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Project Management-MS-52

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1 Project Management-MS-52
Created by : PCTI Group

2 What is project? A project is a set of activities which are networked in an order and aimed towards achieving the goals of a project. A programme of non-routine work bringing about a beneficial change. Has a start and end date Constrained by cost, time and quality Scope of work that is well defined A project is a set of non-repetitive activities which create a unique product or service.

3 Examples of a project 1.commissioning a new industrial unit
2. Construction of a house 3. Setting up of an office 4. developing a technology 5. Launching a new product in the market 6. Conducting a seminar 7. Writing of a book

4 What is management? Management is the technique of understanding the problems, needs and controlling the use of resources such as cost, time, manpower, materials etc. Project management means : The art of controlling the cost, time, manpower, hw and sw resources involved in a project.

5 Important definitions:
Project cycle: A project cycle basically consists of the various activities of operations, resources, and the limitations imposed on them. Resource : it refers to manpower, machinery, money and materials required in the project. Scope : it refers to the various parameters that affect the project in its planning, formulation and executions.

6 Need for Project Management:
Project mgmt. is necessary because: A project requires huge investment which should not go waste. A loss in any project would have direct or indirect impact on the society Prevent failures in project Scope of the project activity may undergo a change Technology used may change during the course of project execution. Changes in economic conditions may affect a project.

7 Players : The players in a project management are the individuals and the organizations That are actively involved in the project Whose interest may be affected by the outcome (success / failure )of the project. Exert influence over the project and its result. Players are also called “stakeholders ” of the project.

8 Who is project manager? A project manager is a person who manages the project. The project manager is responsible to carry out all the tasks of a project

9 Key Responsibilities of Project Manager :
Budgeting and cost control Scheduling tasks Allocating resources Tracking project expenditures Ensuring technical quality Manage relations with the customer and company

10 Phases of project mgmt Life cycle:
Analysis and evaluation Marketing Design Inspecting , testing and delivery Post completion analysis

11 Project management principles
Five dimensions that must be managed on a project Features Quality Cost Schedule staff

12 What is feasibility study?
1. After the identification stage, the project ideas are subjected to a process of preliminary filtration through pre-feasibility study. 2. This involves the study of the project idea at a more elaborate level than that carried out at the opportunity study state. This is an intermediate stage between an opportunity study and a fully-fledged feasibility study After project formulation or a detailed techno-economic feasibility study this stage is recommended.

13 Outline of a pre-feasibility study
Executive summary Project background and history Analysis of demanded supply Analysis of inputs Location and site Engineering & technology Organization Manpower Execution schedule and methodology Financial & economic evaluation

14 Project mgmt is a Team Work
- Proper communications - Feedback system Reliability on system Good team mgmt.

15 Why do projects fail? A project may fail because of one or more of the following reasons- Projects objective not in line with business objective Project mgmt. not observed Non-dedicated / Less qualified team Lack of complete support from clients No prioritization of project activity from an organizational position Absence of smooth communication between involved parties.

16 Steps of a good project Mgmt. are:
define the project Reduce it to a set of manageable tasks Obtain appropriate and necessary resources Build a team to perform the project work Plan the work and allocate the resources to the tasks. Monitor and control the work Report progress to senior mgmt. Review it to ensure that the lessons are learnt and widely understand.

17 The key issues at the planning stage of a project
-key stages of the project Project logic diagram Key stages responsibility chart Estimation for all key stages Optimized project Gantt chart Updated and reviewed project risk log Risk mgmt. forms for new high risks Project operating budget

18 Project planning process
1. Identification process 2. Review process 3. Analysis process

19 Project organization 1. Initiation 2. Planning 3. Executing 4. Control
5. close

20 What is WBS? WBS is the technique to analyse the content of work and cost by breaking it down into its components parts. - The entire process of a project may be considered to be made up on number of sub process placed in different stage called the Work Breakdown Structure (WBS)- WBS is produced by identifying the key elements , breaking each element down into components parts and continuing to breakdown until manageable work packages have been identified. WBS does not show dependencies

