Professional Documents
Culture Documents
2010
Author(s): Wen Li
Xiao Ying (Chelsea) Wang
Bouy Lim
Matthew Santilli
James Sterling
Ray Uamang
Jason Heydon
Box Hill Institute | Executive Summary 0
Executive Summary
As part of this project we looked at the work breakdown structure and operational project design
and analysis, which include, budget, quality, human resources, communication, risk, procurement,
systems and processes. However, due to the limited nature of this project, we would only be
discussing the relevant theories and approaches used by the current business as part of their project
and operational plan.
After completing the project report, we have found that project planning is a complex
process, involving various sub elements such as budgeting, quality analysis/control, human resource
planning, communication planning, and risk analysis/mitigation and procurement strategy.
All in all, this project report has taught us a great deal about project planning procedures
and processes, which we could carry forward into our future assignments and jobs. Through this
project report write-up process, we have learnt about the finer points involved in human resource
and communication planning, where non-performing member of the group should be made to
contribute.
Table of Contents
Executive Summary................................................................................................................................. 1
The aim of this project is to provide students with the necessary skills to write a project plan, and
direct the student to learn the theoretical and structural basis of what it is composed of.
1.2. Authorisation
This project is authorised by Helen Bosa and David Eade from Box Hill Institute Centre for Business
programs. It is undertaken as part of the Planning Projects and Budgets unit cluster, which are the
core competency units for the Diploma of Business (Marketing) and Diploma of Business
(International Trade) students.
As part of this project we would look at the work breakdown structure and operational project
design and analysis, which includes, budget, quality, human resources, communication, risk,
procurement, systems and processes. However, due to the limited nature of this project, we would
only discuss the relevant theories and approaches used by the current business as part of their
project and operational plan.
Ideally, we would like to use books, periodicals and peer reviewed journal articles as much as
possible, it is however not always possible, due to the specific nature of our projects and the limited
resources made available to us. Therefore, secondary information sources from the web are often
used where primary sources are unavailable.
Our business goal for the project was, to start a business that imports second hand cars from Japan
to Australia. The grey import or parallel import involving second hand cars from Japan are quite
lucrative due to the following reasons:
The Work Breakdown Schedule (WBS) is a tabulated form of the Work Breakdown Structure. The
WBS is constructed by first starting with the end objectives, and then successively built up into
manageable components, in terms of size, scope, duration and sub tasks, etc. The WBS usually
allows the project manager to easily calculate the total HR costs of tasks and works involved in the
project, by simply multiplying the total man hours with the standardised hourly wage. The tabulation
of costs associated with each milestone and activity, allows the project manager and higher
management team to easily track spending and modify certain tasks to lower project spending.
However, unlike the Work Breakdown Structure, the cost of materials and equipments are not taken
account as part of the Work Breakdown Schedule, which needs to be accounted for as part of the
overall project budgeting process. The WBS also gives every team member a rough idea of who is
3.1. Budget
As any project manager would agree, the budgeting process is the most crucial element within a
project, and often than not it is the deciding factor for whether a project gets a go ahead from the
higher management within an organisation. Therefore, in order to properly manage a project, the
project budgeting must be accurate and reflects the actual future cost of the project to be
undertaken. However, not all project costs can be accurately predicted, as the changing global and
domestic market can drastically change the prices for different materials, equipments and labour
used within a project, this usually means a certain amount of elasticity or contingency must be built
into the project budget to factor-in these future uncertainties. Also, it is of great benefit to keep the
project life-cycle or schedule as short as possible, in order to maximise the chance that the project
will come at or under budget and finishes within the project schedule.
The project budget is usually separated into several elements, such as direct costs,
estimated costs, indirect costs, income, and profit margin. However, due to the limited scope of this
Direct Costs involved in a project similar to the one we are undertaking, would usually
involve the following elements:
1. Human Resources Cost - i.e. Wages, salaries, benefits and taxes, etc.
2. Suppliers/Permits/Insurances consumable items/supplies involved in the project, such as
special business/import permits, insurance coverage (i.e. marine insurance, cargo
insurances), computers, mobile phones, papers, etc.
