ae tn Project Management Foundation Definition of @ project, Project Vs Operations, Necessity of project management, Triple constraints, Project life cycles (ypical & atypical) Project phases and stage gate process. Role of project manager, Negotiations and resolving conflicts, Project management in various organization structures, PM knowledge areas as per Project Management Insitute (PMI). 14 _ Introduction Project Management for long has been an important functional area of large no. of organizations. Today, large no. of organizations execute 50% of their work activities in the form of projects. There are large no. of project organizations ‘whose main activity is to undertake and develop projects for other organizations. The projects executed are of all kinds be it infrastructure, IT, industrial setup or services. The successful execution of a project requires an effective use of management tools & techniques in order to achieve the objectives. Thus, Project management as a subject of study has become important for management personnel and students. 1.2 Project - Aproject is a temporary work done with a definite start and end. It is generally unique in nature unlike a regular operation. it is planned and e keeping a specific problem or opportunity in mind. The aim is always to achi ‘specific goal that helps solve the problem or avail the opportunity present. ~ For example : Building a bridge or 2 building, Developing a software, Launching a product, Conducting an event, Doing a market survey etc. Almost everyday around the world large no. of projects are initiated. 121 Project Management The success of any project is measured by the objectives achieved at the end. Some of the important objectives to be achieved are the set standard of the output, its timely completion and meeting budget limits. In order to achieve the objectives, the role of management becomes very important. Project Management is the application of management ‘knowledge, skills, tools and techniques to project activities in order to meet the project requirements. 13 Operations Operation is a vital organizational function. It includes production of goods as well as services. The process of operations turns raw materials into goods. The quality of products to a great extent depends on the operational efficiency and effectiveness. ~ Operations include a three step process- Input, Process and Output. It isa routine function within an organization and 's performed as long as the business of the organization exists. ions its proper management is of utmost importance. Operation management is the For effective and efficient oper administration of business practices to create the highest level of efficiency possible within an organization. ‘Scanned with CemScannerWF Proj ome mw e co! Operations management teams attempt to balanc rofit possible. : resources from staff, iz ds and Operations management involves uti ; sn alent needs " managers acquire, develop, and deliver goods to clients based eng he sie of manta ding ” Ju : ‘ cpestons maragement andes various rate sus nee ITT networks Othe Operation, project management methods and implementing the structure of i res and row mater scsi including work-in-proces ; issues include the management of inventory levels, including workin“ / wuality control, materials handling, and maintenance policies. customers. This induid quality sivery of goods tO cludes Another large facet of operations management involves the deli jong management alS0 tyPicaly folloy,. ensuring products are delivered within the agreed time commitment. Oi opsrutons manual up with customers to ensure the products meet quality and functionality nee* a department to use in takes the feedback received and distributes the relevant information to eat — sats, equipment, and technology. Op mater sand the abilities of the COMPany, to produce and distribute products and services improvement. operations management often includes Operations management focuses carefully on managing the processes A great deal of focus is on efficiency and effectiveness of processes. Therefore, substantial measurement and analysis of internal processes. izatic very much on Utimately, the nature of how operations management is carried out in an organization depends very the nature of the products or services in the organization, for example, agriculture, mining, construction or general services. Here are some additional perspectives on the field. 1.3.1 The Difference between Projects and Operations There are many differences between projects and operations. Some differences are as follows : Projects are unique and temporary, while operations are ongoing and permanent with a repetitive output. (i) i) Projects have a fixed budget, while operations have to earn a profit to run the business. Projects are executed to start a new business objective and terminated when it is achieved, while operational work does not produce anything new and is ongoing. (w) Projects create a unique product, service, or result, while operations produce the same product, aim to earn a profit and keep the system running. There are more risks in projects as they are usually done forthe fist time, while in operations there are fewer rsks 9s w they are repeated many times. (vi) Projects are performance intensive while operations are efficiency intensive, (i) Projects are managed through project management and operations require business process management. Understand this efference through an example : Asume you were given 9 projet to build a car manufacturi facility. You bull the fecity and delver i tothe cent. Your job i completed, andthe cent has starton aa na ing Cats. In this example, biling the faity isan example ofa project, because here you constructed s vy mntateautd facility and handed it over tothe client and signed off However, once the facity stats working and the car manufacuring process Betis, hie operations, because here the facility is producing a repetitive output, cars. Therefore, thi - is an example of , an example of an ee ers ‘Scanned wih ComScannerprojec Management (MU) 13 Project Management Foundation 74__ObjectivesiNecessity of Project Management successful development and implementation of project's phases : A project generally involves different phases such ~ jsinitiation, Planning and Design, Construction and Execution, Monitoring and Control, Completion. The smooth and uninterrupted development and execution of all the phases ensures the success of a project. productive guidance, efficient communication. |and supervision : The success or failure of a project is highly dependent on teamwork which requires collaboration among its members. Proper guidance, Good communication and regular supervision are of major importance as information needs to be articulated in a clear, unambiguous and complete way so everything is comprehended fully — Achievement of the project's main goal : Project management has the responsibilty of achieving the set goals of a project even with the presence of all constrains, Optimization of the allocated resources : The success of the project also depends on the optimum utilization of all the sesources. This isa major objective of Project management. The identification and proper utilization of the resources areto be done to achieve the goals, ~ Completion of project as per the client's exclusive needs and objectives : This might mean that you need to shape “and reform the client's vision or to negotiate with them as regards the project’s objectives, to modify them into feasible goals. Once the client's aims are clearly defined they usually impact on all decisions made by the project's stakeholders. 