2_sim335 v2-0 nov 07

University of SunderlandBA (Honours) Business Management

SIM335

Managing Projects

Version 2.0

Published byThe University of Sunderland

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Managing Projects

Contents

How to use this workbook

Introduction

Unit 1

Project Concepts

Introduction 1What is Project Management? 2Types of project 5Examples of Projects 7The Role of the Project Manager and the Team 8Summary 12Unit 1 References 13

Unit 2

Planning and Monitoring Tools and Techniques

Introduction 15Project Feasibility 16Project Life Cycle 20Project Objectives 24Planning the Project 27Sequencing Activities 32PCs and Project Management Software 56Summary 58Unit 2 References 63

Unit 3

The Management of Project Cost And Risk

Introduction 65Financial Project Appraisal 65Payback 66Net Present Value (NPV) 68Estimating Methods 70Putting Together the Detailed Project Budget 72Common Causes of Cost Problems 75

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Project Accounting 76Managing Risks 80Summary 86Unit 3 References 87

Unit 4

Project Team Structuring

Introduction 89Developing Project Teams 90Belbin’s Team Roles 98Effective and Ineffective Teams 99Multi-disciplinary Teams 100Project Leadership 101Motivation 106The Project Manager’s Role 110Summary 111Unit 4 References 113

Unit 5

Project Control

Introduction 115Scope and Quality Control 118Managing: The Start of the Project 125Controlling Project Objectives 127Resource Control 128Methods to Control Resource and Project Objectives 129Controlling the Changes in the Project 136Project Evaluations 137Closing the Project 138Summary 142Unit 5 References 157

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How to use this workbook

This workbook has been designed to provide you with the coursematerial necessary to complete Management of Projects by distancelearning. At various stages throughout the module you will encountericons as outlined below which indicate what you are required to do tohelp you learn.

This Activity icon refers to an activity where you are required to undertake aspecific task. These could include reading, questioning, writing, research,analysing, evaluating, etc.

This Activity Feedback icon is used to provide you with the informationrequired to confirm and reinforce the learning outcomes of the activity.

This icon shows where the Virtual Campus could be useful as a medium fordiscussion on the relevant topic.

It is important that you utilise these icons as together they will provideyou with the underpinning knowledge required to understandconcepts and theories and apply them to the business and managementenvironment. Try to use your own background knowledge whencompleting the activities and draw the best ideas and solutions you canfrom your work experience. If possible, discuss your ideas with otherstudents or your colleagues; this will make learning much morestimulating. Remember, if in doubt, or you need answers to anyquestions about this workbook or how to study, ask your tutor.

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Managing Projects

Introduction

The module will define the nature of projects and their management.Various aspects will be considered including financial control andmanagement of risk, human resource elements (building and leading amulti disciplinary team) and the control of time. The module willexamine the integration of time, cost and quality aspects of projectsthrough the application of relevant tools and techniques.

LEARNING OUTCOMES

Upon successful completion of this module, you will be able to;

1. Evaluate and apply a range of skills and techniques associated with themanagement of projects.

2. Demonstrate capability to evaluate projects from a financial, humanresource and time related perspective.

3. Appreciate the requirements for control and the application of controlmechanisms.

4. Evaluate the relationship between time, cost and quality andunderstand the alternate approaches available for managing them.

Skills

Demonstrate critical thinking and analysis skills:

a) Ability to apply and evaluate tools and techniques associatedwith the management of projects.

b) Conduct reporting and diagnostic skills.

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Amplified content:

1. Project Concepts

Introduction to / overview of the management of projects.

2. Planning and Monitoring Tools and Techniques

Processes and tools for project plan development.

Resource planning.

Techniques and systems for project plan execution.

Project quality assurance systems.

Planning for the co-ordination of changes during projects.

3. The Management of Project Cost and Risk

The analysis and allocation of risk

The preparation of formal project proposals

Management of project cash flows

4. Project Team Structuring

a) Choosing suitable project team structures.

b) Project human resource management.

5. Project Control

The planning and control cycle.

Application of tools and techniques for scheduling projectactivities, monitoring progress, managing variations andslippage, updating and controlling project time and quality.

Management of project cash flows and incentives.

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Unit 1

Project Concepts

LEARNING OUTCOMES

Following the completion of this unit you should be able to:

· Understand the factors that make up a project in today’s businessenvironment.

· Be able to analyse and understand the different types of project.

· Examine and understand some of the general concepts involved inproject management and be able to explain the role of the projectmanager, and the skills needed to practise project management.

Introduction

This module introduces the management of projects. Traditionally themanagement of projects was considered more of an art than science, butwith the growing number of project management institutions,associations and academic establishments, project management hasbecome more of a science, and a discipline, as accepted practices arecaptured and formalised in the global body of knowledge.

This unit will consider why project management has become importantfor organisations and explain what constitutes a project in today’sbusiness world.

A brief history of project management is reviewed and how companiesuse project management to improve company performance andintroduce new products and processes.

Some general concepts are introduced and the role of the projectmanager is also considered, as well as the skills needed for projectmanagement success.

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What is Project Management?

Project management has been around since the beginning of time. Thepyramids in Egypt stand to day because of sound project managementprinciples (although at the time they did not realise they were practisingsound project principles!). But although there have been excellentproject managers over the years, project management was notrecognized as a formal management concept until the 1950s. This firstsection looks at what project management is and how companies arebeing forced to look to project management techniques to improvecompany performance. It also looks at the role of project managers, abrief history of project management and the role of a project’s keystakeholders.

It was high profile aerospace projects, such as Polaris, NASA and otherUS Department of Defence projects that led to the establishment of theproject management standards that they expected their contractors tofollow. Polaris was the first British project on which contractors wererequired contractually to use advanced project management systems.

The construction industry started to see the benefits of projectmanagement and started to adopt the new techniques. The 1970s and1980s brought more practitioners on project management leading to thedevelopment of theories, methods and standards.

Throughout the 1970s project management continued to grow anddevelop into a multi-disciplined profession with its distinctive tools andtechniques. The economic pressures during this decade, OPEC oilembargoes and the rise of environmental pressure groups had causedmany projects to be constrained or delayed. This in turn led to a periodof refinement of project management tools and techniques. More hightechnology companies outside the defence and construction industriesstarted to use project management systems effectively.

In the 1980s project management tools and techniques were integratedinto accepted management practices. Such techniques were known asProgram Evaluation and Review Technique (PERT) and the CriticalPath Method (CPM). We will discussing these techniques in moredetails in later sections.

Other issues taken on board at this time included the integration of time,cost and quality. These were beginning to be seen as critical bymanagement to the success of projects.

In the 1990s the globalisation of world trade and competition from theFar East encouraged leaner, flatter and more flexible organisationalstructures, together with more efficient systems. Companies found thatby using a management-by-project approach they could assign work tosmall project teams, which were able to respond to innovation and newideas and keep the culture of the entrepreneurial company alive.

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In the 1990s large scales re-engineering and TQM processes needed adirection for the implementation of these new projects (many of themin-house), and managers turned to project management for direction intracking such initiatives. Project management is a structured approachto planning and controlling projects. It is a set of principles, methodsand techniques that managers use to effectively plan and control projectwork. We will look at all these principles and techniques in detail in thecoming chapters.

Business Trends

It is important to note that in today’s business world projectmanagement is not just about managing a new building or managing acivil engineering project.

In today’s business world there have been several trends that have madecompanies concentrate more on project management concepts, notably:

· Today the focus is on high quality, quick to market andfirst class customer satisfaction. During the last 15 yearsthere has been a shift from mass production to customproduction of goods and services. To respond to thismanagers have turned to project management to ensurehighly responsive management style. Companies arechanging from hierarchical management to projectmanagement. Organizational charts are changing fromvertical structures to team- centred structures.

· Jobs that do the same tasks every day are disappearing.Middle management are also disappearing. The newfocus is on projects and teams assigned to specific tasksor problems. Teams might be set up to launch a newproject or re-engineer a process. Projects are conceived,staffed up, implemented and then shut down.

· Companies offer less job security than before. Theyoutsource non-core activities. People define themselvesless by the companies they work for, more by theirprofession. Pay is determined by skill level and themarketability of the person’s services rather than bymanagement hierarchy.

Richman (2002)

The 1990s also saw the increasing deregulation, reduced tariff barriersand, more importantly, expanding IT facilities and communication(s)through the Internet.

During the 1960s and 1970s the manual tasks and concepts thatpredominate throughout project management (network diagrams, barcharts, etc) were computerised using mainframe computers. However it

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was the introduction of the PC that led to the expansion and spread ofproject management software.

As Burke notes:

The introduction of the PC in the late seventies (Apple 11)and the IBM PC (1981) in the early eighties withaccompanying business software encouraged the growth ofproject planning software and the use of projectmanagement techniques

Burke (2003)

What is a Project?

This section defines what a project is and gives several definitions ofprojects. There is no one definition of a project. However most expertsagree that a project is a unique thing with a start and a finish. Mostexperts also agree what a project is not: routine work, every day tasksand the normal day to day activities of a company or person.

The following list is not exhaustive, but it will help clarify exactly what aproject is:

Buchaanan and Body (1992), defined a project as:

A unique venture with a beginning and an end; conductedby people to meet established goals, schedule and quality.

Turner (1993), described a project as

An endeavour in which human (or machine), material andfinancial resources are organised in a novel way, toundertake a unique scope of work, of given specification,within constraints of cost and time, so as to deliverbeneficial change defined by quantitative and qualitativeobjectives.

Wilson (2002) described a project as:

Any new work if it lasts for a limited period, involvesdifferent groups of workers, and has penalties for latecompletion. The project manager is responsible for firstplanning, then controlling the allocation of time, money,people and other resources.

The British Standards Institution defined a project as:

A unique set of coordinated activities, with a definite startand finishing point, undertaken by an individual ororganization to meet specific objectives within defined,

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scheduled cost and performance parameters. (BS6079-1,200:2).

Another way of looking at a project is as:

· An event or thing that with a start and a finish and clearobjectives covering time, cost and quality.

· The most efficient way of introducing changes.

· Defining what has to be done in terms of time, cost andquality.

· Using a plan to do these, and working to this plan,ensuring that progress is maintained.

· Using appropriate project management techniques toplan, monitor and maintain progress.

· Employing persons skilled in project managementincluding a project manager who is responsible forintroducing change and its successful accomplishment.

Types of project

Projects are usually categorized into one of three types:

· Change driven: the need to change operations to matchthe environment.

· Market driven: producing a new product in response tomarket needs. For example, BMW uses projectmanagement techniques to deliver its new models.

· Crisis driven: Usually in response to an urgent situation.A pharmaceutical company may start a project to managethe re-call of a defective product, and introduce thereplacement and the following public relations campaign.

Sometimes a number of related projects are done together. This isusually called a programme. Programme management is often a verylarge project that will be broken down into a number of smaller projects.As Field and Keller highlight:

“Sometimes the work needed to achieve a majororganisational objective will be far greater than can easily beorganized and carried out in a single project. This maymean that the organisation will undertake a programmethat consists of a number of interrelated projects“.

Field and Keller (1998)

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Another example from Field and Keller puts programme managementin perspective:

“A good example of a programme of work is thedevelopment of fixed-wing vertical take-off and landing jetaircraft. The result was the successful Harrier ‘jump jet’, butthe programme began about two decades earlier, with aproject exploring the control of vertical take-off and landingin a test-harness referred to lovingly as the ‘FlyingBedstead’. Later projects that grew out of the FlyingBedstead explored what was required to allow a fixed-wingaircraft hovering, lifting or descending vertically to changeto travelling forward horizontally. Over the years thetechnology, techniques and design were refined until it waspossible to build and test a prototype aircraft, and finally toannounce the design, take orders and build the Harrier.Each phase of this programme of development containedone or more projects which had proper schedules andbudgets, while the overall programme tended to ’develop’as projects successfully produced answers to key questionsin the effort to find out whether such an aircraft wasfeasible, and if it was, what design parameters werenecessary for it to work satisfactorily.

Suppose that one of the early exploratory projects indeveloping the Harrier had shown that the overall objective– a fixed-wing vertical take-off and landing jet aircraft – wasunfeasible for some reason, such as the likely cost of thefinal product far exceeding what the market could afford topay. When this becomes known, management can ceasecontinuing this development and use the financial and otherresources freed thereby to do other things of importance tothe organisation.

There are other reasons for breaking up a large project orobjective into a programme of smaller ones. One reasonmight be that an appraisal of the financial situation in anorganisation will show that even if the whole of a largeproject cannot be achieved at once, benefit can be gained bytaking a phased approach to the work. A smaller project,which can quickly achieve part of the objective, may beworth doing now, while further work is delayed until thefinancial situation improves. It is also possible that anorganisation will wish to gain experience with a particularpart before proceeding with the rest, or feel it desirable tominimize the inevitable disruption to working that thechange inherent in a project always brings with it.”


Successful projects have clear deliverables and objectives from the start;they also have time, cost and quality objectives. Projects must also meetthe customer’s requirement.

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Examples of Projects

To understand this more fully let’s look at some examples of projects:

· The research and development department of apharmaceutical company bringing new drugs to marketwill use project management techniques.

· The marketing department of a household productscompany will use project management to help withmarket research, arranging promotional events and pressreleases.

· A telecommunications company wishes to improve itsCustomer Services by rationalising its customer repairand maintenance offices by creating a more flexiblestructure able to cope with future growth, and move toEnquiry Desks dealing with all customer needs.

· A research and development department in a chemicalfirm may be asked to devote time to exploring thepossibilities of developing new products using a newpolymer.

The last example was from Field and Keller (section 1.1). Look at theother examples in Field and Keller to get a more thoroughunderstanding of the different types of projects.

By now you will be aware of the need for projects to be managed by aproject manager, but who else is important in making projects gosmoothly? Who actually owns the project when it is completed?

Field and Keller define six key people who are critical to the success ofall projects: Sponsor, Champion, Client, Customer, Owner andStakeholder. You will come across these terms as we progress throughthe module. They are defined as follows:

· Sponsor: The person who ensures that the project issuccessful at the company level.

· Champion: The chief promoter of the project.

· Client: The person who pays for contractual services. Forinter-company projects, the contract may be an informalone.

· Customer: Very similar to the client; could be the personwho buys or pays for the projects, but more normally it isthe person whom one is concerned with.

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· Owner: Again very similar to client and customer. Thinkof it more in the sense of someone with a strongattachment to the project.

· Stakeholder: Everyone who has an interest in the projectsuccess.

ACTIVITY

Look at Activity 1.1 in Field and Keller. Note down answers to the questionsthey outline. If you have not been involved in any projects at work think of apersonal/home project that you have been involved with.

ACTIVITY FEEDBACK

Refer to Field and Keller for activity feedback

READING ACTIVITY

Read section 1.1 of Field and Keller.

The Role of the Project Manager and the

Team

This section looks at the role played by project managers and the teamhelping him achieve his goals. We look at the skills needed to manageprojects successfully and the essential skills project managers need tooperate successfully.

The project manager is the person assigned to manage a specific projectand is expected to meet the approved objectives of a project, includingproject scope, budget and schedule.

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The project manger leads the project and provides vision, direction andencouragement. The project manager takes lead in project planning todetermine the schedule and budgets necessary to meet the projectobjectives. The project manager is responsible for delivering the projectonce the project has been approved by senior management.

The PM is responsible for the project support team. On small projectspeople and resources are not normally assigned directly to the projectmanager. People in other departments work on the project, and for theproject, but usually stay in their functional department reporting totheir normal manager. On large projects a dedicated team will beassigned to the project, with everyone reporting to the project manager,or to functional managers, who in turn report to the project manager.

ACTIVITY

What do you consider to be the basic skills required for successful projects andwhy do you think these are important ?

ACTIVITY FEEDBACK

Please refer to the text below.

Project Management Skills

What skills does a project manager need? Skills of flexibility,resourcefulness, ability to negotiate, personal drive and a large measureof common sense. On top of these a project manger needs skills thatdirectly relate to managing and delivering the project. These skills (asdefined by Richman, 2002) which we shall call basic skills, are listedbelow.

Basic Project Management Skills

· People skills.

· Project management skills.

· Technical skills.

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· Integration Skills.

People skills: the project manager needs to be an expert atcommunication. He also needs to be able to manage change and conflict,as well as motivate others to achieve project goals. He also needs tounderstand how to use authority and persuasive skills. Authority canbe defined as the ability to get another person to accept responsibilityand produce the desired result. Persuasion is the ability to convinceanother person to accept your values and take on responsibility.

Project management skills: these skills include being able to estimatecosts and prepare budget plans, to be able to analyse reports, conductproject audits and analyse progress information. Other skills includebeing able to plan and execute a project.

Knowledge of the organisation: the project manager will need tounderstand he organisation inside out. He will need to negotiate withmany people inside the organisation and he will need to understandtheir needs, personalities and desires.

The more he knows about the organisation the more he will be able tonegotiate around problems and unforeseen challenges that crop up andresolve them successfully.

Technical skills: Project managers need to have skills in the technicalarea of the project. The greater the technical knowledge the greater thechance of success in the project. The project manager is also responsiblefor the integration phase of the project; this is where technicalexperience is essential.

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Project management skills

People skills

Integration skills

Technical skills

Knowledge of organisation

Figure 1.1 Diagram of Basic Skills (Taken from Richman 2002)

Integration skills: The project manager might have to understandtechnical drawing relating to a building; he might also have tounderstand functional drawings from a civil engineer and co-ordinatevarious other factors relating to the project. All these things areintegration issues that need to be properly co-ordinated.

Other skills that are essential for the project manager are the skills ofaccountability, authority and responsibility. These are skills that wetend to assume that all managers have to varying degrees. However,with project managers it is very important that these skills areunderstood and kept in balance.

Responsibility is having agreement on achieving the desired result. Toput this context, when a project manager passes part of theresponsibility for completing a task to others the project managerretains full responsibility for the final outcome. In this senseresponsibility is all about trust.

Accountability is very similar to responsibility in the projectmanagement context. For example, when a project manger assignsresponsibility to a contractor for decorating the office the manger holdsthe contractor accountable for all the work. This would include workquality, schedule performance and budget targets. Good performancedepends on sound accountability. Good accountability makes goodperformance visible.

Authority is the power given to a person to complete a given task.Authority must match the responsibility assigned .The key to all theseskills is giving each of them to the project team member in the rightbalance. For these to work properly companies usually writeprocedures that define how responsibility and authority are assigned tothe project manger and team.

No matter how well a project manager executes the project there arebound to be problems. Project managers should be able to demonstrateexperience, technical skills and imagination to overcome the problemsso they do not delay the project.

The best project manager is both a specialist and a generalist. Hesucceeds because of the way he understands the requirements,operations and problems of clients and the project team.

As Field and Keller note:

“A project manager’s key role is to ensure that the teamsucceeds, and since projects are by their very natureinterdisciplinary and cross many organisational lines,routine does not exist and choices have to be madefrequently and quickly.”


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Role of Team Members

It is vital that for each project to identify all the team members andclearly define their roles and responsibilities. Team members can havevarious roles; roles such as engineers, technicians, planners or softwarespecialists. Just as each project is unique so are the roles of the peopleperforming the work. We will look at team dynamics in more detail in alater unit.

Summary

Today project management has emerged as a leading solution inbusiness operations. Large and small companies realise that astructured approach to controlling and planning projects is the keyapproach to success.

We have reviewed several definitions of projects. Most experts agreethat projects have the following: an event or thing that has a start and afinish and clear objectives covering time, cost and quality.

Some projects have a short life span, perhaps a few months, others couldcontinue for years. Multiple projects are usually grouped together toform a programme of work.

Several examples of projects were given. You should all be aware thatprojects are not just construction type projects, but cover a whole rangeof business change processes and the introduction of new businessinitiatives, i.e. new marketing and sales programmes.

We also looked at the skills needed. Project managers need a widevariety of skills to run projects successfully: people skills and technicalskills being two of the key skills required.

REVIEW ACTIVITIES

Review activity 1

Read section 4.1 of Field and Keller to understand more fully some of theprinciples introduced here.

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Review activity 2

One of the most common uses of project management is in marketingdepartments. List some of the activities marketing managers would use inlaunching a new product

REVIEW ACTIVITY FEEDBACK

Review Activity 1

Please refer to Field and Keller

Review Activity 2

Launching a new product would include: design of the product, design of thepackaging, distribution to be used, pricing, training sales force, arrangingadvertising, booking space with TV company and newspapers, arrangingproduct launch, managing media and printing brochures and other newproduct information.

Unit 1 References

Boddy, D. and Buchanan, D. A. (1992) Take the Lead. Prentice Hall.

Field, M., Keller, L. (1998) Project Management. Open University.

Burke, R. (2003) Project Management, Planning and Control Techniques.John Wiley and Sons.

Richman, L. (2002) Project Management Step-by-Step. AMACOM.

Turner, R. (1993) Handbook of Project-Based Management. McGraw Hill.

Wilson, D.A. (2003) Managing Information. Butterworth Heinemann

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Unit 2

Planning and Monitoring Tools

and Techniques

LEARNING OUTCOMES


· Examine and analyse the tools and processes for project plandevelopment

· Understand the techniques for project plan execution

· Analyse and discuss project quality issues, project resource issues,project quality systems and the management of changes duringprojects.

Introduction

This module takes you through the latest planning and controltechniques.

Research has shown that for projects to be successful, that is deliveredon time, satisfying customer objectives and delivered to budget, athorough approach to planning and control is essential. Projectfeasibility is usually the first stage of the planning process.

Project planning has been likened to a modelling exercise. You draw upplans then put them together and then experiment with the model tofind out the best way of proceeding through your project.

The project plan starts with the project life-cycle. This is the plan thathelps us break the project down into manageable chunks

Very simple projects can be run from just a bar chart. More complexprojects will have a full critical path analysis (CPA) and a detailednetwork diagram. You will then measure progress, update the plan andcommunicate your updates to the project team. If you have manyresources you will need a resource plan and a resource histogram. Youwill also need to understand how to manage changes to your projectand plan.

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All of these techniques are covered in this unit.

Project Feasibility

A feasibility study will look at whether the company has the expertiseand experience to handle the project successfully. It will also look atwhether your company has the ability to make the best use of itsresources. Other areas that will be reviewed include: How realistic arethe project budget and time requirements? Have enough resources beenassigned to the project to successfully complete the project? Are theobjectives realistic? A feasibility study will also look at the financialissues associated with the project. Is it worth doing financially and willthere be a return on our investment? These issues are looked at in thenext section.

The process of project formulation varies in different companies and ondifferent types of projects. Whichever way your projects develop thereshould at some point be a feasibility study to ensure the project isfeasible, but also to make sure it is making the best use of yourcompanies resources.

A feasibility study looks at the following questions:

· How realistic is it to expect that the project can meet thestated objectives?

· How realistic are the project scope, budget and timerequirements?

· Are sufficient funds available to complete the project?

· Does the organisation have the technical expertise toaccomplish the project?

A feasibility study should also look at the stakeholders involved in theproject to insure their interests are taken into account. Thesestakeholders are the customers and project team, as well as the users,the suppliers and vendors, the external stakeholders such as theregulatory authorities, lobby groups, government agencies and tradeunions. Here, if possible, identify the key decision-makers and focusyour attention on their needs.

As Burke notes:

“Whichever way your projects develop there should atsome time point be a feasibility study to not only ensure theproject is feasible, but also ensure it is making the best useof your company’s resources.

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Project stakeholders are people and organisations (bothinternal and external) who are either actively involved inthe project, or whose interests may be affected by theproject being implemented. It is the project manager’sresponsibility to identify all the stakeholders and determinetheir needs and expectations. These needs and expectationsshould then be managed, influenced and balanced, toensure project success. The project manager should createan environment where the stakeholders are encouraged tocontribute their skills and knowledge as this may influencethe success of the project”

Burke (2003)

Burke also goes on to note..

”That some stakeholders are interested in the outcomes ofthe project, while others are only interested in the projectwhile it is being implemented”

Burke (2003)

The feasibility study will also have its own project life cycle.

Burke also outlined the following issues that should be covered in thefeasibility study:

Stakeholder Analysis: The people and organisations who are activelyinvolved in the project, or whose interests may be affected by the projectbeing implemented. Stakeholders include: customers, project team,

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Concept :outline of thepurposeof thefeasibilitystudy

Design:plan howto carryout thefeasibilitystudy

Implementat ion: perform thefeasibility study

Commission:confirm thefeasibilitystudy hasproducedthe requiredreport

Desc

r ip

t io

nL

evelo

fE

ffo

r t

Concept Design Implementat ion Commission

Figure 2.1 The Feasibility Life Cycle (Taken from Burke 2003)

senior management, suppliers, sub-contractors, regulatory authorities,lobby groups and individual citizens.

Define the Clients Needs: The evolution of something quite vague tosomething tangible. The clarification of the problem, need or businessopportunity.

Evaluate Constraints: Any internal or external restrictions that mayaffect the achievable scope of the project. These may be broken downinto (a) Internal Project Constraints (such things as: Can the product bemade? Does the company have the technology? Can the product bemade within budget?) (b) Internal Corporate Constraints (such thingsas: Can the financial objectives be met?) (c) External Constraints (suchthings as national laws and international laws and regulations; materialand component delivery lead times).

A cost benefit analysis should also be carried out to establish thefinancial feasibility of the project. Here a report should be produced thatlooks at the costs and benefits in financial terms. In general terms if thefinancial benefits exceed the costs then the project should go ahead.(The next section looks in more detail at the financial aspect ofappraising projects). For example, a dam project may have manybenefits to the community, but might cause the silting up of the river. Ifthe financial benefits of having the dam exceed the costs of dredging theriver, this project should go ahead.

