LESSON 7 PROJECT PLANNING

INTRODUCTION Project Planning is foreseeing with blue print towards some predicated goals or ends. Project plan is a skeleton which consists of bundle of activities with its future prospects; it is a guided activity. It is a plan for which resources are allocated and efforts are being made to commence the project with great amount of preplanning, project is a way of defining what we are hoping to do about certain issue. Project is a final form of written documents that guides us as to what steps need to be taken next. NATURE OF PROJECT PLANNING One cannot conceive a project in a linear manner. It involves for activities, resources, constraints and interrelationships which can be visualized easily by the human mind and planned informally. A project crosses a certain edge level of size and complexities, informal planning has to be substituted by formal planning. It is an open system oriented planned change attempt which has certain parameters and dimension. The need for formal planning is indeed much greater for project work than for normal operations. The pre-defined and outlined in detail plan of action helps than manners to perform their task more effectively and efficiently. There are always competing demands on the resources available in a region or a country because of the limited availability and ever expanding human needs. Planning for the optimum utilization of available resources becomes a pre requisite for rapid economic development of a country or a region. Project planning makes a possible to list out the priorities and promising projects with a view to exercising national choice among various alternatives available. It is a tool by which a planner can identify a good project and to make sound investments decisions. PROJECT OBJECTIVES AND POLICES Summarise the specific objectives of the project. Along with the aims outlined in the project summary they set out what you plan to do. Specific Be clear about what will be achieved Measurable Quantify results and measure when they have been achieved Achievable Ensure they can be achieved Realistic Can be attained with within project resources Timed Can be attained within a specified timescale.

The aims and objectives will give your project a direction and will allow you to focus on results. Throughout the project, revisit your objectives and measure what you have achieved. At the end of the project they will help you to demonstrate what you have achieved.

NEED FOR PROJECT PLANNING One of the objectives of project planning is to completely define all work requested so that it will be readily identifiable to each project participant. Besides that there are four basic reasons for project planning. To eliminate or reduce uncertainty To improve efficiency of the operation To obtain a better understanding of the objectives To provide a basis for monitoring and controlling work

Components of a Project Plan A project type determines some of the components in a project plan. Project types such as computer technology, construction or manufacturing have unique deliverables, such as a computer network or a bridge, and the project plan components must support the deliverables. For example, a computer-technology plan to develop and implement an application would include a technology evaluation component. However, some core components exist for all projects. Project Objectives The objectives for this project have been summarized as: 1. Time The project plan must contain the time taken to complete the project end-end from requirements to implementation. A detailed analysis of each stage and the time taken for the same must be outlined upfront and milestones for each stage defined. 2. Cost The cost for completion of the project as defined by the time taken to complete and the technical and business objectives being met is to be defined. All the project objectives are linked to each other and any change in one variable affects the others as well. For e.g. a change in the technical requirements would mean that more time would be required to complete the project and this in turn affects the cost. Thus there are cascading affects on each of the variables. 3. Business The business objectives have to be clearly spelt out by your company in terms of the sales generated, the cost benefit analysis of building a website and consequent revenue generation etc. 4. Technical The technical requirements can be stated in terms of the quality of the deliverables and the number of defects found during each of the testing phases and the turnaround time for implementation etc. Problem and Mission Statements Develop a statement that defines the problem to solve. For example, a problem statement could be that an outdated network fails to meet heavy usage demands. A mission statement defines how to solve the major problem plus many smaller related ones. For example, the users require a new computer network to replace the outdated network. In addition, the solution will include an electrical upgrade for the data communications room to support the network.

