2What is project?A project is a set of activities which are networked in an order and aimed towards achieving the goals of a project.A programme of non-routine work bringing about a beneficial change.Has a start and end dateConstrained by cost, time and qualityScope of work that is well definedA project is a set of non-repetitive activities which create a unique product or service.
3Examples of a project 1.commissioning a new industrial unit 2. Construction of a house3. Setting up of an office4. developing a technology5. Launching a new product in the market6. Conducting a seminar7. Writing of a book
4What is management?Management is the technique of understanding the problems, needs and controlling the use of resources such as cost, time, manpower, materials etc.Project management means :The art of controlling the cost, time, manpower, hw and sw resources involved in a project.
5Important definitions: Project cycle: A project cycle basically consists of the various activities of operations, resources, and the limitations imposed on them.Resource : it refers to manpower, machinery, money and materials required in the project.Scope : it refers to the various parameters that affect the project in its planning, formulation and executions.
6Need for Project Management: Project mgmt. is necessary because:A project requires huge investment which should not go waste.A loss in any project would have direct or indirect impact on the societyPrevent failures in projectScope of the project activity may undergo a changeTechnology used may change during the course of project execution.Changes in economic conditions may affect a project.
7Players :The players in a project management are the individuals and the organizationsThat are actively involved in the projectWhose interest may be affected by the outcome (success / failure )of the project.Exert influence over the project and its result.Players are also called “stakeholders ” of the project.
8Who is project manager?A project manager is a person who manages the project. The project manager is responsible to carry out all the tasks of a project
9Key Responsibilities of Project Manager : Budgeting and cost controlScheduling tasksAllocating resourcesTracking project expendituresEnsuring technical qualityManage relations with the customer and company
10Phases of project mgmt Life cycle: Analysis and evaluationMarketingDesignInspecting , testing and deliveryPost completion analysis
11Project management principles Five dimensions that must be managed on a projectFeaturesQualityCostSchedulestaff
12What is feasibility study? 1. After the identification stage, the project ideas are subjected to a process of preliminary filtration through pre-feasibility study.2. This involves the study of the project idea at a more elaborate level than that carried out at the opportunity study state.This is an intermediate stage between an opportunity study and a fully-fledged feasibility studyAfter project formulation or a detailed techno-economic feasibility study this stage is recommended.
13Outline of a pre-feasibility study Executive summaryProject background and historyAnalysis of demanded supplyAnalysis of inputsLocation and siteEngineering & technologyOrganizationManpowerExecution schedule and methodologyFinancial & economic evaluation
14Project mgmt is a Team Work - Proper communications- Feedback systemReliability on systemGood team mgmt.
15Why do projects fail?A project may fail because of one or more of the following reasons-Projects objective not in line with business objectiveProject mgmt. not observedNon-dedicated / Less qualified teamLack of complete support from clientsNo prioritization of project activity from an organizational positionAbsence of smooth communication between involved parties.
16Steps of a good project Mgmt. are: define the projectReduce it to a set of manageable tasksObtain appropriate and necessary resourcesBuild a team to perform the project workPlan the work and allocate the resources to the tasks.Monitor and control the workReport progress to senior mgmt.Review it to ensure that the lessons are learnt and widely understand.
