Project Management

PROJECT MANAGEMENT

Times of India dt 29th oct 2007.

An air port in Assam,a bridge in Orissa, a
highway in Karnataka what they have in
common? all running behind schedule.

PROJECT MANAGEMENT.
Total no of projects (Rs 20crores &
above)
866.
No of delayed projects=297.
Cost over-run=Rs 24,389 cr
Total anticipated cost=3,75,888cr
Expenditure till Dec 2006 =1,38,905 cr
Scale of time over run =1-196 months.

PROJECT MANAGEMENT.
Out of a total of 866 projects, each costing
Rs 20cr or more ,297 projects- spawned by
13 ministries GOVT of India are running
badly behind schedule. More than 24,000 cr
will be spent additionally, because of delay
an amount sufficient for many more
projects.
---- Quarterly report by the ministry of
statistics and program implementation.

PROJECT MANAGEMENT.
By the time we build the airports, they
have become obsolete.
By the time we build the roads, they
have already become over crowded.

- Mr Ratan Tata.

PMBOK GUIDE

Project body of knowledge (PMBOK), is the sum of

knowledge within the profession of project
management.

PURPOSE OF PMBOK
The primary purpose of the PMBOK guide is to
identify that subset of project management body of
knowledge that is generally recognized as good
practice.
PMBOK Guide provides guide lines for managing
individual projects. It defines project management
and related concepts and describes project
management life cycle and related processes.

PROJECT MANAGEMENT
Project Management Institute, USA
(PMI) was founded in 1969 to provide a
means for project managers to
associate, share information, and
discuss common problems.
Making project management
indispensable for business results.
www. pmi.org.

PROJECT MANAGEMENT
Project management is application of
knowledge, skills, tools & techniques to
project activities to meet project
requirements.

PROJECT MANAGEMENT
PMI standards are developed, by teams
of hundreds of volunteers from around
the world with expertise, enthusiasm
and dedication to advancing the
practice of project management and the
profession.

PROJECT MANAGEMENT
Over its almost 40 years history, PMI has
created standards and practices that are
globally recognized.
Through its credential programs and
publications, which include A guide to the
project management body of knowledge
(PMBOK Guide), PMI identifies, defines,
documents, and champions valued
approaches.

PURPOSE OF PMBOK
The PMBOK guide also provides and promotes a
common lexicon for discussing, writing and applying
project management. Such a standard lexicon is an
essential element of a profession.

PURPOSE OF PMBOK
Generally recognized means the knowledge and
practices described are applicable to most projects,
most of the time, and there is consensus about their
values and usefulness.

Good practice means that there is general

agreement that the correct application of these
skills, tools and techniques can enhance the
chances of success over a wide range of different
projects.

PROJECT MANAGEMENT.

Does project control the project manager? Or project

manager controls the project?

PROJECT MANAGEMENT
A project is a temporary endeavor undertaken to
create a unique product, service or result.

Two Major Risks come to fore

while talking about Projects
Time Slippage / Delay

Cost Overrun

Mega Projects
Underground
Railways in Calcutta
Moonidih Coal Mine
Salal Power Project in
J&K
Vizag Steel Plant

20 years
25 years

> 18 years
8 years

Like these 135 projects have been delayed

Projects successfully completed

Nehru Stadium in Chennai
Abu Dhabi Airport
Bahai Temple in Delhi

Vijaipur Project was completed on Time

NTPC Projects, Asian Games in 1982.
DELHI METRO

General Elections

When projects are

considered failure?

In your opinion
why do projects
often fail?

Unclear requirements
Poor planning
Lack of clear, realistic project objectives
Misunderstanding of team roles, responsibilities,
authority, and power
Failure to communicate and act as a project team
Lack of buy-in from team members
Project Management Methodology

Project mgt & operation mgt.

Projects can interact with operations at various
points during product life cycle:
At close out.
When developing a new product, upgrading a
product, or expanding outputs; or
Until the divestment of the operations at the end
of the product life cycle.

Project management
Examples of project include, but are
not limited to:
Developing a new product or service.
Effecting a change in structure, staffing, or style
of an organization.
Designing a new transportation vehicle.
Developing or acquiring a new or modified
information system.
Constructing a building or facility.
Building a water supply system for a community.

Project management

Running a campaign for a political office.

Implementing a new business procedure or process.
Responding to contract solicitation.
Conducting a wedding ceremony.
Project to facilitate payments of tax through internet.
Service to collect garbage from homes.
Presenting a budget papers to the board.

What are the basic characteristics of

operation & project work

Operation work is:

Ongoing
and

Repetitive

Project work is:

temporary endeavor
undertaken to create a

unique product, service

or result

1. Temporary endeavor means

project is having:
Definite beginning
Definite end, and
Clear defined Project Objectives

Or when it becomes clear that the project

objectives will or cannot be met, or the need
for the project is no longer exists and the
project is terminated

Milestone is an agreed end or starting of a

specific event or deliverable and has a duration ZERO

2. Unique Product, Service

or Result means:
Projects creates unique deliverables, i.e.,
products, services, or results that has not
been done exactly the same way before and
which is, therefore, unique and distinct

PROJECT MANAGEMENT
Uniqueness is an important
characteristics of project deliverables.
For example: many thousands of office buildings
have been developed, but each individual facility
is unique different owner, different design,
different location, different contractors and so on.
The presence of repetitive elements does not
change the fundamental uniqueness of the project
work.

3. Progressive Elaboration
General

Level
of
detail

Detailed

Requirements

High-level design

Progressive elaboration means developing in steps,

and continuing steadily by increments

What is subproject?
Sub-projects are often contracted:
1. to an external enterprise, or
2. to another functional unit in the
performing organization
Project managers of the sub-projects are
accountable to the project manager of a project.

What is common to both

operation and project work?
Performed by people
Constrained by limited resources
Planned, executed & controlled

PROJECT MANAGEMENT
The purpose of a project to attain its objectives and
then terminate.

Conversely, the objective of an ongoing operation is

to sustain the business.

Triple constraints influence projects

Project
Quality is
affected by

balancing
triple
constraints

SCOPE constraints limits project team to define scope and manage

Ifscope
any one of the triple constraint factors is affected, at
least
other factor
likely
to be effected,
e.g.,
TIME one
constraints
limits is
team
to determine
& manage
time lines

Deliver high quality product, service or result within scope, time and budget
COST
If scopeconstraints
is increased, itlimits
has a team
likely effect
on time,life
and cycle
cost ascost
well i.e., project
to estimate
cost
If time
or scope
is increased,
cost is most likely
to be effected
plus
operating
and implementation
costs

Organizational Project
Management (OPM)
Projects: temporary endeavors
undertaken to create a unique product,
service or result

Program: related projects grouped and

managed to optimize benefits, control
and outcomes, not available from
managing individually.
Portfolio: projects and programs
grouped for effective management and
focused on meeting specific strategic
objectives
Implementations should fit the
Organizational Environment: the
structure, policies, processes and culture of
the organization.
Right combination of right projects,
done right.
35

PROJECT MANAGEMENT
The projects or programs of the portfolio may not
necessarily be interdependent, or directly related.
For ex:
An infrastructure company that has the strategic
objective of maximizing the return on investment
may put together a portfolio that includes a mix of
projects in oil and gas, power, roads, rail, and
airports.
From this mix, the firm may choose to manage
related projects as one program. All of the power
projects may be grouped together as a power
program. Similarly , all of the water projects may be
grouped together as water program.

