000. The company uses the straight-line method depreciation. Calculate the return on capital employed for both Machine 1 and Machine 2 and state which machine you would recommend, giving reasons.

143. For Machine 1£ Total cash profit =210,000 × 5 =1,050,000 Total depreciation = 570,000 - 70,000 =500,000 Total accounting profit =550,000 Average annual accounting profit = 550,000 /5 = £110,000 per year Average investment = (570,000 + 70,000) /2 = £320,000 Return on capital employed = 100 × (110,000/320,000) = 34.4 per cent

144. For Machine 2£ Total cash profit =510,000 × 5 =2,550,000 Total depreciation = 1,616,000 - 301,000 =1,315,000 Total accounting profit =1,235,000 Average annual accounting profit = 1,235,000 /5 = £247,000 per year Average investment = (1,616,000 + 301,000) /2 = £958,500 Return on capital employed = 100 × (247,000/958,500) = 25.8 per cent ** Machine 1 should be chosen, as it has a higher return on capital employed than Machine 2.

145. Advantages of the return on capital employed method - Gives a value in percentage terms, a familiar measure of return, which can be compared with existing ROCE of a company. - The primary ratio used by financial analysts in assessing company performance. - Simple method to apply and can be used to compare mutually exclusive projects - Consider all cash flows arising during the life of an investment project.

146. Disadvantages of the return on capital employed method - It is not based on cash, but uses accounting profit which is open to manipulation and is not linked to the fundamental objective of maximizing shareholder wealth. Because this method uses average profits, it also ignores the timing of profits. - It does not consider the time value of money and so gives equal weight to profits whenever it occurs. - Failed to take into account the length of the project life.

147. Tutorial - The expected cash flows of three projects are given below. The cost of capital is 10 per cent. 1- Calculate the payback period, net present value. 2- Show the ranking of the projects by each of the two methods and compare your findings.

148. PeriodProject A (£)Project B (£)Project C (£) 0(5000) 19007002000 29008002000 3900 2000 49001000 59001100 69001200 79001300 89001400 99001500 109001600

149. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. -Maylor, H. (2010) Project Management, 4 th edition, Pearson Education, Harlow, England. - Watson, D., & Head, A., (2004) Corporate Finance, Principles & Practice, 3th edition, FT Prentice Hall.

150. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 8 Quality Management / Risk Management Lecturer: Dr. Revenio

151. Learning Objectives: -Identify various definitions of quality product an service -Recognize a process for managing basic level of quality achievement through the concept of the quality bridge - Identify the benefits of improving quality performance.

152. The concept of quality and quality management: -The definition of quality did matter. -There are many definitions of quality. -The effectiveness of the quality management is determined by the combination of two views: Internal approach and External approach

153. 1- Internal approach: (managing the project team)( team -focused) - Quality is conformance to internal procedures - Quality is not making any mistakes and maximizing internal efficiency - Quality is “fitness of purpose” - Quality is “technical excellence”

154. 2- External approach: (managing the communications and touch –points between the project organization and the external stakeholders) (communication – focused) - Quality is a set of expectations and perceptions, which project managers have a role in managing - Quality costs and must be part of the business case.

155. - The effectiveness of the quality management is determined by the combination of these two views ( the bridge) - The Bridge (the external stakeholders) - Quality is the stake holder’s opinion of the totality of goods and service provision. - Quality comprises objective and subjective elements of both expectations of what the project will do and how it will be done. - Quality is what that stakeholder perceives has been done and how. The two approaches comprise the definitions from a number of different approaches to quality:

156. Perspectives on quality management Perspective Definition supported Description of approach Mathematical Conformance to specification The management of quality is limited to the assurance of the ‘goodness’ of a mechanical product or process. Activities are based on statistical tools. Such as Statistical Process Control. System- structural Conformance to procedure This is encapsulated in the approach of the bureaucratic quality system as used as the basis for the ISO 9000 model of quality management. The achievement of a level of quality relies on the development and following of a hierarchical set of procedural documents.