21 Mapping of economical zones rather than geographic zones
Continuous floating virtual inventory to save time and efforts

22 Work Breakdown Structure (WBS)
Work Breakdown Structure (WBS) breaks down a project into smaller , measurable and managerially useful constituents having well defined scope. EXAMPLE OF WBS: PROJECT -> TASK -> SUB TASK-> ACTIVITY

23 Estimation Approaches
Bottom up Approach Top down Approach Estimation Tools: Algorithmic model Expert judgment Analogy Automated estimated tools for cost and schedule

24 Characteristics of project Mindset:
Time Responsiveness Information sharing Processes Structured planning

25 Market & Demand Analysis:
What is the need for Demand Forecasting? All business planning starts with forecasting . Capital investment, like procurement of materials and production planning has to relate to demand forecasting. High volumn high tech mass production systems have further high –lighted the importance of accurate demand forecasts. It enables the personnel to know about market forces, currents, cross-currents and under currents relevant to demand behaviour.

26 Levels of Demand forecasting
1. Firm Level : if the exercise aims at forecasting demand of firm’s products locally at state, region or national level, it is a micro-level of demand forecasting . Sometimes, forecasts are required for company’s products in specific industry or market segment. 2. Industry level : it focus on industry as a whole for the region and or national level. These forecasts may be undertaken by a group of companies or by industry / trade associations.

27 3. National level: Demand forecasts at national level include parameters like national income, expenditure, index of industrial / agricultural production etc. estimating aggregate demand of products at national level facilitates govt. decisions for imports, exports, pricing policy etc. 4. International level: companies operating in multinational markets would require similar forecasting of demands for its products, trends in consumption etc. at international level Managerial economics play a leading role in masterminding these forecasts at firm, industry, national and international levels.

28 Criteria for a good forecasting method :
Accuracy in forecast Economy of forecasts Quick results Availability and timeliness Durability Flexibility

29 Calculated methods of Forecasting
Simple average : sum of demands of all periods number of periods Moving Average Method : sum of demands of chosen periods number of chosen periods Weighted moving average = W1*D1 + W2D2+ …….+ Wn*Dn Exponential smoothing methods : W *(Dt-1)+(1-w)(Ft-1)

30 Human Resources Project mgmt. = Planning / Controlling / Monitoring
The basic hunger of all the human beings is to feel important. Managers can incorporate this in their style of decision making and become more subordinate oriented.

31 Concept of Project Driver
D- Directing individuals and teams - by motivating & bias free decisions. 2.) R- Reinforcing commitment & Excitement by praise & fulfilling commitment. 3.) I- Informing everyone on the project by proper communication 4.) V-Vitalizing teamwork – by strengthening team by resolving conflict 5.) E- Empowering at all levels-by providing power of actions, reward & punishment. 6.) R-Risk taking & creativity – by innovations and controlling risk.

32 Financial Aspects Project mgmt. Allows the execution of diverse and complex tasks in a tight time frame through the involvement of a number of persons and agencies. The a/c system has to be designed to particularly meet the requirements unique to each project. The classification of receipts and expenditures must be structured into “heads of Accounts” in such a manner that financial information sought by various entities – internal and external may be readily and economically compiled

33 Aspects of accounting 1. Financial aspect 2. Physical aspect
Few a/c heads are Capital, shares, loans, debentures, discount , preliminary expences and bank a/c all these heads reflects financial aspects of accounting. Land, building, vehicles, plant & equipment, furniture,fittings, depriciation for asset accounts, capital works-in-progress, preliminary expenses , loans and advances granted, cash and bank balances, current liability heads are reflecting physical aspect of a/c

34 Accounting Procedure * An Accounting procedure of Project management involves the Preparation of Profit & loss a/c, balance sheet. A/c system must ensure that all relevant expenditure data are captured and compiled speedily , accurately, and at a reasonable cost. No type of expenditure transaction should be allowed to go unreported, particularly advance payments and adjusted transaction Basically all project related expenditure on equipements, materials, supplies, salaries, wages, transportation, interest, power, water etc. incurred during the implementation stage is capital expenditure and must be included in work-in-progress a/c.

