Beuth University of Applied Sciences Berlin

MBA Renewables

WRITTEN ASSIGNMENT

PROJECT MANAGEMENT

Lecturer: Prof. Dr.-Ing. Dieter Pumpe

Student: Mario Maras, Dipl. Ing.

Berlin, 06th January 2014

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Table of contents

Task 1. Project Parameter Tetrahedron.................................................................................. .3

Task 2. Monitoring The Project.............................................................................................. ...3

Task 3. Product Breakdown Structure, Work Breakdown Structure, Multi-project

Environment............................................................................................... ...............................5

Task 4. Work Breakdown Structure..........................................................................................8

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Task 1. Project Parameter Tetrahedron

Theory of tetrahedron describes that project comprises four main components: scope, time,

costs and quality. Basic theory comprises three parameters as main ones: scope - unique

set of activities to produce defined outcome, time - period between start and end of a project,

and costs - parameter for specific allocation of resources. These three parameters may be

stated as three main parameters for a certain organization, but if a company wishes to win

the market in long term, it has to pay special attention to quality of project, because quality is

the only parameter that endures and wins new customers. Costs for example may be

exceeded in certain fiscal year, and they belong to the past. This parameter is visible only

inside of organization, but not to the outside, i.e. to customers who will benefit from the

project. Customer will benefit only if quality of a project is satisfactory and will probably make

order for another project or recommend organization to other clients. Parameter costs is also

defined as resources, as it represents amount of capital that is to be invested into the

development of project. Some companies expand tetrahedron model and add fifth

parameter, the risk parameter. Risk is very important in decision whether the project will be

developed or not. Risk can be defined as high, medium and low risk to the business. If a

company wishes to build profitable project in long term, and win more future customers, it

should add more parameters than just three: scope, time and costs. Quality is very important

for future development of business to win new customers, and risk is very important for

current development of business to make a decision if the specific project is profitable, will it

bring new necessary experience to follow with the project or terminate it before it even starts.

I would personally suggest to add more parameters than following just three because it is

necessary to examine the project from every possible aspect.

Task 2. Monitoring The Project

In this part we should consider earned value analysis. Earned value analysis defines various

quantities that aid assessing project performance. Analysis will be processed with combined

labour and material costs.

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actual costs - AC = €90.000 + €450.000 = €540.000

present value - PV = €100.000 + €400.000 = €500.000

budget at completion - BAC = €1.000.000 + €600.000 = €1.600.000

For the first month, actual costs equals earned value EV.

PV - EV = - €40.000 shows that project is behind schedule.

PV - AC = - €40.000 shows that project is over budget.

Concerning variances, we have to look cost variance and schedule variance.

CV = EV - AC = €0 shows that there is no difference between planned cost of work and that

was really accomplished and the actual cost of doing work.

SV = EV - PV = €40.000 show difference between planned cost of work that was really

accomplished and work that was supposed to be accomplished. Positive result is good.

Next, we have to look upon performance indices.

cost performance index - CPI = EV/AC = 1. This figure shows unity project is running

according the plan. If figure were less than 1, it would mean that actual costs were larger

than planned costs, and if figure were more than 1, it would mean that actual costs were

smaller than planned costs.

schedule performance index - SPI = EV/PV = 1.08. As value 1 shows that project is going

according the plan, value 1.08 shows good result, and if it were less than 1, it would not be

good.

Next, we have look forecasting.

estimate at completion - EAC = AC + (BAC-EV)/CPI = BAC/CPI = €1.000.000. This figure

shows if something could go wrong till the end of the project. as EAC = BAC; it can be

assumed that project will be accomplished according the plan.

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estimate to completion - ETC = EAC - AC = €460.000 shows amount of money needed to

complete project.

variance at completion - VAC = BAC - EAC = €600.000.

After going through all of these figures, it can be assumed that project will be finished as

planned and can be proceeded without fears.

Task 3. Product Breakdown Structure, Work Breakdown Structure, Multi-projectEnvironment

Product Breakdown Structure

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Work Breakdown Structure

Both Product Breakdown Structure and Work Breakdown Structure represent breakdown

structures in the scope planning phase. Scope planning represents work that has to be done

to achieve objectives of the project. Breakdown structures are needed to make accurate

schedule, budget and risk estimates. Work that has to be done, has to be broken into smaller

units and worked through.

Product Breakdown Structure is used to break product into smaller units to achieve objective.

In our case, wind farm is final product, meaning that farm has to be broken into smaller

engineering units, specialists should be hired in order to build fully functional wind farm that

will deliver company objectives.

Work Breakdown Structure breaks project work into smaller units. Building wind farm is not

only engineering task, but includes many specialists from other areas. Financial resources,

i.e. budget has to be defined, work schedule has to be defined, risks have to be defined and

accounting that will manage finances from both aspects - financial and management

accounting. During initiating, planning, executing, monitoring and closing the project,

management accounting will have most important role. Financial accounting will take place

after the project is closed and fiscal year comes to the end.

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Multi-Project Environment, or Multi-project management is planning and steering of multiple

projects of project portfolio within an organization. This can be done in the case of a wind

farm if process of building wind farm would be broken down into pieces and developed

separately, but managed together.

There are four success factor that need to be taken into consideration.

Actors and role definition meaning that multi-project management should include top and

middle management as most important actors. Tasks of top management are: following

organization´s rules of operation and standards for multi-project management, making fast

decisions on project issues when needed, being sufficiently qualified to understand the

projects, allocating sufficient time for multi-project management involvement, playing a

central role in selecting different projects, and is also included in project portfolio board.

Middle management on the other hand consists of three important factors: project manager,

line manager and multi-project manager.

Incentive systems have to be developed for project managers, meaning that after the

completion of project, project managers should receive awards if project targets were

exceeded. It is important to define appropriate incentive systems, as inappropriate incentive

systems might do more harm than good to multi-project environment.

Project portfolio management is considered to be core activity of multi-project

management. The main tasks are selection of projects, monitoring and controlling them and

adapting project portfolio to a changing environment. Key success factors for project portfolio

management are: strategic integration, project portfolio controlling, and project formalisation.

Performance methods and measurements of multi-project management represents

implementation of performance measurement and the correct execution of its different

methods.

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Task 4. Work Breakdown Structure

Work breakdown structure for a gas and heating turbine consists of five main parts: creating

budget, project management, collecting gas, converting gas into electricity and heating and

finally storing energy in the system. Level three might be additionally broken into fourth and

fifth level. Attention to details is very important in every single element if new turbine would

work on its full capacity.