Objectives and Deliverables Objectives and deliverables define the results to achieve from the project. These must be specific, measurable and time-bound. For example, an objective statement might indicate that a new computer network will replace the outdated network at the business office by March 19, 2011. The deliverable is the new computer network. Specifications Provide specifications that define standards and requirements, such as building codes and government regulations. For example, fire and building codes dictate how to perform an electrical upgrade to a data communications room. In addition, the computer network has defined standards for data communications. Work Breakdown Structure The work breakdown structure (WBS) defines all tasks necessary to accomplish the project objectives. These tasks define the project scope, which indicates what activity is included in the project. The WBS also determines the sequence of project tasks. This is known as task dependencies. For example, project teams must complete one task before starting a dependent task. Resources Use the WBS to determine required resources, such as personnel, equipment and material. After determining the resources, estimate activity duration and project cost. Next, establish a budget that should contain a contingency amount, which normally is based on a percent of the estimated project cost. Otherwise, unforeseen issues will arise and funding for the necessary tasks to address these issues will not be available. Schedule Based on the WBS and resources, develop a work schedule to complete all tasks necessary to achieve objectives and produce project deliverables. A schedule will reflect task dependencies. It should take into account circumstances that affect the project schedule, such as political climate, bad weather, constraints related to other projects and the economy. For example, building a new computer network might face delays because of an economic downturn.

TYPES OF PROJECT PLAN The routinisation of planning is done by types of planning decisions, They are as follows: a) One shot or single use plans and b) Standing or Standard use plans Single use plans: It includes programmes schedule and special ways of operating under particular circumstances. Single plans are meant as objectives which centre on focused and desired results. In can also be known as short term plans to deal with the specific problem for specific place with prescribed time limit.

Standing plans: Standing plans are those plans which include policies, standard methods and standard operation, procedures. They are designed to deal with recurring problems. It may be treated as standard document to be used in different plans to deal with a set of problems. The design procedure and steps are already described. It may require adjustment considering the unit of operation. PROJECT DESIGN A project is a blue print for actions oriented activities of organization/individuals projects reflects the plans for action in it totality.

So, project design is the heart of the project entity. It defines the individual activities which go into the corpus of the project and their inter relationship with each other. It identifies the flow of events which must take place before a project can start yielding the results for which it has been set up. Project designing is primarily convened with the development of the detailed work plan of the project with time schedule. The design can most conveniently express the inter-relationship between various constituent activities of a project in the form of a net work diagram. This design gives a clear picture of the work elements of the project and paves the way for detailed identification and quantification of the project inputs. TIME ESTIMATE While designing a project it is essential to fix/set time target for each and every activities of the project. It helps to complete the projects as per time schedule through which it can enjoy optimum benefits. Time estimate can be made by making a work break down of the project, estimating the time schedules for each work, putting them in proper sequence as per technical or any other logical manner and finally matching their build-up on a time scale with the available resources. The time estimation for completing a project depends not only the work content/sequence but also be influences by resources and constraints. So, the basic factors involving in the time estimation are work, constraints, resources and also the data available. Besides that, three time values can be obtained for each activity of a project viz., Optimistic time (to) Most likely time (tm) Pessimistic time (tp) The optimistic time is the time required if no hurdles or complications arise. The most likely time, tm, is the time in which the activity is most likely to be completed. This estimates takes into consideration normal circumstances, making allowances for some unforeseen delays. The pessimistic time, tp, is the time required if unusual complications and / or unforeseen difficulties arise. Conditions of time estimate

1.

2. 3. 4. 5.

Time estimate should be obtained by skipping around the network rather than by following a specific path. If estimates are obtained by following one path, there is tendency for the person providing estimates to add them mentally and compare them with a previously conceived notion of the time of the total path. The estimates of to, tm and tp should be defined independently of each other. The time available for completing the project should not influence the estimates of to, tm and tp. It should be made known that to, tm and tp are estimates and not schedule commitments. The estimates of to, tm and tp should include allowances for occurrences which are generally considered as random variables (weather conditions, administrative delays) but not for occurrences that are normally not considered as random variables (flood, war etc.)