4.5 Importance of Project Management ~ Gearly defines the plan of the project before it begins : The importance of planning in project management cannot be ignored. The more complex project, the more scope there is for chaos. One of project management's primary functions is to tame the chaos by mapping out a clear plan of the project from beginning to end. ~ - Establishes an agreed schedule and plan : Schedules help to eliminate delays or overruns and provide a plan to be followed for all those involved with the project. ~ Greate a base for teamwork : People are required to work in a team on a project. This is due to team synergy benefits through the sharing and support of knowledge and skills. Bringing people together in this way inspires team members to collaborate on a successful project. Maximization of Resources : Both human and financial resources tend to be expensive. Project tracking and project "isk management ensure that all resources are used efficiently and are accounted for economically. Facilitates Integration : Projects that are completed within an organisation are generally integrated with wider business processes and systems. Integration forms the value aspect of projects and their management. Keeps control of the cost : Depending on the scope of the project, some projects can incur organisations significant (Costs It is important therefore to keep on budget and to control spending, Project management greatly reduces the ‘isk of budget overruns. Manages Change : Today, more than ever, change is something which all organisations face. Projects, during their ‘unning, also face changes and rust be prepared to face such deviations from the original plan. Project management ’llows for effective change management and makes it less of a complex task. Ensures Quality : More so than ever, itis important to produce quality results, Project management helps to identify, manage and control quality. Quality results make clients happy, which is a win-win situation for all involved, SE eataenttnt ‘Scanned wih ComScanner—~ 1.6 Project Scope 7 7 Qn s to ensure that ject scope management involves managing the extent ofthe project. The concept ner es tata 4 ro sos ce hwo a “4 work to be done fs inclu e management a work that has been done before the project is certified as completed. Project Scope Management processes (Collect Requirements i) Define Scope (ii) Create Work Breakdown Structure (iv) Verify Scope (v) Control Scope Requirements Collection phase involves gathering all the requirements from the stakeholders. A stakeholder js anyone who has an impact on the project. ‘The stakeholders are usually documented in a stakeholder register and the high level documentation of the projects usually contained in the project charter. The project charter also appoints and authorizes the project manager to take charge of the project. These two documents (project charter and stakeholder register) serve as inputs for the process of requirements collection. ‘Scope Definition typically involves creating the project scope statement from the high level information (in the project charter) and the requirements you have gathered during the requirements collection process. Close attention should bbe paid to the eventual goal of the project and alternatives should also be explored. The output of this process is the 0 scope statement. Work Breakdown Structure Creation involves dividing the entire project work into smaller bits until you have reached manageable units of work that can be easily controlled as individual entities. The small unit of work is called a work Package. The goal here is that the units must be clear, measurable, assignable and easy to control. The output of this chart that shows the decomposed project. (ity process is a Work breakdown structure, whi Scope Verification happens after we have started receiving deliverables on the project. t involves formally accepting the deliverables ofa project. Its important to note that the goal of this process isnot validating the deliverables. This process focuses on inspecting the validated deliverables to ensure they meet the original requirements of the project (iw) as defined in the requirements documents. Controling the scopes one of the most critical aspects ofthe project Scope management, This involves monitoring the project to ensure that there are no changes tothe cost baseline which isnot controlled. itis important to eneare ‘that if changes are to occur, the correct integrated change control process i followed. 1.7 Project Environment: a Business functions or projects are not performed in cased environment. There re alot ofuncerainties that surround | 2 Project. These are called environmental factors and they lay 2 val role nthe sucess or flare ofa pojere sney nny be internal aswell as external to the organization and often many of them are beyond the contol therefsrc g hent apparent to enify all of them in time so that proactive measures can be planned to minimize the damene or ™ interference in case sucha situation arises. 