Projects and strategic planning

Projects are often utilized as a means of
achieving an organizations strategic plan:

Market demand.
Strategic opportunity/business need.
Customer request.
Technological advance.
Legal requirement.
Social need

ROLE OF PROJECT MANAGER

PM is the person assigned by the performing
organization to achieve the project objectives.
(S.M.A.R.T.)
The role of PM is distinct from a functional manager,
or operation manager.
Typically the functional manager is focused on
providing management oversight for an
administrative area, and operations managers are
responsible for a facet of the core business.

ROLE OF PROJECT MANAGER

In addition to any area-specific skills and general management
proficiencies required for the project, effective project
management requires that the PM possess the following
characteristics:
Knowledge: this refers to what the PM knows about project management.
Performance: this refers what PM is able to do or accomplish while applying
their project management knowledge.
Personal: this refers to how the PM behaves when performing the
project. The personal effectiveness encompasses attitudes,
core personality characteristics and leadership.

Project Characteristics

Why do we
undertake Projects?
NEED

NEED

Projects are undertaken to

successfully implement organizational
strategies under uncertainties and
successfully meet the
expectations as visualized
NEED

1. Triple constraints influence projects

How project objectives are related?

C = f (Q, T, S)
COST
is a function of
QUALITY, TIME, & SCOPE

2. Project teams areas of expertise

influence projects
Effective
communication
1.Knowledge
1.
A standard
Cultural
is
social
a documented
environment
General
management
of& project
mgmt.,
Leadership
established
factors
by
consensus
encompasses
planning,plan, and
processes
to initiate,
2.organizing,
approved
International
by
the&
recognized
political
Influencing
the
organization
staffing,
execute,
control,
&
close
body
environmental
factors
Motivation
executing,
and controlling
the
projects
does
influence
the
2. 3.
A regulation
Physicalofenvironmental
a governmentoperations
the
ongoing
org
Negotiating
& isconflict
mgmt.
success
of
projects
imposed
factors
requirement
and project operations.
Problem solving

PMBOK

Project Mgmt.
Methodology

Areas of
expertise
by project
team

3. Product-life-cycle expectations
influence project
Product life cycle includes following projects:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Curtain Raiser, Idea Generation

Market Research
Research and Development
Feasibility Analysis Product Development
Marketing of a project product Installation of a User friendly product
Operation and Maintenance of a product
Disposition of product -

PROJECT LIFE CYCLE

The Internal-Business-Process
Business
PLAN

Need to upgrade
need

Customer
NEED
Identified

Need
Operation
to

Discard

Project Life Cycle Phases

Customer
NEED
Satisfied

PROJECT MANAGEMENT

What is importance of project phase?

Project phases are the description of
What project or technical work need to be
done, and describes what deliverables are
to be planned and managed in each project
phase of the project-life-cycle?

CHARACTERISTICS OF PHASES
The completion and approval of one or more
deliverables characterizes a project phase.

A project phase is not a project management

process group.

Project Phases.
The phases:

Example:
Requirements gathering.
Design.
Construction.
Testing.
Implementation.

Project Phases.

Design documents.
Deliverables at kill points.
Test plans.
Exit gates.
Architectural design.
Low level design.
Coding standards
User interface approvals.

Planning phase

Construction phase

Characteristics of project life cycle

Projects vary in size and complexity.

No matter, how large or small, simple or complex, all

projects can be mapped to the following life cycle
structure:
Starting the project.
Out put: charter.
Organizing and preparing. Out put: project mgt
plan.
Carrying out the project work. Out put: accepted
deliverables
Closing the project.
Out put: archived
project documents.

Characteristics of project life cycle

A DELIVERABLE IS A MEASURABLE, VERIFIABLE
WORK PRODUCT, SUCH AS A SPECIFICATION,
FEASIBILITY STUDY REPORT, DETAILED DESIGN
DOCUMENT, OR WORKING PROTOTYPE.

Characteristics of project life cycle

Entry criteria & exit criteria (kill points).
Each phase contains all the five process groups.
If project has five phases, the closing is done six
times.

Characteristics of project life cycle

Life cycle is from start to end.
All projects have a purpose or objective, but in those
cases where the objective is a service or result,
there may be life cycle for the service or result, not a
product life cycle.

Phase to phase relationships.

Sequential relationship:
A phase can only start once the previous phase is
complete.
Step by step approach reduces uncertainty, but
may eliminate options for reducing the schedule.

Over lapping relationship:

A phase can start, prior to the completion of the
previous one. Fast tracking. Reduces the
schedule, quality may be the victim.

Phase to phase relationships.

Iterative relationship.
Is used where one phase is planned at any given
point of time and the planning for the next is
carried out as the work progresses on the current
phase and deliverables.
This is useful in largely undefined, uncertain , or
rapidly changing environment, such as research.

PROJECT MANAGEMENT

High

Low

Influence of Stakeholders,
Opportunity to add Value, and
Uncertainty of success

Cost to make change, and

Amount of stake

Project Life Cycle (Time)

Project Cost and staffing levels

PROJECT MANAGEMENT
LIFE CYCLE

Project Management Life Cycle describes what

we need to deliver in order to
successfully manage, integrate the
project life cycle deliverables to
meet customer expectations.
Project management life cycle include:

Initiating, Planning, Executing, Controlling, and Closing

process groups. Process groups are also known as
project life cycle phases

STAKE HOLDES INFLUENCE ON PROJECT

Project
manager
is
A
stakeholder
is someone
Project
management
Sponsor
is a person
or
responsible
to:
whose
interests
may
be
team are the members

1.
Accomplish
objectives,
group
that
provides
the
positively
or project
negatively
of
the
project
team
who
2.
Identify
&resources,
quantify
risks,
financial
in
impacted by the project.
response
to involved
the uncertainties,
are
directly
in &
cash
or
kind,
for
the
control risks during execution
the
project
management
They
may also
include those
3.
Continuously
utilize
project
activities
whoprogressive
may exertelaboration
influence
over
the project
but would
technique
throughout
the
not project
otherwise
be considered
life cycle,
stakeholders.
4.
Adhere to code of professional
conduct

sponsor
Proj.
Mgr
Project
mgmt team

Proj. Team
Performance
organization

7. Organization culture & style influences project

Performance
of
work

Organization
culture

Values, norms, beliefs, & expectations

Policies & Procedures,
View of Authority relationships
Work ethic & Work hours

Project Management knowledge areas

Project Integration mgmt

Project Cost mgmt

Project Comm. mgmt

Supports the various

elements of the project
mgmt, which are
identified, defined,
combined & coordinated

Planning, controlling, &

managing costs so that
project is completed
within the approved
budget

To ensure timely and

appropriate generation,
collection, dissemination,
storage & disposition of
project information

Project Scope mgmt

Project Quality mgmt

Project Risk mgmt

To ensure that the project

includes all the work
required, and only work to
complete the project
successfully

To ensure that the project

will satisfy the NEEDS for
which it was undertaken

Concerned with
identifying, analyzing, and
responding to project
risks

Project Time mgmt

Project H.R mgmt

Project Procurement mgmt

To ensure timely
completion of project

To make the most

effective use of the people
involved with the project

To acquire material, goods

and services from outside
the performing
organization

Project Management knowledge areas

Project Integration mgmt

Project Cost mgmt

Project Comm. mgmt

Develop project charter

Estimate costs

Identify stakeholders

Develop project mgt plan

Direct & manage project execution
Monitor & control

Perform intergated change control

Determine budget

Plan communications
Distribute information

Control costs

Manage stakeholder expecations

Project Quality mgmt

Project Risk mgmt

Plan Quality

Plan risk management

Report Performance

Close project /phase

Project Scope mgmt

Collect requirements
Define scope
Create WBS
Verify scope

Perform Quality assurance

Perform quality control

Control scope

Project Time mgmt

Define activities
Sequence activities
Estimate activity resources
Estimate activity durations
Develop schedule
Control schedule

Identify risks
Perform qualitative risk analysis
Perform quantitative risk analysis
Plan risk responses
Monitor and control risks

Project H.R mgmt

Project Procurement mgmt

Develop Human resource

plan

Plan procurements
Conduct procurements

Acquire project team

Administer procurements

Develop project team

Close procurements

Manage project team

Introduction to
Project Management
Processes

Project management
processes
Project Integration Management: Develop project charter:- is the process of
developing a document that formally authorizes a
project or a phase and documenting initial
requirements that satisfy the stakeholders needs
and expectations.
Develop project management plan:- is the process of
documenting the actions necessary to define,
prepare, integrate, and coordinate all subsidiary
plans.
Direct and manage project execution:- is the process
of performing the work defined in the project
management plan to achieve project objectives.