35 Implementing the Financial Plan
When giving effect to the financial plan the project’s finance manager must keep in mind the following points : funds involves certain cost in the form of cash outflows. Cash must be readily available to meet different liabilities as the project progresses

36 Authorization of Expenditure
Budget should be consistent with the objectives of the project. Budget should be consistent with the quality standards of the project. And the budget should be realistic i.e be neither an over-estimate nor an under-estimate. Smoothly integrate with the accounts classification system.

37 The concept of CONTROL Control is an integral part of any management process which comprises of Planning Organizing Actuating Controlling * Fundamental to control is the existence of a norm (the “should be”) with which the measured results of actual actions are compared. * For effective control, therefore, up-to-date and precise costing and performance data must be available at brief intervals of time. * The mgmt. Structure should be so trim and well-knit as to be able to respond speedly and decisively.

38 Factors affecting Control of Project Cost
Irrespective of the size of a project one basic objective of the owner is to complete it to the specifications in time and at the lowest cost. Basically time / performance / cost constitute the triad which demands to be managed in an integrated manner. The overall project cost exist at the stage of feasibility study , when all possible options are open to the owner. The potential of cost reduction steadily declines through the stages of design, engineering etc.

39 Real cost control demands cost consciousness right from top mgmt
Real cost control demands cost consciousness right from top mgmt. To the lowest levels of the project organization. All must be properly motivated towards cost control to make it successful. Changes in scope in terms of description, justification of needs, alternatives considered , requirements of plant, equipment and resources,schedule for implementation and financial implications of the project is responsible for change. Delays in terms of slow progress, delayed supply , delays in govt. clearances ,law and order problems, inadequate infrastructure, constraint of funds.

40 Variance analysis approach to cost control
It involves periodically variations between the actual and the budgeted costs. The lesser the variation the more “controlled” the project is supposed to be. Drawback of this method : this approach is not considered suitable for effective project control since it neither gives any clue to the owner about the value of the work already done not does it help him in knowing the direction in which the project is heading.

41 Performance analysis approach
Performance analysis constitutes an improvement over the variance analysis approach. Use of the techniques involves certain terms and concepts like : 1.)Budgeted cost of work schedule (BCWS) : budgeted cost of work schedule is the sum of the budget for all work schedule to be done plus an appropriate portion of the budget for overheads for the relevant time period. 2. Budgeted cost of work performed (BCWP) or “earned value “this is the sum of the budget for work packages (including in-process work) or their portions actually completed , plus an appropriate portion of the overheads budget for the relevant time period

42 3.) Actual cost of work performed (ACWP): this is the sum of direct costs actually incurred and the indirect cost applied in accomplishing the work performed within a given time period. 4.) Budgeted cost of total work (BCTW) this is the sum budgeted costs of all activities plus the overheads for the entire projects. 5.) Cost variance (CV) equals the budgeted cost of work performed less the actual cost of work performed CV= (BCWP-ACWP) CVP=CV / BCWP Schedule variance (SV)= BCWP-BCWS SVP - Schedule variance percentage SVP=SV / BCWS

43 Project development process
Pre-investment phase, leading to the authorization for a particular project idea under prevailing conditions. Investment phase, involving detailed design and actual implementation, leading to fructification of erection of relevant assets. Operation phase, following he start-up of the completed project, now the project would hopefully produce the stream of “benefits” for which it was originally conceived

44 Pre-Investment phases:
1. Identification 2. Preliminary filtration 3. project formulation 4. final evaluation and decision

45 What is opportunity studies ?
Identification of suitable industrial or commercial opportunities for investment necessitate first and foremost an objectives of the investor. Investor needs to become aware of the existence of possible investment opportunities.

46 AOA (Activities on Arrows) diagram
Activity : an activity is the smallest unit of productive effort to be planned , scheduled and controlled in a project and is represented by an arrow in a network diagram. Event : the starting of an activity or the ending of an activity is called an event. Simple event : is one which has only one preceding activity and only one suceeding activity . Merge event: it is one which has more than one preceding activities and only one suceeding activity.

