Master of Business Administration - MBA Semester 3 PM 0011 PROJECT PLANNING AND SCHEDULING (4 credits) (Book ID: B1237) ASSIGNMENT-

- Set 1 Marks 60 Note Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme. 1. Explain the usefulness of WBS in cost control (10 Marks)
Once the organization has developed its WBS, every cost estimate prepared should apply this structure. Properly structuring and applying the WBS will result in significant benefits in estimate preparation and in the estimates relationship with other project and financial tools. In the estimating process a consistent approach to estimating will emerge. This consistency in approach will soon increase accuracy and efficiency in preparation, modification and the review / validation process. Estimators will have the benefit of the WBS to use as a framework that acts to prompt input or note exclusions. The grouping of cost elements will speed preparation and clearly link relationships between scope items. When they exist as well as allow for cost models to easily be inserted or deleted in cost estimates. During the review process data will be easily comparable to past projects and other project professional will begin navigating the cost data with a known location for the information they seek. Estimate preparation with the WBS will allow for more consistent estimate preparation, which allows for faster revisions and easier reconciliations. By applying the WBS to the basis of estimate, scope of work narrative, schedule, procurement plan and fixed asset register, the WBS can provide the formatting of other data sources to enhance the accuracy, efficient revision, review and validation of the estimate. The ability to more fluidly between tools will eliminate continuous cross referencing, reconciliations and / or data mapping exercises. As the project progresses and increase activity the WBS continues to increase in usefulness. The baseline estimate should seamlessly transfer to the control estimate and cost reports. The procurement change management and performance measurement efforts are facilitated, as well as the ability to incorporate information from these efforts into revised forecasts and cost reports. When the WBS is structured to support contract packages, project teams can quickly review bids to determine where they may vary from plan. As these variances are identified, forecasts can be adjusted accordingly. Additionally the information can be used to develop initiation strategies by revising the procurement plan if needed.

Change management is supported by the WBS by allowing for the cost impact of change to be accurately incorporated into the forecast and quickly evaluated. Identifying, evaluating, and reporting the impact of change is critical to proactive project management. The ability to clearly communicate the impact of change is greatly enhanced by the baseline scope to cost relationship inherent in the WBS. Performance measurement is an integral part of preparing revised cost forecasts. Performance measurement consistent with the WBS allows for the earned value and productivity metrics to be quickly compared to the baseline estimate to identify any variance from plan. Again, this performance data can be used for trending and forecasting. The usefulness of WBS in cost reporting is its consistent presentation of cost data. From the original estimate through close out, the cost data (budgets, commitments, and expenditures) will be maintained in proper alignment and structure. This data alignment along with the grouping and roll-up drill down capability provided by WBS results in greater analytical and reporting capability.

2. Explain the method to estimate cost and create Budget

(10 Marks)

Calculate Cost of the project:-This process of the planning process group helps get an approx. idea of the monetary resource required for accomplishing the project. The quantity of this resource required is generally expressed in some currency. The major input required for calculating the cost of the project are: Scope Baseline: This is the component of project plan which gives information about the project scope, listed in the scope statement, lists the work breakdown structure and description of the WBS elements. Project schedule: In this stage we analyze the activity break-up and sequence and resource and duration requirement, identified in the pervious processes and put all this together to create schedule. Human Resource plan: This subsidiary plan of project management plan gives information about resource staffing and human resources labor charges and reward and recognition policy. Risk register: is document which lists the identified risks, risks which have already occurred in similar projects in the past, and cost involved in risk mitigation. Enterprise environmental factors: Information about organizational culture, processes, infrastructure, government standards, human resource data, PMIS, stakeholder information etc.