The Pareto improvement criteria is expressed as “the project shouldmake some people better off without making anyone worse off”. As youcan imagine justifying the project in simple economic terms is fairlystraightforward, justifying it other ways (social, environmental or to thewider community) can be difficult.

Another factor that needs to be considered is technical feasibility. Fromthe point of view of minimising risk we need to be sure that the chosentechnology is sound.

As Field and Keller comment:

“Not only do we need to assess whether a technology ismature, sound and applicable, we also need to assess avariety of technical aspects of any proposal. These varyenormously and often require experienced or expert peopleto evaluate them properly. Even the building of a house byan experienced building contractor requires this sort ofassessment. For example, the soil on the building site willeffect how the foundations have to be constructed. A housebuilt on clay has different requirements from one built onsandy soil. A soil engineer may be called to take samplesand prepare a report before building commences.Marketing projects need to take into account the fact thatmarkets vary due to climate, cultural and economicdifferences: you can’t market air conditioners very

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successfully in a cold climate, nor to people who can’tafford them. A software developer may need expert advicefrom the hardware manufacturer before undertaking aproject using that manufacturer’s platform.

You should bear in mind that cost is by no means the onlyfactor when determining whether a project is worthwhile,though its ease of measurement may tend to give itprominence.”


Towards the end of the feasibility study the project will be formallyendorsed by senior management. With larger projects a formal businesscase will be prepared with clear analysis of all the issues and optionsand a full financial appraisal of the project costs. Management shouldclearly endorse the project showing clear commitment to the project andthe project team.

Of course, if the feasibility study shows the project is not feasible thisshould be shown in the tracking reports before you get to the end of thefeasibility stage and the project should be stopped before any more timeis wasted on the project proposal.

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A s the RFP r equested it A s the wor k statementspecified it

A s i t was negot iated

A s engineer ing designed it A s i t was bui l t W hat the customer wanted

Swings, a classic r evisted

Figure 2.2 Swings (Taken from Burke 2003)

A feasibility study should be done in-house or by an external agency. Itcan, in fact be handled as a mini project. A feasibility study is important,look at the classic example in Figure 2.2 to understand what happenswhen things go wrong at this stage!

Project Life Cycle

The project life cycle is a framework for dividing the project up into moremanageable phases. This section looks at how the project life cycle is usedto focus on the deliverables of a project. Most projects can be subdividedinto four generic phases: concept, design, implement and commission.The project life-cycle enables us to look at the bigger picture.

Burke defines the project lifecycle as:

“a four phase life cycle that passes through four phaseheadings: concept and initiation phase, design anddevelopment phase, implementation (or constructionphase), and commission and handover phase.”

Burke (2003)

Figure 2.3 shows these Life Cycle headings in graphical format:

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L evel of E ffor t

Concept andini t iat ion

Design anddevelopment

Implementat ionor const r uct ion

Commission orhandover

Concept Design Comm.Implementat ion

Acc

umulat iv

e E ffor t

Rateof E ffor t

Figure 2.3 Generic Project Life-Cycle (Taken from Burke 2003)

These stages are interrelated and dependent on each other, you mayhave heard of them when you have been involved in projects or comeacross them in other readings.

To understand these phases we will define them in a bit more detail:

Concept or Initiation Phase: The first phase. Starts the project off byestablishing the need for the project and the feasibility phase is in thisstage.

Design or Development Phase: Phase number two. Designs the serviceor product, develops schedules and plans for implementing the project.

Implementation Phase: Phase number three. Implements the project asper the agreed plan.

Commissioning Phase: The fourth phase. Confirms the project hasbeen completed to the design, then the project is closed down.

Note there is no single project life cycle applicable to all projects. That is,one project life-cycle used by everyone throughout the project world.

As Field and Keller note:

There is no single life cycle that applies to all projects andwe discuss below three different life cycles which might bea model for a given situation, depending on the approach tobe taken. These three life cycles are:

· A basic project life cycle, adapted from a five-phasemodel described by Weiss and Wysocki.

· A phased development life cycle (a sequence of miniprojects) from Jordan and Machesky (1990)

· A prototyping life cycle.


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The phased life cycle shows the phases in sequence. You wouldnormally complete one phase before moving to the next phase, but inpractice there may be some overlap. Remember, the phases areinterrelated and dependant on each other.

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P hase 1CON CEP TConceive

(C)

Gather dataIdentify needEstablish- goals, objectives- basic economics- feasibility- stakeholders- skill level- strategy- potential teamGuestimateresourcesIdentify alternativesPresent proposalObtain approval fornext phase

P hase 2DEV EL OP MEN T

Develop(D )

Appoint key teammembersConduct studiesDevelop scopebaseline- end products- quality standards- resources- activitiesEstablish- master plan- budget, cash flow- WBS- policies and

proceduresAssess risksConfirm justificationPresent project briefObtain approval toproceed

P hase 3IMP L EMEN T AT ION

Execute(E )

Setup- organisation- communicationsMotivate teamDetail technicalrequirementsEstablish- work packages- detailed schedule- information control

systemsProcure goods andservicesExecute workpackagesDirect/monitor/forecast/control:- scope- quality- time- costResolve problems

P hase 4T ERMIN AT ION

F inish(F )

Finalise product(s)Review and acceptTransfer productresponsibilityEvaluate projectDocument resultsRelease/redirectresourcesReassign projectteam

Plan Accomplish

T otal P r oject L i fe Cycle

Time

A cc

t

umu

eE

lat iv

ffor

Figure 2.4 Phased Development Life Cycle (Taken from Burke 2003)

With prototyping, a model of the system or deliverable is built andshown to the user to get feed back. The prototyping is a form of phaseddevelopment. The model may start out as very basic, may be discardedquite quickly and then another one substituted.

READING ACTIVITY

Read the London Ambulance Service case study in Field and Keller (section1.5). This is very interesting case study that highlights many projectmanagement issues.

CASE STUDY

XTC Mobile of Birmingham, England, is a manufacturer of mobile phoneproducts. Their Research and Development department has designed a newmobile phone that is 20% smaller and 15% lighter than any of theircompetitors.

The head of marketing has asked John Bedford, XTC’s top salesman, to managethe project to engineer and manufacture the new product. He asks John todevelop a schedule and budget, and present it to the management team thefollowing week.

When John presents his plans to the management team, there is lots ofdiscussion about whether the company should start manufacturing the phone.After the meeting, the Chief Executive Officer of the company asks John to takeup the project and report directly to him. The CEO will work to get approval ofthe project and will approve every cost on the project.

Questions: based on the concepts we have looked at in the above chapters,what steps should John take to make sure the project is a success. Bear in mindthe following when formulating your answers:

Has project approval taken place?

Is John the best qualified person to take this role on?

Have project management concepts been followed?

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CASE STUDY FEEDBACK

Your answer should have included the following points:

· Project approval has not taken place; lots of discussion aboutwhether to start making the phone, but no approval or supportfrom the full management team.

· John is a salesman in the company. This role does not qualifyhim to be a good project manager. He needs to acquire projectmanagement skills quickly or the project will fail.

· Project management knowledge appears sorely lacking in thecompany. John was asked to develop a budget and schedule ina week for the project! Someone needs to educate themanagement team about project management.

Project Objectives

This section covers project objectives, i.e. What is to be done? How is itto be done? What are the cost constraints and timescale issues?

The classic project has a simple singular objective: build that pyramid,launch that rocket, construct that hospital. Such projects are simple,clear and comprehensible. Project management started in powerstations, bridges and things like that. To-day projects are not sostraightforward. Project management is applied to a wide range of tasksthat do not have this singularity. For example, a software companymight have a dozen or so projects on the go at any one time. However, itis still true to say that unless you can identify a clear objective, or a shortlist of clear objectives, project management may not be the right tool foryou.

It is essential that project teams have clear aims and goals. As Field andKeller explain:

“The term aim is used here as meaning what you intend todo: a goal is the desired outcome. Objectives focus onachieving the aims – means to an end.”


Project objectives may have been refined from the company objectivesthrough a series of iterations. In many companies planning is carriedout from the top-down, this helps keep employees minds focused on the

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key issues and objectives of the organisation. As Field and Kellerhighlight:

“At the strategic level a project manager may have no inputat all. However, as the key strategies are identified andincreasingly refined through iteration, strategies can turninto programmes of change, and the tactics of realisingthese strategies can become projects.”


Project objectives and project definition help the project manager clearlyunderstand the issues surrounding the project. If these are clearly laiddown from the start then the better chance the project has of success.The objectives are the quantitative and qualitative measures by whichthe project team will judge the completion of the project. It is not alwayspossible to set the project’s benefits as the objectives, as they may not beachieved until sometime after the end of the project

The project objectives are defined as soon as the project has been agreed.

Objectives should cover

· What is to be done?

· How it is to be done

· How much will it cost?

· When will the project be finished?

Objectives should be SMART (specific, measurable, agreed, realisticand time-limited)

· Specific: should define the project and what it will andwill not do.

· Measurable: objectives should be laid down inmeasurable terms.

· Agreed: the key people involved (PM, clients andcustomers) in the project must agree the projectobjectives.

· Realistic: the objectives agreed must be achievable.

· Time limited: define how much time is available and costeach element of that time allocated.

Project objectives should also define what will be completed by the endof the project, detailing what will and will not be completed when theproject is finished. This will give us the essential criteria for establishingwhether the project has been successful or not.

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For example, if a project involves the construction of new chemicalworks it is critical that the PM understands:

· The needs of the users of the plant.

· Understands why the client wants the new plant.

· How the new facility will operate.

· What the client is expecting from the PM and a clear viewof what is involved in constructing the plant.

· Be convinced the new facility will actually solve theproblem.

All the above will have an impact on the agreed project objectives.

Project definition is often used as a stage in the project plan. Certainly inlarger projects it is normal to make project definition a clear milestoneon the project path. To make this easier for successful project outcome,project definition and should be clear from the start, most projectmanagers would not start a project unless the following was clear fromthe beginning:

A clear definition from the client of the problem to be solved by theproject requires:

· Written definition of the clients needs and wants.

· Background information to the current situation.

· Understanding of the business reasons for the project.

· Understanding of the client’s reason for undertaking theproject.

READING ACTIVITY

Please read the section on identifying objectives in Field and Keller, section1.1.5.

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ACTIVITY

What would happen if a project was not clearly defined?

ACTIVITY FEEDBACK

You would not have the appropriate information to understand the client’sneeds and fully understand the business reasons for starting the project.

Planning the Project

This is a fairly lengthy section. It covers the important steps of planningthe project in detail, something that many failed projects have beenaccused of not doing thoroughly enough. It also introduces severalimportant concepts, such as Work Breakdown Structure (WBS) andCritical Path Analysis (CPA).

Many experts believe that proper planning is essential for projectsuccess.

In the 1960s several UK Government projects were stopped or faileddue to poor initial planning. For example, the TSR-2, swing-wingbomber was scrapped due to cost overrun and delays. A reporthighlighted that the project had been started before the design wasstable. In other words, proper up-front planning was not carried out.

Planning and control go hand in hand. With solid planning a projectmanager can exercise proper control. Without a plan there is nothing tocompare progress against and project control is impossible.

As Rory Burke notes:

“Planning is an important component of the planning andcontrol cycle, because the planning process not onlyestablishes what is to be done, but also smoothes the way tomake it happen.

Planning is all about thinking forward in time. What variesis how far ahead the plans stretch and how precise they are.

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The planning process communicates planning informationto the project team and stakeholders, and obliges them to“sign on” and pledge their support. When plans are drawnup by those who are going to implement them, they feelobliged (if not totally committed) to complete as planned“.

Burke (2003)

Work Breakdown Structure

One of the first steps, after a project has been sanctioned, is to break theproject down into a more detailed series of activities. Breaking theproject down into more manageable pieces is known as creating a workbreakdown structure (WBS). A WBS defines the work to be completedin the project. It is a graphical representation (diagram) of the projectshowing its component parts.

It provides definition to the project scope by showing the hierarchicalbreakdown of activities and end products that must be completed tofinish the project.

As Turner has emphasised, the work breakdown is a process by which:

“The work of a project is divided and sub divided formanagement and control purposes”

Rodney Turner (1993)

I am sure many of you have used, or seen a WBS, before. But maybe notrealized that it is a key tool in project management. Work breakdownstructures are normally shown in graphical format. The example inFigure 2.5 shows a very simple work breakdown structure with threelevels.

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When you are putting together a WBS for the first time you will need thefollowing information to ensure that all the important information isincluded in the WBS.

· Activity.

· Activity Title.

· Duration of Activity.

· Successor Activity.

· Personnel.

· Direct Costs.

· Predecessor Activity.

The WBS defines the work to complete in the project. The WBS is thebackbone of the project management from which all other controlsystems are derived. The work at all levels of the WBS should be definedin terms of results, or deliverables, it is intended to achieve. There arethree reasons for this:

· It gives better control of scope.

· It gives a more stable plan.

· It gives more visible control.

The work breakdown structure is one of the key elements of the projectplan. Once the basic work breakdown structure has been set up the timeand cost estimates for each activity can be estimated and the resources

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Gather Feed

Animals

House Feed

People

Designboat

Buildboat

Boat

Interiordesign

Exteriordesign

Getelephants

1M, 1F

Getlions

1M, 1F

N oah’s A r k

Level 0

Level 1

Level 2

Level 3

Figure 2.5 Noah’s Ark WBS (Taken from Richman 2002)

for each activity defined. There are no hard and fast rules for setting upa WBS, but in practice it is useful to bear in mind the following;

Use the categories that make up your project: i.e. components of theproduct, organisational units or geographical areas.

· The WBS diagram does not have to be symmetrical.

· Every box is a summary of the boxes in levels below it.

· The final box in each level must end in a deliverable.

· The lowest level activities are called work packages, thisis lowest detail you wish to describe and control.

· All the boxes must equal the complete project.

The WBS should be reviewed with the project team member to ensure itmeets their requirements and concerns. WBS can come in two differentformats, either shown graphically in boxes (as per the example) orpresented in text indent format.

READING ACTIVITY

Read Chapter 2.1.3 of Field and Keller to understand this topic more fully.

Two further examples are shown below to help you understand theseformats.

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Foundations Walls/roof

Civil

Piping Sewerage

Plumbing Electrical

Wiring Appliances

House

Figure 2.6 House Project WBS Subdivided in Boxes (Taken from Burke 2003)

ACTIVITY

Do you think the following activities should be included in the WBS:documentation and project management activity?

ACTIVITY FEEDBACK

Yes. Be sure to include all of the following activities: project management,documentation, product implementation, user training and project closure.

Organisational Breakdown Structure

The WBS gives us a diagram of the activities needed to complete theproject. On larger projects this is usually linked to the OrganisationalBreakdown Structure (OBS) to ensure that everyone knows who isdoing what, to whom and with what.

The OBS gives us a division of responsibility. The thinking goessomething like this: if you do not have a clear idea of responsibility andif you do not assign tasks effectively, people will be confused. This maysound like common sense, but it is essential that the project managercommunicates clearly these responsibilities. If he does not some jobs

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Foundations

Walls/roof

Civil

Piping

Sewerage

Plumbing

Electrical

Wiring

Appliances

House

Figure 2.7 WBS Horizontal Presentation (Taken from Burke 2003)

will be done twice or not done at all! When the next project meeting isheld someone will ask if the quotes for the landscaping are in andeveryone will look at everyone else. An angry argument will followduring which people will deny that they had responsibility for thework.

None of this will move the project forward, but it does emphasize theneed to have a clear allocation of responsibilities.

Most project software systems have a method of allocating codesagainst the activities and then assigning those activities to the differentdepartments. Most software systems also have a link between the WBSand the OBS (an interface between the WBS and the OBS) which wouldclearly indicate the work packages and the person responsible forcarrying out the work.

As you can imagine on large projects the level of detail this provides canbe quite cumbersome. Assigning responsibilities can be very timeconsuming without the use of software. However, it is important tounderstand the principles involved.

READING ACTIVITY

Please read section 3.2.2 of Field and Keller to understand this subject morefully.

Sequencing Activities

One of the most important parts of project planning is determining thelogical flow of all the project activities. The next step is to create anetwork diagram. This is a diagrammatic plan of how the project mustbe completed.

It establishes the logical relationship between the activities using anetwork diagram. The key point is that the diagram highlights whichactivities must be carried out in sequence.

NOTE: today it is rare for network diagrams to be drawn by hand. Evenif you know nothing about network planning, the computer willproduce a schedule for you and carry out all the calculations. However,most project managers must understand the theory behind this conceptand most projects (even the largest) usually start with a hand drawnsketch of the first cut of the network to obtain some rough ideas. (In fact,before computer programs were developed most project managers

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needed to be expert at draughting skills and have a degree in logic tocomplete a network chart.)

A network diagram shows the activities and the logical relationshipsamong those activities. The method used to determine this relationshipis called the PDM method. This stands for Precedence DiagrammingMethod. The diagram below shows an example of this method. ThePDM method was developed from the activity on node (AON) method.

Both of these conventions aim to achieve the same objectives. They bothexpect a project manager or project planner to break the project intoactivities and work out how the activities depend on each other. Theprocess is then to calculate when each activity could, should and muststart, and to determine which activities are vital to the success of theproject.

Precedence diagramming method is also referred to as activity on nodebecause it shows the activities in a node box, with arrows showingdependencies. This is the most common form used in project softwarepackages.

Relationships

Before we can start the network diagram we must determine therelationships between all the activities. There are two basicrelationships:

· Activities in series: activities are carried out one afteranother.

· Activities in parallel: activities can be performed at thesame time

The two examples below illustrate these points:

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A100 (Task 1) A200 (Task 2) A300 (Task 3)

FOUNDATIONS WALLS ROOF

Figure 2.8 Activities in Series (Taken from Burke 2003)

What we are doing here is putting the activities in logical sequence.Now, this is very straightforward if you only have four activities! It getsvery complex when there are 100s (sometimes 1000s) of activities.

Note the activities are in each box. As already discussed, in projectmanagement terminology each box is called a node. Normally thelegend in the node box will show the following information: earlieststart time, duration, earliest finish time, activity number, description,latest start time, float and latest finish time (see the example in Field andKeller, page 197). This method is also the most common format found inproject management software packages.

Although in today’s work place the use of project management softwareis widespread, which makes the formation of sequencing activitiesstraight forward, it is essential for students to understand the logicbehind this process.

To create a network diagram for you should use the following steps:

1. For each activity, work out the relationships with other activities.That is, determine where each activity depends on otheractivities.

2. List the activities into a logical sequence.

3. For those activities that are not dependent on each other aseparate path should be formed.

4. Each activity must be dependent on the activity that immediatelygoes before it.

5. Go over the sequence to make sure it is logical and makes sense.

Here is example of how this works in practice:

Suppose you are in charge of a team responsible for arranging a salestraining programme for your organisation. You have listed all he

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A300 (Task 3)

A500 (Task 5)

A600 (Task 6)

WALLS

ELECTRICAL

PAINTING

A400 (Task 4)

PLUMBING

Figure 2.9 Activities in Parallel (Taken from Burke 2003)

components of the project. These are the activities that the members ofyour team must do and the time needed for doing them – the activitydurations are in days:

List locations 2

Select locations 4

Plan topics 3

Get speakers 7

Arrange speaker travel plans 5

Design and print brochure 14

Final check on travel plans 8

Take reservations 6

Run training programme 10

The next step is the analysis phase; here you work out what activities aredependent on other activities being completed first. For instance, whenyou are building a house you cannot plaster the walls until the walls arebuilt, so plastering must be scheduled to follow on, in series, after wallbuilding.

However, there will be other independent activities as well. Forexample, once the walls are built the plumber and electrician need notwork in any special order. Either can do their work first before the other,or they can both work at the same time in parallel.

Getting back to the example above, the sales training programme,clearly the speaker travel plans cannot be arranged until the locationshave been finalised. This is dependent relationship. However it isalright for the speaker travel plans to be arranged at the same time as thebrochure is being prepared because these activities are independent.

ACTIVITY

Draw a rough sketch of the network diagram for the sales training example asoutlined above. What would help you with this task?

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ACTIVITY FEEDBACK

A copy of the network diagram as produced by Project Management software,is shown in Figure 2.10. To help you with this it would have been useful to drawup a chart with the activities listed, showing durations and what was thepreceding activity. The network diagram clearly shows the preceding activityfor each of the activities.

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Figure 2.10 Network for Arranging a Sales Training Programme

It also might be useful to show this in a chart form; this is known as a Ganttchart.

We will come back to Gantt charts in a moment. To help us understandthis further let us look at another example, one with slightly moreactivities.

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Figure 2.11 Gantt Chart for Arranging Sales Training Programme

Here you can see the activities have been listed, with the duration and apreceding activity(s) for each activity.

This will help us build a network diagram for the project.

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ActivityNo.

ActivityDescription

Durationin days

Preceding

activity

1 Start 0 0

2 Mobilise 2 1

3 Survey 1 2

4 Grade site 2 2

5 Trench footings 5 3, 4

6 Form and pour concrete 5 5, 8

7 Cure concrete 8 6

8 Concrete and material design 5 1

9 Spec prefab metal building 4 1

10 Plumbing materials, pump 5 1

11 Electrical materials, lights, panel 5 1

12 Install pump 7 7, 9, 10

13 Erect structural steel 4 7, 9, 10

14 Install roofing and siding 5 13

15 Install lights and panels 3 11,14

16 Test pump 2 12

17 Paint 3 15

18 End 0 16, 17

Figure 2.12 Activities to Construct a Pump Station (Taken from Richman 2002)

READING ACTIVITY

You now need to read section 3.3.3 of Field and Keller to understand networktechniques more thoroughly.

The earliest event time for every node is calculated by doing a forwardpass through the network. You start at the project start node and finishat the unique completion node. We are concerned with event times here,a point in time not a period of time. Look at the example of a forwardpass, on page 192 of Field and Keller to understand this topic.

We are also interested in the latest times that each activity can occur ifthe project is to be completed by the required date. These are calculatedby doing a backward pass. This calculates the latest time for eachactivity if the project is to be completed by a given completion date. Themethod is exactly the reverse of the forward pass procedure. This will

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Concrete andmaterial design

8 5 days

Grade site

4 2 days

Form and pourconcrete

6 5 days

Cure concrete

7 8 days

Trench footings

5 5 days

Survey

3 1 dayMobilise

2 2 days

Install pump

12 7 days

Test pump

16 2 days

End

18 0 days

Paint

17 3 daysInstall lights andpanels

15 3 days

Install roofing andsiding

14 5 days

Erect structuralsteel

13 4 days

Plumbing materials,pump and controls

10 5 days

Spec prefab metalbuilding

9 4 days

Start

1 0 days

Electrical materials,lights, panels, etc.

11 5 days

Figure 2.13 Network Diagram for Construction of Pump Station (Taken from Richman 2002)

also highlight any activities that could increase duration and stillcomplete the project on time, activities like this have what is known asfloat (more on float in the next section). Look at the example of abackward pass, on page 194 of Field and Keller.

READING ACTIVITY

You now need to read section 3.3.4 of Field and Keller to understand this topicmore fully.

Some of the examples above have been very straightforward. This hasbeen done on purpose so you can understand the concepts that havebeen presented here. It is important you work through the examples toensure you understand the techniques being presented here. If you areunsure of these concepts work through the Pump Station example,activity by activity, to ensure you understand the logic behind theexample.

The next section introduces the critical path. This is the final piece of thejigsaw when it comes to sequencing activities and should (if you arefinding this incomprehensible!) make all this clearer.

SEQUENCING ACTIVITY CASE STUDY

The directors of Nelson Clothing Company approved (six months ago) thebuilding of a new facility to manufacture a new clothing range. A projectmanager and project team has already been selected.

Phil, the project manager spent the first four months planning the project. Heworked out the project costs, he worked out the time of each activity and theproject scope. Phil then obtained project approval.

His next step was to create the WBS. This had over 120 boxes in nine levels.Some of the work packages have 2 to 4 hours of work, some have 200 hours ofwork. Phil estimated each of the activities using plans he found for a similarproject planned four years ago. Phil drew a network diagram that showed thesequence of activities and there interrelationships. Phil now intends to select aproject team and really start to roll out the project.

Question: If you were the project manager what would you do differently?

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CASE STUDY FEEDBACK

Your answer should have included:

Phil should have involved the project team from the start not done everythinghimself. The project team should have helped develop the work breakdownstructure, helped with the estimates and all the other phases of the project.How will he get the support of the project team when he has not consultedthem?

No mention is made of project reviews, cost benefit analysis or risk assessment.The WBS seems poorly thought out; normally work packages represent 10 to75 hours of work. Packages of 2 to 3 hours of work are too detailed to bemanaged effectively. The estimates are probably out of date (over 4 years old!).

Creating the Critical Path

This next section discusses how you achieve the critical path throughthe network but first, to prevent any confusion, let us review some of thejargon that often crops up in books and in project managementmanuals. The terms critical path analysis, PERT, critical pathnetworking, CPM and network analysis all mean the same thing; at leastthe same basic technique.

Critical path analysis (we shall call it CPA from now on) is an entirelynatural management tool. It is something we do every moment of ourlives. You normally open the kitchen door before stepping into thekitchen. You put the kettle on for tea before getting the cups out, as youknow that the boiling water is required for tea making.

We unconsciously understand much about the flow of doing things, thelogic that dictates the way things get done. Projects are just the sameexcept that there are a larger number of tasks. As we have already said(and it is worth repeating) what we do is break down any project intoactivities, or tasks, and then decide how long each task will take andhow each of these activities relate to each other. We then find the bestroute through the activities, from start to finish (usually represented ona network diagram from left to right) – this is CPA. It is also theminimum time for the project, taking into account all the different tasks,relationships, times and dependences.

