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1 © The Delos Partnership 2004 Welcome to the Project Management Foundation Course Based on the Project Management Body of Knowledge (PMBOK TM ) from the.

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Presentation on theme: "1 © The Delos Partnership 2004 Welcome to the Project Management Foundation Course Based on the Project Management Body of Knowledge (PMBOK TM ) from the."— Presentation transcript:

1 1 © The Delos Partnership 2004 Welcome to the Project Management Foundation Course Based on the Project Management Body of Knowledge (PMBOK TM ) from the Project Management Institute (PMI®).

2 2 © The Delos Partnership 2004 The Project Management Institute (PMI®) is project management’s leading global professional association, and as such, it administers a globally accepted and recognised, rigorous, examination- based, professional certification programme of the highest calibre.

3 3 © The Delos Partnership 2004 The course is designed to support both the immediate practical challenges you face implementing projects within your organisation and also to provide you with a solid foundation in recognised good project management practice for all your future endeavours.

4 4 © The Delos Partnership 2004 Expectations!

5 5 © The Delos Partnership 2004 Course Objectives To provide you with a strong foundation in good project management practices To improve the management of the current projects you are working on for the benefit of the company To fulfil the eligibility criteria (and prepare students) for the PMI’s® Certified Associate in Project Management (CAPM®) Exam

6 6 © The Delos Partnership 2004 Active Learning Approach – The Project Management Life Cycle Presentation on Key Concepts/Techniques Case Study to reinforce key learnings Case Study Feedback with interactive Q&A Learning Review Theory & Practice

7 7 © The Delos Partnership 2004 Introduction At the end of this session you will have an understanding of the following:- The definition of a project Projects versus Programmes The PMI lifecycle and knowledge areas

8 8 © The Delos Partnership 2004 The Project Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes

9 9 © The Delos Partnership 2004 And The PMI® Project Management Knowledge Areas All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project IntegrationManagement IntegrationManagement 5. Project ScopeManagement ScopeManagement 6. Project TimeManagement TimeManagement 7. Project CostManagement CostManagement 8. Project QualityManagement QualityManagement 9. Project Human Resource Management 9. Project Human Resource Management 10. Project CommunicationsManagement CommunicationsManagement 11. Project RiskManagement RiskManagement 12. Project ProcurementManagement ProcurementManagement

10 10 © The Delos Partnership 2004 What is a Project? A project is a group of related work activities, organized under the direction of a project manager, which when carried out, will achieve certain objectives. A project has stated scope, deliverables, work steps, duration, and budget.

11 11 © The Delos Partnership 2004 What is a Project? A project: –Is unique –Has a beginning and an end –Is defined by specific objectives –Is conducted by a well-defined organization –Has a single project manager who is responsible for its success –Is defined by identifying the starting point and the goal and the route between them

12 12 © The Delos Partnership 2004 What is Project Management? Project Management is the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project. Meeting or exceeding needs invariably involves balancing competing demands among: –Scope, time, cost, and quality –Stakeholders with differing needs and expectations –Identified requirements (needs) and unidentified requirements (expectations) Source: Project Management Institute 1996

13 © The Delos Partnership 2004 Programme vs Projects –A programme is a group of projects managed in a coordinated way –A programme is a set of activities / initiatives that need to come together to achieve a major business change

14 © The Delos Partnership 2004 Without a Programme Mgmt Framework Strategic Imperatives Mergers & Acquisitions Business Process Changes Regulatory Changes Market Driven Changes Change Drivers ? Many projects, little alignment Organisation Goal PastFuture

15 © The Delos Partnership 2004 With a Programme Mgmt Framework PastFuture Strategic Imperatives Mergers & Acquisitions Business Process Changes Regulatory Changes Market Driven Changes Change Drivers ? Programme Mgmt Focus on closing gap and seeking other improvement opportunities Programme co-ordination Organisation Goal

16 16 © The Delos Partnership 2004 Project Initiation At the end of this session you will have an understanding of the following:- 4 Stages within Project Initiation The Business Filters Project Charter(s)

17 17 © The Delos Partnership 2004 The PMI® Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes

18 18 © The Delos Partnership 2004 PMI® Initiating Processes 5.1 Initiation 5.1 Initiation Business Case Business Case Charter Initial Invest. Initial Invest. Idea

19 19 © The Delos Partnership 2004 Ideas - Pick the Winners BI s UI s GI s (Business Imperatives) (Good Ideas) (Useless Ideas)

20 20 © The Delos Partnership 2004 Potential for Globalisation Supports Regional customer base Supports country customer base Local customers Geographic Scope Significantly enhances skills Builds on current skills to grow Contributes to strategic plan Does not enhance skills Competency Improve`t Could be applied widely across the business Could be adapted to several programmes Could be applied to another programme Single prog. Synergy with Other Progs Opens up new Opportunity Potential for diversification Opportunity for business extension Dead-end, Platform for Growth StrongGoodModest Peripheral Fit to Strategy RATING STRATEGIC FIT KEY FACTORS

21 21 © The Delos Partnership 2004 Uses existing sales & distrib. Existing sales operations Existing skills in new channel Skills needed, in new channel Sales & Distribution Positive impact FavourableNeutralNegative Community Relations Large margins; large market Large margins; small market Small margins; large market Small margins; small market Target Market Opportunity LowModerate/LowModerate/HighHigh Competitive Intensity High Growth expected Modest growth Mature or Embryonic Declining Market Maturity Ahead of market ‘me too’ ‘me too’ Need must be highlighted. Little apparent need Market Need RATING MARKET ATTRACTIVENESS MARKET ATTRACTIVENESS KEY FACTORS

22 22 © The Delos Partnership 2004 Widely practised in the company Selectively practised in the company Some experience Technology new to business Technology Skill Base Available and ready Available, need advance planning Current systems require mods. No appropriate systems/ facilities Availability of Systems/ Facilities People immediately available People available Shortage in key areas No appropriate people Availability of People Straight Forward Challenge, but do-able Easy to define Difficult to define Project Complexity Incremental Improve`t Step change Major step change Large gap Technical Gap RATING TECHNOLOGY FIT KEY FACTORS

23 23 © The Delos Partnership 2004 No detrimental effect. Rescheduling required Disruption.Inconvenient Major disruption Effect on Other Company Programmes Resouces immediately available. Could be rescheduled Some resource available No Resource Availability of People Clear Focused Commit. Functional commitment. Lukewarm. Little Business Commitment Detached from Prog. Stakeholder Commitment & Buy-In Quantifiable Attractive Benefits Quantifiable in specific areas Difficult to substantiate Cannot be substant- iated Benefits to the Company Available Could be made available Partially Available Not Available Availability of Funding RATING BUSINESS IMPACT KEY FACTORS

24 24 © The Delos Partnership 2004 Self Sustaining From Compliance to Commitment Partial Not available Cultural Fit Competent team up and running Team in place but skills need to be developed Partial No resources available Sponsorship Commitment Aligned approach Can do but resource conflicts not dealt with Difficult to predict Mission impossible Effort of Transition Both Top Down and Bottom up desire Benefits agreed but not measurable Uncertainty about final outcome No fit with values of company Attractiveness of Future Burning platform Recognition of need to change Partial recognition of problem It aint broke don’t fix it Dissatisfaction with present RATING CHANGE ORIENTATION CHANGE ORIENTATION KEY FACTORS

25 25 © The Delos Partnership 2004 First Cut Priority Check Overall Average Change Orient. Bus. Impact Tech Fit Market Attract. Strategic Fit Prog