3. Travel All travel related costs (i.e. hire car, plane tickets, accommodation costs, etc.).
4. Communication Cost All the phone (mobile, fixed) and internet (fixed and wireless internet)
costs used as part of the project.
5. Publications Printing and binding costs involved for publications, brochures, reports, etc
6. Consultant Fees Sometimes there are elements within projects where outside expert
advices are needed, which must be accounted for in the consultant fees.
7. Cost of Quality is the sum of costs a project will spend to prevent poor quality, and any
other costs incurred as a result of outputs of poor quality (i.e. waste, errors or failures, etc).
While, the direct costs involved in a project are usually quite straight forward to estimate,
the indirect costs on the other hand is not easily calculated with great degree of certainties. Indirect
costs are usually incurred by the organisation for common or joint objectives, which cannot be
identified specially with a particular activity or project (i.e. cost of having a CEO and various back-
office support staffs in an organisation, etc). However, due to the limited nature of our project, we
do not have much indirect costs involved, and we would discuss it further in the report.
As part of the risk management process in budgeting, we should make provision for possible
changes in the direct cost of project resources, materials, equipments, by introducing a contingency
factor into our overall budget of between 5 to 15 % for each direct cost category (i.e. equipment
costs, etc). The percentage contingency factor used for the direct cost category depends on these
several factors:
1. How far into the future the project activities are relatively to the time of budgeting.
We can usually work out the rate of possible increases, by looking at past trend in
pricing, then applying this rate with some adjustment to the contingency rate.
2. The importance of this equipment or resource in the project, and whether an
equivalent alternative can be found as a suitable replacement.
Box Hill Institute | Diploma of International BusinessAuthor(s): Wen Li 6
3. The availability of supply contract prior to use of the material, resource or equipment
can also affect the contingency rate. As certainty of events decreases the risk
associated with the supply of goods and services, which decreases the contingency
factor percentage.
3.2. Quality
Quality management is an important part of the overall project management process, as it ensures
that all project activities are effective and efficient, with respect to the project objective and scope.
Project Quality Management (QM) forms a continuous process that starts and ends with the project,
with regular QM activity during each stage of the project. The purpose of the QM is to prevent and
avoid poor quality outputs at the completion of the project, through continuous monitoring and
application of the quality processes in all parts of the project. QM would also detect any duplication
and inefficiency (i.e. people not putting in their share of workload, etc), and remove these
bottlenecks as soon as they are found through various options. Therefore, the QM would maximise
the values for the beneficiary and produce project outputs and deliverables that would meet or
exceed their requirements and expectations.
While, it is not within the scope of the project, the project team should develop a good
working relationship with key stakeholders, in order to understand what quality means to them.
Frequently, many projects have poor outcomes, due to the project team focusing too much on
meeting the written requirements for the main required project outputs, and ignoring the other
stakeholders actual needs and expectations for the project. Therefore, not only must the project
team meet the project scope on time and on budget, but it also has to achieve general stakeholders
satisfaction with project, through meeting of both stated and implied needs. Quality characteristics
of project usually include the following elements:
In order to meet the quality characteristics, a quality plan or quality material must be used
during the project implementation phase. The quality materials ensure the project team are
delivering the project outputs, according to the quality requirements in an efficient and effective
manner (refer to table 2).
While, the implementation of quality materials would ensure that everyone in the project
teams have a set of appropriate tools, to meet the requirements of the project. However,
appropriate quality control still needs to be in place, in order to check and review the quality of
project deliverables. These quality control events are usually referred to as Quality Events, which
are tabulated in table 3.