Project management
Monitor and control project work:- is the process of
tracking , reviewing, and regulating, the progress to
meet the performance objectives defined in the
project management plan.
Perform integrated change control :- is the process
of reviewing all change requests, approving
changes, and managing changes to the deliverables,
organizational process assets, project documents,
and the project plan.
Close project or phase: is the process of finalizing
all activities across all of the project management
process groups to formally to complete the project
or phase.

Project scope mgt

Collect requirements:- is the process of defining and

documenting stake holders needs to meet the
project objectives.
Define scope:- is the process of developing a
detailed description of the project and product.
Create WBS:- is the process of subdividing project
deliverables and project work into smaller, more
manageable components.
Verify scope:- is the process of formalizing
acceptance of the completed project deliverables.
Control scope:- Is the process of monitoring the
status of the project and product scope and
managing changes to the scope base line

Project time mgt

Define activities:- is the process of identifying the
specific actions to be performed to produce the
project deliverables.
Sequence activities:- is the process of identifying
and documenting relationships among the project
activities.
Estimate activity resources:- is the process of
estimating the type and quantities of material,
people, equipment, or supplies, required to perform
each activity.
Estimate activity durations:- is the process of
approximating the no of work periods needed to
complete individual activities with estimated
resources.

Project time mgt

Develop schedule:- is the process of analyzing
activity sequences, durations, resource
requirements, and schedule constraints to create a
the project schedule.
Control schedule:- is the process of monitoring the
status of the project to update project progress and
managing changes to the schedule base line.

Project cost mgt

Estimate costs:- is the process of developing an
approximation of monitory resources needed to
complete project activities.
Determine budget:- is the process of aggregating the
estimated costs of individual activities or work
packages to establish an authorized cost base line.
Control costs:- is the process of monitoring the
status of the project to update the project budget
and managing changes to the cost base line.

Project quality mgt

Plan quality:- is the process of identifying quality
requirements and / or standards for the project and
product, and documenting how the project will
demonstrate compliance.
Perform quality assurance:- is the process of
auditing the quality requirements and results from
quality control measurements to ensure appropriate
quality standards and operational definitions are
used.
Perform quality control:- is the process of
monitoring and recording results of executing the
quality activities to assess performance and
recommend necessary changes.

Project HR mgt
Develop human resource plan :- is the process of
identifying and documenting project roles,
responsibilities, required skills, reporting
relationships, and creating a staffing management
plan.
Acquire project team:- is the process of confirming
human resources availability and obtaining the team
necessary to complete the project assignments.
Develop project team:- is the process of improving
the competencies, team interactions, and the overall
team environment to enhance project performance.
Manage project team:- is the process of tracking
team member performance, providing feed back,
resolving issues, and managing changes, to
optimize project performance.

Project communication mgt

Identify stakeholders:- is the process of identifying
all people, or organizations, impacted by the project,
and documenting relevant information regarding
their interest, involvement, and impact on the project
success.
Plan communications:- is the process of determining
the project stakeholders information needs and
defining a communication approach.
Distribute information:- is the process of making
relevant information available to project stake
holders as planned.
Manage stakeholder expectation:- is the process of
communicating and working with stakeholders to
meet their needs and addressing issues as they
occur.

Project communication mgt

Report performance: Is the process of collecting and distributing
performance information, including status reports,
progress measurements, and forecasts.

Project risk mgt

Plan risk management:- is the process of defining
how to conduct risk management activities for a
project.
Identify risks:- is the process of determining which
risk may affect the project and document their
characteristics.
Perform qualitative risk analysis :- is the process of
prioritizing risks, for further analysis or action by
assessing and combining their probability and
impact.
Perform quantitative risk analysis: - is the process of
numerically analyzing the effect identified risks on
over all project objectives.

Project risk mgt

Plan risk responses:- is the process of developing
options and actions to enhance opportunities and
reduce threats to project objectives.
Monitor and control risks:- is the process of
implementing risk response plans, tracking
identified risks, monitoring residual risks, identifying
new risks, and evaluating risk process effectiveness
through out the project.

Project procurement mgt

Plan procurement:- is the process of documenting
project purchasing decisions, specifying the
approach , and identifying potential sellers.
Conduct procurements :- is the process of obtaining
sellers responses, selecting a seller, and awarding a
contract.
Administer procurements :- is the process of
managing procurement relationships, monitoring
contract performance, and making changes and
corrections as needed.
Close procurements:- is the process completing
each project procurement.

PROJECT MANAGEMENT
PROCESS GROUPS

INITIATION.
PLANNING.
EXECUTING.
MONITORING & CONTROLLING.
CLOSING.

Project management process groups are not project

phases.
Each phase will have these five process groups.

PROCESS
inputs

tools &

outputs

techniques

control

plan

information

monitor

Project Management Process Groups

Initiation process group

Develop
Project
Charter

Identify stake
Holders.
Project
objective
+40%
ROI

Sponsor

Project
mgr.

Project
stakeholders

Planning process group

Execution process group

Time

Controlling process group

Closing process group

Activities

Interaction between
Project mgmt. process groups

Executing
Process

Planning
Process

Initiating
Process

Phase
Start

Closing
Process

Controlling
Process

time

Phase
Finish

LINKS IN PROCESS GROUPS

PROJECT MANAGEMENT
Project Management Office :
A PMO is an organizational unit to centralize and
coordinate the management of projects under its
domain.

PMO
The responsibilities of PMO, can range from
providing project management support functions to
actually being responsible for the direct
management of a project.

A primary function of a PMO is to support project

managers in a variety of ways which may include,
but are not limited to:
Managing shared resources across all projects.
Identifying and developing project management
methodology, best practices, and standards.

PMO
Coaching, mentoring, training and oversight.
Monitoring compliance with project management
standards policies, procedures, and templates via
project audits.
Developing and managing project policies,
procedures, templates, and other shared
documentation.
Coordinating communication across projects.

KNOWLEDGE AREAS TO PROCESSES

Knowledge
areas

Initiatio
n
Process
group

Planning
Process
group

Executing
Process
group

4.Project
Management
Integration

4.1Devel
op
Project
Charter.

4.2 Develop
Project
Management
plan.

4.3 Direct
& Manage
Project
execution

5. Project
scope
management.

6. Project
Time
Management

7. Project
Cost
Management.
8.Project
Quality
Management
9. Project
Human
Resource
Management.

5.1 Collect
requirements.
5.2 Define
Scope.
5.3 Create
WBS
6.1 Define
activities.
6.2 Sequence
Activities.
6.3 Estimate
Activity
Resources.
6.4 Estimate
activity
durations.
6.5 Develop
Schedule.
7.1 Estimate
Costs.
7.2 Determine
Budget.
8.1 Plan
Quality.