17The key issues at the planning stage of a project -key stages of the projectProject logic diagramKey stages responsibility chartEstimation for all key stagesOptimized project Gantt chartUpdated and reviewed project risk logRisk mgmt. forms for new high risksProject operating budget
18Project planning process 1. Identification process2. Review process3. Analysis process
19Project organization 1. Initiation 2. Planning 3. Executing 4. Control 5. close
20What is WBS?WBS is the technique to analyse the content of work and cost by breaking it down into its components parts.- The entire process of a project may be considered to be made up on number of sub process placed in different stage called the Work Breakdown Structure (WBS)-WBS is produced by identifying the key elements , breaking each element down into components parts and continuing to breakdown until manageable work packages have been identified.WBS does not show dependencies
21Mapping of economical zones rather than geographic zones Continuous floating virtual inventory to save time and efforts
22Work Breakdown Structure (WBS) Work Breakdown Structure (WBS) breaks down a project into smaller , measurable and managerially useful constituents having well defined scope.EXAMPLE OF WBS:PROJECT -> TASK -> SUB TASK-> ACTIVITY
23Estimation Approaches Bottom up ApproachTop down ApproachEstimation Tools:Algorithmic modelExpert judgmentAnalogyAutomated estimated tools for cost and schedule
24Characteristics of project Mindset: TimeResponsivenessInformation sharingProcessesStructured planning
25Market & Demand Analysis: What is the need for Demand Forecasting?All business planning starts with forecasting . Capital investment, like procurement of materials and production planning has to relate to demand forecasting. High volumn high tech mass production systems have further high –lighted the importance of accurate demand forecasts. It enables the personnel to know about market forces, currents, cross-currents and under currents relevant to demand behaviour.
26Levels of Demand forecasting 1. Firm Level : if the exercise aims at forecasting demand of firm’s products locally at state, region or national level, it is a micro-level of demand forecasting . Sometimes, forecasts are required for company’s products in specific industry or market segment.2. Industry level : it focus on industry as a whole for the region and or national level. These forecasts may be undertaken by a group of companies or by industry / trade associations.
273. National level: Demand forecasts at national level include parameters like national income, expenditure, index of industrial / agricultural production etc. estimating aggregate demand of products at national level facilitates govt. decisions for imports, exports, pricing policy etc.4. International level: companies operating in multinational markets would require similar forecasting of demands for its products, trends in consumption etc. at international levelManagerial economics play a leading role in masterminding these forecasts at firm, industry, national and international levels.
28Criteria for a good forecasting method : Accuracy in forecastEconomy of forecastsQuick resultsAvailability and timelinessDurabilityFlexibility
29Calculated methods of Forecasting Simple average : sum of demands of all periodsnumber of periodsMoving Average Method : sum of demands of chosenperiodsnumber of chosen periodsWeighted moving average = W1*D1 + W2D2+ …….+ Wn*DnExponential smoothing methods : W *(Dt-1)+(1-w)(Ft-1)
30Human Resources Project mgmt. = Planning / Controlling / Monitoring The basic hunger of all the human beings is to feel important. Managers can incorporate this in their style of decision making and become more subordinate oriented.
31Concept of Project Driver D- Directing individuals and teams -by motivating & bias free decisions.2.) R- Reinforcing commitment & Excitementby praise & fulfilling commitment.3.) I- Informing everyone on the projectby proper communication4.) V-Vitalizing teamwork – by strengthening teamby resolving conflict5.) E- Empowering at all levels-by providing powerof actions, reward & punishment.6.) R-Risk taking & creativity – by innovations andcontrolling risk.
32Financial AspectsProject mgmt. Allows the execution of diverse and complex tasks in a tight time frame through the involvement of a number of persons and agencies.The a/c system has to be designed to particularly meet the requirements unique to each project.The classification of receipts and expenditures must be structured into “heads of Accounts” in such a manner that financial information sought by various entities – internal and external may be readily and economically compiled
33Aspects of accounting 1. Financial aspect 2. Physical aspect Few a/c heads are Capital, shares, loans, debentures, discount , preliminary expences and bank a/c all these heads reflects financial aspects of accounting.Land, building, vehicles, plant & equipment, furniture,fittings, depriciation for asset accounts, capital works-in-progress, preliminary expenses , loans and advances granted, cash and bank balances, current liability heads are reflecting physical aspect of a/c
34Accounting Procedure* An Accounting procedure of Project management involves the Preparation of Profit & loss a/c, balance sheet.A/c system must ensure that all relevant expenditure data are captured and compiled speedily , accurately, and at a reasonable cost.No type of expenditure transaction should be allowed to go unreported, particularly advance payments and adjusted transactionBasically all project related expenditure on equipements, materials, supplies, salaries, wages, transportation, interest, power, water etc. incurred during the implementation stage is capital expenditure and must be included in work-in-progress a/c.