1 Interna Environment it comprises al thse factors tht ate resent win he Osanna hat maympet suecess ofthe project. They are generally within organization's control. Some of them are ey impact he. | ‘Scanned wih CamScannerPied Meregement (MU) 15 Project Management Foundation (i) Organizational Structure (i) infrastructure (iv) Risk taking Attitude () Governance Approach wi i) Skill Availability Management (Plan/Processes/Policies/Procedures/Knowledge) 2, Paternal Environment : It comprises all those factors that are present outside the organization, They are often beyond the organization's control and therefore there understanding i of utmost importance. Some of ther are: () Political Climate (i) Economic Condition (ii) Market Condition 1.8 Triple Constraint ~_[tlsamodel ofthe constraints inherent in managing a project. hose constraints are threefold. They are © Gost: Its the financial constraints of a project also known as the project budget. © Scope :Itis the tasks required to fulfil the project’s goals © Time It is the schedule for the project to reach completion ~ The Triple Constraint states that the success ofthe project is impacted by its cost, scope and time. As a manager ofthe project, you can trade between these three constraints. However, changing the constraints of one means that the other two will suffer to some extent which should give you an idea of how impiortant the Triple Constraint is when managing a project. ~ Hfyou are managing a project you are working with the Triple Constraint too. Therefore, it can be easily argued that the Triple Constraint becomes a vital concept in project management. ~ While it's true that the Triple Constraint is an important part of any successful project, it doesn’t determine success. Projects are made from many parts, more than the three that make up the Triple Constraint but these factors are always at play in the project. 1.8.1 Importance of Triple Constraint ~ Tiple Constraints are like the boundaries in which you have to work, Just as restrictions enhance creativity, the Triple Constraint provides a framework that everyone in the project can agree on. These metrics drive the project forward while allowing for adjustments as needed when issues arise. of trade-offs and compromises to keep things moving towards a successful is a model that helps managers know what trade-offs are going to work and what Managing a project is often a s completion. The Triple Const Impact they'll have on other aspects of the project. ~ By using a project management dashboard, a manager can keep sight of the project as it progresses. Metrics such as the schedule, cost and scope of the project are easy to track. With this information, a manager can identify issues and ‘just the Triple Constraint to prevent those issues from developing into problems. Let us nav learn the three constraints in details 1. Cost ~ Cost is the first financial constraint that affects a project. itis the financial commitment that is made to the Project. Cost ofa project is dependent on several components ranging from the materials to people. Apert from that there are outside forces also that impact a project and therefore they too are considered as the cost of the work. ~ Costs are divided into fixed and variable cost. Both of them are associated with a project. Costs vary depending on various factors such as the use of contract workers or outsourcing. aaa ‘Scanned wih CamScanner2 Scope Time ‘According to the Project Man: f (Pr 1e schedule can be managed through a process lagement Body of Kn Boy jowledge (PMBOK), the sche 8k 46 wre are various costs processes associ II the resources with a project. Cost Cost of a project needs to be processed: The jated pro 1 commitment needed for al necessary to complete the estimating is used to figure out the financial project. Cost budgeting manage the fluctuation of costs throug! ss another process used to create a cost baseline. Cost control is third process which works to rout the project. ost has always been a complicated area on the Triple Constraint triangle. To ensure that your estimates are tools to calculate the cost variances. accurate, it’s advisable to use project management the specific requirements or tasks which are necessary wy project, whether they are agile software projects or ff project is the second constraint. It outlines help in delivering it on time or vital in am I the scope of the project will not The scope of to complete the project. Managing the scope Is ‘well-planned waterfall projects. Failing to contro! within budget. Managing scope is critical. it is important to prioritize the tasks so that resources are planned and assigned effectively. Project management has a specific feature called task management that help 2 project easily assign, sort and prioritize the tasks. This way all the critical project tasks can be delegated to the right people. it prevents the its, collaboration on the task ‘scope to be compromised. Additionally, by offering file sharing and task comme level is encouraged. Managing and establishing scope also requires effective handling of stakeholder expectations. Stakeholders often have new demands that Keep coming up during the progress of a project and that need to be fulfilled. This can especially be the case in long term projects where new stakeholders might be introduced in the middle of the project. Inorder to fulfil the requests and new demands of stakeholders that come with the progress of the projects, tis important to manage change. At the same time care should be taken to accommodate only those change requests that are necessary to achieve project goals and deliverables. The steps used under scope management are essential as the amount of time each task required is cr assure the quality of the project. This can have a great impact on schedule and cost particularly for a project ical to which is large. Time isa very important project constraint. The amount of time required to complete a project or produce the | deliverables must be estimated well for a good schedule. Usually this is done by first identifying all the tasks that are going to be performed during the entire life cycle of the project. For estimating time, first of all a Work Breakdown Structure (WBS) is used generally to convert the large project goal into a series of manageable tasks. These tasks are then prioritized and placed on a timeline. ‘useful tool in awe a te s the form of Gantt Charts ean aso be used to prepare the project schedule, with each task given 2 timeline, with task dependencies linked, and durations determined. Data from previous projects can also help make more accurate estimates. For estimating tim ri | aoe tine ene by ious project management software features such as an online Gantt chart are available. fated automatically as your team completes their project tasks, so data is always accurate. ‘Scanned wih CamScannerproject Management Foundation Planning Schedule : Before beginning with a project, necessary policies, procedures and documentation with regard to planning, executing and monitoring of the project schedule should be prepared. @ Defining Acti deliverables. ies = It is very im it ry important to identify and record all the actions that can be taken to produce the project (ay Sequencing Activities: Next step is to identify and record the order of the work activities in the right logical way. (ow) estat peor Required : A project requires various resources in various quantities. Therefore, its important to estimate What type of and how many materials, people, equipment, supplies, etc. will be required to perform each activity. cing Activ ons tn-thk (v) Estimating Activity Durations : In this step, you calculate the time required to complete each activity with the required resources. (u) Developing Schedule : In this step, you Analyze activity, duration, resources and timeline to develop 2 proper schedule. (vil Controlling Schedule : This is done by comparing the planned schedule to the actual progress. It tells whether the project is on track or not. Necessary actions can be taken based on the analysis. ‘Thus, as we can see, the triple constraint should be balanced to reach a successful conclusion. 