Organizational asset: This includes all process related assets, which an organization captures, which can impact project success. This can range from organization policies, procedure, processes to knowledge base created from previous project experiences. The tools and techniques used for estimating cost of the various activities and in turn the entire project are:

Expert Judgment: Although the techniques listed above are appropriate for identifying the project activities, but an experienced and skilled expert can help finalize the most appropriate activities. Analogous estimating: This estimating technique uses information from previous similar projects to calculate the duration. This methodology is cost effective and time saving but the result may not be very accurate. Parametric estimating: This technique uses historical data, i.e. information from similar previous projects and relationships between variables. This technique is more accurate then the analogous estimating. Bottom-up estimating PERT or three point estimating: Also known as three-point estimate is more accurate then the estimating techniques mentioned before. This estimate is calculated using the following formula:
Expected activity Duration (tE) = (tO + 4tM + tP)/6 Activity standard deviation tD = (tP - tO)/6 Activity Variance = tV = (tP- tO)2/6 The range of duration can be calculated: tE +or - tD Where tO Optimistic or activity duration in best scenario. tM Most likely or activity duration resource availability and dependencies are as assumed tP Pessimistic or activity duration in worst scenario.

Reserve analysis: contingency reserves or buffer may also be included in the schedule accounting for uncertain schedule.

Cost of Quality (COQ): like all other factors certain cost is attached to quality and the exact cost for quality cannot be calculated. Thus a small part is assumed and while estimating cost, it is necessary to add this assumed portion as well. Vendor bid analysis: A portion of the cost is also based on the bid responses and bids made by selected vendors. For estimating a correct cost, it is necessary to analyze the bids responses of the selected vendor. Finally the outcome of the project which is components of cost estimate would be: Activity Cost estimates: They are measurable calculation of the feasible cost required to complete project work. Basis of estimates: this includes information about how cost was estimated, assumptions made while estimation, constraints in the estimation process and possible range within which the estimated cost would lie. Create budget for the project:-As the approx. cost of the project is already estimated, now its time to cumulate the costs of all the activities of the project and create an approved cost baseline. This approved cost baseline will be the estimated cost minus the management reserves. The information required for determining the budget are: Activity cost estimate. Basis of estimates.

Scope Baseline Project schedule Resource Calendar Contract: This document provides information regarding the contract under which project was received, the cost factors. Utilizing the information listed in the documents described as inputs, and tools and techniques mentioned below, we can get an appropriate budget designed. Tools and techniques used are: Cost Aggregation: Are aggregated cost per work package, as per the WBS. Similarly cost for work packages are aggregated for higher level elements. Reserve analysis: Contingency reserves or buffer may also be included in the schedule accounting for uncertain schedule. Expert Judgment: Although the techniques listed above are appropriate for identifying the project activities, but an experienced and skilled expert can help finalize the most appropriate activities. Historical Relationships: This includes data from previous project which have been used in parametric estimation or analogous estimation techniques resulting in scientific model for forecasting entire project cost.
3.

Explain the steps to draw a CPA chart

(10 Marks)

Critical Path Analysis:-The critical path specifies the tasks on which the timely completion of the complete process depends. The tasks that fall on critical path should receive special attention by the project manager and the person to whom the task is assigned. As the project progresses, if tasks are completed either within or ahead of schedule, the critical path may shift. This can cause other tasks which may still be on schedule to fall on a new critical path. Two steps are used to draw CPA chart. They are explained below. Step 1: List all activities in the plan For each activity in the project, the information must be assembled in a certain way. The project planning process consists of the following: Setting the projects earliest start date Setting the projects completion date Determining task dependencies Identifying the tasks that can be done in parallel Identifying tasks that can be done sequentially and require the completion of other tasks before they can start Step 2: Plot the activities as a circle and arrow diagram Critical Path Analyses are represented using circle and arrow diagrams. The circles represent events within the project, such as the beginning and ending of tasks, they are also known as nodes. The numbers in the left half of the circle represents the node number. An arrow running between two circles represents the activity, the name of the activity is written below the arrow and the time for activity is shown above the arrow. For example here High Level Analysis is the activity and 1 Week is the time taken to complete High level Analysis.

By convention, all arrows run left to right. Arrows are also sometimes called arcs. An example of a very simple diagram is shown below.

High Level Analysis

While doing a task sequentially, one activity depends on the completion of the previous activity. The arrows for such sequential activity start at the completion event circle of the previous activity as shown in the diagram below:

9
Hardware selection

1
High level analysis

2
core module analysis

From the above diagram it is clear that: The tasks Select Hardware and Core Module Analysis starts only after 'High Level Analysis has been completed. The numbers in the circles at each end refer to the activities. For example, the task 'Core Module Analysis' is likely called as activity 2 to 3 and 'Select Hardware' as activity 2 to 9. In the diagram above, activities are 1 week long, 2 weeks long and 1 day long. Arrows in any case are all the same length. In the example above, you can see a second number in the top, right hand quadrant of each circle.

