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Managing Projects for Success_EN

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Satesh Namas

on 28 March 2013

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Transcript of Managing Projects for Success_EN

Top Management Presenter: Dr. Satesh Namasivayam Managing Projects for Success Defination of a project CHAPTER 1 - Fundamentals of Project Management A project in business and science is a collaborative enterprise that frequently involving research or design, which is carefully planned to achieve a particular aim.

It is an idea that is converted into reality.

Non-repetitive: one off, unique, first time, special case, different factors
Low-volume, high-variety: non-operation-like
Start and finish: timeline Why project management? This subject provides us a framework to deal with projects.

It is the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific project goals and objectives. Benefits of project management The target is to achieve successful outcome by

Having better understanding of project scope and its purpose
Ensuring that the time is sufficient for the completion of project
Ensuring that the projects are aligned with organizational goals
Providing clear clarification of team members’ roles
Understanding the project scope
Creating the ability to measure performance
Being able to identify, monitor and track milestones
Providing the ability for improved mitigation by early assessment of project risks
Improving communications between project participants How to define a successful project? A project is considered successful when project scope is covered and objectives are fulfilled:

-within a given time
-within a pre-determined cost
-product delivered as per required quality standard Project management process Project description, priority analysis, stakeholder analysis, complexity analysis, policies & procedures, risk management, preliminary scope statement Initiate (Pre-launch) Estimating cost & duration, Work Breakdown Structure (WBS), network diagram, Gantt chart, tools Planning (Launch) Validating scheduled plan, project progress review Executing Monitoring, managing changes Controlling & Monitoring Project deliverable, handover, review, implement Closing (Implement) Project manager's role... Organizational Structure Operations R&D Finance Project 4 Project 3 Project 2 Project 1 Human Resources Others Procurement Line manager
ensure project flows smoothly
define how task is done
provide sufficient resources
ensure high efficiency system Project manager
ensure project objective is achieved
responsible for task delegations
responsible for integration of departments
monitor project schedule Understanding the concept... CHAPTER 2 - Initiating Projects What happens in the Initiation stage?

Imagine you’re working in a company..
You are an engineer who have just innovated an brilliant idea..
You want to turn your idea into a project..
You want to sell your idea to your CEO so he will agree to fund your project..
You do your background study of the project requirements.. Priority Analysis Attributes that will affect quality What happens in Initiation stage?
Imagine you're working in a company...
You're an enginner who have just innovated an brilliant idea...
You want to turn your idea into a project...
You want to sell your idea to your CEO so he will agree to fund your project...
You do your background study of the project requirements... What happens in initiation? Among the things you look into are:
Background of the project – How the idea originates? What issue are you trying to solve?
What do you want to achieve at the end of your project?
What are the priorities?
Who are involved and affected by the project?
How much would it cost?
Do we have the materials, technology and manpower we need?
How long would it take to complete?
What are the risks involved? What happens in initiation? Project proposal content Table of Contents
Executif Summary
Introduction (introduction of project)
Objective (objective of project)
Materials / Resources
Proposed Budget
Project Scope and Key Deliverables
Project Sponsorship and Major Stakeholders
Gantt Chart
Linear Responsibility Chart / Organizational Structure (WBS)
Complexity Assessment
Risks and Risk Management
Conclusion
Refference Executive summary Project Description
Background

Objective
Scope

Deliverable
Budget
Deadline Introduction to project, past work, success and failures, what has not been addressed
What are you trying to accomplish
Work that needs to be accomplished to deliver the product with its functions and features
What will be produced at the end of the project
A rough estimate of how much the project will cost
Target date for completion Priority analysis is a tool for understanding the relative priorities within a project. Project = Schedule + Scope + Budget + Quality Ensure time is met! Product specification as agreed! Cost is minimised! Ease of configuration
Ease of adaptability
Quality of user documentation
Aesthetics & workmanship
Cost of maintenance
Defect rate
Reusability Stakeholders Why are they important? Who are they? Complexity Assessment Technical Complexity Policies & Procedures Need to complete by Week 14
No artefact in Engineering Fair
Affect project marks

To design a bike that can fly for Harley Davidson
Lose client’s trust

Not to exceed RM1,000,000.00
Would create losses in project

To ensure bike is maintenance-free for the first 3 years
Customer satisfaction jeopardized
Reimbursement of maintenance fee Example Schedule: Consequences: Scope: Budget: Quality: Consequences: Consequences: Consequences: Project team’s priorities may not agree with:-