Average time Once the three time estimates for each activity are obtained, the expected value of activity duration is calculated. The expected value, te, is usually obtained by the formula:
te to 4 tm tp 6

where : te tm tp = = = optimistic time most likely time pessimistic time

The time estimates for various activities of a project is given in the following Activity Numerical Description a b c d e f 1-2 1-3 2-4 3-4 2-5 4-5 Time to 9 6 1 4 10 1 tm 12 12 1.5 8.5 14 2 tp 21 18 5 10 24 3
te to 4 tm tp 6

13 12 2 8 15 2

The network diagram with average time estimates is shown in the following figure:

13

15

2 12 2 8

Difference approaches of time estimation 1. Time study approach: In this approach the time T for completing a work is T = a/P x n where a = total quantity of work, P = productivity factor, n = normal size of view. But it is very, difficult to realize the above data. 2. Previous project data: In this approach data from recently competed projects are used without consideration of a , p and n. Often these data are used for estimating broad work package duration. Their values are also used for estimating the overall project duration. 3. Estimating approach: In this approach experienced project personnel are asked to guess project duration. This approach is widely used for estimating time duration for a project. Three estimates optimistic, most likely pessimistic are made in this approach to make up for error in the estimates. A single time, known as expected time the is then worked out as

te

to 4 tm tp 6

This approach has been used for calculating the average time as given above. 4. Range Estimates: These estimate may also be a estimate or even past data. No two do time data from past projects for any work will be the same; they can be better expressed by a range. e.g. vendors quite often guest deliveries like 6-8 months or 10-12 months.

5. Estimates from vendors and contractors: Vendors and contractors are asked to indicate time estimates as they are often asked to quote budgetroy cost estimates. These estimates in a competitive situation are supposed to provide a realistic estimate. 6. Allocated an committed time Certain activities requires a fixed duration likes an incubation period. The duration could be changed, within a limit, to meet the requirements of the project. In practice, therefore, instead of trying to accurately estimate the duration, a reasonable duration is allocated and commitment obtained from the people who will be held responsible for implementation. When the duration is not acceptable to any one, it may change. PROJECT SCHEDULING It is one of the key components in the project control system. It refers to when it is to be done and how much is to be done. The purpose of scheduling is to obtain commitment, communicate the commitments to concerned and ensure coordination through self regulating first efforts. The scheduling is helpful to link the summarial activities appearing in the network. PURPOSE: The ongoing scheduling and monitoring process enables one to: 1. 2. Successively detail out the schedule to provide equivalence with reality. Adopt the schedule to the changed realities

3. Provide intervention when stability of the work system is being threatened and revitalize the system. Monitoring is an action inducing efforts meaning thereby that it would ensure that commitments made by various agencies are followed by action.

TIME MONITORING EFFORTS For monitoring the time aspect of the projects, the efforts should be taken. 1) Conduct appreciation programme for the owner. 2) Development of project execution plan and overall project implementation schedule. 3) Preparation of special condition of contract for scheduling and monitoring by work package contradictions. 4) Evaluation of bids in relation to scheduling and monitoring. 5) Appearance or review the detailed schedules and progress reports submitted by vendors and contractors. 6) Review with owner, consultants, contractors and vendors. 7) Project audit and corporate review 8) Monthly progress report to the owners 9) Installation and operation of an on-line information system. 10) On the job training for on-going scheduling and monitoring to the monitoring agency. So schedule control is to ensure adherence to the agreed time schedule for the project. Monitoring and control of project and time, therefore becomes essential to ensure adherence to project schedule. BOUNDING SCHEDULES Scheduling of non critical activities can be done by two schedules: Early start schedule Late start schedule Early start schedule refers to the schedule in which all activities start as early as possible. In this schedule a) Are events rear at their earliest because all activities start at their earliest starting time and finish at their earliest finishing time. b) There may be time legs between the completion of certain activities and the occurrence of events which these activities lead to, and c) All activities emanating form an event at the same time. The early start schedule: It suggests a careful attitude towards the project and a desire to minimize the possibility of delay. It provides a greater measure of protection against uncertainties and adverse circumstances. Such a schedule however, calls for an earlier application of resources. A model for early start schedule is given below: The early start schedule

