Fundamentals of Project Management

1 Overview of Project
1.1 Concepts and Definition of Project
1.2 Characteristics of a Project
1.3 Project Environment
1.4 Types of Project
1.5 Projects Life Cycle and Project Phases
1.6 Project Organizations
2 Project Management
2.1 Concept and Definition of Management
2.2 Concept of Project Management
2.3 The Project Manager, His Roles and Responsibilities
3 Project Management in Nepal
3.1 Historical Overview
3.2 Project Planning in Nepal
3.3 Why do Projects Fail in Nepal?
3.4 Improving Project Management in Nepal

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 1. Overview of Project
1.1 Concept and Definition of Project
Projects are the specific schemes or action units designated for the investment of given
resources and skills with an aim of attaining some predetermined objectives. A project starts
from the scratch. It has a specific objective. It has a well-defined life span divided into a life
cycle. It involves a set of activities within a schedule and budget. It integrates human and non
human resources.
According to Harold Kerzner: A project is any series of activities and tasks that:
• have a specific objective to be completed within certain specifications
• have defined start and end dates
• have funding limits, and
• consume resources.
A project is one-time job that has defined starting and ending dates, a clearly specified objective,
or scope of work to be performed, a pre-defined budget, and usually a temporary organization
that is dismantled once the project is complete ( The project Manager’s desk Reference, James
Lewis)
A group of multiple interdependent activities that require people and resources is the Project.

Projects generally originate from plans. They serve as the building blocks for development
planning. A Plan, Programme and Project are different concepts yet complementary to one
another.

PLAN
A plan is an image, map or vision to represent the forms and/or features of desired
situation(s). It is a process of setting future goals for country or organization and choosing the
actions to achieve these goals. Plans may be Community Development Plan, District
Development Plan or Regional Development Plan depending upon the area it serves
and its magnitude. Similarly, depending upon different sectors (agriculture, education, Health
and so on) there may be different sector-specific plans known as Sectoral Development Plan.
And finally, we have the National Development Plan.
In Plan document, we can find only the level or sector-specific Broad Decisions
indicating what and how much is to be achieved with the investment of given resources. A plan
itself is static. In other words, a plan representing only an imagination or vision will have no
meaning unless it is put into operation to achieve its set objective/s.
A Plan is a set of Programmes.
PROGRAMME
A Programme is the extensive and consistent set of action units stating the needs of
interrelated activities to achieve the plan’s objectives and goal. There could be several
programmes within a plan or development plan.
PROJECT
A project is a unique group of tasks designed to attain a specific objective within the
constraints of time, cost and quality based on planning and control through the use of a variety of
resources in a dynamic environment.

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 Project Family Tree

Development Plan

Agricultural Programme Health Programme Roads Programme Other Programme

Wheat Project

Potato Project

Fertilizer Project

Livestock Project

Other Projects

Plan Five-Year Plan

Programme Health Programme

Project Hospital Construction

Work Package Electrification Package

Activity/ Task Preparation of Drawing

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Project Terminology
Goal: Goal is what exactly needs to be accomplished after completion of the project.
Project Scope: Documented set of standards and criteria that the customer defines as successful
completion.
Objective: A combination of tasks that concern specific functional groups or structural areas.
Tasks: A combination of activities that lead to the achievement of a definable result.
Activity: A time consuming piece of work with a definite beginning and end.
Duration: The elapsed time from the beginning to the end of an activity, task or objective.

1.2 Characteristics of Project

Despite the different types and natures of projects we observe in different sectors and in
different levels, all of those necessarily reflect a set of common characteristics.
A project has the following characteristics:
1.Objective: Each and every project needs to be guided to achieve an objective or a set of
objectives. It ceases to exist when the objective is achieved.
2.Life Span: A project has beginning and end. It cannot continue forever.
3.Constraints: A project has a schedule. It operates within the constraints of time, cost and
quality. Every project requires certain investment of resources.
4.Unique: Every project is unique. No two projects are exactly similar.
5.System: All projects need to undergo a system of inputs-process - Outputs.
6.Life Cycle: Every project will have its own phase-based cycle.
7.Teamwork: A project has many participants. It requires teamwork under the leadership of
the Project Manager.
8.Organization Structure: A project is a temporary organization. A project usually has its own
budget and management.
9. Planning and Control System: A project requires information, planning and control system.
The actual performance is compared with the planned targets.
10. Collection of Activities: A project is a collection of activities that are linked together to
constitute a system.
Time

Environment
Objectives

Cost Quality

Model of a Project

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 1.3 Project Environment
Environment consists of forces that influence the project’s ability to achieve its objective.
Projects operate in a dynamic environment.
Project environment can be classified into:
i Internal Environment
Internal environment is located within the project. It is Controllable by the project. It
provides strengths and weaknesses to the project. The forces in the internal environment
consists of:
o Project Objective
o Constraints
o Structure
o Resources
ii Task Environment
The task environment of a project is made up of stakeholders. They are either involved in the
project or their interests are affected by the project. The elements of task environment are:
o Customer
o Contractor
o Consultants
o Suppliers
o Government
o Financiers
o Competitors
o Labour Unions
iii. External Environment
It is located outside the project. It cannot be controlled by the project. The project can
indirectly influence it. It provides opportunities and threats to the project. The forces in the
external environment are:
o Economic
o Technological
o Political-Legal
o Socio-cultural
(For detail Refer- Project Management in Nepal by Dr. Govinda Ram Agrawal page: 16-20)
1.4 Types of Project
Projects can be of many categories. Various ways of categorizing a project are as shown in the
Table below.

Sponsorship Nature Orientation Speed Funding Technique Size

Source
Customer Individual Product- Normal Indigenous Labor Mega
Organization Staff Oriented Crash Foreign Intensive Major
Contractor Special Process- Disaster -J/V Capital
Medium
Government Complex Oriented -Bilateral Intensive
INGO -Multilateral Small
Donor
(For detail Refer- Project Management in Nepal by Dr. Govinda Ram Agrawal page: 21-34)

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1.5 Projects Life Cycle and Project Phases
A project is time bound. It has beginning and end. The life of a project is divided into several
phases to provide better management control and appropriate links to the ongoing operation
of the performing organization. Each phase defines the work outcomes or deliverables of the
project. The phases are arranged in a sequence.
Collectively, the project phases are known as Project Life Cycle. Project life cycle generally
defines:
o What technical work should be done in each phase?
o Who should be involved in each phase?
Cost and staffing levels are low at the start, higher towards the end, and drop rapidly as the
project draws to the Conclusion. The probability of successfully completing the project is
Lowest, and hence risk and uncertainty are highest at the start of the project. The probability
of successful completion generally gets progressively higher as the project continues.

The ability of the stakeholders to influence the final characteristics of the project product and
the final cost of the project is highest at the start and gets progressively lower as the project
continues.

Risk/Amount
Formulation Planning Implementation Termination
Risk
Amount of stake

Time

Project life cycle:

The breakdown and terminology of project phases differ; depending upon whether we are
discussing products or projects.
The life cycle phases of a product are:
o Research & Development
o Market Introduction
o Growth
o Maturity
o Deterioration
o Death
Today, there is no general agreement about the life cycle phases of a project. This is
understandable because of the complex nature and diversity of projects.

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 Project life cycle according to Cleland and King:
o Conceptual
 Preliminary Evaluation of project idea
 Identification of needs
 Determination of initial technical, environmental and economic feasibility
and practicability of the system.
 Preliminary identification of human and non-human resources
o Definition
 Firm identification of resources required
 Preparation of the detailed plans required to support the system
 Establishment of time, cost and performance parameters
o Production
 Standardization of efforts and completion of documents for operations
 Identification and management of the resources required facilitating the
production process such as inventory, supplies, labor, funds etc.
 Project implementation
o Operational
 Use of the system results by the intended customer
 Evaluation of the project and its integration into another organizations
o Divestment
 System phase down
 Reallocation of resources to other projects

 The Life cycle of a Construction Project:

The various phases in the life cycle of a project are:
 Formulation Phase
 Planning Phase
 Implementation
 Termination Phase

I Formulation Phase
The main tasks in the formulation phase are:
• Project Identification and
 Project Formulation
Project identification
• A situation survey is done.
• The project idea is born.
• The project is conceptualized.
• The sources of project ideas are internal (Strategies, Plans, Programmes, R&D Dept.,
Quality Circle) or external (Customer needs, Donors, Experts, Politicians, Legal
Provisions, Technological Development).

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 Project Formulation
• Defines the parameters of the identified project.
• Broad statement defining the objective and outputs
• Preliminary statement of schedule and resources required.
• Preparation of Project Proposal based on prefeasibility study and preliminary design.

II Planning Phase
The basic tasks in the planning phase of the project are:
• Feasibility study
• Appraisal
• Detailed design
Feasibility Study
• Determines the implement ability of the projects.
• The areas for which analysis is done are-
o Technical analysis – Studies the feasibility of meeting technical specifications
and examines the availability of alternative technical solutions.
o Financial analysis –Studies the financial sustainability of the project in terms of
capital requirements and capacity for meeting of financial obligations.
o Management analysis – Studies the adequacy of management system to direct
and control the project.
o Marketing analysis- Studies project capacity, market demand and sales forecast.
o Economic analysis – Studies net contribution of the project to the economy and
to the society. Benefit/Cost analysis is done for this purpose.
o Environmental analysis- Studies the impact of the project on the environment.
Feasibility study should be based on accurate information.
Appraisal
It is the Evaluation of the project’s ability to succeed. Appraisal is based on the findings of
the feasibility analysis. It addresses
- Ability of the project to achieve its objectives
- Comparability of the project with other projects (in terms of investment, cost/benefits,
job creation, profit etc.)
The competent authorities appraise the project against a list of criteria (policy, technical,
economic, financial, social, etc.) before giving approval and formally approve the project
selected through appraisal. Approval involves finalization of funding proposals and
agreements and allocation of resources to the project.
Detailed design
• It is concerned with
- Preparation of blueprints of engineering design and specifications for
construction, facilities, equipments etc.
- Preparation of detail implementation plans and work schedules.
 The design task establishes:
 Operating plans and performance standards
 Allocates responsibilities
 Determines activities and resources
 Sets down work schedules

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III Implementation Phase
The basic tasks in this phase are:
- Implementation
- Control
Implementation
Implementation is concerned with mobilization. It involves-
• Setting up of project organization,
• Allocation of tasks and responsibilities,
• Getting together project team
• Preparation of tender documents.
• Other pre-construction activities like land acquisition and coordination with other
infrastructure,
• Tendering, Construction and/or installation of equipment
 Project management, quality assurance, progress reporting and the participation of target
groups and project affected groups.
Control
It involves supervision and control of project performance to provide feedback.
Monitoring of project performance is done. It is a means to improve implementation through the
identification of problems and the possible corrective actions. Various techniques like CPM,
PERT and other network analysis techniques are used for control purpose. The Control
comprises the following activities:
• Setting of standards
• Measuring outputs
• Verifying the output with pre set standards
• Finding deviations, if any.
• Correcting the process/output to the pre set standards if required.

IV Termination Phase
The basic tasks in this phase are:
• Project Evaluation
• Project Handover

• Project Evaluation
Evaluation measures the effects and impacts of the project. It can be carried out during the
project implementation to improve implementation or can also be carried out after project
completion to improve future project planning and management.
• Project Handover
Handover begins when the project work is finished. Resources are then reallocated to other
projects.

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Other ways of breaking project phases in the Project Cycle
I.
• Concept and Feasibility Study F/P
• Engineering and Design P/P
• Procurement I/P
• Construction I/P
• Start Up and Implementation I/P
• Operation and Utilization T/P
II.
National and Local Level needs

Benefit Monitoring Project

And Evaluation Identification

Operation and Project Preparation

Maintenance Project
Cycle
Project Project Appraisal
Implementation

Funding

Loan/Grant Donor
Negotiation and Appraisal
A

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1.6 Project Organizations
Concept of Organization:
An Organization is a network of structure and relationship. Commonly, the focus of the
structure is the specialization of the human elements of the group.
Characteristics of Organization:
 Goal-Oriented
 Collection of People
 Consists of Structure (division of labor)
 Consists of Technology
 Has Environment
 Has Feedback
Project Organization
When projects are initiated, two issues immediately arise. First, a decision must be made
about how to tie the project to the parent firm. Second, a decision must be made about
how to organize the project itself. Project Organization consists of:
 Designing a Structure
 Pulling together Project Team
 Establishing Authority and Responsibility relationship
 Establishing Project Office
There are three major organizational forms commonly used to house the projects.
 Functional Organization
 Pure Project Organization
 Matrix Organization
1 Functional Organization
 Organization structure is broken into different functional units.
 The project tasks are performed through functional units.
 A project tends to be assigned to the functional unit that has most interest in ensuring its
success or that can be most helpful in implementing it.
 Functional elements of the parent organization- Administrative home for a project.

General Manager

Production department Marketing department Finance Department HR Department

Project A Project B

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Advantages:
o There is maximum Flexibility in the use of staffs.
o Individual experts can be utilized by many projects
o Specialists in the division can be grouped to share knowledge and experience--
Synergistic solutions to technical problems
o Serves as a base of technological, procedural, administrative and overall policy
continuity.
 Functional division contains the normal path of advancement for individuals whose
Expertise is in the functional area.
Disadvantages:
o Lack of Client/Project focus. Focus on unique area of interest.
o Decision delay
o No individual is given full responsibility- lack of co-ordination
o Tendency to sub optimize the project
o Weak motivation for people
o Does not facilitate a holistic approach to the project (e.g. Jet air craft/ emergency
room in a hospital can not be well designed unless designed as a totality.)
2 Pure Project Organization
o The project is separated from the rest of the parent system.
o A self- contained unit with its own technical staff/ administration.
o The project manager has his own line organization with project authority and
responsibility.
o The project has its own resources and management.
General Manager

Project A Manager

Design

Construction

Administration

Production Department Marketing Department Other Departments

Advantages:
o The PM has full line authority over the project
o Project work force directly responsible to the PM
o Line of communication- shortened.
o Focus on project objective
o High motivation
o Unity of command Exists
o Flexible labor force

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 Disadvantages:
o Duplications of efforts/Inefficient use of resources
o Lack of job security
o Stock piling of equipments / Technical expertise
o Projectiles (A disease-that creates animosities between parent organization. staff and
project staff)
3. Matrix Organization
o A combination of pure project organization and functional Organization
o It is a pure project organization overlaid on the functional divisions of the parent firm.
o Project team is assigned from the functional departments.
o The PM has overall responsibility

General Manager

Production department Marketing department Finance Department HR Department

Project A
Manager

Advantages:
o The project is the point of emphasis/ special focus
o Availability of entire reservoir of technical talents in the FD
o Team identity
o Less anxiety about job
o Rapid response to client needs
o Consistency of policies/ practices/procedures of parent firm
o Holistic approach/Balance of resources
Disadvantages:
o Power and Authority is balanced. Doubt exists who is in charge
o Division of authority and responsibility is complex
o Movement of resources from project to project- may foster political infighting among
the several PMs.
o Projectile is still a serious disease.
o Violates the management principle of unity of command.

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 2 Project Management
2.1 Concepts and Definition of Management
All organizations carry out various activities to achieve their certain pre-determined
goals. Management helps organizations to achieve goals. Management can be defined as
follows:
Management achieves goals by getting the jobs done efficiently and effectively through
and with people by using the means of planning, organizing, staffing, directing and
controlling in a dynamic Environment.
Management is a know- how. Actually it is an art. It consists of skills, practical knowledge,
creativity and result- orientation. Management is a science also because it has an organized
knowledge of principles and techniques. Management is a profession also.
Characteristics of management
• Management achieves goals
• Management gets the jobs done efficiently and effectively
• Management works through and with people
• Management is a process comprising planning, organizing, staffing, directing and
controlling
• Management operates in an environment
Principles of management
Principles are fundamental truths and are essence of management theory. Henry Fayol
propounded 14 Principles of Management, which are universally applicable. These are:

• Division of Work: Principles of specialization. An employee should be assigned only

one type of work to increase output.
• Authority and Responsibility
Authority Legitimate power, right to influence others and make decisions
Responsibility Obligations to carry out assigned jobs. It cannot be delegated.
Accountability Answerability for satisfactory performance
Those who exercise authority must assume responsibility.
 Unity of command: One employee should have only one boss.
• Unity of direction: One head and one plan for a group of activities having the same
objective.
• Span of management (Scalar chain of command): All employees should be linked with
each other in superior- subordinate relationship.
• Subordination of individual interests to general interests
• Remuneration: Fair and equitable pay to employees.
• Discipline: Obedience and respect for agreement.
• Centralization: Highly centralized power structure; decentralization with centralized
control.
• Order: A place for every thing and every thing in its proper place.
• Equity: Sense of kindliness and justice throughout all levels of scalar chain.
• Stability and tenure of personnel: The tenure should be stable.
• Initiative: Encourages subordinate’s initiative.
 Esprit de Crops: Union is strength; cohesiveness and team spirit.

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Functions of Management
Management is what managers do. Management has certain functions. Various writers have
classified management functions differently. Some of them are as listed below.
i. Henry Fayol (POCCC)
• Planning
• Organizing
• Commanding
• Coordinating
• Controlling
ii. Luther Gullick (POSDCORB)
• Planning
• Organizing
• Staffing
• Directing
• Coordinating
• Reporting
• Budgeting
iii. Kast and Rosenzweig (GPAOIC)
• Goal Setting
• Planning
• Assembling resources
• Organizing
• Implementing
• Controlling
For our purpose, the functions of management are:
i. Planning:
• Predetermining future
• Selection of goals
• Discovering alternatives
• Choosing the best alternative
• Choosing future course of actions
• Estimating the cost and resources etc.
ii. Organizing
• Defining activities and tasks
• Grouping the activities in departments
• Designing a structure
• Assigning activities to the position and people
• Establishment of responsibility and authority
iii. Staffing
• Manpower planning
• Preparation of an inventory of people available
• Job analysis to determine job description
• Recruiting, selecting, placing developing, promoting, remunerating and
retiring
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 iv. Directing (Leading)
• Communicating, influencing and motivating people
• Concerned with interpersonal aspect of management.
v. Controlling
• Establishing standards
• Measuring actual performance
• Finding and analyzing deviations
• Corrective actions.
Managerial Skills:
Managers need wide variety of skills. These skills can be categorized into:
• Technical Skills: Ability to perform a specialized task or function.
• Human Skills: Ability to go along and motivate people.
• Conceptual skills: Ability to think and analyze and to relate the organization
to environmental forces.

Conceptual Conceptual Conceptual

Human
Human
Human
Technical
Technical

Technical

Top Managers Middle Managers Lower Managers

Top Managers have the overall responsibility for the survival, growth and welfare of the
organizations. They should have more conceptual skills. Middle managers subordinate to top
managers. They implement and control plans and strategies developed by top managers. They
are responsible for the activities of lower level managers. It will be better to have all three skills
equally for them. Lower managers subordinate to middle managers. Operating personnel report
to them. They should possess more technical skills than other two skills.

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2.2 Concept of Project Management
Project management is a system approach for efficient and effective achievement of
project objectives through assignment of total responsibility and accountability to a single
project manager from inception to completion and coordination across functional lines with
proper utilization of planning and control tools
According to Harold Kerzner: Project management is the planning, organizing,
directing and controlling of company resources to complete specific goals and objectives.
Project Management is an alternative to the traditional management models. It is
planning, implementing and controlling of complex and unique projects to achieve results
within constraints in a dynamic environment.
The main characteristics of Project Management
• Objectives-oriented
• Change-oriented
• Single responsibility center
• Multi-disciplined
• Requires functional coordination along functional lines.
• Requires integrated Planning and Control systems.
• Achieves results within the constraints of time, cost and quality.
Key Objectives of Project Management
Any project must meet several objectives. Each objective is made up of many concerns,
or constraints. Project management should have a document that has all of the details of each
concern spelled out.

Objective Document Concerns/Constraints

Quality Requirements Specifications  Definition of end product
 Form, fit and function
Deadlines Project Schedule  Must complete by ------
 Must start by-----------
 Can’t start before -----------
Cost limits Project Budget  We can only spend ---------
 Bring it under ---------------
Your minimum profit margin is ------
High levels of Team Project  We understand the purpose
Commitment Charter/Team  Each person’s role is clear
Commitment  Mutual respect and trust
 Self- motivated

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2.3 The Project Manager, His Roles and Responsibilities
The Project Manager
The project manager serves as a single responsibility center to achieve project objective
within the constraints of time cost and quality. His actions “make or break” the project. He
occupies a focal position in project management. He assumes total responsibility and
accountability for the project from inception to completion.

A project manager must manage key project stakeholders-customers, contractors,

consultants, suppliers, government, labor unions, competitors and financers.

What to Manage?
• Time Time
• Cost
• Quality

Cost Quality

Where the PM stands in project control?

Client Organization

Project Manager

Project Team
What a PM should know?
• What the priorities are?
• What authority he has?
• Opportunity and facilities to do the job.
• Feedback-to know how he is getting on.
• What extent of guidance and support from the superiors?
• Recognition for good program.

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Skills Requirements of Project Manager
1. Technical skills:
• Understanding of the technology involved
• Evaluation of technical concepts and solutions
• Communication in technical terms
• Assessment of technical risks, trends and innovations
2. Managerial Skills
• Planning and control skills
• Organization skills
• Decision making skills
• Human Resource Management skills
• Leadership skills
3. Human Relations skills
• Communication skills
• Motivation skills
• Negotiation and bargaining skills
• Conflict management skills
4. Conceptual Skills
They are ability to relate the project to environmental forces. The project manager should
have vision, foresight, judgment and intuition.
5. Team Building skills
They are ability to integrate people from many disciplines and departments into an effective
team.
Roles of Project Manager

1.Diplomat:
• Maintain better relationship between project and environment
• Ensure political support
• Tackle new threats, if any
• Have high level of sensitivity
• Good negotiating skill
2.Chief Executive:
• Responsible for all action of project personnel
• Make things happen by active intervention
• Make changes if necessary
• Coordinate the team
• Controlling and allocating resources
3. Leader
• Authority and influence
• Define ethics, norms and values of the team
• Motivating capacity
• Drive- be a leader
• Team spirit- team work

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Responsibilities of Project Manager
Responsibility is the obligation to perform duties and carry out tasks. It flows from authority. It
cannot be delegated. The specific responsibilities consists of:
i. Defining and maintaining project integrity
ii. Selecting the project team
iii. Identifying and managing stakeholders
iv. Planning the project implementation
v. Project organization
vi. Project implementation
vii. Project control and progress tracking
viii. Financial management
ix. Change and conflict management

Few Important Tips for Project Managers:

• Money makes things possible, people make things happen
• We are not looking for fire-fighting managers, we need managers to prevent fire
• If you want every thing, you may get nothing
• If you don’t know where you have to go, any road will lead you there.
• Those who have no place and work in the project should not be in the project.
• Being a construction manager, don’t be overly defensive, keep yourself cool, conceal
your frustrations, when you slip off- say so.