Customer’s priorities
Sponsor’s priorities
CEO’s priorities

It is important to discuss this upfront for everyone to be on the same page! Any organization or individual (internal or external) that has a stake or interest in the project, i.e. something to gain or lose from the project. Project Support Staff Board of
Directors Supplier Associations/
External Bodies End User Media Client Client Competitor Project Team Financial support
Political support
Happy staff
Technical support
Marketing opportunities
Satisfied customers
Increased business opportunities
Future projects Low complexity High complexity 0 1 2 3 4 Availability of Resources
Knowledge
Skills
New Technology
Scope Business Complexity Low complexity High complexity 0 1 2 3 4 Budget
Market
Time Scale
Geography
Policies & Procedures Source: Managing Projects to Success, Centre for Project Management, a Kapur enterprise Every project, directly or indirectly, will be governed by a set or sets of rules that may shape or effect the project. Internal Company guidelines, policies, purchasing procedures External International standards, government regulations, delivering restrictions, contracts So what you need to ask yourselves are… What are the potential restrictions of your project due to policies and procedure? Risk Management Risk? Risk is any future event that has a chance to occur, in which the occurrence may effect the performance or outcome of a project. What is risk management? +ve opportunity
-ve threat Risk management is a planned and systematic process of identifying, assessing, monitoring and controlling risks.

Risk management aims to:
Maximise business opportunities
Choose optimum business solution
Optimise chances of achieving objectives How to achieve? By overseeing all possible risks and planning ahead. Identify
Prevention
Mitigation Risk identification, management and assessment should be incorporated throughout the life of the project. It should be continuous and documented.

The idea is to list down all possible risk, come up with mitigation plans way before it happens! Organisational
Structure Functional organisation Matrix organisation Task force There are several ways to integrate the project team in a readily built organizational system. line department 'lends' resources
no dual reporting (dual boss) project based
no specialised line department most common
combination of both structure
maximise resources utilisation
dual boss - may cause conflict! Why do we need to plan? CHAPTER 3 - Planning Projects Easier


Faster


Cheaper Tasks planned before execution
Difficulties overseen

Know what’s coming
Risk mitigation plan determined

Promote prevention rather than cure Planning a project No more conceptual, everything is detailed

Time
Task breakdown
What is the duration for one task
What can start first, what has to wait
Resource
Know the skills you need
Know the equipment and materials you need
Know the team members
Cost
Detailed breakdown
Close to actual cost EFFORT
DURATION
RESOURCES
COST Estimating How much effort is required?
How long is the project duration?
How much does it really cost?
Who will be the team players? Estimating fundamentals Include uncertainties
Ranges
Verify assumptions
Prices, duration
Resist estimating unverified assumptions
Expiration date
Price may increase
Accurate task plan
Smallest task item
Avoid high level estimation
Establish baseline and stick to it
Initiating ±35% Planning ±15%
Depending on projects Definition of Activities Functional structure Process to obtain Activity List, also known as the Work Breakdown Structure (WBS). Simply spells out the tasks needed to produce project deliverables and to complete the project/phase. Defines activity, must be small enough to estimate, schedule, monitor, and manage. Why we need this?
To break down a huge project into small, meaningful, do-able tasks
Checklist
Avoid ambiguity
Basis for estimating time, cost, resources Projects can be broken down into:
Functional structure
Physical structure
Phase structure

Does it matter how you break it?
Sometimes, yes! task based, departments, discipline
deliverable based, items to complete
research, conceptual, etc. Physical structure Phase structure Work Breakdown Structure Rules of WBS - 1 Mutually exclusive
Duplication of work eliminated
Ambiguity Rules of WBS - 2 Mutually exclusive
Duplication of work eliminated
Ambiguity
The 100% rule
Sum of all work packages is 100% Rules of WBS - 3 Mutually exclusive
Duplication of work eliminated
Ambiguity
The 100% rule
Sum of all work packages is 100%
Know when is enough
Small enough to enable estimation – resources, cost, time Work Breakdown Structure Refurbishing the garden You are planning to refurbish your garden. It is a DIY project that your younger brother and sister will help. Since your parents are paying for the expenses, you should consider their preference.