26 26 © The Delos Partnership 2004 The PMI Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes Business Case Business Case Charter Initial Invest. Initial Invest. Idea

27 27 © The Delos Partnership 2004 Tech. Feasibility Study Refine Scope of Activity –Prepare Statement of Work. Make or Buy –Rationale and Options –Do we have or can we acquire the skills? Do we have a solution? –Technical Issues & Risks –Commercial Issues & Risks –Rough Cut Costs Background & Experience

28 28 © The Delos Partnership 2004 Business Attractiveness Positioning 30130Growth Route to Market Competition Market Size ScoreRating*WeightFactor * High = 1.0; Medium = 0.5; Low = 0.0

29 29 © The Delos Partnership 2004 Operational Capability Marketing Infrastructure Systems Capability CapacityScoreRating*WeightFactor * Strong = 1.0; Average = 0.5; Weak = 0.0

30 30 © The Delos Partnership 2004 Resource Allocation No No No No Yes1.0nil Yes Yes Yes Yes CommitAccum.ResourceCriticalResourceOper.Capability Business Attract. OverallAverageProg

31 31 © The Delos Partnership 2004 Prog.Portfolio Mgmt Weak Average Strong Operational Capability HighMediumLow Business Attractiveness P1 P3 P8 P2 P4P6 P7 P5P9

32 32 © The Delos Partnership 2004 The PMI Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes Business Case Business Case Charter Initial Invest. Initial Invest. Idea

33 33 © The Delos Partnership 2004 Tech. Feasibility Study Refine Scope of Activity –Prepare Statement of Work. Make or Buy –Need for control, Intellectual Property –Do we have or can we/do we want to acquire the skills? Do we have a solution? –Technical Issues & Risks –Commercial Issues & Risks –Rough Cut Costs Background & Experience

34 34 © The Delos Partnership 2004 Developing the Business Case Benefits Objectives Critical Success Factors Deliverable Costs What will be the Business Benefit? Benefits Mgmt Process What must be achieved? Strategic / Tactical / Operational What must go right ? Pertaining to Overall Success What must we do at Deliverable Level ? High Level Work plan What will it cost? Cost +/- 10% / Risks/ Assumptions ? What ? How ?

35 35 © The Delos Partnership 2004 Benefit Analysis Types Discounted Cash Flow Types Net Present Value (NPV) Return on Investment (ROI) Non Discounted Case Flow Types Benefit Cost Analysis (BCA) Payback Period

36 36 © The Delos Partnership 2004 The PMI Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes Business Case Business Case Charter Initial Invest. Initial Invest. Idea

37 37 © The Delos Partnership 2004 Initiating the Project  Develop goals and objectives  Define project deliverables  Define high level scope  Identify high-level activities  Document project assumptions  Secure project sponsorship  Obtain approval to proceed InputOutput Process Initial Project Charter  Initial Project Charter  Major Constraints Identified  Major Assumptions Listed  Project Manager Assigned  Authority to Proceed Business Case

38 38 © The Delos Partnership 2004 What is a Project Charter? The Project Charter provides authority for the project to proceed. The Charter documents the agreement between the Sponsor, the Programme Manager (if appropriate) and the Project Manager and provides a blueprint for the project Makes the project visible from “start”

39 39 © The Delos Partnership 2004 The Charter Should Contain A clear statement of the project’s objectives, High Level Scope and deliverables; The rationale for the project (headlines from the business case) Defining the project roles & responsibilities; Outlining the High Level Plan; Documenting related projects. Roles and Responsibilities

40 40 © The Delos Partnership 2004 Initiating the Project Key Project Manager Activities Define Project Objectives & Major Deliverables; Define Project Structure & Resource Plan; Prepare High Level Project Budget; Prepare Business Case Compile Project Charter;

41 41 © The Delos Partnership 2004 What is an Objective? Specific (What is it we are trying to do?) Measurable (How will we know we have achieved it?) Achievable (Can we do it?) Relevant (Is it the right thing to do?) Time-related (When will we do it?) A statement of a particular desired outcome supporting the Goal that is:

42 42 © The Delos Partnership 2004 Case Study Breakout Session 1

43 43 © The Delos Partnership 2004 The PMI® Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes

44 44 © The Delos Partnership 2004 Planning At the end of this session you will have an understanding of the following:- The Planning Process The Planning Hierarchy WBS Plans Schedules Up, Down and Across the Company

45 45 © The Delos Partnership 2004 Planning Processes 6.3 Activity Duration Estimating 6.3 Activity Duration Estimating 5.2 Scope Planning 5.2 Scope Planning 5.3 Scope Definition 5.3 Scope Definition 6.1 Activity Definition 6.1 Activity Definition 7.1 Resource Planning 7.1 Resource Planning 6.2 Activity Sequencing 6.2 Activity Sequencing 7.2 Cost Estimating 7.2 Cost Estimating 6.4 Schedule Development 6.4 Schedule Development 7.3 Cost Budgeting 7.3 Cost Budgeting 4.1 Project Plan Development 4.1 Project Plan Development N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

46 46 © The Delos Partnership 2004 InputOutput Process Phases Objectives Deliverables Acceptance Criteria Scope Planning Charter Project Charter Scope Plan Wave 1Wave 2

47 47 © The Delos Partnership 2004 InputOutput Process Decomposition Scope Definition Objective Work Breakdown Structure CharterScope Plan CharterScope Plan WBS

48 48 © The Delos Partnership 2004 Why Define the Work Breakdown Structure? To manage a project successfully, you must first have a clear understanding of the amount of work you are required to complete Only then can the cost and schedule of your project be estimated and controlled with any confidence The WBS identifies all the work to be performed I.e. the Scope of the Project. If it is not in the WBS it is not part of the project It can often be as important to say what is not within scope

49 49 © The Delos Partnership 2004 Goal Objective 1 Objective 2 Objective 3 Deliverable 1 Deliverable 2 Deliverable 3 Defining the WBS Task Sub Tasks Task Sub Task Task Sub Tasks Task Sub Task Task Sub Tasks Task Sub Task

50 50 © The Delos Partnership 2004 InputOutput Process Activity Lists Activity Definition CharterScope Plan WBS CharterScope Plan WBS Project Task List

51 51 © The Delos Partnership 2004 Case Study Breakout Session 2

52 52 © The Delos Partnership 2004 InputOutput Process Dependencies Activity Sequencing Project Visual (Network Diagram) CharterScope Plan WBS CharterScope Plan WBS Project Task List Network Diagram

53 53 © The Delos Partnership 2004 Creating the Project Visual (The Network Diagram) 3 Types of Dependencies –Mandatory No choice e.g. the walls must go up before the roof can go on –Discretionary Preferred by stakeholders e.g. like the kitchen done before the lounge –External Legally required e.g. planning permission before you start

54 54 © The Delos Partnership 2004 Creating the Project Visual (The Network Diagram) Facilitates engaging the project team and other stakeholders Sanity Check Helps determine the critical path A D BC E G F HI Critical Path = A:D:E:F:H:I= = 16 (weeks)

55 55 © The Delos Partnership 2004 Critical Path Method The focus on CPM is to determine float in order to determine which tasks have the most and the least scheduling flexibility A D BC E G F HI Critical Path = A:D:E:F:H:I= = 16 (weeks)

56 56 © The Delos Partnership 2004 Critical Path Method What is the critical path? (no scheduling flexibility) Where is the float/slack? (some scheduling flexibility) Start Finish A=1 F=1 B=4 P=3 M=3 I=3 D=2 O=2 G=1 N=1 Dummy C= 2 Q=3 L=6 H=2