The down side risk of Project Management

• Severe down side risks
• When a PM begins to fall in love more with his jobs than with his family, the result is
usually lack of friends, a poor home life and possibly divorce
• During the birth of the missile and space programs, companies estimated that the divorce
rate among PMs and Project Engineers was probably twice the national average.
• The followings are the characteristics of the workaholic Project Manager:

o Every Friday he thinks that there are only two more working days until Monday
o At 5:00 PM he considers the working day only half over
o He has no time to rest or relax
o He always takes home work from the office
o He takes work with him on vacations.

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 3. Project Management in Nepal
3.1 Historical Overview
Nepal is one of the least developed countries of the world. More than 38% of people live
below the poverty line. The project concept in Nepal began in 1950/51 with a grant assistance of
US $ 100,000 by USA. The planned development in Nepal began with the implementation of the
First Five Year plan in 1956 (1956-1961). Since then, Nepal has implemented Nine
Development Plans. The current Tenth plan (2002-2007) is mid-way in implementation. The
financing of Nepal’s development plans has been heavily project based.
Project management model appeared in Nepal during 1970. The project organization
structure adopted was “Development Committee”. It was an autonomous pure project
organization structure for the management of a specific project. The matrix project organization
structure was also used.
• The first Engineering project in Nepal was an iron bridge over the Bagmati River in
1850.
• The first hydroelectric project at Pharping was completed in 1911.
• The Raxual-Amlekhgang railway line was constructed in 1927.
• Manakamana Cable Car is the marvel of project management in Nepal.
• Kali Gandaki “A”, Kulekhani, Marsyngdi Hydro-Power projects and International
Conference Hall are the Mega projects in Nepal.
3.2 Project Planning in Nepal
Most central level development projects in Nepal are planned by the donors. Most local
level projects, however, are planned within the country by various agencies of the ministries or
local authorities. National Planning Commission, NPC is responsible for preparation of five-year
development plan. Projects are the primary means of translating development plans into action.
Central level projects should have approval of NPC. Enactment of Local Self Governance Act,
1999 (LSGA) and Local Self Governance Rules, 2000 (LSGR) has made local bodies
responsible for local level planning. According to the new decentralization concept, local bodies
(e.g. DDCs, VDCs and Municipalities) are totally responsible for planning and implementing
local level projects. These bodies, constituted of the directly elected local representatives,
prepare Periodic Plans for the development of their jurisdiction by comprehensively taking into
consideration of the situation, need and potential of their jurisdiction and the aspiration of the
local people. Planning is Participatory and Bottom-Up. On the basis of this Periodic Plan, they
prepare Annual Plans for development investment. There are sets of government guidelines for
helping the local authorities undertake such planning exercises. In addition to the Annual Plans
and Periodic plan, the districts are also encouraged to prepare a vision plan of the concerned
district in a participatory manner. This vision plan, generally termed as the Strategic
Development Plan basically defines 20-year development goals in different sectors for the
district and is essentially a Perspective Development Plan. In that sense, the Annual Plan is
extracted from Periodic Plan, which in turn, is extracted from Strategic Development Plan.

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3.3 Why do Projects Fail in Nepal?
Project implementation in Nepal has remained poor. Most development projects have failed to
achieve the desired results. Time and cost overruns are common. There are various reasons
behind the failure of the projects. Some of them are as listed below:
• Unclear Policy and Objectives
• Weak Institutional Capabilities
• Lack of Users’ Participation.
• Defective Project Design
• Delays in Project approval
• Consultants related Problems
• Procurement Delays
• Delays in Contract Award
• Lack of Co-ordination
• Delays in Budget Release
• Lack of Counterpart Funds
• Poor Monitoring and Evaluation
• Corruption

3.4 Improving Project Management in Nepal

Problems of project implementation are profound in Nepal. Poor implementation has
been the key reason for project failure. Thus for successfully managing construction projects in
Nepal, project implementation needs urgent improvement. The actions needed for this purpose
are:
• Formulate proper policies and guidelines
• Ensure good project design
• Improve financial management
• Strengthen institutional capabilities
• Establish PMIS system
• Prepare implementation plan
• Streamline procedures
• Strengthen Co-ordination, Monitoring and evaluation
• Control corruption and politicization.

Thank You.

22
 PROJECT PLANNING TOOLS
1 Work Break Down Structure (WBS)
1.1 Concept:
To develop a project schedule, the successful Project Manager must break the
project down into small work components. The concept is fairly intuitive. Most people
understand that any job is easier to handle when broken into smaller pieces. A Work
Break Down Structure is a “tree” showing the hierarchy of the required work to be
performed to complete a project. It organizes, defines and displays the work to be
accomplished.
In planning a project, the project manager must structure the work into small
elements that are:
• Manageable, in that specific authority and responsibility can be assigned.
• Independent, or with minimum interfacing with and dependence on other
ongoing elements.
• Integratable so that the total package can be seen.
• Measurable in terms of progress.
The WBS is the single most important element because it provides a common
framework from which:
• The total program can be described as a summation of subdivided elements.
• Planning can be performed.
• Costs and budgets can be established.
• Time, cost and performance can be tracked.
• Objectives can be linked to company resources in a logical manner.
• Schedules and status-reporting procedures can be established.
• Network construction and control planning can be initiated.
• The responsibility assignments for each element can be established.
The work breakdown structure acts as a vehicle for breaking the work down into
smaller elements, thus providing a greater probability that every major and minor
activity will be accounted for.
1. 2 Hierarchy of Work:
A job must be broken down into objectives, then into tasks, and finally into
activities. Using this hierarchy of work simplifies the process of breaking down the
project into its smallest components, called activities, and ensures that any of the
components is not missed out.
Objective:
An objective is a combination of tasks that concern specific functional groups,
major contractors, major subassemblies or some other logical division of the total
project like major parts, skills or major resources etc.
Tasks:
A task represents one of several major deliverables towards an objective. It is a
combination of activities that lead to the achievement of a definable result.
Activities:
An activity is a time consuming piece of work with a definite beginning and
end. Activities are the basic building blocks of a project, the individual actions that
will be performed one at a time.

To develop Work Break Down Structure:

• Develop the project goal.
• Define the objectives- the preliminary plan.
• Have teams refine the objectives.
• Have teams break down the objectives into tasks.
• Have doers break down the tasks into activities.

Chart-1 shows a typical example of WBS with break down of the project into
objectives, tasks and activities.
There is a variety of WBSs. Alternatively a WBS can be developed as composed of
three components:
• Work Items
• Levels &
• Work Packages
Work Item: A work item is a manageable element at each level.
Level: The level refers to the management scope, which divides a project into clearly
defined elements. For example, level 0 is for end product of a project. Level 1 is for
manageable elements of the project manager. Level 2 is for manageable elements of
superintendent. Level 3 is for manageable elements of project engineer. Level 4 is for
manageable elements of fore men.
Work Packages: The units of WBS at the lowest developed level. The work package
is to be performed by a single organization unit (crew), sub-contractors etc. and is the
base for project element, short interval planning, and collection of expenditures.
Chart-2 shows a typical example of WBS with break down of the project into
work items, levels and work packages.
2 Precedence Relationships:
It is the relationship between activities based on where they occur in relation to
each other. In other words, it is the sequencing of activities. There are four main
logical categories that will influence the sequencing of activities.
• Technical Requirements
o Write before editing
o Test before repairing
o Frame before pouring concrete
• Safety and efficiency considerations
o Check preflight checklist
o Disconnect power before making repairs
• Policy or preference decisions
o A developer may insist that landscaping of the entrance must precede the
opening of sales office. Though there is no technical reasons or may even
be less efficient to do so.
o Vendor certification prior to contract
o Preference to minority contractors
• Availability of limited resources
o One may not be able to commit major expenditures until revenue is
realized or credit is obtained
o One may not be able to hire outside experts in some fields, and have to do
with in house teams.
3. Planning Tools
The Planning phase of any venture involves a listing of tasks or jobs that must be
performed to bring about the venture’s completion. Gross requirement for material,
equipment and manpower are also determined in this phase, and estimate of costs and
duration for the various jobs are made.

PLANNING

ESTIMATING SCHEDULING CONSTRUCTION

COST RESOURCES TASKS COST RESOURCES SITE LAYOUT TECHNOLOGY

DIRECT INDIRECT Material Activity start & finish Cost Profile Resource Aggregation Materials Methods
Equipment dates Resource Levelling Equipment Organization
Manpower Limited Resource Manpower
Materials Overheads Allocation
Project start &
Equipments Profits finish dates
Manpower

Sequence of operations
Scheduling on the other hand, is laying out of the actual jobs of the project in the time
order in which they have to be performed. Manpower and material requirements
needed at each stage of construction are calculated, along with the expected
completion time of each of the jobs.
Control generally regarded as “ the underlying managerial function”, begins with
reviewing the difference between the schedule and actual performance once the project
has begun. The analysis and correction of this difference forms the basic aspect of
control.
There are a number of planning, scheduling and controlling tools in use.
Basically these tools are of two types- the bar chart and flow chart. The use of any
particular type depends upon the situation and complexity.
A separate description on each of these tools is given in following paragraphs.
3.1 Bar Chart (Gantt Chart)
A graphical representation of project activities shown in a time scaled bar line
with no links shown between activities.
A bar chart is a scheduling technique in which activity duration is drawn to scale
on a time base. A bar chart is also called a Gantt chart since it was developed by
Henry Gantt. It is one of the most popular and widely used techniques for planning and
scheduling activities because the graphical representation of a bar chart makes it easy
to read and understand.
How to draw Bar Chart?
• Listing of work activities
• Estimation of work duration
• Identifying start and completion date in calendar format
• Drawing each activity as a horizontal bar in chronological order according to its
start date.
Advantages:
• Easy to understand
• The status of the project can be assessed in a short time
• Easy to develop and implement
• No training is required
• Appropriate for small projects
• Starting point for planning
Shortcomings:
• The length of the bar indicates rough time estimate.
• Difficulties in seeing immediately and exactly overall project duration if
changes occur in any particular activity.
• Not detail but gross planning
 • It does not show specifically which activities to control and expedite and how
much.
• It does not depict the dependencies of activities upon each other.
• Updating means to redraw the entire chart again and again.

Types of Bar Charts:

Bar charts differ in the way they show planned progress on the horizontal scale,
in the way they report progress and in numerous details of diagrammatic style. Three
of the more common types of bar charts are discussed in some detail below.
Type I: Linear Time-scaled for Planning; Linear Progress-scaled for Reporting

Jan Feb March April May

Type I: Plan Bar

Reporting date
Jan Feb March April May

Type I: Reporting Bar

• Assumes that progress on an activity is a direct linear function of elapsed time.
Therefore, in planning, no attempt is made to show the physical percentage
completion at any point on the bar representing an activity.
• In order to report progress, a parallel bar is sometimes placed immediately
below the plan bar and is initially open also. Then as the job progresses, it is
shaded in direct proportion to physical work (not necessarily elapsed time)
completed on the activity.
• In above example, 5 months were originally scheduled for the activity and that
60% of time has elapsed by the reporting period.. However, the shaded bar
reports that only 50% of the physical work in the activity has been completed. It
may seem that the activity is lagging behind by 10% or by 15 days. But it may
not be true. It depends upon the volume of work and resources scheduled during
different months. If resources scheduled are higher towards first half, it may be
lagging behind the target and if the resources scheduled are higher towards later
half, it may be on or ahead of scheduled target.
Type II: Time-scaled for Planning; Time-scaled for Reporting

Jan Feb March April May

0 10 30 50 80 100

Type II: Plan Bar

Reporting date
Jan Feb March April May
0 10 30 50 80 100

55

0 8 28 55

Type II: Reporting

Jan Feb March April May Jun

0 10 30 50 80 100

0 8 28 55 75 90 96

• Type II differs from Type I in the sense that planned cumulative progress
percentages (in terms of physical work, man hours expended etc.) are written at
the end of each basic time interval (generally at the top). This progress need not
be uniformly linear. In above example, 50% of the work is planned to be
performed in last 2 months (40% time interval).
• As the activity gets underway, work completed is reported by a parallel shaded
bar below the planned one. It is shaded to show the actual time worked on the
activity up to the current date or to completion, whichever is earlier. Figures
giving the actual percentage cumulative progress are written on the opposite side
of the bar.
Type III: Time-scaled for Planning; Variable Progress-scaled for Reporting
• In this type of bar chart, work completed is reported by shading in alternating
areas in the lower and upper portions of the bar, one for each basic time interval
worked.. The segments are shaded in proportion to the physical work actually
performed during the basic time interval compared with the scale for the basic
time interval in the range being shaded. It is important to recognize that the scale
of progress generally changes during each basic time interval considered unless
progress is indeed a direct linear function of time.

Jan Feb Mar April May June July

0 10 30 50 80 100

0 8 28 55 75 90 96 100

The End
 MR Gelal
FPM
CPM/PERT Networks
CPM/PERT Networks are flow charts and are sometimes called network
diagrams. Critical Path Method (CPM) is a graphical network- based scheduling
technique that evolved in late 60’s. US Government agencies insisted on their use by
contractors on major government projects. Basic concepts of CPM such as activities,
events and predecessors have become a regular part of the language of Project
Managers. CPM enables planners and managers to thoroughly analyze the timing and
sequential logic of all operations required to complete a project.
In the 1950s, the US Navy developed the project management tool known as
PERT (Project Evaluation and Review Technique). In the same decade (in 1956) CPM
(Critical Path Method) was developed jointly by Engineers at DUPont and Remington
Rand. Since the mechanics of the two approaches are so similar, they are now
commonly referred to as CPM/PERT.
The most obvious difference between the two is that PERT recognizes
uncertainty in activity duration by the use of optimistic, pessimistic and most likely
durations, whereas CPM makes only one time estimate for an activity- the most likely
duration.
In PERT, three duration estimates for each activity is developed. These are:
• The most Optimistic duration: duration of an activity if all went right, without
any problem.
• The most pessimistic duration: duration of an activity if everything went
wrong.
• The most likely duration: duration of an activity based on experience of what
usually happens- something went wrong and some thing right.

A probability is attached to each estimate, and the final duration is derived from a
stochastic formula:
Final Duration= D0P0 + Dp Pp + Dc Pc
Where,
D0 is the most optimistic duration
P0 is the probability of D0
Dp is the most pessimistic duration
Pp is the probability of Dp
Dc is the most likely duration
Pc is the probability of Dc
CPM is most often used in commercial projects. It differs from PERT only in
the duration estimating technique. As CPM requires only one duration estimate; it sure
do save a lot of time and effort. In practice, however, both PERT and CPM are used
synonymously.

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FPM
PERT is used more in research and development projects and CPM is used more in
projects such as construction, where there has been some experience in handling
similar endeavors.
Project characteristics that are essential for analysis by CPM are:
• The project consists of a well-defined collection of jobs, or activities which
when completed mark the end of the project.
• The jobs are ordered, that is they must be performed in technological sequence.

PERT/CPM charts can be drawn in one of two ways:

• Activity on Node (AON Diagram): Each activity is represented by a node/box.
Example:
Activity A precedes activities B and C. E cannot start until both B and C are
finished. B precedes D. D and E must finish before F can start. G must wait for F to
finish.

B D
A
F G
C E

• Activity on Arrow (AOA Diagram): Each activity is represented by an arrow

Example:
In the above example, the AOA diagram will be as shown below.

A B D F G

C E

Sometimes dummy activity (which requires neither time nor resources) is

introduced. It is required to properly show the logic of an arrow network to provide
unique labeling. The nature of the relationships conveyed by the dummy activities
is not readily clear. For example, the dotted arrow on the far left representing finish
to start between A and C could also mean start to start between B and C, which is
not true in this case.
For these and other reasons, the AON technique is generally used and for our
purpose also we will describe PERT/CPM networks in AON only in this chapter.

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 MR Gelal
FPM
The Critical Path
So far the only logic element in CPM networks has been discussed. The second
main element is time. In general, these schedule calculations involve the following
steps:
i. Estimating Durations

Once all activities in a project have been defined and organized into a logical CPM
network, their durations must be estimated. An activity’s duration is the expected
amount of time that will be required to complete the activity from start to finish.

ii. Forward Pass:

The calculation procedure called the forward pass establishes the earliest start
and finish times for each activity in the network. The following nomenclature and
relationship is used in the discussion of the forward pass:
Early Start (ES): The early start of a job in a project is the earliest possible time
that the job can begin.
Early Finish (EF): The early finish of a job is its early start time plus the time
needed to complete the job.
The “Forward Pass” yields an ES and EF for each activity, and the earliest
finish date, T for the project.
S= Start time of project (usually =0)
ES (a)= S for all beginning jobs, or
ES (a)= Max {EF (all predecessors of a)}
EF (a)= ES (a) + t (a)
T= Max {EF (all jobs)}= Earliest finish time for project
The set of rules that defines the procedure for the forward pass calculations is called an
algorithm.

iii. Backward Pass:

The calculation procedure called the backward pass establishes the latest
allowable start and finish times for each activity that will still permit the overall project
to be completed without delaying beyond the scheduled completion date. The
following nomenclature and relationship is used in the discussion of the backward
pass:
Late Start (LS): It is the latest time the job can begin without pushing the finish
date of the project further into the future.
Late Finish (EF): The late finish of a job is its late start time plus its duration.
The “Backward Pass” yields LS and LF for each activity, and the finish times
for all jobs.
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 MR Gelal
FPM

LF (a)= T for all ending jobs, or

LF (a)= Min {LS (all successors of a)}
LS (a)= LF (a)-t (a)

iv. Total Float/Slack

The total float or total slack for an activity is the maximum amount of time that
the activity can be delayed without extending the complete time of the overall project.
However, such a delay might postpone the early start of one or more of its following
activities. Total slack of a job activity is the difference between its late start and early
start times (or equivalently, as the difference between its late finish and early finish
times).
TS= LS- ES or LF-EF

v. Free Float/Slack

Free float is the maximum amount of time an activity can be delayed without
delaying the early start of any of its followers. For calculation purpose, the free slack
of a job is the difference between its early finish time and the earliest of the early start
times of all its immediate successors.
Free slack, of course, can never exceed total slack; moreover, all jobs that have total
slack do not necessarily have free slack. In general, a job has free slack if it has more
total slack than one of its immediate successors.
FS (a)= Min {ES (immediate successors of a)} –EF (a)

vi. Critical Path

A critical path is a continuous chain of activities from the beginning to the end
of a network with the minimum float value. In the case where the target project
completion time is set equal to the early project completion time, a critical path will
have Zero Float. In other words the longest path through the network is called the
critical path.

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 MR Gelal
FPM
Example:

Draw AON diagram indicating ES, EF, LS, LF and earliest finish time of the project
having the activities, durations and precedence relationship as shown in the table
below.
Activity Duration Predecessors
A 6 -
B 3 A
C 4 A
D 9 A
E 12 -
F 8 -
G 3 B, D
H 6 C, D
I 4 C
J 4 E
K 3 E
L 1 E
M 6 G, H
N 7 H
O 4 N, I, J
P 2 K, L

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 MR Gelal
FPM, Class Note VI

Construction of Arrow Networks

Example

Activity Duration Predecessors Followers

A 3 - D, E
B 2 - G, H, K
C 1 - F
D 4 A L
E 4 A G, H
F 3 C K
G 5 B, E L, M
H 3 B, E L, M
K 3 B, F -
L 1 D, G, H -
M 2 G, H -

Equivalent Precedence Network

D L

E G

Start
End

B H M

K
C F

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 MR Gelal
FPM, Class Note VI

AON Diagram

D L
A
E G

Start B H M End
Start S=0
Finish Time T= 14

C F K

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 MR Gelal
FPM, Class Note VI

AOA Diagram

2 9

8
1 3 5 10

4 6

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 MR Gelal
FPM, Class Note VI
Forward Pass
D (x) = Estimated duration for activity x
ES (x)= Earliest start (expected) time for activity x
EF (x)= Earliest finish (expected) time for activity x
S= Project start time
ES (Initial Activities) =S
ES (x) = Maximum (EF (all predecessors of x))
EF (x) = ES (x)+ D (x)

Backward Pass

D (x)= Estimated duration for activity x

LS (x) = Latest allowable start time for activity x
LF (x) = Latest allowable finish time for activity x
T = Target project completion time
LF (End Activities) =T
LF (x)= Minimum (LS (all followers of x))
LS (x) = LF (x)- D (x)

Total Float
The Total Float for an activity is the maximum amount of time that
the activity can be delayed without extending the completion time of
the overall project. However, such a delay might postpone the early
start of one or more of its following activities.

Total Float for Activity x, TF (x) = LS (x)- ES (x)

= LF (x)- EF (x)

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 MR Gelal
FPM, Class Note VI

Free Float
Free Float is the maximum amount of time an activity can be delayed
without delaying the early start of any of its followers.

Free Float for Activity x,

FF (x) = Minimum (ES (all immediate followers of x))-EF (x)
All activities on the critical path have zero float- Total or Free.
Free float for any activity is always less than or equal to the total
float.

5
 MR Gelal
FPM, Class Note VI
THE S-CURVE
S-Curve is one of the popular planning tools. S-Curve graphically plots some measure of
cumulative progress on the vertical axis against time on the horizontal axis. Progress can be
measured in terms of money expended, quantity surveys of work in place, man-hours
expended, or any other measure which makes sense. Any of these can be expressed either in
terms of actual units (Rupees, Cubic meter, etc.) or as a percentage of the estimated total
quantity to be measured.
Why does it look Like S?
On most projects, expenditures of resources per unit time tend to start slowly, build up to a
peak, and then taper off near the end. This causes the slope of the cumulative curve to start
low, increase during the middle, and then flatten near the top. After signing a construction
contract, the contractor has to prepare himself for the work. Also minor works are started
which takes time to gain momentum. After the period of slow start, when the contractor
mobilizes him fully, the rate of progress accelerates remarkably and for quite sufficient
duration, the rate of progress is constant. Finally, a falling off of this rate of progress is
marked when the project is towards completion. Contractor reduces his manpower
substantially and activities are limited to finishing, testing and commissioning. By this, for
any project, if we draw on a graph, we find a figure having S- shape.