Burke defines the critical path as:

“The critical path is defined as the series of activities thathave zero float. The critical path always runs through the

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project from the first activity to the last activity. Activitieswith zero float are on the critical path”

Burke (2003)

You will be aware of the term float from your reading of Field andKeller. Burke defines float as:

“Float is the measure of an activity’s flexibility, quantifyinghow many working days the activity can be delayed beforeit will extend the completion date of the project, or anytarget finish dates.”

Burke (2003)

Today the schedule is very rarely run manually. Most networks areproduced and maintained (as already discussed) using project managementsoftware. This involves assigning a calendar date to the beginning of the firstactivity and converting the time durations on each activity to a calendardate. You can then run a schedule using the appropriate software on yourcomputer and review the schedule using a Gantt chart.

To highlight this further let us return to the pump station example.Below is the pump station example with the critical path shown.

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Concrete andmaterial design

8 5 days

Grade site

4 2 days

Form and pourconcrete

6 5 days

Cure concrete

7 8 days

Trench footings

5 5 days

Survey

3 1 dayMobilise

2 2 days

Install pump

12 7 days

Test pump

16 2 days

End

18 0 days

Paint

17 3 daysInstall lights andpanels

15 3 days

Install roofing andsiding

14 5 days

Erect structuralsteel

13 4 days

Plumbing materials,pump and controls

10 5 days

Spec prefab metalbuilding

9 4 days

Start

1 0 days

Electrical materials,lights, panels, etc.

11 5 days

Figure 2.14 Network Diagram with Critical Path (Taken from Richman 2002)

What is important about the critical path?

The activities on the critical path are those activities on the network thatif delayed will delay the completion of the project. These activities areknown as critical activities. Therefore, it is essential that these activitiesmust be started and completed on time.

The critical path calculates the following dates for each activity:

· Early start is the earliest date the activity can begin.

· Late start is the latest date the activity can begin and stillallow the project to be completed on time.

· Early finish is the earliest date the activity can end.

· Late finish is the latest date the activity can end and stillallow the project to be completed on time.

Obviously activities on the critical path are important. These activitiesneed careful monitoring because if they are not completed on time theproject will be late, unless subsequent activities are completed in lessthan the scheduled time.

For activities on the critical path the early and late start, and early andlate finish, are the same. The concept of float we have already touchedon. However, it is an important concept and it is worth going over a fewimportant points with regard to float.

Float

· This is the time an activity can slip without delaying theproject.

· It is equal to the difference between the early start andlate start.

· Activities on the critical path generally have zero float.

Another concept is lag. This is the time delay between activities. Forexample, a lag of 5 days between activities A and (with a finish to startrelationship) means that B cannot start until 5 days after A is finished.

If the schedule does not complete by the required time you can takeaction to decrease the total project duration. This is known as crashingthe schedule. To do this you need to review all the available options andreduce the time of some activities. Remember that it is the activities onthe critical path that needed adjusting.

This next article concisely notes some of the key factors when puttingtogether a project plan.

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CASE STUDY

Detailing the Plan

The approved project charter has been signed, sealed and delivered to thedesignated project manager—you! However, you are not surprised. As iscustomary in your organisation, the strategic planning and project managementoffice facilitated the development of the project charter in coordination withthe senior management team, project sponsors and stakeholders. You were aparticipant in that process. It is now your task to take the charter, develop aproject plan and manage the effort to a successful conclusion. Since youparticipated in the development of the charter, you have already begun thethought process of what needs to be done. Piece of cake! Nothing to worryabout, right? What? You were NOT included in the development of the charter,and this is the first time you have seen it? Welcome to PM reality!

Now, don’t take me too seriously on this. There are organisations that havesome very mature project management processes and do involve the projectmanager in the development of the project charter. But many more do nothave mature PM processes, and the charter is developed without theknowledge of the designated project manager, or the charter is developed bythe project manager with general guidance from the senior management. Ineither situation, your actions, as the project manager, must follow a prescribedcourse in the development of a detailed project plan.

As you read through the project charter, mentally check off key pieces ofinformation that you are looking for, such as:

· Project description.

· Scope statement.

· List of the deliverables/milestones and when they are to occur.

· The senior management team.

· Your authority to act.

· Funding limits.

· Signatures of the sponsor and stakeholders.

But now the work starts. The charter only provides a high-level view of theproject and what needs to be done. It does not provide you with the totality ofthe task. The devil is in the details, and that’s what you’ll find as you begin todevelop your plan. It is now your responsibility to distill the charter intosegments that can be analysed and dissected, uncovering the detail andcomplexity of the project, and developing a plan that will document a detailedcourse of action that will ensure the successful completion of the project.

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Muster the Core Team

Breaking down the charter into project activities is a team effort. Therefore,you need to identify your core team, if it has not already been selected, anddiscuss the project charter. The objectives of this initial meeting are to makesure there is a clear understanding of the overall project, and that thecomposition of the core project team represents the needed resources toaccomplish your goals. For an IT project, the core team may have a softwareengineer, hardware engineer, network systems engineer and a procurementspecialist. These are the individuals who will be your functional projectmanagers for their respective business units’ support to the project. The nextobjective is to identify the parts of the project that will be major resourceexpenditure activities, such as software development, training and hardwareengineering, or administrative activities, such as travel. These items becomewhat I call “budget buckets.” Their more formal designation is major costaccount line items.

The next step is for the core team members to take their assigned portion ofthe project and:

· Break down the major tasks into manageable work packages.

· Identify work that needs to be done.

· Quantify duration of tasks.

· Schedule activities with consideration to their dependency on otheractivities.

· Refine resource requirements.

· Identify points of risk in a structured presentation of task-orientedgrouping of work packages.

This must be a deliberate and methodical process, resulting in the identificationof project work package activities that can be managed and their progresstracked. The quality of the effort invested in this process will be the bedrock ofthe overall quality of the project.

In developing your estimates, use as many sources as possible, e.g., in-house,outside sources, professional organisations, historical project files, etc. As theproject detail is assembled, scheduling and sequencing of activities in the planbecome the life blood of the project. Scheduling activities and the identificationof predecessor and successor activities for an activity must be identified alongwith the activity’s duration and required completion date. When considering anidentified risk of an activity, you may want to apply a contingency pad ofduration and/or cost to the activity, based on its probability of occurring and itsimpact on the project.

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WBS Review

Once the core team members have developed their respective WBS, I suggestthat each core team member provides a presentation to the entire team of hisrespective WBS, explaining the activities and their relationship to otheractivities. This “walk-through” of all the activities does a couple of things to getthe project off on a good start. First, the WBS review informs the entire team ofwhat this business unit will provide. The review may uncover overlookedactivities, or a resulting discussion may lead to refinement of duration and costestimates. You may discover an activity’s relationship to other activities to beperformed by another business unit.

The WBS is the most important tool of the project manager in the managementof a project. It provides a complete representation of work to be done asdescribed in the project scope. It also provides the project manager with anelement of protection and monitoring against scope creep and “gold-plating,”i.e., activities that misdirect the use of time and resources from the completingthe defined in-scope work.

Assembling the Detail

The project plan is a collection of self-standing project-related documentsdeveloped as a result of project requirements or are standard, establishedorganisational core policy, process and procedure documents to be applied tomanaging all projects.

Here is my suggested list of project-specific and core documents to include in aproject plan:

Project Specific Documents:

Project charter

Work breakdown structure (WBS)

Project milestones

Roles and responsibilities of the project team

Communications management

Time management (network diagrams, Gantt chart)

Escalation and problem resolution

Core Project Management Documents:

Change management

Fiscal management

Risk management

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Procurement management

Quality control and assurance

The core PM processes are established enterprise standard operatingprocedures for the management of the respective functional areas of allprojects. If this project is a result of a contract award from a third party,contract terms may require modification to some core documents. Oneexample could be how changes of scope are processed. The contract maystipulate a joint process of review and determination between you and theclient.

The project-specific processes are unique for each project as the nature andrequirements of the project direct the formation of the process andprocedures followed during the project’s course.

The assembled plan is a formal document developed by the core project team,describing to stakeholders and shareholders how the project will be managedand governed. The project plan is the integration of tools, procedures andpolicies to successfully manage the project.

Tracking the Detail Trail

Depending on the complexity of the project, you may decide either to developa single WBS document showing the project work breakdown of all activities,or develop detailed breakdowns for each level one major activity of the project,as a well as a summary or executive level presentation. There are numerousproject management software applications that will enable you to developmultiple work breakdown presentations and link them to a higher levelsummary presentation. These applications will also produce network diagramsthat will show lead, lag and float of the activities, their relationship based ontheir designated predecessor and successor activities, and the critical path ofthe project. Choosing the best method of presentation is based on experience.If you are unsure, ask a more seasoned project manager.

As you move into project execution, I would like to provide a word of caution inmonitoring the progress of the project. As the project manager, you areexpected to provide the status of the project from a broad prospective andsituational awareness of the entire project. Monitor and track project detail at alevel that will enable you to be aware of the overall status of the project so youcan answer questions from senior management, stakeholders and sponsors.Remember, their focus is on progress, resource expediter rate and schedule. Inshort, their mantra is, “On time and under budget!”

Your goal is to manage the project process and to address the businessmanagement aspects of the project. You should not track the progress of tasksat a level of detail that causes you to lose sight of the critical parts of the project.(My article, “http://www.gantthead.com/article.cfm?ID=18757" , tells thestory of a project manager who experienced first-hand what happens to aproject – and the project manager – when too much project detail ismonitored.) Leave the detail tracking of major activities to your core teamleaders. They are the experts in their area, so if you need to have detail

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information regarding a situation, go to them. After all, that’s what you paythem for!

Jim Harris

December 6, 2004. From: www.gantthead.com

Gantt Charts

Gantt charts are bar charts that display a schedule of all the activities.They were named after Henry Gantt who invented them in the FirstWorld War.

The idea and layout is quite straightforward. (I am sure you have seen aGantt chart before, you have just not realized that it was a Gantt chart! Itis normally only project teams that call them Gantt charts; almosteveryone else calls them bar charts)

READING ACTIVITY

Read section 3.3.2 of Field and Keller to obtain a thorough understanding ofGantt Charts.

A Gantt chart or bar chart provides a very easy to read picture of theproject activities (look at Figure 2.15). You will see that it easy to see therelationships between the activities and time.

We will come back to Gantt charts later when we look at reporting, andthat subject will make Gantt charts more interesting and relevant.

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Figure 2.15 Baseline Plan Gantt Chart (Taken from Richman 2002)

CASE STUDY

Now read the following article and case study to understand how some ofthese techniques and issues are managed in practice:

Don’t Break Out the Champagne Just Yet!

By Luc K. Richard

Many executives evaluate software development projects with one criterion:whether or not it meets its ship date. Agreed, missing your project milestonescould be devastating, especially if there are some legal implications tied to arelease schedule. However, the ship date is not the only decisive factor youshould pay attention to. Ever heard of customer satisfaction?

At the end of the day, if your customers don’t like what you’ve shipped, they’renot going to pay for it. And if they don’t pay for it, then meeting that importantship date is meaningless.

Unfortunately, too many managers learn this lesson the hard way. They declarethe product generally available as soon as it comes out of the validation phase,and immediately break out the champagne. “Congratulations everyone! We’vemet our ship date! Let’s celebrate!”

Wait a minute! Meeting the ship date is like studying for an important exam.Sure, you think you are ready, but don’t you think you should wait until after theexam to celebrate? The true test to determine whether or not you’vesucceeded is not exiting the validation phase; it’s successfully completing thecustomer acceptance phase.

I remember a case where the R&D team was celebrating its success just as theproduct was being packaged and shipped to the customer. One executive inparticular was going on and on about how he played an instrumental role inmeeting the ship date. Without him, this project wouldn’t be a success—or sohe claimed.

When the customer received the application, the installation manuals and userguides weren’t even in the box. They “weren’t quite ready” replied theexecutive “because they needed some last-minute updates due to a changerequest implemented at the last minute.” Regardless, the customer proceededto install the application. He failed miserably! “Not to worry,” answered theexecutive. “We’re going to send someone over to help you out.” Finally, aftermodifying a few (read: most) configuration files and tweaking some of the code,the system seemed to work.

A week in the Acceptance Test phase, the customer reported that five of themost important use cases weren’t met, and that their testers had raised morethan 50 software defects. They decided to not accept the product – nor pay forit – until they reached a 98 percent success rate on the ATP.

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Do you consider this project a success? Was meeting the ship date a goodenough reason to break out the champagne?

If you’re that executive, you’re probably trying to put the blame on otherdepartments. “Product Management didn’t identify the right set ofrequirements” and “Quality Assurance should have consulted with thecustomer to better understand their acceptance criteria.” It’s their problem,right? Wrong!

Listening to your customers is not an activity that only applies to other teams.It’s an activity that needs to be practised by every department in yourorganisation. Involving the customer should be part of your corporate culture.It should occur at every stage of the development process, including theplanning, definition, construction and validation phases.

Granted, customers are not always easy to deal with. They can make your worklife miserable and, if not managed properly, can actually do more harm thangood. Customers…

· Don’t always know what they want, and those who do have a hardtime explaining it.

· Won’t commit to a set of features. They’ll describe somethingdifferent every time you ask.

· Agree (after the fact) that the initial set of features don’t meet all oftheir requirements, yet they’re not willing to pay extra for theadditional features they are now requesting.

· Won’t read your specifications or answer your questions in a timelymanner, but are very quick to complain once the product is in theirhands and doesn’t meet their expectations.

· Aren’t technical enough to describe their real needs.

· Don’t understand your software development process and that youcan’t rewrite the system two weeks before its ship date.

However, regardless of how tough your customers are, you cannot developyour system in a silo and then hope they’re going to accept and pay for theproduct. The solution is not to ignore the customer. The solution is to developa better relationship with them, and to involve them even more!

By further involving your customer, you build a better relationship with them:one where you’re not afraid to remind them that you need feedback in a timelymanner, or otherwise jeopardize the delivery date. One where you can say noto change requests late in the development cycle.

Building a strong relationship with your customer doesn’t just make theexperience more enjoyable. It increases your likelihood of meeting theiracceptance criteria. It allows you to manage their expectations and, therefore,

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their satisfaction. After all, isn’t customer satisfaction just the customer’sperception of your solution in comparison to his expectations?

Involving the customer isn’t just a start-of-project and end-of-project activity.Here are some ideas to involve the customer at every phase of thedevelopment lifecycle.

Planning phase: Inquire about your customer’s internal milestones. Tryto line up your deliverables and determine a release schedule that meets bothyour needs. If you can both agree to some of the larger milestones, there is astronger likelihood that your schedule will remain the same. Furthermore, yourdesigners will treat those deadlines more seriously and will put in extra effort tomeet them.

Definition phase: Get your customer to describe, or better yet, write

down use cases and other requirements that will eventually be included

in the acceptance test plan. Get him to review your prototypes andfunctional specifications and welcome their feedback. The earlier you work onthe acceptance criteria, the better your chances of meeting them—and gettingpaid.

Construction phase: Keep your customer up-to-date on your

progress. Do regular product demos and show them you’re on track.Demonstrating progress is great for nurturing your customer’s trust.Furthermore, it helps them understand that they can’t submit significant changerequests when you’re so close to project completion.

Validation phase: Ask your customer to Beta test your application. Letthem install your application, execute system tests, integrate it with their othersystems and even get a sneak peak at your manuals and user guides. Many ofthem will gladly do it—for free—and will be more than happy to point outsome defects and/or recommendations that you can fix before the ship date.This is especially useful when you don’t have enough capacity to test yoursystem as thoroughly as you’d like.

Product launch: Train your customer. Show them how the product ismeant to be used. Teach them how to not make errors. Many defects raisedduring an acceptance phase are not bugs with the system itself but ratherproblems related to how the tester uses the system. Educate them on how toproperly configure your system and use your graphical user interfaces.

Involving the customer won’t guarantee they’ll commit to a set of features,control feature creep or magically increase their technical knowledge. It won’tget rid of the six problems highlighted earlier in this article. But it will build astronger relationship, it will allow you to better understand their acceptancecriteria, and it will make it easier for you to manage their expectations. Withoutyour customers, you’d be out of business, so don’t learn to ignore them, learnhow to deal with them. Involve your customers throughout the softwaredevelopment process, and ship a product that meets their expectations—andthen break out the champagne!

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Preparing Resource Plans

Assigning the right resources to the project is a critical operation. Theright people, materials, and equipment all need to be assigned to theproject and they all need to be in the right place at the right time.

The following should be used as a guide when assigning resources:

· Assign scarce resources to activities on the critical pathfirst.

· Obtain firm commitments from team members,managers, and senior management.

· If you cannot get the right resources at the right time youwill need to replan.

· Do not assign the wrong person to the job just because noone else is available.

· Balance critical resources by adjusting float.

One of the most important tasks is identifying the right skills. You needto be careful that you do not assign a junior operative to do the jobspecified for a more senior person. You might also need to recruitindividuals who best fit the skill requirements that were identifiedduring the creation of the work breakdown structure. You may need tolevel the workload by reallocating other available personnel to provideassistance or even reducing the scope of an activity.

Assign the most appropriate people to each activity. A useful tool fordetermining this is a resource histogram.

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Weeks

03/9

2

4

6

8

10

3/16 3/23 3/30 4/6 4/13 4/20 4/27 5/4 5/11 5/18 5/25

Ho

urs

per

day

Project work

Operational support

Administrative

Senior Editors

Figure 2.16 Resource Histogram (Taken from Richman 2002)

It is important to remember that the resource estimate is linked directlyto the scope of work. As Burke points out, the scope of work may beexpressed as so many tonnes of steel or so many square metres of wall tobe painted. From this description the estimator can convert the scope ofwork into man-hours per unit.

Resource Loading

In an ideal world the resource requirement equals the resourcesavailable. In practice, this rarely happens and some form ofrescheduling is needed.

A resource overload is when the resource forecast requirement exceedsthe available resources, while a resource underload is when theresource forecast is lower than available resource. A resource overloadwill lead to some activities being delayed, which could delaycompletion of the project. While a resource underload will under-utilizethe company’s resources, which could have a detrimental effect on thecompany’s profitability.

The histogram now shows the forecast resources and availableresources, both as a histogram and numerically. You can now addressthe problem by:

Resource smoothing: Assign resources to critical activities and try tomove other activities to ease the overload.

Increase Resources: To address the overload.

Reduce Resources: To address the underload.

Other factors include extending the end date or increasing the resourcesif the end date is fixed.

When resources are overloaded there are a number of ways ofincreasing the resources available.

· Working overtime.

· Working shifts.

· Increase productivity.

As you can imagine this can very complex. In fact, resource analysisneeds a tremendous amount of mathematical calculations. It is sensibleto use computer software for this type of analysis.

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READING ACTIVITY

Read section 3.4 of Field and Keller to obtain a full understanding of this topic.

Why do Resource Schedules fail?

Schedules often fail because administrative and operational activitiesare underestimated. When his happens, fewer hours than expected canbe devoted to project work.

As you allocate resources it is important to consider the trade offs intime, cost and resources. For example, putting more people on a projectmay get the job done but may also be less efficient. Also (and this is veryimportant) the total cost of the project increases as you add moreemployees. Some activities take the same number of time regardless ofthe number of people involved.

Finally, adjust the project schedule based on the availability of the rightresources at the right time. NOTE doing this often results in increasingthe total project duration.

To make things go smoothly you should:

· Compile a resource histogram to compare resourceforecast and resource available.

· Allocate resources to the critical activities first.

ACTIVITY

Why is identifying skills, when preparing resource schedules, important?

ACTIVITY FEEDBACK

You don’t want to assign a junior person to a job specified for a senior person,likewise you would not normally assign a senior person to a junior person’s job.

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PCs and Project Management Software

The computer is now an integral part of the project manager’sinformation and control system. Project management software is nowused to assist with schedule development and take the pain out ofcalculation of mathematical analysis of resource plans and CPA plans.

Software is used by mangers to plan and control projects and there isnow complete acceptance of project management software to helpproject teams with their tasks.

Today many large projects have project offices to help with themanagement of projects. These offices not only help with co-ordinatingproject information but enable the standardization of projectinformation and management reporting systems.

With standard systems and reporting, the collecting of project data, theprocessing of the data and the reporting on project performancebecomes efficient and standardized. The project office also becomes thesource of project knowledge and project information. If a project officemanagement structure is introduced it is essential that thecommunication aspect of the project office is emphasised. The projectoffice becomes the single point of responsibility and lines ofcommunication to the project team, contractors, suppliers and allstakeholders should be handled through the project office.

Project Management Software

Software is used to store data about projects. Data about activities, thecost of those activities, the duration of those activities, the time it takesto complete those activities, in fact everything about the project can beinput into project management software and used to produce reports onthe status of the project.

In a very perceptive piece, Reiss notes the following about projectplanning software:

“What is a project planning software package? A softwarepackage is a very disappointing thing indeed. Like a pieceof music what you actually want is invisible. You get apretty box, lots of manuals you also get a disk or three. Onthese disks are recorded the instructions that turn yourcomputer into a project planning machine.

These instructions tell the computer how to ask for detailsof your projects and how to produce barcharts andhistograms. It is these instructions that you really want. Themanuals just tell you how to use the program. The diskscarry the program. The packages nearly all work in thesame essential way. You tell the program about the tasks

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that make up your project, and it tells you when each taskshould happen and which are critical. Critical tasks lie onthe critical path and are vital to the success of your project.If you also tell the software how many resources are neededfor each task, it will add up these demands and tell youhow many resources you need day by day.

You build your plans, analyse them, and produce barchartsand other reports to communicate your ideas to your team.As work progresses, you frequently update your plans andproduce new reports showing the current state of theproject, which parts are going well, and which parts aregetting into trouble. While you will solve no problems withthe software, you will greatly increase your chances ofpredicting problems in time for you to do something aboutthem. A problem foreseen is a solvable problem.”

Reiss (1995)

In general, project management software has very many benefits, andtoday most large projects could not be run without the use ofappropriate software.

As Rory Burke notes project management software has the followingbenefits:

· Project management software offers fast calculations.

· The calculations are always correct, the accuracy of theoutput being directly dependent on the accuracy of thedata input.

· Editing is quick.

· The software has the capacity to process large projectswith 10000+ activities.

· The project database can be linked to the corporatedatabase.

· Once the database has been established, ‘what if’ analysiscan be performed quickly.

Burke (2003)

However there are a number of disadvantages:

· Additional costs associated with education and training,hardware and software procurement.

· The additional cost of maintenance and up-grading.

· If the computer goes down this could stop the company’soperation.

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· The new system may cause a resistance to change.

Burke (2003)

Project management software cannot control or manage the project. It isan aid to the PM to help calculate project timescales and critical pathanalysis. It is not a substitute for practical management control of theproject.

Summary

This has been a long section, but a very important section at that.

The feasibility study helps us identify whether the proposed project islikely to be successful. It should help us paint a scenario that will helpidentify whether it is feasible to go ahead with the project or whether theproject is too risky to be taken further.

Project planning starts with the project lifecycle and project feasibility totest whether the project is feasible or not. The project life cycle is veryuseful for planning and seeing the project through the various stages. Inreal life, things do not normally go quite so smoothly. The stages in thelife cycle model are apt to run into problems, but that is what the projectmanager is there for; to smooth over these problems.

After this the more detailed project plan can be put together. This willcomprise: a work breakdown structure and analysis of the activitiesneeded to complete the project.

The Work Breakdown Structure (WBS) breaks the project down intomanageable chunks. Critical Path Analysis (CPA) gives us a structuredapproach to planning. It is a critical part of the planning process.Following this analysis the activities will be sequenced in the correctorder.

The network diagram outlines the logic or sequence of work, i.e. thecalendar when the work can be scheduled. The critical activities arethose on the network with zero float. The CPA method is best learnt bysetting up your own network diagram and calculating the start andfinish dates.

Project planning can be likened to a modeling exercise. You put the plantogether and then experiment with the model to find out the best way ofproceeding through your project.

Very simple projects can be run from just a barchart. More complexprojects will have a CPA and a detailed network diagram. If you havemany resources you will need a resource histogram. You will thenmeasure progress, update the plan and communicate your updates tothe project team.

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REVIEW ACTIVITY

Urgent Care Hospital

Urgent Care Hospital has recently received several large grants to moderniseand upgrade the care they provide to the community. The hospital hasdetermined to spend some of the money to upgrade the radiology departmentand has hired you to manage a project to install a new CAT scanner(computerized axial tomography scanner) to provide better care to criticalpatients.

The new scanner will require major renovation of the radiology department,which is estimated to take eight weeks. Although the head of the department iseager to have the new machinery, she is not happy about the disruption theconstruction will cause. The scanner is expected to arrive March 1 and will takethree weeks to install. The construction renovation cannot begin until after theinstallation is complete. The four operators who will use the new equipmentalso need two weeks of training.

The estimated costs are as follows:

Purchase $1,000,000

Installation $45,000

Op Training $16,000

Renovation $96,000

Since the new hospital expects to generate income of $50,000 a month on thenew scanner, its managers are anxious to begin using it as soon as possible withthe least possible disruption to hospital functions.

The head of the radiology department has come to you asking you to reducethe total project time as much as possible. She feels thirteen weeks is too long adisruption.

To accommodate the request, you now need to complete the following tasks:

· Determine what can be done to “crash the schedule” (make itshorter).

· Prepare a network diagram and assign calendar dates to eachactivity.

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This activity asks you to crash the schedule. Although the four activities can bedone in sequence (one after another), the schedule can be fast tracked bybeginning the training before the renovation is completed. As a result, twoactivities can be performed in parallel (at the same time) and the project can becompleted two weeks sooner, as illustrated below.