Create a WBS that will include but not limited to the following:
Analysis/survey
Design
Development Integrating WBS with organisational structure WBS Work package Organisational
structure Organizational breakdown structure (OBS) WBS coding with information system 1. Product Production
1.1 Customer Specification
1.2 Customer Requirements
1.3 Technical Knowledge
1.4 Control

2. Marketing
2.1 Media
2.2 Marketing Strategy
2.3 Control & Assessment

3. Finance
3.1 Budget
3.2 Source of Materials Network Base Activity – time consuming element in a project
Work package from WBS forms activities
Each work package can consist of one or more activities
Network – activities arranged in a systematic order
2 methods 1. Nod Activity 2. Arrow Activity Network diagram formation Activity – an element in the project that consumes time, that might not need additional resources
Joint Activities – activity that consists of 2 or more activities as its predecessor (activity that depend on more than one activity to proceed)
Parallel Activities – activities that can occur without depending on one another (activities can happen at different timing) Path – a series of activities that depend on one another that is connected in order
Critical Path – the path that takes the longest time in the network diagram
Delay in the critical path will affect the entire project! Start/Finish – the point when an activity starts or ends. It does not take time
Branching activity – activity that has more than one activity after it Basic rules for network diagram formation Network diagram starts from left to right

An activity cannot start until all predecessor activities are completed

Each activity is assigned a unique number. Numbers should in ascending order.

Statements are not allowed (eg, If… then…)

Looping is not allowed Basic communication Predecessor
activity that has to be completed before the next activity
Successor
activity that follows the activity beforehand
Parallel
activities that occur alongside another activity Activity sequencing The first step to estimating duration.
Process to develop the Network Diagram or PERT chart.

Sequence of activities to show dependency of one activity to the other. If duration estimates are added, critical path can be obtained.

Why do we need?
Gives clearer picture of project flow of activities
Simplify planning and scheduling of large projects
Useful to identify possible parallel activities Most common method of establishing the sequence:

Activity on Node (AoN) technique
Precedence Diagramming Method (PDM)

Finish-to-Start
Finish-to-Finish
Start-to-Start
Start-to-Finish Network diagram Task A and C can start at the same time
Task B can start only after task A is completed
Task D can start only after task C is completed
Task E can start after both tasks B and D have been completed Network diagram Duration Estimation Duration estimation is determined by two main factors:
Task duration
Effort Example:
It takes 16 hours for one employee to complete a task. An employee is required to work only 8 hours a day. Hence, it takes 2 days to complete the task.

The effort for this task is 16 hours.
The duration to complete this task is 2 days.

Say the employee is working on another project and is required to split his time working on each project 50-50 %

The effort for this task is 16 hours.
The duration to complete this task is 4 days. Asks the employee to whom the task is assigned to
Most common
Different employees may have different estimates – skills, knowledge, work interruptions
Manager comes up with estimates
Based on knowing his team members – skills, knowledge and work interruptions
Manager gathers representative group and collectively estimate task effort and duration
Delphi method
Historical data
Past experience Critical path Critical path can be obtained when time is available on a Network Diagram

What is Critical Path?
The path through activities which has longest duration

Critical path does not necessarily contain critical task! Task A and C can start at the same time
Task B can start only after task A is completed
Task D can start only after task C is completed
Task E can start after both tasks B and D have been completed AON network - 1 Task A and C can start at the same time
Task B can start only after task A is completed
Task D can start only after task C is completed
Task E can start after both tasks B and D have been completed AON network - 2 A project contains 7 activities, A1 to A7. Draw a logical network for the project, given the following sequential relationships:
A2 can only start once A6 has been completed
A4 can only start once A7 has been completed
A5 can only start when A4, A6 and A7 have been completed
A6 can only start when A7 and A3 have been completed Time Estimation Time estimation of a certain task is determined by two main factors:
Task duration
Effort Asks employee to whom the task is assigned to (bottom up)
Different employees may have different estimates – skills, knowledge, work interruptions
Manager comes up with estimates (top down)
Based on team members skills, knowledge and work interruptions
Employee pressured to meet top requirement
Manager gathers representative group and collectively estimate task effort and duration
Delphi method
Historical data
Past experience How does a manager gets his estimates? Three point estimate Common rule for time estimating.
Optimistic, pessimistic, most likely.

Example:
Adam normally can finish a piece of cake in 3 minutes. However, sometimes he takes 5 minutes to finish it, especially when he is talking to Lee. When he is really hungry, he could finish it in 1 minute.

Most Likely (ML) 3 minit
Optimistic (O) 1 minit
Pessimistic (P) 5 minit From these data, there are 2 ways to obtain estimation of how long it takes for Adam to finish a piece of cake.