S- Curve
Cumulative Cost

Time

Traditionally, the curve was being used to plan the budget and cash flow only. It was drawn
for cumulative schedule of cost on vertical scale and time duration on horizontal scale. But
now, we have started using it not only to plan overall cost of the project, but also to plan
man-hours, physical percentage completion, individual items of work and so on. In that case

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 MR Gelal
FPM, Class Note VI
the vertical scale represents man- hours, physical percentage of work completed etc. and
horizontal scale always represents the time.

Example:
An airport construction project has to move 10,000 cubic meter of earth within 10 days. The
daily excavation quantities are as shown in figure 1 below. Summing all the daily excavation
quantities through any particular day gives the cumulative quantity by that day. For example,
by the end of day 5, the cumulative quantity is the sum of excavation on days 1, 2, 3, 4 and 5.
That is = 200 + 600 + 1000 + 1400 + 1800 = 5000

The shape of S- Curve can be seen by connecting the points at the end of each days
cumulative production as shown in figure 2.

Figure 1

Figure 2

7
 MR Gelal
FPM, Class Note VI

LINE OF BALANCE
Line of Balance is a graphic technique used for project planning and control to depict time-
quantity relationships. They apply best to linear and repetitive operations such as tunnels,
pipelines, highways and building projects.
The vertical axis typically plots cumulative progress or percentage completed for different
systems of a project, such as the structural, electrical, mechanical and other trade sub
contractors on a high-rise building. The horizontal axis plots time.
An example may be, clearing, excavation, stringing, welding, pipe laying, and backfill
operations on a pipeline. As long as the slopes are either equal or decreasing as one moves to
the right, the project should proceed satisfactorily. However, if early scheduling shows one
operation proceeding too rapidly, with a high slope compared with those preceding it, the
time and location of the first conflicts become rapidly apparent. To illustrate this, figure 3
shows the eighth operation starting to conflict with the seventh, when each is about 70%
complete.

100%

Time

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 MR Gelal
FPM, Class Note VI

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 MR Gelal
FPM

Linked Bar Chart

Linked bar chart is a modified version of Gantt bar chart. It was developed to
overcome some of the inherent limitations of bar chart. It shows the links between an
activity and the preceding or succeeding activities. The linked bar chart has advantage of
exhibiting the effect of delay on succeeding activities and also it can provide some
information of the extra time available (if there is) with an activity for its completion. The
extra time available for an activity for its completion is called float. Similarly, the
activities, which do not have extra time for completion, are called critical activities.
It is to be noted that linking bars are very complicated, difficult and sometimes
impossible to show graphically.
An example of linked bar chart is presented below.
Example:
Activity Duration Predecessors Followers
A 4 - B
B 3 A D
C 2 A F
D 2 B G
E 7 B H
F 3 C H
G 8 D -
H 8 E, F -

Corresponding AON and CPM Network

D G

B
E
Start A End

C F H

Corresponding Linked bar Chart is as given in figure 1 below.

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 MR Gelal
FPM

Milestone Chart
A Milestone Chart is an improved version of a bar chart in which some of the limitations
of bar chart are eliminated. As Henry Gantt invented it, it is called Gantt Milestone
Chart. Combined activity bar charts can be converted to milestone bar charts by placing
small triangles at strategic locations in the bars to indicate completion of certain
milestones within each activity or group of activities as shown in figure below. A
milestone implies some specific stage or point where major activity either begins or ends,
or cost data become critical.
Figure (a) shows a bar chart of a project, which involves four tasks or activities or jobs
viz. Task I, Task J, task K and Task L and figure (b) shows the corresponding Milestone
Chart.
It may be seen that in a milestone chart the long time activities or jobs or tasks are
identified in terms of specific events or milestones which are plotted against the time
scaled indicating their accomplishments by specified times. Each bar in a milestone chart
again represents an activity or job or task and all the bars taken together represent the
entire project.
A milestone chart shows relationship between the milestones within the same activity or
job or task. It may be seen from fig. (b) that Milestone 2 can not be started until milestone
1 has been accomplished. Thus as compared to bar chart better control can be achieved
with the help of a milestone chart, but it still possesses the same deficiency that it does
not depict the interdependencies between the various tasks or the relationship between the
milestones of different tasks.

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 MR Gelal
FPM

Earned Value Analysis

Any deviation in schedule, performance or cost from the plan or from the set standard to
the actual accomplishment is called variance. In the past the conventional method of
control analysis was variance analysis. This measures the difference between two factors
by subtracting one from the other to give a positive or negative variance. It can be used to
show differences between actual progresses and planned, and the resources used against
estimate or budget. For example, the followings are common variances in the control of
projects:
• Scheduled start vs. Actual start
• Scheduled finish vs. actual finish
• Scheduled time for an activity vs. actual time
• Scheduled date of milestone vs. the actual date when the milestone was reached
• Budgeted cost vs. Actual cost
• Measured value vs. Actual cost
• Budgeted man-hours vs. Actual man-hours
• Budgeted unit cost vs. Actual unit cost
Although still used extensively today, variance analysis must be supplemented by other
methods, as it is an inadequate, often misleading, and sometimes meaningless, guide to
progress and performance.
For example, consider a simple case where out of total project cost of NRs. 25,00,000,
the budgeted expenditures to date on a project is NRS. 850,000 and actual expenditure is
NRs. 900,000, giving a variance of NRs. 50,000. All this tells us is that expenditure is
ahead of budget. It does not give us any of the following information:
• Whether we are on, above or below the expected cost performance.
• What will be the likely final cost of the project
• Whether we are on, behind or ahead of schedule
• What will be the likely completion time of the project
Thus variance analysis, when used on its own is an ineffective way of analyzing and
reporting project progress and performance.
Performance analysis based on Earned Value
The modern methodology used in analyzing project progress and performance uses
‘Performance Measurement’ based on ‘Earned Value’ concepts, which integrates cost
and schedule on a structured and personalized basis. There are actually three elements of
data required to analyze performance, from which more information can be extracted
than from than two-element variance analysis. These elements are:
• Budgeted Cost of Work schedule (BCWS) = NRs. 850,000
• Actual Cost of Work Performed (ACWP) = NRs. 900,000
• Budgeted Value of the Work Actually Completed, i.e. Earned Value (EV)
=NRS.750, 000
In addition the completion time of the project is 50 weeks (say).

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FPM

Cost variance CV
Cost Variance CV, is the difference of Budgeted Value of Work performed
(Earned Value) and Actual Cost of Work Performed. It can be expressed as:
CV= EV-ACWP
Negative value of CV indicates Cost Overrun. In the above example, CV is,
= NRs. 750, 000- NRs. 900, 000
= NRs. (-) 150, 000
The project is NRs. 150, 000 over budget!
Cost Performance
Cost Performance can be obtained by dividing Earned Value EV by Actual cost of
Work Performed ACWP. It can be expressed as:
Cost Performance = EV/ACWP
In the above Example,
Cost Performance = NRs. 750,000/NRs. 900,000
= 0.8333
The project is obtaining 83.33 Paisa of Earned Value for every Rupee expended, that is
cost performance is 83.33% of that planned.
Final Cost Forecasting= NRs. 25,00,000/ 0.83333
= NRs. 30,00,000
The project will be NRs. 500,000 over budget, if there is no change in performance.
Schedule Variance SV
Schedule Variance SV (In cost terms), is the difference of Budgeted Value of
Work performed (Earned Value) and Budgeted Cost of Work Schedule (BCWS). It can
be expressed as:
SV= EV-BCWS
Negative Value of SV indicates time overrun. In the above example, SV is,
SV (In cost terms)= NRs. 750,000- NRs. 850, 000
SV (In cost terms)= NRs. (-) 100, 000
The Project is equivalent of NRs. 100,000 behind schedule.
Schedule Performance
Schedule Performance can be obtained by dividing Earned Value EV by
Budgeted Cost of Work Schedule BCWS. It can be expressed as:
Schedule Performance= EV/BCWS
In the above Example,
Schedule Performance = NRs. 750,000/NRs. 850,000
= 0. 8823
Schedule Performance is only 88.23 % of that planned.

Final Completion Time Forecasting= 50 weeks/ 0.8823

= 56.67 Weeks
The project will be 6.67 weeks late, if there is no change in performance.

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 MR Gelal
FPM
Resource Allocation and Leveling
Resource
Any consumable, except time, required to accomplish an activity, such as labor, materials,
equipment, machinery, tools and shop space are the resources for the project.
Resource requirements are estimated at the activity level based on project/activity documentation
and achieved productivity or production rated under the stated environmental and managerial
conditions. More than one resource needed is to be estimated. These resources may be constant over
an activity’s duration or may be variable in intensity. Having estimated the resources needed for the
activities considered, and based on the CPM diagram already developed, the project team will
develop a schedule with no resource constraints. Project resources all have certain characteristics
that differentiate them in specific categories for further analysis.

1. Stock ability
2. Required/ Availability resource intensity
• Constant Intensity (Uniform Requirement)
• Non uniform Intensity (Non uniform requirement)
3. Resource Complexity.

Resource Aggregation
Resource aggregation is a method of calculating needed resources at the project or multi
project level for each time unit to enable implementation of the plan. During this process, no
limitation on available resources is considered.
Most CPM –oriented software on the market is capable of performing aggregation or finding
daily (time unit) project requirements for all resources estimated as needed to implement the plan.
Resource Aggregation Process
The step-by-step procedure for obtaining resources histograms for a given project with or
without computer usage are as listed below.
1. A project CPM network using the arrow or precedence technique is developed.
2. The required resources/activity are limited; sometimes more than one resources / activity is
specified.
3. The CPM network is computed considering Early and Late start schedule.
4. A bar chart in ascending order of early or late activity start is developed.
5. For each specified resource for each project time unit, the total daily-required resource is
calculated.
6. For each resource, based on requirements per project time unit, histograms are developed.
(for both ES and LS schedule).
7. For each resource analyzed, cumulative curves for early start and late start schedules are
developed on the same plot.
Resource Allocation
Resource allocation is the distribution of available resources to different activities on
different dates and in different quantities is. It is usual in planning a project; a planner has to
consider not only the activity precedence relationships but also the availability of the resources.
While allocating resources, the planner tries to distribute (allocate) the resources from non-critical
activities to critical activities so that important activities (having no floats) can be continued without
affecting the project completion date.

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 MR Gelal
FPM
Resource Allocation Process
Many of the constraints hedging in a plan will have origins in the limitation of total
resources or in the proportion of total resources that can be committed to a project. Resource
allocation procedures or programs allocate available resources to project activities in an attempt to
obtain the shortest project schedule (completion date) consistent with fixed resource limits. For
project managers, one of the most challenging tasks is allocating resources that are available only in
a fixed amount for a given period. The first step of the process is to identify project required
resources with limited availability and the periods of availability.
• Available resources with constant intensity for long period of time or project duration
(e.g., a tower crane for lifting materials for a multistory building).
• Available resources for shorter or cyclic periods
o Stock able resources (if not used today, can be used in future)
o Non-stock able resources (if not used when allocated, incur extra costs in future)

To reach the best use of resources, the utilization factor of the allocated resources is desired. The
additional cost directly associated with utilization of allocated resources fall in one of the following
categories:
• Cost of hiring or requiring additional resources
• Cost of idle labor or equipment
• Cost of delay to other activities not having enough resources to schedule the work.

The quality of allocation decision can be measured through a resource utilization factor. A
utilization factor of 1 for the project is considered best. A simple procedure is presented for
understanding the allocation procedures that lead to a more realistic schedule.
• The resource availability limits are known for the entire project duration.
• Starting with the first day of the project, consider all activities that can be scheduled and
select the one with the highest priority. The most common priority criterion is the earliest
start and minimum total float.
• If an activity meets the allocation criterion and there are available resources in the pool,
schedule and assume that the activity will not be interrupted until completion. A more
complex procedure considers the possibility of interrupting an activity after its start and
rescheduling the remaining position at a later date.
Resource Leveling
Resource Leveling is the method of scheduling activities within their available float so as to
minimize fluctuations in day- to- day resource requirements. By resource leveling, we try to
optimize the use of resources required to complete a project. Resource leveling helps in
obtaining uniformity (so far as possible) in resource requirement throughout the life of a project.
The benefit of resource leveling is to ease resource management so that cost involved in
managing resources can be minimized.
Resource Leveling Process:
i. Identification of what type of resources on what dates and on what quantity.
ii. Preparation of Resource Histogram of the resources required for each activity in a
time series.
iii. Shifting of activities having floats for resource allocation/leveling.
iv. Sometimes, resource allocation/leveling may require extension of total project
duration also.

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 MR Gelal
FPM,

Limited Resource Scheduling

The completion of a construction project at maximum efficiency of time and cost requires
the judicious scheduling and allocation of available resources. Men power, equipment and
materials are important project resources that require close attention. The supply and availability
of resources is seldom be taken for granted due to seasonal shortage, labor disputes, equipment
breakdowns, competing demands, delayed deliveries and many other uncertainties. Nevertheless,
if time schedules and cost budgets are to be met, the work must be supplied with the necessary
men, equipment and materials when and as they are needed on the job site. The project manager
has to identify and schedule the future job needs so that the most efficient employment is made of
the resources available. He must establish what resources will be needed, when they must be on
site and the quantities required. He should have detailed compilation of resource requirements. If it
appears that there will be adequate numbers of resources available to satisfy these projected
requirements, the work presumably goes according to established schedule and no adjustment of
the job completion date is required. If the resources requirement discloses that demand will exceed
the supply, remedial measures to combat inadequate resource supply is to be made. If there are
conflicts among project activities for the same resource items, rescheduling the non- critical
activities will often solve the problem.

Most project managers are faced with

• The problem of relatively fixed manpower availabilities, a certain number of machines or
other pieces of equipments, and – considering money as a resource- a limited budget.
• Jobs that occur on parallel paths through the network may compete for the same resources,
and even though precedence constraints would not prevent their being scheduled
simultaneously, a limited supply of resources might force them to be scheduled
sequentially.
Example:
Consider the small project plotted as a schedule graph with a horizontal time scale. The
horizontal length of each activity arrow represents its duration and the number above the arrow
represents its manpower resource requirement.
Assume that there are only 10 men available on any day.

In modified schedule, the completion time has increased from 6 to 7 days. The resource limit has
resulted in a delayed completion date. (See graph in next page)

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 MR Gelal
FPM,

The complexity of Project Scheduling with Limited Resources

Problems of resource scheduling vary in kind and in severity, depending upon the nature of the
project and its organizational setting.
• In some cases there may be just one key resource- perhaps a large crane- that is bottleneck
in scheduling a project.
• Activities must be scheduled so that no two of them requiring the same facility occur at the
same time.
• Or perhaps there is relatively small number of resources, whose limited availability must
be jointly considered in scheduling.
• At other extreme are projects requiring many resources, most of which are available in
fixed, limited amounts.
• The problem of scheduling activities so that none of the resource availabilities are
exceeded and none of the precedence relations are violated is a exceedingly difficult task
for project of even modest size. This is especially true if one tries, simultaneously, to
minimize project duration or meet some other reasonable scheduling criteria.

Resource leveling program attempts to reduce peak resource requirements and smoothen out
period-to-period assignments, within a constraint on project duration.

Resource Leveling of Project Schedules

• In most project situations resources can be acquired or released in practically any desired
amounts if one is willing to pay expenses involved in changing resource levels, such as the
costs of hiring, training, unemployment insurance, and so on.
• It is usually prudent, however, to maintain relatively stable employment levels and to
utilize resources at a more constant rate.
• The activity slack is a measure of flexibility in the assignment of activity start times. The
scheduler may use activity slack as a means of smoothing peak resource requirements.
• One has to start by calculating an early start schedule for the project and then plotting a
resource loading chart for the schedule. (See Example 2 in next page)

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 MR Gelal
FPM,

Resource Requirement/ Availability and Economics of

Project Completion Date
1. The projects required resources can be satisfied at normal prices.
The recommendation is to adopt the early start schedule and target the project early
completion date.

2. If the project requirements cannot be satisfied at the normal price level.

Maintain the project completion date, reschedule the activities, and target the
project contractual due date (Project late finish date)

3. If the early schedule resource requirements can be satisfied using the resource
Premium -price level (if economical).
The planner may choose this solution, targeting early completion.

4. If project resource requirements can not be satisfied at the premium- price level
by implementing an activity early start schedule but it will be possible to
complete the project by contractual due date.
There is no alternative.

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FPM, Class Notes 10

Project Monitoring and Control

1.Concept
Monitoring and evaluation (M & E ) are of critical importance for achieving the objective of
the project and are among the most challenging tasks faced by the Project Managers. They are tools
for effective project management. Monitoring and Evaluation are related but distinct activities.
Monitoring:
Monitoring refers to timely gathering of information to review project implementation. It is
usually an ongoing activity throughout the life of the project. It is management review of project
implementation to ensure that project inputs, schedules, outputs and other actions are proceeding
according to the plan. It is done during the project implementation phase.
Some definitions:
• Meredith and Mentel
Monitoring is collecting, recording and reporting information concerning any and all aspects of
project performance that the project manager or others in the Organization wish to know.
• David I. Cleland
Monitoring means to keep track of and to check systematically all project activities.

Monitoring is a feedback mechanism.

Evaluation:
Evaluation is an objective and systematic process for determining relevance, efficiency,
effectiveness and impact of project in the light of its objective. Evaluation can be on- going, terminal
or ex-post.
Evaluation is used to improve project implementation or to improve future project planning
and decision-making.

2 Project Monitoring and Evaluation in Nepal

The UNDP/World Bank developed the existing project monitoring and evaluation system in
Nepal in 1993. It is common to all sectors. It consists:
• A system of weighting.
• Indicators for financial and physical performance.
• The monthly and trimester performance reports related to financial and physical performance
of projects from Line Ministries serve as the heart of monitoring system.
• Projects are divided into:
o Priority Projects
o Other Projects
 The Central Monitoring and Evaluation Division of NPC monitors priority Projects.
Monthly and Trimester reports, supplemented by ad-hoc field observations of projects by
NPC staff, serve as the source of information for monitoring. Problems of project
implementation are identified.

 Sector- wide problems are discussed in National Action Development Committee

(NDAC) chaired by the Prime Minister on a trimester basis.
 The non- priority projects are reviewed by the respective line ministries in the
Ministry Action Development Committee (MDAC)

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 MR Gelal
FPM, Class Notes 10

3. Logical Framework for M&E

A logical framework is generally used for monitoring and evaluation. It evaluates cause and
effect relationships and assumptions and risks of the project. The logical framework evaluates three
sequential relationships:
Inputs to Outputs
Outputs resulting from inputs. For example, construction of Cold Storage facility for Apple
Promotion Project.
 Outputs to Effects
Effects resulting from project outputs. For example, ability of storing apple for a long time
with out damage is an effect of cold storage facility.
 Effects to Impacts
Impacts resulting from project effects. For example, higher income to farmers due to higher
price of apple in the market during off-season is the impact of apple storage.

The assumptions and risks are evaluated as to their validity. They cannot be controlled by the
project. Performance Benchmarks serve as the standards for monitoring and evaluation purposes.
A logical framework matrix for each project is prepared for planning, monitoring and
evaluation purposes as shown in the box below.

Narrative Objectively Means of Verification Assumptions and Risks

Summary Verifiable
Indicators
Objective Per Capita Income Nepal Human If assistance from
(Increased by 2010 will be Development donors continues
economic growth NRs. 25000 Report published after If the present
through economic (PCI now is NRs. 2010 situation of
reform) 11000) Sample Surveying insurgency
Reports of CBS improves.

Effect/Purpose Rice Production Reports of DADO If the present

(Increased by 2010 shall be Records of DIC Agriculture/Irrigation/Subsidies
Production and 50,000 MT Policies of HMG/N and the
productivity (Present norms and programs continues
through Production If assistance from donors
modernization and 36,000MT) continues
professionalism in
agriculture and
livestock)
Outputs 3000 Hectors Project completion If assistance from donors
(Area irrigated by report of DOI continues
X Irrigation
Project)
Activities Inputs

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FPM, Class Notes 10

Key Concepts in Logical Framework

o Objective: Desired outcome of the project
o Purpose: Effect or impact of the project.
o Outputs: Deliverables of the project
o Activities: Tasks that must be undertaken to accomplish outputs.
o Objectively Verifiable Indicators (OVIs): Targets in terms of quantity, quality and
time (QQT) to measure actual performance.
o Means of Verification (MOV): Sources of information that provide the basis for
monitoring and evaluation of the project.
o Assumptions and Risks: External factors beyond the control of the project.

4. Concept of Control:
Control, generally regarded as “ the underlying managerial function” begins with reviewing
the difference between the schedule and actual performance once the project has begun. The analysis
and correction of this difference forms the basic aspect of control. It ensures that the right things are
done in the right manner and at the right time.
Control is measuring, evaluating and correcting actual performance to achieve planned targets.

Some definitions:

Koontz and Weihrich

Controlling is the measurement and correction of performance in order to make sure that enterprise
objectives and the plans devised to attain them are accomplished.
Ivancevich, Donnelly, Wilson:
Controlling consists of actions and decisions managers undertake to ensure that actual results are
consistent with desired results.

Control is interrelated with planning. Planning provides standards for control. Control
measures actual performance and compares it with standards to identify deviations. Deviations are
analyzed to take corrective actions.
Control is a continuous process. To be effective, it should give attention to critical control
points or benchmarks where deviations adversely affect the attainment of targets.

Types of Control:
I. Pre- Control (Feed-Forward Control):
It is inputs- based. It is initiated before the start of the activity. It anticipates problems in
advance and takes preventive corrective actions. Example: Specification for Quality
Control, Acquisition of right human resources.

II. Concurrent Control (Yes/No Control):

It is transformation- based. It is initiated during the implementation of the activity. It
ensures that operations are being conducted according to plans. Problems are corrected as
they arise. Example: Quality control from process to process.