49 Project Management Life Cycle The project management life cycle is a process that is followed by nearly all the project managers. It provided a framework within which any project can be well managed. Leaders around the world have found that following a project life cycle is critical for the success of a project. A project cycle can be of two types is also called a standard Project life cycle because it follows a set of steps that are predictable and prove 1. Typical successful in most of the cases. 2. Atypical : It is also called Adaptive Project Ii here rapid changes are expected and scope is not possible to define upfront. cycle. It deviates from the set steps and is used mostly for projects 1.9.1 Typical Project Management Phases itiating, planning, executing, controlling and closing. The five phases of In project management there are five phases: 4 project constitute the project management life cycle. Let's take a closer look at the five phases of a project. 1. Initiation begin. In this phase, the value as well as the feasibility of the project is This is the phase where all projects .d on the basis of these two documents. They are created to convince determined. The project is approved oF rejecte the stakeholders or sponsors: (0 Business case : A business case is a document prepares tobe offered by the project both in terms of financial gain and problem solving (i) eastity Study: Ths isan important report It analyze whether itis feasible to start the project and complete an the given time. You need to evaluate the project's goals the timeline to completion and the total cost to be incurred, You also require to identify the resources to be required to.complete the project, .d to justify the need of the project. It analyzes the benefits Ns ‘Scanned wih CamScannerZz) ral Proj ject Management (MU) Planning ; _—— Once the project approved, the next step isto build a project team and start working on project planning. Planning helps to achieve the goals within budget and allotted time. / financing and materials needs. The plan also gives your team direction ang ‘The project plan identifies the resources, the following : ; . (i) Scope : A'Scope statement reiterates the need for the project and identifies its deliverables and objectives, (i) Definition: itis a process used to break down the larger deliverables into smaller ones that help manage them better. (iil) Tasks : Tasks are performed to produce the deliverables. Thus their identification and dependence on other ‘tasks must be figured out. Schedule : This refers to the duration of the tasks and their completion date and time. tiv) Cost : Costs are the financial commitments involved across the project and it helps formulate a budget. ” (vi) Quality : Quality objectives are important to be defined and met throughout the project. (wi foject organization must be clearly described with a good structure including reporting on (vill) Staff : Determining roles and responsibilities of the project team is another vital aspect of project planning. (ix) Communications : Decide how information will be disseminated, to whom and with what frequency. impact on the project and (%) Risk : Project plan also includes assessment of possible risks that are likely, and the how to resolve them. (xi) Procurement : Decide what work or materials will be contracted. Define those contracts and who they'll go to Execution ‘After planning is done, it’s time to start the project execution. This phase is made up of the following detail processes: (0) Executing the Plan : You begin by following the plan you created. ‘and monitor their progress with project management tools (i) Administrate : This is done by managing the contracts secured in the project. ign the tasks to team members and manage Monitor and Control This is another crucial phase of project management life cycle. Here, you ensure that the project plan is being executed as described by monitoring and adjusting all the aspects of the project as and when required. To do this, follow these processes : (Reporting : You should develop @ metric tomeasure project progress and an instrument to deliver thi information. (li) Scope : itis important to monitor the scope and control changes. Ail)" uality : Develop ways to measure the quality of deliverables and make sure that the planned quality is being ‘met. If not, evaluate how to improve the quality. (™) Schedule: Keep track of delays or blocks that impact the timeline ofthe project and adjust to stay on track (¥)_ Cost : Monitor expenses and control cost changes. (i) Risk : Note changes in risk throughout the project and respond accordingly. ‘Scanned with ComScanner4 1 Project Man ot +9 Project Foundation 5, close ‘This isthe last phase of the cycle, A project isn’t over till the project goals and objectives have been met. The last phase ofthe project is all about meeting the goals. Ths involves the following set of processes: () Scope : Make sure the project deliverables have been completed as planned. {a Administration : Close out all outstanding contracts and admis disseminate to proper parties. istrative matters, archive the paperwork and 4.9.2 Atypical (Adaptive) Project Life Cycle ~_ Thelife cycle of a particular project is composed of different phases, around which the project management scheme is cxganized, There are different types of projec fe cycle depending on the organizations involved as well as the phases. (One of the project life cycles important in project management is the adaptive or atypical project life cyde. ~ An atypical project life cycle ts change-driven. It fs an agile way of doing things as itis intended to the high level of changes. It needs on-going stakeholder’s involvement. in this life cycle, the overall scope of a project is broken down into different sets of requirements or sub-projects that will be undertaken individually. During the iteration, the functionalities of the cycle is discussed, implemented and, finaly, reviewed by the client. ~ Here Rerations are very rapid usually with a duration of 2 to 4 weeks and are fixed in time and cost. This life cycle is used for projects where rapid changes are expected and scope is not possible to define upfront. So, a change during the project is naturally handled in rapid iterations. ~ Aso, the end result is delivered at the end of 2 to 4 week iteration. Like, a yearlong