157. Control- organizationa l Continuously meeting customer requirements In this approach, employees and customers are viewed as key determinants of project quality. This is particularly useful where there are high levels of contact with particular external stakeholder groups during the project. EconomicCost of (un)quality The financial costs and benefits of quality management are assessed against the costs of failure. Holistic Continuously meeting customer requirement at lowest cost The Total Quality approach- relies on a change in the entire way the operation approaches its project processes, from senior management to the front-of-house staff. StrategicQuality as competitive advantage The additional responsiveness that can come from successfully pursuing product and process improvement is treated as part of the competitive strategy of the firm.

158. Manufacturing and service approaches to quality ManufacturingService Definition Product-based- a precise and measurable set of characteristics Based on stakeholders’ expectations and perceptions AttributesPerformance, conformance features, reliability, durability, serviceability, perceived quality and aesthetics. Access, communication, competence, courtesy, credibility, reliability, responsiveness, Security tangibles, understanding/knowing the customer

159. -Quality conformance planning== quality assurance : has been used to ensure the minimum standards are maintained in a wide array of activities. - Project Manual: means to planning for achieving what you have set out to do in quality terms, demonstrating that you have planned to achieve what you set out to do in quality terms. (Its about bringing all project information – including that about time and cost- into one place.

160. Quality Performance Planning: -Tangible and intangible qualities - Intangible elements: * Responsiveness * Communication * Competence/ professionalism * Courtesy * Accessibility

161. - Project manager need to consider which elements of the project are core and which are peripheral. - The table below shows the elements of the process and outcomes form the project and how the expectations and perceptions can be managed to each case:

162. Management of expectations and perceptions ProcessOutcomes Expectations Provide samples of process documentation; use of accreditations of processes (e.g. ISO 9000) Determine actual requirements, do not over- promise PerceptionsProvide regular reports of progress; build on issues important to the stakeholders (e.g. through senior management involvement in the project) Promote positive aspects of outcome- cues; in some cases, use ‘selective over-delivery’

163. Communication planning: - A common technique for communication management centers on the use of table to identify the nature of the communication (what will be told to whom and in what format )

164. Communication plan Stakeholder Communic ation TimingFormat Distribu tion Person responsible Project sponsor Monthly Week1 each month Short report E-mail Project manager Accounts department Monthly spend schedule 2 weeks before start of month Short budget E- mailAdministrator Client department MonthlyWeek 1 each month 1- page report E-mail and notice board Liaison officer

165. Towards quality improvement - Quality performance has both direct and indirect effects on the financial performance of the organization - Quality costs include elements of prevention, appraisal and failure.

166. CategoryCharacteristic being measuredExamples Prevention The costs of ensuring that the required level of quality of service is met Planning Risk management Stakeholder management Appraisal Measuring what level of quality of service is provided Stakeholder surveys Random inspection/checks Performance date gathering and analysis failureThe costs of getting it wrong and putting it right-can be categorized as either internal or external failure. Internal failure: mishaps or errors that are resolved without the customer ever seeing them. External failure: occurs in the interaction with the customer, may result in loss/withdrawal of business of rectification/rescue being required.

167. Management of failure: The stages in the management failure: 1- Identify that something has gone wrong 2- Contain the situation- accept that there is a problem, prevent further damage or escalation of the problem. 3- Put in place recovery actions to regain the customer’s confidence. 4- Ensure that practices are changed so that this incident does not occur again.

168. Risk Management What is risk? - Risk: the possibility of suffering harm or loss -Risk: the uncertainty inherent in plans and the possibility of something happening (i.e. a contingency) that can affect the prospects of achieving business or project goals. Some particular aspects to consider : -Time: critical path (uncertainty) - Cost : estimates have uncertainty - Quality: assurance of all process?? - Health and safety: risks to people or things of activities - Legal: level of risk to the legal or financial standing

169. - Identifying and listing the possible risks Brainstorming: is an effective technique for considering many aspects of risks.

170. Qualitative approach: - The majority of risk management activity is based on qualitative data. - Probability – likelihood - Failure mode and effect analysis (FMEA):

171. Quantitative approach : -Quantitative analysis methods attempt to assign numerical values to risks and their possible effects. For example: one organization needed 80 per cent certainty of delivery with the specified time as a policy requirement for a project to go ahead. The project manager had to present plans that met this basic criterion. Such an ’80 per cent certainty’ is arrived at through the use of a variety of differed techniques.