1. Triangular
2. PERT (Project Evaluation & Review Technique) AON network Time for each task on a Network Diagram is estimated. Estimated time is incorporated into diagram. We can now estimate duration of project. Critical path Critical Path on a Network Diagram is simply the path of longest duration. Hence, Critical Path in this example would be: Contoh 2 Find the critical path through the network, given:

A1 13 days
A2 2 days
A3 1 days
A4 3 days
A5 5 days
A6 5 days
A7 4 days Precedence Diagramming
Method (PDM) A network diagramming technique similar to Activity on Node diagramming but with a certain node format.

Advantages:
Help identify Critical Path
Help capture amount of time required
Help identify dependencies
Identify lead and lag times
Identify slack or float Time estimate based on dependency can be obtained via the forward pass and backward pass method.

Forward pass: method used to obtain Earliest Start and Earliest Finish

Backward pass: method used to obtain Latest Start and Latest Finish Planning a 'Bridal shower' Objective?
'Bridal shower' for Monica Project team?
Rachael & Phoebe Task??? Effort

Duration Number of person hours or person days required to complete a task
Time period required to complete the task
Number of work days required to complete the effort Why we need this?
Know project duration
Shows critical path
Develop schedule Effort

Duration Number of person hours or person days required to complete a task
Time period required to complete the task
Number of work days required to complete the effort How does a manager gets his estimates? Contoh 1 AON network ES Earliest Start
DUR Duration
EF Earlist Finish
LS Latest Start
F Float
LF Latest Finish Foward pass ES (current) + DUR (current) = EF (successor) ES Earliest time for an activity to start
EF Earliest time for an activity to finish
DUR The anticipated duration of the activity EF from predecessor activity is brought on as ES for successor activity Backward pass LS (current) - DUR (predecessor) =
LS (predecessor) LS Latest time for an activity to start
LF Latest time for an activity to finish Joins Foward pass
Use highest value of ES (Successor)

Backward pass
Use lowest value of LS (Predecessor) Contoh ES (current) + DUR (current) = ES (successor) EF (current) = ES (current) + DUR (current) ES (current) + DUR (current) = ES (successor) ES (current) + DUR (current) = ES (successor) Joins: Foward pass
Use highest value of ES (Successor LS (current) - DUR (predecessor) = LS (predecessor) LS (current) - DUR (predecessor) = LS (predecessor) Join: Backward pass
Use lowest value of LS (Predecessor) Float/Slack The amount of time that an activity can be delayed without causing a delay in the subsequent activity or project completion date. Float = LS - ES Free Float - amount of time that can be delayed in an activity without affecting the ES of a successor activity

Total Float - total time that can be delayed in an activity without delaying the completion time of a project Float = LS - ES Float = 0
Critical path = path of zero float Gantt Chart A project schedule in a form of bar chart.
Contains task duration details.
Allows users to monitor progress of project easily. Example Gantt Chart Gantt Chart VS Network Diagram (cc) image by anemoneprojectors on Flickr Network Diagram General picture
Progress tracking
New trial project
Breakdown of work not fully known
Understandable by whole team More detailed
Mainly used by project managers to check dependency of activities, fast track or crash project activities
Clearer resource allocation Ways to shorten critical path... How do project managers overcome the critical path?

1. Fast tracking
Shorten the time taken to complete activity
Converting series activities to parallel
2. Crashing
Shorten the time taken to complete activity by employing more resources for an activity
Crash time less, crash cost more
3. Reduce scope
4. Cut quality Resource Estimating Resource estimating includes equipment, materials and people.
Project manager must know the quantity and type of resources that will be assigned to each activity.
Must be planned and coordinated well to avoid issues such as lack of resources, resources being taken away, etc.
Review resource availability
Review WBS
Identify potentially available resources
Review historical information about the use of resources on past or similar projects
Quantify resource requirements by activity
Create RBS (Resource Breakdown Structure)
Availability of alternatives How??? Resource Profiling for each team member.