As part of the overall quality control, once a part of the project deliverables are rejected or
deemed unsatisfactory, then the appropriate actions must be undertaken to bring the rejected
product or services into compliance. However, the reworking usually takes substantial amount of
time and money, so it is best that it is caught early and prevented from re-occurring in the future. As
part of the error prevention process, adjustments must be made to the overall procedure and
necessary quality materials, so that the processes that produced the error or defects are eliminated.
These infrequent adjustments maybe incorporated into the overall Quality Improvement process,
which is a systematic approach to the processes of work that identifies and remove the waste, loss,
rework, frustration from the project, to produce a more effective, efficient, and appropriate project.
While, there are many different quality improvement processes, most share these same four steps:
1. Identify What you want to improve, which is usually the error or inefficiency identified
in the quality control processes.
2. Analyse Investigate the cause of problem and its implications to the project, which
maybe external or internal to the project.
3. Develop Generate potential solutions or changes that appear likely to improve the
problem or system, the project team brainstorms ideas and potential solutions to the
problem. After careful consideration the team decides and chooses the best alternative.
4. Test Make sure that any solutions are tested and before it is fully implemented.
People or human resource (HR) is the core determinant of a projects success, and most projects are
HR resource strained. Therefore, the management of HR within a project lifecycle has a major
impact on the projects success or failure. Human resource management involves leading,
communicating, delegating, motivating, team building, recruiting and appraising, etc. The HR plan
usually contains information for each human resource category, such as:
Additionally, the HR management plan also needs to account for the cost required for
staffing a particular project, which would then be used as part of the project budgeting and WBS.
The initial HR cost estimation may need to account for the following factors:
Can the HR be sourced internally, provided they meet the required skill level.
If sourced externally, work out the cost range for each HR category.
Specific office and material needed by each HR category.
The physical space available for use by the HR category.
Balanced ratio for private and public work space.
Finalise all the office equipment requirements and their cost.
Cost of conducting the team building exercises
Within the HR plan is the definition of the project team structure, which defines the roles,
responsibilities and relationships of the people managing and working within a project
organisational unit. While, most HR plan would also details the steps and requirements involved in
acquiring staff, our project team was already defined and set before the commencement of the
project.
Also, to ensure that each project team members work productively within their assigned
roles, each member will undergo interviews and tests to ensure they are suitable for their job roles.
Characteristics considered in the interviews and tests include the following:
Once the person is assigned to a particular job role, the performance of this person on their
job, is constantly evaluated, according to:
Client satisfaction
Quality of work output
Achievement of milestones
Productivity and efficiency
Teamwork
If the team member does not meet the requirement or target, then they will either be
reassigned or dropped from the team, in order to minimise cost/time wastage and disruption to the
rest of the project team.
Take responsibility for leading the team; Conduct team sessions to improve
Project Team develop strategies and plans to build communications and facilitate issue
group cohesion; work with team to identification and resolution; build team
Building
identify needed skills and behaviours to identity; solicit and address team concerns.
enhance team performance.
Table 4. The human resource planning matrix table. (http://www.hyperthot.com/pm_meth6.htm)
Effective project communications is needed to ensure that we get the right information to the right
person at the right time and in a cost-effective manner. Communications is basically the process by
which information is exchanged. Communications can be:
Written formal
Written informal
Oral formal
Oral informal
Oral communications come with a high degree of flexibility. Oral communications includes
the medium of personal contact, group meetings, or the telephone. Written communications are
precise. They are transmitted through the medium of correspondence (minutes, letters, memos, and
reports), e-mail, and the project management information system. Some people consider
nonverbal/visual communications, such as gestures and body language, as an acceptable process.