172. Some risk quantification techniques are: 1- Expected value 2- Sensitivity analysis 3- Monte Carlo analysis 4- PERT

173. Tutorial Case Study: Total Quality Management Practices in Large Construction Companies: A Case of Oman

174. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. -Maylor, H., (2010), Project Management, 4 th edition, Pearson Education, Harlow, England.

175. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 9 Phase 3: Do It Project Structure and Teams/ Project Leadership Lecturer: Dr. Revenio

176. Learning Objectives: -Recognize the role of teams in achieving project objectives -Understand the impact that the choice of structure will have anon the achievement of project objectives. - Identify the differing roles of leadership and management in the project environment.

177. Project Structure and Teams -A strategic issue is how the project management structure fits in with the structure of the organization as a whole. -The gathering together of individuals with the aim of making them a cohesive whole and ensuring the benefit of all stakeholders is a fundamental role of most project managers.

178. -The distinction between the terms ‘team’ and ‘group’ is made to indicate the differences is operating characteristics of each. A group is simply a collection of people. A team meets the following criteria: The output of group is greater than the sum of the outputs of the individuals. A greater range of options can be considered by exploiting differences in individual thought processes. Decision- making by the team is likely to be better

179. The purpose of studying the role of teamwork in the project environment is: To help the project manager in the design and selection of the workgroup. To enable the monitoring of the degree to which the team is functioning effectively. To provide feedback to the team to help improve effectiveness.

180. More openness to taking risks, as the risk is shared between the team rather than carried by one individual. Higher overall level of motivation, as there is an inherent responsibility to others in the team and a desire not to let them down. Better support for the individuals with the team, who are more likely to be included in a greater range of activates than they would normally be exposed to, but without their having to work alone.

181. - Use Organizational Breakdown Structure (OBS) to break down the big team to smaller. Lifecycle of the teams: 1- Collection 2- Entrenchment 3- Resolution / accommodation 4- Synergy 5- Decline 6- Break-up

182. Requirements of team structure: Category Likely phase of project lifecycle Characteristics of team structure CreativePlanning Need to have a high degree of autonomy in order to explore the widest range of possibilities and alternatives. Needs to be independent of systems and procedures and requires independent thinkers and people who are self-starters. TacticalDoing Need a well-defined plan, hence unambiguous role definitions and clarity of objectives for the individual members. The team members should have loyalty and a sense of urgency. Problem- solving Doing (when problems arise) Will focus on problem resolution rather than any predetermined conclusions- these must be eliminated. The desirable characteristics of the people involved are that they are intelligent and have people sensitivity.

183. Selecting the best structure for a project: -The selection for the project is an important issue facing the project manager. - The choice should refer to the critical objectives of each project that an organization in undertaking.

184. The relationship between structure and objectives for the project: Functional organization Lightweight project organization Heavyweight project organization Project organization Example of usage Minor change to existing product Implementing change to work organization e.g. IT system Major innovation project Large construction projects AdvantagesQuality through depth of specialization possible within functions, possible to “hide” project costs Quality maintained Speed and quality (improvement) through use of relatively “stable” organization as a base Speed highest through dedicated resources; organization design dependent only on project strategy.

185. Disadvantages Relatively slow as an process Some cost disadvantage due to additional coordination expense of the matrix. Advese reaction form line managers; additional coordination and administration costs. Can incur significant additional cost due to the relative expense of contractors; quality may not improve over time; instability for staff Issues for the project manager Integration of functions within the organization Two bosses problem Management of knowledge

186. - When a project has a high degree of organizational complexity, project managers are being required to use mixed organizational structures and additional coordination mechanisms to help make the structures effective.

187. The role of leadership and management in projects: - Leadership involves the influencing of others through the personality or actions of the individual. - The skills and attributes of a good project manager will be determined by personality, experience, and both formal and informal education and training.

188. - For leader, time is a non-replenishable resource and must be managed accordingly. -The modern project manager has a responsibility both to the organization and to the team members to ensure that they are provide with a high level of motivation.