57 57 © The Delos Partnership 2004 Creating the Project Visual (The Network Diagram) Network Diagram (AON, AOA) –Shows interdependencies of all tasks –Used for planning the project –Used for crashing and fast tracking the project

58 58 © The Delos Partnership 2004 Network Diagrams Aid Planning Crashing –Adding more resources to critical path tasks while maintaining scope E.g. move resources from non-critical tasks which have float or adding extra resources Fast Tracking –Doing critical path tasks in parallel that were originally planned in series Resource Levelling –Plans out time of tasks (and costs) in favour of a stable number of resources used consistently in full

59 59 © The Delos Partnership 2004 Case Study Breakout Session 3

60 60 © The Delos Partnership 2004 InputOutput Process Activity Duration Estimating Top Down (Analogous) Estimating Expert Judgement Monte Carlo Analysis Heuristic (Rule of Thumb Historical Information (Benchmarking) PERT a combination of the above…. CharterScope Plan WBS Project Task List Network Diagram CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions

61 61 © The Delos Partnership 2004 Estimating Estimating –Should be done by people doing the work not just by project managers Estimating Methods –CPM Has one task per estimate Emphasis on controlling costs and leaving time line flexible Can only be drawn on AOA Can have dummies –PERT Has 3 estimates per activity –Optimistic, pessimistic, most likely –Can be used for time and cost –Emphasis on time with flexibility on cost

62 © The Delos Partnership 2004 PERT (Program Evaluation and Review Technique) 1. Estimate for 3 separate scenarios: Best Case (B), Most Likely (ML) and Worst Case (W) 2. Calculate Weighted average estimate by: (B + 4 ML + W ) / 6

63 © The Delos Partnership 2004 Pert Analysis - Example 1. Best Case estimate = 10 hours, Most Likely estimate =15 hours, Worst Case estimate =25 hours. 2. Average estimate = (10 + 4* ) / 6 =16 hours. N.B. Standard Deviation = (Best Case + Worse Case) / 6 Variance = [(Best Case + Worse Case) / 6] 2

64 64 © The Delos Partnership 2004 PERT PERT –Estimate = (P+4M+O)/6 –Standard Deviation = (P-O)/6 –Variance = [(P-O)/6] 2 Task A B C D O M P Duration Standard Deviation Variance

65 65 © The Delos Partnership 2004 InputOutput Process PERT (Project Evaluation and Review Technique) CPM (Critical Path Method) Resource Levelling Schedule Development CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule

66 66 © The Delos Partnership 2004 Project Schedule Project Plans Activity List A multi page document (not a Gantt chart) Down to the level that you are going to control at Rolling Weekly schedule of tasks (<4 weeks out) The Planning Hierarchy WBS

67 © The Delos Partnership 2004 Designed to reduce overhead associated with maintenance of more detailed project plan on a weekly basis Activity List is a detailed picture of the work assignments and schedule of activities over the coming weeks ( <4 weeks) It specifies tasks, resource assignments and the expected start and end dates It is updated on a weekly basis, based on actual performance during the preceding week Changes in the project work plan are reflected in the activity lists and vice-versa Activity Lists

68 68 © The Delos Partnership 2004 What is required?...………………... by when?……………………………. What must be done?…………………. in what order?…………………………. and by whom?………………………. How long will each activity (and therefore the whole project) take?... So how do I make it fit ?…………... Objectives and deliverables High level estimates/external milestones Activities Dependencies Resourcing Detailed work estimates Reconcile Scheduling Summary

69 69 © The Delos Partnership 2004 Reconciling More resources De-scope Further breakdown - focus on what’s actually required Critical path analysis Re-time Levelling - better utilisation of existing resources Overtime! Crash Fast Track

70 70 © The Delos Partnership 2004 InputOutput Process What type of resources are required? How many? For how long? What % of time Resource Planning CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule Resource Requirements

71 71 © The Delos Partnership 2004 InputOutput Process Top Down (Analogous) Estimating Bottom Up Estimating Parametric Estimating Cost Estimating Resource Rates Chart of Accounts Historical Information CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule Resource Requirements CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule Resource Requirements Cost Estimates

72 72 © The Delos Partnership 2004 InputOutput Process Grouping of estimates Cost Budgeting CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule Resource Requirements Cost Estimates CharterScope Plan WBS Project Task List Network Diagram Duration Estimates & Assumptions Project Schedule Resource Requirements Cost EstimatesBaseline Budget

73 73 © The Delos Partnership 2004 InputOutput Process Project Management Information System Project Plan Development

74 74 © The Delos Partnership 2004 InputOutput Process Quality Plan Organisational Plan Communication Plan External Resource Plan Procurement Plan Risk Management Plan Project Plan Development Initial Project Charter Initial Project Charter Project Management Information System Project Standards Stakeholder know how

75 75 © The Delos Partnership 2004 Quality Plan Standards What requirements do you need to meet? Assurance how will you assure the requirements will be met? Control How will you verify that the requirements have been met?

76 76 © The Delos Partnership 2004 Organisation Plan Responsibility Breakdown Structure Who does what? Staffing Management Plan When and how human resources will be taken on and off the project Organisational Chart

77 77 © The Delos Partnership 2004 Communication Plan

78 78 © The Delos Partnership 2004 Communication Plan Channel / Vehicle DescriptionFrequencyPotential Audience Project PlanMicrosoft Project Plan with deliverables by stage OngoingSteering Committee, Key Stakeholders Status ReportsProgress against deliverables and identification of issues and risks WeeklyProject Office Update Presentations Monthly summary of status reports MonthlyAll staff (via Key Process Owners) Info letterUpdate on schedule, benefits of Project One Every QuarterAll Staff

79 79 © The Delos Partnership 2004 Case Study Breakout Session 4

80 80 © The Delos Partnership 2004 Procurement Management Plan Procurement Planning Solicitation Planning Solicitation Source Selection Contract Administration Contract Close Out

81 81 © The Delos Partnership 2004 InputOutput Process Make or Buy Expert Judgement (internal capability / internal capacity / need for control/ Protection of Intellectual Property / Cost) Contract Type Selection (Fixed Cost / Cost Reimbursable / Unit Price Contract) Procurement Planning Scope Statement Market Conditions Procurement Management Plan e.g. What type of contracts will be used? How will multiple suppliers be managed? Statement of Work

82 82 © The Delos Partnership 2004 InputOutput Process Standard Forms Expert Judgement Solicitation Planning Procurement Management Plan e.g. What type of contracts will be used? How will multiple suppliers be managed? Statement of Work Bid Documents Evaluation Criteria

83 83 © The Delos Partnership 2004 InputOutput Process Advertising Bidders Conference Agencies Internet Solicitation Bid Documents Evaluation Criteria Proposal

84 84 © The Delos Partnership 2004 InputOutput Process Screening System Weighting System Contract Negotiation Source Selection Contract Proposal Evaluation Criteria Organisational Policies

85 85 © The Delos Partnership 2004 InputOutput Process Change Control Performance Measurement Payment Contract Administration Contract Work Results Invoices Change Requests Contract Changes Payment Requests

86 86 © The Delos Partnership 2004 InputOutput Process Procurement Audit Contract Close Out Contract Documentation Contract File Formal Acceptance and Closure

87 © The Delos Partnership 2004 Risk Management Plan Risk Identification Risk Quantification Risk Response Development Risk Response Control

88 © The Delos Partnership 2004 EVERY project carries a number of risks... How likely is it to happen? How severe will the impact be if it does happen? How do we reduce the likelihood (mitigation)? How do we deal with the consequences if it occurs (contingency)? What is a Risk ? A condition or circumstance which may occur which could a negative affect on the success of your project at some point IN THE FUTURE

89 89 © The Delos Partnership 2004 InputOutput Process Check Lists Interviewing Feedback Risk Identification Contract Documentation Sources of Risk Potential Risk Events Risk Symptoms

90 90 © The Delos Partnership 2004 InputOutput Process Judgement Decision Trees Statistical Sums Risk Quantification Stakeholder Tolerance Potential Risk Events Cost Estimates Duration Estimates Risks to Accept Risks to Pursue

91 91 © The Delos Partnership 2004 Statistical Sums PERT Standard Deviation = (Worse Case - Best Case)/6 Variance = [(Worse Case - Best Case)/6] 2 The higher the variance the greater the risk...