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 MR Gelal
FPM, Class Notes 10

III. Post Control (Feedback Control):

It is output-based. It is initiated after the completion of the activity. It is based on feedback
of performance results. Example: Financial analysis.

5 Project Monitoring and Control cycle

Control is a cyclic process. Figure below shows project monitoring and control cycle.

Planning / Replanning
(Setting standard)

Corrective Actions Measuring Actual

Goals Performance

Finding and Analyzing

Deviations

i. Setting standards (What should be done?)

• Planning sets standards for performance
• Starting point of control
• Targets of performance
• Standards can be in terms of quality, quantity, costs, income and time.
• Standards should be clearly understandable and reasonable.

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FPM, Class Notes 10

ii. Measuring Performance (What actually was done?)

• Measurement of actual performance within a given period
• Continuous on going process to get feedback
• Internal reports relating to quantity, quality, costs, income, time etc., provide
information about actual performance.

iii. Finding Deviations (Extent and Causes of Difference)

• Comparison of actual performance with standards
• Performance can be equal to, be higher, or be, lower than standards
• The magnitude of deviation is identified
• The causes and incidence of deviation are analyzed
• The responsibility for deviation is located

iv. Corrective Actions (Future Standards)

• Corrective actions are taken
• The actions can be-
o Do nothing, if deviations are within the allowable tolerance
o Corrective actions (More training, better raw materials, design improvements,
greater motivations etc.)
o Change standards (Standards are revised to make them appropriate and
realistic)

6. Prerequisites of Control system

The prerequisites of control system are:

• Planning: Control is not possible with out planning.

• Information System: Control is based on feedback of performance information.
• Organization Structure: Control requires a structure with people and clearly defined
authority-responsibility relationship to collect performance information and analyzing.
• Flexibility: Should be flexible and capable of adjusting to environmental changes.
• Participation: Control should be based on participatory approach.
• Timeliness: The reporting and feedback for control should have timeliness. There is no
point in “ bringing a doctor after death”.

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FPM, Class Note 11

Project Monitoring and Control

1. SCHEDULE CONTROL
Time is one resource that we manage and control; it is non-renewable. Schedules are a
graphical representation of time management on a project.
Control of project progress is an on-going activity. Progress must be marked on the plan for every
one to see; it should be reported from site and must be supplemented by the report on expediting
procurement activities so that reliable updated reports can be prepared at regular intervals.
During the process of implementing the plan according to the schedule, we may come across one
or more of the following possibilities:
• that some or all activities are progressing according to schedule;
• that some or all activities are ahead of schedule; and
• that some or all activities are behind schedule.
If all activities are progressing according to the schedule, there is no need for updating the
network but this is seldom the case.
Therefore, based on the progress of the work and the revised durations of unfinished activities due to
delays, the schedule has to be redrawn.

1.1 Marking Project Progress Information

Progress information can be displayed on a project network or bar chart as shown in figure 1
below. A thick line can be used above an activity line to show extent to which the activity has been
completed. Since the bars are drawn to scale, the length can shoe the status of activities on a certain
day.
Notice in figure 1 above that activities 1-3, 3-4 and 2-4 are behind schedule. Activity 6-7, on
the other hand, is 50% complete and two days ahead of schedule. On the day of update, a vertical line
is drawn through the bar chart to indicate how far the project should have progressed. The use of such
control information in a format that enables easy visualization of the activity status enables all
members of the project team to predict future events more accurately, weather favorably or
unfavorably.

1.2 Updating
When the progress report has been received from the site, it is necessary to compare it with
the original schedule. Although the duration of each activity can be compared with its planned
duration, this does not give an accurate picture of actual performance. For a clear understanding of
what a delay on an activity means to the complete project plan, it is necessary to perform an update.
In effect this involves entering the progress information into the network plan and analyzing the
network with this added information.
Updating is carried out to accommodate configuration changes, to assign a new target date
instead of a previously planned target date, and to reflect remedial actions designed to correct
deviations in order to predict their effect.

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 MR Gelal
FPM, Class Note 11
Updating CPM Network: Process
The CPM networks previously developed in planning can be used to aid planners and
managers in decision making during controlling process.
When the project is partially completed and is at an intermediate stage, it may be possible
that:
• the time durations originally assigned for some activities were erroneous and
• the planner may himself feel it desirable as a result of experience or he may be enriched with
additional information, or compelled by some changes in original schedule due to various
reasons, to reconsider and re-estimate duration times of activities not yet being performed.
Now, new information and considerations can be placed on the original network and fresh
calculations are made for controlling the project.

The process of replanning and rescheduling based on the results which serve as a guidance for
decision by performing calculations made by taking into consideration the new knowledge and
latest information at an intermediate stage of the project thus modifying the original network, is
known as the process of Updating.

Data Required for Updating

The following information is necessary to update the plan at an intermediate stage of execution of a
project:
• Original network
• Original network calculation chart
• Stage at which updating is being done
• Execution position of the project at that stage and
• New information and knowledge, that affects the duration time of the activities to be
performed.

Steps in Updating Process:

1. DESCRIBE: updating point as per the original plan
2. RECORD: what has happened actually till that point
3. SUMMARIZE: the knowledge attained in the tabulated form
4. PLACE: the information contained in the updating table on to the original network.
Assigning the time of update as the earliest occurrence time for the tail event of the project
Allocating a zero time duration for all activities which have been completed
Entering the remaining estimated durations of those activities which are in progress; and
Entering the estimated durations based on new knowledge of activities which are still to be
Commenced.
5. PERFORM: calculations of earliest occurrence time and latest occurrence time and mark
these on the network known as updated network.

The updating cycle is as shown in figure 2 below.

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 MR Gelal
FPM, Class Note 11

Re-plan / Compare Progress

Reschedule Project to Schedule: Is it
Network Satisfactory?

Issue Directions Report Progress

Execute the Project Record and Assess

Progress

Project Completed

Figure 2: Updating Cycle

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FPM, Class Note 11

Illustrative Example:
The network of a project shown below is to be updated at the end of 12
days. The following conditions exist at the time of updating.
• Activity 1-4 was completed as originally planned.
• Activity 1-3 was executed more rapidly than originally scheduled,
and it took 8 days for its completion.
• Activity 3-4 commenced following the completion of activity 1-3
and was finished at the end of 11th day.
• Activity 4-5 was commenced following the completion of activity 1-
3 (i.e., at the end of 11th day), and still requires 6 more days for its
completion.
• Completion of activity 1-2 was delayed drastically, and it still
requires 10 more days for its completion.
• Activity 2-7 will commence following the completion of activity 1-2
and will require 9 days for its completion instead of 6 days
originally estimated.
• The time required to perform activity 5-8 has been revised based on
the experience on the project gained to this point. It now requires
10 days in the place of 6 days originally planned.
• No other activities have been started, and the original time
estimates for these activities still appear to be accurate.
Update the network, and determine the revised critical path.
TE =8 TE =23
2 7 TL =24
TL=18
TE =13 TE =20
1 TL =13 TL =20 TE =29
4 5 8
TE =0 TL=29
TL =0

3 6
TE =10 TE =24
TL= 10 TL =24
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 MR Gelal
FPM, Class Note 11

Solution:
Figure above shows the original network, with TE and TL marked. The critical path, shown by
dark lines is along activities 1-3, 3-4, 4-5 and 6-8.Table below gives the details of execution of the
various activities at the end of 12 days.
The updated network can now be drawn on the basis of data of columns (1), (2), (4) and (5) of the
above table. For those activities, which have already been completed, completion time t is taken to be
zero, since they require zero time after the 12th day. Also the earliest event time (TE) and latest
occurrence time (TL) of each event is computed with reference to the original date of the project. This
can be best achieved by taking TE for event 1 as equal to 12.

Table: Review after 12 days

Activity Whether completed or not Additional Completion
Yes/No If yes, time time required time required
taken (days) for activities for activities
in progress yet to begin
(days)
(1) (2) (3) (4) (5)
1-2 No - 10
1-3 Yes 8
1-4 Yes 5
2-7 No - 9
3-4 Yes 3
4-5 No - 6
5-6 No - 4
5-7 No - 3
5-8 No - 10
6-8 No - 5
7-8 No - 5

After having determined the updated TE for each event, corresponding TL can be computed by the
backward pass. The updated network is shown in figure below. The critical path of the updated
network has now changed; it is along activities 1-2, 2-7, 7-8, shown by dark lines. According to the
updated network, the project will take a total time of 36 days, instead of 29 days originally planned.
On the day of updating, the remaining duration of the project is = 36-13 =24 days.

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 MR Gelal
FPM, Class Note 11

Updated Network:
TE =22 TE =31
TL =22 TL =31

2 7

1 TE =12 TE =18 TE =36

4 5
TL =20 TL =26 TL =36 8
TE =12
TL =12

3 TE =12 TE =22
TL =20 6 TL =31

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 MR Gelal
FPM, Class Note 12

COST CONTROL
Every project has its own way of controlling cost with a wide variety of record keeping,
terminology and approaches. Project cost control systems should be designed to highlight
potential problem areas. If you anticipate that some functions or contractors may have cost
overruns, then track cost by function or contractor. Conversely, if you anticipate certain tasks or
objectives to be the source of cost problems, then design the system to track cost by task. Other
possibilities include tracking cost by resource type, by work category, and by activity.
All costs must be managed and most costs can be controlled. An important question is
which costs are controllable and by whom? Some costs are not directly controllable and yet a
project manager must manage within a given environment, such as the state of the general and
local economy.
There are three cost categories:
a. Direct Cost
Direct costs are those that can be related to the production, such as the cost of labor and
material inputs that remain as part of the permanent facility. Direct costs include the
following:
• Labor wages
• Overtime premium
• Materials
• Sub contractors
• Freight
• Sales tax
b. Indirect Cost
Indirect costs include labor, material, and expenses that are incurred but cannot be readily
apportioned to a particular part of the project. They are usually applied as a percentage of
direct costs, and include items such as
• General supervision,
• Daily subsistence allowances,
• Temporary roads and facilities,
• Snow removal,
• Licenses and permits
• Insurance and
• First aid facilities etc.
c. General Overhead Cost
These are home office costs that are charged to a project on a predetermined basis. General
overhead costs include:
• Costs for executive management
• Home office facilities
• Other costs required to carry out the normal courses of company business.

Field personnel can measure the costs incurred on a project best. The starting point for data
collection is at the grass roots level through the use of time cards, invoices for materials, material
requisition forms, and equipment utilization sheets.

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FPM, Class Note 12

1. Labor Cost
On all projects it is necessary to obtain the number of hours spent on each part of the job
by each employee. The man-hour distribution sheet is usually prepared by the foreman, except
for costing, which is done by the office. The information on this sheet is summarized from the
daily time check report in which the foreman records each worker’s time against the work items
on which the individual works. The activity code column on the daily time sheet, as shown in
figure 1 below and the man-hour distribution sheet have this function.
Daily time sheets and man-hour distribution records are totaled weekly, as well as the
costs for each activity and each work item.
Full use of man- hour information cannot be made without knowing the interim quantity
of work. It is of little value to know the man- hours expended on an incomplete work item if the
quantities of work done are not known. The quantity report, as shown in figure 2, is used to
measure the work done on different work items in the preceding period. It provides space for
noting the budgeted and actual quantities of work done. The forecast quantity is normally
estimated, taking into account any changes.
A labor report as shown in figure 3 enables management to keep track of man-hours
worked. Such reports generally give a comparison of work item in terms of estimated hours for
each activity with the actual hours to date and indicate any overrun or under run. Total estimated
and actual man- hours within each work item are listed. The difference between the forecast to
complete and the original estimate is computed and listed as the projected overrun and under run,
depending on whether the balance is positive or negative.

DAILY TIME SHEET AND WORKER – HOUR

DISTRIBUTION
Date: Report No:
Job No: Page No:

Occupatio Employee Activity Perf. Work Item Hours Reg OT Amount

n Code Agncy ular
Name No BA03100 BA03200 h r h r
R O R O
Labor X 32 15-32 4 5 2 9 12 2 18 144 00
Carpenter Y 75 16-48 3 2 4 3 7 15 5 23 220 00
Iron Z 80 20-43
worker
Mason P 96 25-50

Figure 1: Example of daily time sheet

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 MR Gelal
FPM, Class Note 12
CHARGE AS OF DATE SHEET
NO
WORK ITEM BA 03 200 WORK ITEM BA 03 300
WORK UNIT m3 WORK UNIT m3

ACTIVITY BUDGET ACTUAL LATEST BUDGET ACTUAL LATEST

REVISED REVISED
15-32 750 400 800 200 125 220

Figure 2: Foreman’s Quantity Report

CONTRACT RESPONSIBLE CONTRACT NO REPORT DATES

DESCRIPTION ORGANIZATION
XXXX YYYYY NNN FROM-------------TO-------------
WORK
IDENTIFICATION CURRENT PERION TOTAL WORKER-HOURS
WORKER-HOURS
RESOURCE AGENCY WORK ITEM A E ( OVR) A/TO DATE E F/COMP. PROJECTED
UNDR (OVR)
UNDR
Crew Supervisor XX Structural 205 200 (5) 875 2000 2500 (500)
Metal frame
Str. Steel work

Welders

Crane Oprt.

Light Equip. Oprt.

Figure 3: Example of worker- Hour Summary Report

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FPM, Class Note 12

2. Material Cost
Material cost feedback is generated mainly through a purchase requisition control
procedure. All materials used on a project are requisitioned by the home office (Project
Manager) or the field office (Construction superintendent). A good definitive estimate and a bill
of materials provide excellent control documents by which the material cost can be kept in check
on a project.
For control to be exercised at the appropriate time, it is essential that a record of
purchases be maintained by the organization. If the quantity and cost of materials for a particular
work item do not match its estimate, the cost engineer must determine the reasons for the
discrepancy and report to the Project Manager.
The materials received on the site must be recorded on a material receiving report or in a
similar manner. The materials receiving report is useful for inventory control and for keeping
track of the status of purchase orders received at the site.
Materials are charged to work items by means of the costing code, and every order,
invoice, and delivery ticket should bear both a job name and number and a costing code for the
work item.
For the materials, that can not be charged to a particular work item ( for example, ready
mixed concrete which are used in many items and sometimes as indirect cost items also), an
inventory of materials on site is taken at the end of week. After deducting these quantities from
the materials received, the materials used can be determined. These are distributed over the
volume of work performed in each work item, as shown in figure 4. Such materials are costed at
the average purchase price for the period.
To check on the use of a certain material on a project, it is useful to generate a material
consumption report separated by work items using a format similar to the man-hours report.

PERFORMING QUANTITY
WORK ITEM AGENCY MATERIALS UNITS USED RATE AMOUNT
BA 03 200 XXX Concrete m3 600 1000 600000

Figure 4: Material Register

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3. Equipment Cost
Equipment cost must also be charged to work items just like man- hours and materials
cost. To do this, a record of number of hours per work item and the hourly rate for each piece of
equipment is required. The number of days that equipment is assigned to a project can be derived
from checking- in and checking- out procedures. Hours of operation can be accumulated from
equipment time cards, as shown in figure 5.
Idle time should be distributed to items of work or captured in a separate idle time
account.
When use of equipment is not heavy on a project, the equipment costs can be applied to
all work items as well as to all activities as an indirect cost. In such cases, operators and
operation costs are charged directly to work items, along with the manpower costs.

PERFORMING WORK MON. TUE. WED.---- TOTAL

AGENCY ACTIVITY ITEM (hrs) (hrs) (hrs) (hrs) RATE AMOUNT
XXX 4-5 AA02200 4 3 5 12 100 1200

Total:

Figure5: Weekly Equipment Record

Control of Spending
Even though the project manager is responsible for the total project budget, this budget is
made up of a collection of items, assigned to various team members to spend. These team
members do not have visibility of the total budget and are usually spending in isolation. In
addition, the timing and the amount actually spent on a budgeted item will vary from the budget,
causing item variances. The sum total of these variances needs to cancel out or be within the
budgeted tolerances. This never happens by itself. In order to exercise effective control on
spending, you need insight into the behavior of spending.
Most items are spent over a period of time. Each time another expenditure towards this
item is needed, turning an increasing portion of the Budgeted Cost into Contracted Cost.
This portion is called Cumulative cost- to- date. What is left is called item balance.

Item Balance = Budgeted Cost- Cumulative Cost to- date.

The objective of a project manager is to have a zero or positive item balance when this item is
complete. An easy way to keep track is to keep a running balance per item, except that you don’t
know at which point the big variances may hit. As you get deeper into the implementation of an
item, you get better visibility of its true cost requirements, i.e., how much more will it take to
complete this item, which is known as Projected Cost to Complete.
Projected Total Cost= Cumulative Cost- to- date + Projected Cost to Complete.

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By comparing this projected total cost with the budgeted cost, we can anticipate the ultimate
variance for this item, known as Projected Variance.
Projected Variance= Budgeted Cost- Projected Total Cost

Keeping this projected variance at zero or positive becomes the responsibility of the item
“Owner”.
Example:
Given the following data for an important project item, calculate (a) the item balance, (b) the
projected total cost, and (c) the projected variance.
Cumulative Cost- to- date = Rs. 5,40,000.00
Budgeted Cost= Rs. 7,50,000.00
Projected Cost to Complete= Rs. 2,50,000.000

Solution:

(a) Item Balance = Budgeted Cost- Cumulative Cost- to- date

= Rs. 7,50,000- Rs 5,40,000
= Rs. 2,10,000.00
(b) Projected total cost= Cumulative Cost- to- date + Projected Cost to complete
= Rs. 5,40,000 + Rs. 2,50,000
= Rs. 7,90,000.00
(c ) Projected Variance= Budgeted Cost- Projected total Cost
= Rs. 7,50,000- Rs. 7, 90,000
= Rs. (40,000)
It is obvious that this item will overrun the budget if action is not taken to get it back in budget.

The End

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FPM, Class Note 13

Quality Control
1. What is Quality?
According to Advanced Learner Dictionary, Quality is degree of goodness. Similarly
Crossby defines Quality as conformance to requirements. According to Juran, Quality is fitness for
purpose.
Others define Quality as:
• Zero defects
• Consistent conformance to expectation
• Doing things right the first time
• Quality is the totality of characteristics of an entity that bears on its ability to satisfy stated
and implied needs.
Facts Regarding Quality
• Quality is not grade
(Grade is an indicator of category or rank related to features that cover different sets of
needs for products or services intended for the same functional use. Level is a general
indication of the extent of departure from the ideal. A high-grade article can be of
inadequate quality as far as satisfying needs and vice- versa. E.g. a luxurious hotel with
poor service or a small guest- house with excellent service.)
• Quality costs more, but lack of quality costs even more
• Quality is a means of achieving project success. It is not the goal in itself.
• Process quality is more than product quality
• Quality standards do not demand the best quality; they establish the minimum requirements
to be achieved.
• Quality does not happen by accident, it has to be properly planned and implemented
Summary of Quality Guru’s
• Management, Commitment and Involvement is a MUST.
• Break interdepartmental barriers and encourage teamwork.
• Philosophy of “Do it right the first time”.
• Prevention is better than rectification.
• Quality must be customer focused.
• Set goal which is SMART (Specific, Measurable, Attainable, Relevant and Track able).
• Drive out fear so that workers work efficiently.
Be Careful:
• Sub-standard materials
• Malpractices in Construction
• Shoddy workmanship
2. Quality Management
Quality management includes Quality Assurance (QA) and Quality Control (QC) as well as
other concepts of quality planning, quality policy and quality improvement. Total Quality
Management (TQM) develops these concepts as a long-term global management strategy and the
participation of all members of the organization for the benefit of the organization itself, its
members, its customers and society as a whole.

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FPM, Class Note 13

QUALITY MANAGEMENT

QUALITY CONTROL QUALITY ASSURANCE TOTAL QUALITY

What to do?  Detection  Prevention  Improvement

How to do?  Output Verified  Work Procedures  Work Processes
• Adequate Improvement
• Authorized
• Implemented
Method?  Inspections  Audit  Quality Circles
• Sample or 100%  Samples All work Processes
Who does?  Inspectors  QA Organization  All Employees
Client
Suppliers

Quality System
The provision made by management to ensure that quality is protected and promoted
throughout all an organization’s activities is referred to as the ‘Quality system’ or ‘Quality
Management system’

Quality control
Quality Control is the operational techniques and activities that are used to fulfill
requirements for quality. Quality Inspection is done first for quality control. Activities such as
measuring, examining, testing, gauging one or more characteristics of a product or service and
comparing these with specified requirements to determine conformity is quality inspection.
Inspection is concerned with sentencing the product as good or bad, by comparison with
the standard. On the other hand, quality control is concerned with feedback of the comparative

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information in order to regulate the process. In quality control, the limits are set so that the process
can be adjusted before product from the process reaches the limit where it has to be rejected.

Quality Assurance

All those planned and systematic actions necessary to provide adequate confidence that a
product or service will satisfy given requirements or quality both within the organization and
externally to customers and authorities.
Quality assurance:
• is a systematic way of ensuring those organized activities happen in a way that they are
planned.
• is concerned with anticipating problems and with creating the attitudes and control that
prevent problems from arising.
• firstly, aims to impart confidence to the client assuring that his needs will be consistently
met (external quality assurance). Secondly, it aims to achieve quality through systematic
and planned actions avoiding “ fire-fighting or crisis management” (internal quality).
Elements of Quality assurance system
• Assessment of the project’s requirements
• Development of technical specifications and acceptance criteria
• Choice of quality materials and design
• Choice of construction method; Equipment/ Plant
• Field supervision and quality control
• Assessment of quality of completed project
• Periodic Inspection and Maintenance measures
Preparation of Quality Assurance Plan
• Clearly defining the objectives
• Enumerating the activities involved
• Incorporating the requirements of quality in each activity and providing far a fail- proof
safeguard, if any, and
• Laying down the surveillance plan, checks and penalties for each apprehended lapse and
omission
Total Quality Management
Total quality Management is a new concept of quality management and is that aspect of the
overall management function that determines and implements the quality policy. The essential
elements of TQM are:
• Quality Planning
• Quality Control
• Quality audit
• Quality surveillance
• Quality Assurance
• Quality Circles

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FPM, Class Note 13

TQ (Improvement)

QA (Prevention)

QC (Detection)

Total Quality Management

Quality Plan
A Quality Plan (QP) is a document setting out the specific quality practices, resources, and
sequences of activities relevant to a particular product, service, contract or project. It should
define:
• The quality objectives to be attained
• The specific allocation of responsibilities/authority during the different phases of the
project
• The specific procedures, methods and work instructions to be applied
• Suitable testing, inspection and audit programs at appropriate stages
• A method of modification for the quality plan as the project proceeds.
• Other measures necessary to meet the objectives
3. Quality Management Tools
(a) Brain Storming
Brainstorming is an idea- generating process. Alternatives are generated spontaneously
through group creativity. Freewheeling including unrealistic or fantastic alternatives is encouraged.
Criticism is ruled out. The generated alternatives are screened to identify appropriate alternatives.
BS is used to:
• Generate list of problems
• Identify possible causes of problems
• Identify possible solutions
• Analysis, Evaluation and Investigation
• Develop action plans

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(b) Cause and Effect Analysis

Cause and effect analysis is very useful for investigating root causes of problems. A
solution applied after finding root causes of problem will have chance of lasting success in
eradicating the problem.
C/E analysis
• is a form of structured brainstorming
• breaks complex problems down
• sorts and records ideas
• gives focus to generate more ideas
• considers all areas
• points to root cause

Effect

Cause

Sub-Causes

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(c) Process Flow Chart

A process is anything, which converts an input into an output by doing work. Flow chart
provides substantial help to picture a process where overlaps, duplication and iterative loops are
easily identified.