189. Hierarchy of needs (Maslow’s hierarchy of needs)

190. The development of new management paradigms: -The role of the successful project manager will be to date with changes in management thinking, but to take an intelligent approach as to which changes will add value. - Any new idea should be: 1- Adopted only after careful consideration 2- Purged of unnecessary buzzwords and clichés. 3- Judged by their practical consequences

191. 4- Tied to the here and now 5- Rooted in genuine problems 6- Adapted to suit particular people and circumstances 7- Adaptable to changing and unforeseen circumstances 8- Tested and refined through active experimentation 9- Discarded when they are no longer useful.

192. Tutorial Conjecture a hierarchy of need for project by using the following Maslow’s model

193. Self-actualization Our need to actualize our potential as humans. Because each of us is unique, this need expresses itself uniquely for each individual. Esteem Our needs for achievement, adequacy, recognition, status, appreciation, and mastery. Belongingness and love Our needs to give and receive affection, to relate to other people, family, and friends. Safety Our needs for security, stability, and freedom from fear and anxiety. Physiological Our fundamental needs for food, water, sleep, touch, shelter, and exercise.

194. Delivery actualization……………………………… ……………………………………………………… Esteem…………………………………………….. ……………………………………………………… Business purpose………………………………. ……………………………………………………… ………………………………………………………. Stability……………………………………………. ……………………………………………………… Resources………………………………………… ………………………………………………………

195. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. - Maylor, H., (2010), Project Management, 4 th edition, Pearson Education, Harlow, England.

196. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 10 Phase 3: Do It (2) Control / Supply Chain Issues Lecturer: Dr. Revenio

197. Learning Objectives: -Identify the elements of a control system appropriate to a particular project. -Identify the role of the supply chain in project management and its importance in ensuring project success. - Describe the nature of the supply chain relationships and contracts that can exist.

198. Control Many projects do run late, over budget or fail to deliver to customer/stakeholder requirements. How did this happen?

199. It’s happened very gradually with days being lost and money spent, not in one large block but in small amounts, these amounts gradually add up and over the life of most projects will provide significant problems.

200. How to deal with this problem??

201. -The only way is by having systems that will detect such occurrences and allow the project manager the opportunity to instigate correction actions to bring the project back to track. -Control takes place during execution phase of the project but it should be given careful consideration during the planning phase. - Provide control at different levels with the project that relies on simple and easily understood measures that reflect the objectives of the project.

202. The basic requirements for a control system: 1- Defining system characteristics of importance 2- Defining limits to their variation 3- Measurement of these characteristics 4- Making progress visible 5- Feedback to the team of performance 6- Instituting corrective action where required

203. Techniques of control: The techniques with focus initially on the key issues of quality, cost and time.

204. Quality: -The project manager has two roles in the management and control of quality. conformance and performance -One of the recognizable standards for a quality system is ISO 9000 - Measuring expectations and perceptions is vital for control.

205. Cost and time: - Controlling cost and time requires a considerable input from the project manager in the establishment and execution of process. - The role of the project manager in cost control maybe stated as: Setting up the cost control system in conjunction with the needs and recommendations of the financial function. Allocating responsibilities for administration and analysis of financial data.

206. Ensuring costs are allocated properly (usually against project codes). Ensuring costs are incurred in the genuine pursuit of project activities. Ensuring contractors’ payments are authorized. Checking other projects are not using your budget.

207. -Cost can be monitored through the application of the “earned value” concept. Earned value management: The concept of earned value is explained, with the requirement for project managers to report cost to completion at various stages during the project.

208. -future forecasts of the outcome of the project activities -Project Management Information Systems (PMIS) provide the means for achieving the measure-record-analyze-act system for ensuring minimization of waste in the control system. -Change control is needed to check that the effects of changes. - Control using critical chain.

209. Limits of control: 1- The concept of control 2- The nature of the baseline 3- The nature of the system being controlled 4- The limits of measurement and assessment 5- Control as a paradox 6- Control as a negative idea want to be “ in control” but may resist the idea of “ being controlled”

210. Supply Chain Issues: -The value of goods and services purchased can make up a major proportion of the project budget. -The role of purchasing in organizations has changed to incorporate the management of both supplies and customers with the objective of maximizing the performance of the project.