The above diagram shows all the actions that take place as part of the project. Observe that every event circle also has a figure in the bottom, right hand quadrant. It shows the earliest finish time that is permitted for the former activity if the project is to be completed in the minimum time possible. You can calculate this by starting at the last event and working backwards. The latest finish time of the former event and the earliest start time of the following event are the same for circles on the critical path.

4. Explain the different methods in solving linear programming problem (10 Marks)
Linear Programming Formulation:-The most basic mathematical program is the linear program (LP). An LP prefers to an optimization problem in which the objective and the constraints are linear in the variables to be determined. An LP can be expressed as follows: Minimize C1 X1 + C2 X2 +..Cn Xn Subject to A11x11+a12x2+..a1nxn<=b1 A12x12+a22x2+..a2nxn<=b2 Am1x11+am2x2+..amnxn<=bm The objective is the minimization of costs. The c1.cn vector is referred to as the cost vector. The variables x1 xn have to be determined so that the objective function c1 x1 + cn xn is minimized. The column rector refers to the level at which this activity j is performed. The b1 ..bm is referred to as the resource vector. The fact that in linear programming n denotes the number of activities and in scheduling theory n refers to the number of jobs is a more coincidence that in liner programming m denotes the number of resources and in scheduling theory m refers to the number of machines in a coincidence as well. The representation above can write in matrix form: Minimize - - C X Subject to A x <= b X >= O There are several algorithms or classes of algorithms for solving an LP. The two most important over are i) The simplex methods ii) The interior point methods A special case of the linear program is the so called transportation problem. In the transportation problem the matrix A has a special form. The matrix has mn columns and m + n rows and takes the form I0 0 0I 0 A= 00 I II I

Where the I is a row vector with n1s and the I is an n x n, identity matrix. All but two entries in each column (activity) of this A matrix are zero; the two none zero entries are equal to 1. This matrix is associated with the following problem. Consider a situation in which items have to be shipped from m sources to n destinations. A column (activity) in the A matrix represents a route from a given source to a given destination. The cost associated with this column (activity) in the cost of transporting one item from the given source to the given destination. The first m entries in the b 1.b m+n vector represent the supplies at m sources. While the last n entries of the b 1.b m+n vector represent the demands at the n different destinations. Usually it is assumed that the sum of the demands equals the sum of the supplies and the problem is to transport all the items from the sources to the demand points and minimize the total costs incurred.(when the sum of the supplies is less than the sum of the demands there is no feasible solution and when the sum of the supplies is larger them the sum of the demands an artificial destination can be created where the surplus is sent to at zero cost). The matrix A of the transportation problem is an example of a matrix with the so called total unimodularity property. A matrix has the total unimodularity property if the determinant of every square sub matrix within the matrix has a value I O or I. it can be early verified that this is the case with the matrix of the transportation problem. This total unimodularity property has an important consequence: if the values of the surplus and demands are all integers, then there is an optimal solution x1.xn, that is a vector of integers and the simplex method will find such a solution. Example 1: (Parallel machines and the transportation problem). Consider m machines in parallel. The speed of machine I is vi; There are n identical jobs that all require the same amount of processing, say 1 unit. If job j is processed on machine i, its processing time is 1/vi. Preemptions are not allowed. If job j is completed at c j a penalty hj (cj) is incurred. Let the variable xijk be equal to 1 if job j is scheduled as the r th job on machine I and o otherwise. So the variable xijk is associated with an activity. The cost of operating this activity at unit level is. Cijk = hj (cj) = hj (k/vi) Assume that there are a total of n x m positions (a maximum of n jobs can be assigned to any machine) clearly not all positions will be filled. The n jobs are equivalent to the n sources in the transportation problem and the n x m positions are the destinations. The first set of constraints ensures that job j is assigned to one and only one position. The second set of constraint ensures that each position i, k has at most one job assigned to it. Actually, from the LP formulation, it is not immediately clear that the optimal values of the variable xijk have to be either O or 1. A special case of the transportation problem is the assignment problem. A transportation problem is referred to as an assignment problem when n = m (the number of sources is equal to the number of destinations) and at an each source there is a supply of exactly one item and at an each destination there is a demand of exactly one item. The assignment problem is also important in scheduling theory. Single machine problems with the n jobs having identical processing times often can be formulated as assignment problems. Example 2: (Single machine and the assignment problem)

Consider a special case of the problem discussed in example 1 , namely the single machine version. Last the processing time of each job be equal to 1.