92 92 © The Delos Partnership 2004 InputOutput Process Mitigating Approach Contingency Planning Insurance Procurement Risk Response Development Risk Management Plan Contingency Plans Reserves Risks to Accept Risks to Pursue

93 93 © The Delos Partnership 2004 InputOutput Process Work Arounds Risk Response Control Corrective Action Risk Management Plan Actual Risks

94 © The Delos Partnership 2004 Some Common Risk Factors Project size and/or complexity External environment influences Technology (experience, reliability, etc) Availability of experienced resources Project sponsorship Clarity of project direction

95 95 © The Delos Partnership 2004 During the life of the project, the project manager should strive to reduce the: –impact, and –probability of all risks facing the project. Regular (at least monthly) review meetings should re-assess the probability and impact of all risks and the risk management plan should be updated accordingly. Severe risks should have a robust contingency plan and a comprehensive mitigation strategy, although a ‘wait and see’ policy may be appropriate in some circumstances. Risk Management Plan (continued)

96 96 © The Delos Partnership 2004 Rate Risks based on probability x Impact Risk Probability xImpact = Rating MitigatingContingency ApproachPlan a11 = 1 b33 = 9 c23 = 6 Tips: Avoid probability ratings of 2 (make a decision is it high or low) Convert low probability risks to assumptions based on mitigating approach Place mitigating approach to high probability risks into action plans Escalate risks to steering committee based on severity and/or lack of contingency plan Risk Management Plan (continued)

97 97 © The Delos Partnership 2004 Case Study Breakout Session 5

98 98 © The Delos Partnership 2004 Planning the Project Key Project Manager Activities Review / Establish Project Standards & Procedures; Develop Project Management Information System Develop Project Plans

99 99 © The Delos Partnership 2004 The PMI® Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes

100 100 © The Delos Partnership 2004 Executing The Project At the end of this session you will have an understanding of the following:- Status Reporting Issue Management Technical Change Management Knowledge Management Project Mgrs Responsibilities

101 101 © The Delos Partnership 2004 PMI® Executing Processes 4.2 Project Plan Execution 4.2 Project Plan Execution N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

102 102 © The Delos Partnership 2004 Project Plan Execution  Work Authorisation to Perform activities in plan  For all issues, complete an issue report, including:  Issue description  Project impact  Proposed resolution  Develop mitigating approach and contingency plan for risks  Review and approve resolution  Assess change  Develop team skills / knowledge  Communicate for commitment  Manage 3rd party relationships  Manage Knowledge InputOutput Process Maintained Project Work plan  Work Results Status Reports Change Requests Issues Risks Changes

103 © The Delos Partnership 2004 Communicate status and expectations to the Programme/ Project Office and therefore Management Inform team members and other Project Managers Communicate changes, issues, variances Facilitate coordination across the programme Share good news (as well as bad) Demonstrate that you are in control Why report project status? Status Reporting

104 © The Delos Partnership 2004 Synthesise Issues Progress Achieved Risks Activities Planned Status Report Make reports comprehensive Status Reporting (contd) Time / Effort

105 105 © The Delos Partnership 2004 Report Project Status Guiding Principles Be careful what you ask for -- if you are only concerned with task starts and completions, you will very likely get tasks that start and finish on time… but possibly at the expense of quality. If you ask for information, use it. Make sure your reporting periods are realistic. Be creative in designing your reports. Make use of exception reporting.

106 106 © The Delos Partnership 2004 An ISSUE is anything that is CURRENTLY or will SHORTLY affect the progress of a project or its ability to produce its stated deliverables, and about which no agreement has yet been reached. As the Project Manager you own the issues and must address them early and drive them to resolution Issue Management For example: Limited availability of resources Problems with technology Ambiguous business requirements

107 © The Delos Partnership 2004 Are issues being raised? Are the issues raised being rated appropriately? Are issues being assigned to appropriate people for resolution? Do all accepted issues have a reasonable resolution due date? Are any resolution due dates about to be missed? Are there any concerns with implementing the approved resolutions? Are there any issues you need to raise now before they become a change request? Issue Management (contd)

108 108 © The Delos Partnership 2004 Knowledge Management Knowledge should be centrally managed A repository should be developed for all the information gathered and produced over the life of the programme. Its purpose is to ensure that all information is: Readily accessible; Consistently presented; Protected from damage or loss; Coordinated and reused; Status Reports Correspondence Budgets Deliverables Project Plans Project Charters Working Papers Contracts Timesheets Expense Records

109 109 © The Delos Partnership 2004 Knowledge Management What are we trying to avoid? Lost Information Duplicated Information Inconsistent Information Wasted Effort Lost Time

110 110 © The Delos Partnership 2004 Manage changes to: Scope :more; less; different Time : elapsed; actual effort Approach : sign-off/consultation; prototype/big bang Resource :team size; skill set Cost :budget Technical Change Management

111 111 © The Delos Partnership 2004 Technical Change Management Complete change request form –Description of proposed change –Benefits of change –Implications of not making the change Log change request Assign change request and due date Investigate request and determine resolution Review resolution Approve resolution Update budget, scope and work plan Communicate

112 112 © The Delos Partnership 2004 Assess Change Guiding Principles Shift happens -- the project world is dynamic Set a tolerance level -- determine the amount of change you can safely accept without formal user approval. When you exceed your tolerance level, use the formal change request process Manage expectations as well as scope.

113 113 © The Delos Partnership 2004 Executing the Project Key Project Manager Activities Periodically (weekly) assess and report the following project status: Schedule -- planned, current & forecast; Budget -- planned, current & forecast; Issues -- number, progress & age; Risk -- severity, likelihood & strategy; Deliverable -- completeness, quality; Change Request -- number, progress, impact

114 114 © The Delos Partnership 2004 Executing the Project Key Project Manager Activities Identify variations in agreed project scope (deliverable, functional, organisational, etc); Analyse impact on project schedule, resource requirements and budget; Revise project schedule, budget and resource plan if change accepted;

115 115 © The Delos Partnership 2004 The PMI® Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes

116 116 © The Delos Partnership 2004 Controlling The Project At the end of this session you will have an understanding of the following:- Earned Value Management Quality Management Stage and Gate Process Project Managers Responsibilities

117 117 © The Delos Partnership 2004 PMI® Controlling Processes 10.3 Performance Reporting 10.3 Performance Reporting 4.3 Overall Change Control 4.3 Overall Change Control N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

118 118 © The Delos Partnership 2004 Controlling the Project  Capture actuals  Evaluate actuals versus plan  Manage Change Requests  Stage and Gate review  Update project scope, as required  Update project work plan InputOutput Process Project Actuals Performance Measures Change Requests Maintained Project Work plan

119 119 © The Delos Partnership 2004 Detailed project plan & Project charter Deliverables & Achieved objectives Is the project progressing on schedule? Do actuals support estimates? How is the risk profile changing over the life of the project? Has contingency been used? What issues are hampering progress? Are deliverables being produced to the required levels of quality? Are changes being identified and how are these being managed? What are we Controlling?