Factors to consider:
Skill level
Work Interruption
Multi Project Factor Profiling -
Skill level Example:
Proficient
fully experienced, subject matter expert
Competent
Competent in all task-related skills, solid knowledge of subject, good experience
Learner
Possess basic competencies for task, some subject knowledge, little experience
Novice
Some knowledge of subject matter, extensive training required Work Interruption Factor
(WIF) WIF = time lost due to interruption

Examples:
Network or computer breakdown
Software licensing renewal delay
Unexpected department meetings (not project meeting)
Enquiries from colleague, peer, manager
Personal matters

Work Interruption Factor Assessment:
Interviews with team members
Historical data Multi Project Factor The amount of productive time that is lost when a resource shifts effort back and forth between projects. Time Lost to multi project assignment Cost Estimating What does COST in Project Management focus on?
Cost of the resources needed to complete activities, eg. Labor, training for project, office expenses, travel for project, meetings, software and hardware for project, consulting, legal, software licensing, parties/celebration, etc.
The effect of project decisions on the cost of using, maintaining, and supporting the project, eg. The quality of the project might be jeopardised if we cut down the time for testing, is it acceptable? Fundamentals Cost
total sum of effort and materials actually used to complete and deliver the project to client

Price
the dollars at which the proposed project is sold to the client Variable cost - costs that vary depending on conditions applied in the project, eg. cost of material, supplies, wages

Fixed cost - costs that remain constant for the duration of the project, eg. rental of office and equipment Either Direct cost - costs directly attribute to the project, eg. Wages, travel, cost of material

Indirect cost - Cost representative of more than one project, eg. building service fee, software license, utilities Or Type of
Cost Estimating cost 2 Processes Budgeting cost develops an approximation of the costs of the resources needed to complete project activities
includes identifying and considering various costing alternatives aggregate the estimated costs of individual activities or work packages to establish a cost baseline Cost estimates VS Cost budgets Cost Estimates show cost in category
Cost Budgets show cost across time Accuracy Types of estimate:

Rough Order of Magnitude (ROM)
Made with minimal/no data
During initiating process
Accuracy range: 50% to 100% from actual
Definitive
Based on WBS
More refined
Accuracy range: 10% to 15% from actual

Accuracy of a project estimate will increase as the project progresses through the project life cycle. Enterprise environment factors, marketplace conditions, commercial cost databases
Company policies, processes, procedures, historical information
Project Scope Statement, including cost constraints
Overall/high level Schedule
WBS
Network Diagram
Staffing management plan – available resources and their rates, resource calendar
A list of risks identified Information needed for cost estimating Estimating
techniques Analogous (Top-Down Estimating)
overall project estimate given to the project manager from management or sponsor
take less time/effort to complete estimating
less accurate
Parametric
mathematic model to calculate projected costs based on historical records
Three-Point
take an average or by a formula of the optimistic, pessimistic and most likely estimates
Bottom-Up
estimate cost of individual activities, summarize or roll up to get a project total
gain buy-in from team
more accurate Cost Budgeting cost aggregation -
activity costs are rolled up to work package costs, rolled up to work project costs

Contingency reserve -
known unknowns

Management reserve -
unknown unknowns Outcome Cost baseline : a measure of project performance/success
Project funding requirements
Cost Management Plan Time & Resources 7 steps to practical project resource schedule:
Define the project
Divide project into constituent tasks
Establish logical working sequence
Estimate duration of each task
Calculate timing and priority of each task
Reconcile task needs with resources Time, Cost
& Resources (cc) image by nuonsolarteam on Flickr Network Diagram is rarely used for showing resource aggregation.

This is usually done in a schedule (Gantt Chart). Time & Cost Trade-Offs Before that,
Time and cost are estimated in the planning stage
Cost estimating and budgeting depends on the itemized cost – activities in WBS

Cost ≠ Price

Cost is borne by the project by the contractor/supplier /project team.
Price is borne by the clients/end user. When a network diagram is built, optimum time can be estimated.

… sometimes the activities need to be crashed (or fast tracked).

Note: reducing scope and cutting down on quality is not the ideal choice as these two activities would hugely affect customer satisfaction.

Crashing, almost all the time, may result in an increase in cost! Crashing Fast
Tracking PLAN YOUR WORK,
WORK YOUR PLAN It is important to identify the critical path issue early...

Identification of critical path issue in the planning stage (before a contract is signed) = may allow this additional cost to be included in the contract

Identification of critical path issue after the planning stage = almost all the time, cost has to be borne by supplier / service provider / project team Quality Definition ISO (International Organization for Standardization) defines quality as “the degree to which a set of inherent characteristics fulfills requirements”.

Experts define quality as “conformance to requirements and fitness of use”.