35Implementing the Financial Plan When giving effect to the financial plan the project’s finance manager must keep in mind the following points :funds involves certain cost in the form of cash outflows.Cash must be readily available to meet different liabilities as the project progresses
36Authorization of Expenditure Budget should be consistent with the objectives of the project.Budget should be consistent with the quality standards of the project.And the budget should be realistic i.e be neither an over-estimate nor an under-estimate.Smoothly integrate with the accounts classification system.
37The concept of CONTROLControl is an integral part of any management process which comprises ofPlanningOrganizingActuatingControlling* Fundamental to control is the existence of a norm (the “should be”) with which the measured results of actual actions are compared.* For effective control, therefore, up-to-date and precise costing and performance data must be available at brief intervals of time.* The mgmt. Structure should be so trim and well-knit as to be able to respond speedly and decisively.
38Factors affecting Control of Project Cost Irrespective of the size of a project one basic objective of the owner is to complete it to the specifications in time and at the lowest cost.Basically time / performance / cost constitute the triad which demands to be managed in an integrated manner.The overall project cost exist at the stage of feasibility study , when all possible options are open to the owner.The potential of cost reduction steadily declines through the stages of design, engineering etc.
39Real cost control demands cost consciousness right from top mgmt Real cost control demands cost consciousness right from top mgmt. To the lowest levels of the project organization.All must be properly motivated towards cost control to make it successful.Changes in scope in terms of description, justification of needs, alternatives considered , requirements of plant, equipment and resources,schedule for implementation and financial implications of the project is responsible for change.Delays in terms of slow progress, delayed supply , delays in govt. clearances ,law and order problems, inadequate infrastructure, constraint of funds.
40Variance analysis approach to cost control It involves periodically variations between the actual and the budgeted costs.The lesser the variation the more “controlled” the project is supposed to be.Drawback of this method : this approach is not considered suitable for effective project control since it neither gives any clue to the owner about the value of the work already done not does it help him in knowing the direction in which the project is heading.
41Performance analysis approach Performance analysis constitutes an improvement over the variance analysis approach.Use of the techniques involves certain terms and concepts like :1.)Budgeted cost of work schedule (BCWS) : budgeted cost of work schedule is the sum of the budget for all work schedule to be done plus an appropriate portion of the budget for overheads for the relevant time period.2. Budgeted cost of work performed (BCWP) or “earned value “this is the sum of the budget for work packages (including in-process work) or their portions actually completed , plus an appropriate portion of the overheads budget for the relevant time period
423.) Actual cost of work performed (ACWP): this is the sum of direct costs actually incurred and the indirect cost applied in accomplishing the work performed within a given time period.4.) Budgeted cost of total work (BCTW) this is the sum budgeted costs of all activities plus the overheads for the entire projects.5.) Cost variance (CV) equals the budgeted cost of work performed less the actual cost of work performedCV= (BCWP-ACWP)CVP=CV / BCWPSchedule variance (SV)= BCWP-BCWSSVP - Schedule variance percentageSVP=SV / BCWS
43Project development process Pre-investment phase, leading to the authorization for a particular project idea under prevailing conditions.Investment phase, involving detailed design and actual implementation, leading to fructification of erection of relevant assets.Operation phase, following he start-up of the completed project, now the project would hopefully produce the stream of “benefits” for which it was originally conceived
44Pre-Investment phases: 1. Identification2. Preliminary filtration3. project formulation4. final evaluation and decision
45What is opportunity studies ? Identification of suitable industrial or commercial opportunities for investment necessitate first and foremost an objectives of the investor.Investor needs to become aware of the existence of possible investment opportunities.