120 120 © The Delos Partnership 2004 You only control three dimensions... Time Cost Quality Dimensions of Control Scope

121 © The Delos Partnership 2004 Collect and verify project actuals Compare project actuals against plan Determine variances Update plan to reflect actuals Anticipate future impacts Progress Management

122 122 © The Delos Partnership 2004 Earned Value Management Is a control mechanism to allow a contractor and client to monitor progress in terms of –Cost –Schedule –Technical Performance Normally created and owned by the prime contractor Traditional project mgmt practice tends to compare actual costs with planned expenditure and confuses actual costs with actual progress. –EVM provides a third reference point; an objective view of the status of the contract

123 123 © The Delos Partnership 2004 Earned Value Management It works by tracking 3 parameters –Planned Value (PV): the budgeted costs of work scheduled –Actual Costs (AC): the actual cost of work performed (ACWP) –Earned Vale (EV): the budgeted cost of work performed It relies on the Work Breakdown Structure (WBS) establishing all the goods and services to be supplied…the deliverables! The WBS should go down to the level that earned value will be reported against (the more levels the more heavier the burden of reporting…3/4 levels should meet the needs of most reasonably complex projects)

124 124 © The Delos Partnership 2004 Earned Value Management Each deliverable/activity in the WBS can have a value (money/hours) estimated to it Value is “earned” by the completion of those deliverables or activities Estimate vs actual variances can then be generated Simple Example Project x –3 Stages 1 deliverables per stage –2 activities per deliverable What is the WBS?

125 125 © The Delos Partnership 2004 Earned Value Management Time Now Planned Completion Date Original estimated project budget Actual cost of work performed (AC) (PV) (EV) Cost Variance Schedule Variance (Cost) Schedule Variance (Time) Budget at completion (BAC) Forecast Cost Overrun

126 126 © The Delos Partnership 2004 Earned Value Management Backward looking measures –Cost Performance Index = Earned Value / Actual Cost CPI = EV/AC –Schedule Performance Index = Earned Value / Planned Value SPI = EV / PV –Cost Variance = Earned Value - Actual Cost Cost Variance = EV - AC –Schedule Variance = Earned Value - Budget Schedule variance = EV - PV Forward Looking Measures –Final Cost = Budgeted Cost / CPI –Final Project Duration = Planned Project Duration / SPI (time based)

127 © The Delos Partnership 2004 Quality management should not be something which starts ‘at the end’ - when a deliverable has been produced…rather a “stage and gate” approach should be taken over the entire live cycle Quality Management

128 © The Delos Partnership 2004 Quality Management Prevention Have quality criteria been defined for each stage/deliverable? Has the training, coaching and knowledge transfer prepared team members for their work? Are the estimates of effort and planned duration sufficient to produce acceptable quality work? Have standards and procedures been developed and are they being followed?

129 © The Delos Partnership 2004 Inspection Is time being made for the assessment of deliverables against agreed quality criteria? Are team reviews working? Are both the project team and independent quality reviewers involved in assessment/sign off of deliverables? Are approvals of deliverables going smoothly? Have there been any change requests regarding defects in approved deliverables? Quality Management (contd )

130 © The Delos Partnership 2004 Key Components Quality Management (contd) Cross functional review of deliverables by stage (Stage and Gate) Enforcement of formal standards and procedures Consistent application of PM processes and techniques Continuous improvement through training and skills transfer Provision of appropriately skilled people

131 131 © The Delos Partnership 2004 STAGES –Gather information –Multi-functional with parallel activities –Drive uncertainty down –Where work is done Stage and Gate GATES –Decision points for next stage - Go/ No Go,etc (‘GO’ authorises resources for next Stage) –Serve as quality & prioritisation control –Are predefined & specify a set of deliverables

132 132 © The Delos Partnership Stage and Gate (contd)

133 133 © The Delos Partnership 2004 Stage and Gate (Functional Buy-In) Idea Initial Invest Business Case Plan Devel. Risk Assess. Produce Post Project Eval. R & D / Medical Sales & Marketing/ Operations Sales & Marketing/ Operations Finance / Commercial Initiate Plan Execute Control Close

134 134 © The Delos Partnership 2004 Case Study Breakout Session 6

135 135 © The Delos Partnership 2004 Control the Project Guiding Principles Control the outcomes more than the process. Recognise the balance between formal and informal control. Project management software is not a replacement for a full-time project manager.

136 136 © The Delos Partnership 2004 Controlling the Project Key Project Manager Activities Monitor & evaluate progress (schedule, budget); Make adjustments (schedule, resourcing, activity) necessary to achieve time, cost & quality targets; Identify and resolve all project issues

137 137 © The Delos Partnership 2004 Controlling the Project Key Project Manager Activities Identify and manage project risks; Monitor status and impact of all related projects; Co-ordinate allocation of project resource; Review & approve quality of all deliverables;

138 138 © The Delos Partnership 2004 The PMI® Project Management Life Cycle Initiating Processes Initiating Processes Planning Processes Planning Processes Controlling Processes Controlling Processes Closing Processes Closing Processes Executing Processes Executing Processes

139 139 © The Delos Partnership 2004 Closing The Project At the end of this session you will understand the importance of :- Post-Project Evaluation Evaluation of Team & Individual Performance Project Managers Responsibilities

140 140 © The Delos Partnership 2004 PMI® Closing Processes 12.6 Contract Close Out 12.6 Contract Close Out 10.4 Administrative Closure 10.4 Administrative Closure N.B. All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas

141 141 © The Delos Partnership 2004 Closing the Project  Objective Review and Scope Verifications  Procurement Audit  Update & Archive documentation  Identify lessons learned and define future improvements  Review team members InputOutput Process Contracts Project Charter Project Assessment Individual Performance Assessment Future Improvements Contract Files Performance Measures

142 142 © The Delos Partnership 2004 Conclude the Project Guiding Principles This project management process provides the basis for continuous improvement. Get some input from outside the project team. This should not be your first attempt to document project information. Debrief before parting.

143 143 © The Delos Partnership 2004 Closing the Project Key Project Manager Activities Obtain final review and approval of project deliverables; Assess performance against project schedule, and budget; Archive project information; Compile closure report;

144 144 © The Delos Partnership 2004 Project Management Framework & Organisation – Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

145 145 © The Delos Partnership 2004 Role of the Sponsor The Sponsor is the customer. The one who will pay for the product the project is going to deliver Must be visible and lead from the Top Own the Business Case Belief and energy to “Stay the course” Balance Priorities with Business-As-Usual Budget Holder Commitment to new ways of working Manage and Influence Stakeholders Ensure Resources are committed

146 146 © The Delos Partnership 2004 Planning & Control Prog Office Role of the Project Manager Role of the Project Manager. Business Review System Interface Leadership Change Management Team Building Benefits Management Financial Well-Being

147 147 © The Delos Partnership 2004 Functional Organisation Functional Manager Chief Exec. Functional Manager Functional Manager Part-time programme manager Direct reporting of team members to functional mgrs Project manager has little or no authority Virtually none of the team assigned full-time Programme coordination