9.1 Develop
Human
resource plan.

Monitoring
&
controlling
Process
group
4.4 Monitor
& control
Project
work
4.5
Perform
Integrated
Change
control
5.4 Verify
Scope.
5.5 Control
Scope.

6.6 Control
schedule

7.3 Control
Costs.

8.2
Perform
Quality
assurance.
9.2 Acquire
Project
Team.
9.3Develop
Project
Team
9.4 Manage

8.3
Perform
Quality
Control

Closing
Process
group

4.5 Close
project or
Phase.

KNOWLEDGE AREAS TO PROCESSES

10. Project
Communicati
on
Management

10.1
10.2 Plan
Identif Communicatio
y
ns
Stake
holder
s.

11. Project
Risk
Management.

12. Project
Procurement
Management.
2
Total = 42 processes.

10.3
10.5 Report
Distribute
Performanc
Information e
.
10.4
Manage
Stake
holder
Expectation
s.
11.6
Monitor
and Control
Risks.

11.1 Plan Risk

Management.
11.2 Identify
Risks.
11.3 Perform
Qualitative
Risk Analysis.
11.4 Perform
Quantitative
Risk Analysis.
11.5 Plan Risk
Responses.
12.1 Plan
12.2
procurements. Conduct
procuremen
ts
20
8

12.3
Administer
procuremen
ts
10

12.4 Close
Procuremen
ts.
2

Process group
break up

5. Closing process group:

2
20
8
10
2

TOTAL PROJECT MGMT. PROCESSES

42

1. Initiation process group:

2. Planning process group:
3. Execution process group:

4. Controlling process group:

processes
processes
processes

processes
processes

Organization culture & style influences project

Chief Executive

Chief Executive

Functional
manager

Functional
manager

Functional
manager

Functional
manager

Functional
manager

Functional
manager

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

staff

Function organization
In balanced
People
have
split
the loyalty
focus
matrix,
between
the
towards
project
power
isand
their
function
functional
balanced
manager PMs
responsibilities
between
& not
&
to weak
in
functional
the projects
matrix
mgrs

Weak Matrix Org.

Chief Executive

Functional
manager

Functional
manager

Functional
manager

staff

staff

staff

staff

staff

staff

P.Mgr

staff

staff

Balanced Matrix Org.

Organization culture & style influences project

In projectized
strong
matrix, the
organization
power is
people
develop
balanced
loyalty
to rests
the
with the&project
project
not to
managers
a
function mgr.

Chief Executive
Functional
manager

Functional
manager

Functional
manager

Project
head

staff

staff

staff

P.Mgr

staff

staff

staff

P.Mgr

staff

staff

staff

P.Mgr

Strong matrix organization

Chief Executive

Projectized organization

Project
manager

Project
manager

Project
manager

staff

staff

staff

staff

staff

staff

staff

staff

staff

Composite Organization

Project Roles
Project Manager:
Is the person ultimately responsible for the outcome of the project.
Found in balanced, strong matrix and projectized organization.

Project coordinator:
Is weaker than project manager, may not be allowed to make
budget decisions or over all project decisions, but may have some
authority to reassign resources.
Usually found in weak matrix or functional organizations

Project expeditor:
Is the weakest among the project roles.
Is staff assistant who has little or no formal authority.
Reports to the executive who ultimately has responsibility of the
project.
Responsibility lies in making sure that things arrive in time and the
tasks are completed on time.
Part time role --- found in functional organizations.

Project Selection Methods

Benefit Measuring Methods:

BCR
Pay Back Period
Discounted Cash Flow
IRR
ROI
Economic Value Added Method

PROJECT SELECTION
METHODS
Mathematical methods:
Constrained optimization methods linear, dynamic,
integer, non linear, and/or multi objective programming.

Benefit measuring methods:

Benefit cost ratio: is the ratio of benefits to costs.
For example: if you expect a construction project to cost
$10 million and you expect to be able to sell that completed
building for $15 million, then your BCR is 1.5

SCORING MODEL
SCORING MODEL:
criteria

weight

proj-A

proj-B

proj-C

profit potential

marketability

ease to produce

41

37

29

weighted score
project -A is the obvious choice.

PAY BACK PERIOD

EXAMPLE: say initial investment on a project is
$200,000, with expected cash inflows of $25,000 per
quarter for the first two years and $ 50,000 per
quarter then on. What is the pay back period?
Initial investment=$200,000.
Cash inflows=($25,000)*(4) /year.=$100,000.
Pay back period = initial investment/ cash inflow per
year.=($200,000)/($100,000)=2 years.
Pay back period does not consider time value of
money-- serious draw back.

DISCOUNTED CASH FLOWS

FV= future value of money.
PV= present value of money.
i=interest rate.
n= no of years.
PV=FV/(1+i)^n.

Rs1,three years from now is worth

1/(1+0.09)^3=1/(1.09)^3=1/1.29=0.77 Rs.

NET PRESENT VALUE

With NPV, you bring the value of the future money
into todays dollars.
12% is cost of capital.
Project A:

Year.
1
2
3
Total

inflows.
10,000
15,000
5,000
30,000

PV
8,929
11,958
3,559
24,446

Less investment
NPV

24,000
446

NET PRESENT VALUE

Project B:

Year
inflows
1
7,000
2
13,000
3
10,000
Total
30,000
Less investment
NPV

PV
6,250
10,364
7,118
23,732
24,000
<268>

NET PRESENT VALUE

Project A has NPV greater than zero and should be
accepted.
Project B has NPV less than zero and should be
rejected.
When NPV >0 means that the project will earn at
least or greater than the cost of capital.

DISCOUNTED CASH FLOWS

Project A is expected to make $100,000 in two years.
Project B is expected to make $120,000 in three
years.
If the rate interest is 12%, which should you
choose?.
Using the PV formula:
The PV of project A=$79,719.
The PV of project B=$85,414.
The project B is the project that will return highest
investment to the company and should be chosen
over Project A.

INTERNAL RATE OF RETURN

IRR is the discount rate when the PV of the cash
inflows equals original investment.
For the exam, you need three things concerning IRR:
IRR is the discount rate when NPV=0
IRR assumes the cash inflows are reinvested at the
IRR.
You should choose project with highest IRR value.

RETURN ON INVESTMENT
Is a % that shows what return you make by making
in something.
Ex: a company invests in a project that costs
$200,000. The benefits of doing the project save the
company $230,000 in the first year alone.

ROI = (benefit-cost)/cost=30,000/200,000
15%.
For the exam:
ROI , bigger is better.

BEP
BREAK EVEN POINT:
BEP analysis is done for a predefined for future time
periods ( years, months, or weeks ).
It evaluates the time period when total cash inflow
equals fixed cost.
If calculated BEP value is less than expected value,
investment is considered justified.

BEP
A club is planning a dance party for its members.
The tickets will be sold for $30 each.
Fixed costs (band & hire hall etc, ) $1500.
The variable costs (food etc, ) will be $10, for each
ticket sold.
(x)*(30)= (x)*(10)+1500.
X=75
no of tickets to be sold for BEP.

Economic value add (EVA)

It takes into account the fact that there are opportunity costs to
every financial expenditure, and that if a project does not make
more money than those opportunity costs, it has not truly
added economic value to the organization.

A company XYZ, invested $175,000 in a project, and that project

returned a net profit of $10,000 in the first year operation.
Assume cost of capital 6%.
If the organization could have put the same $175,000 in the
bank and earned 6% return.
$10,000-(06*175,000)=-$500.
$ 10,000-10,500 = -$500.
They would have earned $10,500 in interest if they had invested
in the bank, instead of project.