Conformance to requirements means the project’s processes and products meet written specifications/

Fitness for use means that the products can be used as it was intended to be. Project quality management Quality Planning
Identify which quality standards are relevant, and how to apply it.
Quality Assurance
Evaluating overall project performance to ensure that the project will satisfy the relevant quality standards.
By managers/clients.
Qualiti Control
Checking and monitoring specific project results to ensure that they comply with the relevant quality standards.
By engineers/technicians. Quality planning The first step to ensuring project quality management.
Implies the ability to anticipate situations and prepare actions that can bring desired outcome.
Identify relevant quality standards for each project and processes.
Design of experiments to identify variables which has the most influence in project outcome.
Communicating correct actions based on organizational policies and standard regulations to ensure quality format is understandable and complete.
Determine project quality metrics – baseline of project quality.
Policies and regulations are main inputs to Quality Planning. The main output of this stage is Quality Management Plan.
Quality measures how well scope is met - functionality, feature, performance, reliability and maintainability. Qualiti assurance Performing the plan – to deliver quality product and services.
--> Products: materials, companies
--> Processes: quality of end product is met
Satisfying quality standards and ensuring continuous improvement.
Acts as a preventive measure to avoid defective products or processes.
Inputs by top management, project managers and clients.
Tool for quality assurance - quality audit. Identify lessons learned for current or future projects. Qualiti control Tools & techniques Pareto Analysis
80% of quality issues are often due to 20% of the causes
Pareto diagrams – histogram or column charts showing frequency distribution – to help identify the common causes
Statistical Sampling
Inspect variations of samples
Common certainty factor used: 1.96 (95%), 1.645 (90%) and 1.281 (80%)
6 Sigma
Defination: a comprehensive and flexible system for achieving, sustaining and maximizing business success.
Targets perfection: <3.4 defects per million opportunities
Six Sigma often applied in process for design or production
Targets to minimize waste, improve quality, raise level of financial performance Checking the conformance of product to planned quality
The main outcomes are acceptance decisions, rework and process adjustment:
1. Acceptance decision
- Determines if the product or outcome is accepted or rejected
- If rejected, rework must be in place
2. Rework (if rejected)
- Only performed if product is rejected
- Brings rejected items to compliance with product
3. Process adjustment
- Improve process to prevent future repetition of quality issue Define DMAIC Identify and define opportunity/process/customer requirements.
Tools include Project Charter, customer requirements, Voice of Customer (VOC) Measure Analyse Improve Control Measure, collect, compile and use data Investigate and generate ways for improvement Track improvement and verify predicted solution Generate pilot test plan
Perform test plan
Review results and implement where appropriate Cost of Quality Cost of conformance and cost of non-conformance. 5 categories: Prevention Cost



Appraisal Cost




Internal Failure Cost



External Failure Cost Cost of planning and executing a project with minimal or zero error.
Include cost of training, detailed studies, planning.

Cost of evaluating process and project output to ensure minimal or zero error.
Include cost of inspection, testing, maintenance, reporting of results, etc.

Cost to correct identified defect before product is delivered to customer.
Include cost of rework, design changes, etc.

Cost to correct unidentified defect after product is delivered to customer. Communication Importance The difference between the almost right word and the right word is really a large matter - it's the difference between the lightning bug and the lightning. What is communication? The process of exchanging information between individuals through common system.

Document or message imparting news, views, information, etc.

Communication environment is regarded as network of two ways channels. Number of channels, N is: N = X (X-1) 2 where, X is the number of people communicating with each other. Communication channels Communication plan Plan of how information or messages will be communicated within a project.

Eftective communication:
Identify the message (what needs to be communicated)
Target the audience (who needs to be informed)
Decide the timing (when does it have to be communicated)
Confirm the format (formal or informal, in what form)
Create the message (put it in writing or presentation)
Deliver it (send it out or present it clearly) Risk Management Risk = an event that may or may not happen. Purpose? To increase probability and impact of positive events and decrease probability and impact of negative events. Opportunities - good risks Threats - risks that would have a negative impact on a project Resources costs cheaper than estimated
Materials arrived earlier than expected
Resources require minimal on-the-job training as all are experienced Delivery of material is delayed
Equipment failure
Up to 90% threats identified in risk management process can be eliminated. Uncertainties Lack of knowledge about an event that reduces confidence in conclusions drawn from the data. When dealing with risks, one should consider:
The probability it will occur
Range of possible outcomes
Expected timing (in project life cycle)
Expected frequency

Inputs (information prior to planning for risk management)
Project background information
Past lessons learned
Tolerance areas – project priority
Risk threshold – how much is too much?
Team

Output (what you get from this exercise)
Project Management Plan Risk management plan Include:
Methodology - how risk management will be performed
Roles and responsibilities - – who will do what?
Budgeting - cost of risk management process
Timing - when to perform?
Reporting formats
Tracking Risk identification Information gathering:
Brainstorming - held in meetings where one’s idea generates another
Delphi Method - build consensus of experts who participate anonymously
Interview
Root Cause Analysis - organising risks based on root cause – will this allow more risk identified?
SWOT (Strengths, Weakness, Opportunities, Threats) Analysis - looks into project strengths, hence identify risks.