46AOA (Activities on Arrows) diagram Activity : an activity is the smallest unit of productive effortto be planned , scheduled and controlled in aproject and is represented by an arrow in anetwork diagram.Event : the starting of an activity or the ending of an activityis called an event.Simple event : is one which has only one preceding activityand only one suceeding activity .Merge event: it is one which has more than one precedingactivities and only one suceeding activity.
47Burst event : A burst event is one which has only one preceding activity and more than one succeding activities.Combined merge & burst event : An event having more than one preceding activities as well as more than one succedding activities is a combined merge and burst event.
48Network diagramA network diagram is a set of activities and events represented by arrows and circles respectively.The orientation of arrows is usually kept from left to right signifying the flow of time from left to right .Large project consume a huge amount of resources and have to be planned , monitored and controlled at various levels this is achieved by drawing different levels of project network diagram as it includes lots of activities and events ex : a company manufacturing and selling consumer products has recently developed a new brand of soap and has prepared a project for launching the new brand.
49Time analysis It helps to answer such questions like : “in how much time can I complete the project”Once the project network and the activity durations are known time analysis is usedTime analysis by :Forward passBackward pass
50Forward pass :1.) what is the earliest time at which we can start the activity ?2) What is the earliest time at which we can finish the activity
51Backward Pass:1.) what is the latest time by which the activity has to start ?2) What is the earliest time by which the activity has to be finished?
52Critical Path :1.The project has to be finished at its earliest completion then some activities cannot be delayed at all. These are the activities with zero slack and they are called critical activities as their timely completion is critically important for the timely completion of the project.2. Basically by joining the critical activities critical path is obtained .3. The critical path is also the longest path from the start of the project to its completion / finish.4. A single project can have more than one critical path5. While a project is under execution , critical activities need to be monitored very closely as any delay in their completion is immediately reflected as a delay in the project completions
53Slack time: Some activities have some looseness and others do not Slack time: Some activities have some looseness and others do not. This property is referred to as activity slack
54Time estimates :When some activities where the degree of uncertainity is high it may be easier and more appropriate to get 3-time estimates for each activity duration rather than trying to get the best estimate.Optimistic time : if all the conditions are favourable , then the minimum time in which an activity can be finished is called the optimistic time of the activity concerned. It is impossible to finish an activity in less than its optimistic time.
55Pessimistic time : this is the reverse of optimistic time if all the conditions are unfavourable, then the maximum time in which an activity will be finished is called its pessimistic time . It is impossible for an activity to take longer than its pessimistic time for finishing.Most likely time : its reality , some factors may be favourable and some others unfavourable for the timely finishing of an activity will be somewhere between the optimistic and the pessimistic times.the most likely time is that duration of the activity which has the highest probablity of occurrence among all possible values of the activity duration.
56AON (Activity-on-node) diagram : It also uses circles and arrows but the circle now represent activities “activity B can start only after activity A has been completedA B
58Precedence network diagram (PDM): 1. In these diagram , activities are represented as square or rectangular nodes.2. Flow of time from Left -> Right3. Types of Relationship FS / SS / FF/ SFA B
59Types of Relationship : FS : finish to start: activity B cannot start until n weeks after activity A is finished.SS : Start –to-start: activity B cannot start until n weeks activity A is started.FF : finish to finish: Activity B cannot finish until n-weeks after actiivity A is finished.SF : start to finish : Activity B cannot finish untill n weeks after activity A is started
60Project planning & scheduling : 1. establishing the project goals & objectives.2. Defining the work3. estimating the activity duration and defining activity interdependencies4. Carrying out time analysis of the project.5. Establishing the resource availability and requirements
616. Developing a resource feasible schedule 7. Analyzing activities to find feasibility of crashing8. Optimising the baseline plan & schedule9. Freezing the baseline plan & schedule.10. Continuous monitoring
62PERT / CPM :It is a new tool of planning monitoring & controlling projects.NASA called it “program evaluation and review technique” while Dupont called their system “critical path method”.This tool enables the managers to capture complex inter-relationship between different tasks in large projects as well as enable them to handle uncertainties
634. These techniques enable a project manager to use the graphical method of representation of a project with indications of the time required to complete each activity.5. A network depicts the sequential relationship of different activities.6. The time taken by each activity and the longest chain of the activities from the beginning to the end known as the “critical path” .7. This chain of activities controls the total time required to complete a project and deserves the greatest attention from the project manager.