148 148 © The Delos Partnership 2004 Functional Organisations Easier management of specialists Team members report to only one supervisor Similar resources are centralised, companies are grouped by specialisation People place more emphasis on their functional speciality to the detriment of project No career path in project management Project manager has no authority AdvantagesDisadvantages

149 149 © The Delos Partnership 2004 Matrix Organization Project Manager Project Manager Prog. Manager Project Manager Project Manager Function Manager Function Manager Function Manager TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL TLTL

150 150 © The Delos Partnership 2004 Matrix Organisations Highly visible project objectives Improved project manage control over resources More support from functional organisations Better coordination Better horizontal and vertical dissemination of information than functional Team members maintain a “home” Not cost effective because of extra administrative personnel More than one boss for project teams More complex to monitor and control Tougher problems with resource allocation Need extensive policies and procedures Functional managers may have different priorities than project managers Higher potential for conflict and duplication of effort AdvantagesDisadvantages

151 151 © The Delos Partnership 2004 Projectised Organisation Full-time project manager Direct reporting of team members to PM Project manager has high or total authority % of team assigned full-time Prog. Manager Prog. Manager Project coordination

152 152 © The Delos Partnership 2004 Projectised Organisations Efficient project organisation Loyalty to project More effective communications that functional No “home” when project complete Lack of professionalism in disciplines Duplication of facilities and job functions Less efficient use of resources AdvantagesDisadvantages

153 153 © The Delos Partnership 2004 Organisational Structure Influences on Projects Project Manager’s Authority % of Performing Organisation’s Personnel Assigned Full Time to Project Work Project Manager’s Role Common Title for Project Manager’s Role Project Management Administrative Staff Organisation Type Part-time Project Coordinator/ Project Leader Part-time Virtually None Little or None Functional Part-time Full-time Part-timeFull-time Project Coordinator/ Project Leader Project Manager/ Project Officer Project / Program Manager 0-25%15-60%50-95%85-100% Limited Low to Moderate Moderate to High High to Almost Total Projectised Matrix Weak Matrix Balanced Matrix Strong Matrix Project Characteristics Source: PMI® Project Management Body of Knowledge

154 154 © The Delos Partnership 2004 Project Organisation No one “best” structure Major considerations are: –Control –Responsibility & Accountability –Integration & Decision Making –Communication & Visibility –Priority & Trade-off –Stakeholder Management

155 155 © The Delos Partnership 2004 There are Two Life Cycles Project Management Life Cycle –This describes what you need to do to manage the project (Initiating, Planning, Executing, Controlling, Closing) –You are concerned about this life cycle Product Life Cycle –The deliverable of a project that will be used by the customer –The project team is not responsible for the product life cycle

156 156 © The Delos Partnership 2004 The Triple Constraint The three are so intertwined that a change in one will in most cases lead to a change in at least one of the others Management sets the priority of each constraint

157 157 © The Delos Partnership 2004 Project Integration Management During execution… The Project Team focus on completing tasks The sponsor and senior management protect the project from changes and loss of resources The project manager integrates all the pieces of the projects

158 158 © The Delos Partnership 2004 Project Integration Management Constraints –Factors that limit the teams options –Financial, time, human, technical, other Historical Information –Can include tasks, WBS, Reports, Estimates, Plans, lessons learned, benchmarks, correspondence Lessons Learned –Technical aspects –Project Management Life Cycle

159 159 © The Delos Partnership 2004 Project Integration Management Project Management Methodology –Organisations set of standards, templates for managing projects Project Management Information System –The system set up in advance where the project manager goes to find all project related information, to know the status of the project etc Baseline –The original plan plus any approved changes. Used to compare actuals with original to monitor variances to budget

160 160 © The Delos Partnership 2004 Project Integration Management Kick Off Meeting –A communications and coordination meeting of all parties to ensure all are familiar with the details of the project and who will be responsible for what –Includes team, sponsor, customers, sellers, senior management, functional managers) Work Authorisation System –A formal procedure for sanctioning work Change Requests –Formal changes to the project after it has been approved (during execution) by integrated change control –The project plan is a formal document that needs to be controlled

161 161 © The Delos Partnership 2004 Project Integration Management Change Control System –A collection of formal documented procedures and supporting organisation detailing how changes will be managed, approved, and implemented Corrective Action –The project manager proactively looks for deviations rather than just waiting for them to be brought to their attention –Corrective action may involve cause and effect analysis, changes to schedule, costs, quality and risks

162 162 © The Delos Partnership 2004 Project Integration Management Scope change control –Measure performance –Replanning –Making changes and adjusting the baseline –Taking corrective action –Documenting lessons learned Schedule Control Cost Control Quality Control Performance Measurement Risk Monitoring

163 163 © The Delos Partnership 2004 Project Integration Management Managing Changes –Influencing the factors that affect change –Ensuring that change is beneficial –Determining that a change has occurred –Looking for alternatives to change –Minimising the negative impact of change –Notifying stakeholders affected by change –Managing changes as they occur Configuration Management –Managing the scope of the project so that the project delivers the product required by the customer

164 164 © The Delos Partnership 2004 Thank- you

165 165 © The Delos Partnership 2004 Back-Up Slides Optional slides to be used as required to support the Q&A session following the case study breakout sessions of to flex the course to meet a clients particular focus area

166 166 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas – Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

167 167 © The Delos Partnership 2004 Scope Management “Includes the processes required to ensure that the project includes all the work and only the work required to complete the project successfully. It is primarily concerned with controlling what is and what is not in the project” Check you are completing all the work Say no to additional work Prevent extra work or gold plating

168 168 © The Delos Partnership 2004 Scope Management Project Selection –Murder Board –Peer Review –Scoring Models –Benefit compared to cost NPV, IRR, Payback, BCA

169 169 © The Delos Partnership 2004 Scope Management Management by Objectives –Establish objectives –Periodically review –Take corrective action Delphi Technique –Obtain estimates from independent experts anonymously –Used to reduce bias and build consensus

170 170 © The Delos Partnership 2004 Scope Management Work Breakdown Structure –The foundation of the project. All planning and controlling is based on the WBS –Defines the scope of the project. –If it is not in the WBS the team should not be working on it WBS Dictionary –Created with the team to increase understanding of each task, who is going to do what, –what they will need, –what they will deliver

171 171 © The Delos Partnership 2004

172 172 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas – Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

173 173 © The Delos Partnership 2004 Time Management Activity on Node (AON) –Four types of relationship Finish to start Finish to finish Start to Start Start to finish Activity AActivity B

174 174 © The Delos Partnership 2004 Time Management Activity on Arrow (AOA) –One type of relationship Finish to start –Can use dummies to show dependencies between tasks –PERT and CPM can only be drawn on AOA Activity A

175 175 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas – Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

176 176 © The Delos Partnership 2004 Cost Management Cost Estimating –Should be done by the person doing the work –Should be based on the WBS to improve accuracy –Historical information is key to improving accuracy

177 177 © The Delos Partnership 2004 Cost Management Cost Estimating –Analogous Estimating Top down expert judgement Quick and cheap to do Less accurate –Bottom Up estimating Estimates based on WBS are rolled up to get a project total Takes time and more costly to do More Accurate –Parametric Testing (Uses a mathematical model e.g.x hours per test) Regression analysis (Scatter Diagram) Learning Curve –The 100 th test will be quicker than the 1st

178 178 © The Delos Partnership 2004 Cost Management Progress Reporting –50/50 Rule A task is considered 50% complete when it begins and only gets remaining 50% when task complete –20/80 Rule A task is considered 20% complete when it begins and only gets remaining 80% when task complete –0/100 Rule A task only gets credit when completed