The output of the Risk Identification stage is Risk Register Risk analysis Qualitative:
A subjective analysis of identified risks by ratings of:
i) The probability of the risk occurring
ii) The impact of the risk on the project, if it occurs

Quantitative:
Further analysis on probability and impact.

Expected Monetary Value - Mean probability times impact
Monte Carlo Analysis – Mathematical simulation Decision tree To make decisions regarding individual risks when there is uncertainty. With prototype: $200,000 + 20% x $100,000 = $220,000.
Without prototype: $0 + 75% x $450,000 = $315,000. Risk response planning A plan for responding to identified risks.

Why is it done? Risk response plan targets to either:
Make the threats smaller or eliminate them entirely, or
Make the opportunities more likely or have greater impact, or
Serve as a contingency plan when risks does occur, or
Provide fallback plan if contingency plans are not effective
How is it done? Response strategies for threats include:
Avoid by eliminating the cause
Mitigate by reducing the probability of impact
Transfer by making another party responsible, such as purchasing insurance, guarantees, outsourcing
Outputs?
Project Management Plan updates – update work packages, iterate
Risk Register updates Summary Time Estimating
WBS
Network Diagram
Resource Estimating
Estimate resource requirement
Cost Estimating
Developing budget
Time-cost trade-off
Quality
Quality Metrics
Communications
Communications plan
Risk Management
Risk management plan gain approval Projeck Kickoff Meeting Project Kickoff Meeting is the first ever meeting of all stakeholders (customers, project team, senior management, functional management, sponsors).

Held at end of Planning stage of a project before beginning work on project.

The meeting targets to inform everyone involved of project details including:
project scope
project priorities
who are involved
project milestones and timeline
communications plan
etc. CHAPTER 4 - Controlling &
Monitoring Projects The fundamental purpose of project management is to be able to control the project as it progresses Control Monitor Project is executed as according to plan
Ensure minimal changes adopted Track where they are in the project
Measure performance A Project Manager is happy when things go according to plan. ...but when something comes up... Why do projects run late? Projects are new - time estimated is average Maximum effort at the last minute Work expands to fill all available time Unexpected risks
Panic (or lack of it)
Communication breakdown
etc. No, estimates includes 'buffer' - so why are projects still late? Yes, this is somewhat true. Yes, person involved may want to make it perfect by triple-checks rather than report early completion. Time, Cost, Quality What are we trying to control??? Schedule Baseline
final schedule
changes to be formally approved
Schedule Control
status/progress report - percentage complete; timely basis
project tracking
changes; changes are to be approved, request delay, change scope - change in WBS
Earned Value Analysis Time Cost VS Time Time & cost control method of measuring project performance against project baseline
shows deviation of project from cost and schedule baselines Earned value analysis Why is it useful?
allows project managers to gauge project performance while project is running Example We are six months into our project, and my latest analysis shows that we have a CPI of 1.2 and SPI of 0.89.

This means that we are getting 1.2 dollars for every dollar spent on the project, but only progressing at 89 percent of the rate originally planned.

How can we solve this? 1.2 dolar for every dolar.
actual value is lower than earned value

89% of the rate originally planned.
project not progressing as fast as it should.

How can they solve this?
team should focus on speeding up the project. Time & Cost Trade-Offs Time and cost are estimated in the planning stage
Cost estimating and budgeting depends on the itemized cost – activities in WBS
When the network diagram is designed, optimum time is estimated
When there is a delay, crashing would occur

Crashing, almost all the time, may result in an increase in cost!!!