3 0 5 10 15

4 20 25 30 35 40

The late start schedule: It refers to the schedule arrived at when all activities are started as late as possible. In this schedule, i.) ii) iii) all events occur at their latest because all activities start at their latest starting time and finish at their latest finishing time. some activities may start after a time lag subsequent to the occurrence of the proceeding events. all activities to an event are completed at the same time:

The late start schedule reflects a desire to commit resources late as late as possible. However, such a schedule provides no elbow room in the wake of adverse developments. Any unanticipated delay results in increased project duration. A model for late start schedule is given below: The late start schedule

0
Example 1:

10

15

20

25

30

35

40

SCHEDULING TO MATCH AVAILABILITY OF MANPOWER Let us consider a small project for which the network diagram is shown in fig. 2 1 day 2days

2days
1 6

1day
3days 4 5

2days 8

In fig. activity duration is shown above the activity arrow and manpower requirements are shown below the activity arrow. Only 12 men are available for the project (a manpower resources constraint). SCHEDULING TO MATCH REALIZE OF FUNDS The cost estimates for various activities of our illustrative project is given in the table. For out discussion here weeks have been changed to months. Cost estimates Activity (1-2) (1-3) (2-4) (3-4) (2-5) (4-5) Duration 13 12 2 8 15 2 Cost per months 2,00,000 5,00,000 10,00,000 2,50,000 1,00,000 7,50,000 Total Cost in months 26,00,000 60,00,000 20,00,000 20,00,000 15,00,000 15,00,000 1,56,00,000

The government has decided to release Rs. 1,56,00,000 required for the project in the following manner. Rs. 69,00,000 in the first year Rs. 68,00,000 in the second year, and Rs. 19,00,000 in the third year. It has also stipulated that the unspent amount would lapse and hence cannot be carried forward. Before we develop the project schedule a preliminary question may be asked: is it possible prima facie to schedule this project without extending its duration beyond 28 months, which is the minimum time required given the network logic and activity duration? To answer this question let us look at the funds requirement for the early start schedule and late schedule. This is shown in Fig. From Fig. we find that: 1. The rate of expenditure is relatively higher for the earlier stages in the early start schedule and is relatively higher for the later stages in the late start schedule. 2. A rate of spending greater than that of the early start schedule is not possible (This is because in the early start schedule all activities start as early as possible). Any release of funds above the early start schedule requirement curve is beyond the capacity of the project to spend.

3.

4.

The rate of spending corresponding to the late start schedule is the absolute minimum necessary to complete the project on time. If the rate of spending is less, than that corresponding to the late start schedule the project duration will have to be necessary extended. A pattern of funds release lying between the two bounds, early states schedule requirement and late start schedule requirements, prima facie suggests that a schedule can be worked out without extending project duration.

Let us not look at the cumulative funds release pattern for our illustrative project. This lies between the early start schedule requirements as late start schedule requirement. So prima facie it suggests that a feasible schedule without extending the project duration can be developed. Let proceed further and consider scheduling year by year. The activities thus begin in year 1 according to the early start schedule are (1-2) and (1-3). If both these activities are commenced as early as possible, the fund requirement for year 1 would be Rs. 84 lakhs. Since this amount exceeds Rs. 69 lakhs, the amount to be released in year 1, the expenditure in year 1 has to be reduced by Rs. 15 lakhs. For this we consider the possibility of shifting activities to subsequent periods. Looking at activities (1-2) and (1-3) we find that (1-2) is on the critical path, so there is no flexibility available with respect to it. Activity (13), however, can be shifted as it is not on the critical path. Since activity (1-3) requires Rs. 5 Lakhs per month it has to be shifted by three months so that the amount spent in year 1 in equal to the amount released in year 1. Since there is free float of six months for activity (13), we shift it by three months. We not go to years 2. The effects of shifting activity (1-3) by three months are as follows: (i) the funds requirement for year 2 on account of activity (1-3) increases by Rs. 15 Lakh over and above what it is for the early start schedule, (ii) The earliest finishing time moves to 23 months from 20 months. Since this shift occurs within year 2, there is no change in funds requirement on account of activity (3-4), (iii) The earliest starting time for activity (4-5) moves to 23 months from 20 months and the earliest finishing time for activity (4-5) moves to 25 months from 23 months. This decreases the funds requirement for year 2 by Rs. 7.5 lakhs = Rs. 75.5 lakhs. However, the funds budgeted for year 2 are only Rs. 68 lakhs. So we consider the possibility of shifting some activities to year 3. We find that by shifting activity (4-5) to year 3 the expenditure in year 2 can be reduced to Rs. 68 lakhs, the budget of the year. As a result of this shifting the expenditure for year 3 (first four months of it) equals the budgeted funds release for year 3. The schedule arrived at finally is shown in Fig.