project will have multiple 2-4 week iteration and each iteration will execute Planning, Analysis, Design, Code, testing phases and deliver the result at the nd ofthe iteration. ~ The advantage of atypical life cycle is that itis appropriate for projects that involve higher levels of complexity and Uncertainties such that each iteration of this particular project life cycle should address issues for every task and each {tik should be completed before another task is undertaken. The rsk s minimized for this particular project lifecycle. Atypical Project Lifecycle exists within five stages 1 Constant change Urgency 3. Need to Learn “Small Team Ability % Deliver in Small increments When we work in adaptive, there's a sense of urgency, we've to move quickly. We also recognize before we get ‘underway that there will be constant change. There will alvays be change on projects. I's constant change after ‘hange and decision after decision. You need a different framework for an adaptive project then you do for predictive, 'rcremental or iterative projects. nike a predictive lfeycle or incremental iterative where you could have one factor suggest that tis sa predicted, °F his is incremental because we can do phases or stages. In an Adaptive project you need constant change as a Aefnition, There wil bea sense of urgency to learn because you don’t know the goal because i's unclear. or this methodology, or sometimes referred to as the Agile Manifesto, itis a small team ability. Small teams set out *owork to figure out where to go. ‘Scanned wih CamScannerFoundation Project Management loring but unsure which way through the mountain pass, 4-10 find the Promised Land or the frontier wagon trains expl lorers to try to find the route to Bet ‘ample, Israelites trying t II team of scouts or expl a smal to cross the river, to find food, ete. _ You've got al ofthese tle scouts going out 8 they established stopping points along the W2¥- You might have to b tts all these lessons we're learned as we're GOIN: There's a nee ‘ents. We are going to call it incremental. Its sma ‘ples, small components, small P hat doesn’t meet or lead to anol = For ex: they're headed will send snd coming back to the wagon train and goin out and coming back until jacktrack and try again. to learn, typically at eith II parts as we're learning. arts is the requirement of the thor step, therefore you set it er delivered in small ‘teams or small increm small increments or small deliveral = The ability to deliver inst projec fllwin this fe cyte.youray have an ouput aside or throw it away entirely. 1.9.2.1 The Core Values of Atypical Project Life Cycle in atypical project life cycle, the focus ison the clients They are given the opportunity to control the direction of the around six core values : the focus is on the need of th ‘the scope of ethical business project. It centers — Focus on Clients : Here, practices Client-driven : Being client-centric encouret co-manager Incremental fe client. But they must be wit ges you to include and involve the clients it your project by having project arly Results It makes it possible to deliver a solution 0 the client's problems atthe earliest and also KeeP the clients engaged in the project Continuous Questioning and Intros make the best possible decisions ané ‘change for a better solution : The client an project to understand the project better His 9 helps Future not speculated : APLC focuses on the work activities that bring ben vlue is removed. Project teams resist the temptation of getting the best rath pection : Openness and honesty must exist between dlient and the project team to 1d deliver positive results d the project team work on the deliverables from the early stages of the ‘hem think ofthe better changes that can be Drought. lefts to the client. Work that doesn’t give ier they focus on the planned processes. 4.10 Stage Gate Process patented trademark of Dr. Robert Cooper. The center of this model is on developing sees the Waterfall process. This model offers 2 project management technique which 2 stages are separated by ‘gates’ where decisions are taken to decide whether or 'seful while developing new products or bringing change oF ‘The State Gate process is @ innovative processes. It is also ca project is divided ito several stages. The prota proceed to te next stage: This model generally u improvements in 2. 4.10.1 Gates ates in state gate process are decision POI ina stage or not. The decision is based o” ‘the availabilty of in js taken by a manager or a committec ach gate, the quality and repercussions of an idea are assessed. The areas of assessment are the quality of the ce an eared he acon “conn showing the things th = ‘one of the following decisions is to be taken : armas ™~ prot ‘They help take a decision whether to continue the next formation on the project progress till that moment. The decision ates execution, business mot the project successful After each Bate a Se rte ‘Scanned wih CamScannereo Project Mana (Muy wail better. 1 Project Management Foundation decision is taken when the project is not good enough and cannot be developed further and terminating It's - Hold : This decision fs taken project is not found good enough to continue at that moment, but there is possibilty for the situation to Improve and therefore rather than terminating It should be put on hold for resumption ata later date. — Recycle: This decison is taken when the projects found good enough to develop further with some changes. 4.10.2 Stages ‘The Stage Gate process has five stages. They are connected to each other by gates. Each stage is designed to collect specific information : Stage 0: Discovery stage 1: Scoping ‘Stage 2: Business Plan Concept ‘Stage 3 : Development. Stage 4: Testing and Validation stage: Not all of the Following stages are used Launch and Implementation all the projects. For example, stages 2, 3 or all 5 are followed depending on the size of the project. A project focusing on major product innovation goes through all 5 stages. A project with less risk requires to go through just stage 1, 2 and 4. A project that requires very small or simple adjustments needs to go through only stage 3 and 4. Stage 0 : Discovery This is the initial preparatory stage. It identifies the project a company wants to undertake. For that, Ideas are generated in brainstorming sessions. Everyone from Employees, Customers to the suppliers are involved in the session. They provide useful information for idea generation. An idea is first selected and then proposed. ifthe idea is not is not found good enough the gate closes here. Stage 1 : Scoping In this stage, the product and the existing market for it are assessed. Product's strengths and weaknesses and the benefits it brings to the user/consumer are evaluated. All the possible threats from