Urgent Care Hospital – Crashed Schedule

Activity Description Duration(weeks)

Precedingactivity

1. Receive CATSCAN 0 None

2. Install CATSCAN 3 1

3. Renovate radiology department 8 2

4. Train CATSCAN operators 2 2

5. End 0 3, 4

CASE STUDY

The following case study highlights many project management issues in a reallife situation. Read with interest!

Case Study: Universiade XVI – the 16th World Student Games

Taken from Project Manager Today

The biggest sporting event ever to have taken place in the UK – that is the 16thWorld Student Games. All of the competitors are supposed to be students ofone form or another, and many of the athletes will go on to compete in the onlybigger sporting event – the Olympics.

Now, when you think of a major sporting occasion, your first thoughts probablygo one of two ways. If you are a builder, you think of all those stadia andswimming pools. If you are an IT professional, you think of scoring and timingsystems. The games involve many buildings and lots of computers, and that isjust the beginning.

Take a look at the management chart of Universiade Great Britain Limited.

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UGBL is the company which was formed to organise and run the games. Youwill see the major departments into which the organisation is split as well as ashort list of the sub-projects within the major project. From this you may getsome idea of the project’s scope.

Let’s take catering as an example. There were 6000 competitors and officialsfrom 130 countries living in Sheffield for the two weeks of the games. They allhad to be fed in accordance with their national and religious needs as well astheir special needs as athletes. They had three nutritious, muscle-buildingmeals a day. Not so with the VIPs attending the sporting conference, the judgesand umpires, and the huge number of team-support members – they tuckedinto more up-market fare. There was guzzling going on at the student village,most venues, the conference and the VIP facilities. The total grub requirementwas 40 tonnes per day.

The caterers didn’t even start with a kitchen. In the build-up period they had toorganise the kitchens, cafeteria, bars and buffets. It is not surprising that UGBLhad a full-time catering expert seconded from Gardner Merchant – the kitchenequipment company.

There were five purpose-built venues – this building work was organised bySheffield City Council – and in these venues the hopeful athletes grunted andgroaned their way towards gold medals. The village to house all of these visitorswas converted from the semi-derelict Hyde Park Flats in Sheffield, most ofwhich will be put back into the local housing stock after the games. There wasone of those spectacular opening ceremonies. There were 998 competitions –including 192 athletic events, 216 basketball and 88 hockey matches and 180swimming races. As this is a friendly competition, the losers do not simply dropout but take part in runner-up contests, so that every visitor got to play, run,jump, dive or whatever quite a few times.

The venues overspilt from Sheffield into South Yorkshire, causing a realtransport problem. There had to be a fleet of vehicles to take the competitorsfrom the village to the right location, as well as to move the VIPs and judges, notto mention the transport of the huge number of visitors who came to watchtheir hero, heroine, niece or boyfriend compete.

The venues could not be completed, commissioned and immediately pressedinto use for the games. They needed realistic testing as venues. Hence, most ofthe new venues were made available to local clubs to use in the period betweenbuilding completion and the opening ceremony of the games.

Everyone attending the games had to be vetted to ensure security. Every namewas entered into a purpose-built software system, so that when participantsarrived they could be issued with suitable badges to allow them into therelevant areas. This is called accreditation, which was only a small part of thesecurity sub-project.

Add medical, drug and sex testing, media facilities and a daily newspaper, andyou get some feel for the size of the project. As if that were not enough,Sheffield threw in a cultural festival to compete with the Edinburgh Festival, and

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every group in the town from the cricket club to the tiddlywink society didsomething to coincide with the main games.

Planning

While the games were planned at a broad-brush level by network planning, andbarcharts existed for most of the elements in the project, this work was put onhold following some management changes. One of the problems with theplanning, even at a summary level, was to create a work breakdown structure(WBS) that would suit the current requirements and yet leave room for theunknown future needs of the project.

A WBS is a structured system for coding tasks by relating them to various groups,phases, management responsibilities or other groupings. Commercial softwarepackages handle it in different ways – some are very structured and some have avery free format. The various functions within the organization suited themanagement needs but bore little relationship to the natural sub-projects withinthe project itself. Hence, the system shown below was developed:

The software used was Pertmaster Advance, which permits a 12 character workbreakdown code. The first character was devoted to the operations function,with A = accommodation, S = sports, and so on. The second character was leftfree for later subdivision within these categories. The third character indicates amarketing involvement with a C= ceremonies and an I = information services. AV in the seventh position indicates a need for volunteers.

In addition to this, the tasks were numbered in groups, 12100 to 12199 setaside for accommodation at the student village, 12200 to 12299 foraccommodation elsewhere, and 14100 to 14199 for shuttle transport. The tasknumbering relates to the sub-projects, whereas the work breakdown relates tothe management functions. The tasks can have only one number but could havemany characters in the WBS. The table below shows the task numberingsystem. As the plan was built, the planners allocated each task with its tasknumber range and entered any characters in the WBS that were relevant.

If you want a barchart for the sports department, you need to check for an S inthe first column; a C in the third position indicates a task connected with theceremonies. Any character at all in the fifth column indicates a financeconnection. It is easy, therefore, to get a barchart for a part of the plan. Tellingthe software to look for an S in position 1 and a V in position 7 gives a barchartrelevant to volunteers working on the sports sub-project. A requirement fortask numbers between 12000 and 12199 gives details of the student village, andtasks between 12000 and 12299 give all the accommodation activities. Askingfor tasks numbered between 12000 and 12199, plus a V in the seventh positionof the WBS, gives a barchart of those tasks in the student village that requirevolunteers.

By this means, a barchart can be produced for most needs. There isconsiderable scope for expansion of the plan within the structure and mostpeople can get a single A4 barchart for their area of interest.

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UNIVERSIADE (GB) LIMITED

PROPOSED WORK BREAKDOWN STUCTURE JULY 1989

FUNCTIONAL DEPARTMENT DIVISION CODINGSYSTEM

OPERATIONS ACCOMODATIONOPERATIONS SUPPORTTECHNICAL SERVICESSPORTSPROTOCOL

A*O*T*S*P*

MARKETING SPONSORSHIPPRESS OFFICEMERCHANDISINGCEREMONIESEDITORINFORMATION SERVICES

S*P*M*C*E*I*

FINANCE INFORMATIONTECHNOLOGYPURCHASINGACCOUNTINGFINANCIAL CONTROLOFFICE MANAGEMENT

I*P*A*F*O*

HUMAN REOURCES VOLUNTEERS V*

Unit 2 References


Field, M., Keller, L. (1998) Project Management. Open University.

Harris, J (2004) www.gantthead.com

PMBOK Handbook (1992). Volume 6, Project and Program RiskManagement.

Richard, L.H. (2004) www.gantthead.com


Reiss, G. (1995) Project Management Demystified. Geoff Reiss Spon Press



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Unit 3

The Management of Project Cost

And Risk

LEARNING OUTCOMES


· Analyse the key techniques that enable project managers to managefinance and project risks.

· Be able to explain the key project financial appraisal techniques,project accounting processes and project business case approvalprocesses.

· Discuss the importance of risk in the management of projects.

Introduction

This module considers the management of project cost and risk.

Clear project objectives are essential to the success of the project. Theseusually start the project planning process.

However, before this is even worked on the financial viability of theproject must be carried out. Investment appraisal is a series oftechniques to decide whether the project is financially feasible. Varioustechniques are discussed; NPV and payback are two such techniquesthat are reviewed.

The monitoring of project finance, once the project is up and running, isdiscussed. The methods to control (or limit) the project from risk arealso reviewed.

Financial Project Appraisal

Clear project objectives and a project definition document are essentialto the success of the project. These are the first steps in project planning.

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If the objectives are unrealistic or not written down then the project is inserious trouble before it has started.

But before this is even worked on a financial viability of the project mustbe carried out. This is sometimes called Investment Appraisal or CapitalInvestment, or even Project Financial Appraisal. No matter what thisprocess is called the investment decision is a decision on:

· Whether or not to undertake an investment.

· When there are alternative choices for an investment,selecting which of the mutually exclusive investment toundertake.

· When capital for spending is in short supply, decidingwhich investments to undertake with the money that isavailable.

Investment decisions need to be considered in the light of strategic andtactical plans of the company. Investment decisions, and thereforeprojects, should use a formal process of project appraisal and approvalas a way of checking consistency with strategic objectives.

Projects, once identified should be properly financially evaluated and aformal proposal to invest submitted to senior management forapproval. Most companies have a formal business case system in placethat includes a financial appraisal of the project in one form or another.

It is important that management give their formal, full support to theproject. It shows commitment to the project and the task in hand. Somecompanies have a senior committee, perhaps a capital expenditurecommittee that approves all capital expenditure (projects are normallycapital spend) and all projects of a certain spend, e.g. projects over£100,000. These are internal controls that ensure the correct procedureshave been followed in the lead up to the project approval.

The financial appraisal techniques are discussed below.

Payback

This method calculates the length of time a project will take to recoupthe initial investment, in other words how long a project will take to payfor itself. A project might not be undertaken unless it achieves a paybackwithin a given period of time.

Payback is often used as a first screening process. The question usuallyfirst asked is “How long will it take to pay back its cost ?” Payback is avery unsophisticated method; companies often use payback as a roughguide and then use a more sophisticated technique.

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An example of the payback method is given below:

Payback example

The Kensgate Battery company is planning to invest in a new machinethat will increase productivity and thus profits for the company. Theprojects costs and benefits can be summarised as follows:

We can see that the cumulative cash flows become positive in the thirdyear. Had we assumed that the cash flows arise evenly over the year theprecise payback period would be, 2 2/3 years.

To decide whether this measure is acceptable we must ask ourselves ifthis minimum payback is acceptable to the company. In reality thecompany would have some criteria that listed the minimum paybackthat would be acceptable.

If, for example, the company had a minimum payback of 3 years theproject would be acceptable. If there were two competing projects thatboth met the minimum payback criteria the company would select theproject with the shorter payback period.

ACTIVITY

How do you explain the popularity of the payback method, given the limitationsof this method?

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Net cashflows£000

Cumulativecash flows

£000

Immediately Cost of machine (100) (100)

1 year’s time Net profit before depreciation 20 (80) (–100 + 20)

2 years’ time Net profit before depreciation 40 (40) (–80 + 40)

3 years’ time Net profit before depreciation 60 20 (–40 + 60)

4 years’ time Net profit before depreciation 60 80 (+20 + 60)

5 years’ time Net profit before depreciation 20 100 (+80 + 20)

5 years’ time Disposal proceeds 20 120 (+100 + 20)

Figure 3.1 Payback example(Taken from Atrill 2003)

ACTIVITY FEEDBACK

Payback is easy to understand and use. It can avoid problems of forecasting intothe future. It emphasis to early cash flows, which are normally accurate. Itemphasizes the importance of liquidity. Where a business has liquidityproblems, a short payback period is likely to appear attractive.

Net Present Value (NPV)

You will have covered NPV and investment appraisal techniques inyour finance module. However, it is worth going over a few key pointsthat are critical to the success of appraising projects. You will also befamiliar with the term discounting and understand the concept ofpresent values from your finance module.

The net present value (NPV) method takes into consideration all therelevant cash flows associated with a project during its life and alsowhen the cash flows will occur. Cash flows occurring in future years arethen adjusted to a present value. This process, which I am sure you haveheard of, is known as discounting.

Discounted cash flow techniques look at the cash flows of a project, notthe accounting profits. Cash flows show the costs and benefits of aproject when they actually occur. The timing of cash flows is taken intoaccount by discounting them. Briefly discounting is the opposite ofcompounding. Discounting starts with the future amount of a cash flowand converts it into a present value. A present value is the amount thatwould need to be invested now to earn the future cash flow if the moneyis invested at the “cost of capital”.

As Peter Atrill makes clear:

“If you are to be deprived of the opportunity to spend yourmoney for a year, you could equally well be deprived of itsuse by placing it on deposit in a bank or building society. Inthis case, at the end of the year you could have your moneyback and have interest as well. Thus, unless the opportunityto invest offers similar returns, you will be incurring anopportunity cost. An opportunity cost occurs where onecourse of action deprives you of the opportunity to derivesome benefit from an alternative action – for example,putting money in the bank.

Any investment opportunity must, if it is to make you morewealthy, do better than the returns that are available from

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the next best opportunity. Thus if a company sees puttingmoney in the bank on deposit as the alternative to investingin a new project, the returns from investing in the projectmust be better than those from investing in the bank. If thebank offered better returns, the business would becomemore wealthy by putting money on deposit.

The advantage of the DCF method is that it helps us makesensible investment decisions because it takes into accountall the the costs and benefits of each investment opportunityand also makes a logical allowance for the timing of thosecosts and benefits.”

Atrill (1997)

The Internal Rate of Return

This method uses the discounting to calculate the return expected fromthe project calculated on a discounted cash flow basis. The internal rateof return for the project is compared with the target rate of return(sometimes known as the hurdle rate).

The internal rate of return of a project is the discount rate at which theproject NPV is zero. For a normal project the initial outflow is followedby the net inflows, this represents the maximum rate of return theproject is able to cover before the NPV turns negative.

Bear in mind it can sometimes be difficult to obtain an exact NPV ofzero. In these cases the nearest NPV to zero is used. With today’smodern spreadsheets it is easy to try different discount factors and getthe NPV as close to zero as possible.

ACTIVITY

How should cash flows be monitored for control purposes?

ACTIVITY FEEDBACK

By recording the capital spending, the revenues or savings from the project, andthe revenue expenditure incurred. In practice, it might be difficult to identify allthe cash flows directly attributable to a project. This can make monitoring verydifficult.

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Some Practical Points

When dealing with questions relating to project appraisal please bear inmind the following points:

Costs: Only take into account costs that vary according to the decision inour analysis. Costs that will be the same irrespective of the decisionunder review should be ignored. For example, overheads that will beincurred in equal amount whether the investment goes ahead or notshould be ignored.

Opportunity costs: opportunity costs arising from benefits forgonemust be taken into account.

Interest payments: When using DCF interest payments that have beencharged to the profit and loss account should not be taken into accountin deriving the cash flow for the period. The discount factor alreadytakes into account the cost of financing. To take interest charges intoaccount would be double accounting.

Other factors: investment decision making must not be viewed as amechanical exercise. The results from a particular investment appraisalmust be seen as only one input into the decision making process.

READING ACTIVITY

Now read section 1.2.3 in Field and Keller.

Estimating Methods

Estimating is the process of gathering data to develop an estimate forthe project. The process usually goes like this: We start with a roughestimate, this is later confirmed by an expert. We then ask for quotes andthe price becomes more firm. When the work is done various argumentsabout technical specification, support facilities and so on, are resolved.

Then the contractor sends in his invoice, which is too high and is arguedabout a bit. The invoice is paid and the final cost of the item is 100%.That would the ideal situation.

However gathering all that information takes a very long time. Youcannot wait for the contractor to send in his estimate before confirmingthe estimate is 100% firm. You have to take you best forecast for theestimate and put that in the project plan.

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In reality, on big projects, you can concentrate on the two or three bigitems and insure you get firm estimates from the supplier for thoseitems (remember these items might be the largest pieces of kit you arebuying or the main contract with your biggest supplier). So, gettingthese right will ensure you get a large proportion of your total projectestimate right.

There are various estimating methods, these are briefly listed below:

Parametric Modeling: Uses mathematical techniques to help withcosting estimates; for example, in the building industry square foot(£ per square foot) metrics are used.

Bottom up: Estimates the activities at the bottom of the WBS first andthen works up through the WBS.

Analogous Method: Looks at the costs of similar projects and otherhistorical information.

Simulation: Used on large or complex projects, software calculatesmany costs or durations with different assumptions, the most commonis known as Monte Carlo Analysis.

READING ACTIVITY

Read section 2.3 of your core text, Field and Keller, to build up your knowledgeon this subject

ACTIVITY

Think of two ways you could shorten the overall duration of a project.

ACTIVITY FEEDBACK

Reallocate resources from non-critical activities to provide extra help youneed. Relieve employees of other responsibilities to allow them to devotemore hours to the project.

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READING ACTIVITY

Read section 2.3 in Field and Keller on estimating.

Putting Together the Detailed Project

Budget

Once the detailed WBS has been set up you can then estimate the costsfor this in more detail. This detailed estimating is called budgeting andis the process of allocating the cost estimates to the activities. Smallprojects will not need detailed budgets. However, larger projects willneed extensive budget plans.

To prepare a project budget do the following:

· Total the personnel costs from each activity.

· Total the direct costs from each activity estimate sheet.Remember to include project management costs.

· Total indirect costs (overhead costs if your organisationrequires they be included in your budget).

· Total cumulative costs.

The first step is to determine when spend will be made to calculate thecash flow needed. Cash flow is usually planned according to a timeinterval, i.e. weekly or monthly depending on the length of the project.

Prepare a report, in graphical format if desired, for each functionalsection and for the project as a whole.

This report will give you a project cost baseline. This can be used tomeasure performance as the project progresses. Often this first total ofthe project cost estimates is displayed as an - curve.

The S-curve is quite common in project management as it depicts theproject spends starting off slowly and then rising steeply as the projectgets going, and then tailing off as the project reaches fruition.

An example is shown in Figure 3.2.

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This project cost baseline can be used to measure performance as theproject progresses. It is put together by summing the cost estimates bytime period.

Definition: Budgeting; the process of allocating the cost estimates towork items to establish a cost baseline for measuring projectperformance.

The basic cost spreadsheet shows the amount of money planned foreach activity. The amounts are entered as the project progresses, there isone column for actuals and another column to calculate the variance.

The cumulative spreadsheet is along the same lines, except thecumulative costs to date and the forecasted costs are also shown at thecompletion of the project.

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Cum

ula

tive

cost

s

Time

Estimated cashflow

Figure 3.2 Project Cost Base Line (Taken from Richman 2002)

The cumulative cost spreadsheet (Figure 3.4) shows the cumulativecosts to date and the forecast costs at the completion of the project.

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January February

Cost categories Plan Actual Variance Plan Actual Variance

Select demo site $5,000 $0

Prepare demo $7,000 $9,000

Conduct demo $0 $7,500

Evaluate demo $0 $0

Prepare final report $0 $0

Other $200 $200

Total direct labout $12,200 $16,700

Materials etc. $8,000 $9,500

Total direct costs $8,000 $9,500

Project mgmt. support $5,000 $5,000

Other $550 $550

Total operational costs $5,550 $5,550

Total Project Costs $25,750 $31,750

Figure 3.3 Basic Cost Spreadsheet

Cumulative costs to date Anticipated total at completion

Cost categories Plan Actual Variance Plan Actual Variance

Select demo site $15,000 $14,500 $500 $15,000 $14,500 $500

Prepare demo $17,000 $17,500 ($500) $17,000 $17,500 ($500)

Conduct demo $8,500 $9,000 ($500) $9,500 $10,000 ($500)

Evaluate demo $1,500 $50 $1,450 $2,000 $2,000 $0

Prepare final report $750 $0 $750 $750 $0 $750

Other $1,275 $750 $525 $2,500 $2,500 $0

Total direct labout $44,025 $41,800 $2,225 $46,750 $46,500 $250

Materials etc. $8,000 $8,025 ($25) $10,000 $10,500 ($500)

Total direct costs $8,000 $8,025 ($25) $10,000 $10,500 ($500)

Project mgmt. support $12,500 $12,500 $0 $15,000 $15,000 $0

Other $350 $325 $25 $550 $550 $0

Total operational costs $12,850 $12,825 $25 $15,550 $15,550 $0

Total Project Costs $64,875 $62,650 $2,225 $72,300 $72,550 ($250)

Figure 3.4 Cumulative Cost Spreadsheet

ACTIVITY

What significance does a cost variance at this stage (the first few months of aproject) in a budget report have?

ACTIVITY FEEDBACK

None, the project has only just started, so spend has probably not got going yet.There is always a time lag in reporting spend during the first 2-3 months of aproject. Therefore not significant;, the project has just started and variances atthis stage should be insignificant and, therefore, manageable.

Common Causes of Cost Problems

Poor budgeting practices, these can usually be put under the followingheadings:

· Basing estimates on poor information rather thandetailed specifications of the project at hand.

· Failure to allow contingency, failure to correctly estimateresearch and development activities.

· Indiscriminate use of the contingency budget by activitiesor people, who overrun their budget.

· Receiving information too late to take corrective action.

You can avoid such cost problems by following good estimating andbudgeting practices, as described earlier. Careful monitoring and quickcorrective action will also help keep cost problems under control.

Some project have certain activities that consume a large percentage ofthe total cost of the budget. These activities need careful monitoring andby focusing on these you may be able to ensure that the project isbrought back on track.

Reiss highlights some important issues regarding costs:

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“Many people use “cash commitment”, an expressionwhich ignores how long the accounts department takes topay the bill but concentrates on what you have committedthe company to pay. The amount of your company’scommitment may be open to some doubt, as contractorsoften feel that you owe them more than you think.Arguments often occur about the amount of payment duefor some work performed.

On the other hand you could deal with actual paymentsmade – this avoids most problems caused by arguments,but costs take a great deal longer to establish. Some peoplecombine both approaches, refining actual costs as moreinformation comes to light. Your situation and the way yourcompany works will probably decide the question, butmake sure that your planned and actual costs are calculatedon the same basis. Compare, as my fruit growing uncle usedto say, apples with apples.”

Reiss (1995)

Project Accounting

Project accounting includes all the processes needed to ensure that theproject is completed within the approved budget and the recording ofactual costs, as they occur, and ensuring the necessary response is takenpromptly to ensure actual costs come under budget.

The importance of sound project accounting techniques cannot beunder estimated, as Burke makes clear in his introduction to projectaccounting:

“The financial success of a project depends not only on theproject making a profit, but also financing the projectthrough the project life cycle. Statistics clearly indicate thatmore companies go into liquidation because of cashflowproblems than for any other reason.”

Burke (2003)

This section gives an overview of the processes and methods that makeup project accounting. Some of you will familiar with accounting termsfrom your finance module, for those who are unfamiliar with them letus briefly look at these terms and see how they apply to the projectaccounting.

Financial accounting: keeps a record of financial transactions,including creditors and debtors. This information is used to report thefinancial status of the company using generally accepted accounting

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principles. The main statements are the balance sheet, profit and lossaccount and cash flow statement.

Management accounting: uses financial information to analysecompany performance by producing internal reports for the companymanagement to make decisions.

Project accounting: uses both financial accounting and managementaccounting with some project management techniques, WBS, CPM andearned value, to integrate the project accounts with the other projectdata.

Cash Flow Statement

This is a document which records the money in and out of the project.Usually produced monthly, the statement uses the same principals asthe normal bank statement. The example below shows a cash flowstatement for the first three months of the year.

Brought forward amount for January is $5000

Income: January $10000, February $15000, March $20000

Expense: January $8000, February $12000, March $16000

How would you set up the cash-flow statement using the aboveinformation? Think about how you would go about this before readingthe next section.

1. Set up the headings.

2. The brought forward (B/F) is given at $5000.

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January February March

Brought forward

Income

Total available

Expenses

Total expenses

Closing balance

Figure 3.5 Cash flow Statement Exercise (Taken from Burke 2003)

3. List the cash items from the income statement for January,February and March. $10k, $15k and $20k.

4. Calculate the total funds available for January by adding the totalincome to the brought forward amount.

5. List the outflow of cash items from the expense statement forJanuary, February and March. $8k, $12k and $16k.

6. Calculate the total outflow of funds for January.

7. Calculate the closing statement for January; funds availableminus expenditure.

8. The closing statement for January now becomes the B/F (or theopening statement) for the next month, February.

The above example is fairly straightforward. You would just follow thispractice each month for the rest of the project. With this statement weare only concerned with items that are paid from the company’srevenue fund. (Company assets do not appear here, capital purchaseswould be treated separately. Indeed the large items that will form assetswill be paid out of the capital fund. This would normally be handled bythe in-house accounting team)

You may have a project accountant to do these transactions for you andsupply you with financial reports.

Cash flow Timing

The thing that can make the cash flow statement more difficult to puttogether is the timings of the payments. As you can imagine noteveryone pays you at the same time each month. This means that theproject cash flow may not be the same as the sales figures or expenseseach month.

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January February March

Brought forward $5,000 $7,000 $10,000

Income $10,000 $15,000 $20,000

Total available $15,000 $22,000 $30,000

Expenses $8,000 $12,000 $16,000

Total expenses $8,000 $12,000 $16,000

Closing balance $7,000 $10,000 $14,000

Figure 3.6 Cash Flow Statement (Taken from Burke 2003)

For example, the following have different timings (by timings, I meanthat payments come in at different times, usually over a 1-3 monthperiod).

· 90 days credit is the norm for most suppliers.

· Stage payments for large items that may take months tocomplete.

· Part payment with the placement of order.

· Payment as you purchase the goods, normal with mostretailers.

Labour costs are usually paid in the month they are used. Material costsare usually paid on 1-3 months credit. Remember these arebusiness-to-business transactions, therefore very little is paid forstraight away.

Earned Value Analysis

Earned value analysis compares the amount of work planned with theamount of work actually done to determine whether the project is ontrack. Earned value calculations are usually done by computer.

Earned value is a very complex set of project accounting methodologiesthat look at he cost of work achieved alongside the cost of achieving thatwork. This quote from Field and Keller defines earned value:

“The system we define here is called the earned value,because it seeks to show the manager not only the cost ofwork performed so far but also the value earned by thatwork. Such systems are now quite common among projectperforming organisations. Some clients may insist on theuse of such a system.

The earned value of the work performed on a project is thecost that the estimator attached to that work when theproject budget was defined. Another term for it which israther more explicit is Budget Cost of Work Performed, orBCWP.”