The processes used for communication (i.e. teleconferencing or meeting, etc), are selected
based on the following factors:
1. Communication goals
2. Communication skills
3. Position and Status
4. Attitude, emotion, and self-interest
5. Existing relationships with receivers
6. Personality and interests
7. Sender credibility
8. Lack of responsive feedback
9. Needs
In consideration of these factors, it is therefore imperative that a proper and clear message
must be conveyed to the recipients, which may be achieved using these following techniques:
Meeting will form a crucial part of the project communication, where crucial information
giving, receiving and listening takes place. However, if the meeting is improperly carried out, it could
be a waste of time and monetary resources. Therefore, it is necessary to ensure that every meeting
is valuable and provide the necessary exchange of information, by following this checklist:
Start on time
Develop meeting objectives or agendas.
Conduct one piece of business at a time.
Allow each member to contribute in his own way.
Silence does not mean agreement, so seek opinions.
Be ready to confront the verbal member, so that they do not talk over other members.
Test for readiness to make decision.
Make the necessary decision.
Test for commitment to the decision.
Assign roles and responsibilities after decision making
Agree on follow up and accountability date.
Indicate the next step for this group.
Set the time and date for the next meeting
End on time
Also, most importantly is the meeting necessary?
Project risk analysis is a process that enables the analysis of the risks associated with a project. If it is
properly undertaken it will increase the likelihood of successful completion of a project to cost, time
and performance objectives. The objective of the risk analysis is to gather enough information or
data about the risk issues, in order to judge the probability of occurrence and cost, schedule, and
technical consequences if the risk occurs.
First part of the risk analysis is to identify the possible threats that a project or organisation
faces. The threats could be:
Each risk category (i.e. cost, schedule, and technical) usually includes a core set of evaluation
tasks, which is related to the other two categories. Some characteristics of cost, schedule and
technical evaluations follow:
Cost Evaluation
Schedule Evaluation
Reflects technical foundation, activity definition, and inputs from technical and cost areas
Incorporates cost and technical evaluation and schedule uncertainty inputs to program
schedule model
Performs schedule analysis on program schedule
Documents schedule basis and risk issues for the risk evaluation
Describing and quantifying a specific risk and the magnitude of that risk usually requires
some analysis and modelling, which can be done using the following tools/methods:
Basically, the quantitative analysis involves either measurement of uncertainty in cost and
time estimates, or probabilistic combination of individual uncertainties. Without any hard data, it
may be necessary to use qualitative rather than quantitative data to assess the potential damage. A
common form of qualitative risk rating is as follows:
High Risks Substantial impact on cost, schedule, or technical. Substantial action required to
alleviate issue. High priority management attention is required.
Moderate Risks Some impact on cost, schedule, or technical. Special attention may be
required to alleviate issue. Additional management attention may be required.
Low Risk Minimal impact on cost, schedule, or technical; normal management oversight is
sufficient.
For most projects, it is more useful to start the risk analysis process by using the qualitative
method, which better captures the whole risk spectrum, while a more detailed analysis is then
conducted using the quantitative method.
Box Hill Institute | Diploma of International BusinessAuthor(s): Wen Li 16
3.6. Procurement
Usually, most procurement process involves a certain degree of interaction with the external
business environment, which may act as the supplier of goods and services. This outside interaction
may often be abused, if it is not carefully managed and followed through with official procedures.
Like most other project management systems (i.e. Human Resources, etc), the procurement strategy
should be assessed according professionalism, fairness, reliability, transparency and competitiveness.
The procurement strategy for goods and services is usually guided by four set core principles,
which are:
Competition - The procurement policy usually calls for competition among potential suppliers.
Usually there should be at least 3 suppliers are invited to submit for quotations, proposals or bids for
the supply of goods or services. However, sometimes competitions between suppliers are waivered
under agreed circumstances, which usually include:
1. Prices for goods and services are fixed by national legislation or regulatory bodies, (i.e.
taxi fare).
2. When there is only limited source of supply meeting requirements.
3. When the company is the only that uses the standardised or approved equipments.
However, in order for these waivers to occur, the procurement officer or person in charge of
procurement must provide a written justification for this competition waiver, which must be
endorsed by the management team in a documented process.