competitors are also taken into account. The assessment of the threats helps decide whether project will not continue. If the threats are big the chances are that the gate will be closed. Stage 2 : Business Plan Development This is the last stage of concept development. Here, business plan is developed considering all kinds of opportunities, threats, competitions, etc. It is crucial before starting the actual project implementation. This stage includes the following sub-stages : {Product analysis Here, the value a customer is going to get is determined by analyzing the benefits offered by the product. This information can be collected by interviews and surveys of the prospective customers and the project development team, The environmental factors such as the competition are also analyzed. {t) Creating the business plan Here, a document ofthe project is prepared to describe and define the project requirements including the legal health and safety requirements. Sen ‘Scanned wih CemScanner¥ Project Management (MU) 412 Project Management Foundation (iil) Creating the project plan This plan contains alist of all tasks that are to be executed during the entire project development cycle. It also outlines the roles and responsibilities of the people involved in the execution. The expected launch date can also be mentioneq this plan. (iv) Feasibility review Here, a feasibility study is done in which different departments assess the plan’s chances of succeeding. Even at this stage If it appears that the business concept is not having sufficient potential the gate is closed. Stage 3 : Development ~ At this stage, the plans are executed and simple tests are conducted. For example, at this stage customers can be asked for their feedback of the product. A timeline with specific milestones that have to be achieved are created by ‘the development team. — This timeline can be revised and updated regularly. It also takes help of multifunctional teamwork. Different departments provide input with expert advice. This stage results into a product prototype, which is then extensively tested during the next stage. The gate remains closed if the prototype of the product has not been sufficiently developed. Stage 4 : Testing and Validation In this stage, product testing and validation are done. The manufacturing process and the product acceptance by customers and the market are assessed. There are some sub-stages that are completed during this stage : () Neartesting This test is done to identify all possible production errors or any other problem area. At this stage, the product is almost ready to be sold. The groups that carry out this test Include staff, regular customers and suppliers and are closely tied to the organization. (i) Field testing In this part, the product is tested in the field by various participants who can make a valuable contribution. This is usually done with the help of specific customers. Whether this target group i interested in the product ls evaluated, ‘The characteristics they consider important and the context in which the product will be used are also acsessed. i) Market testing is san optional test a the product is offered in the market only when thas passed through the previous test stages. This testis jst to assess to see whether the product sufiently matches the need werner ct an consumer after a period. The product i usually pretty much ints al form after testing, However» gona enretng plan is equally important atthe time of launching the product. not, the gate tothe next stage wilcreen ceeet Stage 5 : Launching and Implementation In this stage, the marketing strategy comes into play. The product is ready to be by means of an advertising campaign, free publicity and interviews or other promot ‘about the quantity that will be sold. Policies regarding production, inventory and ¢ the sales team is predominantly responsible for ensuring a smooth process, launched and that requires attention tional activities. An estimate is made istribution are prepared. In this stage, ‘Scanned wih CamScannerie project Management (MU) 13 Project Management Foundation 711_ Role and Responsibilities of the Project Manager ‘The project manager Is the most important person in a project. He has the following role and responsibilities = He designs the appropriate project management standards and then implements that. He also has to manage the production of the required deliverables at different stages of the Project development. te has a crucial role of preparing project plans and ways to monitor the project. He also prepares and maintains projet stages and exception plans as and when required He has to identify and managing project risks including the development of contingency plans. nother very important role isto liaison with program management and related projects to ensure that work is neither overlooked nor duplicated. He monitors the overall progress and usage of resources, initiates corrective action where-ever necessary and applies change control and configuration management processes. — _Hehas to reporting to the top management on project progress through reports and end stage assessments. — He has to liaison with appointed project assurance representatives to assure the overall direction and integrity of the project is maintained. He must maintain an awareness of potential interdependencies with other projects and their relative impact — He identifies and obtains support and advice required for the management, planning and control of the project, managing project administration — He has to regularly conducting a project evaluation review to assess how well the project is being managed and then he prepares any follow-on action on the received recommendations 4.12_ Negotiation = Negotiation is a process used to resolve disputes of different kinds between different people or group. It is done by ‘conducting consultations between the involved parties to reach a consensus. = Negotiation involves a discussion between two or more parties involved. It aims at reaching an agreement or settlement. It can take place at any time in a project, program or portfolio and it may be formal or informal in nature. ~ Formal negotiations are held on issues such as contract agreements while Informal negotiations include discussions to resolve conflict, or discussions to obtain internal resources. ~ The skill of negotiation is used in many areas of Project Management. They could be managing conflict, contract, requirements management and stakeholder management. Negotiations can take place at any time within the project it can be either formal or non-formal. Negotiations are generally ‘management life cycle. Depending on the issues, initiated by the project manager and therefore he should have excellent negotiation skills. ~ Negotiation is done through a process which can be categorized into phases. These include planning, discussing, Proposing and reviewing. ~ Planning i the first phase. It helps a manager in preparing all the relevant information needed for the discussion. The second phase is discussing, It refers to setting up the scene for discussion. In this phase, the conflicting issues are © plored and discussed. The proposing stage involves creating the solution to solve the problem. This may also include bargaining before attving at an agreement. Once the agreement is done, the information in this regard is disseminated all throughout the organization. Finally, the last phase reviewing is carried out to see whether it resuted into @ win-win situation for both the parties or not. Tecaunindgt ‘Scanned wih CamScanner= Anability to set goals and limits; — Excellent listening skills Excellent verbal communication skills; = Accommodative not rigid ; Knowledge of when and how to close the negotiation. 