179 179 © The Delos Partnership 2004 Earned Value Management Is a control mechanism to allow a contractor and client to monitor progress in terms of –Cost –Schedule –Technical Performance Normally created and owned by the prime contractor Traditional project mgmt practice tends to compare actual costs with planned expenditure and confuses actual costs with actual progress. –EVM provides a third reference point; an objective view of the status of the contract

180 180 © The Delos Partnership 2004 Earned Value Management It works by tracking 3 parameters –Planned Value (PV): the budgeted costs of work scheduled –Actual Costs (AC): the actual cost of work performed (ACWP) –Earned Vale (EV): the budgeted cost of work performed It relies on the Work Breakdown Structure (WBS) establishing all the goods and services to be supplied…the deliverables! The WBS should go down to the level that earned value will be reported against (the more levels the more heavier the burden of reporting…3/4 levels should meet the needs of most reasonably complex projects)

181 181 © The Delos Partnership 2004 Earned Value Management Each deliverable/activity in the WBS can have a value (money/hours) estimated to it Value is “earned” by the completion of those deliverables or activities Estimate vs actual variances can then be generated Simple Example Project x –3 Stages 1 deliverables per stage –2 activities per deliverable What is the WBS?

182 182 © The Delos Partnership 2004 Earned Value Management Time Now Planned Completion Date Original estimated project budget Actual cost of work performed (AC) (PV) (EV) Cost Variance Schedule Variance (Cost) Schedule Variance (Time) Budget at completion (BAC) Forecast Cost Overrun

183 183 © The Delos Partnership 2004 Earned Value Management AcronymTermMeaning PVPlanned Value What is the estimated vale of the work planned to be done? EVEarned ValueWhat is the estimated vale of the work actually done? ACActual CostWhat is the actual cost incurred? BAC Budget at Completion What was the budget for the total job? EAC Estimate at completion What is now expected to be the total cost of the project? ETC Estimate to complete From today, how much more is the project expected to cost? VAC Variance at Completion How much under or over budget is the project now expected to be?

184 184 © The Delos Partnership 2004 Earned Value Management AcronymTermMeaning Cost Variance CVEV-AC Negative is over budget Positive is under budget Schedule Variance SVEV-PV Negative is behind schedule Positive is ahead of schedule Cost Performance Index CPI EV/ACThe project is achieving $_ out of every $1spent Schedule Performance Index SPI EV/PV The project is progressing at _% of the rate originally planned Estimate at Completion EAC BAC/CPI What is now expected to be the total cost of the project? Estimate to Complete ETC EAC-AC From today, how much more is the project expected to cost? Variance at Completion VAC BAC-EAC How much under or over budget is the project now expected to be?

185 185 © The Delos Partnership 2004 Earned Value Management Each deliverable/activity in the WBS can have a value (money/hours) estimated to it Value is “earned” by the completion of those deliverables or activities Estimate vs actual variances can then be generated Simple Example Project x –3 Stages 1 deliverables per stage –2 activities per deliverable What is the WBS?

186 186 © The Delos Partnership 2004 Earned Value Management Tips –EV comes at the beginning of every formula –If it is a “variance” it is EV minus something –If it is an “index” it is EV divided by something –If the formula relates to cost use AC –If the formula relates to schedule us PV –Negative is bad; positive is good –Greater than one is good; less than one is bad

187 187 © The Delos Partnership 2004 Cost Management PV AC ETC EAC BAC TodayOriginal Plan

188 188 © The Delos Partnership 2004 Project Selection Project AWhich Project To Pick? Net Present Value$85,000 Project B $75,000 IRR14%18% Payback Period20 Months25 Months Benefit Cost Ratio

189 189 © The Delos Partnership 2004 Project Cost Management Sunk Costs –A project with a budget of £300,000 is halfway through and has spent £600,000. Do you consider the £300,000 when deciding to continue? –Accounting standards require that sunk costs are not considered when deciding whether to continue with a troubled project

190 190 © The Delos Partnership 2004 Project Cost Management Variable Costs –Any cost that varies with the amount of work e.g. team wages, consultancy fees Fixed Cost –Any cost that do not change, e.g. insurance Direct Costs –Costs directly attributable to the work on the project Indirect Costs –Overhead costs that are shared e.g. HR support

191 191 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas – Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

192 192 © The Delos Partnership 2004 Quality Management Pareto Analysis Cause and Effect / Fishbone / Ishikawa Diagram Statistical Sampling –Studying the whole population would take too long, cost too much, be destructive

193 193 © The Delos Partnership 2004 Quality Management Find the following on the charts following –Upper control Limit –Lower Control Limit –The process is out of control –Assignable cause –Normal and expected variation –Rule of Seven –Specification limits –Three Sigma –Six Sigma –Normal Distribution Curve

194 194 © The Delos Partnership 2004 Quality Management

195 195 © The Delos Partnership 2004 Quality Management

196 196 © The Delos Partnership 2004

197 197 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

198 198 © The Delos Partnership 2004 Human Resource Management Responsibility Exercise Handout Halo Effect –Thinking someone will be good at everything just because they are very good at one thing MCGregor’s Theory X and Y xx X Y

199 199 © The Delos Partnership 2004 Maslow’s Hierarchy of Needs Self Actualisation Esteem Social Safety Physiological Growth, learning Accomplishment, appreciation Love, affection, friends, approval Security, stability, freedom Food, water, shelter

200 200 © The Delos Partnership 2004 Sources of Conflict within Projects Schedules Competing priorities Resources Technical Opinions Administrative procedures Cost Personality Frequency as cause of conflict Low High Source: PMI Project Management Body of Knowledge

201 201 © The Delos Partnership 2004 Effectiveness in Project Situations Low High Conflict Resolving Techniques Confronting (Problem Solving) Working a shared problem Smoothing Emphasizing common ground Compromising Bringing some degree of satisfaction to both sides Withdrawal (avoidance) Postponing/waiting for better timing Forcing Push your viewpoint at expense of others

202 202 © The Delos Partnership 2004 Power Types Expert Power based on knowledge/skills/experience Reward Power based on ability to reward Formal Power based on position Referent Power based on association with someone in a higher position Penalty Power based on ability to penalise Effectiveness in Project Situations Low High

203 203 © The Delos Partnership 2004 Hertzberg's Motivation Theory Hygiene factors cannot motivate but lack of them will de-motivate Working conditions, Salary, Personal life, Relationships at work, Security, Status Motivating agents motivate people Responsibility, Self Actualisation, Professional Growth, Recognition Design Jobs with right balance Stretch vs Comfort Zone vs Grunge “If you want people to do a good job give them a good job to do” (Hertzberg)

204 204 © The Delos Partnership 2004

205 205 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

206 206 © The Delos Partnership 2004 Project Communications Management Can the project manager control all communications –No Should the project manager try to control communications –Yes, otherwise rumours and speculations and mis-understanding fill the vacuum 90% of a project managers time is spent communicating –Communication is the single most important skill in project management

207 207 © The Delos Partnership 2004 Project Communications Management Communication Channels –# Channels = (N 2 -N)/2 Where N is the number of people How many communication channels are there when there are 5 stakeholders involved in a project? How many are there when there 10?