PROBLEMS IN SCHEDULING REAL LIFE PROJECTS In the above discussion we have considered simple examples comprising few activities and one constraint, to indicate the broad approach. In real life projects the activities run into hundreds and there may be several constraints. The problem of scheduling in such cases tends to become very complex. For solving such problems the technique of linear programming can be used. However, when a problem has numerous activities, say more than 100, the technique of linear programming becomes computationally unwisely and inordinately expensive, even with the aid of fastest computers available. In view of the practical difficulties in using linear programmer for solving large-scale scheduling problems, heuristic programs have been developed. A detailed discussion about these aspects are given in paper 4.

PROJECT COST MONITORING COST CONTROL Cost control is important to al companies, regardless of size. Small companies generally have tighter monetary controls, mainly because of the risk with the failure of us little as one project, but with less sophisticated control techniques. Large companies may have the luxury to spread project losses over several projects, whereas the small co., may have ten projects. Cost control is not only monitoring of cost and regarding perhaps massie quantities of data, but also analyzing the data and to take corrective action before it is too late. Cost control should be performed by all personnel whoever may be the cost centre projects office. Cost control is actually a such system of the management cost and control system. The purpose of any management cost and control system is to establish policies, procedures and techniques that can be used in the day-to-day management and control of projects and programs. The planning and control system must, therefore, provide information. The appropriate system must consider a cost/benefit analysis, and include such items which are: Planning & control techniques facilities Derivation of output specifications (project objections) Delineation of required activities (work) Co-ordination and communication between organizational units Determination of type, amount and timing of necessary resources Recognition of high risk elements and assessment of uncertainties Suggestions of alternative courses of action Realization of effect of response level charges on schedule and output performance Measurement and reporting of genuine progress Identification of potential problems Basis for problem solving decision marking and corrective action Assurance of complying between planning and control

PROJECT COST Planning & control techniques require: a) New terms (new systems) of information form additional sources incremental processing (managerial time computer experts etc.,) b) Additional personnel or smaller spurn of control to free managerial time for planning and control task (increased overhead) c) Training is use of Techniques (time and material)

and

A well disciplined Management Cost Control System (MCCS) will produce the following results: 1. 2. 3. 4. 5. Policies and procedures that will minimize the ability to distort reporting Strong management emphasis on meeting commitments Weekly term meetings with a formalized agenda, action items and minutes Top management periodic review of the technical and financial status Simplified internal audit for checking compliance with procedures

COST CONTROL SYSTEMS Effective management of a progress during the operative cycle requires that a well-organized cost and control system be designed, developed and implemented so that immediate feed back can be obtained, whereby the up-to-date usage of resources can be compared to target objectives established during the planning cycle. REQUISITES OF EFFECTIVE CONTROL SYSTEM The requirements of an effective control system (for both cost & schedule/performance) should include: a) Through planning of the work to be performed to complete the project b) Good estimating of time, labour and costs c) Clear communication of the scope of required tasks d) A disciplined budget and authorization of expenditures e) Periodic re-estimation of time and cost to complete remaining work f) Frequent, periodic comparison of actual progress and expenditure to and budgets, both at the time of comparison and at project completion.

