1. Introduction to Project Management
Managing Project Time, Cost,
and Procurements
Welcome to Introduction to Project Management: Managing Project Time, Cost, and Procurements. This is Lecture a.
Lecture a
This material (Comp19_Unit6a) was developed by Johns Hopkins University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number IU24OC

2. Managing Project Time, Cost, and Procurements Learning Objectives—Lecture a
Define project management time activities.
Define project cost management activities.
Define project procurement activities.
The Objectives for Managing Project Time, Cost, and Procurements are to:
Define project management time activities.
Define project cost management activities.
Define project procurement activities.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

3. Introduction and Overview
5 Process Groups
Initiating
Planning
Executing
Monitoring and controlling
Closing
9 Knowledge Areas
42 Project Management Processes
Project management is organized as processes and knowledge areas. There are nine project management knowledge areas:
Integration
Scope
Time
Cost
Human Resources
Quality
Communication
Risk
Procurement.
This unit addresses how the project team manages the project time, cost, and procurement processes. We will review the process groups relevant to managing the project time, cost, and procurement. These are initiating, planning, executing, monitoring and controlling, and closing. We will assume that the project scope is well defined after the Work Breakdown Structure (WBS) is created. The project team then decomposes, or breaks down, each work package of the work breakdown structure to create an activity list. The activities in each activity list are sequenced, followed by estimating activity resources, estimating activity durations, and finally, developing a project schedule. The project schedule becomes an important factor for creating cost estimates for all project activities.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

4. Process Group Sequence
This slide is intended to show where time, cost, and procurement management take place in our process group sequence. Project planning can begin at the completion of two key project initiation processes. These processes involve:
Creating the project charter and having it approved by the project sponsor
Identifying the project stakeholders
Once these steps are completed, the project can move forward into these phases:
Initiating processes are performed to define a new project or new phase of an existing project. A project charter is created, stakeholders are identified, and the project is started.
Planning processes are performed to define the scope and objectives of the project and develop plans to accomplish the objectives. During project planning, the project management plan and project documents are developed that are used to perform the project.
Executing processes are performed to accomplish the work of the project and satisfy the project objectives.
Monitoring and controlling processes involve tracking, reviewing, and controlling the progress and performance of the project, identify required changes to the project management plan and take preventive or corrective steps appropriate for the changes.
Closing processes are performed to finalize all activities and formally close the project or phase.
Mindfulness of time, cost, and procurement management is important throughout the various processes including during project planning, project execution, and project closure as well as during project monitoring and control, which spans across all other processes.
Before we begin to manage time, cost, and procurement, we will assume that the project scope is well defined after the project WBS has been created.
The project team decomposes (breaks down) each work package of the work breakdown structure to create an activity list.
The activities in each activity list are sequenced, followed by estimating activity resources, estimating activity durations, and finally developing a project schedule.
The project schedule becomes a key input to creating cost estimates for all of the project activities.
A project budget is developed by adding all of the activity cost estimates together.
The project team will decide if they will perform the work or if it will be outsourced — this is considered a buy vs. build decision. A procurement plan is used by the project team to manage obtaining goods and services required to complete project activities.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

5. Essential Planning Processes
Collect requirements process
Define scope process
Create WBS process
Define activities process
Developing schedule, determining budget & making procurement decisions
This slide provides an overview of the sequence of the activities, followed by the project team during project planning. The following five essential processes are required to develop a schedule, determine the budget, and make procurement decisions. We must complete the collections requirement process, complete the scope definition process, create a WBS, begin to decompose or define activities within that WBS and then, finally, develop a schedule, determine a budget, and begin to make procurement decisions.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

6. Project Activities by Process Group
A variety of activities will take place when developing time, cost, and procurement management plans. This table illustrates how these activities break down across the different process groups.
When developing a time management plan, it is important to at first define all of the project activities. Once that’s done, begin to sequence these activities; once they are sequenced you will begin to:
Estimate the activity resources required
Estimate the duration of each activity
Develop a schedule and then control the schedule
In the cost management process group, you will begin to estimate costs, determine budget, and control costs. The activities in procurement management will involve planning procurements, conducting procurements, administering procurements, and closing procurements.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

7. Collect Requirements Process
To ensure project success, it is very important the project scope be clearly defined before starting project execution.
Project requirements are generated from the information contained in two project initiating documents, the project charter and stakeholder register.
The project charter is issued by the project sponsor, which formally authorizes the existence and start of the project, describes the business need or justification of the project, and provides product and project requirements.
The stakeholder register contains the requirements or needs of the stakeholders. The requirements could be for quality items, organizational processes, or directly related to the product of the project such as performance capabilities. Requirements can be gathered by techniques such as stakeholder interviews, focus groups, questionnaires, surveys, and facilitated workshops.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