Concreting Work

Cement Sand Aggregate Water

Batching to Proper Ratio

Dry Mixing

Addition of Water

Mixing

Slump Test

Placing

Compaction/Finishing

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(d) Check List

Check list is the collection of different activities accompanied with required quality
standards in each activity expressed in a sequential order so that each item is checked with the
stipulated performance standard.

4. Quality circle
Quality circle is a small group of employees in the same work area or doing a similar type
of work who voluntarily meet regularly for about an hour every week to identify, analyze and
resolve work related problems, leading to improvement in their total performance and enrichment
of their work life.
QC is a technique of participative management for continuously improving quality,
quantity, efficiency and safety.
QC is a work group of employees, who meet regularly to discuss their quality problems,
investigate causes, recommend solutions and take corrective actions.

5. Quality Costs
Quality cost can be divided into two parts:

1. Quality Management Cost

Prevention cost
Cost involved in activities to ensure right first time performance, e.g., costs of:
• quality planning
• new products review
• process planning
• process control
• quality audits
• supplier quality evaluation
• training
Appraisal Cost
Cost involved in activities that check whether right first time is achieved, e.g., costs of:
• incoming inspection and test
• final inspection and test
• product quality audits
• maintaining accuracy of test equipments
• evaluation of stocks etc.

2. Failure Cost
Cost involved in the activities which result from not confirming to right first time and
includes:
• Internal Failure Cost (Scrap, Rework, Failure Analysis, Re- inspection, Scrap and rework
from suppliers etc.}
• External Failure Cost (Warranty charge, Returned material etc.)
• Intangible Quality Cost (Loss of goodwill of the company)

Quality costs more but lack of quality costs even more.

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Cost Per Unit

Of Production Economic Balance
Total Cost

Prevention and
Appraisal Cost
Failure
Cost

Quality Level
Cost of Quality
The Fundamentals of Quality System ISO 9000
• International quality system standard
• The ISO 9000 series actually consists of Five Documents

1. ISO 9000: Principal Concepts and Applications (Definitions)

2. ISO 9001: Quality Systems- Model for Quality Assurance in
Design/Dev./Prod./Installation/Servicing
3. ISO 9002: Quality Systems- Model for Quality Assurance in
Production / Installation
4. ISO 9003: Quality Systems- Model for Quality Assurance in
Final Inspection and Testing
5. ISO 9004: Quality Management and Quality System Elements
Guidelines
• ISO 9000- 9003 issue orders. Use the word “shall”.
• ISO 9004 offers advice, using the word “should”. It is an advisory or guidance document.
• Needed for international trade.
• For selling the products of developing countries to the developed countries and to compete
with International market, one has to be attached to ISO 9000 and produce its goods or
services as per the attached standard.

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FPM
PERT: Time Estimates
1 Uncertainties: Use of PERT
PERT stands for Programme Evaluation and Review Technique, which can be applied to any
field having some uncertainties about time of completion of project activities. These uncertainties may
be about the times required for developmental research, engineering designs, ultimate construction and
may be for specific activities or sometimes about the configuration of end product itself. There is little
past history on which to base network construction and time estimates. In such projects, management
cannot be guided by past experience. They are referred to as once- through operations or projects such
as launching a spacecraft.
Two approaches may be used for assessment of duration for any activity in a project for its
completion. The first approach is the deterministic approach in which we may assume that we know
enough about each job or operation, so that a single estimate of their durations is sufficiently accurate
to give reasonable results. This approach is followed by CPM users.
The second approach is the non-deterministic approach or the probabilistic approach in which
one may only be able to state limits within which it is virtually certain that the activity duration will lie.
Between these limits we must guess what is the probability of executing the activity. PERT planners
follow this approach.
2 Time Estimates
Time is the most essential and basic variable in PERT system of planning and control. PERT is
mostly used for research and developmental projects, which are referred to as once- through. In these
projects, there is uncertainty about the times required for the completion of various activities.
Thus, to take the uncertainties into account, PERT planners make three kinds of time estimates:
• The Optimistic Time Estimate: duration of an activity if all went right, without any problem.
This time estimate is denoted by t0.
• The Pessimistic Time Estimate: duration of an activity if everything went wrong. This time
estimate is denoted by tp.
• The Most Likely Time Estimate: duration of an activity based on experience of what usually
happens- something went wrong and some thing right. This time estimate is denoted by tL.
Frequency Distribution
These three time estimates, though look simple, are very difficult to prepare, unless some
guidance is available. The planner should base the estimations on available information and past
experience. For example, consider a certain activity ‘A’ under diverse conditions. The time required
for the completion of this activity under each condition is known. Naturally, the time of completion
will be short (optimistic time) if better than normal conditions exist. The number of cases when such
conditions exist for completion of an activity A will be naturally small. Similarly, time of completion
will be long (pessimistic time) if adverse conditions are there, and such cases will also be small in
number.
If a curve is now plotted between the ‘time’ of completion and the number of jobs completed in
that time, a frequency distribution curve, such as the one shown in Fig. 1 below will be obtained.
From the curve, it is clear that there are large numbers of cases of the activity that are completed in the
most likely time. Such a curve is also called unimodal curve, since it has single hump.

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FPM

No. Of Activities

Time
Figure 1

The curve shown in figure 1 is symmetrical on either side of point Q; such a curve is known as
the normal curve. It is not necessary that a frequency distribution curve may be normal; it may have
skew due to which it is not symmetrical about the peak Q. Figure 2 below shows few frequency
distribution curves.

Figure 2 (a) Figure 2 (a)

Figure 2 (a) Figure 2 (a)

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FPM
Figure 2 (a)
• Frequency distribution curve having skew to the left
• The difference between tL and to is 1 while difference between tP and tL is 3 days.
Figure 2 (b)
• Frequency distribution curve having skew to the right
• The difference between tL and to is 3 while difference between tP and tL is 1 day.
Figure 2 (c)
• Frequency distribution curve symmetrical about the peak (Normal Curve)
• Wider variation between tP and to (Greater Uncertainty)
Figure 2 (d)
• Frequency distribution curve symmetrical about the peak (Normal Curve)
• Smaller variation between tP and to (More reliable time estimation)

The method of preparing a frequency distribution curve will be explained with the help of an
example.

Example 1
In a certain project, the times required for digging 54 trenches of fixed dimensions are
recorded below. The trenches were excavated by different parties, each consisting of the same
number of persons. Plot the frequency distribution curve.

8 11 14 9 10 8
10 9 12 11 9 10
12 8 7 13 11 9
6 10 9 10 10 11
9 14 13 14 7
11 16 10 9 13
10 12 8 12 11
13 16 11 15 8
15 15 17 14 12
12 10 13 9 11

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Solution:

Days of No. of trenches Days of No. of trenches

Completion completed during Completion completed during
these days these days
6 1 12 6
7 2 13 5
8 5 14 4
9 8 15 3
10 9 16 2
11 8 17 1

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3 Mean, Variance and Standard Deviation
Mean
Mean of distribution may be defined by the algebraic sum of time durations taken by various jobs
divided by the number of the jobs.
tm = ∑ t / n
Deviation
Deviation is the difference between the time under consideration and the mean time. This difference
may be either positive or negative.

δ = t- tm
Variance
Variance is the mean of the squared deviations. It is expressed by σ2 .

σ2 = ∑ (t- tm ) / n
2

Variance is commonly used in statistics as measure of variability of the distribution.

Standard Deviation
It is simply the square root of the variance. Standard deviation is denoted by symbol σ .

σ = ∑ (t- tm )2 / n

In the above example, tm = ∑ t / n

= 597/ 54 = 11.06
∑δ = 338. 834
2

σ2 = ∑δ / n = 338. 834 / 54 = 6.275

2
Variance
Standard Deviation = √ 6.275 = 2.50

In the above example, we observed that the most likely time ( tL ) was 10 days, while the mean
time tm is 11.06. The tallest peak of the distribution curve is called the mode, corresponding to the
most likely time, tL .
Both mean and mode do not coincide because the distribution curve is not symmetrical curve
about its peak. In the case of a symmetrical curve ( i.e., normal distribution curve) the mean coincides
with the mode.

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FPM
Time taken, t Deviation δ = t - tm δ2
8 -3.06 9.364
10 -1.06 1.124
12 0.94 0.884
6 -5.06 25.604
9 -2.06 4.244
11 -0.06 0.004
10 -1.06 1.124
13 1.94 3.764
15 3.94 15.524
12 0.94 0.884
11 -0.06 0.004
9 -2.06 4.244
8 -3.06 9.364
10 -1.06 1.124
14 2.94 8.644
16 4.94 24.404
12 0.94 0.884
16 4.94 24.404
15 3.94 15.524
10 -1.06 1.124
14 2.94 8.644
12 0.94 0.884
7 -4.06 16.484
9 -2.06 4.244
13 1.94 3.764
10 -1.06 1.124
8 -3.06 9.364
11 -0.06 0.004
17 5.94 35.284
13 1.94 3.764
9 -2.06 4.244
11 -0.06 0.004
13 1.94 3.764
10 -1.06 1.124
14 2.94 8.644
9 -2.06 4.244
12 0.94 0.884
15 3.94 15.524
14 2.94 8.644
9 -2.06 4.244
10 -1.06 1.124
9 -2.06 4.244
11 -0.06 0.004
10 -1.06 1.124
7 -4.06 16.484
13 1.94 3.764
11 -0.06 0.004
8 -3.06 9.364
12 0.94 0.884
11 -0.06 0.004
8 -3.06 9.364
10 -1.06 1.124
9 -2.06 4.244
11 -0.06 0.004
597 338.834
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FPM
Probability Distribution
Probability is connected with chance and Uncertainty. The probability measures are always
between 0 and 1. If an event has probability of 1, it is certain to occur, while if the probability is 0, it
will not occur. Closer the probability value is to 1, more certain is the occurrence of the event.

y= f(x)
Probability
function

No. of days

Probability number can always be assigned to the estimated time, if sufficient data is available.
Generally, the available data (frequency distribution) is used to plot probability distribution.
Probability distribution is the curve, with its height so standardized that the area under the
curve is equal to unity. The height or the ordinate of the curve at any point x, is denoted by function
f(x), usually called the probability density function.
+∞
Thus ∫ -∞ f (x) dx = 1

Normal Probability Distribution

The probability curve is not necessarily symmetrical about its apex. If the curve is symmetrical,
then it is known to have normal or Gaussian distribution. The mean of the normal probability
distribution is denoted by µ (i.e. x= µ ). It can be proved that:

y= f(x)

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FPM
(a) Approximately 68% of the values of the normal distribution lie within + σ from the average,
where σ is the standard deviation. This means that the shaded area of the curve between x= µ - σ to
x= µ + σ is 68% of the total area.

(b) Approximately 95% of all the values lie within + 2σ from the average. This means that the
shaded area of the curve between x= µ - 2σ to x= µ +2σ is 95% of the total area.
(c) Approximately 99.7% of all the values lie within + 3σ from the average. This means that the
shaded area of the curve between x= µ - 3σ to x= µ +3σ is 99.7 % of the total area.

The last property (c ) can be used to calculate the Standard Deviation directly if the minimum
time t0 and maximum time tp are known. Let us say that the minimum time is 6 days and maximum
time is 18 days for the completion of a job. If 99.7 % of all the values (I.e., possible completion times)
are assumed to lie between 6 and 18 days then the distance between the extreme left value (6) and
extreme right value (18) should be equal to + 3σ or 6σ in total.
The standard deviation = (18-6)/6 = 2 days.
Hence we conclude, in general, that standard deviation is given by
σ = (tp – t0 ) / 6
or Variance δ2 = {(tp – t0 ) / 6}2

The above method of calculating standard deviation is approximate. A more exact method is by
frequency distribution. However, in PERT problems, the emphasis is one- time, non-repetitive
projects for which there are no history of the activity. Hence we must base computations for σ on the
given time estimates of the estimator.

The Beta Distribution

The beta distribution is a typical type of probability distribution, which fits well for PERT
analysis. A beta distribution is the one, which is not symmetrical about its apex. Figure below shows
two beta distributions, one having skew to the left (beta distribution for optimistic estimator) and the
other having skew to the right (beta distribution for pessimistic estimator).

Probability Probability

Time Duration Time Duration

It can be shown that for beta distribution,

Standard Deviation σ = (tp – t0 ) / 6
or Variance δ2 = {(tp – t0 ) / 6}2
Greater the variance, greater will be the uncertainty.

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4 Expected Time
The three time estimates t0 (optimistic time), tp (pessimistic time) and tL (most likely time) are
identified on the beta distribution. The variance and standard deviation can be computed by using t0
and tp . However, one must combine the three time estimates into one single time – the average time
taken for the completion of the activity or job. This average time or single workable time is commonly
called the expected time and is denoted by tE .
In computing the expected time, a weightage of 1 is given to the optimistic time and weightage
of 4 to the most likely time and weightage of 1to the most pessimistic time.
Thus, tE = (t0 +4 tL + tp) / 6

Example 2
Let us take the examples of estimated times of completion of three jobs A, B and C as under.

Jobs t0 tL tP
A 4 6 11
B 5 10 12
C 4 6 8
Find the Expected time of each job.

Solution
The expected times for these jobs are
(tE)A = (t0 +4 tL + tp) / 6 = (4+4*6+11)/ 6 = 6.5 days
(tE)B = (t0 +4 tL + tp) / 6 = (5+4*10+12)/ 6 = 9.5 days
(tE)C = (t0 +4 tL + tp) / 6 = (4+4*6+8)/ 6 = 6 days

For job A
The expected time, tE, falls to the right of the most likely time, though the curve has skew to the left.
For job B
The expected time, tE falls to the left of the most likely time, though the curve has skew to the right.

One important point should be noted about the expected time, tE. The expected time tE
represents the average value while the most likely time tL represents the mode of the β- distribution.
Naturally, the vertical ordinate through tE will divide the probability curve into two equal areas.
If the estimated time (to , tL and tP ) are such that the expected time tE computed with these
comes out to be equal to tL the distribution curve will be symmetrical about the mode (tL), as in job C.

Job Standard Deviation Variance

A σA = (tP – tO ) /6 = (11-4)/6 =1.167 σA2 = (1.167)2= 1.36
B σB = (tP – tO ) /6 = (12-5)/6 =1.167 σB2 = (1.167)2= 1.36
C σC = (tP – tO ) /6 = (8-4)/6 =0.667 σA2 = (0.667)2= 0.444

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Probability Function
Probability Function

Time Duration Time Duration

Job A Job B

Probability Function

Time Duration

Job C
Expected Time for Activities in Series
When a number of activities are in series, the expected time for the path, along the activities,
can be found by first finding the tE for each activity, and then taking their sum. Alternatively, to , tL and
tP of the path can be calculated first by taking the sum of all to , tL and tP respectively and then tE can be
computed.
4-6-8 5-7-11 4-10-12
11 12 13 14

Activity to tL tP tE
11-12 4 6 8 6
12-13 5 7 11 7.333
13-14 4 10 12 9.3333
Σ tE = 22.666

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FPM

Alternatively,
Σ t0
= 4+5+4 =13
Σ tL
= 6+7 +10 = 23
Σ t0
= 8+11+12 = 31
Σ tE
= (Σ t0 + 4 Σ tL +Σ tP ) / 6 = (13+4*23+31) / 6 = 22.67
The standard deviation for the last event (network ending event) in a series of activity, is given by,
σtE = √ σ12 +σ22+σ32+………..+σn2
Example 3
The network for a certain project is shown in figure below. Determine the expected time for each of
the path. Which path is critical?
Solution:
2 7

1 3 6 8

4
5

Path Activity t t t t t
1_2 6 8 11 8.1667
2_7 8 10 12 10.00
A 7_8 5 8 12 8.1667 26.34
1_2 6 8 11 8.1667
2_6 4 8 14 8.3333
B 6_8 7 10 15 10.33 26.83
1_3 3 7 9 6.6667
3_6 8 10 12 10.00
C 6_8 7 10 15 10.33 27.00
1_4 5 7 10 7.1667
4_5 4 6 8 6.00
5_6 3 5 6 4.8333
D 6_8 7 10 15 10.33 28.33

11
Path Activity t t t t t
1_2 6 8 11 8.1667
2_7 8 10 12 10.00
A 7_8 5 8 12 8.1667 26.34
1_2 6 8 11 8.1667
2_6 4 8 14 8.3333
B 6_8 7 10 15 10.33 26.83
1_3 3 7 9 6.6667
3_6 8 10 12 10.00
C 6_8 7 10 15 10.33 27.00
1_4 5 7 10 7.1667
4_5 4 6 8 6.00
5_6 3 5 6 4.8333
D 6_8 7 10 15 10.33 28.33
 FPM
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HEALTH AND SAFETY
Safety
• Oxford Advanced Learner’s Dictionary defines the term “safety” as ‘being safe; free from
danger’.
• Safety hazards are those that pose imminent danger of causing injury or death to workers or
damage to materials, equipment or structures.
• Theoretically, safety would mean the absence of danger at work, which is made possible by
eliminating hazards that create the danger.
• A more practical definition used in an ILO document states “A thing is provisionally
categorized as safe if its risks are deemed known and, in the light of that knowledge, judged
to be acceptable.”
• However, it is not always easy to determine to what extent the accidents are the direct result
of the working environment only. There may be lack of proper safety equipment at work
sites. The design of the structure or of the equipment used may be faulty. The physical
conditions at work sites, heat, light, humidity etc. may not be satisfactory. Long working
hours may cause fatigue. Living conditions, social habits, experience, attitudes, motivation
etc. are other possibilities. It is for these reasons that, very often, health, occupational safety,
working conditions, working hours and welfare are bracketed together for evolving
measures of accidents control as well of promoting safety.
• Safety may be defined as an act of being safe from the materials, substance and the process
at construction site. Safety basically is concerned with no loss of life at the work place and
minimizing injuries to the workmen and other common people. It is also concerned with the
safety of works and with the damage of property and loss of time.
Accident
• An event that happens all of a sudden unexpectedly which may cause injury, death or
damage to men/equipment/material and affects the life of individuals and his family as well
as ultimately entire society.
Causes of Accidents
1. Hardware Causes
Physical
• Improper equipments
• High speed of operation
• Unauthorized operation
• Machine related (Working space, Obstruction etc.)
• Tools related (Breakage etc.)
• Materials (Inflammable, explosives etc.)
• Uniform
• Working environment

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Physiological
• Poor eye sight
• Poor health
• Old age
• Intoxication ( alcohol, drugs etc.)
• Physical disability
Psychological
• Anxiety
• Worries
• Fear
• Over consciousness

2. Software Causes
• Inadequate plan and program
• Lack of training
• Negligence
• Mistakes
Health Problems in Projects
• Health hazards in project include, among others, heat, radiation, noise, dust, shocks and
vibrations, and toxic chemicals.
• Perhaps the main hazard here, however, is human optimism. Since the effects are not
immediately felt, we say-
o “ I can work in this dust from rock drilling for a few more hours. A hot, steamy
shower will clear it out! “
o “ I can go into the tunnel heading without earplugs. The pain stops when I come
out!”
o “ It sure is hot out, and I’m feeling dizzy and have a real headache coming on, but
it’s only an hour until quitting time. There is no point in stopping this truck for a
drink of water now!”
o “ I’ve been working with asbestos for 20 years and I’m not sick. What’s this business
about its causing cancer?”
• Increasingly, it is being recognized that occupational diseases have indeed been a serious
problem in construction. There are substantial direct costs for medical treatment and
disability claims, and indirect costs through the premature loss of skilled workers.
• It is virtually important that all organizations involved in construction stay up to date with
developments in occupational health and implement methods proven to reduce health
hazards. If humanitarian concerns are insufficient, the liability implications should be more
than enough reason.
Since Health and Safety are interdependent to each other, they will be dealt combinly in this
chapter.

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Project and Safety Considerations
• Projects involve thousands of different types of materials, chemicals, equipments and
machinery. Also the work involves working on difficult working conditions and situations.
• Project sites are often dangerous because they:
o Are carried out at dangerous place or
o The construction place are made dangerous
o Use dangerous materials like blasting materials and other chemicals
o Use dangerous methods like underwater drilling and blasting
o Use heavy machines, which often become the cause of accident.

• From the record of other countries, the distribution of cause of accidents are as follows:
 50% by fall of persons
 15% by falling objects
 15% by transport or mobile equipments
 6% by other machines and
 14% by others.
• Most important thing in dealing with the dangers from articles and substances and work
process and arrangements associated with them is good quality safety training to the
managers of construction industry.
• If managed properly, at least 90% of the accidents can be predicted and hence avoided in
construction industry.