211. Scope of influence of purchasing, materials management and supply chain management. 2nd –tier suppliers 1st –tier suppliers Project organization 2nd –tier customer s 1st –tier customer s Traditional purchasing function Material management function Supply chain management

212. - Many decisions to be made and issues to be understood with regard to purchasing in projects as: 1- The nature of the organization that can carry out the purchasing role 2- The purchasing objectives 3- The nature and role of contracts established.

213. Purchasing and project strategy: -The objectives of the purchasing activities should be consistent with those of the project. - The objective for the project to be broadly stated as having time, cost or quality as the primary objectives.

214. - In purchasing terms the strategy is converted into the “five rights”, these are independent characteristics of a supplier or contractor depending on their ability to deliver. The right quantity The right quality At the right price At the right time and place, and be….. The right supplier.

215. Contracts: -The role of contracts in many industries has changed -The process by which contracts are awarded depends on the nature of the task being contracted. The relationship between the purchaser and supplier and the relative size of each.

216. Some contract types: - Fixed price - Time and materials - Target cost - Revenue share. - Cost- plus

217. Modern approaches to supply chain management: - There have been big changes in the nature of the relationship between buyers and suppliers. Three basic classification of relationship between buyers and suppliers: - Traditional adversarial - Partnership - Relationship management

218. Modern techniques in supply chain management: -Open- book accounting: Too little profit-----the customer may suggest ways to reduce costs. Too much profit----- the customer will be looking for price reduction - Vendor-managed inventory:

219. Tutorial - Consider the way that you make purchase for yourself. How do you decide from whom to buy? Are there examples of your personal purchasing where you have frequented a particular business and formed a partnership-type relationship?

220. - You have been offered tickets to your favorite entertainment event of the year by a major potential supplier. The offer includes full corporate hospitality treatment. Should you accept this offer?

221. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. - Maylor, H. (2010), Project Management, 4 th edition, Pearson Education, Harlow, England.

222. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 11 Phase 3: Do It (3) Problem – solving and Decision – making Lecturer: Dr. Revenio

223. Learning Objectives: -Provide a structure for the identification, definition and solution of problems -Identifying appropriate tools which can be brought to bear at different stages of the problem-solving process. - Show the implications of some of the changes in modern management thinking in the area of decision –making

224. Problem–solving and Decision – making Problem: the gap between an actual situation or the perception of it and the required oar expected situation. Problem- solving is a core management skill but, assumed to be an inbred attribute rater than an acquired skill.

225. -The nature of the problem determines the point of departure for the manager can categorized as: Requiring an immediate reaction Response to a crisis Emerging problem Response to an opportunity Strategy formulation

226. -The response solution for a problem either instinctive ( such as to run away) or ingrained through training (to remove the source of potential danger) -The systematization of problem resolution depends on identifying the situation (programmed response)

227. Brainstorming: -Brainstorming: Taking a group out of their normal work situation to ponder a problem can immensely beneficial to both the organization and the group - The dynamics of the brainstorming process are aided by adherence to a few rules: Provide a basic structure or the task of decision making. The benefit is from the extraction and combination of ideas form a variety of people

228. Give people the opportunity to do some pre-thinking on the problem At the start eh meeting an ice-breaking exercise will help people to relax and provide a “save environment” for the generation of ideas All ideas must be written down Express ideas as the participant state them

229. Do not allow any criticism of ideas put forward Do not permit one or a small group of individuals to dominate the proceedings. Summarize and record the outcome of the brainstorming session and then circulate it to all those concerned.

230. Decision – making: -Decision- making as a process is the period involving the seeking of alternatives through to the end of the comparative evaluation stage. - The nature of the decision-making process depends on the system that the decision concerns. Open system Closed system

231. Modeling systems for decision-making: -Management Science -Operational Research

232. - The model of the system may take on one of many forms, including: * A descriptive model * A geometric model * A mechanistic model * Static predictive * A dynamic predictive model * Time contractions * What-if * Error avoidance/detection

233. - The use of mathematical models in decision-making is widespread, ranging from basic spreadsheet calculations to the most advanced statistical techniques.