As earned value is a highly complex subject I do not propose to gothrough this in detail here. If you ever manage a project with earnedvalue reporting you will need to have specialist training on the softwareused to monitor the project using earned value. (I have never seen aproject monitored using earned value without the use of a softwarepackage.)

This subject is covered thoroughly in Field and Keller.

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READING ACTIVITY

Read section 5.3.1 in Field and Keller to understand this complex subjectfurther.

Managing Risks

Risk management is all about deciding what to do about risk. In thissection we look at the techniques that help control and reduce risk.These techniques include risk reduction, risk avoidance, risk transferand risk acceptance.

All projects have a certain degree of risk that needs to be managed. Risksare uncertain events or conditions that could have a positive or negativeoutcome on the project. Uncertainty, opportunity and risk are closelyrelated. As Rory Burke explains:

“Company success is achieved by pursuing opportunities togain a competitive advantage, and projects have typicallybeen set-up to take advantage of these opportunities, tomake something new, or change an existing facility. A keycomponent of change is making decisions – ideally thosedecisions would be based on complete information with ahigh degree of certainty of the outcome. However, in thereal world most decisions are based on incompleteinformation with an associated level of uncertainty aboutthe outcome – it is uncertainty that leads to risk. So risk hasalways been an intrinsic part of project management”

Burke (2003)

Risk management can be defined as:

“the systematic processes of identifying, analysing andresponding to project risk through out the project life cycle”

PMBOK Handbook, Burke (2003)

Reiss puts all of this into perspective

“A risk identified is a risk shared. If you and the rest of theproject team identify and discuss and collectively acceptsome risks, the team, the client and the programmemanagement will go ahead with the project with their eyeswide open – with the risks understood and acknowledged.

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If you do not detect a serious risk or don’t mention a bigone, you are taking that risk on your own shoulders whichis unfair on your project, senior management and theproject sponsors. If you identify no risks you are taking thewhole lot on your shoulders.”

Reiss (1995)

The list below is not exhaustive but summarises many of the riskelements that project managers need to be aware of.

Major Categories of Risk

Risk Category Examples

Technical New technology, design errors or omissions.

Environmental Culture of the organisation, change in management,office politics.

Financial Budget cuts, cash flow problems, corporateunpredictability.

Resources Specialized skills or critical equipment not available.

Human Human error, poor worker performance, personalityconflicts, communication breakdowns.

Logistical Material supply problems.

Government Government regulations.

Market Product fails in marketplace, new competitorproducts.

The first step is to determine any likely risks. This can be done by askingyourself, “What could go wrong?”. Assess every part of the project,review the work breakdown structure, review the cost estimates andresource plans. Consider the main internal and external events thatcould affect the project. You can never anticipate all the possible risks.Simply identify all those that are fairly likely.

Another way of looking at risk is to break risk down into qualitativeand quantitative issues.

For qualitative issues you would look at : suppliers, poorcommunications, labour and exchange rates (to name a few). You canthen decide which of these risks is important by giving them a value, sayout of ten. Some project managers put together what is known as a riskregister, where you can list these values and you end up with a one ortwo page overview of the major risks on the project.

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For quantitative risk analysis you look at the critical path model andassess each of the durations for each task. In fact, you need sophisticatedsoftware for this analysis. This is known as Monte Carlo analysis. Thispiece of software carries out a quantitative risk analysis along thecritical path by feeding a variety of different durations through thelogical path. Each go at analysing the plan is called an iteration. It tendsto be used only on major projects where risk plays a very significantrole.

Assessing Risk

For each potential risk event, estimate its impact on the time, cost andscope of the project. Bear in mind that a single risk could have multipleeffects. For example, the late delivery of key component could causeschedule delays, cost overruns and a lower quality product.

Focus on risks with high impact. These are critical risks that you can dosomething about. For example, in construction projects equipmentbreakdowns will be one such risk, the impact is great becauseconstruction will stop if there is no functioning equipment. Some projectmanagers find it useful to prioritise risks on a chart. This can helpanalyse risks more clearly.

Another model that can help identify risk is the Risk ManagementModel as outlined in Fiogure 3.8:

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High impact:Low ability to

influence

High impact:High ability to

influence

Low impact:Low ability to

influence

Low impact:High ability to

influence

IMPA

CT

ABILITY TO INFLUENCE

Figure 3.7 Prioritising potential risks

This has divided the risk management process into the followingheadings to make them easier to understand and tackle.

Define objectives: Define the context of your work and your plan forsuccess. This defines what you have to achieve to be successful andestablishes a basis for dealing with risk.

Identify Risk: Identify areas of risk, uncertainty and constraints, whichmay impact on your project, limit or prevent you achieving yourobjectives.

Quantify Risk: Evaluate the risks and prioritise the level of risk anduncertainty, and quantify their frequency of occurrence and impact.

Develop Response: Define how you are going to respond to theidentified risks.

Risk Control: This implements the risk management plan. It mayinvolve training team members and communicating to all stakeholders.It is essential to continually monitor and review the level of risk.

Remember that it is the project manager who is responsible for projectrisk. However, responsibility is usually delegated through the projectmanagement structure with the aim to ensure functional managers areresponsible for their own departments risk. These managers wouldthen be responsible for developing the appropriate risk managementplan for their scope of work.

As Rory Burke makes clear:

“As with other management techniques, it should be themanager’s responsibility to ensure that their team membershave a working understanding of risk within the context of

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Risk ManagementPlan and Control

DocumentRisk Management

Plan

DefineObjectives

IdentifyRisk

QuantifyRisk

DevelopResponse

Figure 3.8 Risk Management Model (Taken from Burke 2003)

their scope of work and feel accountable for theconsequences of their actions.”

Burke (2003)

Responding to Risk

One possible response is to ensure you have a plan in case of major risk.This would mean developing a response plan before the risk hasoccurred. Then the response plan can simply be executed should theevent occur. Planning ahead allows you to carefully analyse the optionsavailable and determine the best course of action, so you aren’t forced tomake a quick decision when presented with a threatening situation.

Possible responses including avoiding the risk, transferring the risk,mitigating the risk, or even accepting the risk. Let us now look at these abit more closely.

Risk Avoidance: Here you concentrate on eliminating the cause of risk.For example, you may choose to give work to an experienced contractorwho you have used before, rather hand a new contractor who you haveno experience of.

This is known as removing risk from the project. Sometimes this is onlypossible if the project is not done at all!

The following case study from Field and Keller highlights some riskavoidance issues:

Avoiding risks on a Major Construction Project

It is proposed to provide fixed links from mainlandDenmark to Denmark’s large islands of Funen and Lolland.From Funen, another link is planned across the Store Baelt(Great Belt) strait to the main Danish island of Sjaelland(also known as Zealans, which contains Copenhagen) andfinally to southern Sweden in place of existing ferry links(Pearce, 1995). There already exists a fixed link betweenLolland and mainland Germany. These links will provideSweden and Copenhagen with their only fixed links to themainland of Western Europe. Intergovernmentalagreements were signed in 1991 and the first 17 km link,between Funen and Sjaaelland, opened in 1997, was thelargest construction project in Europe. The proposed 16 kmcombined tunnel and bridge between Sjaelland and Malmo,Sweden, in particular creates a risk of restricting the vitalperiodic flow of salty, oxygen-rich waters from the NorthSea through the narrow Store Baelt and Oresund straits intothe brackish and relatively stagnant Baltic and strangling it.

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The Swedish Government is concerned at the risk andinsisted in late 1993 on a complete redesign of the proposalfor the Oresund link to avoid the risk of further restrictingthe flow between the Baltic to the North Sea. A furtherredesign has subsequently been ordered by the SwedishWater Rights Court to limit damage that might be caused byproposed compensatory dredging and reduce the risk ofadversely affecting the flow to below 1%. The resultingchanges to the designs have increased the estimate for thelink by more than $100 million, but the problems have yet(in 1995) to be resolved to the satisfaction of the expertoceanographic panel advising the Swedish Water RightsCourt. Opponents of the bridge option who say it is toodamaging in any form favour a tunnel.


Risk Reduction: This means reducing the impact of risk. Field andKeller highlight some common risks : lack of experienced staff,contractors reputation is poor, project manager has no prior experienceof working with the assigned contractor.

Risk Transfer: A way of transferring risk is to subcontract the work tospecialist subcontractor. For the risk transfer to work successfully thesubcontractor should have specialist skills in the area of work. Thesubcontractor needs to be reliable (in practice it also helps if you haveworked with this subcontractor before, and thus have confidence inhim) with appropriate experienced resources.

In transferring risk to a contractor there is usually a trade off. Forexample, you can accept a higher price from a contractor, perhaps for aspecific activity, in return for a fixed price contract. Here the contractorassumes most of the risk.

Another means of transferring risk is by insurance. Simply insuringagainst fire or theft provides financial cover for any losses incurred.

Risk Acceptance: Accepting risk when there is the likelihood of a lowrisk event and when the potential impact on the project is low. Asatisfactory response may be to accept the risk.

In this strategy, the project manager has evaluated risk but decided thatit is too costly to do anything at the present time. He may note thevarious factors that could be risky to the project and plan to re-visitthem during the course of the project. The important factor is that theproject manager has given some thought to the risk(s) that mighthappen.

Mitigating risk: Here you can reduce the likelihood of risk by reducingthe risk of the event happening. For example, you can reduce the risk ofproduct failure by using proven technology rather than “cutting edge”technology.

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Contracts and Risk

Giving a large contract to a contractor is a way of deflecting risk. Wehave already looked at different contract types, but is useful to reviewthem again from the risk point of view.

A fixed price contract is exactly that: a contract to complete the work fora fixed price. The contract will usually include all costs associated withlabour, plant, material and risk.

Turnkey contract: this is where the contractor is responsible for thewhole project: from the design phase right through to thecommissioning phase.

Cost Plus contract: Here the direct costs are paid by the client plus anagreed fee or percentage profit to the contractor. Once the scope of workis finalised the type of contract may change; for example, the ChannelTunnel contract changed from a cost plus to a fixed price.

READING ACTIVITY

Read section 2.2 of Field and Keller to be able to analyse risk more fully.

Summary

Clear project objectives are essential to the success of the project. Theseare usually the first steps in project planning. If the objectives areunrealistic or not written down then the project is in serious troublebefore it has started.

But before this is even worked on, a financial viability of the projectmust be carried out. This is sometimes called Investment Appraisal orCapital Investment, or even Project Financial Appraisal. The differentinvestment appraisal techniques were reviewed, these included:payback, NPV and IRR.

The methodology for monitoring cashflow was discussed and thetechniques for estimating project costs, and obtaining sound estimates,was reviewed.

Risk management is all about deciding what to do about risk. In thissection, we have looked at the techniques that help control and reducerisk. These techniques include risk reduction, risk avoidance, risktransfer and risk acceptance.

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All projects have a certain risks that needs to be managed. Risks areuncertain events or conditions that could have a positive or negativeoutcome on the project. Project managers need to be aware thatuncertainty, opportunity and risk are closely related.

REVIEW ACTIVITY

Evaluate your organisation’s ability to manage risk and explain what you can doto improve the way you manage risk in projects.


Refer to the text above for key points and techniques on managing risk.

Unit 3 References

Atrill, P. (2003) Financial Management for Non-Specialists. FT PrenticeHall 2003.


Field, M., Keller, L. (1998) Project Management. Open University

Harris, J. (2004) www.gantthead.com

Harrison, F. (1985) Advanced Project Management. Gower

Maslow, A. (1943) Motivation and Personality. revised by R.Frazer et al(3rd edn 1970) Harper and Row, London.


Richard, L. (2004) www.gantthead.com



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Unit 4

Project Team Structuring

LEARNING OUTCOMES


· Discuss the factors in the business environment that lead to thesuccessful selection and management of project teams.

· Understand how the role of managing teams differs from the role ofthe functional manager.

· Explain fully the role of the project manager and understand the skillsneeded to practice project management successfully.

Introduction

This module looks at the issues of forming and managing project teams

Managing projects successfully poses particular “people issues” forproject managers. This makes it particularly important for managers tounderstand the issues that go with managing projects. Projects poseparticular problems of building and managing project teams. Projectmanagers need to be able to motivate groups to work well andleadership skills are essential if the team is to work willingly towardsthe successful achievement of organisational goals.

Management is nearly always a transaction. Most people both manageand are managed. Good managers treat others as they themselveswould like to be treated. Something we can do, to help with these tasks,is to try to classify people into types in order to build a rounded teamwith people in suitable roles.

This unit looks at the challenges that face project mangers, the challengeof managing and leading a team, and how people management iscritical for the success of projects.

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Developing Project Teams

Developing Teams

This section looks at how managing project teams differs fromfunctional management. Burke defines a project team as: “a number ofpeople who work closely together to achieve shared common goals” .The diagram below puts this in perspective.

This diagram shows that through the teams interaction they “strive toenhance their creativity, innovation, problem solving, decision making,morale and job performance” (Burke, 2003).

As previously mentioned a team implies a number of people workingtogether to achieve results, while a group of people does not. A groupimplies a collection of individuals who, although they may be workingon the same project, do not necessarily interact with each other. This isthe key point. It is part of the project manager’s job to pull together ateam to ensure that the team works with a unity of purpose.

Project managers need skills of planning, scheduling and controlling torun projects successfully. But, more than this, they need skills of teammanagement. This skill is decisive, research has shown that projects failwhen the project manager does not build a strong team. Before we lookat more issues surrounding project teams let us first look at how projectmanagement differs from normal functional work.

Look at the chart which highlights some of the differences betweenproject leadership and normal management leadership.

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Planner

P r ojectManager

Procurement

Designer Accountant

Draftsman

Expeditor

Engineer

Secretary

Figure 4.1 Project Team Structure – (Taken from Burke 2003)

Differences Between Project Leadership and Functional

Leadership

Functional Project

Type of work Similar work Unique work

Skill level Skilled Highly Skilled

Authority Delegates authority Empowers people

Org. Structure Hierarchy Team

Focus Today Tomorrow

In a project or leadership environment the project managementbecomes a partner or facilitator with the project team to accomplish thework in hand. The project manager motivates the team, with hopefullyvision and positive team working, to ensure the team accomplishes thework successfully.

What is a team?

It is important to understand the problems of forming new teams andthe type of development a team goes through before it can get down towork and, as nearly all projects are made up of teams working together,it is especially relevant to project team formation. Having the right teamin place to deliver your project will be a key factor in meeting projectobjectives successfully.

Team formation can be difficult to those inexperienced or unused toworking in teams.

Handy defined a team as:

“Any collection people who perceive themselves to be a group”

Handy (1980)

The point of this definition is the distinction it implies between arandom collection of individuals and a group of individuals who sharea common sense of identity and belonging.

Group dynamics is the name given to the system of relationships andbehaviour which exists in any group of people. A group or team hascertain attributes that a random crowd does not possess:

· The members have a sense of identity: there areboundaries to the group which define it.

· Members are loyal to the group: they conform to thenorms of behaviour and attitude that bind the grouptogether.

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· Purpose and leadership: most groups have a purpose anda set of objectives.

Benefits of Teams

Today many organisations recognise that they have become toopreoccupied with the qualities of individual people. But more and morecompanies are learning that teams have more benefits, the synergy ofthe team, than the sum of the individual parts. As well as these attributeteams (or rather working in teams) have certain benefits:

· Team synergy generates more output than the sum of theindividual inputs.

· The team can offer a wide range of technical support.

· Many people are more successful working within a teamor partnership than working alone.

· It is the team that is the key for sustaining and enduringmanagement success.

· A team can build up a store of shared experiences.Information and judgement which can be passed on tonew team members.

Purpose of Project Teams

The project will almost certainly require a range of skills, which any oneperson is unlikely to have. Brainstorming and discussions are goodexamples of interactive teamwork, where the outputs (hopefully!)generate lots of creative ideas and solve problems. A suggestion fromone person can generate many ideas from others.

Once a team has made a decision the team will commit to the course ofaction. The schedule of work must be distributed among the team.Project teams help and enhance motivation: the other team members donot want to let the side down. Team members support each other whenthey need help both technically and emotionally.

ACTIVITY

Why would an individual want to be a member of a team? Think of some of thereasons for wanting to be a member of a team.

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ACTIVITY FEEDBACK

You should have noted some of the following points:

It is a means of satisfying an individual’s social and affiliation needs, to belong tosomething or be part of a team. The team provides a psychological home forthe individual. It is a means of sharing risk with other team members – to spreadthe load. It is a means of gaining support to carry out their particular task orgoal. It will also allow you to discuss ideas with other team members who canoffer advice and constructive criticism.

Team Size

Team size depends on what the team has been put together for. Teamstend to grow in size and then subdivide. Experts suggest that the idealteam is between five and ten people. The best analogy of this question iswith sporting teams, which provide us with some good examples. Forexample, a rugby team has fifteen players, a number that is slightlyabove the ideal, but a rugby team tends to subdivide into smaller teams:i.e. backs and forwards.

Why Teams Win

But what makes a successful team?

Belbin carried out research, at Henley Mangement College, that showedsome or all of the following characteristics are present in a successfulteam:

· There was a good spread of mental skills.

· There was a spread of personalities which gave the teambalanced appearance.

· The team leader had an appropriate management stylefor the project and was not challenged by other teammembers.

· At least one member of the team generated innovatedideas as a means to solve problems and identify newproducts and new markets.

Belbin, also found that the chair or the leader will be successful if theygain and earn respect from the other team members. He notes that thechairmen did not need to dominate proceedings but should know how

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to pull matters together and integrate the team. In practice, Belbin foundthe leader always worked closely with the talented members of theteam.

It is also essential that teams show flexibility. Successful teams exhibitflexibility where members are able to move around in the team to findthe best match between people and jobs. Also it is essential that teamsshow creativity and innovation to solve problems and respond tochange.

Why Teams Fail

Belbin found that the single factor that was evident in all unsuccessfulteams was low mental ability. If this is compared with the innovationand creativity of winning teams, it means that poor teams are not ableto:

· Take advantage of opportunities.

· Were poor at problem solving.

· Unable to change with the times.

Burke notes that:

“The failure of companies to produce teams which have anadequate proportion of managers with good mental abilitymust surely not be due to any conscious search for suchpeople, but rather the unintended byproduct of negativeselection. Negative selection refers to the recruitmentprocess designed to filter out the type of people thecompany needs. Consider the company which is looking fora good manger to reverse their present decline, but will notincrease the current salary package offered. This low salarywill unintentionally exclude the quality manager thecompany needs“.

Burke (2003)

ACTIVITY

List, from the organisation view, what you think the functions of teams are?

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ACTIVITY FEEDBACK

Teams and groups have several functions, or purpose. Notably: performingtasks, creating ideas, co-ordinating work, motivating individuals, consulting ornegotiating (especially to resolve disputes), testing and ratifying decisions madeoutside the group.

READING ACTIVITY

Read section 4 of Field and Keller to appreciate this subject fully.

Forming Teams

Simply bringing a group of people together does not make a team. Itimplies synergy. Its output is collectively greater than the sum of theoutputs of the individuals.

When tasked with starting a team from scratch it is sensible to identifywhat the task is and what skills and characteristics are needed toachieve it.

Most project teams bring together individuals from different disciplinesand backgrounds.

Groups are not static. They mature and develop. Tuckman identifiedfour stages in group development.

· Forming.

· Norming.

· Storming.

· Performing.

Tuckman (1965)

Each of these stages has different implications for task and therelationships between members.

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Look at the chart below to understand these inter relationships.

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FORMING

The group is beginning to establish personal relationships. Members will cautiously test boudaries,trying to find out about each other, and about the aims and norms of the group, which will at this stagebe primarily organisational traditions and standards.

Interpersonal focus Task focus

Main concerns: Resulting in: Main concerns: Resulting in:

Inclusion Cautious behaviour Task orientation “What are we supposedto do?”

Rejection Avoiding contact “What are the goals?”

Acceptance

STORMING

Interpersonal behaviours and greater confidence in self expression begin to cause conflict. There isresistance to group influence and task requirements, as a struggle for control and leadership emerges.



Control Conflict Organisation of the task “Are these the rules wewant to follow?”

Status/authority Power struggles Rules and agendadecisions

Questioning decisionsalready reached

Stress Critism “Is the task possible?”

Values and ideas Challenging ideas andpractices

NORMING

A settling down period. Group cohesion increases as roles (including leadership) are established. Normsand processes are evolved for group functioning: work sharing, output levels, interactions, decisionmaking, and so on.



Being liked Cohesion Getting on with the job Willingness to change

Being accepted Group focus Compromise andcollaboration

Open-mindedness Building team spirit Data flow Information sharing

Listening

Figure 4.2 Forming, Storming Chart

Next is a brief case study that highlights how Tuckmans theory can beput into practice:

CASE STUDY

The Nationwide Building Society

It may be possible to apply Tuckman’s ideas to the management of workgroups.

The Nationwide Building Society introduced self managed teams into itsadministrative centre. The progress of the change can be described inTuckman’s terms. The project also illustrates how management input cancontribute to the process.

At the forming stage, management provided extra training in team building,conflict management and job specific skills. Leaders were appointed, but incoaching rather than directive roles. The need to learn new skills produced atemporary dip in performance.

The storming stage started at the same time, with some leaders fearing a loss ofcontrol and some team members objecting to what they saw as more work forthe same rewards.

Forming was a important part of the project and crucial to the management’sintention. One management input was the publication of a series ofperformance measures for each team. A sense of ownership and responsibilitycaused the teams to work to improve their results. For instance, peer pressureled to a 75% reduction in sickness absence. Similarly, a low achieving grouptook advice from other groups and made a significant improvement in itsperformance. Consistent comment from team members during annualappraisals indicates that they are now committed to the new norms.

The performing stage has now been reached. Productivity is up by 50% and thecentre’s staff are now top of the organisation’s annual staff survey in terms ofjob satisfaction.

ACTIVITY

What norms and customs are there in the group you are part of, or familiarwith? What do you have to do to become part of the culture? Is there anon-conformist in the group- someone who didn’t fit in? How is that persontreated?

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ACTIVITY FEEDBACK

You should think of your real life experiences in groups; be it groups in college,work or social occasions. Do they fit in with the theory listed above?

Belbin’s Team Roles

Belbin discovered that a differentiation of influence among teammembers resulted in higher morale and better performance. Belbindiscovered that a mixed group of team members worked best. Ideallythe group should cover the eight roles that Belbin outlined below.

1. The co-ordinator presides and co-ordinates. This person isbalanced, disciplined and good at working through others.

2. The shaper. Highly strung, dominant, extrovert, passionate aboutthe task and a spur to action.

3. The plant is introverted, but intellectually dominant andimaginative. This person is a source of ideas.

4. The monitor-evaluator is analytically rather than creativelyintelligent and so dissects ideas and spots flaws. This person ispossibly aloof and tactless, but necessary.

5. The resource-investigator is popular, sociable, extrovert, relaxed.He or she is a source of new contacts but is not an originator.

6. The implementer (or company worker) is a practical engineer

ACTIVITY

Over the next month make a note of the sort of roles you play in meetings andgroup situations. Are any of the roles absent from the group? Did this make thetask harder or easier? NOTE: more than one role may be played by eachperson at a meeting.

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ACTIVITY FEEDBACK

Refer to the notes on teams in the text above.

Effective and Ineffective Teams

Let us now look at some of the characteristics that make up an ideal team:

1. Each individual gets the support of the team and a sense ofidentity and belonging.

2. Skills, information and ideas are shared, so that the team’scapabilities are greater than those of its individual members.

3. New ideas can be generated, tested and reactions taken intoaccount, and persuasive skills brought into play in groupdiscussion and problem solving.

4. Each individual is encouraged to participate and contribute, andthus becomes personally involved in and committed to theteam’s activities.

5. Goodwill, trust and respect should be built among individuals,so that communication is encouraged and potential problemseasily overcome.

Now let us look at factors that contribute to ineffective teams.

1. Too much discord, conflicting roles and relationships can causedifficulties in communication effectively.

2. Personality problems will harm performance if one memberdislikes or distrusts another; is too dominant or so timid that thevalue of his ideas is lost.

3. Rigid leadership and procedures may strangle initiative andcreativity in individuals.

4. Difference of opinion and political conflicts of interest are alwayslikely.

5. Too much harmony: teams work best when there is room fordisagreement. The cosy consensus of the group may preventconsideration of alternatives and constructive criticism.

6. Corporate culture and reward systems. Teams may fail if thecompany promotes and rewards the individual at the expense ofthe group.

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Think about your group at work. How effective is it in terms of (a) doingwhat the organisation wants it to do in the way of tasks and (b) offeringsatisfaction to its members?

Multi-disciplinary Teams

Multi-disciplinary teams bring together individuals from differentfunctional specialisms, so that their competencies can be pooled orexchanged.

Multi-disciplinary teams have three important capabilities.

(a) They increase team members’ awareness of the wider context oftheir tasks and decisions.

(b) They help to generate solutions to problems and suggestions forimprovements by integrating disparate ideas.

(c) They aid co-ordination across functional boundaries byincreasing the flow of communication, informal relationships andco-operation.

However, bear in mind that the members of such teams have differentreporting lines and responsibilities. This could create the ambiguity ofdual responsibility and they may have a range of differentbackgrounds, work cultures, specialist skills and terminology. Thiscreates a real challenge for the team leader: how to build a sense of teamidentity, role clarity and co-operative working.

Another approach is to bring together a number of versatile individuals.This is known as a Multi-skilled team. Each of its members can performany of the group’s tasks. The team leader, or project manager, can thenallocate work flexibly, according to who is best placed to do a given jobwhen required. This allows team members to see the big picture andencourages them to contribute information and ideas for improvement.