Need for Safety in Construction

 A disabling injury or fatal accident on the job site has negative impact on operations at many
levels. Accidents cost money and affect workers morale.
 The factors that motivate safe practices at the job site are generally identified as follows:

 Humanitarian Concerns
 Economic Costs and Benefits
 Legal and Regulatory Considerations

Humanitarian Concerns
 On a purely humanitarian level, the purpose of improved occupational safety and health is to
reduce the human pain and suffering, to workers’ families as well as to themselves, that
result from accidents and work- induced illness.
 Even the strongest human beings are frail creatures when subjected to the forces of nature
and the industrial hazards associated with the moving machinery, dust, explosives, heat,
electricity, noise, potential for falling, and toxic substances that form the everyday
environment of construction.
 The resulting injuries are often cruelly disfiguring and result in lifetime handicaps and
disabilities.

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Economic Costs and Benefits

• When the indirect as well as the direct costs of accidents and illness are considered, costs
associated with insurance premiums, claims settlements, and the like are only a small
portion of the whole.
• Even at the project level, it is often estimated that the indirect and impact costs resulting
from interrupted production, reduced morale, lower productivity and ripple effects on the
schedule can be several times the direct costs associated with hospitalization, disability pay,
spoiled materials, damaged equipment and reconstruction. The indirect impact costs must
normally be absorbed directly by the project.
• Direct costs of each accident occurrence:
 Delay to project
 Uninsured damages
 Lost production
• Indirect costs:
 Investigation
 Loss of skilled workers
 Loss of equipments
 Reduced morale
• Much the same analysis applies at the worker’s level. More typical settlements under
workers’ compensation are limited mainly to workers’ medical expenses and a fraction of
lost salaries.
• Further more, the indirect impact of the psychological and emotional disruption to the
families is very real, but not easy to quantify. Where long-term or permanent disability
results, there is an unknown lost potential for both earnings and future growth and
development.
• Skilled workers area scarce and valuable resource; considerable time, money, and effort are
invested in their training. A career interrupted at age 25 means that 40 additional years of
skilled production have been lost.
• With today’s shortage, it is misjudgment to say there will be someone else to take the
accident victim’s place.
• For these and other reasons, the more enlightened organizations in the engineering and
construction industry- owners, constructors, designers and agencies alike- have recognized
that effective programs to improve performance in safety and health are not expenses, but
investments.
• Some have estimated that $ 1 invested in safety and health pays $ 4 to $8 in return.

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Legal and Regulatory Considerations
 Due to competitive nature of the construction industry cost cutting areas such as safety and
health often seems attractive and even necessary for business survival. This not only runs
counter to the productivity of long-term investments in safety described above, but this
general attitude of expediency also accounts in large measure for the high rate of business
failure in construction.
 Regardless of the origins, the consequences of the irresponsible safety and health
performance of some individuals and firms have brought on laws and regulations as a
leveler for all.
 Many Laws, Rules and Regulations have been formulated and are being enacted in several
countries as a physical approach to achieving safety.
 These legislations require the owner, designers and contractors to meet certain requirements
to protect the workers against health and accident hazards.
 A typical physical measure of this type is the requirement to install guardrails around all
open floors of a multistory building during construction.
 Furthermore, physical measures are implemented to minimize injury in the event of an
accident. An example of this is the requirement to wear a safety belt when working high
steel and the installation of safety nets to protect a man who slips and falls.
 One typical legislation is:
o Occupational Safety and Health Act, 1970 (US), more popularly known as OSHA.
 Under this act, all employers are required to provide “employment and a place of
employment which are free from recognized hazards that are causing or are likely to cause
death or serious physical harm to his employees.”

 From above paragraphs, we believe without any doubt that the safety is needed for:
o Minimizing rate of accidents in construction industry
o Eliminating fatal accident at construction sites
o Raising morale by which raising efficiency of the worker
o Improving overall quality of the work and
o Ultimately reducing construction costs.

What are the Unsafe Conditions?

 Unsafe conditions are those factors that are present due to defects in conditions, errors in
design, faulty planning or omission of essential safety requirements for maintaining hazard
free physical environment.
 Unsafe conditions may be grouped into:
o Inadequate mechanical guarding
o Defective condition of equipment, tools, floors, stairs etc.
o Unsafe design and construction
o Unsafe process, operation or arrangement e.g. unsafe piling, stocking, storage,
overloading, over crowding etc.
o Inadequate light and ventilation and
o Unsafe dress e.g. loose clothing, no gloves, no aprons and shoes etc.

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What are the Unsafe Acts?
 Unsafe acts of the persons are those types of behavior at the work place that cause accident
and leads to injuries or death.
 They include:
o Working unsafely
o Contravention of safety orders
o Removing or altering safety devices
o Operating at unsafe conditions
o Use of unsafe or improper equipments etc.

Human elements in safety

Safety policy
A clear and well-defined policy should be followed
Discussion with trade union relating to safety policy
Safety policy should be reviewed and updated in regular interval

Recruitment and Placing

• Preparation of a standard list of physical demands applicable to the entire task to be included in
the selection procedure.
• Square peg into a square hole and circular peg into a circular hole should be the guiding principle.
• Preparation of job description and job specification including listing the requirement the holder of
the job should have is the responsibility of personnel manager.
Personnel Manager should seek expert advice of the safety in charge or safety expert.
Medical Examination
• Thorough medical examination is necessary for some specific jobs.
• Care should be taken for patient of epilepsy, poor vision and poor hearing condition.

Alcoholism
• Alcoholism and drug abuse worsen the problem of control of injuries and therefore are matter of
concern.
• Alcoholism in job situation can be defined as “a disease in which an employee’s consumption of
any alcoholic beverage definitely and repeatedly interferes with his job performance and/ or his
health”.
• Alcoholism is a complicated disease and not easy to cure as culture and values are associated with
it.
Training
• Employee should be trained for the safety procedure and practice to be followed.

Safety Program for Construction

• Safety planning
• Safety Implementation
• Safety Monitoring
• Safety Control

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The Growth of safety Regulation/Legislation: Nepalese

Scenario
In Nepal, the government’s first response towards safety in projects might possibly be the
enactment of the “Labor Act 2048”, which came into force on 15 May 1992. Before this, there was
no special law regarding labor in construction industry.

‘Labor Act, 2048’ contains provisions on health and safety of the workers. As provided under
chapter 5 of the act, management of an organization should ensure the following:

a. General Safety
• The working area should be cleaned, painted, cleared of waste and necessary insecticides
spread on the area.
• Proper light and ventilation as well as appropriate temperature should be maintained.
• Arrangement should be made for the disposal of waste material.
• Working area should be free from dust, air, vapor and other material, which could adversely
affect the health of the worker.
• Arrangements to be made for the control of noise and necessary equipment to be provided if
workers have to work on loud noise area.
• Work area should not be congested. Every worker should get at least 15 Cum. Of working
space within 4m. height from the ground.
• Adequate potable drinking water should be provided.
• Gents and ladies latrines to be provided at appropriate place.
• Medical checkup of the workers should be done at least once a year.

b. Safety for Eye

• Eye shield or goggles should be provided to safeguard eyes from flying dust, object, welding
and gas cutting light etc.

c. Safety from Chemicals

• Personal safety arrangement has to be made for the workers who handle dangerous
chemicals.

d. Fire Safety

• Modern safety equipment

• Provision of fire escape
• Provision of fire extinguisher at required places.

e. Guarding the Machines

f. Heavy load handling
g. Pressure Plant
h. Safety Order
i. Information of the accidents

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ILO STANDARDS AND GOVERNMENT RULES

In 1966, Nepal became a member of ILO. Besides the general ILO Standards (ILS) like freedom of
association, prohibition of forced labor etc, there are ILS on Occupational Safety and Health which
are more specifically related to the construction workers. Some of the Conventions are:

• No 155 : Occupational safety and Health Convention, 1981

• No 161 : Occupational Health Services Convention, 1985
• No 13 : White Lead (Painting) Convention , 1921
• No 115 : Radiation Protection Convention, 1974
• No 139 : Occupational Cancer Convention, 1974
• No 170 : Chemical Convention , 1990
• No 119 : Guarding of Machinery Convention, 1963
• No 127 : Maximum weight Convention, 1967
• No 148 : Working Environment(Air pollution, Noise and Vibration)Convention, 1977

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Class Notes 17 & 18
Risk and Uncertainty in Projects
Managing Risks in Projects

When our World was created, nobody remembered to include Certainty

- PETER BERNSTEIN

Every project is risky, meaning there is a chance things won’t turn out exactly as planned.
Project outcomes are determined by many things, some that are unpredictable and over which
project managers have little control. Risk level is associated with the certainty level about
technical, schedule and cost outcomes. High certainty outcomes have low-risk; low- certainty
outcomes have high risks. Certainty derives from knowledge and experience gained in prior
projects, as well as from management’s ability to control project outcomes and respond to
emerging problems.
In general, risk is a function of uniqueness of a project and the experience of the project
team.
Risk = f (uniqueness, experience of project team).
When activities are routine or have been performed many times before, managers can anticipate
the range of potential outcomes and manipulate aspects of the system design and project plan to
achieve the outcomes desired. When the project is unique or team is inexperienced, the potential
outcomes are more uncertain, making it difficult to know what could go wrong and how to avoid
problems. Even in routine projects there is risks because outcomes may be influenced either by
factors that are new and emerging, or those beyond anyone’s control.
The notion of project risk involves two concepts:
i. The likelihood that some problematical event will occur.
ii. The impact of the event if it does occur.
Risk is joint function of the two; that is,
Risk = f (likelihood, impact)
A project will be ordinarily considered risky whenever at least one factor- either the
likelihood or the impact- is large. For example, a project will be considered risky where the
potential impact is human fatality or massive financial loss even when the likelihood of either is
small.
Though the risk cannot be eliminated from projects, it can be reduced. That is the purpose
of risk management. There are three major aspects of risk management:
• Risk Identification
• Risk Assessment
• Risk Response Planning

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Class Notes 17 & 18
1 Risk Identification
• Before you can manage something, you must first know about it. Thus, risk management
begins with identifying the risks and predicting their consequences.
• If a risk and its consequences are significant, ways must be found to avoid the risk or
reduce it to an acceptable level.
• Acceptable risk depends on the risk tolerance of project stakeholders and managers.
• Experienced managers are more careful (and risk averse), where as less experienced
stakeholders tend to be greater risk-takers (more risk tolerant) because they don’t know of
the risks or are ignorant of the consequences.
o Risk of failure: project might fall short of schedule, budget or technical goals.
o Risk of opportunity: events leading to rewards, savings or benefits.
• One method to identify project risks is to proceed according to project chronology; that is
risks associated with each phase of project life cycle that may ruin the project immediately
or lead to a later failure are separately identified.
• High risks in projects typically stem from:
o Using an unusual approach.
o Attempting to further technology.
o Training for new tasks or applying new skills.
o Developing and testing of new equipment, systems or procedures.
Sources of Risk:
• Any factor with an uncertain probability of occurring, that can influence the outcome of a
project, is considered a risk source or risk hazard.
• The most difficult part of risk identification is discovering things you don’t already know!
• Project risk can be classified as internal risks and external risks.
Internal Risks:
• Internal risks originate inside the project and project managers and stakeholders usually
have a measure of control over these. Two main categories of internal risks are market risk
and technical risk.
Market Risk
• Market risk is the risk of not fulfilling either market needs or the requirements of particular
customers. The sources of market risk include:
 Incompletely/ inadequately defined market or customer needs.
 Failure to identify changing needs
 Failure to identify newly introduced products by competitors.
Technical Risk
• Technical risk is the risk of not meeting time, cost or performance requirements due to
technical problems with the end-item or project activities.
• These risks are high in projects involving activities that are unfamiliar or require new ways
of integration and especially high in projects with untried technical applications.
• One approach to expressing technical risk is to rate the risk of the project end-item or
primary process as being high, medium or low according to the following features.

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Class Notes 17 & 18

o Maturity: An End-item or process that is pre-existing, installed and operational or

based on experience and preexisting knowledge entails less risk than that in the
early stage of development or new.
o Complexity: An End-item or process with numerous interrelated steps or
components is more risky than one with few steps and components having simple
relationship.
o Quality: An end- item or process that is known to be completely producible,
reliable or testable is less risky than one that has not yet been produced or has low
reliability or testability.
o Concurrency or Dependency: In general risk increases the more that activities
overlap one another. Sequential, dependent activities with no overlap are much less
risky than those with much overlap.

External Risks:
• External risks include only risks that stem from sources outside the project. Project
managers and stakeholders usually have little or no control over these. External risk
hazards include changes in:
 Market conditions
 Competitors actions
 Government regulations
 Interest rates
 Decisions made by senior management/ customers regarding project
priorities, staffing or budgets
 Customer needs and behavior
 Weather (adverse)
 Labor availability (strikes/walkouts)
 Material/labor resources (shortages) etc.
Risk Identification Techniques
 Project risks are identified from analysis of the numerous documents reviewed or prepared
during project conception and definition. These documents include:
 Reports from past projects
 Lists of user needs and requirements
 WBSs
 Cost estimates
 Schedules
 Models of end-items.
 The various techniques for pin pointing risks are:
o Analogy Technique: looking at records, post completion summaries and project
team members’ notes and recollections from previous similar projects.
o Checklists: lists of factors that can affect the risk in a project
o WBS Analysis: Every work package is scrutinized for potential problems with
management, customers, suppliers, equipment and resource availability and
technical hurdles.
o Process Flow Charts: A flow chart illustrates the steps, procedures and flows
between tasks and activities in a process.

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Class Notes 17 & 18
o Cause- and- effect Diagram: Potential outcome or end-item (effect) due to
potential causes (hazards) or risk hazards (cause) that might ensue (effect).
o Brainstorming: share opinions and generate ideas about possible problems or
hazards in the project.
2 Risk Assessment
Risks are commonplace, but it is only the notable ones that require attention. What is considered
notable depends on three things:
 Risk likelihood
 Risk impact, and
 Risk consequences
Risk Likelihood
• Risk likelihood is the probability that a hazard or risk factor will actually materialize.
• It can be expressed as a numerical value between 1.0 (certain to happen) and 0
(impossible) or as a qualitative rating such as high, medium or low.
• Table 1 below shows an example of qualitative ratings and the associated numerical
percent values for each. The table is for illustration only. The association between
qualitative ratings and particular values is subjective and depends on the experience of the
project team and risk tolerance of stakeholders.

Table 1 Risk Likelihood: Qualitative Ratings for Quantitive Values

QUALITATIVE NUMERICAL
Low 0- 0.20
Medium 0.21- 0.50
High 0.51- 1.00

Table 2 is a checklist that gives numerical likelihood for five potential sources of failure in
computer systems projects.
Table 2: Sources of Failure and Likelihood.
MS failure likelihood due to immaturity of software
CS failure likelihood due to complexity of software
MH failure likelihood due to immaturity of hardware
CH failure likelihood due to complexity of hardware
D failure likelihood due to dependency on external factors

Likelihood MH MS CH CS D
0.1 (low) Existing Existing Simple Design Simple Design Independent

0.3 (minor) Minor redesign Minor redesign Minor complexity Minor complexity Sch. Depnt.on ES

0.5 (moderate) Major change feasible Maj.Change feas. Moderate complexity Moderate Perf.depnt. on ES

0.7 (significant) Complex design New but similar to exist. Signif.complex. Signif.complex Sch.Depnt.on NS

0.9 (high) SoA/ research done SoA/ never done Extreme complx. Extreme complx. Perf.depnt. on NS

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Class Notes 17 & 18

When a project has multiple, independent risk sources, they can be combined and expressed as a
single Composite likelihood factor, or CLF. For example, using the sources listed in Table 2
the CLF can be computed as a weighted average,
CLF= W1 MH + W2 CH + W3 MS + W4 CS + W5 D
Where W1, W2, W3, W4 and W5 each have values 0 through 1 and together total 1.

Example 1:
The ROSEBUD project involves development of hardware and software with characteristics as
follows:
The hardware is existing and of minor complexity; the moderately complex software involves a
minor redesign of current software; the performance of the overall system depends on how well it
can be integrated into another, larger system.

Calculate the CLF for the probable risk.

Solution:
From Table 2 above, we have;
MH = 0.1, CH = 0.3, MS = 0.3, CS = 0.5 and D= 0.9. Assuming all sources are rated
equally at 0.2, then,
CLF = 0.2*0.1 + 0.2* 0.3 +0.2* 0.3 + 0.2*0.5+ 0.2* 0.9 = 0.31 Ans.

Risk Impact
What would happen if a risk hazard materialized? The result would be called risk
impact. A poorly marked highway intersection is a risk hazard; the risk posed is that of collision
with the impact of injury or death. Risk impact in projects is specified in terms of time, cost and
performance measures. For example,
Risk hazard: insufficient numbers of skilled labor
Risk impact: extending the schedule of the project
Risk impact can be expressed as a qualitative rating such as high, medium or low. The
rating is subjective and depends upon the opinion of managers about the importance of the risk.
For example, a risk leading to a schedule delay of 1 month or less might be considered “ low
impact”, whereas a delay of 3 months or more might be deemed “high impact”.
Risk impact also can be expressed as a numerical measure between 0 and 1, where 0 is
“not serious” and 1 is “catastrophic”. Again the rating is subjective and depends upon the opinion.
Just as the likelihood for multiple risks can be combined, so can the impacts from multiple risk
sources. If technical, cost and schedule impacts are TI, CI and SI, then Composite Impact Factor
CIF, can be computed using a simple weighted average,
CIF = W1 *TI + W2 * CI + W3 * SI
Where W1, W2, and W3 are valued from 0 to 1 and together sum to 1. If CIF is 0, it means “no
impact” whereas CIF equal to 1 means “ the most severe impact”.

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Class Notes 17 & 18
Table 3: Impact Values for Different Technical, Cost and Time Situations.
Impact Value Technical Impact (TI) Cost Impact (CI) Schedule Impact (SI)
0.1 (low) Minimal Within budget Negligible
0.3 (minor) Small reduction in Cost increase 1- 10% Minor slip <1month
performance
0.5 (moderate) Moderate reduction in Cost increase 10- 25% Moderate slip
performance (1-3 month)
0.7 (significant) Significant reduction in Cost increase 25- 50% Significant slip
performance > 3 month
0.9 (high) Technical goals might not Cost increase in Large slip
be achievable excess of 50% (unacceptable)

Above equation assumes that risk impacts are independent. If they are not, then they must be
treated jointly as, for example, the impact of both a 20% increase in cost and a 3- month schedule
slip.

Risk Consequences
The risk is a function of risk likelihood and risk impact. This notion is referred to as the
risk consequence. Risk consequence can be expressed in two ways.
First, it can be expressed as a simple numerical rating with a value ranging between 0 and
1. In that case, the risk consequence rating, RCR, is
RCR= CLF+CIF- (CLF)* (CIF)
Small value represents unimportant risk that might be ignored; large values represent
important risk worth attending to. The consequence rating value is interpreted subjectively. In
general,
• Value over 0.7: high risk project
• Value under 0.2: low risk project
• Value of 0.48: moderate level risk
Another way to express risk consequence is an Expected value. The risk consequence expected
value is computed as
Risk Consequence= (Impact)* (Likelihood)
The risk consequence on project duration is called the Risk Time, RT.
RT= (Corrective time)* (Likelihood)
The risk consequence on project cost is called the Risk Cost, RC.
RC= (Corrective cost)* (Likelihood)

Example 2
Suppose the baseline time estimate (BTE) for project completion is 26 weeks and the baseline cost
estimate (BCE) is NRs. 500,000. Assume that the risk likelihood for the project as a whole is 0.3,
and, should the risk materialize, it would delay the project by 5 weeks and increase the cost by
NRs. 80,000. Calculate the expected project completion time ET and expected project completion
cost Ec, considering risk into account.

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Class Notes 17 & 18
Solution:
As the probability of the risk materializing is 0.3, the probability of not materializing is
0.7. If the risk does not materialize, no corrective measures will be necessary, so the corrective
time and cost will be nil. Hence
RT= 5*0.3 + 0* 0.7 = 1.5 Weeks
RC= 80,000* 0.3 +0* 0.7 = NRs. 24,000
These figures RT and RC would be included as reserve or buffer amounts in the project
schedule and budget to account for risk. RT and RC are the schedule reserve and project
contingency (budget reserve) respectively.
Thus,
Expected Project Completion Time, ET = BTE+ RT = 26 + 1.5 = 27.5 Weeks
Expected Project Completion Cost, EC = BCE+ RC = 500,000 + 24,000 = NRs. 524,000

When the corrective time and cost cannot be estimated, then ET and EC are computed as
ET= BTE (1+likelihood) = 26* 1.3 = 33.8 Weeks
EC= BCE (1+likelihood) = NRs. 500,000* 1.3 = NRs. 650,000

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Class Notes 17 & 18
3 Risk Response Planning
Risk response planning addresses the matter of how to deal with risk. The response to, or
the allocation of, risk can take any of four forms:

Risk Response

Risk Transfer Risk Reduction Risk Avoidance Risk Acceptance

Risk Transfer
Transferring risk does not reduce the criticality of the source of risk; it just removes it to
another party.
The commonest form of risk transfer is by means of insurance, which changes an uncertain
exposure to a certain cost.
Risk can be transferred partly or fully from the customer to the contractor, or vice versa,
using contractual incentives, warranties, or penalties attached to project performance, cost or
schedule measures. The contractor and customer may decide to split the risk through a contractual
agreement in which each manages the risks they can handle the best.
Of course it is impossible to entirely transfer the risk to one party or another. Even with a
fixed price contract, where the contractor takes all the risk, the customer still incurs damages or
hardship should the project exceed the target schedule or the contractor declares bankruptcy.
Transfer of one kind of risk often means inheriting another kind of risk.

Risk Reduction
One of the ways of reducing the risk exposure is to share risks with other parties. For
instance, the international banks syndicated loans to third world governments or the stock market
investor spreads his risks over many securities. The general contractor will attempt to reduce his
risk exposure to pay liquidated damages for late completion by imposing liquidated damages
clauses in domestic sub contractor agreements.
Among the many ways to reduce risk associated with technical performance are to:
• Employ the best technical team.
• Base decisions on models and simulations of key technical parameters.
• Use mature, computer aided system-engineering tools.
• Provide the technical team with adequate incentives for success.
• Hire outside specialists for critical review and assessment of work.
• Perform extensive tests and evaluations.
• Minimize system complexity (By decoupling activities and subsystems, that is, making
them independent of one another, the failure of any one activity or subsystem is contained
and will not spread to others).

8
 MR Gelal
Class Notes 17 & 18
• Use design margins (A design margin is quantified value that serves as a safety buffer to
be held in reserve and allocated by management. By aiming for the target value, any
design error can miss by as much as the design margin amount and still satisfy the
requirement).