The objective is again h j (cj). So there are n jobs and n positions, and the assignment of job j to position k has cost hj(k) associated with it.

5. Write short notes on process review report

(10 Marks)

Process Review Report:-A company may decide to conduct process reviews in varying degrees of thoroughness, from totally comprehensive, to partial, to less formal and cursory. A formal comprehensive process review should be followed by a report. The report should contain as minimum the following. Current project status: The best way to do this is to use earned value analysis. However, when earned value analysis is not used, status should still be reported with as great accuracy as possible. Future status: This is a forecast of what is expected to happen in the project. Are significant deviations expected in schedule, cost, performance, or scope? If so, the report should specify the nature of the changes. Status of critical task: The report should describe the status of critical task, particular those on the critical path. Tasks that have high levels of technical risks should be given special attention, as should those being performed by outside vendors or subcontractors, over which the project manager may have limited control. Risk assessment: The report should mention any identified risks that could lead to monetary less, project future, or other liabilities. Information relevant to other projects: The report should describe what has been learned from this process review that can should be applied to other projects, whether in progress or about to start. Limitations of the process review: The report should mention any factors that may limit the validity of the process review. What should be monitored and reviewed? To keep things running smoothly, the following must be monitored for every project regardless of size or complexity. The completion of work packages as compared to the plan to check if the project is on schedule. The scope of work being performed to make sure the project does not have scope creep. The quality of the work being performed against the requirement of the project. The costs and expenditures as compared to the plan to check the budget. The attitudes of people working on the project or involved with the project including key stakeholders and management. The cohesiveness and cooperation of team members.

6. Substantiate the impact of Life Cycle Costing on new product selection and strategy (10 Marks)
Lifecycle Costing: This is an essential part of value management. It is a structured approach used to address all elements of the cost of ownership based on the anticipated life span of a project. The entire life of a project is the measurement of standard for life cycle costing. Life cycle costing differs from other costing methods because it normally includes revenue as well as material and labour costs. Life cycle costing can have dramatic impact on new product selection and strategy. By-products have greater cash flow after the main product have been sold. Successful projects: Successful projects return value to the business. Successful projects are relatively easy to identify. They are the project that improves processes or product reduce costs and operational efficiencies, make contributions to the technical and functional competence of the organization, or add capacity and capability to service customers and markets with greater satisfactions. They are the projects that make good as the promises of the project charter, deliver the intended scope and deliver that scope within a time frame commensurate with business objectives. Mindful of the fact that projects, all projects are one time temporary endeavors bordered with uncertainties and not blessed with errors, reducing opportunities of repetitive ongoing operations. The project manager faces many risks arising from internal stresses, and external controllable. The project managers mission is t hem to accomplish the assigned scope with the available resources, taking managed risks to do so. Really valuable projects enhance core competencies. Indeed for many companies, project management and the ability to execute projects as envisioned is a core competency. As defined by Gary Hamel and C.K Prahlad in their 1990 Harvard Business Review article, The core competence of the corporation and subsequently expanded in their 1994 book, competing for the future core competence are integrated bundles of staff, often cross departmental that provide business with gateway & future opportunities. To be a core competency in Hamel and Prahlad view, an integrated skill set must meet three tests. First, it must be employed to make a material contribution to customer value in the products and service offered by the business. Second a core competency must be competitively unique and add to the differentiation in the market between the firm and its competitors and substitutes. Finally a core competency enables extension of the business into new products and services. In project management the value is calculated as a Net Present Value, economic value ads or earned value. Overtime several models have evolved to describe other sources of business value that are effective tools for project managers. Project management are often called on to contribute to the selection of projects, to interpret the voice of the customer when setting scope to evaluate the discretionary investments in upgrades and enhancements throughout the life cycle and to assist with the roll out and deployment of the project deliverables to the end users and customers.