Sometimes project managers can be used within companies forco-ordinating between functional teams as this piece from Richard LDaft explains:

Task Forces, Teams and Project Management

“A task force is a temper team or committee designed tosolve a short term problem involving several departments.Task force members represent their departments and shareinformation that enables co-ordination.

For example, the Shawmut National Corporation createdtwo task forces in the human resources department toconsolidate all employment services into a single area. Thetask force looked at job banks, referral programs,

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employment procedures and applicant tracking systems;found ways to perform these functions for all Shawmut’sdivisions in one human resource department; and thendisbanded. General Motors uses task forces to solvetemporary problems in its manufacturing plants. When ashipment of car doors arrives from a fabricating plant withsurface imperfections, the plant manager immediatelycreated a task force to solve the problem. He got everymanager together on the factory floor to examine the partthat was causing the trouble, and the task force resolved theproblem in about two hours.

In addition to creating task forces, companies also set upteams. As used for co-ordination, a team is a group ofparticipants from several departments who meet regularlyto solve ongoing problems of common interest. Forexample, Snap on Tools gained a competitive edge bycreating engineering teams to work with marketing andcustomer focus groups to discuss ideas and define newproducts. Team cooperation helps new products sailsmoothly through the design and development cycle.

Companies also use project managers to increasecoordination between functional departments. A projectmanager is a person who is responsible for coordination theactivities of several departments for the completion of aspecific project. Project managers may be working onseveral different projects at one time. The distinctive featureof the project manager position is that the person is not amember of one of the departments being coordinated. Theproject manager position may have a title such as productmanager, program manager or branch manger.

General Mills, Proctor and Gamble, and General Foods alluse product mangers to coordinate their product lines. Amanager is assigned to each line, such as Cheerio’s,Bisquick and Hamberger Helper. Product managers setbudget goals, marketing targets and strategies, and obtaincooperation from advertising, production and salespersonnel needed for implementing product strategy.”

From: Management, Richard L Daft, (2000)

Project Leadership

For project mangers to be successful and effective they must practice anappropriate style of leadership. This section looks at the leadershipstyles that can make project mangers more effective in deliveringprojects. It also touches on some general leadership issues that you mayhave come across before.

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You will have already studied leadership under the HR course module,but it is important to review some of the key concepts in respect ofleadership within a project management function. As Burke notes:

“Leadership is about setting goals and objectives andgenerating enthusiasm and motivation amongst the projectteam, and stakeholders, to work towards those objectives.”

Burke (2003)

Field and Keller define leadership in the following way:

“Specific skills that contribute to effective and positiveleadership are mostly based on good communication skills:effective listening and effective talking or writing”


Leadership is the process of influencing others to work (to the best oftheir capabilities) willingly towards a goal. Leadership andmanagement are different.

Managing is concerned with logic, structure, analysis and control.

Leadership requires a different mindset and the leader has differenttasks. These tasks include:

· Creating a sense of direction.

· Communicating the vision.

· Energising, inspiring and motivating.

All of these activities involve dealing with people rather than things. Amanager must have leadership skills to be effective. Early writersbelieved that leadership was an inherent characteristic. You either had itor you didn’t. Leaders were born not made. Today it is now agreed thatleadership appropriate to a given situation can be learned.

ACTIVITY

What is the difference between a manager and a leader?

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ACTIVITY FEEDBACK

Refer to the text above for guidance.

Leadership Styles

Leadership styles can be seen as either democratic or (at the other end ofthe scale) autocratic. The style used will depend on the type of decisionrequired. Other issues to take into account include the pressure at thetime and the type of people you are working with.

The decision making diagram below shows these styles.

The six stages from autocratic to democratic are:

1. Autocratic: (isolated decision) The project manger solves theproblem on his own, using information available to him at thetime. There is no communication from team members.

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1 2 3 4 5 6

Boss makesthe decision

Team makesthe decision

Autocratic

Democratic

Figure 4.3 Decision Making Continuum (Taken from Burke 2003)

2. Autocratic: (informed decision) The project manager obtainsinformation from team members but decides on the solution onhis own.

3. Consultative Autocratic (discuss with individuals): The projectmanager shares the problem with team members individually,gathering their ideas, etc. Then makes the decision on his own.

4. Consultative Autocratic: (discuss with team) The project managershares the problem with team members, as a group. Then makesthe decision on his own.

5. Democratic: The project manager shares the problem with theteam members. Then together they make the decision as a group– majority vote.

6 Laissez- Faire: The project manager gives the problem to the teamand lets them make the decision themselves.

But what leadership style should you use?

This is perhaps the key to being an effective project manager: choosingthe right leadership style for the appropriate situation. For there is noone style that will lead to success in all circumstances.

Think back to the leadership styles above, what is most important is howthe project manager uses his leadership style in any given situation Theproject manager may use all of the styles as different circumstancedictate.

As a guide to how to use the above styles the following questions mightprove useful:

1. Is one decision likely to be better than another? If not, go fornumber 1.

2. Does the leader know enough to make the decision on his own?If not avoid number 1.

3. Is the problem clear and structured? If not use number 4 or 5.

4. Must the team members accept the manager’s decision? If notthen number 5 is preferable.

5. Do the team members share the manager’s goals for theorganisation. If not then number 5 is risky.

6. Are the team members likely to conflict with each other? If yesthen number 4 is better than 5.

The concept of shared leadership is essential for project management.Because it leads to effective team building and requires the participationand involvement of all the project team members. How does this workin practice? Well, the project manager must delegate some authority tothe team and in so doing the project manager will become more of a

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team member and the team members will assume more of a leadershiprole.

This encourages the team members to participate in problem solving anddecision making and accept more responsibility for achieving its goals.

The following example is from Field and Keller. It sums up nicely someof the issues that crop up around delegation, something you will have todo when you manage a project.

CASE STUDY

Delegation Example: Your Way – Their Way

A project to produce training materials and establish a training system in acountry in Eastern Europe was in the mobilisation phase. The project managerwas not yet engaged full-time on the project because she was winding up anearlier project and only handled the preliminary negotiations with the client.She delegated the set-up work, which involved mainly research and scheduling,learning the protocol and finding examples of the materials to be used, toanother team member. The team member proposed an early visit to the hostcountry before most of the planning and set-up had been done. The projectmanager disagreed; she wanted to see more of the research undertaken first.However, she did not interfere except to point out the key activities that musttake place before the first visit to Eastern Europe. The planner felt many ofthese were unnecessary at such an early stage. The project manager gave wayand allowed the early visit.

The project planner soon realised that most of the early activities that theproject manager suggested were necessary. He then worked hard to get thesedone, even working extra hours. However, he still had to delay the first visit bya couple of days. The result, nevertheless, was that the early visit took placesuccessfully and the majority of the activities thought to be needed before thefirst visit were done after all.

Consider the probable outcome if the project manager had not allowed properdelegation, had stamped her authority on the project and not allowed the earlyvisit. Possible consequences are:

· A generally bad atmosphere in the project team (at a key stage of theproject).

· A demotivated project planner.

· The set-up phase might have taken longer.


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Motivation

You will have studied motivation under your HR module. However it isappropriate to briefly touch on it here because project managers mustunderstand that motivating people to deliver their project objectivescan be critical for the whole project.

The project managers task is to influence the work situation in a waythat encourages the person (or persons) to achieve the project goals. Thetwo most important factors that a person can bring to the job are abilityand commitment.

The competencies, skill and personal qualities a person brings to the jobare known as the person abilities. Hopefully these abilities enable theperson to achieve the tasks of the project and cope with the demands ofthe job.

The person’s willingness the perform the job is known as thecommitment the person brings to the job. It is the project manager’s jobto ensure he brings an appropriate style of leadership, addressing theteams needs in terms of ability and commitment, to the workingenvironment so that the performance he brings out of his work forceachieves the project goals.

The term motivation indicates things that increase your commitment tothe job. Frederick Herzberg (I would expect most students to already ofheard of Herzberg from their HR studies) studied motivation for manyyears and preached “job enrichment and individual development”. Helooked at what factors determine job satisfaction. He coined the termhygiene factors. These are factors that will cause a sense of grievancethat could lead to dissatisfaction and, therefore, a lack of motivation.Motivational factors are those factors that are the reverse of these,factors that increase job satisfaction

Interestingly, Herzberg’s research found that salary was only amotivator for a short period of time and working conditions, once set atan acceptable standard, were also not seen as a motivator, and thereforeimproving them would not motivate employees further. All managersneed to keep motivational theories in mind when striving to achieveproject objectives with staff delegated to obtain results on behalf of theproject manager.

Maslow’s Hierarchy of Needs

Maslow’s research (Maslow 1954) established an hierarchy of needs. Thishierarchy contained five needs that outlines that people work in order tosatisfy certain needs. (You will no doubt have covered this as well in aprevious module, but it is such an important topic that to review it againin the context of project management can only be of benefit).

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Physiological Needs

This is the most basic of needs. It refers to the needs of the body tosurvive and for self preservation. If you were deprived of these needs(food, air to breathe) you would become totally preoccupied trying toacquire these.

Security and Safety Needs

This concerns needs of job security, protection from accidents anddanger. When the security needs have been satisfied you are unlikely tobe motivated towards activities aimed at increasing security. Wegenerally prefer a safe environment to one plagued by unforeseenevents. To put this in a project context: if you are working on a projectthat is coming to the end, and maybe your contract terminated at theend, your security need will prevail.

Social Needs

The need to be accepted by others and belong to the team. This isespecially important in project teams as we share our lives with ourfellow workers and we seek approval and acceptance of our fellowworkers. We even alter our behaviour in order to be accepted by friendsand groups.

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P hysiological needs

Secur i t y needs

Social needs

Self-esteemneeds

Self-actual isat ion

needs

Fig 6.4 Maslows Hierarchy of Needs

Self-esteem Needs

This is the need for recognition and the need to be wanted and feelimportant within the group. It also involves the need for attention,importance and prestige.

Self-actualisation Needs

This is the highest of all the needs. It refers to a person’s ownself-fulfilment and self-realisation and becomes very important as theprevious needs are met. Maslow described self-actualised workers as:

· Strongly ethical.

· A more efficient perception of reality.

· Increased acceptance of self and of others.

· Spontaneity and simplicity.

· Deeper more profound interpersonal relationships.

· A natural creativity.

· Increased detachment and desire for privacy.

Maslow said that people needed to self-actualise; that is, grow anddevelop and by developing themselves they begin to self-actualise.

Self-actualisation can be seen in companies where people seek a highdesire for promotion. Indeed successful companies recognise the needamong its workers for self-actualisation by providing careeropportunities and promotional opportunities. It is wise for the projectmanager, especially on large projects, to bear this in mind.

Conflict

All mangers will come up against conflict at some stage in their workingrelationship(s). The important thing is that managers understand whatcauses conflict and take appropriate steps to control conflict.

Although the following list is not exhaustive it contains the mainsymptoms of conflict:

· Lots of rules and regulations.

· Poor communication.

· Decisions taken with incomplete information.

· Low morale caused by inefficiency and frustration.

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· Problems focus on people and personalities.

The important thing is that managers recognise conflict at an early stageand take action to stop the situation deteriorating even further.

Such action might include smoothing; by seeking to maintain friendlyrelations by emphasising common areas of agreement andde-emphasizing areas of difference. Compromising; this involvessearching for solutions that bring some degree of satisfaction to theparties involved. Negotiation: this is where conflicting parties negotiateand trade items of behaviour.

Some managers believe it is beneficial to have conflict in the work place.They believe conflict pushes people to higher levels of performance andit enhances the decision process. If you have a heterogeneous projectteam you are bound to have some conflict, at some time or another inyour project team. You should try to manage the conflict, not eliminateit completely.

Read the Chapter 4.2 in Field and Keller on dealing with people tounderstand this topic further.

ACTIVITY

Think about your own supervisor or manager. Would you consider him or her aleader? Are you a leader to your subordinates (if you are in an appropriateposition)? Why, or why not?

ACTIVITY FEEDBACK

You should have covered the points as mentioned on leadership that make upleaders characteristics. Things such as creating a sense of direction,communicating the vision, inspiring and energising.

The energy of the leader should be directed to influencing others to workwillingly towards the company’s goals.

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The Project Manager’s Role

Although we have looked at this in the introduction, this section buildson that and looks in more detail at the role of the project manager andthe skills needed to be successful in a project manager career.

It is the project manager’s job to carry out the project plan and take thelead in project planning to work out the resource plans, the projectschedules and budgets necessary to accomplish the project objective. Itis essential the project manager has the appropriate skills to achieveproject success. This section discusses the role of the project managerand the type of skills needed to be a successful project manager.

The project manager is the single point of contact to co-ordinate thework of the project team, to ensure the project meets its objectives andmake the best use of company resources.

The role of the project manger is influenced by the size of the project. Ona small project the project manager may be expected to be technicalmanager as well. Some companies prefer project managers to betechnical experts rather than generalists. A technical expert being anindividual who has some experience and training in the technicalaspects of the project being implemented.

The following points favour a project manager being a technical expert:

· Judgement is enhanced: the project manager knows andunderstands the technical issues and thus can applysuperior judgement skills.

· Technical skills: enable the project manager to be directlyinvolve in the feasibility study

· Respect from the team: by demonstrating good technicalskills (and management skills) they will gain enhancedrespect from the team.

The other side of the coin puts the argument for the project managerbeing a generalist:

· A generalist will not hold back ideas and innovation

· Good, effective project management requires manynon-technical skills. Skills such as team building,financial management negotiation and co-ordination.

· As managers become more experienced they will be moreaware of the people, costs and co-ordinating activitiesand less with technical issues.

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The project manager is the person assigned to manage a specific projectand is expected to bring the project in on time and budget and meet theagreed project objectives.

The project manager will have overall responsibility for planning,integrating, controlling, leading, communicating and building apositive and supportive climate for the project

Summary

Why is all this important in respect of managing projects? Projects poseparticular problems of building and managing project teams. Projectmanagers need to be able to motivate groups to work well, andleadership skills are essential if the team is to work willingly towardsthe successful achievement of organisational goals.

The selection of the project team is critical in obtaining the right balanceof skills, experience and personalities. Classifying people into typeswhen forming a project team is a sound way of building a rounded teamand ensuring you have the right people in suitable roles.

It is the project manager who has to extract contributions from all thepeople involved in the project. However, the nature of projectmanagement sometimes means that very often the project team is puttogether very quickly and sometimes project managers find themselvesworking on a project with a crew of strangers. This means the issue ofleadership, from the project manager, is a little more complex thanordinary management.

Motivating people working on projects can also be a problem. Thebiggest problem here is motivating and keeping people when theproject nears completion. People need career progression and a job thatwill grow, but major changes, like the end of a major project, make thisvery hard to deal with such things.

The challenge of project managers, especially for short-term projectsthat have a time constraint, is to accelerate the process of teamdevelopment and at the same time keeping pace with the immediatetargets set out in the project plan.

REVIEW ACTIVITY

Global Industries

Global industries prepares an annual stockholder report in ten languages. Thisyear’s report gives important information about a pending merger that requires

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a vote at the annual stockholder meeting on June 3. Therefore, the presidentrequested that the ten versions of the report be mailed by May 1.

On March 1, Larry, the project manager, scheduled the four-weeks’ work ofediting and designing the primary document (in English) to be completed byApril1. This would give time for translation, graphic production and printing inthe other nine languages by May 1.

The project team consists of an editor and a designer located at companyheadquarters, nine language translators located in various countries, andcustomer services representatives from five printing companies also located invarious countries. At the beginning of the project, Larry set up a telephoneconference call with all members of the team to explain the project objectivesand schedules. Because the representatives from the printing companies didn’tspeak English very well, Larry was careful to speak slowly and clearly. He askedeach team member to provide a status report every two weeks.

In the beginning, Larry was confident that the schedules would be met, but atthe first status report, the editor informed him that she was ten days behind inwriting the report because the president had not returned her phone callsrequesting clarification on some details of the merger, Furthermore, thedesigner and editor couldn’t agree on the basic design of the report. The editorwanted a formal, traditional design and the designer wanted an informal,modern layout.

What potential problems do you see in Larry’s communication plan?

What communication barriers exist and how would you solve them?

What conflicts exist and how would you resolve them?


This case presents typical issues in communications and conflict resolution.

Larry began well by gathering the entire team together in a conference call toexplain the project objectives and schedules. Because the team was dispersedin several countries, this conference call was probably the next best option tohaving a face to face meeting. However, because several team members arenot native English speakers, Larry needs to be sure they understand hiscommunications with them. He could consider using the translators tointerpret his communications into the languages spoken by the representativesfrom the printing companies.

A fault in the communication plan appears to be the frequency of the statusreports. Since the major project tasks are in increments of one month, a status

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report every two weeks is not often enough to spot potential problems in timeto take corrective action. Status reporting on this project should be at leastweekly.

The communication barriers between the editor and the president are typicalin many organisations. Although the editor was responsible for writing aboutthe merger, she could not get the necessary information from the companypresident. In this case, the project manager needs to help open up channels ofcommunication and get the needed access to the president. This access mayhave been blocked by organisational culture or formal lines of communication.

The project manager also needs to help resolve the conflict between the editorand designer on the layout of the report. The most effective strategy would beto facilitate a rational, problem solving meeting where the editor and designerdiscuss their concerns, look at alternatives and select the best approach. It mayinvolve compromising on some issues. The project manager could helpmaintain a friendly atmosphere by emphasizing common areas of agreement.

Unit 4 References

Belbin, M., (1996) Management Teams. Butterworth-Heinemann.



Handy, C. (1993) Understanding Organisations. Penguin.

Herzberg, F. Work and the Nature of Man. Ty Crowell Co.

Maslow, A. (1943) Motivation and Personality, revised by R.Frazer et al(3rd edn 1970) Harper and Row, London.



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Unit 5

Project Control

LEARNING OUTCOMES


· Analyse and understand the factors that make up sound projectcontrol principles.

· Describe the factors of comparing actual performance against planand other project performance criteria.

· Examine the various techniques and methods for reporting onproject progress.

Introduction

This module considers the management control of projects. This is thesystem, or process, of comparing actual performance to the plan todetermine how the project is progressing.

The success of controlling a project is directly linked to the effectivenessof the project plan. This section looks at the various systems andmethods needed for reporting progress. Evaluating the work that hasbeen done by visiting the project, or visiting contractors who areworking on the project, and then updating the plan is the key tosuccessful project monitoring.

Reporting on variances is also a key task, but even more important isdoing something about those variances, so the project is kept on track.

This section also looks at the start of the project: that is the first stages ofactually initiating the project.

Control and Reporting

Control is the system, or process, of comparing actual performance tothe plan to determine how the project is progressing. Your ability tocontrol a project is directly linked to the effectiveness of the project plan.

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This section looks at the various systems and methods needed forreporting on progress.

It’s important to remember, as Burke points out:

“The frequency of the reporting cycle should reflect theneeds of the project. Short reporting periods when there is ahigh level of change and uncertainty in the project, longperiods when there is little or no change. For example,during project start up and during commissioning phase thereporting cycle may be reduced or daily or even hourly,while under normal conditions the reporting cycle isusually weekly or monthly.

As a rule of thumb, the reporting cycle should havesufficient time to implement corrective action to bring anydeviation back on course without delaying any criticalactivities.”

Burke (2003)

Field and Keller point out that:

“Monitoring and control are the project manager’spredominant activities during the main execution phase.”


It should be apparent that the whole process of monitoring and controlis in place to prevent problems as outlined above. But even with themost rigorous systems in place problems are likely to occur. The mostimportant thing is that you should be prepared for problems and evenexpect problems to happen during your project.

At the very least you should expect the following to happen during yourproject.

· There will problems meeting quality specifications.

· Some items will be overlooked in the estimate.

· Activities will take longer than expected.

· Key staff will leave the project.

· Suppliers will be late delivering equipment.

· Equipment will cost more than estimated.

· New legislation may prohibit a planned course of action.

(As listed by Field and Keller. For the full list see Field and Keller, page272.)

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The important point with all this is that however much you plan someunexpected problems will happen and these problem will use upvaluable time and resources. A project manager needs to have a strongwill and maintain a balanced view at all times.

Principles of Monitoring and Control

You need a plan to tell you where you are supposed to be and statusdata to tell you how the project is progressing. Even with the best plans,problems will still occur, but they should be fewer and less serious.Before the project gets under way the project manager should consultwith the project team, the customer and the client to determine theinformation needs, data collection methods and frequency of datacollection.

· Always have a formal process to control changes in theproject.

· Revise project plans as needed to keep them realistic andaccurate, but only those authorised to update the plans.

· Elevate problems to the lowest level of management thatcan make the decision and take action.

· Ensure that progress, cost expenditure and scopeperformance are calculated and reported using methodsconsistent with the way the plan was set up.

Collecting information on project progress is a key task. The data can becollected electronically, manually, by onsite inspections and teammeetings.

Electronic collection can be quick and cost effective. Today most projectteam workers have access to a PC. They can input status informationdirectly. For example, team members can enter work hours and teammembers can update cost reports and transmit data to the projectmanager for collation.

Data capture should be managed to appropriate level of accuracy anddata capture feedback forms should be structured in line with theoriginal estimate to help make data capture less subjective.

A higher level of accuracy is required on critical activities because anydelay on these activities will extend the project’s duration.

For electronic data collection to work well it is essential all teammembers have access to the appropriate project management system,they have all been trained in project management principles and a teammember (or even members) has the skills to manage and present theinformation collected.

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The project manager will establish a cycle for the collection of data. Thiscycle could be daily, weekly or monthly. This information should becompared with the project plan to identify the variances. A varianceexists when the actual status does not match the planned status.

ACTIVITY

Develop a written plan for monitoring a project of your choice.

ACTIVITY FEEDBACK

You should include detailed information needs, data collection methods andfrequency of data collection. Think of data needed on each activity, manpowerdata, financial data, time data and data about deliverables from suppliers.

Scope and Quality Control

Scope management is defined as:

“The processes required to ensure that the project includesall the work required, and only the work required, tocomplete the project successfully. It is primarily concernedwith defining and controlling what is or is not included inthe project.”

Burke (2003)

This section looks at managing the scope of the project: that is ensuringall the work within the agreed project terms of reference is done to therequired cost and time objectives.

Rory Burke goes on to highlight what the essence of scope managementis all about:

“Since most projects seem to be riddled with fuzzydefinitions, scope management takes on a greaterimportance to avoid scope creep, and avoiding addingfeatures and functionality to the product that were not part

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of the original project contract without an appropriateincrease in time and budget“.

Burke (2003)

Scope management is all about defining what the project will achieve. Italso covers what it will deliver, what it will produce and where thework packages start and finish.

The scope document not only includes a description of the features andfunctions of the project, but also the quality measures (performancerequirements, security issues and technical specifications). Thesemeasures are used regularly in controlling quality once the projectbegins. To effectively manage scope, quality standards must be definedin the project scope statement. (More about quality in a moment.)

Scope management is interested in both the quality of the project workand the quality of the product or service that is being created by theproject.

To control the scope and quality you must compare actual performanceto the scope statement to determine variances. Scope and quality aremore difficult to measure than time or cost, and when project teammembers are up against time and cost deadlines they may forced to cutcorners on scope and quality!

Burke, highlights the following key point with regard to scope changes:

“It is important, particularly on large complex projects, thatany scope changes are only approved by the nominatedtechnical experts. This will not only prevent scope changesby do-gooders shooting from the hip, but also ensure that

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NCRsConcessions

Changesrequests

VariationsModificationsExtras

Identifychange anddocument

Presentcommunications

Impactstatement

Circulate forinput and design

approval

Instructions

Clientapproval

ReviseScopeBaseline

Baselineupdate

Issueorders

Authorisedwork

Figure 5.1 Configuration Control Flow Chart (Taken from Burke 2003)

all implications of the proposed changes have beenconsidered.”

Burke (2003)

In practice, you need to ask yourself the following questions whencontrolling scope and quality:

· Is the specification, as per the scope statement, beingmet?

· Compare performance with the scope statement.

· Analyse variance to compare against to determine impactagainst scope and quality.

· Publish reports that detail where the project is meeting ornot meeting specification.

· Take corrective action to act on scope deviations quickly.

It is good practice to use a formal change request and a projectcommunication form to help with scope changes (see examples below).The change request form will be a numbered form that describes thescope change and the reason for change.

The project communication form is used to identify a question, problemor suggestion. This document will be numbered and recorded (in theconfiguration management system) to ensure that it is actioned.

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CHANGE REQUEST

NUMBER:

INITIATED BY:

DATE RAISED:

CHANGE REQUESTED (related drawings / work packages):

REASON FOR CHANGE:

APPROVAL:

NAME POSITION APPROVAL DATE

Figure 5.2 Change Request (Taken from Burke 2003)

The impact statement clarifies the implications for the proposedchanges. This form will look at the impact of the changes on the designteam, legal impact, cost impact, quality impact, technical impact, etc. Infact all the impacts the change might have on the project need to beconsidered.

Quality management is the processes to ensure the project will satisfythe needs for which it is undertaken by addressing the management ofthe project and the product of the project.

Burke highlights the importance of quality management:

“You need to consider both the quality management systemto assure you are capable of building the product and thequality control system which tests and inspects the product,to confirm you have achieved the required condition.

With projects becoming larger, more complex and moretechnically advanced, the need to assure the product willmeet stringent requirements is the focus of qualitymanagement. These requirements may be set not only bythe client, but also by insurance companies, governmentlaws and regulations, together with national andinternational standards.