Risk Avoidance
Risk avoidance is synonymous with refusal to accept risks. The refusal to contract is a
simple example to risk avoidance. However, it is more relevant to consider the specific risks,
which can be avoided.
The basic rational of risk aversion is that it is more unpleasant to lose a given sum than
pleasant to gain the same amount; for a loss may cause a reduction in the standard of living to
which one has become accustomed. In an extreme case, a risky venture may be shunned because it
puts basic necessities at risk.
Also, avoiding risk can diminish the payoff opportunities. Research projects and
innovative, new-product development projects are inherently risky, but they offer potential for
huge benefits later on. Because the potential benefit of such a project is proportionate to the size of
the risk, it is better to reduce risk to an acceptable level rather than completely avoid risk.

Risk Acceptance
Not all impacts are severe or fatal, and if the cost of avoiding, reducing or transferring the
risk exceeds the benefit, then “ do nothing” might be advisable. Of course, this response would not
be chosen for risks where the impacts or consequences are potentially severe.
Not all risk can be transferred, but even if they were capable of being transferred it may not
prove to be economical to do so. The risk will then have to be retained. The gamble is between
paying premium and the probability of the event occurring and the consequential loss that would
result. The risk retention is based on the probability of a claim for damages and what the practice
can afford to pay if the claim is successful.

Summarizing Risk Management

• Project management is risk management.
• Risks have to be identified, classified and analyzed before any response is made.
• An identified risk is not a risk; it is management problem.
• Beware of using solely the intuitive approach or ‘gut fell’ to manage risk.
• Risk management needs to be continuous from the moment the project starts to the
moment it ends.
• A poorly defined risk structure will breed more risk.
• Use both creative and negative brainstorming and don’t use the ostrich approach.
• Always have a contingency plan (risk reserve) to cope with the worst eventuality.
• Risk management system should not be complicated or burdensome; they need to be
integrated into a firm’s daily operations.
• A risk officer should be appointed to take the responsibility of risk management.
• A communication channel is to be established within the project team to ensure that bad
news quickly gets to the project manager.
• Ensure accurate and comprehensive project documentation for better risk planning in
future.

9
 MR Gelal
FPM
THE S-CURVE
S-Curve is one of the popular planning tools. S-Curve graphically plots some measure of
cumulative progress on the vertical axis against time on the horizontal axis. Progress can be
measured in terms of money expended, quantity surveys of work in place, man-hours
expended, or any other measure which makes sense. Any of these can be expressed either in
terms of actual units (Rupees, Cubic meter, etc.) or as a percentage of the estimated total
quantity to be measured.
Why does it look Like S?
On most projects, expenditures of resources per unit time tend to start slowly, build up to a
peak, and then taper off near the end. This causes the slope of the cumulative curve to start
low, increase during the middle, and then flatten near the top. After signing a construction
contract, the contractor has to prepare himself for the work. Also minor works are started
which takes time to gain momentum. After the period of slow start, when the contractor
mobilizes him fully, the rate of progress accelerates remarkably and for quite sufficient
duration, the rate of progress is constant. Finally, a falling off of this rate of progress is
marked when the project is towards completion. Contractor reduces his manpower
substantially and activities are limited to finishing, testing and commissioning. By this, for
any project, if we draw on a graph, we find a figure having S- shape.

S- Curve
Cumulative Cost

Time

Traditionally, the curve was being used to plan the budget and cash flow only. It was drawn
for cumulative schedule of cost on vertical scale and time duration on horizontal scale. But
now, we have started using it not only to plan overall cost of the project, but also to plan
man-hours, physical percentage completion, individual items of work and so on. In that case

1
 MR Gelal
FPM
the vertical scale represents man- hours, physical percentage of work completed etc. and
horizontal scale always represents the time.

Example:
An airport construction project has to move 10,000 cubic meter of earth within 10 days. The
daily excavation quantities are as shown in figure 1 below. Summing all the daily excavation
quantities through any particular day gives the cumulative quantity by that day. For example,
by the end of day 5, the cumulative quantity is the sum of excavation on days 1, 2, 3, 4 and 5.
That is = 200 + 600 + 1000 + 1400 + 1800 = 5000

The shape of S- Curve can be seen by connecting the points at the end of each days
cumulative production as shown in figure 2.

Figure 1

Figure 2

2
 MR Gelal
FPM

LINE OF BALANCE
Line of Balance is a graphic technique used for project planning and control to depict time-
quantity relationships. They apply best to linear and repetitive operations such as tunnels,
pipelines, highways and building projects.
The vertical axis typically plots cumulative progress or percentage completed for different
systems of a project, such as the structural, electrical, mechanical and other trade sub
contractors on a high-rise building. The horizontal axis plots time.
An example may be, clearing, excavation, stringing, welding, pipe laying, and backfill
operations on a pipeline. As long as the slopes are either equal or decreasing as one moves to
the right, the project should proceed satisfactorily. However, if early scheduling shows one
operation proceeding too rapidly, with a high slope compared with those preceding it, the
time and location of the first conflicts become rapidly apparent. To illustrate this, figure 3
shows the eighth operation starting to conflict with the seventh, when each is about 70%
complete.

100%

Time

3
 MR Gelal
FPM

Linked Bar Chart

Linked bar chart is a modified version of Gantt bar chart. It was developed to
overcome some of the inherent limitations of bar chart. It shows the links between an
activity and the preceding or succeeding activities. The linked bar chart has advantage of
exhibiting the effect of delay on succeeding activities and also it can provide some
information of the extra time available (if there is) with an activity for its completion. The
extra time available for an activity for its completion is called float. Similarly, the
activities, which do not have extra time for completion, are called critical activities.
It is to be noted that linking bars are very complicated, difficult and sometimes
impossible to show graphically.
An example of linked bar chart is presented below.
Example:
Activity Duration Predecessors Followers
A 4 - B
B 3 A D
C 2 A F
D 2 B G
E 7 B H
F 3 C H
G 8 D -
H 8 E, F -

Corresponding AON and CPM Network

D G

B
E
Start A End

C F H

Corresponding Linked bar Chart is as given in figure 1 below.

4
 MR Gelal
FPM

Milestone Chart
A Milestone Chart is an improved version of a bar chart in which some of the limitations
of bar chart are eliminated. As Henry Gantt invented it, it is called Gantt Milestone
Chart. Combined activity bar charts can be converted to milestone bar charts by placing
small triangles at strategic locations in the bars to indicate completion of certain
milestones within each activity or group of activities as shown in figure below. A
milestone implies some specific stage or point where major activity either begins or ends,
or cost data become critical.
Figure (a) shows a bar chart of a project, which involves four tasks or activities or jobs
viz. Task I, Task J, task K and Task L and figure (b) shows the corresponding Milestone
Chart.
It may be seen that in a milestone chart the long time activities or jobs or tasks are
identified in terms of specific events or milestones which are plotted against the time
scaled indicating their accomplishments by specified times. Each bar in a milestone chart
again represents an activity or job or task and all the bars taken together represent the
entire project.
A milestone chart shows relationship between the milestones within the same activity or
job or task. It may be seen from fig. (b) that Milestone 2 cannot be started until milestone
1 has been accomplished. Thus as compared to bar chart better control can be achieved
with the help of a milestone chart, but it still possesses the same deficiency that it does
not depict the interdependencies between the various tasks or the relationship between the
milestones of different tasks.

5
 MR Gelal
FPM

Earned Value Analysis

Any deviation in schedule, performance or cost from the plan or from the set standard to
the actual accomplishment is called variance. In the past the conventional method of
control analysis was variance analysis. This measures the difference between two factors
by subtracting one from the other to give a positive or negative variance. It can be used to
show differences between actual progresses and planned, and the resources used against
estimate or budget. For example, the followings are common variances in the control of
projects:
• Scheduled start vs. Actual start
• Scheduled finish vs. actual finish
• Scheduled time for an activity vs. actual time
• Scheduled date of milestone vs. the actual date when the milestone was reached
• Budgeted cost vs. Actual cost
• Measured value vs. Actual cost
• Budgeted man-hours vs. Actual man-hours
• Budgeted unit cost vs. Actual unit cost
Although still used extensively today, variance analysis must be supplemented by other
methods, as it is an inadequate, often misleading, and sometimes meaningless, guide to
progress and performance.
For example, consider a simple case where out of total project cost of NRs. 25,00,000,
the budgeted expenditures to date on a project is NRS. 850,000 and actual expenditure is
NRs. 900,000, giving a variance of NRs. 50,000. All this tells us is that expenditure is
ahead of budget. It does not give us any of the following information:
• Whether we are on, above or below the expected cost performance.
• What will be the likely final cost of the project
• Whether we are on, behind or ahead of schedule
• What will be the likely completion time of the project
Thus variance analysis, when used on its own is an ineffective way of analyzing and
reporting project progress and performance.
Performance analysis based on Earned Value
The modern methodology used in analyzing project progress and performance uses
‘Performance Measurement’ based on ‘Earned Value’ concepts, which integrates cost
and schedule on a structured and personalized basis. There are actually three elements of
data required to analyze performance, from which more information can be extracted
than from than two-element variance analysis. These elements are:
• Budgeted Cost of Work schedule (BCWS) = NRs. 850,000
• Actual Cost of Work Performed (ACWP) = NRs. 900,000
• Budgeted Value of the Work Actually Completed, i.e. Earned Value (EV)
=NRS.750, 000
In addition the completion time of the project is 50 weeks (say).

6
 MR Gelal
FPM

Cost variance CV
Cost Variance CV, is the difference of Budgeted Value of Work performed
(Earned Value) and Actual Cost of Work Performed. It can be expressed as:
CV= EV-ACWP
Negative value of CV indicates Cost Overrun. In the above example, CV is,
= NRs. 750, 000- NRs. 900, 000
= NRs. (-) 150, 000
The project is NRs. 150, 000 over budget!
Cost Performance
Cost Performance can be obtained by dividing Earned Value EV by Actual cost of
Work Performed ACWP. It can be expressed as:
Cost Performance = EV/ACWP
In the above Example,
Cost Performance = NRs. 750,000/NRs. 900,000
= 0.8333
The project is obtaining 83.33 Paisa of Earned Value for every Rupee expended, that is
cost performance is 83.33% of that planned.
Final Cost Forecasting= NRs. 25,00,000/ 0.83333
= NRs. 30,00,000
The project will be NRs. 500,000 over budget, if there is no change in performance.
Schedule Variance SV
Schedule Variance SV (In cost terms), is the difference of Budgeted Value of
Work performed (Earned Value) and Budgeted Cost of Work Schedule (BCWS). It can
be expressed as:
SV= EV-BCWS
Negative Value of SV indicates time overrun. In the above example, SV is,
SV (In cost terms)= NRs. 750,000- NRs. 850, 000
SV (In cost terms)= NRs. (-) 100, 000
The Project is equivalent of NRs. 100,000 behind schedule.
Schedule Performance
Schedule Performance can be obtained by dividing Earned Value EV by
Budgeted Cost of Work Schedule BCWS. It can be expressed as:
Schedule Performance= EV/BCWS
In the above Example,
Schedule Performance = NRs. 750,000/NRs. 850,000
= 0. 8823
Schedule Performance is only 88.23 % of that planned.

Final Completion Time Forecasting= 50 weeks/ 0.8823

= 56.67 Weeks
The project will be 6.67 weeks late, if there is no change in performance.

7
 Project Management Information System
Project Management
Information System

Example - Screen Layout

Main screen
(Headquarters)
Site query
(Headquarters)
Monthly business performance
(Headquarters) Project Management
Information System

Real-time Site monitoring Main screen Monthly work status input

(Headquarters) (Site) (Site)

Process photograph & slide show Organization Chart Document management

(Site) (Site) (Site)

Drawing management Weekly safety management status Process photograph management

Contact us
(Site) (Site) (Site) Homepage http://www.hit.co.kr
E-mail global_business@hit.co.kr
Tel +82-2-2129-4387
Fax +82-2-2129-4072
INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY
Address Kukdong Bldg., 6th Floor, 60-1 Choongmuro-3Ga, Choong-Gu,
Seoul, Korea 100-705
 Project Management Information System

Project Management
Information System Flow Diagram
PMIS supports information sharing and cooperative work among various business entities (headquarter/field,
Conceptual Design
The PMIS server resides at headquarter office while each site accesses the server to process the tasks of each site. The various
customer/architect/supervisor/constructor/affiliates) and provides management information to managers during projects. The outputs or reports are stored in the server, and these will be used for management information. Employees at each site can download
knowledge management system is supported by managing results after the completion. the drawings from the server for immediate use, so that information sharing is available among headquarter/site/affiliate/customer.
The application of IT in the construction sector has shown considerable success in administrative processes
such as financing and accounting; however, while construction is a field-oriented industry, the system
implementation for collaboration among business entities to support engineers in site is still in its early stage.
PMIS implement business management system to overcome shortcomings of headquarter-oriented ERP ERP
Information for manager ERP ERP
systems such as insufficiencies in field monitoring, reporting system between headquarters and site, difficulties Information HR/Payroll Business Rentals Finance/ Material Construstion
Management Accounting Management Management
of drawing transfer or recycling by establishing systematic process of reporting and communication, cooperating HR/Payroll
ERP management
with sharing of related information and knowledge among field business entities. information ▶ HR/Payroll
ERP manager
Financial ▶ Financial management
Management
Statement ▶ Business management Strategy
Site report Integrated Integrated
UI PMIS(Construction) DB Headquarters
Site
PMIS is ideal system for all companies which intend to implement business management manager
Site report, Project management
system prior to introduction of ERP as well as the construction company who needs information such as Site status, HR Cost Business expense/ Site
information
Drawings/
documents
Construstion
management
Headquarter
processes Community
- Drawing
Project information distribution
comprehensive management of information and outputs within the entire lifecycle from problems, profit/loss ▶ Construction ▶ Drawing ▶ Process ▶ Construction ▶ Board
Administrators Customer - Sent/Received
Overview management photos status report ▶ Headquarter
documents
beginning to end of the construction site and a business management system enabled by of Business division ▶ Bird’s eye view
▶ Organization
▶ Specification
management
▶ Schedule
management
▶ Business
performance report
mail
▶ Site mail - Work report
EKP
IT prior to ERP implementation. Project monitoring Chart
▶ Site Monitoring
▶ Received/
Sent document
▶ Quality
management
▶ Bill collection report
▶ Withdrawal project
▶ Electronic
approval
& control PMIS(Construction related) Architect management ▶ Constructio reports
- Document transfer ▶ Conference status Site
- Managing information Records Data management
▶ Site information
- Technique/Method with integrated DB
- Defect/Repair ▶ Drawing/document Management Internet
▶ Construction Status Report ▶ Construction management Supervisor
- Work report ▶ Headquarter Work management
Drawing/Document ▶ Resource management
▶ Work Report
- Safety/Quality management
▶ Quality/Safety/Environment
EKP
Management system
- Process management ▶ Community
- Field information Headquarter - Completion result Electronic
Site - Construction Drawing/Specification Affiliates Approval
- Business performance Personnel - Drawings/Documents
- Video conferencing, cctv ▶ Provide optimized function
- Billing Information (Sent/Received)
- Test running - Basic project information E-mail for each site:
- Progress report - Personalization of site tasks

Knowledge
management

Headquarters PMIS Affiliates Construction site Architecture site Machine site Electricity site Overseas site

Additional Options
functions

▶ SMS ▶ e - Contracting
System Menu (Headquarters) ▶ Mail
▶ System
▶ Electronic tax
invoices
System Menu (Site)
Customer Management ▶ Work personnel
management
▶ Affiliates management Management Information ▶ Web camera,CCTV Construction Management System
- Daily work report ▶ Videoconferencing
▶ Cooperation & Community
- Work instructions
- Sending/Receiving ocument - e-Contracting
- Schedule management - Achievement management Site Drawing/Document Construction Resource Quality/Safety System
Site Contract Bill collection / Budget / Drawing/Document Headquarter
- Document/Drawing management Sales/Profit Status Resource Status Information Management Management Management /Environment Management
Information Information Receivables Performance status Management
- Process photography management ▶ Business Overview ▶ Architectural ▶ Site photograph ▶ Site status ▶ HR management ▶ Quality ▶ WBS management
▶ Site Overview ▶ Contract status ▶ Sales summary ▶ Deposit / Withdrawal ▶ Budget planning ▶ HR status ▶ By project ▶ Organization Chart drawings management - Contract details - Plan/Status training/inspection ▶ OBS management
▶ Organization Chart ▶ Subcontracting status ▶ Profit / status ▶ Performance ▶ Outsourcing status ▶ File Search
Project Management Information System

- Headquarter, Site ▶ Construction ▶ Schedule - Achievements ▶ Material ▶ Safety ▶ Material code

▶ Report Issues ▶ Affiliates information Loss summary ▶ Receivables status summary ▶ Material status drawings management management training/inspection management
- Customer - Plan /
▶ Construction status ▶ Receivables ▶ Budget / - Affliates ▶ Specifications ▶ Process status Performance - Plan/status ▶ Environmental ▶ Equipment code
▶ Shortcoming management Performance status
Features & Benefits Reasong
▶ Bird’s eye view ▶ Received ▶ Shortcomings and ▶ Business ▶ Equipment training/inspection management
▶ Real-time site documents remedies performance management ▶ Safety cost ▶ Job code
Overcome plans ▶ Sent documents ▶ Schedule management management
monitoring ▶ Bill Collection report - Plan/status
▶ Emergency ▶ Conference records management ▶ Cancellations ▶ Safety ▶ Position code
▶ Information sharing and real-time business ▶ Site monitoring for process status by business unit (Individual site Communication management ▶ Process estimation (within organizations management
available among customer, supervisor, affiliate and architect or Grouping of construction sites classified by types) netwoork ▶ Document folder management 3 months) ▶ Disaster status ▶ Graphs
by using single Web-based interface ▶ Flexible interface with other systems (ERP etc) ▶ Process ▶ Business report data ▶ Hardcopies
photographs
▶ Drawings and documents available in site (Same as headquarters) ▶ Empower each business division for its business
▶ Knowledge Management of field accumulated data (Defect
cases/Safety management cases/new construction methods)
 MENG 344
Work Analysis and Design
Method Study

Lotfi K. Gaafar
Based on Introduction to work study. 3rd ed. International Labor Office, Geneva, 1992.

October 03 Lotfi K. Gaafar 1

Work Study

Work Study is the systematic examination of the

methods of carrying on activities so as to
improve the effective use of resources and to set
up standards of performance for the activities
being carried out.

October 03 Lotfi K. Gaafar 2

1
 Method Study
Method study examines the way a task (changing the clutch on a
car, preparing a flower bed for planting, cleaning a hotel room) is
done. The industrial engineer has an eye on operational
efficiencies and costs, quality of processes, service reliability,
staff safety etc. Method study techniques are applicable from
factory/workshop manufacturing to cabin crew activities on an
international flight and office clerical work.

A collection of techniques used to examine work - what is done

and how it is done - so that there is systematic analysis of all the
elements, factors, resources and relationships affecting the
efficiency and effectiveness of the work being studied.
October 03 Lotfi K. Gaafar 3

The Human Factor in The

Application of Work Study
Management

Work Study
Specialist

Supervisor Workers

October 03 Lotfi K. Gaafar 4

2
October 03 Lotfi K. Gaafar 5

Work study and the Management

§ Importance of management.

§ How to gain the management support:

l Make them feel that it is not their fault.

l Make them understand the purpose and

techniques of work study.

October 03 Lotfi K. Gaafar 6

3
 Work Study and the Supervisor
The importance of the supervisor:
l Mostly affected by work study.

l A personal challenge.

l Responsibilities are taken away.

October 03 Lotfi K. Gaafar 7

Work Study and the Supervisor

Do’s and Don’ts
l Never give a direct order to a worker.

l Always refer worker’s questions to the supervisor.

l Never express opinions to workers.

l Don’t allow worker’s to get you to alter decisions made by the

supervisor.

l Seek the supervisor advice whenever possible.

l Always be introduced to workers by the supervisor.

October 03 Lotfi K. Gaafar 8

4
 Work Study and the Worker
§ Work study improves industrial relations:
l Workers feel that the management cares for
them.
l Workers discover that there are managers who
highly understand their job.
l Improving the feeling of confidence.
l Workers are more able to carry out their jobs.

October 03 Lotfi K. Gaafar 9

Work study and the Worker

§ Why workers resist the work study:

l It will change their familiar work methods.

l Many workers resent being timed.

l Fear of being fired.

October 03 Lotfi K. Gaafar 10

5
 Problem Solving
§ Problem definition
l statement of purpose, goal, objective
l criteria of judging successful solution
l output requirements
l completion date
§ Analysis of problem
l constraints or specifications
l description of the present method
l review problem definition and criteria

October 03 Lotfi K. Gaafar 11

Problem Solving

§ Search for possible solutions

l identify the basic cause that creates problem;
l eliminate all unnecessary work
l combine operations or elements
l change sequence of operations
l simplify the necessary operations
§ Evaluation of alternatives
l in terms of criteria and original specification

October 03 Lotfi K. Gaafar 12

6
 Problem Solving

§ Recommendation for action

l written reports to senior managers
l presentations to senior managers and shop floor
employees
l development of soft skills, listening,
negotiating,
§ Marketing recommendations
l target relevant groups

October 03 Lotfi K. Gaafar 13

How do we measure performance?