Project Management
Charter.
Scope Statement.
Work Break Down Structure.

Project Scope Management

Manages the work involved in the project.

Understand requirements.
Define the scope.
Break down the scope in the form of WBS.
Control the scope of the project.
Verify that the project is completed correctly.

Scope Management Processes

Collect requirements: This is the process of understanding what is needed to
satisfy the stakeholders and creating a document to reflect
that understanding, for both product and the project.
Deliverables :Requirements documentation.
The root business problem being solved.
The source of the requirements.
The way each requirement addresses the problem.
How business processes interact with the requirements.
Associated measurements for each requirement.
Business, legal, ethical compliance.
Constraints and assumptions.
Anticipated impact of the requirement on other.

Scope Management Processes

Requirements management plan:
Defines what activities the team will perform to gather and
manage project requirements.
Shows how requirements will be gathered, how decisions
will be made, how changes to the requirements will be
handled, and how the requirements will be documented.

Requirements trace ability matrix:

It is important to identify the source of the requirement.
The source could originate from a stake holder or
departmental request, a legal, contractual, or ethical need,
an underlying requirement.
Who owns the requirement so that it is fulfilled.
Status of the requirements.

Define scope
.
Product analysis.
Product breakdown.
System analysis.
Requirement analysis.
System engineering.
Value engineering.

Define scope
Alternatives identification:
Brainstorming.
Lateral thinking. (Shift in paradigm)

Scope Management Processes

Define scope:
Defines the total work and only the work to be executed by
the project team , so that all the requirements of the project
are fulfilled and the final deliverable is created.
Scope of the project.
Scope of the product.

The scope statement.

Product scope description, product acceptance criteria, project
deliverables, project exclusions, project constraints, project
assumptions.

Scope Management Processes

Create WBS: Is the process of subdividing project deliverables and project work
into smaller, more manageable components.
Is deliverable oriented hierarchical decomposition of the work to
be executed by the project team, to accomplish the project
objectives and create the required deliverables.
Each descending level of the wbs, representing an increasingly
detailed definition of the project work.
Organizes and defines the total scope of the project.
Planned work is contained within the lowest level WBS component
, which are called work packages.
A work package can be scheduled, cost estimated, monitored and
controlled.
Work packages contain the deliverables, i.e the result of the effort
and not the effort it self.

Create WBS

First we need to organize project work

Travel Abroad
Passport
Passport

Apply for
Passport
Get
Application
Form
Fill
Application
Form
Submit
Application
Form

Obtain
Police
verification

Visa

Get
Passport

Ticketing &
Boarding

Work Breakdown Structure

organizes and defines the
total scope of the project

WBS subdivides the project deliverables into smaller, more

manageable deliverables, with each descending level of WBS
representing an increasingly detailed definition of the project
work. Lowest level of WBS components or deliverables are
called work packages.
WPs can be scheduled, cost estimated,
monitored, & controlled

Identify stake holders.

The process of identifying all people or organizations
impacted by the project, and documenting relevant
information regarding their interests, involvement,
and impact on project success.

Identify stake holders.

What it is?
Keep in mind that a stakeholder may be any one with an
interest in the project.
And that interest may be positive or negative.

Why it is important?.
If the stakeholders are not properly identified on the project
and their needs are understood, then there is little chance of
meeting their expectations.
Many projects are derailed because they did not understand
the needs of stakeholders and address them on the project.

Identify stakeholders
Stake holder analysis
tool.

high

Manage
closely.

Keep
satisfied.
power

Keep
informe
d.

Monitor(mini
mum effort).

low

low

Interest.

high

Scope Management Processes

Group Exercise: Using Mind Map & M.S.Words
Create a WBS for wedding ceremony.
Create a WBS for a house construction.
Create a WBS for cycle.
Stake holder analysis of these projects?

VERIFY SCOPE.
Verifying the project scope includes reviewing
deliverables with the customer or sponsor, to ensure
that they are completed satisfactorily and obtaining
formal acceptance of deliverables by the customer
or sponsor.

VERIFY SCOPE
If the project is terminated early, the project scope
verification process should establish and document
the level and extent of completion.

Control Scope
Control scope:
Is the process of monitoring the status of the project
and product scope and managing changes to the
scope base line.
It ensures all requested changes and recommended
corrective or preventive actions are processed
through the perform integrated change control
process.

Control Scope.
Is also used to manage actual changes when they
occur and is integrated with other change control
processes.
Uncontrolled changes are termed as Scope Creep:
Avoid scope creeps.

PROJECT TIME MANAGEMENT

INCLUDES THE PROCESSES
REQUIRED TO ACCOMPLISH TIMELY
COMPLETION OF THE PROJECT.

PROJECT TIME MANAGEMENT

Fundamentals:
ACTIVITY ON ARROW DIAGRAM (AOA)/ADM.
Dummy activity. Finish to start relationship.
ACTIVITY ON NODE DIAGRAM(AON)/PDM.
FS, SS, FF & SF RELATIONSHIPS
Lead & lag between activities.
Early start, early finish & late start, late finish
Float , free float, critical path.
Forward pass and back ward pass.
Project float.
Crashing and fast tracking.

ESTIMATIONS
Analogous estimation:
top down estimate. It is a form of expert judgment.
Parametric estimating / Quantitative method :
it uses a mathematical model to calculate projected
times for an activity based on historical records from
previous projects. Such as time per line of code,
time per linear meter or time per installation.
Learning curve:
the 100th room painted will take less time than the
first room because of improved efficiency.

Project Time Management

Define activities: The process of identifying the specific actions to be
performed to produce the project deliverables.
Sequence activities: The process of identifying and documenting
relationships among the project activities.
Estimate activity resources: The process of estimating the type, and quantities of
material, people, equipment, or supplies, required to
perform each activity.

Project Time Management

Estimate activity durations: The process of approximating the number of work
periods needed to complete individual activities with
the estimated resources.
Develop schedule: The process of analyzing activity sequences,
durations, resource requirements, and schedule
constraints to create the project schedule.
Control schedule: The process of monitoring the status, of the project
to update the project progress, and managing
changes to the schedule base line.

Scheduling Techniques
Activity on arrow (AOA) also known as ADP( arrow
diagramming method).
Activity on Node (AON) also known as PDM (
predecessor diagramming method).
CPM & PERT.

CPM-EXERCISE-1
Sl.no act

1.Estimate cost
to complete project.
2.Bid job& get order.
3.Build system
4.Dev-training
5.Implement.

dur

pred.

7d
15 d
7d
4d
5d

---1
2
2
3,4

Find critical path, float/slack, free float/free

slack for each activity.

CPM EXERCISE-2
SL. NO.

ACTIVITY.

DUR.

A
B
C
D

2 DAYS.
6 DAYS. 1
8 DAYS. 1
4 DAYS. 2,3

1
2
3
4

PRED.

FIND CRITICAL PATH . FLOATS. , OF ALL

ACTIVITIES.

CPM-3

SL
A

Activity
Dur(Hrs)
Remove & dis mantle
motar.
8
B. Clean & Paint frame.
7
C. Rewind armature.
12
D. Replace armature.
9
E. Assemble & Install
Motar.
4
Calculate the total time of the ovehaul.

Pred.
---A.
A.
A.
B,C,D

CPM-Exercise.
Sl no

activity

1 Get equipment.
2. hire people.
3. develop system.
4. training.
5. documentation.
6. install system.

dur
5d
4d
15 d
3d
6d
9d

pred.

1,2
3
3
4,5

Find critical path.

What are floats for each activity?.