Separation of Duties - It is important that the person in charge of procurement does not also run the
financial portfolio. In addition to this, the procurement officer should not be the person responsible
requiring the procurement action, writing of the product/service specification, soliciting bids or
proposals, approving awards and payment, and taking delivery of the items purchased. However,
when there is staffing constraints, it is often difficult to enforce the principle of separation of duties
in the procurement process. But even under such situation, one must not be assigned too many
Transparency and Openness - Transparency and openness are key principles that should govern any
procurement action. One way to ensure transparency in the procurement process is to establish a
Procurement Committee that will evaluate tenders/proposals/bids and award contract to the most
responsive bidder. A Procurement Committee can be ad-hoc or permanent, depending on the
nature of the goods or services to be procured, frequency of the procurement and the technical
competence of the staff involved. The principle of separation of duties also reinforces transparency
of the procurement process. Openness is effective when all suppliers are treated equally and receive
the same amount of information. The information related to any procurement should be readily
available for consultation and the procurement authority should be ready to provide any additional
information as required.
There are usually three modes of solicitation used in competitive procurement process;
Request for Quotations (RFQ) - This mode of solicitation is used for the procurement of low value
goods or services the value of which is below the limit requiring the meeting of a Procurement
Committee. The specifications of such goods and services are usually clearly and precisely defined
(standard goods and services).
In a request for quotations, solicitation is evaluated and awarded based on the quotation
that meets the technical specifications (including required delivery time) at the lowest price without
any negotiation with the suppliers. Thus, an RFQ is ideally used to procure standard goods and
services such as office supplies; furniture; simple and less expensive communication equipment
(telephone, fax); and security services, among others. RFQs may be faxed, mailed or collected from
the buyer or project that seeks to make the procurement.
RFPs are always used in cases of direct procurement (waiver of competition). They can also
be used in competitive procurement when only a short list of suppliers is invited to submit
proposals. In such cases the Procurement Committee must approve the short list of suppliers before
the solicitation takes place. The Procurement Committee assesses the financial and technical
proposals on the basis of value for money and awards the contract to the supplier whose proposal
gives the project the most value. Further discussions may be held with the selected supplier for a
refinement of the final offer.
The criteria for evaluation of the proposals, including weights for each criterion, must be
determined in writing by the Procurement Committee before the solicitation takes place. The RFP is
commonly used for the procurement of non-standard goods and services such as network
installations, renovations, PBX systems, consultant services, audit services, goods that require after
sales services not covered by a warranty, among others.
The RFP must go through the Procurement Committee for all procurements over the limit
stated in a Projects Grant Agreement. In the event that the direct procurement (waiver of
competition) is used, prior approval by the Procurement Committee must be obtained in addition to
a noobjection letter from the funding agency, like ACBF.
An ITB is used for the purchase of standard goods or services such as computer equipment,
radio equipment, office equipment, etc. The ITB must go through the Procurement Committee,
which will approve the form of bid, the mode of publication, the criteria for the evaluation of the
bids, open the bids once received, and announce the winning bid on the basis of the lowest price
and most technically acceptable offer. No negotiations with suppliers are undertaken.
Name and contact address of the Project procuring the good or service.
Bid invitation reference number.
List of the items required (specification and quantity).
Name of the contact person.
The delivery terms
Warranty period.
Terms of payment.
Origin of the goods, if necessary.
The required delivery time.
Criteria for evaluation of bids.
Instructions on how to submit bids.
Closing date for submission of bids.
Brief instructions concerning the format of the proposals (technical and financial).
Terms of reference or scope of the work.
Any other relevant information.
Standard Non-Standard
Amount
RFQ RFP
Value
High
ITB RFP
In this report we discussed how to ensure that a project should be properly managed through the
implementation of a project plan, which included policies and processes associated with project
budgeting and planning processes involved for quality management, human resources, and
communication method. Detailed discussion was also carried out for methods and steps involved in
risk analysis and procurement processes relevant to the long term success of a project.
Appendices