§ Profit
§ Financial measures
§ Productivity – output/input ratios
§ Cycle time

October 03 Lotfi K. Gaafar 14

7
 Possible Performance Measures
§ Quality expressed as % scrap value, % returns, %
downtime
§ Costs expressed as inventory turnover, value added
to incoming material
§ Delivery expressed as % on time delivery, cycle
time
§ Flexibility as Average number of setups /day, % of
common parts/product
§ Innovation as % sales from products introduced in
last 3 years

October 03 Lotfi K. Gaafar 15

Method Study
To Simplify the job and Select the job to be studied
develop more economical
methods of doing it
Record by collecting data or by direct observation

by Challenging purpose, place, sequence,

Examine and method of work

new methods drawing on contributions of

Develop those concerned

Evaluate results of different alternative solutions

Define new method and present it

new method and train persons in applying

Install it

and establish control procedures

Maintain
October 03 Lotfi K. Gaafar 16

8
 Select – Where to Look
§ Poor use of resources Select

§ Bad layout Record

Examine
§ Bottlenecks
Develop

§ Inconsistent quality Evaluate

§ High fatiguing work Define

§ Excessive overtime Install

Maintain

§ Employee’s complaints

October 03 Lotfi K. Gaafar 17

Select – Economic Considerations

Will it pay to begin, or continue, a method study
of this job? Select

Record

§ Key profit- generating operations Examine

Develop
§ Key costly operations Evaluate

§ Repetitive work Define

§ Long travels Install

§ Excessive overtime Maintain

October 03 Lotfi K. Gaafar 18

9
 Select – Technical Considerations
Desire to acquire more advanced technology
Select

Record

§ Extensive paperwork Examine

Develop
§ Repetitive work (automation) Evaluate

§ Hazardous work Define

§ Inconsistent quality Install

Maintain

October 03 Lotfi K. Gaafar 19

Select – Human Considerations

Workers satisfaction/resentment
Select

Record

§ Satisfaction level Examine

Develop
§ Start with non-controversial jobs Evaluate

§ HSE Define

Install

Maintain

October 03 Lotfi K. Gaafar 20

10
 Select – Limiting the Scope
Setting boundaries and determining content
Select

Record

§ One operation or a sequence Examine

Develop
§ The whole operation or part Evaluate

§ Which aspect: worker, materials, Define

equipment, … etc. Install

Maintain

October 03 Lotfi K. Gaafar 21

Select – Possible Results

§ Increased production rate Select

§ Reduced cost Record

Examine
§ Less labor, materials, or equipment
Develop

§ Improved quality Evaluate

§ Improved safety Define

§ Reduced scrap Install

Maintain

§ Improved standards of cleanliness

October 03 Lotfi K. Gaafar 22

11
 Select – Pareto Analysis
Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 23

Record- Symbols
Operation (Make ready, Do, Put away)
Select

Inspection Record

Examine

Transport Develop

Evaluate

Delay Define

Install

Maintain
Storage

October 03 Lotfi K. Gaafar 24

12
 Record- Symbols
Operation (Make ready, Do, Put away)
Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 25

Record- Symbols

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 26

13
 Record- Symbols

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 27

Record- Symbols

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 28

14
 Record- Symbols

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 29

Record- Charts and Diagrams

Outline Process Chart
Flow Process Chart (Worker, Material, Equipment)
Two-Handed Process Chart
Procedure Chart Select

Simultaneous motion Cycle Chart Record

Examine
Multiple Activity Chart
Develop

Flow Diagram Evaluate

String Diagram Define

Cyclegraph Install

Chronocyclegraph Maintain
Travel Chart
October 03 Lotfi K. Gaafar 30

15
 Record- Example
Outline Chart

Turn shank Face both sides Face, turn, cut

Remove chip Drill hole Face opposite end

Dimensions Final check Dimension and finish

Degreasing Straddle mill four flats

Cadmium plating Remove burr

Final inspection of machining

Final check
Select Degreasing

Record Cadmium plating

Final check
Examine

Develop Assemble and drill

Evaluate
Fit stop pin
Define

Install Final check

Switch Rotor
Maintain
October 03 Lotfi K. Gaafar 31

Record- Example

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 32

16
 Record- Example
Outline Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 33

Record- Example
Flow Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 34

17
 Record- Example
Flow Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 35

Record- Example
Flow Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 36

18
 Record- Example
Flow Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 37

Record- Example
Flow Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 38

19
 Record- Example
Multiple activity
Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 39

Record- Example
String Diagram

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 40

20
 Record- Example
String Diagram

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 41

Record- Example
Travel Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 42

21
 Record- Example
Two- handed
process Chart

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain
October 03 Lotfi K. Gaafar 43

Examine- The Questions

Purpose: What is actually done?
Why is it necessary?
Place: Where? Why?
Sequence: When? Why? Select

Person: Who? Why? Record

Examine
Means: How? Why?
Develop

With a view to: Evaluate

Eliminate Define

Combine or Rearrange Install

Simplify Maintain

October 03 Lotfi K. Gaafar 44

22
 Examine- Secondary Questions
Purpose: What is done?
Why is it done?
What else might be done?
What should be done? Select

Record

Examine

Develop

With a view to: Evaluate

Eliminate Define

Simplify Install

Maintain

October 03 Lotfi K. Gaafar 45

Examine- Secondary Questions

Place: Where is it done?
Why is it done there ?
where else might it be done?
Where should it be done? Select

Record

Examine

Develop

With a view to: Evaluate

Combine or Rearrange Define

Install

Maintain

October 03 Lotfi K. Gaafar 46

23
 Examine- Secondary Questions
Sequence: When is it done?
Why is it done then?
when might it be done?
When should it be done? Select

Record

Examine

Develop

With a view to: Evaluate

Combine or Rearrange Define

Install

Maintain

October 03 Lotfi K. Gaafar 47

Examine- Secondary Questions

Person: Who does it?
Why does that person do it?
Who else might do it?
Who should do it? Select

Record

Examine

Develop

With a view to: Evaluate

Combine or Rearrange Define

Install

Maintain

October 03 Lotfi K. Gaafar 48

24
 Examine- Secondary Questions
Means: How is it done?
Why is it done that way?
How else might it be done?
How should it be done? Select

Record

Examine

Develop

With a view to: Evaluate

Simplify Define

Install

Maintain

October 03 Lotfi K. Gaafar 49

Develop

New Designs
Multidisciplinary Teams
Select
Worker Involvement
Record
Quality Circles
Examine

Simple Ideas ( Spring Loaded Table) Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 50

25
 Evaluate

Multiple Improvement Ideas

Consider costs, benefits, and drawbacks
Select
Report (ABC, Accurate, Brief, and Clear)
Record
Example
Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 51

Define
The written standard practice
Prepare a written standard practice, also known as an
"operative instruction sheet". This serves several
purposes
Select

1. It records the improved method for future reference. Record

2. It can be used to explain the new method to Examine

management, supervisors and operatives. It also advises Develop

all concerned, including the works engineers, of any
Evaluate
new equipment required or of changes needed in the
layout of machines or workplaces. Define

3. It is an aid to training or retraining operatives. Install

Maintain
4. It forms the basis on which time studies.

October 03 Lotfi K. Gaafar 52

26
 Define
The written standard practice outlines in simple terms the
methods to be used by the operative. Three sorts of
information will normally be required:
(1) The tools and equipment to be used and the general
Select
operating conditions.
Record
(2) A description of the method. The amount of detail
Examine
required will depend on the nature of the job and the
probable volume of production. For a job which will Develop

occupy several operatives for several months, the Evaluate

written standard practice may have to be very detailed,

Define
going into finger movements.
Install
(3) A diagram of the workplace layout and, possibly,
Maintain
sketches of special tools, jigs or fixtures.

October 03 Lotfi K. Gaafar 53

Define

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 54

27
 Install
Installation can be divided into five stages, namely:
(1) Gaining acceptance of the change by management.
(2) Gaining acceptance of the change by the Select

departmental supervision. Record

There is no point in trying to go any further if this Examine

approval and acceptance have not been obtained. Develop

(3) Gaining acceptance of the change by the workers Evaluate

and their representatives.

Define

(4) Preparing to make the changes. Install

(5) Controlling the changeover. Maintain

October 03 Lotfi K. Gaafar 55

Install
Training
May use films to demonstrate the old and the new methods.
Films are particularly valuable when retraining.
Develop the habit of doing the job in the correct way. Select

Record
Train to follow a numbered sequence illustrated on a chart.
Examine
Learning curves
Develop

In the first stages of learning, rests between periods of practice Evaluate

should be longer than the periods of practice themselves.
Define
When the operative has begun to grasp the new method and to Install
pick up speed, rest periods can be very much shorter.
Maintain

Nursing the new method.

October 03 Lotfi K. Gaafar 56

28
 Install

Select

Record

Examine

Develop

Evaluate

Define

Install

Maintain

October 03 Lotfi K. Gaafar 57

Maintain

workers should not be permitted to slip back into old Select

methods, or introduce elements not allowed for, unless Record

there is very good reason for doing so.
Examine

To be maintained, a method must first be very clearly Develop

defined and specified.
Evaluate

Assign a specialists permanently. Define

Formal review. Install

Maintain

October 03 Lotfi K. Gaafar 58

29
Method Study in the Office
Offices use resources, must be used efficiently.
Percentage of workers in offices continues to increase.
Administrative costs (overheads) must be controlled.
Introduction of advanced technology (machinery).
In most offices, most of the work is routine.
Look for areas or activities that:
Account for a significant proportion of office labor costs.
Are producing large numbers of errors or serious errors.
Are creating high levels of dissatisfaction.
Need to change in response to some external change.
Quality circle.

October 03 Lotfi K. Gaafar 59

Method Study in the Office

Most office work can be placed on a hierarchy which
includes systems, procedures, activities and methods.

October 03 Lotfi K. Gaafar 60

30
Method Study in the Office
Use the columnar chart form in which each column represents
one department or section of the organization (figure 60).

October 03 Lotfi K. Gaafar 61

Method Study in the Office

Design of forms

Naturally, a document or form should be examined together with the

procedure in which it is used. Changing a system or procedure may have
automatic implications for forms used. Forms themselves should be
examined when the procedure itself has been examined and improved or
validated. Examination of a form follows the basic critical examination
process, asking:

Why is the form necessary?

What information does it convey? Who uses it?
When do they use it? Where is it used?
How is it used? (Is the form produced by a computer, are entries typed on to
the form, is it filled in manually, etc.?)

Then examining and evaluating alternatives.

October 03 Lotfi K. Gaafar 62

31
Method Study in the Office
Design of forms

When designing forms we are trying to make the form:

compatible with its intended use
easy to complete
easy to use

Consideration must be given to: paper size; paper weight;

shape;
color;
maintaining any house style or corporate identity;
and balancing these with the cost involved.

October 03 Lotfi K. Gaafar 63

Method Study in the Office

Details that affect design are:
the filing/retrieval process;
the routing of the form throughout the organization
the degree to which additional entries are made on the form at subsequent stages);
the nature of data entered on the form and the degree to which they can be grouped.

October 03 Lotfi K. Gaafar 64

32
Method Study in the Office

Control of forms
The most important part of controlling forms is to
undertake regular audits to discover if each form is still
necessary to serve a particular business function
(MAINTAIN).
Where the purpose of the form is still valid, questions must
be asked about the environment in which the form operates
and whether changes here, for example, in technology or
filing methods require changes to be made to the form.

October 03 Lotfi K. Gaafar 65

Method Study in the Office

Control of forms
Other items to be considered are:
The production method:
How is the form produced and are there now better or cheaper ways?
How much stock of each form is held, and where is it held? Is this
appropriate to the use of the form?
How are supplies to users reordered?
How is stock issued to users?
How is issued stock tracked?

October 03 Lotfi K. Gaafar 66

33
Method Study in the Office
Control of forms
What is the useful life of information on the form? Are there any
legal constraints on disposal?
How do we ensure that forms are disposed of, after their useful life is
ended (to release valuable space)?
Are there security restrictions on disposal (should forms be shredded
or burnt)?

October 03 Lotfi K. Gaafar 67

Office Layout
Office layout study should consist of the following steps:
Record details of the major systems in use in the office.
Record details of the clerical procedures that support those systems.
Examine the working methods of those procedures and carry out a basic method study of each
one.
Carry out a capacity assessment of each part of the procedure
Analyze volumes of output and question the senior managers to discover likely future trends.
Identify communication and contact paths and frequencies.
Design individual workstations ( ergonomics)
From volume and capacity data, calculate total workstation requirements.
Decide on basic type of layout.
Identify any "external" constraints.
Draw up a schematic layout
Investigate available hardware solutions
Discuss the provisional layout with both the users
Modify the layout in accordance with the results of discussions and prepare the proposed layout.

October 03 Lotfi K. Gaafar 68

34
Top 10 Sources of Project Failure Page 1 of 3

Events Almost Daily Web Log What's new?

Services Miscellany Questions? Comments?

Strategy & Alignment Operational Problem Solving Project Management Implementation & Change Management

Top 10 Sources of Project Failure I don't like the sound of

all those lists he's
making - it's like taking
too many notes at
Do any of these conditions exist in your organization? school; you feel you've
achieved something
when you haven't. --
Do you see the possible linkages between them and poor project
Dodie Smith, I Capture
performance? Think about whether you are doing anything to the Castle, 1948
address these potential roots of problems. If not, then you might
be stuck at current performance levels Discuss Critical Chain -
An email-based discussion
1) Failure to appreciate the impact of a multi-project group
environment on single project success. (More...)
Frequently Asked
Questions about Critical
1 a) Trying to put 10 pounds of projects Chain-based project
through a 5-pound pipeline in a multi- Management
project environment.
Related links:

1 b) Wasting of resources through

Check Out the Following
dedication to projects, making them Links for More About the
unavailable to support other projects. TOC Approach to Project
Management:

1 c) Failure of management to provide real

Critical Chain and
guidance on priority of projects before they Risk Management -
are planned and promised. Protecting Project Value
from Uncertainty -- Project
management is the
1 c1) As well as the flip side, practice of turning
ignoring rational plans and uncertain events into
certain promises. If so,
promises for perceived, but then project management
questionable, priorities. As an is an extended excersie in
explanation of this, IMHO, risk management. The
core concepts underlying
project priorities are part of
Critical Chain-based
the initiation phase. Once project management
promised and launched, all directly support risk
project have equal priority -- management and are
described in this paper,
to complete when and how expanded from one
promised -- and deserve presented at PMI's 2001
attention only proportionate to National Symposium.

the threats to that promise.

Getting Out From Between
Parkinson's Rock and
1 c2) Another flip side Murphy's Hard Place --
regarding priorities -- failure of This first link will bring up
a paper based on a poster
management to kill projects presentation originally
when their reason for given at the 1998 New
existence goes away. Jersey PMI Chapter's
annual symposium,
honored with a "best of
2) Irrational promises made due to a failure to take the show" award by
attendees, and later
into account the variable nature of task performance. turned into an article
(More...) published in PMI's PM
Network magazine.

http://www.focusedperformance.com/toptenpm.html 27/07/2009
Top 10 Sources of Project Failure Page 2 of 3

3) Irrational promises made due to a failure to take Program Management --

Turning Many Projects into
into account the statistical nature of project networks. Few Priorities with TOC --
(More...) This link will lead to a
paper on the key
attributes of a TOC Multi-
4) Insufficient identification of dependencies necessary Project Management
to deliver the project. (More...) environment. (Most
projects are performed by
resources shared with
5) Focus on (and active management of) only a other projects. It can be
portion of what should be the full project -- a true deadly to ignore the
resulting interactions, no
bottom-line value adding outcome for the sponsoring matter how well you
organization. (More coming...) manage single projects.)
This paper was originally
presented at PMI's Global
6) Reliance on due-date, train-schedule, and actual- Symposium in Philadelphia
against-budget-to-date performance to drive project in October of 1999 and is
performance, resulting in the wasting of any safety included in the
proceedings of that
included in the project (to account for 2 and 3 above) conference. Audio tapes of
and in the effects of Parkinson's Law -- Work will the presentation are also
expand to fill (and exceed) the time allowed. The available from PMI.

whole concept of "time allowed" is a major culprit.

Project Portfolio
(More...) Management - The First
Cut is the Kindest Cut -
7) Wasting of resources through underutilization One of the common
problems faced by project-
because they aren't the "best resource" for the job. oriented organizations is
(More coming...) having too many projects
relative to their capacity.
Therefore, one of the first
8) Wasting of the "best" resources through over- things that needs to be
utilization, multi-tasking, and burn-out. (More done is to determine what
can be done is to
coming...) determine what should be
done . . . and what should
9) Delivering original scope when conditions/needs not be done . . .

change. Flip-side: accepting changes to scope without

Consumption of Effort and
sufficient analysis of impact on the project (or on other Conservation of Energy for
projects). (More coming...) Project Success -- This link
will lead to an essay on
the necessity for
10) Multi-tasking, multi-tasking, multi-tasking, multi- managing protective
tasking, and multi-tasking. Commonly thought of as a capacity in multi-project
key problem in multi-project environments, where environments to get the
most organizational
resources are expected to address tasks from different throughput from the
projects in a coincident time-frame, multi-tasking also efforts of project
impacts single project durations (and wastes safety) resources.
when dedicated resources are expected to wear
several hats. (More... and more... and more...)

"Quick and Dirty"

Commentary . . .

Critical Chain Basics

A Critical Chain Schedule

The Sooner You Start, The

Later You Finish

Multitasking Multiplies
Lead Time

http://www.focusedperformance.com/toptenpm.html 27/07/2009
Top 10 Sources of Project Failure Page 3 of 3

Discuss Critical Chain -

An email-based discussion
group

Who is FP? Web Log Miscellany

You can reach Focused Performance at:

601 Route 206, Suite 26-451, Hillsborough, NJ 08844
Voice: 908-874-8664
Contact Focused Performance

http://www.focusedperformance.com/toptenpm.html 27/07/2009
Fundamentals of Project Management

CASE STUDY
Improper Project Scheduling
Background
ABC Company is a private firm with a good track record in water resource management.
Most of the projects completed by ABC were finished by their respective contracted completion
dates. The success of ABC is based upon the firm’s philosophy of recruiting good personnel and
ensuring complete support from the firm’s head office administration to its on-site operations. An
economic boom and associated demand for energy have resulted in the firm getting more works
than it had ever experienced before. Consequently, an adequacy in the firm’s human resources has
resulted which in itself is a major problem. To try to solve this problem, ABC has started to recruit
many young inexperienced Engineers having potentials of becoming project Engineers for many of
the firm’s projects.

Organizational Practices of ABC

A project Engineer is completely responsible for on-site operations. Completing a project
within the established schedule and with the desired quality are the major tasks of a project
Engineer. Furthermore, a project Engineer has to direct foremen and coordinate sub-contractors to
ensure the smoothness of onsite operations.
No formal organizational procedures for quality or schedule control exist. Mostly, all onsite
planning and control procedures or systems depend upon the project Engineer in charge.
Cost control is centralized. On site management (Project Engineer) is not responsible for
material and equipment cost. Only labor budget costs are transferred to the site for control purposes.
Material and equipment procurement too is centralized. The Project Engineer has to place an
order to the head- office procurement department with specified material and equipment amounts
and quantities and their required delivery dates.

Project Information
John is a new Project Engineer with ABC and is in charge of a Flood Water Conservation
(High Dam) project. Before coming to work with ABC, he worked for three years with a good
management consultant firm as an on-site Engineer for high dam construction. John’s previous
experience is more on the technical engineering for dam construction such as concrete placing
procedures, soil mechanics etc. He knows his weaknesses in the construction management aspects
of this project and makes an effort to talk to ABC’s experienced Project Engineers and learn more
from them as often as he can.
Project is a turnkey type with contract duration of 2 years. Hydrological study, geo-technical
study, surveying, design, drawing and detail costing are over. Site (excavation, piling, etc.),
structural and concreting works are now to execute by ABC. Other work items may be
subcontracted either for labor only or all costs depending upon the nature of these works.
John has seven foremen and one engineer working with him. Of the eight foremen, Bob,
Neil and Peter are highly experienced senior foremen with ABC. Scott, Tom and Michel are new
foremen with no experiences. Carl is an experienced senior foreman that John had brought along
from his former company. Dave, the Engineer, is a fresh graduate who has been sent by ABC to
work with John.
Question
Based on the provided information, what do you think about the likelihood of the project being
completed on time? Please provide four good reasons to support your thinking.
Fundamentals of Project Management

Home Assignment

1. Choose a project of your own convenience. Develop a Work Breakdown Structure (WBS)
for the project. Note that the WBS should have minimum three distinct levels.

2. A project consists of 16 activities having their predecessor relationship as follows:

(a) A is the first activity of the project.
(b) B, C and D follow A and can be done concurrently.
(c) E and G can not begin until C is completed and can be performed simultaneously..
(d) F is the immediate successor to activities B and E.
(e) H and K run in parallel, and both succeed G.
(f) L succeeds F and H.
(g) I and J are immediate successor activities to activity D.
(h) M and N are immediate successor to I and K. However, both M and N can be
performed concurrently.
(i) Activities O and P are the last activities. Activity O is the immediate successor to N
and L. activity P is the immediate successor to M and J.
Draw the AOA network and number the events.

3. A project consists of following activities with their durations and precedence relationship as
presented in tabular form below.
Activity Precedence Duration
A - 3
B A 15
C - 5
D C 20
E A 5
F A 1
G F 25
H G 10
I H, K 3
J B 5
K J 10
L B 1
M L 10
N D, E 10
O I, M, N 10

Draw AON diagram indicating ES, EF, LS, LF and earliest finish time of the project. Also
find out the Critical Path and calculate the total and free floats of each activity.

4. Briefly discuss the status and difficulties of Project Planning and Implementation in Nepal.
What are your suggestions for improvement?
Fundamentals of Project Management

Assignment 1
1. Why do projects fail in Nepal? Give your suggestions for improvement.
2. What do you mean by Project Environment? Describe the different types of project
environments and explain how they influence the project.

Assignment 2
1. What do you mean by Project Monitoring and Evaluation? What are the status and
practices of Project M& E in Nepal?
2. What is Project control? Discuss the Project Control Cycle.

Assignment 3
1. Define ‘Optimistic time estimate’, ‘Pessimistic time estimate’ and ‘Most likely time
estimate’. Differentiate clearly between most likely time estimate (tL), mean time (tm)
and expected time (tE).
2. What is a Gantt Bar Chart? A project consists of 8 activities A, B, C, D, E, F, G and H
with their times of completion as follows:
Activities Duration (weeks)
A 2
B 4
C 2
D 4
E 6
F 4
G 5
H 4
The precedence relationship is as follows:
• A and B can be performed in parallel
• C and D cannot start until A is complete.
• E can not start until half the work of activity C is complete
• F can start only after activity D is complete.
• G succeeds C.
• H is the last activity, which should succeed E.
Draw the bar chart. What is the total time of completion of the project? If there is increase of
2 weeks in time of completion of activity A, what will be the corresponding increase in the
total time of the completion of the project.

3. What are different types of Project Organizations? Give a brief description of the
advantages and disadvantages of each.

Assignment 4
1. What is Monitoring and Evaluation of Project? Give a brief description of Project M& E
system of HMG, Nepal.