648. PERT was applied for activities where durations were not known . 9. These methods of working out the time required for project completion have been extended to include the costs for each activity, the resource required for each activity and the uncertainties involved with each activity .10. To deal with the uncertainities associated with the project 3-estimates of time obtained –Optimistic (A)Pessimistic (B)Most likely (M)
65It is possible to work out the expected time for each activity TE = A+ 4M + B / 6It is possible to calculate the standard deviation (SD) for each activity by :SD = B- A / 6Using these expressions, planners can work out the expected completion time of the project and the standard deviation for each activity.
66The PERT –Cost system:PERT is essential for large projects it involves the preparation of detailed schedule of activities and its translation into a network diagram after considering preceding requirements.Previously it focus only on time mgmt but now on cost mgmt , it involves assignment of costs to individual project activities.this system uses the following two sets of data for activity-wise cost control.Estimates of costs for activitiesActual costs for the same activities / groups
67PERT / CPM Time Calculations : PERT probability calculation and project appraisal can be carried out by Computer also.The critical path calculations are highly amendable to computerizations . The essential inputs for these calculations are the following :1. start node2. end node3. Duration4. Description of the activities5. Resource requirements6. Cost7. Agency
68Materials & Equipment Mgmt. Management of projects by network analysis provides an integrated techniques of planning and control by breaking the entire project into various package system which are further blown into various functional components like mechanical, piping, civil, structural, electrical , instruments etc. each of these functions is further divided into design and indenting, ordering and payment expediting and inspection transportation and storage erection and commissioning .*Procurement of materials and equipment spans across percent of the overall project duration.If we carry out delay analysis of projects in India, late delivery of materials and equipment would emerge as the most important factor contributing to delay in projects implementation.
69What is DPR?A DPR is a final, detailed , appraisal report on the project and a blue print for its execution and eventual operation.2. A well planned DPR is prerequisites of project success.3. The DPR should also include a time schedule for obtaining all the required clearances.4. The DPR must ensure that the provisions are adequate for fulfilling all the legal requirements obtaining in the locality where the project is to come up.5. DPR should devote a section specifically to deal with packaging, storage and handling and dispatch of the finished products6. Consultant prepared the DPR
71Type of organization structures: Organization is structured into divisions, dept. and sections.Work flow along the line of command that is each individual reports to one person only.Communication channels are well defined.
72Advantages: Budgeting and cost control is easier Technical skills are betterFlexibility in use of manpowerGood control over personnelCapability of quick response existsCommunication channels are vertical and well established
73Disadvantages: No one individual is responsible for the total project Co-ordination is complexNo customer focal pointLoss of motivation or innovationIdeas are function-oriented and not project-oriented
74Matrix organization:Matrix form of organizational structure combines advantages of pure functional structure and pure project structure and is ideally suited for companies which are project driven. A typical matrix also called the grid organization structure
75Hierarchical organization structure: In this organization is structured into divisions, dept., and sections. Work flow along the line of command. Each individual reports to only one person so communication channels are well defined.
76Advantages of hierarchical organization: Budgeting and cost controlTechnical skills are betterFlexibility in use of manpowerLarge manpower base to work withGood control over personnelCommunication channels are vertical and well established
77Disadvantages: No one individual is responsible for the total project Coordination is complex and longer lead timeNo customer focal pointLoss of motivation or innovationIdeas are function-oriented and not project oriented
78Complexities of matrix organization structure: Power struggle between horizontal and vertical hierarchyDecision making by group may degenerate into groupitisCritics voice their concern whether excessive supervision of matrix structure is really necessaryToo many people involved in decision making may disturb the problemOrganization might start suffering by being overly obessed with internal relationship.