This is because crashing a task means:
More resources are required
More manpower are required
More energy is spent on a task In the Controlling & Monitoring stage, a Project Manager is required and expected to know:
How to crash a project
What task to crash
How much time is saved
How much additional cost is borne Example 1 Consider the following project: Sketch the network diagram & precedence diagram. Network diagram Precedence diagram Critical Path:
A --> B --> D --> E --> H (Path 1)
Length = 43 days

Other paths in the project:
A --> C --> E --> H (Path 2)
Length = 29 days

A --> C --> F --> G --> H (Path 3)
Lenght = 38 days Example 2 Data given: Data given: Merging the tables together: Notice that there are NO changes to the duration & cost of these activities. Hence, crashing CANNOT be performed on these activites. The difference in the duration indicates the number of days that crashing can take place. Eg: Activity D can be crashed for 6 days (9 days to 3 days) The difference in the cost indicated the amount of additional cost incurred to the task if crashing takes place. Eg: Activity D can be crashed for 6 days (9 days to 3 days) for an additional RM2400 (RM14400-RM12000). Compiling the crashing data: Cost increment per day = total crashing cost maximum number of crash days = 2400/6
= 400 Now, we would like to crash this project to the shortest duration the project can be crashed to. You should begin with the most cost effective method of reducing project duration. For tasks which contains the activity, label the cost for crashing. Cost has to be labelled every time the tasks appear in a path. Identify all the paths in the project. P1 - original number of days required to complete project Label the total number of days before crashing Label the maximum number of crash days per task P2 - Crash E by 2 days
Cost increment = RM100 x 2 = RM200

P3 - Crash H by 4 days
Cost increment = RM150 x 4 = RM600

P4 - Crash D by 3 days
(only enough to crash to next longest path)
Cost increment = RM400 x 3 = RM1200

P5 - Crash D by 3 days & F by 3 days
Cost increment = RM400 x 3 + RM200x3 = RM800 Summary Maximum number of days the project can be crashed is 31days.

The new critical paths are:
A --> B --> D --> E --> H
A --> C --> F --> G --> H

Total cost increment to crash project to 31 days =
RM200 + RM600 + RM1200 + RM1800 = RM3800 Cost increment is ascending Reminder: Question asked for “crash this project to the shortest duration the project can be crashed to”. Important notes:

Crashing must be done on the path with the longest duration AND by crashing the task with the lowest cost increment.
Crashing is not necessarily done until the maximum amount, it depends on the situation
Order of crashing is CRUCIAL. There is only ONE correct order for each situation. A graph of cost increment against project duration can be plotted.

From the graph, an increasing slope indicates that as the project duration is shorten the cost of the crashing increases.

If the slope is not increasing, this means that the order of crashing is incorrect. Remember, crashing has to be done with the cheapest activity first, then move on to the more expensive ones. From the example, we determine the points. To plot the cost increment vs project duration graph, the project duration after each path (P) and the cost increment after each P is required. P1: Cost increment (RM) = 0
Project duration (days) = 43

P2: Cost increment (RM) = 200
Project duration (days) = 41

P3: Cost increment (RM) = 600
Project duration (days) = 37

P4: Cost increment (RM) = 1200
Project duration (days) = 34

P5: Cost increment (RM) = 1800
Project duration (days) = 31 x-axis: project duration
y-axis: cost increment

Note: Cost increment is a cumulative value. This is because, if P2 is to occur, P1 has to occur first. P1: x-axis = 43
y-axis = 0

P2: x-axis = 41
y-axis = 200

P3: x-axis = 37
y-axis = 200 + 600 = 800

P4: x-axis = 34
y-axis = 200 + 600 + 1200 = 2000

P5: x-axis = 31
y-axis = 200 + 600 + 1200 + 1800 = 3800 Now, each point can be plotted on a graph paper starting from P1 to P5. The points are then connected to indicated the gradient. A correct crashing path would show an increasing slope from P1 to P5. Perform a time-cost trade-off analysis for a project based on the following data. Your final answer should include:
The original Network Diagram of the activities before project crashing based on PDM method, including activity early start, late start, early finish, late finish and float.
Identification of the critical path based on original Network Diagram.
Shortest duration to which the project can be crashed to.
The cost increment due to crashing.
The graph of cost increment against project duratio Paths:
ABCEFJ = 70
ABCEGIJ = 69
ABCEHIJ = 71
ABDEFJ = 74
ABDEGIJ = 73
ABDEHIJ = 75 (critical path) Cost increment: P1: RM0
P2: RM500 x 4 = RM2000
P3: RM1000
P4: RM2500
P5: RM6000
P6: RM10500

Total cost increment = RM22000 Plot points:
P1: x-axis = 75
y-axis = 0
P2: x-axis = 71
y-axis = 2000
P3: x-axis = 70
y-axis = 3000
P4: x-axis = 69
y-axis = 5500
P5: x-axis = 67
y-axis = 11500
P6: x-axis = 64
y-axis = 22000
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