47 Burst event : A burst event is one which has only one preceding activity and more than one succeding activities. Combined merge & burst event : An event having more than one preceding activities as well as more than one succedding activities is a combined merge and burst event.

48 Network diagram A network diagram is a set of activities and events represented by arrows and circles respectively. The orientation of arrows is usually kept from left to right signifying the flow of time from left to right . Large project consume a huge amount of resources and have to be planned , monitored and controlled at various levels this is achieved by drawing different levels of project network diagram as it includes lots of activities and events ex : a company manufacturing and selling consumer products has recently developed a new brand of soap and has prepared a project for launching the new brand.

49 Time analysis It helps to answer such questions like :
“in how much time can I complete the project” Once the project network and the activity durations are known time analysis is used Time analysis by : Forward pass Backward pass

50 Forward pass : 1.) what is the earliest time at which we can start the activity ? 2) What is the earliest time at which we can finish the activity

51 Backward Pass: 1.) what is the latest time by which the activity has to start ? 2) What is the earliest time by which the activity has to be finished?

52 Critical Path : 1.The project has to be finished at its earliest completion then some activities cannot be delayed at all. These are the activities with zero slack and they are called critical activities as their timely completion is critically important for the timely completion of the project. 2. Basically by joining the critical activities critical path is obtained . 3. The critical path is also the longest path from the start of the project to its completion / finish. 4. A single project can have more than one critical path 5. W hile a project is under execution , critical activities need to be monitored very closely as any delay in their completion is immediately reflected as a delay in the project completions

53 Slack time: Some activities have some looseness and others do not
Slack time: Some activities have some looseness and others do not. This property is referred to as activity slack

54 Time estimates : When some activities where the degree of uncertainity is high it may be easier and more appropriate to get 3-time estimates for each activity duration rather than trying to get the best estimate. Optimistic time : if all the conditions are favourable , then the minimum time in which an activity can be finished is called the optimistic time of the activity concerned. It is impossible to finish an activity in less than its optimistic time.

55 Pessimistic time : this is the reverse of optimistic time if all the conditions are unfavourable, then the maximum time in which an activity will be finished is called its pessimistic time . It is impossible for an activity to take longer than its pessimistic time for finishing. Most likely time : its reality , some factors may be favourable and some others unfavourable for the timely finishing of an activity will be somewhere between the optimistic and the pessimistic times. the most likely time is that duration of the activity which has the highest probablity of occurrence among all possible values of the activity duration.

56 AON (Activity-on-node) diagram :
It also uses circles and arrows but the circle now represent activities “activity B can start only after activity A has been completed A B


58 Precedence network diagram (PDM):
1. In these diagram , activities are represented as square or rectangular nodes. 2. Flow of time from Left -> Right 3. Types of Relationship FS / SS / FF/ SF A B

59 Types of Relationship :
FS : finish to start: activity B cannot start until n weeks after activity A is finished. SS : Start –to-start: activity B cannot start until n weeks activity A is started. FF : finish to finish: Activity B cannot finish until n-weeks after actiivity A is finished. SF : start to finish : Activity B cannot finish untill n weeks after activity A is started

60 Project planning & scheduling :
1. establishing the project goals & objectives. 2. Defining the work 3. estimating the activity duration and defining activity interdependencies 4. Carrying out time analysis of the project. 5. Establishing the resource availability and requirements

61 6. Developing a resource feasible schedule
7. Analyzing activities to find feasibility of crashing 8. Optimising the baseline plan & schedule 9. Freezing the baseline plan & schedule. 10. Continuous monitoring

62 PERT / CPM : It is a new tool of planning monitoring & controlling projects. NASA called it “program evaluation and review technique” while Dupont called their system “critical path method”. This tool enables the managers to capture complex inter-relationship between different tasks in large projects as well as enable them to handle uncertainties

63 4. These techniques enable a project manager to use the graphical method of representation of a project with indications of the time required to complete each activity. 5. A network depicts the sequential relationship of different activities. 6. The time taken by each activity and the longest chain of the activities from the beginning to the end known as the “critical path” . 7. This chain of activities controls the total time required to complete a project and deserves the greatest attention from the project manager.