1.12.1 Negotiation Falls Within Two Categories 1. Competitive negotiation 2. Collaborative negotiation jeeds and interests of the other Competitive negotiation: Here, the focus ison getting the best deal regardless ofthe m a While competitive negotiation party. This form of negotiation can easly become a battle were the winner takes al should be avoided, it may not always be possible. " jet benefitted from th 2, Collaborative negotiation : It seeks to create a ‘win-win’ scenario where all parties involved B¢ " e * . - It also minimizes jionshig ‘negotiation. This approach tends to produce the best results and helps build long-term relations! the further opportunity for conflict at any other stage. 1.12.2 Process of Negotiation ~ Planning : Ths isthe first step where the focus of the negotiating party is to gather as much information as possible. ‘That helps in preparing better plans. A plan s prepared by setting goals that could be agreed upon. ~ Discussing : Project managers are often required to open the negotiations by iving the details of the conflict. Then their understanding of the discussion. ~ Proposing At this step, the discussion is over and based on that a proposal is made and communicated clearly and openly to all — Bargaining : demands. ~ Agreement : At this step, an agreement is reached and based ot Signed as there is no substitute for a written record; {his step, the negotiation begins for trade-offs. The parties involve ty to accommodate each other's ~ Review : Here, the outcome is communicated to all parties and the management plan Common mistakes in negotiations ~ ilk-preparedness ofthe negotiator ~ Opening and showing rgity in negotiations with an unreasonable offer ~ Rushing through negotiations without paying close attention in order to secure Stick ag reement: ~ Falling to walk away fan agreement isnot possible without breaching tolerances, at Not showing a cool and calm attitude. ‘Scanned wih CamScannerSc ter anager nto, Negotiation in Project Management = Project managers often face a situation where negotiation becomes necessary. Therefore they need to be prepared and apply negotiation skills throughout the project lite cyte. Early on ina project, as requirements are being assessed and initial plans produced, the project manager needs to balance the time, cost, quality and scope requirements of the project and negotiate with stakeholders. = As resources are mobilized and procured, internal negotiation with line managers who ‘own’ the resources and conduct more formal contract negotiations with potential providers become necessary. = Asthe project progresses, conflicts may arise. Therefore the project manager will be required to negotiate the issues of conflicts. - _ Insome environments, there may be specialist support available. It is important for project managers to know when to, ask for help from, for example, the HR or legal departments within the host organization. 443. Conflicts = Conflicts are nothing new. We all experience it in our daily lives. It ranges from minor disagreement to a major problem. But they have the potential to disrupt organizational activities and progress. Being a project manager or 2 team leader, these conflicts are especially rampant and thus damaging in project environment. = Since project activities are executed by human resources there is a possibility of conflict. Everyone tries to execute activities in order to achieve project objectives as per the expectations of the stakeholders. While managing human resources, conflicts are natural but they become serious when they lead to quarrels, fights and even a breakup of the project team. According to the PMBOK Guide, “conflict is inevitable in a project environment.” Inthe project environment, conflicts are © Inevitable © Canbuild the team © Candestroy the team 0 Must be managed 1.13.1 Causes of Conflict Wherever people work, sooner or late, smaller or bigger, conflict are bound to arise because of various eauses. Some ofthe causes may be ~ Scheduling problems ~ Different Project Priorities ~ Competitions for gaining access to resources Cultural differences Differences on team formation Differences on technical issues Personality Conflict Poor Planning ‘Scanned wih CamScanner1 ‘techniques and consider when to 1 3.2 Ways to Resolve Conflicts Management (Mu) After defining the problem, the PMBOK Guide suggests five techniques for project management. Let's review these Use them in managing conflicts. WithdrawiAvoid Conflict ~ This 's @ good technique where people involved retreat from an actual or potential conflict situation. They Postpone the issue to be better prepared or to be better resolved by others. Suppose you are short-tempered, withdrawing can be an excellent technique. By withdrawing, you have the opportunity to come up with better ideas to address the ‘conflict. Project Man: Foundation | / ‘Temporarily avoiding the conflict allows you to take time and rethink over the Issues It also means you have the chance to think through the other person's perspective. While withdrawing and avoiding is valuable in the short term, it can be over used. If you retreat from a conflict situation and fail to follow up, the conflict is likely to become worse over time. Smooth/Accommodate Conflict In this technique, emphasis fen on areas of agreement rather than areas of difference. One concedes his Position to accommodate the needs of others in order to maintain harmony in relationships. This approach maintains professional relationships which are critical to project success. On long term projects, anything over a few weeks, persevering and strengthening the project team becomes very important. Project team members constantly emphasize differences making progress on the project becomes very difficult. Areas of agreement to emphasize may vary depending on the context. You can look at