208 208 © The Delos Partnership 2004 Project Communications Management Communications Planning –Determining the information needs of the stakeholders Communications Management Plan –What information do you need to send to who, when, how etc Information Distribution –Implementing the communications management plan

209 209 © The Delos Partnership 2004 Project Communications Management Non-Verbal –55% of all communication is non-verbal Para lingual –The pitch and tone of your voice which often conveys your real message Active Listening –Confirming you are listening, paraphrasing back, asking for clarification Effective Listening –Watching the speaker for body language, thinking about what you are going to say before responding, asking questions, providing feedback Feedback –Checking understanding of the message

210 210 © The Delos Partnership 2004 Project Communications Management Performance Reporting –Reports are communication tools and may include Status reports Progress reports Trend reports Variance reports Earned value reports Forecasting reports

211 211 © The Delos Partnership 2004 Project Communications Management Administrative Closure is part of communications –All projects must be closed out At end of project At end of each phase When contract is terminated –Administrative Closure includes Product Verification Financial closure Lessons Learned Update records Final project performance reporting Project Archives

212 212 © The Delos Partnership 2004

213 213 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas – Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

214 214 © The Delos Partnership 2004 Project Risk Management Is there more risk at the start or the end of a project? Risk Management Involves –Risk management planning –Risk Identification –Qualitative Risk Analysis –Quantitative Risk Analysis –Risk Response Planning

215 215 © The Delos Partnership 2004 Project Risk Management Step 1 – Risk Management Planning –Formal or informal dependent on perceived risk of project Formal risk management plans may include –Methodology –Roles and Responsibilities –Budget for risk –Timing –Risks thresholds –Risk Tracking

216 216 © The Delos Partnership 2004 Project Risk Management Step 2 – Risk Identification –Brainstorming –Delphi Technique –Interviewing stakeholders / experts –SWOT –During team meetings (status meetings) Outputs from Risk Identification –Risks –Risk triggers what will be the symptom or early warning sign

217 217 © The Delos Partnership 2004 Project Risk Management Step 3 – Qualitative Risk Analysis –Probability and impact –Assumption testing Too many guesses make the data unreliable –Data Precision Ranking How reliable is our information Output from Risk Analysis –Risk Rating Matrix

218 218 © The Delos Partnership 2004 Project Risk Management Step 4 – Quantitative Risk Analysis –Expected value Which risks warrant a response Determine overall project risk Determine cost and schedule reserves

219 219 © The Delos Partnership 2004 Project Risk Management Step 4 – Quantitative Risk Analysis Decision Tree Would you volume test? Do Volume Test $100,000 Do Not do Volume Test $0 Failure: 30% probability and $140,000 impact Pass: No impact Failure: 75% probability and $440,000 impact

220 220 © The Delos Partnership 2004 Project Risk Management Step 4 – Quantitative Risk Analysis –Monte Carlo Simulation Evaluates the project not the task Provides the probability of completing the project on any specific day for any specific cost Determines probability of any given task being on the critical path Can be used to assess cost and schedule impacts

221 221 © The Delos Partnership 2004 Project Risk Management Step 5 – Risk Response Planning –Assign Owner –Decide risk response strategy Avoid –Eliminate cause of risk Mitigate –Reduce probability or impact Accept –Do nothing and live with consequences if it happens Transfer –Insure against

222 222 © The Delos Partnership 2004

223 223 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management

224 224 © The Delos Partnership 2004 Procurement Management StepWhat happensOutput 1 Procurement PlanningMake or Buy? Do it yourself or outsource. Select Contract Type. Draft scope of work 2 Solicitation PlanningRFP createdRFP 3 SolicitationQuestions and AnswersProposal Created 4 Source SelectionPick OneContract Signed 5 Contract administrationMake or Buy?Work completed 1 Procurement PlanningFinishDone

225 225 © The Delos Partnership 2004 Procurement Management 1 Procurement Planning Make vs Buy Main reason to buy is to reduce risk (cost, performance, scope of work) Main reason to make is to utilise own resources, retain control, protect Intellectual Property

226 226 © The Delos Partnership 2004 Procurement Management 2 Solicitation Planning –Evaluation Criteria Understanding or need Life cycle cost Technical ability Management approach Project Management ability Contract Type Selection 4 Main Contract Types –Cost Reimbursable –Time & Material –Fixed Price –Purchase Order

227 227 © The Delos Partnership 2004 Procurement Management A contract is a formal agreement All requirements should be specifically stated in the contract All contract requirements must be met Changes must be in writing and formally documented

228 228 © The Delos Partnership 2004 Procurement Management Contract Types –Cost Reimbursable (risk mostly with the buyer) Cost plus fixed fee (CPFF) –Most common form of fixed fee as seller incentivised to control project as extra work does not result in extra profit Cost plus percentage of costs (CPPC) –Illegal in most governments. Why? Cost plus incentive/award fee (CPIF/CPAF)

229 229 © The Delos Partnership 2004 Procurement Management Contract Types –Time & Material (risk mostly with the buyer) Quick to arrange Suitable for low cost/short term contracts Simple to administer

230 230 © The Delos Partnership 2004 Procurement Management Contract Types –Fixed Price (Risk mostly with the seller) Fixed Price Incentive Fee (FPIF) –E.g. Fixed fee plus $X for every month you finish early Fixed Price Economic Price Adjustment –E.g. Annual adjustment based on inflation for long term contracts

231 231 © The Delos Partnership 2004 Procurement Management Contract Types –Purchase Order Unilateral (signed by one party only) Used for simple commodity items

232 232 © The Delos Partnership 2004 Procurement Management Situation Type of Contract to Use You need work to start right away? You want to buy expertise in determining what needs to be done? You know exactly what needs to be done? You are buying the services of a programmer to augment your staff? You need work done but you do not have time to audit invoices on this work ?

233 233 © The Delos Partnership 2004 Procurement Management 3 Solicitation –Bidders conference –Qualified sellers list –Advertising

234 234 © The Delos Partnership 2004 Procurement Management 4 Source Selection –Presentations by sellers –Negotiations with short listed sellers Main items to negotiate on a contract are –Responsibilities –Authority –Applicable law –Technical and management approaches –Contract financing –Price

235 235 © The Delos Partnership 2004 Procurement Management 5 Contract Administration –FP Check to make sure work in scope is being done Watch for overpriced change orders Check for scope mis-understandings –T&M Provide day to day direction Focus on deliverables and project schedule Decide if alternative contract type better –CPFF Audit sellers costs Watch for seller adding resources that do not add value or part of scope

236 236 © The Delos Partnership 2004 Procurement Management 6 Contract Closeout (When a contract ends or when terminated before work completed –Product Verification –Financial closure make final payments –Contract performance reporting Assess effectiveness of contract type chosen –Contract File Archive documents –Procurement Audits A structured review of the procurement process to capture lessons learned

237 237 © The Delos Partnership 2004 The PMI® Project Management Knowledge Areas Key Concepts All numbering refers to the PMI® Project Management Body of Knowledge (PMBOK) Knowledge Areas 4. Project Integration Management 4. Project Integration Management 5. Project Scope Management 5. Project Scope Management 6. Project Time Management 6. Project Time Management 7. Project Cost Management 7. Project Cost Management 8. Project Quality Management 8. Project Quality Management 9. Project Human Resource Management 9. Project Human Resource Management 10. Project Communications Management 10. Project Communications Management 11. Project Risk Management 11. Project Risk Management 12. Project Procurement Management 12. Project Procurement Management Professional Responsibility

238 238 © The Delos Partnership 2004 Professional Responsibility In a broad sense professional responsibility means –Do the right thing –Follow the right process –Act ethically, fairly and professionally –Watch for conflicts of interest –Report violations –Increase knowledge and practice –Deal with problems


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