64 8. PERT was applied for activities where durations were not known .
9. These methods of working out the time required for project completion have been extended to include the costs for each activity, the resource required for each activity and the uncertainties involved with each activity . 10. To deal with the uncertainities associated with the project 3-estimates of time obtained – Optimistic (A) Pessimistic (B) Most likely (M)

65 It is possible to work out the expected time for each activity
TE = A+ 4M + B / 6 It is possible to calculate the standard deviation (SD) for each activity by : SD = B- A / 6 Using these expressions, planners can work out the expected completion time of the project and the standard deviation for each activity.

66 The PERT –Cost system: PERT is essential for large projects it involves the preparation of detailed schedule of activities and its translation into a network diagram after considering preceding requirements. Previously it focus only on time mgmt but now on cost mgmt , it involves assignment of costs to individual project activities. this system uses the following two sets of data for activity-wise cost control. Estimates of costs for activities Actual costs for the same activities / groups

67 PERT / CPM Time Calculations :
PERT probability calculation and project appraisal can be carried out by Computer also. The critical path calculations are highly amendable to computerizations . The essential inputs for these calculations are the following : 1. start node 2. end node 3. Duration 4. Description of the activities 5. Resource requirements 6. Cost 7. Agency

68 Materials & Equipment Mgmt.
Management of projects by network analysis provides an integrated techniques of planning and control by breaking the entire project into various package system which are further blown into various functional components like mechanical, piping, civil, structural, electrical , instruments etc. each of these functions is further divided into design and indenting, ordering and payment expediting and inspection transportation and storage erection and commissioning . *Procurement of materials and equipment spans across percent of the overall project duration. If we carry out delay analysis of projects in India, late delivery of materials and equipment would emerge as the most important factor contributing to delay in projects implementation.

69 What is DPR? A DPR is a final, detailed , appraisal report on the project and a blue print for its execution and eventual operation. 2. A well planned DPR is prerequisites of project success. 3. The DPR should also include a time schedule for obtaining all the required clearances. 4. The DPR must ensure that the provisions are adequate for fulfilling all the legal requirements obtaining in the locality where the project is to come up. 5. DPR should devote a section specifically to deal with packaging, storage and handling and dispatch of the finished products 6. Consultant prepared the DPR

70 The 4Ps Product Price Promotion Place

71 Type of organization structures:
Organization is structured into divisions, dept. and sections. Work flow along the line of command that is each individual reports to one person only. Communication channels are well defined.

72 Advantages: Budgeting and cost control is easier
Technical skills are better Flexibility in use of manpower Good control over personnel Capability of quick response exists Communication channels are vertical and well established

73 Disadvantages: No one individual is responsible for the total project
Co-ordination is complex No customer focal point Loss of motivation or innovation Ideas are function-oriented and not project-oriented

74 Matrix organization: Matrix form of organizational structure combines advantages of pure functional structure and pure project structure and is ideally suited for companies which are project driven. A typical matrix also called the grid organization structure

75 Hierarchical organization structure:
In this organization is structured into divisions, dept., and sections. Work flow along the line of command. Each individual reports to only one person so communication channels are well defined.

76 Advantages of hierarchical organization:
Budgeting and cost control Technical skills are better Flexibility in use of manpower Large manpower base to work with Good control over personnel Communication channels are vertical and well established

77 Disadvantages: No one individual is responsible for the total project
Coordination is complex and longer lead time No customer focal point Loss of motivation or innovation Ideas are function-oriented and not project oriented

78 Complexities of matrix organization structure:
Power struggle between horizontal and vertical hierarchy Decision making by group may degenerate into groupitis Critics voice their concern whether excessive supervision of matrix structure is really necessary Too many people involved in decision making may disturb the problem Organization might start suffering by being overly obessed with internal relationship.