CPM EXERCISE-3
Sl no.

Act

dur

pred.

1. project dels
12 d
---2.procure h/w
2
1
3.test h/w
8
2
4.procure s/w tools.
10
1
5.write programs
45
4
6.test & debug
22
5
7.install
8
3,6
8.training
3
7
9.acceptance
1
8.
Find critical path, float/slack, free float/free slack for
each activity.

CPM-EXERCISE HOUSE
CONSTRUCTION.
Sl.no

activity

1 lay foundation
2 erect frame
3 install mill works
4 install wiring
5 install plumbing
6 plaster walls
7 decorate interior
8 install siding
9 finish exterior
10 finish

duration
3w
4w
3w
1w
1w
4w
1w
3w
4w
0

pred
nil
1
2
2
2
2
3,4,5,6
2
8
7,9

CPM EXERCISE-6

Sl no act

1
2
3
4
5
6
7
8

specs
design data base part.
design GUI part.
code data base part.
code GUI part.
integrate & test.
write user manual.
finish.

dur

15d
45d
30d
105d
45d
120d
60d
0d

pred

nil
1
1
2
3
4,5
1
7,6

CPM

Sl no
1
2
3
4
5

activity
Dur
Predecessor.
Remove & Dismantle motar. 8hrs -----Clean & paint frame.
7hrs 1
Rewind armature.
12 hrs 1
Replace bearing.
9 hrs 1
Assemble & Install motar.
4 hrs 2,3,4

CRASHING
Sl no activity duration

A.
B.
C.
D.

Get import license.

Ship
Train users.
Train on system.

5 days.
7days
11days
2 days

pred
----A
---B,C.

You have agreed to get the system running in 12 days. If you

are late, you will pay penalty $500/day, beyond 12 days.
Options for activity B :
Slow boat: 7days. (current option). $100.
Fast boat: 6days.
$300.
Air plane: 5days.
$400.

CRASHING
Task

Pred

Nor
mal
dur

Crash
time

Crashing cost/day

4$/D

1$/D

4$/D

2$/D

2,4

COST OF OVERHEAD
$4.5/D

CPM-7

A small engineering company intends to produce a batch of machines

to be used by a shoe manufacturer in the mass production of shoes.

The activities required in the design and manufactures of the

machines are
listed below:
A. Draw up estimate.
--- 2w.
B. Agree estimate.
A
1w.
C. Purchase internal m/c.
B.
4w.
D. Prepare design drawings. B. 6w.
E. Construct main frame.
D. 3w.
F. Assemble machinery.
C,E 3w.
G. Test machinery.
F 4w.
H. Determine model type.
D 2w.
I. Design outer casing.
D 3w.
J. Construct outer casing.
H,I, 8w.
K. Final assy.
G,J, 2w.
L. Final check.
K. 2w.

Find duration of the project.

What would be the effect of strike at the factory supplying the internal
machinery, there by delaying its delivery by 4 weeks?

PERT FORMULA.
Pert duration: p+(4)*(M)+0 divided by 6.
Standard deviation of an activity of
an activity=(p-o)/6.= s.d.
Variance of an activity = (s.d) squared.
Confidence = NORMDIST(D, PERT TIME, SD, TRUE ).
Duration needed at a confidence level = NORMINV
(PROB, PERT DUR, SD ).

PERT EXERCISE-1

SL.NO
pred
O M P
1 ESTIMATE
5 7 15
2 BID
1
10 15 25
3 BUILD
2
4 7 10
4 TRAIN
2
4 4
4
5 IMPLEMET.
3,4
3 5
10
Find PERT duration of the project.
Probability of completing the project?

PERT EXERCISE- 2

Sl no
1
2
3

Activity
A
B
C

OMP
2 4 6
5 13 15
13 18 35

Pred. pert dur

nil
4
1
12
2
20

PERT EXERCISE- 2

Project PERT duration :36 days.

Project std dev:4.08
36+/- 1 std dev=36+/-4.08=40.08 to 31.92 days.
There is 68% chance (0.68 prob ) of completing the
project in 31.92 to 40.08 days.
There is 34% chance (0.34 prob ) of completing the
project in 36 days to 40.08 days.
There is 34% chance (0.34 prob ) of completing the
project in 31.92 days to 36 days.
Duration needed at a confidence level = NORMINV
(PROB, PERT DUR, SD )= ((0.34+0.50), 36, 4.08 )

PERT EXERCISE- 2
If two tail statistical table is referred:
68% confidence = 68/2 = 34% confidence for 36 days
to 40.08 days.
34% confidence for 31.92 to 36 days.
So for confidence of 0.34 , z= 1.0
Z= (x- pert dur of project )/ s.d = 1= (x-36)/4.08 , x=
40.08 days.
If single tail statistical table is referred:
Add 0.5 to 0.34 i,e 0.84 that corresponds to z value
of 1.0 x=40.08 days.
If excel is used prob =0.84 excel uses single tail

PERT EXERCISE: 3

Sl no. Act
dur (d)
pred.
1. project dels
10- 12 -14
---2.procure h/w
2 -2 -2
1
3.test h/w
8 -8 -8
2
4.procure s/w tools. 8 -10 -14
1
5.write programs
38 -45 -57
4
6.test & debug
20-22 -30
5
7.install
5-8-10
3,6
8.training
3-3 -3
7
9.acceptance
1 -1-1
8.
Find critical path, float/slack, for each activity.
There is 68% chance that write program activity will be
completed in ------ days to -------- days.

Variance of the project? Standard deviation of the project?

Project dur=103 days. Variation of project=14.98 s.d= 3.87

PERT EXERCISE: 3
PERT duration of activity write program =
(p+4*m+o)/6 = (38+4*45+57)/6 = 45.83
Standard deviation = (p-o)/6 = (57-38)/6 =3.17
Now we can say:
There is 68% chance that write program activity
will be completed in 42.66 days to 49 days

Monitor & Control Schedule

Tracking:

Set project review date.

Project update.
Show progress line at status date.
Save base line.

Project progress reports.

Critical chain
Critical chain method:
Dr Goldratt.
Managing systems through constraints: TOC
Weakest link is the strongest, because it can break
it.
1. Identify the constraint of the system.
2. Decide how to exploit the constraint of the system.
3. Subordinate every thing else to the decision taken
regarding the constraint.
4. Elevate the constraint.
5. Go back to focusing step-1

Critical chain
Project management using TOC:

Students syndrome --- Law of Murphy.

Law of Parkinson.
Multitasking.
Feeding buffers.
Project buffer.
Critical chain:
In addition to task dependent, is resource dependent
longest path.

RESOURCE LEVELLING

Sl.no
1
2
3
4
5
6
7

activity
A1
A2
B1
B2
C1
C2
C3

duration
3D
2D
2D
2D
3D
3D
2D

pred
nil.
1
nil
3
nil
5
2,4,6

Reso.
Ram.
Lax.
Lax.
Lax.
Sita.
Sita.
Sita.

Project Cost Management

Includes processes that make the project completion within
approved budget.
Estimate cost:
The process of developing an approximation of the monetary
resources needed to complete project activities.
Determine budget:
The process of aggregating the estimated costs of individual
activities or the work packages to establish an authorized cost
base line.
Control costs:
The process of monitoring the status of the project to update
the project budget, and managing changes to the cost base
line.

Earned Value
4-fences. Each fence/day. Rs1000/fence. One fence
after another.