8. Define the Scope Process
The requirements documentation is analyzed by the project team to develop a project scope statement. This document provides a narrative description of the project scope.
A major source of problems in IT projects is poorly defined scope (i.e. scope boundaries – what is in or out of scope). The project scope cannot be added or deleted by the project team without proper authorization.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

9. Create the WBS Process The scope statement is used to create a WBS.
A WBS is essential for project success because it ensures all work is identified (project management work, product. and product scope).
A key input of many of the project management processes is the scope baseline. It is comprised of the WBS, WBS dictionary, and project scope statement.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

10. Work Breakdown Structure (WBS)
The WBS is created by the project team on every project regardless of the project size or complexity.
It is a hierarchical deliverable-oriented graphic image of the project scope.
It provides the complete scope of the project in greater detail than the scope statement.
The lowest level of the WBS is called a work package.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

11. Work Breakdown Structure(WBS)
Each work package contains a list of activities that can be estimated and completed.
In this unit, we will focus on work package cost, schedule, and procurement.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

12. Define Activities Process
The activity lists (scope baseline) contain clearly identified activities or “work” that must be performed to accomplish the scope (“deliverables”) of the project.
The scope baseline is used by the project team as direct input to determine the following: activity definition, sequence activities, estimate activity durations, estimate activity resources, develop schedule, estimate costs, determine budget, plan quality, plan procurements. This information is vital for the project team to create a realistic schedule and budget.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

13. Developing Schedule, Determining Budget, and Making Procurement Decisions
The project team uses the activity lists generated from each work package to create the project schedule, determine the project budget, and make procurement or outsourcing decisions for the project.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

14. Schedule and Cost Constraints
Early in the project it is important for the project team to work with the key stakeholders to identify project constraints related to scope, time, cost, and other items (technical, legal, etc).
Project constraints must be identified and managed by the project team because of their impact on the performance of the project.
Projects have constraints related to scope, time, cost and other items, such as technical and legal issues.
Early in the project it is important for the team to work with the key stakeholders and ask questions about constraints so they can plan the project schedule, budget, and procurement activities.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

15. Exercise List project constraints inherent in your organization.
List unique constraints you have encountered on individual projects.
Take a moment to list project constraints inherent in your organization. Once you have completed that question, list unique constraints you have encountered on individual projects.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

16. PROJECT MANAGER Manages the Project Constraints
Shown on this slide is Henry Gantt (1861–1919), the father of planning and control techniques. The project manager must identify and manage project constraints.
Project constraints are identified and assessed by examining project scope, time, and cost requirements. For example,
Time (event, urgency, deadline) must be completed by …
Scope (purpose, performance level, requirements, features) …
Cost (cash, labor, supplies, equipment, quality, outsourced work, transportation) …
Managing project constraints can be viewed as a juggling act because if one of the constraints on the project changes, the project manager must evaluate if there is an impact on the other constraints
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

17. Triple Constraint: Basic Foundation of Project Management
Competing demands on projects:
Scope
Time
Cost
Consider all constraints equal unless otherwise stated
The triple constraint is the basic foundation of project management. As the slide illustrates, the triple constraint demonstrates competing demands on projects. These are typically scope, time, and cost.
All constraints are considered equal unless otherwise dictated by the sponsor. If one factor changes, another factor will likely be impacted.
Project quality requires balancing the triple constraints.
If the schedule changes, the project manager must determine if there is an impact to the project cost or scope.
If the budget changes, the project manager must determine if there is an impact to the project schedule or scope.
If the scope changes, the project manager must determine if there is an impact to the project budget or schedule.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

18. Strategies to Manage Schedule and Cost Constraints
Questions to ask:
Importance of each constraint?
Is possible to prioritize the constraints (rank order)?
What is the flexibility of a constraint?
Can the deadline or budget be negotiated?
What is the customers’ risk tolerance?
Prior to developing a schedule, determining the budget, or making procurement decisions, the project team must examine project constraints. The project manager should assess the impact of constraints prior to developing project management plans. Questions to ask include:
Are all three aspects of the triple constraint of equal importance (time-scope- cost)?
Can the constraints be prioritized (rank order)?
What is the flexibility of a constraint:
Is time critical?
Is the deadline absolute?
Is the budget absolute?
Can the deadline or budget be negotiated?
What is the customers’ risk tolerance?
Answers to these questions will help the project team develop a schedule management plan, cost management plan, and procurement management plan.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