81 Advantages of Matrix organization
Project manager maintain control over project resources and costs through functional managers Policies and procedures for each project can be spelt out separately provided they do not contradict company policies and procedures Conflicts are minimal Better balance between time , cost and performance Authority and responsibility are shared

82 Types of Matrix organization
Medium size organization Large organization Matrix with separate project engineering functions

83 What is the objective of Project MIS
Record and report relevant info and the status of various components of the project in such a manner as to bring the most critical activities directly to the attention of concerned managers at appropriate level. 2. Highlight deviations from the plan 3. Form the basis of updating of project schedule wherever necessary 4. Identify and report on critical areas

84 How to desing project MIS?
1. The objectives of each format or report in brief. 2. The distribution chart 3. The periodicity of the report 4. The persons responsible for preparation of the reports 5. The timing of the reports 6. The sources from which information has to be gathered in the preparation of reports.+

85 What is EIA? EIA stands for environmental impact assessment, it identifies the environment in which a project is to be implemented? Areas of impact are: surface water quality, air quality, erosion, land quality, fisheries, forests , terrestrial wildlife, noise, aesthetics, industries, resettlement, historical significance, public health and socio-economic factors.

86 What do you mean by saying project DRIVER?
D-directing individuals and teams R-reinforcing commitment and excitement I-informing everyone on the project V-vitalizing teamwork E-empowering at all levels R-risk taking and creativity




90 Economic Analysis of Projects or Social cost benefit analysis (SCBA):
Economic analysis is done from the viewpoint of society or economy as a whole . Economic analysis of projects should cover whether: It fits into national priorities It contributes to the development of that sector of economy Benefits justify the consumption of scare resources of the nation

91 Sectionalising planning of materials:
Projects comprise of various types of hardware. For the use of planning and scheduling, the entire project can be divided into several sectional components like: Civil work electrical work Structural work instrumentation work Mechanical work Piping work

92 What are the objectives of project mgmt. information system(PMIS)?
The project information / monitoring system would have to have the following objective Record and report relevant information and the status of various components of the project in such a manner as to bring the most critical activities directly to the attention of concerned managers at appropriate level Form the basis of updating of project schedule wherever necessary

93 3. Highlight deviations from the plan and also indicate the effects of such deviations on the overall status and completion of the project. 4. Identify critical areas and highlight the corrective action that needs to be taken 5. Provide a basis for the evaluation of the performance of the functions of various managers and dept. by regular comparisons with budgets / plans / schedules

94 Essentials in designing PMIS
The objective of each format or report in brief The distribution chart The periodicity of the reports The persons responsible for preparation of the reports The timing of the report The sources from which information has to be gathered in the preparation of reports


96 Integrated project mgmt. information system:
This system allows total project information to be structured into a number of data sets which are integrated by the software. Some of the relevant datasets for a large project are: - drawing dataset vendor dataset - network dataset job card dataset - cost dataset rates dataset - material dataset resource dataset - history dataset

97 Integration of these independent datasets through various processing modules enables high control of project . It permits: -horizontal integration between disciplines, e.g. cost / schedule integration or cost estimates cost accounts and project schedule integration via work breakdown structure.

98 Empowering project personnel
Power implies ability to make something happen. Everybody wants more power few admit they have enough of it. At all levels people feel that their situation would have been better if they had more power is also a great motivator.

99 Types of power: Positional power : it is the power associated with authority emanating from hierarchical location Personal power : it is the personal competence-skills and abilities possessed by individuals and travels with him.

100 Total quality mgmt. in projects:
TQM basically stands for total quality mindset. If we are to achieve TQM fail safe system of project mgmt, we not only require an unimpeachable commitment to quality but also to the necessary supporting procedures and documentation. We have to achieve excellence in project mgmt. TQM in project requires an uninterrupted commitment to quality along with supporting procedures and documentation. Smooth, uninterrupted co missing results from a large number of factors which need to be monitored and controlled from the early stages of project execution.

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