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PROJECT COMMUNICATION

NUMBER:

INITIATED BY:

DESCRIPTION: (related drawings / work packages):

DATE RAISED:

COMMENTS/INSTRUCTIONS:

WE ACKNOWLEDGE YOUR ENQUIRY /INSTRUCTION:

VERBAL FROM:

WRITTEN FROM:

DATE:

TO:

TO:

PLEASE ADVISE HOW WE ARE TO PROCEED:

1. START IMMEDIATELY AND QUOTE WITHIN 7DAYS

2. START IMMEDIATELY ON UNIT RATES

3. DO NOT START, QUOTE WITHIN 7 DAYS

4. OTHER

REQUEST FROM:

CONTRACTOR

PROJECT MANAGER

INSTRUCTION FROM:

CLIENT

PROJECT MANAGER

The development of quality management systems can bedated back to the large military projects of the SecondWorld War, where they needed to ensure standardisation.Since then BS 5750 (1979) has established the framework forcommercial quality management systems and has sincebeen adapted internationally as the ISO 9000 standard.”

Burke (2003)

One important document is the Project Quality Plan. This is a detaileddocument that explains how the company will assure that the productwill be made to the client’s requirements.

Crosby (1987) argues that quality is free. It costs less to get the job doneright first time. However, some managers never seem to have time toget it right first time, yet seem to have time to re-work the job. The cost ofthe re-work may be two or three times the cost of the original job.

Consider the example, from Burke, where a weld on a steel fabricationproject has been rejected. The additional costs would include:

· Quality raises a non-conformance report.

· Planning re-schedule the repair.

· Remove the weld and surface preparation.

· Re-weld.

· Quality check new weld.

Prevention costs are those costs that are associated with actions taken tomake sure the product will be made to the required standard: such thingsas reviewing and verifying designs, quality training, quality planning,quality improvement programs and in-process control engineering.

Burke also gives us this excellent example from Jaguar cars:

“When John Egan joined Jaguar in 1980 the company waslosing about $5 million a month. Under Eagan’s direction,Jaguar set about developing a quality control programmeand four years later the dramatic effect could be seen in thecompany’s sales figures, rising morale and a boost to theworkers wage packets. In addition, Jaguar has seen adramatic reduction in warranty costs, huge gains inproductivity and major reductions in finished product defectlevels. Once again, Jaguar became a profitable company.”

Burke (2003)

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ACTIVITY

Evaluate your company’s ability to manage risk and explain what you can do toimprove the way you manage the risk in projects.

ACTIVITY FEEDBACK

You should ensure your company has proper procedures in place to managerisk. Do they have systems in place to determine likely risks, do they havesystems in place to respond to risk?

Variances

Not all variances will have a negative impact on the project and not allvariances will need corrective action. It will be the job of the projectmanager to determine whether the variance has:

· A significant impact on the project.

· Whether the impact is a problem.

· The cause of the variance, including reasons and thepeople involved.

· If the variance will cause other variances elsewhere in theproject

Often the project manager will issues a report which shows what theproject should be doing, what is actually happening and the variancebetween the plan and the latest status of the project.

As the project manager develops and analyses solutions to thevariances, and/or problems, he will decide on a course of action. Thisaction could include the following: taking action to solve the problem,follow up to ensure the action solves the problem, document thesignificant design(s) that impact on the agreed project plan, takepreventive action to be sure similar problems do not happen again.

Of course, if the project manager has sufficient authority he will decideon a course of action, if not he will need to take a recommendation tomanagement that can make that decision.

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The following activity is taken from Field and Keller and it provides anexcellent example of the type of problem that project managers faceduring the execution of a project:

ACTIVITY

(5.2 from Field and Keller)

“Here is a typical problem for a project manager. You are halfway through thedesign phase of a fixed-price project to design and supply a roboticmanufacturing system when the design engineers reach the conclusion that thelevel of reliability specified in the contract cannot be met. The reliability of therobots that had been envisaged at the estimating stage had been overestimatedby the supplier who now will only guarantee some lower performance. Furtherdiscussion with your designers reveals that a route to higher reliability isuncertain. There may be alternative suppliers but costs and timescales areuncertain and would require further research.”

Consider the following questions:

(a) Would you prefer to keep the news from the client?

(b) When should your own management be informed?

(c) What steps could you take to recover from this blow?

ACTIVITY FEEDBACK

This kind of situation is not unusual.

(a) If this is a significant problem the client must be told as soon as possible.You may recall that one of the first tasks of the project manager is toestablish mutual confidence with the client. Secrecy will undermineyour credibility. Nevertheless, give yourself time to prepare an outlineof options so that you are prepared for some difficult negotiations.

It is better to have a discussion with the client armed with a range ofpotential answers than just with a nasty problem.

(b) Your own management should be informed at once – and before theclient. (You may need to fend off the suggestion from yourmanagement that there is no need as yet to talk to the client.)

(c)

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Ask the engineers to produce an outline of the options, within the timeconstraint of a few days (no detailed research is possible). Ask them toinclude the option of using the robot originally envisaged with anestimate of the reliability now expected. Then arrange a meeting withthe client with the aim of negotiating either for reduced reliability or fora delay in delivery, and an increase in the price to pay for the additionalwork and, perhaps, higher cost equipment that may be needed as well.As the contract is fixed price you may expect some tough bargainingahead, but remember also that the client has to be realistic. The clientpresumably still wants the project to be completed. If you are put in aposition where future costs will be more than the fixed price, you mayhave to recommend abandoning the project.

Although we have taken the supply of a robotic system as an examplehere, you could apply the same sort of problem to any project. Perhapsit has occurred (or will occur) in your own project and you will havehad to take similar actions.

Managing: The Start of the Project

Executing the Project

Most project managers start the project off by holding a formal kick-offmeeting with all the key players (client, customer, project teammembers) involved in the project. This is usually used as an opportunityto define the roles and responsibilities of everyone involved in theproject and to communicate the project plans clearly and concisely. It isthe first step in building the project team and building team morale(more of these topics later).

On large projects you might do this by holding an away day. You alsomight have a special project logo or slogan to use on every projectcommunication and report.

According to Field and Keller the activities of the project managerduring the project’s execution may be considered to fall under thefollowing headings:

· Initiating.

· Planning, organizing and staffing.

· Monitoring and controlling.

· Directing.

· Communicating.

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You may think that once the planning stage has been completed andyou have actually started getting on with the project the planningactivities will pass. However, project planning is an evolutionaryprocess that continues throughout the life of the project.

Harrison (1992) used the term rolling wave to describe how planningchanges throughout a medium to large project.

“Hierarchical planning normally incorporates the rollingwave concept of planning. In many projects it is notpractical or possible, because of the lack of the necessaryinformation, to plan the complete project in any level ofdetailing its early stages. Often the necessary information toplan the later stages of the project in detail is actuallygenerated in these earlier stages. In such projects, the rollingwave concept overcomes this problem.

At the start of the project it is generally possible to createonly a Level 1 summary plan outlining the complete project,with more detailed Level 2 or 3 plans for the early stages ofthe project. Then as more information is generated by theseearlier stages of the project, it may be possible to create aLevel 2 plan for the complete project, and a Level 3 plan forthe middle stages of the project. Later, as the middle stagesgenerate more information, the Level 3 detailed plans forthe final stages can be created.

This can be likened to a rolling wave, moving from left toright, that is from the start of the project to its finish. Thework in front of the rolling wave is only planned in coarsedetail to Level 1, or perhaps Level 2, with the crest of thewave being the development of Level 3 or 4 plans. Withincost accounts, or larger packages of work, the same conceptcan be used. The earlier activities are fully developed workpackages or job cards, and the later are larger planningpackages in which the work is not fully defined anddetailed.”

Harrison, (1992)

Along with monitoring and controlling, the Project Manager’s othermain job is to communication.

Communicating what is happening with the project, communicating toclients, to suppliers and contractors. In fact communicating to all theteam members and management the status of the project. The ProjectManager also needs to be a good listener and encourage goodcommunications between all the project team members.

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READING ACTIVITY

Read section 5.1 of your core text, Field and Keller, to investigate this subjectmore fully.

Controlling Project Objectives

Producing reports, schedules and budget plans will help you control theproject throughout its life. We will now look at the way these plans andreports are used with any other status reports to control time, cost,scope and resources.

Time

This is the process of comparing actual schedule performance to thebaseline schedule to determine variances, evaluate possible alternativesand take appropriate action.

It is essential to control and monitor the time spent on projects. Timecontrol is the process of comparing actual schedule performance to thebaseline schedule performance. After this is done it is simply a matter ofreviewing the variances and taking appropriate action.

Cost Control

Before we look in more detail at cost control and project accounting, thefollowing comment from Field and Keller is highly illustrative of theproblems of cost control in the project management world:

“Controlling cost is much more difficult than monitoringcost. It is almost impossible to prescribe how it should bedone. There are numerous books on cost control which, inspite of optimistic-sounding titles, are really mostly abouttechniques for cost monitoring. Cost monitoring is, ofcourse, an essential prerequisite for cost control – without itthe project manager is left in the position of one who canonly exhort the team to do their best but does not knowwhether to praise them or blame them for their pastperformance. It comes back to the project control loop.

One axiom should be stated at the outset:

You cannot control the cost of an item when the money hasalready been spent or irrevocably committed.

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A consequence of this axiom is that cost control is all aboutcontrolling future commitments, not about controlling pastexpenditure. So the main part of cost control is theauthorization to spend money.”


In a nutshell cost control is the process of comparing actualexpenditures to the baseline cost plans to determine variances. Afterthis has been done you need to evaluate alternatives and takeappropriate action.

You would need to systematically collect cost data including thefollowing:

· Labour hours expended.

· Percentage completed of activities in process.

· Non labour hours to date.

· New activities that have been identified.

· Previously planned activities that are no longer needed.

All these would need regular review and action taken, whereapplicable. Reports would need to be published.

It is very important to keep a firm grip on costs. The best way to do thisis to ensure you keep a firm grip on the amounts that are authorized.You should only authorise those commitments that are detailed in theproject budget breakdown. On most projects a code would be noted onthe authorisation form so it can be checked against the estimate beforethe order is placed.

It may also be necessary to put together revised estimates when theperformance falls below the standard required. Careful monitoring andquick action will help take care of cost issues before the problem gets outof hand.

Resource Control

Resource control is the process of comparing actual performance to thesource plans to highlight variances and determine appropriate action.

Obviously a project manager cannot micro-manage everyone’s workand be aware of what everyone is doing all of the time. The project teamshould work in an environment, and the project manager shouldencourage such an environment, where team members control theirown work.

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Some methods used to control resources include:

· Team members should prepare individual plans foraccomplishing their work.

· Empower team members to accomplish their tasks bygiving them appropriate authority and information.

· Ensue all team members understand the basic projectobjectives and understand their tasks.

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Figure 5.4 Control Charts Examples (Taken from Richman 2002)

Methods to Control Resource and Project

Objectives

Inspection

You need to ensure that work is being accomplished according to thedesired quality level and specification. One method is inspection: thiswill include examining, testing and measuring whether activities areprogressing to schedule.

Statistical Sampling

It not practical to inspect every activity in the project so sometimesprinciples of statistician sampling are applied to measure progress.

For example, you could choose to inspect ten out of one hundredactivities. You should then apply principles of statistical sampling andprobability to determine the exact number that must be inspected toapply those results to the total with reasonable accuracy.

Control Charts

These are charts that show results along with established control limits.Charts help to check if the project, or an activity, is in control or in needof adjustment. Graphs can also be used to look at trends. The examplesbelow (from a printing facility) show histograms, pie charts and linegraphs to identify trends and will enable project leaders to focus andcontrol influencing factors.

Reporting on Project Objectives

As you may have gathered project managers spend a great deal of timepreparing reports and deciding what information is relevant.

Reports should be designed to communicate exactly what it needs tocommunicated. Projects are sanctioned to meet objectives in scope, timeand cost. It therefore makes sense to align reports on these three aspects.

When preparing reports you should consider the following:

· Maintain concise, quality, accurate plans.

· Choose the best format for a report, such as a Gantt chart,graph or histogram.

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· Use exception reporting by including only majorvariations from plan.

· Use software to break information down and report onvariances.

· Keep everyone informed, including customers, clients,senior management and those in the project team whoneed to be informed.

· Make reports easy to read: use a traffic light symbol asvisual indicator of project status; i.e. green means projectis on track, yellow equals minor trouble, red equals majortrouble.

It is very important to make reports easy to read, Always ensure thatreports only contain the information needed by the recipient. Next,determine whether the reports can be further simplified by convertingthe data to graphical format. Summary reports for senior managementshould always be in graphical format. A simple pie chart or graph ismuch easier to understand than a report full of numbers.

ACTIVITY

Think of the reports in a project you may have been involved in. Usingsuggestions from this chapter determine how you can revise the reports tomake them more useful.

ACTIVITY FEEDBACK

Think of issuing reports in graphical format(s), think of ways of simplifying thereports to help management understand the progress being made.

Reporting per cent Complete

Reporting per cent complete is sometimes more useful than justreporting on how many units or hours have been completed. Take theexample of a brick wall. It would be sensible to plan for 100 bricks perday out of the total of 1000 bricks. It would be logical to assume that 100bricks takes the same effort to lay each day.

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However, this would be misleading because in reality bricklayers laymore bricks at the beginning of the job and fewer bricks towards the endof the job, because higher rows of bricks are required needingscaffolding and more time to move materials up and down.

Sample Reports

The sample reports below show a status report. This report wasdesigned to show senior management key information on three aspectsof the project objectives: cost, schedule and scope.

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S tatus Repor t : 1 June

Schedule (6 months to complete)

Cost

Cumulat ive Expenditur es

0 Week 1 Week 2 Week 3 Week 4 Week 50

20000

40000

60000

80000

Plan Actual Projected

Jun JulMar Apr May

Scope

Quality standardsLegal requirementsZoning variance

okokok

okanticipate delays

ok

S tatus to date S tatus at complet ion

Figure 5.5 Example Status Report (Taken from Richman 2002)

Schedule information is presented as a single timeline with a solidarrow above the line showing performance to date, positioned at theend of the first week of May. You can then check this with the dashedvertical line indicating the date of the report (1 June), this tells us that heproject is running three weeks late.

The solid horizontal bar shows the scheduled length of the project. Inthis example the project is scheduled to complete at the end of June. Thedashed line and the arrow shows that the expected completion is nowthe end of July ! This means the project is four weeks late.

Cost information is shown on a chart showing cumulative expenditure.The dotted line shows that actual spend is ahead of planned spend. Thedotted line shows hat the project is forecast to overspend.

Scope looks at a few key indicators, with a simple warning of potentialproblems.

The example below shows the status of a project. The activities areshown in grey. The black bars represent a summary of the activities ineach phase of the project. The lines show dependencies between theactivities.

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Figure 5.6 Gantt Chart – Baseline Plan (Taken from Richman 2002)

Now look at the next report below.

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Figure 5.7 Schedule Status Report (Taken from Richman 2002)

This report focuses on the same project as in Figure 5.8, except theproject manager has updated it to show the latest status on the project(putting in actual start and actual finish dates). He has used this formatbecause everyone is familiar with the baseline plan. As the activitiesprogress the grey lines become solid lines and the actual start and finishdates appear in the appropriate columns.

ACTIVITY

What is an exception report?

ACTIVITY FEEDBACK

A report that shows only major deviations from the project plan, rather than alldeviations.

Controlling the Changes in the Project

Throughout a project, events may happen that necessitate minor ormajor changes to the plan. Most changes happen because of errors at theplanning stage. Lots of changes to the plan may be an indication of weakmanagement or a sign that the organisation is trying to handle morework than it can handle.

Changes may also be brought on by external events, changes such asgovernment regulations new technologies or competitors changing oradding new products.

Whatever the changes, it is important to put in place a formal changecontrol process to handle changes to the plan. The system shouldinclude formal processes for submitting, evaluating and approvingchanges to the plan.

Change control is needed to manage the potential effects on the project.Whatever change you make, however small, there will be a knock oneffect to the project. A knock on effect to the budget, schedule or scope.Beware of “scope creep”! This is the tendency for scope to increaseduring the course of the project without proportional increases in timeor cost.

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Change control is often called configuration management.

To ensure you keep changes to projects under control take the followingactions:

· Introduce a process for submitting, evaluating andapproving changes to the project plan. Define guidelinesso the team members know exactly what minor changesare acceptable and what changes need to be put throughthe change control process.

· Review change requests with the project team. Considerthe impact of the changes, identify causes of change anddetermine if these impact on other areas of the project.

· Look at other areas and courses of action and determinetheir effect on the project.

· Approve or reject changes and communicate changes toall concerned.

· Document and track changes, reporting their effect in theproject.

READING ACTIVITY

Read section 5.2 to understand these concepts more fully.

Project Evaluations

You will be collecting data and issuing reports to ensure costs, time andresources are being managed effectively. Even though these will giveyou a good idea of the progress you are making, most project managersalso hold project reviews to ensure team members are motivated, andcustomers and clients are happy.

Project reviews also help motivate the team. It is an opportunity to stepback and take a good look at the project to be sure that everything isprogressing to plan.

Project reviews also provide feedback to help everyone stay focused onthe project objectives. People work better when they receive positivefeedback. It helps people stay committed and motivated.

We can breakdown project evaluations into four general methods:

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On-going reviews: on-going reviews should ensure that the projectstandards, as included in the scope statement, are being met.

Periodic Inspections: these are weekly or monthly inspections toensure that project objectives are being met. Every bit of work cannot beinspected, therefore it should be agreed at the beginning of the projectwhat will be inspected and at what frequency.

Milestone Evaluations: milestones are the completion of major phasesin the project. Here you are certifying that all the work scheduled to becompleted has been completed to the agreed specification.

Final Project Audit: this happens at the end of the project to confirmthat every thing was completed as agreed by the customer, and/orclient. The audit is helpful to gather lessons learned during the project.What was well done? What could be learned to improve future projects?

ACTIVITY

Find out if your organisation has formal evaluation process? What projectreviews do you currently perform?

ACTIVITY FEEDBACK

Refer to the research you have undertaken in your own organisation and if itmatches the techniques and processes outlined above.

Closing the Project

Good project management techniques include procedures for formallyclosing the project. The reason for project closure is to confirm that allthe work has been completed as agreed and the customer accepts thefinal product. There may also be a deliverable called project handover.This is very close to project completion and is usually the formalhanding over of the project to the customer or client. The followingcomments from Field and Keller put this in perspective:

“Right from the beginning the project manger should focuson the target: successfully closing the project. The project

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will have finite duration and the project manger will wantto ensure not only that the project has been completedtechnically to good quality, within budget and schedule, butalso that the ongoing business after the project has beencompleted is as healthy as possible. As the projectprogresses, the plan for its closure will need to bedeveloped. This is sometimes called a phase-out plan ortermination plan”


Many projects deliver a working system that is handed over to someother organization. For example, at the end of a chemical plantconstruction, the plant must formally handed over to the client. Prior tothis the maintenance staff would have trained in the new plant. This isto ensure that ease of future operation happens when the plant is onstream.

The documentation also needs to be complete. As Field and Kellerhighlight:

“the documentation includes complete lists of all the projectdeliverables, showing how they fit together and how theywere designed and tested. Furthermore, the documentsshould show how it was intended that the product shouldbe used and maintained. This applies just as much tosoftware as it does to hardware.”


Acceptance need not be 100%. The customer/client may accept theproject with reservations. Again as Field and Keller highlight:

“The reservations will list the items outstanding and theproject team may then deal with these with over someagreed time-scale. It may not make economic sense to fulfilevery aspect of the agreed scope of work, even with thechanges agreed so far. Using the Pareto principle, it isfoolish to spend huge resources on work that is of onlyminor interest to the client. Negotiation is the sensible wayround this problem. Hopefully, unless the client isunhelpfully stubborn, an agreement will be reachedbetween the contractor and the client that payment for thework is adjusted to take account of those elements of thework that cannot be tackled economically”


The purpose of project closure is to ensure that all the payments havebeen made and finance reconciled, project documentation complete andfinal project reports completed.

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Project closure is also a time to recognize individual efforts andcelebrate project success. The project manager should also ensure thatteam members have smooth transition to other projects.

Many project managers use a project closure list to ensure all the itemsare taken care of during project closure. Checklists can clearly indicatethe close out functions; aid project team members who have littleexperience in this area; reduce oversight of important areas.

Example project closure list

1 Have all activities in the project plan been completed?

2 Have all work orders been completed?

3 Have all the contracts been closed out?

4 Has the client accepted the final product?

5 Have all the maintenance procedures been put in place?

6 Have all final project reports been prepared?

7 Have all payments been made to vendors and contractors?

8 Have the project accounts been reconciled and closed?

9 Are all parties aware of the pending closeout?

10 Has excess project material been dealt with?

11 Have all project equipment and other resources been returned tostores or reallocated?

Obviously the project list will vary in size according to the size of theproject.

CASE STUDY

Southern Power

In response to growth in southern England, Southern Power has decided tobuild a £1 billion power plant near Worthing, Sussex. The new plant wouldimplement new technologies not only to produce clean power to benefitsouthern England but also to generate enough power to sell to other utilitycompanies in the UK.

However, news of the new plant generated lots of opposition from localresidents. As building work started they launched several lawsuits to try andstop construction.

Southern Power tried to convince local residents of the benefits of the scheme.After a few months delay the project was started.

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However, after a few months it became apparent that income from powersales would not be as great as forecast. Management asked Paul Jones, theproject manager, to find ways to reduce the building budget so the companycould maintain the level of profitability from the plant.

Paul couldn’t find many ways to reduce costs. (Tight environmental laws andother government legislation). Paul asked the designers and engineers to makedesign changes to reduce costs.

They made several changes that were implemented immediately and Paulasked them to visit the site every month to look for other ways to save money.

After 1 year the CEO of the building company e-mailed the CEO of SouthernPower to complain of too many changes and that caused confusion and extrawork. He outlined a catalogue of changes by the engineers that were not beingfed through to the architects.

Southern Power also discovered that the first phase of the project did not meetenvironmental standards and the project was nine months behind schedule.Management immediately fired the project manager.

You have been hired as the new project manager. What action would you taketo put the project back on track?

You should include some of the following in you answer, project objectives,change control and risk.

CASE STUDY FEEDBACK

The major areas of concern are: managing the objectives of time, cost andscope. As the project has issues around time, cost and scope you need a cleardirection from senior management on the priorities for these projects.

There was no formal process to control changes; this was a major error.Numerous design changes should give you an idea that this high tech. project isvery risky!

Time and cost control: The project started late, as PM you need to review allthe activities to ensure the correct data is being collected and evaluated. Wasthe return on investment done properly? Was a proper investment appraisaldone?

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Summary

This section has looked at the techniques of project monitoring andcontrol. It has also looked at understanding the steps of controlling theproject schedule, cost and scope.

The importance of gathering information and how information isreported effectively in order to support corrective actions wasreviewed. The critical issues of risk were reviewed, in particular howrisk can be identified, assessed and appropriate action taken to respondto risk.

Control is the process of comparing actual performance to the plan todetermine variances and take appropriate action. The effectiveness ofcontrolling a project is tied to the effectiveness of the project plan. Theplan tells you where you are supposed to be and status information willbring you up to date with where you are.

Scope management covers the processes required to ensure that theproject includes all the work required, and only the work required, tocomplete the project. It is about defining and controlling what is or isnot included in the project. Quality management is the process requiredto ensure that the project will satisfy the needs for which it wasundertaken, and in today’s competitive market companies compete onprice, quality and customer service.

REVIEW ACTIVITY

Now read the following case study, taken from Project Manager Today. Thecase study was written when the library was under construction.

Case Study: the British Library

What was the last great public building before the new British Library?

Britain is well supplied with great public buildings. They are structuresorganized and built by the government of the day and for the public good.Westminster Palace, St Paul’s, the V & A, British Museum and The Royal OperaHouse are all well-known examples. The New British Library on Euston Roadand next door to St Pancras will one day surely rate among the great.

PSA Projects are managing the new library project on behalf of the sponsor,The Department of National Heritage, and the client, the British Library.

What we especially wanted to look at on this project was the team’s use ofquantitative risk analysis techniques and so your faithful reporter trotted along

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Euston Road one wet afternoon to meet James Macrae of Eurolog – theproject’s risk analyst.

James’s background is in civil engineering. With Taylor Woodrow International,he worked in Dubai, Nigeria and Trinidad in a project co-ordination role. Herecently managed to find time to get an MBA at City University Business Schoolbefore joining Eurolog in 1988. Eurolog and the MBA took him out ofconstruction into the worlds of defence, telecommunications and IT so hewelcomes the library as an opportunity to return to construction.

The need for risk management on the project stems from the complexinterfaces between construction, commissioning, handover and occupationphases of the building. The library team have a great deal to do once thebuilding is complete – the new computer book retrieval system has to beinstalled, tested and got working as does the book delivery system. This maynot sound too hard until you remember that there will be 11 million books onthe 300 km of shelves in the four deep basements underground. Let me takeyou forward in time on a short guided tour of the new building.

When the building is in use you will enter through the main hall from the piazzaarea on Euston Road having already walked above the deep basements in whichthe books will be stored. The main hall is very grand with marble pillarsreaching from the ground floor entrance area to the ceiling many floors above.Balconies along the rear wall of the hall connect the two main sections of thelibrary to your left and right.

Proffering your library ID card, you will turn left for the Humanities section orright for the Sciences. In either case it is likely that you will seat yourself in areading room at one of the many public computer terminals and search thecomputerized database for the book you want to consult. Once you have madeyour selection you will press a ‘Please get it for me’ button which causes a slip ofpaper to be printed out some distance below you in the depths of thebasements at a librarian station somewhere near where the required tome isstored. One of the librarians will respond to your call taking the book from itsplace on the shelf and sending it off on a journey using automatic paternosterlifts and conveyors running in hidden ducts and tunnels throughout the building.Within 20 minutes your book should appear at the reading room counternearest you and a red light on your terminal will let you know that you can strollover to the desk and get your book.