Report at Day-3.
Completed one wall. spent Rs1000.(D-1)
Completed one wall. Spent Rs1200(D-2)
Completed 50%wall.spent Rs600 (D-3)

Pv=1000+1000+1000=3000
Ev=1000+1000+500=2500
Ac=1000+1200+600=2800

Earned Value
BAC =Rs4000.
Cost variance = EV-AC=2500-2800=-300
Cost performance index =EV/AC=2500/2800=0.893
Over budget. Getting 89 paise for every rupee.
Schedule variance =EV-PV=2500-3000=-500
Schedule performance index=SPI=2500/3000=0.833
Behind schedule & progressing @83% of the rate
originally planned.

Exercise - EV Problem
The project: 5 software package installs on 5 existing
PCs in 5 weeks (1 installation /week ) for a total
consulting fee of $5,000. After two weeks only 1 install
has been done for a cost of $1,500.
Determine PV, AC, EV.
Calculate SV, CV, SPI, CPI.
Assume the rate of progress continues and calculate
EAC .

164

Exercise Solution

165

Earned Value
You have planned for a project to write a software
application to take 1 year. The costs to this project
are budgeted at $12,500 per month.
Six months into the project, you find that software
application is 50% completed, & spent $70,000
Calculate CV, CPI, SV, SPI, VAC.

Earned Value

BAC =(12 MONTHS)*($12,500/MONTH)= $150,000

PV=(6MONTHS)*($12,500)/MONTH=$75,000.
EV= SW IS 50% COMPL = $75,000.
AC=$70,000
CV=EV-AC=$75,000-$70,000=$5000.
SV=EV-PV=$75,000-$75,000=$0.
CPI=EV/AC=75,000/70,000=1.O7
SPI=EV/PV=75,000/75,000=1
EAC=BAC/CPI=$150,000/1.07=$140,186.91
ETC=EAC-AC=$140,186.91-$70,000=$70,186.91
VAC=BAC-EAC=$150,000-$140,186.91=$9813.09

Earned Value Management

168

EVM
Consider a company that took earned value
measurements at monthly intervals for the past three
months:

EV
AC
Month-1
$22,000
$13,700
Month-2
$151,000
$ 137,900
Month-3
$ 107,000
$98,400
CPI cum? At the end of 3-months.

EVM

EV

EVc

AC

ACc

CPI

Month-1, 22000 22000 13,700 13700 1.61

CPIc
1.61

Month-2, 151000 173000 137,900 151,600 1.09 1.14

Month-3, 107,000 280,000 98,400 250,000 1.09 1.12

PROJECT HUMAN RESOURCE

MANAGEMENT
INCLUDES THE PROCESSES THAT ORGANIZE AND
MANAGE THE PROJECT TEAM.

Project human resource

processes
Develop human resource plan:
Identifying, and documenting project roles,
responsibilities, and required skills, reporting
relationships, & creating staffing management
plan.

Acquire project team:

Confirming human resource availability and
obtaining the team necessary to complete project
assignments.
.

Project human resource

processes
Develop project team:
The process of improving the competencies, team
interaction, and the overall team environment to enhance
project performance.

Manage project team:

The process of tracking team member performance,
providing feed back, resolving issues, and managing
changes to optimize project performance

RACI
RACI Chart

Person

Activity

Krishna

Ram

Sita

Karthik

Vinay

Define

Design

Develop

Test

Legend: R = Responsible, A = Accountable, C = Consult, I Inform

174

PROJECT QUALITY
MANAGEMENT
INCLUDES ALL THE ACTIVITIES OF THE
PERFORMING ORGANIZATION THAT DETERMINE
QUALITY POLICIES, OBJECTIVES, AND
RESPONSIBILITES SO THAT THE PROJECT WILL
SATISFY THE NEEDS FOR WHICH IT WAS
UNDERTAKEN.

QUALITY
Quality is the degree to which a set of inherent
characteristics fulfill requirements.
Stated and implied needs are inputs to developing
project requirements.

QUALITY
Plan quality:
The process of identifying quality requirements and how
the project will demonstrate compliance /or standards
for the project and product, and documenting.

Perform quality assurance:

The process of auditing quality requirements and the
results from quality control measurements to ensure
appropriate quality standards and appropriate
operational definitions are used.

Perform quality control:

The process of monitoring and recording results of
executing the quality activities to assess performance
and recommend necessary changes.

Project communication management

Identify stake holders:
The process of identifying all people, or organizations
impacted by the project and documenting relevant
information, regarding their interest, involvement, and
impact on the project success.

Plan communications:
The process of determining the project stakeholder
information needs and defining a communication approach.

Distribute information:
The process of making relevant information available to the
project stakeholders as planned.

Project communication management

Manage stakeholder expectation:
The process of communicating and working with
stakeholders, to meet their needs and addressing their
issues.

Report performance:
The process of collecting and distributing performance
information, including status reports, progress
measurements, and forecasts.

Project Risk
Management.

probability is
the language
of uncertainty

Risk management is
the means by which
uncertainty is
systematic managed

Key word is systematic

Project Risk management

Risk

Uncertain
event
or

condition
that if
occurs
has
+ ve - ve

effect on the Project Objectives

Project Risk Management

Includes the processes of conducting risk
management planning, identification, analysis,
response planning, and monitoring and control on a
project.
The objective:
To increase the probability and impact of positive events,
and decrease the probability and impact of negative events
in the project.

Project Risk Management

Project risk is always in the future.
Risk is an uncertain event or condition, that if it occurs, has an
effect on at least one project objectives.
Objectives can include scope, schedule, cost, and quality.
A risk may have one or more causes and if it occurs, it may
have one or more impacts.
A cause may be a requirement, assumption, constraint, or
condition that creates a possibility of negative or positive
outcomes.
Risk --- cause--- event/condition ---- impact (on project
objectives)

Project Risk Management

Project risks can be substantially decreased.
Some studies quote a 90% decrease in project
problems, through the use of risk management.

Through the process of risk management, we

change from the project controlling PM, to PM
being in control of the project.

It focuses on proactively preventing things that can

go wrong and helping things to go right.

Project Risk Management

Individuals and groups adopt attitudes towards risk that
influence the way they respond.
These risk attitudes are driven by perception, tolerances, and
other biases.
These factors must be made explicit whenever possible.
Risk responses reflect an organizations perceived balance
between risk - taking and risk - avoidance .
Moving forward on project, without a proactive focus on risk
management can potentially lead to project failure.

PROJECT RISK MANAGEMENT

A cause :
May be requiring an environmental permit to do
work.
Risk event: (probability)
Is permitting agency may take longer time than
planned to issue a permit.

Project objective:( impact)

Time over run.

PROJECT RISK MANAGEMENT

A cause:
Having limited personnel assigned to design
a project.
Risk event / condition:
The design personnel available and assigned
may not be adequate for the activity.
Impact on project objective:
Cost, schedule ,or performance (quality).
Risk score=(probability)*(impact) for
prioritization.