schedules

Management must compare the time, cost and performance of the progress to the budgeted time, cost and performance, into independently but in an integrated manner. The first purpose of control therefore becomes a verification process accomplished by the comparison of actual performance to date with the predetermined plans and standards set forth in the planning phase. The comparison serves to verify that: The objectives have been successfully translated into performance standards. Performance standards are, in fact, a reliable representation of progress, activities and events. Meaningful budgets have been established such that actual Vs planned comparisons can be made. In another words, the comparison verifies that he correct standards were selected and that they are properly used. The second purpose of control is that of decision making. Three useful reports are required by management in order to make effective and timely decision: The project plan schedules & budget prepared during the planning phase A detailed comparison between the resources expanded to date and those predetermined. This includes an estimate of work remaining and the impact on activity completion. A projection of resources to be expanded through progress completion These reports are then supplied to both the managers and the doers. Three useful results arise through the use of these reports, generated during a thorough decision making stage of control. Feed back to management, the planners and the doers. Identification of any major deviation from the current program, plan, schedule and budget The opportunity to initiate contingency planning early enough that cost, performance and time requirements can undergo corrective action without loss of resources.

 These report, if properly prepared, provide management with the opportunity to minimize downstream changes by making proper corrections here and now. The management cost and control (MCCS) takes on paramount importance during the operating cycle of the project. The operating cycle is composed of four phases: Work authorization and release (Phase II) Cost data collection and reporting (Phase III) Cost analysis (Phase IV) Reporting: Customer and management (Phase V) These four phase, when combined with the planning cycle phase I constitute and closed system, network that forms the basis for the management cost and control system. COST CONTROL METHODS The methods that can be used at different stages of the project for cost control are given below: 1. At zero date: On the banks of the finalized basic package an itemized control estimate is prepared. Using the net work plan, the control estimated is converted into cash flow plan and annual/quarterly budgets. The control estimate and the budget provide onward control of commitment and expenditure. Further, when time aspect of fund flow and commitments are kept under control with the help of budgetary restrictions, the interest burden for the projects gets reduced. During detailed Engineering: The control estimate prepared before the zero date will be very soon overrun unless design and engineering procedures are constantly reviewed. For which value engineering review should be carried out during the following stages of engineering development. Overall plot plan Specifications of plant and machinery Utility systems design Building design Standard specifications an drawings

3. During procurement and sub-contracting: After engineering the next important phase for cost reduction is procurement. Normally, competitive acceptable item at the lowest cost. But competitive bidding alone will not ensure procurement at lowest cost unless the following steps are taken in addition to competitive bidding. Vendor association in specification Detailed scope and specification General conditions of contract Purchase procedure Delivery is erectable sequence Competitive bidding

4. During construction: There is not much scope for cost reduction during construction. However, there are certain as listed below on which close control must be exercised for keeping cost down. Extra items, Idle chares, Inventory cost, Cash flow planning Cost of operating staff and administrative expenses CASH FLOW PROJECTION Cash is required when construction is in progress as equipments start arriving during this period. The executors/contractors will also raise monthly running bills. Cash requirements must correctly assessed and arranged adequately. Fund shortage will not only slow down work but also attach additional costs. Over provision of fund will unnecessarily keep fund idling, this resulting in excessive interest burden. To make cash flow projection, a probable cash flow statement may be prepared at different point of time periods. Cash flow projection/forecast showing the sources and uses of cash (money) for a given period is an important as balance-sheet in that period. The inflows would typically be revenues from sales of products, sale of fixed assets, issue of shares and loans, out flows would be costs incurred requiring payments to creditors, purchase of fined assets or investments etc. Budgeted, cash flow must be made along with the control flow. The difference between budget and actual for each period is known as variance. Analysis of the period and cumulative variance provide a control mechanism helping to ensure that each expenditure and commitments are not allowed to rise above the projects ability to provide the funds from its operations.