19. Time Management Process Sequence
Define activities
Sequence activities
Estimate activity resources
Estimate activity durations
Develop a schedule
Control schedule
During project planning, the project team decomposes the work packages to produce an activity list composed of multiple activities.
The activities are sequenced, activity resources and durations are estimated, and a project schedule is developed.
A goal of the project team is to develop a realistic schedule. All of the project work that must be accomplished will be included in the schedule. The team will develop a schedule management plan to define how the schedule will be created, what scheduling tools will be used, a sequence of how the work will be performed, and how the schedule will be managed. The sequence to developing a schedule starts with defining activities, which are then sequenced, estimates are determined for the resources required to perform the work, estimates are determined for the duration required to complete the work, and finally the scheduled is produced that will be followed in project execution.
The schedule is monitored and controlled during project execution.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

20. Time Management Processes and Outputs
The major or key outputs for each of the six project time processes are indicated on this table.
First, the planning process group will define activities.
The key outputs are an activity list and a milestone list.
Second, the planning process group will determine the sequence of activities.
The key outputs of the sequencing will be a project schedule network diagram.
Third, the planning process group will estimate activity resources.
The key outputs of this activity are activity resource requirements, and a resource breakdown structure.
Fourth, the planning process group, will perform estimations of activity durations.
The key outputs are activity duration estimates.
Fifth, the planning process group will develop the schedule.
The key outputs of this activity are a project schedule and a schedule baseline.
Finally, a team should commence the process of monitoring and controlling. This involves the activity of controlling the schedule.
The key outputs will be work performance measurements and change requests if the requirements of the project change.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

21. Developing a Project Schedule
Activities are sequenced (predecessors and successors are determined)
Activity paths are determined
Duration of each path is calculated
Critical path is identified (longest path & determines the soonest the project will complete)
The project schedule can be developed after the following activities occur:
All activities are sequenced (predecessors and successors are determined).
Activity paths are determined.
The duration of each path is calculated and the critical path is identified. (It is the longest path and determines the earliest the project will complete.)
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

22. Managing Project Time, Cost, and Procurements Summary—Lecture a
Work Breakdown Structure
Work packages to list of activities
Project time and cost management activities
Define, sequence, and estimate activities
Develop schedule
Develop budget
Control budget
This concludes Lecture a of Managing Project Time, Cost, and Procurements. In summary, you have learned about the WBS and how to use it to show the entire structure of a project from beginning to end including how to use it to examine the discrete activities. This information informs project time and cost management activities and impacts developing a project schedule as well as estimating costs, determining a budget, and controlling the budget.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

23. Managing Project Time, Cost, and Procurements References—Lecture a
Fleming Q, Koppelman J. (2006) Earned Value Project Management. 3rd ed. Newtown Square, Pennsylvania: Project Management Institute (PMI).
 Fleming Q. (2003) Project procurement management: contracting, subcontracting, teaming. 1st ed. FMC Press; 2003.
 Houston S, Bove LA. (2010) Project Management for Healthcare Informatics. New York: Springer Science + Business Media, LLC.
Kerzner H. (2009) Project Management: a Systems Approach to Planning, Scheduling, and Controlling. 10th ed. Hoboken, NJ.:Wiley.  
 Project Management Institute, A Guide to the Project Management Body of Knowledge. 4th ed (2008).Newtown Square, PA: PMI.
Scwalbe K. (2009) Information technology project management (with Microsoft Project 2007 CD-ROM). 6th ed.; Boston: Cenage Learning.
Stackpole C. (2009). A Project Manager’s Book of Forms: A Companion to the PMBOK Guide. Hoboken, N.J.:Wiley;
Wysocki, RK . (2009) Effective project management: traditional, agile, extreme. 5th Edition. New York: Wiley; 2009.
No audio.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a

24. Managing Project Time, Cost, and Procurements References—Lecture a
Charts, Tables, Figures
Table 6.1. Project Activities by Process Groups. Courtesy of Theron Feist.
Table 6.2 Time Management Outputs and Processes. Courtesy of Theron Feist.
Images
Slide 4: Process Group Sequence. Courtesy of Theron Feist.
Slide 7: Collect Process Requirements. Courtesy of Theron Feist.
Slide 8: Define the Scope Process. Courtesy of Theron Feist.
Slide 9: Create the WBS Process. Courtesy of Theron Feist.
Slide 10: Work Breakdown Structure (WBS). Courtesy of Theron Feist.
Slide 11: Work Breakdown Structure. Courtesy of Theron Feist.
Slide 12: Define Activities Process. Courtesy of Theron Feist.
Slide 13: Developing Schedule. Courtesy of Theron Feist.
Slide 16: Henri Gannt. Creative commons: Wikipedia. Available from:
No audio.
Health IT Workforce Curriculum Version 3.0/Spring 2012
Introduction to Project Management Managing Project Time, Cost, and Procurements Lecture a