234. The use of mathematical modeling techniques: TechniquesDescription SimulationComputer modeling of a scenario Linear programming Optimal allocation of restricted resources to maximize or minimize a variable (such as price or cost) Network analysis through CPM or PERT Obtaining the logic of both precedence relationships and the time requirements in a project environment through graphical means Queuing theory Shows how a system reacts when faced with a random (stochastic) customer who demands the services of that system Decision treesGraphical method for describing the flow of decisions depending on the possibilities available at each juncture. May be pursued as a statement of possibilities of with statistical analysis.

235. Problem- solving tools: - The basic problem-solving tools of the project manager include Pareto analysis and Ishikawa/fishbone diagrams. -Pareto analysis -Ishikawa/fishbone diagrams

236. Ishikawa/fishbone diagrams

237. Cause – effect – cause analysis: -Cause-effect- cause analysis is appropriate where: A trained, literate and skillful facilitator is available The group is open to consideration of new problem-solving methods. IF - THEN

238. Decision trees: -Decision tree is technique similar to the cause- effect-cause analysis. Example: A decision has to be made on whether to fund project X or project Y, each has two possible outcomes. For X, it has 75 per cent chance of yielding OMR 100,000 but a 25 per cent chance of yielding only OMR 20,000. For Y, it has a 50 per cent of yielding OMR 200,000 and a 50 percent chance that there will be on yield. The decision tree in the following figure illustrates the problem.

239. X 0.75 20,000 0. 25 100,000 Y 0. 5 0 200,000

240. Decision-support systems: - Decision support systems (DSS): there is sufficient knowledge existing for the subject to be considered complex, and therefore can be better interpreted through the abilities of computers to deal with large amount of information.

241. -The knowledge must exist within the system, and this is provided through the contribution of experts in the relevant subjects. -The most basic form of DSS is a database -Expert System (artificial intelligence): Expert System takes the expert knowledge, usually gained from an individual of a number of individuals over a period of time.

242. Tutorial -How might the tools outlined in this lecture reduce the risk in decision making? -What is the role of ‘brainstorming’ and how might it be used to greatest effect?

243. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. - Maylor, H. (2010), Project Management,4 th edition, Pearson Education, Harlow, England

244. Business Project Management (BSB10194-5) Level 5, Block 1 Lecture 12 Phase 4: Develop It Project Completion and Review Lecturer: Dr. Revenio

245. Learning Objectives: -Identify the steps required to complete the project and start the final phase- that of process improvement. -Recognize the mechanisms for learning and process improvement.

246. Project Completion and Review -A certainty of the definition of a project is that it will end in one way or another. How do we end the project? Two principles guide this: There must be a positive statement of closure rather than simply allowing the project to fizzle out. The knowledge gained by doing the project must be captured.

247. -This is achieved through the review and audit process, feeding back into both project process knowledge and technical knowledge -payback from project ‘investment’.

248. -There are many reasons that work stops on projects. For some, it is because of the successful completion of project’s objectives. Some are stopped by their sponsors, due to changing needs or poor project performance, and others due to lake of the necessary resources to continue. -Projects are prematurely terminated it is usual for the staff to be dispersed with no provision for review.

249. Documentation: -The formal closure notice need only be a very simple form

250. The purpose of documentation is: To provide evidence that the project has been completed in a proper manner To give guidance to the customer on the operation and maintenance of the item provided To allow any future work on a similar project to have a good starting point

251. Closing down the project systems: -A formal notice of closure is issued in many industries to inform other staff and support systems that there are no further activities to be carried out or charges to be made. -In contract project activities, the legal termination of activates occurs at the time when the customer ‘sign off’ the project -It is often tempting for work to continue after this has occurred and for the team to provide the customer with ‘free’ consultancy. e.g. in information technology.

252. -No organization can afford to: Cut off the customer completely at this point and ruin the possibilities for future business. Continue to provide services for which they do not charge.

253. -Closing out the project involves the shut-down of all project systems, ensuring all activities are completed and preparing for the forthcoming reviews. -One of the tools which is of considerable benefit to short-term improvement is an audit of the management by the team. -Getting stakeholder satisfaction in project success is more of a challenge than it may initially appear.