Risk management planning

Definition conditions for Impact Scales of a Risk on
Four Major Project Objectives
(examples are shown for negative impacts only)

Project Very low

.05
objective
Cost
Schedule
Scope
Quality

Low
.1

<5%
Insignificant
cost increase cost increase
Insignificant
sch slippage

<5%
sch slippage

Barely scope Minor areas

scope
change affect
affected
noticeable
Low quality
barely
noticeable

Affects vary
demanding
applications

Moderate

High

Very high

.2

.4

5-10%
cost increase

10-20%
cost increase

>20%
cost increase

5-10%

10-20%

>20%

sch slippage

sch slippage

Scope
Major areas
of scope
reduction
affected
unacceptable
Quality
reduction
requires
approval

Quality
reduction
unaccepted

.8

sch slippage
Effects
project
product
Effects
project
product

Risk management planning

probability and impact matrix
Risk score (probability x impact) for a specific risk
Opportunities

Threats

Probability
0.9

0.05

0.09

0.18

0.36

0.72

0.72

0.36

0.18

0.09

0.05

0.7

0.04

0.07

0.14

0.28

0.56

0.56

0.28

0.14

0.07

0.04

0.5

0.03

0.05

0.10

0.20

0.40

0.40

0.20

0.10

0.05

0.03

0.3

0.02

0.03

0.06

0.12

0.24

0.24

0.12

0.06

0.03

0.02

0.1

0.01

0.01

0.02

0.04

0.08

0.08

0.04

0.02

0.01

0.01

0.05

0.10

0.20

0.40

0.80

0.80

0.40

0.20

0.10

0.05

Impact (Ratio scale) on an objective - cost, time, scope of quality

Low impact

Moderate impact

High impact

RISK SCORE
Risk event : govt may increase commercial tax.
Likely Impact on the project objective: cost increase
<6%.
Ref impact matrix:
It is low with value 0.2
Prob of this event happening=0.2
The risk score =(0.2)*(0.2)=0.04
Ref PI matrix : this score is on Green.
This may not require response plan.

RISK SCORE
Risk event: there may be strike on port.
Likely impact on the project objective: cost . The
cost of out put of the project may increase >20%.
Ref impact scale : very high (0.8)
The team assess the prob of this event happening=
0.4
The risk score of this event =(0.8)*(0.4)=0.32
This score is on RED. To be taken on top priority
for response planning.

Risk Breakdown Structure

(RBS)
Project

Technical
Requirements

External

Subcontractors
& Suppliers

Organizational

Project
dependencies

Technology

Project Mgmt
Estimating

Planning
Regulatory

Resources

Complexity &
Interfaces

Market

Funding

Controlling

Performance
& Reliability

Customer

Prioritization

Communication

Quality

Weather

Project Risk Management

The major steps of risk management are:

Creating a risk management plan.

Identifying risks.
Analyzing risks.
Creating a risk response plan.
Monitoring and controlling risks through out the
project.

Project Management
Risk can be threat or opportunity.
Responses for threat:
Avoid, transfer, mitigate.

Responses for opportunity:

Accept, enhance, share.

Passive acceptance and active acceptance.

Contingency plans.

Risk monitoring & control:

Work around plan to deal with secondary risks.

Project procurement management

Plan procurements:
The process of documenting project purchasing decisions,
specifying the approach, and identifying potential sellers.
Conduct procurements:
The process of obtaining seller responses, selecting a seller,
and awarding a contract.
Administer procurements:
The process of managing procurement relationships,
monitoring contract performance, and making changes, and
corrections as needed.
Close procurements:
The process of completing each project procurement.

RFP
Guide lines for drafting a formal request for proposal
for an contractor:
An RFP must provide statement of work.
Customer requirements.
What deliverables the customer expects the contractor or
the project team to provide.
Should list any customer- supplied items.
RFP might state approvals required by the customer.
Some RFP mention the type of contract the customer
intends to use.
An RFP might state the payment terms the customer
intends to use.
Should state the required schedule for completion of the
project.

RFP
Should provide instruction for the format and the content of
the contractors proposal.
Should indicate the due date by which the customer expects
potential contractors to submit proposals.
May include evaluation criteria.
In rare cases an RFP will indicate the funds the customer
has available to spend on the project.

Preparing proposal

Ensure that the proposal process is competitive.

A customer uses RFP to solicit competing proposals from

contractors.

Submitting a proposal that meets the SOW of work and

requirements in the RFP is not sufficient to guarantee selection as the
winning contractor.

The customer will select the one that it expects will provide the best
value.

A proposal is a selling document.

In the proposal the contractor must convince the customer that the
contractor :

Understands what the customer is looking for.

Can carry out the proposed project.
Is the best contractor to solve the problem.
Will provide the greatest value to customer.
Will capitalize on its successful experience with previous related projects.

Preparing proposal

Will do the work professionally.

Will achieve intended results.
Will complete the project within budget and on schedule.
Will satisfy the customer.

In the proposal the contractor must highlight the

unique factors that differentiate it from competing
contractors.
Must stress the benefits to the customer if the
customer selects the contractor to execute the
project.

Preparing proposal
Proposal contents:
Technical.
Management.
Cost.
Technical section:
Objective is to convince the customer that the contractor understands
the need or problem and can provide least risky and most beneficial
solution.
Understand the problem.
Proposed approach / solution.
Benefits to the customer.

Management section:
Description of work tasks.
Deliverables.
Project schedule.
Project organization.
Related experience.
Equipment and facilities.

Preparing proposal
Cost section:
The objective is to convince the customer that the contractors
price for the proposed project is realistic and reasonable.
In some cases, the customer may want only the bottom line total
cost of the project.
Some customers also want to see the cost of optional items.
Government RFP s usually require contractors to provide a
detailed breakdown of various costs.

Labor.
Materials.
Subcontractors and consultants.
Equipment and facilities rental.
Travel.
Documentation.
Overhead costs.
Escalation.
Contingency.
Fee or profit.

Project
CHARTER,

Now I have
an authority
to direct the
assigned
resources on
project to:
scope

manage

Triple
Constraints

Budget

mile
stones

Project Integration Management

CONSISTS OF:

Develop project charter.

Develop project management plan.
Direct and manage project execution.
Monitor and control project work.
Integrated change control.
Close project.

Global project management

Globalization adds a unique dimension on project
management.
Cultural differences.
Multinational economic transactions.

Currency fluctuations and exchange rates.

Country-specific work codes and regulations, such as hours
per day, holidays, religious observances.
Interdependence of economies.
Corporate joint ventures and partnerships creating entities
with a presence and facilities in multiple countries.
Political relations between countries.
Availability of high-demand work force skills.

Global project management

Requires additional set of competencies:
To have foreign language skills.
Knowledge and understanding of other countries and cultures,
geography, world history, and international economics (
currencies, exchange rates, export /import transactions ).
Culture and customs ( meal times, eye contact, possible differing
roles of men and women, dress codes, religious practices, lines of
authority, communication protocol etc. )
Etiquette (in some countries sitting with crossed leg is considered
as insult, or shaking hand, or touching some one of the opposite
sex is frowned upon )

To have awareness of geo- political environment of the countries

of various project participants, in particular the country of the
customer.

Global project management

Learning and understanding the culture and
customs of other project participants demonstrates
respect, helps build trust, aids in developing an
effective project team.

It is critical for the successful global project

management.

Benefits of Project management

Project management is essential to business results.

Having a satisfied customer.

If youre a PM, you have the satisfaction of knowing you led a

successful project effort.

You have enhanced your reputation as successful project manager

and positioned your self for expanded career opportunities.

If you are a team member, you feel satisfaction of being on a winning

team.

You not only contributed to the projects success, but also probably
expanded your knowledge and enhanced your skills along the way.

When the project is successful, everybody wins.

Project Management
Project management provides people with a
powerful set of tools that improves their ability to
plan, implement, manage activities to accomplish
specific organizational objectives.
Project management is wave of future.
It is a result oriented management style that focus
on building collaborative relationships among
diverse stakeholders.
Exciting opportunities wait people skilled in project
management.

Project Management
Project management provides people with a
powerful set of tools that improves their ability to
plan, implement, manage activities to accomplish
specific organizational objectives.
Project management is wave of future.
It is a result oriented management style that focus
on building collaborative relationships among
diverse stakeholders.
Exciting opportunities wait people skilled in project
management.

Project Management

Project management is indispensable

for business results.

Thank You