This is a significant improvement on the current 24 hour wait that you canexpect while the book is delivered from one of the many repositories that willbe replaced by the new library.

In addition to getting all the book handling systems installed and up and running,which of course means new staff training, the building has a very sophisticatedair conditioning system and fire protection system which will require somelooking after. The air conditioning will maintain the building’s environment andis linked up directly to some of the book cases where it will help to maintain themore precious volumes (the actual Magna Carta and Gutenerg Bible to name anunreplaceable two) in peak condition.

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So the library and the construction team have a job on their hands getting thebook handling systems and building services into place. Add to thesecommissioning activities the normal administration systems that need to bebrought to life – security, accounts, personnel, canteens, toilets, cleaning, etc. –and add in the phased handover of the building as various sections get finishedoff by the building team and you have a king-sized planning problem.

It is planned to hand over the building in a phased way permitting bothconstruction and commissioning work to proceed simultaneously on theproject. In a planned and managed way the builder will hand over each sectionof the building to the client who can then begin his or her own work.

The library wanted to examine various ranges of handover dates as there werea number of possible sequences. The team decided to use quantitative riskanalysis techniques to predict the probabilities of handover dates for each partof the building. On the basis of risk-based predictions the final decisions on thehandover sequence would be made.

Enter James Macrae of Eurolog. This is what was done to examine the phasedhandovers using quantitative risk management techniques. The risk analysisstarted off with the construction project plan as prepared by the managingcontractor – Laing Management Contractor’s – as this was downloaded intothe Eurolog system. Then the Library’s commissioning plan was downloadedfrom their OpenPlan system and the two simplified into a master plan. To thisnetwork plan risk analysis techniques allow James to do two major things.

Variable durations

Each duration can be replaced with a range of durations associated withlikelihoods. You can have either a continuous range or a specific number ofdurations. James explains a case where a range of durations might be used:‘Take an inspection task on an area of the building. The optimistic durationmight assume that the inspection found nothing outstanding: duration one day.The pessimistic duration might assume that the inspectors uncovered a greatdeal of poor quality work which requires correction: duration six days.

The most likely is that the inspection will reveal a few problems which needtidying up: duration three days. Hence the durations will be one, three or six.Each duration can have a likelihood associated with it. Let’s say a 10%likelihood of a six day duration, a 70% likelihood of the three day duration and a20% likelihood of the one day time frame.

In other types of task – plastering a wall, for example – the task might takeanything from two to six days depending on the number of plasterers, how wellthe work goes and all the other things out there waiting to make your projecttake longer than planned. Hence, a duration that can be anything between oneand six days.

Variable Logic

Here the network plan is brought closer to reality by the addition ofalternatives – logical paths that might be followed associated with likelihood’s.

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Let’s take a commissioning task like firing up and adjusting the controls on aboiler. The risk team might judge that there is a 30% chance of commissioningbeing successful straight off. A second possibility, judged at 40% likely, follows apath where the commissioning is complicated by some problems with theboiler but where simple remedies are available. The final route, only 30%likely, is that the commissioning fails very badly causing the need for extremeremedies.

Each part follows a series of activities which take some time.

Multiple analysis

Given a project in which either or both of these two aspects of variability existand have been modelled wherever appropriate you can see that a simplecalculation of early and late start and finish dates will not be enough. The systemcan take the optimistic durations, pessimistic durations, likely and unlikely pathsand calculate a number of overall project durations. The system uses a MonteCarlo simulation technique.

The technique relies on random numbers and the name refers to the randomselection of numbers in the gaming houses in the principality. The roulettewheel spins, the little ball bearing bounces and a number gets chosen atrandom.

What happens to the library project is that it is analysed many times usingdurations selected scientifically at random from the range of durations thatform part of the model. The risk analysis system takes each task and uses arandom number generation technique called the Monte Carlo technique toselect a single duration for each task from the available range and to select asingle path where choices are available. The system then executes a normalcritical path analysis and arrives at an overall project duration. In each specificpass some tasks are assumed to go really well, some really badly and some inbetween. The programme notes down the overall duration and goes back tothe start.

Taking another set of randomly generated numbers the system chooses somemore options and generates another overall project duration. Do this a fewhundred times and a graph emerges linking overall project duration to thelikelihood of that duration occurring.

Instead of one overall duration based on loads of assumptions we have a largerange of durations each based on assumptions and we can deduce some trends.

In the case of the new library, rather than a single overall project duration thisuse of risk analysis leads to a prediction of possibilities for each of the numeroushandover dates – James Macrae’s Window Report shows the sensible range foreach handover and the likelihood of each occurrence. It looks much like abarchart but it shows a range of dates for each event – the window in timeduring which the event is likely to happen.

Not only do you get a range of possible durations for the project, eachassociated with a likelihood of occurring, you also get a valuable tool called a

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criticality diagram. The criticality diagram shows the likelihood of each taskbeing critical. While a normal single pass critical path analysis shows that eithera task is or is not critical, the criticality diagram shows a percentage against eachtask varying from 0% (not critical in any pass) to 100% (critical in every pass)and anything in between.

The technique involved falls under the general heading of quantitative riskanalysis methods. We are not here concerned with the qualitative risk analysistechniques except to say that they exist and perform a useful function in projectrisk analysis methods (PRAM) especially in identifying areas where quantitativetechniques are most likely to be useful.

This all gives the client a better understanding about the plan for the building.You can see that once this has all been done, variations and informationdescribing actual work done can be added to the network plan to see theireffect on the end date/likelihood graph and the criticality diagram.

There are disadvantages of these techniques. It takes time and resources towork out the numbers so there has to be a significant investment throughoutthe project management team to facilitate the risk analysis work. There mustbe a critical path model for the program to work successfully and the variousparties involved must contribute to the plan so a degree of openness must existbetween the organisations.

The benefits of this approach do not arrive without some considerablecommitment and investment. Clearly a project network plan and goodestimating are the foundations on which analytical skills to model uncertaintiescan be used to analyse risk. The information that springs from risk analysis willbe useless without decision makers ready to acknowledge and deal withuncertainty.

Sharing the risk

The library involves many organisations contracted to each other but let’s thinkabout these techniques being used within a single organisation where onegroup of people are moving towards the start of a new project within thecompany. In such a case the biggest advantage for me, an old pragmatist, is apersonal one which I call risk sharing.

If there are risks associated with a project and you keep them to yourself andtell no one, you take the risk on your own shoulders. If things go well peopletake little notice and you get off lightly. If things go badly it will be all your fault. Ifyou examine risk, discuss risk with your management and collectively agree totake on the risks then you have done a great job as a project manager. If thingsgo well you get off lightly – just as before. If things go appallingly badly andeverything that can go wrong does go wrong, you can say that the organisationtook sensible, calculated risks. And at least you get to keep your job becauseyou shared the risks.

Some figures from the new British Library

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The new British Library, after completion which is scheduled for 1995, will seatabout 1300 readers. If the 11 million books were taken from their shelves andthe shelves unwound from their basement walls and laid in a straight linestarting at St Pancras and heading North, there would be a huge traffic queue inHendon as the rush hour cars worked their way around this long line ofshelving. There would also be a traffic jam in Doncaster and delays inNewcastle where the shelves would end!

The books will be stored at a temperature of 17oC and a relative humidity of50% with very narrow tolerances. These cool, dry conditions will apply withinsome of the air-conditioned exhibition cases.

The Mechanical Book Handling System specifies 85% of books requested willbe delivered within 15 minutes and 95% within 20 minutes.

There is a section of the main library which is a building within a building calledthe King’s Library. It is designed to be a glass ‘tower of knowledge’ as a visibledemonstration of the wealth of information stored in the basements beneath.The King’s Library will store a collection of books and manuscripts created byKing George III, and given to the nation by King George IV in 1823. This sectionalone will store 60,000 volumes including four folios of Shakespeare, a firstedition of Paradise Lost and other very early printed works. These are notpurely for show as many can be requested and examined.

CASE STUDY

Read the following case study to understand some general issues of howproject management might be tackled in an educational establishment.

The case study highlights some important project management issues,especially the importance of good communication and building goodrelationships during project management. The lessons learnt section is alsoparticularly pertinent.

Colchester Institute

Approaches to Project Management in theEducation Sector

The perspective of a large FE/HE College

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Colchester Institute Project Management CaseStudy

Colchester Institute; Jayne Bacon

Introduction

Jayne Bacon is the Information Learning and Technology Manager at ColchesterInstitute.

She was appointed the Project Manager of a Joint Information SystemsCommittee (JISC) sponsored interoperability project at Colchester Institute in2001. Janette Hillicks of JISC infoNet interviewed Jayne at Colchester Instituteto find out more about the Project Management approaches used on theproject and the benefits felt, challenges met and lessons learned fromsuccessfully undertaking a sizeable project in a relatively short timescale.

The Institution

Colchester Institute is the largest college in Essex and is based over twocampuses – one in Colchester, the other in the seaside town of Clacton. TheInstitute has over 10,000 full-time and part-time students enrolled on over 140full-time and over 700 part-time courses. There is a large infrastructureunderpinning the academic operation which includes a Learning ResourcesCentre, Student Services and 1,200 internet enabled PCs.

The College offers both Further and Higher Education deliveries and this is oneof the challenges facing the institution given the requirements are diverse foreach; for instance, with regard to examination boards and various statutory andother elements.

The Project

The JISC Committee for Integrated Environments for Learners (JCIEL) set up aManaged Learning Environment Steering Group (MLESG) to help FurtherEducation Colleges with the selection and implementation of ManagedLearning Environments. The MLESG conducted a number of Interoperabilitypilots to “implement and prove the feasibility of interconnection betweensystems within an MLE using the international standard of IMS (InformationManagement Systems), with FE (Further Education) extensions”.

Colchester Institute became one of the pilot sites in 2001.

The intention of Colchester’s project was to investigate the technical and otherissues surrounding the interfacing of TekniCAL’s Virtual Campus (a VirtualLearning Environment product) with Fretwell Downing’s EBS (a studentrecord system component of a Managed Learning Environment (MLE) usingappropriate elements of the IMS standards. The project took place over theperiod 1st April – 31st December 2001.

The project’s stated aims were to:

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· Achieve student and course data exchange between componentparts of the MLE.

· Enable the VLE to deliver specific study material to identified groupof students.

· Test interoperability between the Virtual Campus (VLE) and learningresources (content).

Its specific objectives were to:

· Achieve student and course data exchange easily;

· Construct objectives for best practice within the College;

· Identify summary reports required by Colchester Institute;

· Ensure that the reporting and tracking of students achievementswithin MLE met the needs of Colchester Institute.

The Institute was already working with a standalone VLE (TekniCAL’s VirtualCampus) and were keen to consider if a Managed Learning Environment couldoffer any enhancement to their current operation and also what effects thiswould have in terms of staff and procedures.

The project was supported by a small team who worked on it alongside theirregular jobs and also had a steering group and a small pilot group of students inan identified area of the curriculum.

The Project Management Approach

A great believer in using structured, methodical approaches, it is no surprisethat Jayne used just such an approach for the Interoperability Project. Themethod she used was something of an adapted hybrid of recognised practices.It was not strictly a prescribed Project Management methodology although itdid have elements of tried and tested tools. There were several similarities toPRINCE for example.

Preferring to work within a structure with clear tasks and goals, rather than a‘fluffy’ environment, Jayne believes that the main advantages of using amethodical approach are:

· Control.

· Focus.

· Key inputs/outputs.

· Clear objectives.

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· Challenges.

It is Colchester’s policy to only take on projects that will be of benefit to theInstitute. It is imperative that there is some value for the College in any newinitiative undertaken. Jayne recognises that the temptation is there for theavailability of funding itself to be a driver for committing an institution toundertake a project but feels strongly that this would not be in the bestinterests of Colchester Institute and is keen that any project undertaken shouldfit in with the strategy of the College. The Interoperability Project wassomething that the Institute was going to be undertaking anyway although thepotential for involvement with JISC was very attractive.

Defining the scope wasn’t easy – it boiled down to what was realistic in the timeallowed.

Getting clarity of business process levels, etc – there was a real element of trustin other people’s skills and expertise. There wasn’t a change of scope as suchalthough some minor ‘tweaks’ were made. A real ‘push’ was required towardsthe end of the project to ensure its successful conclusion.

Stakeholders and Related People Issues

When it came to the involvement of stakeholders in the project there was adeliberate overall strategy pursued to ensure that the maximum support fromthroughout the College was generated. The goal was to ensure thatstakeholders reacted positively to the approach and this was achieved. Therewas no detrimental reaction against the formal approach taken and a proactivecommunication strategy helped alleviate any fears and dispel any confusion thatmay have been experienced.

The whole project was managed in a proactive way. All stakeholders wereencouraged to have buy-in to the project. Indeed, it was vital for the success ofthe project for stakeholders to be on board. This included the active buy-in ofthe vendors as well as the other stakeholders. There was also a recognisedrequirement for additional/dedicated resources for the project including aprogrammer. It was essential that the Academic Registry, the SeniorManagement Team and the Head of IT Services were all on board from theoutset too. Transparency of data was an important issue and was theresponsibility of the Academic Registry.

There were some challenges experienced in the selling of the project. It wasimportant to avoid raising stakeholders’ expectations too high, too quickly.Jayne candidly admitted that the institution has had its fingers burnt on previousprojects due to overselling something from the outset. This can cause realdisappointment and helps fuel mistrust for future initiatives.

Academics were not heavily involved in the project initially; there was adeliberate plan to get them more involved later. The college had previouslyundergone a collaborative VLE project which had resulted in a number oflessons being learned and an agreement that some aspects of the previousexperience should not be repeated. One of the lessons heeded was not to raise

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expectations too early on in a project – hence the delay in including someelements of the Institution until there were real tangible outputs.

An interesting approach was taken when academics were initially introduced tothe project. Sessions for academics were held based on the premise thatmoney was no object and technical barriers were surmountable. They wereasked what would make things better for them. No promises were made aboutthe outcome of the exercise. In actuality, several of the suggestions they madewere already available, they just hadn’t realised.

Team building is very important to Jayne and she was also keen to break downformality. Goals were seen as shared and not just the province of management.Meeting of goals was seen as a useful motivational tool encouraging furthercommitment of the stakeholders to the project.

The Project Steering Group was chaired by Jayne and she also managed theteam. Her philosophy with regard to managing people is – “If they’re there,they’re important”. Group mix was important and once the group was formedit stayed together throughout the duration of the project.

Jayne is a pragmatist and one of the strengths that has become apparent in herleading of this project is that she has trusted those people with particular levelsof experience and knowledge to use it appropriately in order to achieve setgoals. However, she felt strongly that in order for her to have an overview ofwhat was happening and a strong steer of direction for the project, it wasimportant to have regular ‘plain English’ explanations of activities by allmembers of the team. This was important as it helped to ensure that everyonehad an understanding of what was going on – in basic terms. It also helped tode-mystify some of the more technological and data specific aspects of theproject.

Feedback from those involved in the Project Team has been positive – onemember of staff stated:

“It has provided a much needed opportunity to reconsider my own,sometimes cynical, view of new learning systems. The enthusiasmwithin the project team has been infectious and I have recapturedsomething of the spirit I had when I was involved in research sometwenty years ago”

Tools

PEST and SWOT analyses were undertaken in order to highlight issues from anearly stage. (A PEST analysis looks at Political, Economic, Social andTechnological factors. A SWOT analysis identifies the Strengths, Weaknesses,Opportunities and Threats involved.)

All stakeholders including the Governors, the Principal, the SeniorManagement Team and the students were analysed using the tools. There wassome familiarity with the approaches and the theory behind them but theproject gave an opportunity to put the theory into a practical context. Theproject investigated elements of the College rather than looking at the sector as

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a whole. Careful consideration was given to what the Institute required of thetechnology and the project outcomes. The team needed to look at a minimumlevel at which requirements could be met to allow scalability for the future.

The project was not just about technology. During the pilot stage a significantamount of time was spent looking at processes and demands on technology. Abusiness process project was undertaken alongside other related projects atthe same time as the Interoperability Project.

External Parties

Vendors met the deadlines. The same vendor representatives attended theregular project meetings each month – there was a consistency of contactwhich, it become more and more obvious, was a major factor in the successfulprogression of the project. The regular meetings always ended with anagenda/action plan being agreed in advance of the next meeting.

It was seen as a definite advantage that the two vendors had worked togetherbefore as this helped save time from the outset of the project. The approachand the relationship cultivated with the vendors worked well and occasionallymore progress was made than had originally been planned for so other taskscould be fitted in. Vendors were so on board that it was not uncommon forthem to seek responses from their developers via phone calls during the regularproject meetings rather than waiting until they were ‘back at base’ aboutparticular issues. If Colchester had not taken such a proactive and methodicalapproach to the project there was definite potential for deadlines to be missed.The project’s communication and reporting framework prevented ‘float’ andencouraged continued motivation.

Tracking and Review

The project used a minimum bureaucracy approach. Form filling was kept to aminimum within a pro-active communication strategy. Emphasis was placedmuch more on communication rather than on over-zealous administration.

The following questions were regularly asked:

· “Where are we today?”

· “Where do we need to go?”

· “What do we need to do?”

· “When can it be done by?”

These simple questions helped frame the project’s progress and resulted inappropriate measurements of tasks and timescales. Tasks within the action planwere tracked. Monthly progress reports were compiled which met therequirements of both JISC and Colchester Institute whilst also being a usefultool for the Project Team itself to measure progress against goals. This helpedensure that the project was regularly reviewed to monitor its progress and

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keep it on track. There was also a major review of the project at its conclusion.Challenges were seen as a positive throughout the project as the approach wassuch that challenges could be faced and met.

A schedule for monthly meetings was agreed from the outset of the project.The whole team, including vendor representatives attended the regularmeetings. Tasks were set at these meetings with an emphasis on ‘reality’ –Were undertakings realistic? Could things be done within the requiredtimescale? The project’s success relied on the setting of realistic goals withinrealistic timescales based on realistic levels of resource.

Communication

Regular communication was vital and, as well as face-to-face meetings, greatimportance was applied to the use of telephones and e-mails. In order toprevent any slippage on deadlines and milestones it was accepted practice thatthe relevant parties were prompted (via telephone or e-mail) a week or sobefore looming deadlines.

Risks

The biggest risk to the project as far as Jayne was concerned was failure – theInteroperability might not actually work. Colchester, however, was preparedto accept this risk, although there was a lot of confidence within the institutionthat this would not happen and it was not generally considered to be a ‘riskproject’. All risks were shared throughout the team – the relationship was veryopen with a high level of communication.

Cultural Challenges

There were some challenges and some cultural differences that becameapparent between business and education sectors during the project’sduration. Terminology, for instance, could be a problem at times – a fieldrequiring the same information in both systems might be called somethingdifferent. Also the possibilities for recording that information could also bedifferent – for instance Male and Female could be represented as M and F in onesystem and 1 and 2 in another. There were also some cultural differencesapparent between private industry (the vendors) and the education sector(Colchester Institute). However, these challenges were met and a very goodworking relationship was developed. This data mapping issue is something thatcan be easily missed when planning a project. Overlooking it can have a hugeimpact on the progress of an implementation project as it can cause majordelays if it is not taken into consideration from the beginning.

Project End – Lessons and Benefits

There were several unexpected benefits felt as a result of undertaking theproject.

Everyone learned a lot. Good relationships were built. It gave extra credibilityto Colchester Institute within the sector. The project also helped to developclose links between sections across the College. If Jayne were undertaking a

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similar project today the main thing she’d attempt to do to improve thingswould be to plan better for absences and holidays – especially those that occurduring the mid-summer period as delays caused by unplanned-for absences canbe a frustration. The project experienced some challenges around thedifferences between education and business holiday arrangements. However,if vendor representatives were away they would always send a replacement toany project meeting.

When asked what message Jayne would give to other colleges who aren’tcurrently using a structured methodology for their projects she said that theyshould, “Stop and re-think – you need the structure!” She feels that sometimespeople blame the product but it’s more about insufficiently definingrequirements. Institutions need to look at what they need to achieve and whoneeds to do it.

One of the main lessons learned was that being proactive was crucial, it becameclear during the project that if there is not a proactive attitude involved then theproject will not work. There is no opportunity to just sit back and expect thingsto happen – people and activities often require prompting.

Ultimately, the project addressed the interoperability of the Institute’s VLE andMLE with the interests and needs of staff, students and Colchester Institute.The project complemented the Institute’s CIS (College Information System)and ILT (Information Learning Technology) strategy. The Institution found thattheir approach to integration had realised benefits of a culture change withinlearning practices across the curriculum. The project was a challenging andrewarding experience for those involved had a major impact on developmentsfor following years and stages at the College.

Further resources

JISC infoNet has a wide variety of resources and tools freely available toinstitutions and individuals in the further and higher education sectors, with theJISC infoNet website (http://www.jiscinfonet.ac.uk) providing the main accessroute to the materials.

Further information is provided on the website on a variety of issues relevant tothe Colchester Institute case study including information and data, PEST andSWOT methodologies, and best practice models for process review andproject management.

Appendix 1

ORIGINAL PROJECT MILESTONES AND OUTCOMES. SUMMARY

(from Public Report to Prove the Concepts of Interoperability Within

Managed Learning Environments in the Further Education Sector

(Colchester Institute). Written by Jayne Bacon.)

Milestone Outcome

1 Submit tender to JISC 6 Feb. DONE

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2 Agree with partners’ monthly meeting dates and venues March.DONE

3 All partners to agree on detailed action plan for the interoperabilityprocess to start March – April. DONE

4 To identify a steering group to include a student, member fromanother college, ILT champion, member of SMT, Head of IT Services,Curriculum Manager and ILT Development Manager This was notdone as stated instead many different cross college meetings tookplace and heads of faculty and centre as well as staff from FE and HEwere invited. This was deemed as the steering group.

5 College to identify curriculum area for pilot with students forSeptember 2001. DONE

6 College to ensure that chosen curriculum area will have appropriatestudy material available by September within the VLE. Course materialto be developed by MPU (Media Production Unit) with course tutorswhere necessary. DONE

7 Trial transfer of student and course data from the MIS to the VLE.JUNE

This was delayed but took place in November and was successful to all3 levels of data transfer. (level 1 transfer, level 2 understanding datatransferred, level 3 using the data transferred in the correct manner)

8 Testing of curriculum mapping within the VLE. JULY. Again delayeduntil November. In November we could see the top level course butnot the broken down modules although the vendor could see them attheir end. Tested again December and the modular level could beseen.

9 Testing of Validation. JULY There is no method to do this in thestandards for this project

10 Testing with Virtual student data. JULY – AUGUST

Testing took place in November and has been successful at all 3 levels(see no. 7 for levels).

11 Staff development sessions for prospective tutors of the pilot project.The pilot project was on 2 courses which the ILT champions are all doingthrough the Virtual Campus. They are all using the Virtual Campus asstudents and are learning through this medium. No training on being astaff member has taken place at present but staff are using the system.

12 Trial of interoperability with Olib the MIS and VC, This was not donebut decision was made to leave this out due to hold-ups and delays onthe rest of the project.

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13 Enrolment and training for trial students Tested in November andsuccessful.

14 Meeting with students on pilot where possible for evaluation ofexperience. As the course they are all doing is accredited at level 3OCN all students will be required to do an evaluation at the end of thecourse. This will not be in time for this project end. However, I havehad positive feedback from staff that want to use this system withstudents and can see the benefits for some groups.

15 Changes made and noted for interoperability I feel that we have madesome very relevant points in this project and we have made necessarychanges as we have progressed.

16 Testing of further areas (deletion, etc). This is something we all feelneeds further testing.

17 Evaluation of all partners and staff and students

This report (Public Report to Prove the Concepts of Interoperability WithinManaged Learning Environments in the Further Education Sector (ColchesterInstitute)) – submitted to JISC at end of project.

Disclaimer

Copyright © Northumbria University 2004.

The statements made and views expressed in publications are those of theauthors and do not represent in any way the views of the Service.

The JISC infoNet Service offers general guidance only on issues relevant to theplanning and implementation of information systems. Such guidance does notconstitute definitive or legal advice and should not be regarded as a substitutetherefore. The JISC infoNet Service does not accept any liability for any losssuffered by persons who consult the Service whether or not such loss is suffereddirectly or indirectly as a result of reliance placed onguidance given by the Service.

The reader is reminded that changes may have taken place since issue,particularly in rapidly changing areas such as internet addressing, andconsequently URLs and e-mail addresses should be used with caution.

No part of this document may be reproduced or distributed in any form exceptby bona fide public sector education establishments or in accordance with theprovisions of the Copyright, Designs and Patents Act 1988 and any amendinglegislation. All reproductions require an acknowledgement of the source andthe author of the work.

Parties outside the education sector should contact JISC infoNet regarding useof these materials.

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References

Atrill, P. (2003) Financial Management for Non-Specialists. FT PrenticeHall 2003.

Belbin, M., (1996) Management Teams. Butterworth-Heinemann.

Boddy, D. and Buchanan, D. A. (1992) Take the Lead. Prentice Hall.



Handy, C. (1993) Understanding Organisations. Penguin.

Harris, J. (2004) www.gantthead.com

Harrison, F. (1985) Advanced Project Management. Gower

Herzberg, F. Work and the Nature of Man. Ty Crowell Co

Maslow, A. (1943) Motivation and Personality. revised by R.Frazer et al(3rd edn 1970) Harper and Row, London.


Project Management Today (1992)


Richard, L. (2004) www.gantthead.com


Tuckman, B.W. (1965) Development Sequence in Small Groups.Psychological Bulletin, 63.


Weiss, J and Wysocki, R. (1994) 5 Phase Project Management: A PracticalPlanning and Implementation Guide. Addisn-Wesley, Reading, Mass.


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