254. -Closing out the project involves the shut-down of all project systems, ensuring all activities are completed and preparing for the forthcoming reviews. -One of the tools which is of considerable benefit to short-term improvement is an audit of the management by the team. -Getting stakeholder satisfaction in project success is more of a challenge than it may initially appear.

255. Reviews and Learning: -Strategy provides the essential focus for improvement activities and all our activities should be geared towards these strategic objectives. -With focus of a clear strategy, the project manager can carry out activities that will improve the performance of future project processes on these criteria. A useful structure is to separate two elements: - Learning before doing - Learning by doing

256. Learning before doing- the role of external knowledge: -The main sources of external knowledge are Training Education Consultants

257. Learning by doing- the role of audit and review -Carrying out audit and review some time after the project has benefit as the results of the actions and the way in which they were undertaken become evident. - The process of auditing and reviewing requires: A reason to exist * Time * Information * Recourses * Creditability

258. Auditing process involves: Establishing the procedures – the formal statement of intent as to how activities should be carried out, whether financial, quality and environmental. Checking documentation and other records of practice to show that they have been followed. Presenting a report detailing the areas where there are deficiencies or irregularities. - An audit is often viewed as a negative process, i.e. it is trying to catch people out.

259. The review process involves: Studying overall performance relative to constraints. Identifying areas where the procedures failed or have otherwise been shown to be inadequate. Reporting on the areas and suggesting improvements.

260. Review and Audit criteria: CriteriaAuditReview Financial Time Quality Human resources Environmental Planning Control Accounting systems Conformance to plan Quality procedures Conformance to policy Conformance to plan Systems for control ROI, cost variance Customer satisfaction Customer perceptions Team spirit, motivation EI assessment Cost, techniques used Basis for improvement

261. Carrying out reviews: Focus on process not individuals Use factual data wherever possible Allow rehearsal of alternatives Use tools and techniques of problem-solving Discourage glib classification

262. -The financial implications of many sorts of failure in performance can be calculated for the purpose of providing the business case for performance improvement activities. -The costs are generally enormous and can be expressed as a percentage of turnovers. -Quality costs are broken down into three categories – prevention, appraisal and failure.

263. Elements of quality cost CategoryActivities included Prevention Quality planning, training and auditing, supplier development, costs of maintaining a quality improvement programme or system, maintenance of all testing equipment. Appraisal Any checking activities (and materials consumed during these), analysis and reporting of quality data, auditing suppliers’ quality systems, storing records of quality results. Failure Internal- any wasted activities, be they in the production of an artifact that is scrap or the generation of a document that is not read, changing or rectifying work already done because it was not right first time, downgrading goods or services, problem-solving time. External- replacement of faulty goods, having to return to a site to redo tasks, complaints and consequent loss of goodwill and repeat business, product and professional liability claims.

264. -Contribution of project managers will come greater rewards. -Continuously improving the own processes should be the goal of every project manager.

265. - The knowledge exists: find the ways to apply it, mindful of strategic requirements and in a way that is open to evaluation. In future, we will need to be able to manage not only the improvement process but also its speed. Now there’s a challenge that may also turn out to be great fun. Here’s hoping.

266. Tutorial Discuss the following case for Hewlett- Packard In new product development it is traditional for the product to be designed, then engineered, then passed to manufacturing for making. The designers would be having battles with the engineers over the need for design features to be preserved, and the engineers with the manufacturing staff over what could and could not be made. Hewlett- Packard, as part of the kinking process between the different functions, ensures that key staff who do the design work carry the project through. Not just to the end of the project and its handover to manufacturing but to three months into mass production of the designed items. This provides ample opportunity for problems to emerge and for the designer to witness the effects of their decisions on the end product. It is a case of knowledge management of the highest order- people gain great insight form this process and retain this for subsequent projects. As a by-product of this, the networks of people they have worked alongside during these extended handovers mean that there is far better communication in the organization.

267. Sources: -Field, M., and Keller, L., (2001). Project Management, The Open University, Thomson Learning, London. -Lock, D., (2003), Project management, 8 th Edition, Hampshire, Gower. - Maylor, H. (2010), Project Management, 4 th edition, Pearson Education, Harlow, England.