81Advantages of Matrix organization Project manager maintain control over project resources and costs through functional managersPolicies and procedures for each project can be spelt out separately provided they do not contradict company policies and proceduresConflicts are minimalBetter balance between time , cost and performanceAuthority and responsibility are shared
82Types of Matrix organization Medium size organizationLarge organizationMatrix with separate project engineering functions
83What is the objective of Project MIS Record and report relevant info and the status of various components of the project in such a manner as to bring the most critical activities directly to the attention of concerned managers at appropriate level.2. Highlight deviations from the plan3. Form the basis of updating of project schedule wherever necessary4. Identify and report on critical areas
84How to desing project MIS? 1. The objectives of each format or report in brief.2. The distribution chart3. The periodicity of the report4. The persons responsible for preparation of the reports5. The timing of the reports6. The sources from which information has to be gathered in the preparation of reports.+
85What is EIA?EIA stands for environmental impact assessment, it identifies the environment in which a project is to be implemented?Areas of impact are: surface water quality, air quality, erosion, land quality, fisheries, forests , terrestrial wildlife, noise, aesthetics, industries, resettlement, historical significance, public health and socio-economic factors.
86What do you mean by saying project DRIVER? D-directing individuals and teamsR-reinforcing commitment and excitementI-informing everyone on the projectV-vitalizing teamworkE-empowering at all levelsR-risk taking and creativity
90Economic Analysis of Projects or Social cost benefit analysis (SCBA): Economic analysis is done from the viewpoint of society or economy as a whole . Economic analysis of projects should cover whether:It fits into national prioritiesIt contributes to the development of that sector of economyBenefits justify the consumption of scare resources of the nation
91Sectionalising planning of materials: Projects comprise of various types of hardware. For the use of planning and scheduling, the entire project can be divided into several sectional components like:Civil work electrical workStructural work instrumentation workMechanical workPiping work
92What are the objectives of project mgmt. information system(PMIS)? The project information / monitoring system would have to have the following objectiveRecord and report relevant information and the status of various components of the project in such a manner as to bring the most critical activities directly to the attention of concerned managers at appropriate levelForm the basis of updating of project schedule wherever necessary
933. Highlight deviations from the plan and also indicate the effects of such deviations on the overall status and completion of the project.4. Identify critical areas and highlight the corrective action that needs to be taken5. Provide a basis for the evaluation of the performance of the functions of various managers and dept. by regular comparisons with budgets / plans / schedules
94Essentials in designing PMIS The objective of each format or report in briefThe distribution chartThe periodicity of the reportsThe persons responsible for preparation of the reportsThe timing of the reportThe sources from which information has to be gathered in the preparation of reports
96Integrated project mgmt. information system: This system allows total project information to be structured into a number of data sets which are integrated by the software. Some of the relevant datasets for a large project are:- drawing dataset vendor dataset- network dataset job card dataset- cost dataset rates dataset- material dataset resource dataset- history dataset
97Integration of these independent datasets through various processing modules enables high control of project . It permits:-horizontal integration between disciplines, e.g. cost / schedule integration or cost estimates cost accounts and project schedule integration via work breakdown structure.
98Empowering project personnel Power implies ability to make something happen. Everybody wants more power few admit they have enough of it. At all levels people feel that their situation would have been better if they had more power is also a great motivator.
99Types of power:Positional power : it is the power associated with authority emanating from hierarchical locationPersonal power : it is the personal competence-skills and abilities possessed by individuals and travels with him.
100Total quality mgmt. in projects: TQM basically stands for total quality mindset. If we are to achieve TQM fail safe system of project mgmt, we not only require an unimpeachable commitment to quality but also to the necessary supporting procedures and documentation.We have to achieve excellence in project mgmt.TQM in project requires an uninterrupted commitment to quality along with supporting procedures and documentation.Smooth, uninterrupted co missing results from a large number of factors which need to be monitored and controlled from the early stages of project execution.