how disagreement impacts others on the team. Compromise/Reconcile Conflict - int ‘technique, the focus is on searching for solutions that bring at least some degree of satisfaction to all Parties and the conflicts is resolved either temporarily or partially. This technique recognizes that some conflicts cannot be fully solved. — But, this technique has some drawbacks too. The project manager needs to understand the needs of the person or stakeholder for successful negotiation. The project manager also has to be willing to make changes to his project. For compromise to be successful, each party needs to benefit and sacrifice party of their objectives. = Project managers can also compromise across time. For example, you may respond to a stakeholder’s request for additional functionality by deferring their request to phase two of a multi-phase project. Though, this type of change is best handled through a change request. Force Conflict — This technique creates more problems than solutions. Here, the focus is on pushing one’s viewpoint at the expense of others thus offering only win-lose solutions. It is usually enforced through a power position to reso an emergency. From time to time, project managers have to take a stand and apply their power. — As the PMBOK definition suggests, applying force to resolve conflicts comes at a cost. The projet manager is likely to harm relationships with the project team by using this method. Abuse or overuse of this technique tends to cause more conflict in the long term. One should use this technique only when absolutelY required. ‘Scanned wih CamScannerProject Management (MU) Project Management Foundation Collaborate Conflict — iis techs foc mn it je This technique focuses on incorporating multiple viewpoints and insights from differing perspectives. It requires a cooperative attitude and open dialogue that typically leads to consensus and commitment. This techie is the most productive technique. It has two major benefits; one, the confit itself is solved and a i 'e project team is strengthened as a by-product of working to solve the problem. This technique is most likely to be successful in situations where the project team already has a high level of trust. 4.44 Organization Structure The process of organizing leads to the creation of the structure of an organization. The term organization structure may be defined as a system of job positions, the roles assigned to them and the authority relationships among the various positions. The structure provides a basis for a framework for managers and employees for performing their various functions. = Organi orgat ion structure can be viewed as established pattern of relationships among the components of the ion. Because strategies and environmental circumstances differ from one organization to the other therc are varieties of possible organization structures. Generally, the organizational structure looks like a pyramid with a narrow top and a broad bottom. = In large and complex organiz Ins the structure is set forth initially by the design of the major components or subsystems and then by establishing relationships among these subsystems. It is the patterning of these relationships with some degree of permanency which is preferred to an organizational structure. — According to Henry Fayol, “Organization is of two kinds, ie. Organization of the human factor and organization of material factor. Organization of the human factor covers the distribution of work to those who are best suitable along with authority and responsibility. Organization of the material factor covers utilization of raw materials, plant and machinery etc.” 1.14.1 Roles of Organization Structure Organization structure is the mechanism through which management directs, coordinates and controls the organizational activities. itis needed for the foundation of management. Following are the roles of organization structure : = Faclitating Management Action : When 2 large number of people work together, some sort of formal structuring is required to place them according to the needs of the organization. All of them perform various functions which are interdependent and interrelated. Therefore, there must be a plan for systematic completion of the work of each specialized job so that total activities accomplish common objectives. ~ Encouraging Efficiency : Organisation structure is the framework within which an organization functions. In this functioning, efficiency is the major criterion. Organizational members using the framework try to maximize the output of goods and services using a given input of resources. ~ Communication : Organization structure provides the pathways for communication among organizational members as well as between the organization and its environment. Organization structure establishes reporting relationships Which involve communication. Similarly, when the organization interacts with its environment, a communication process is involved. Thus structure serves the purpose of communication. = Optimum Use of Organizational Resources : Organization structure tries to make optimum use of organization resources by ensuring their allocation to points where there are needed. Organization structure gives a higher place to activities which are more important to the achievement of organizational objectives. Thus placing of activities according to their importance provides guidelines for resource allocation. ‘Scanned wih CamScannerJob Satistaction : Organization is 2 source of sat those relationships and of their own relationships to the organization and to theie jobs. The organization structure Project Management (MU) Proyect Management Foundation faction to people. Since organization provides relationship among, tasks. responsibilives and people, those who work for an organization sooner oF later come to evaluate the nature of provides for each person a place of status which confers a certain standing among his Fellows. 4.14.2 Importance of Organizational Structure ‘The functions of Organizing and organization are important in the following ways : 42 suitable structure, care is taken to see that the activities are divided and ‘Specialization :In the process of creat! performance of tasks and efficiency Well-Defined Jobs : The organization structure clearly defines and differentiates the jobs of managers and non- subdinded into compact and convenient Jobs An organizational structure thus promotes specialization, speedy managers. This helps the process of looking for and selecting the employees and fitting the right person to the right job. Clarifies authority and Power :A clear-cut defintion of authority enjoyed by each manager and his jurisdiction of activity minimizes conflict and confusion about the respective powers and privileges of managers. A good organization structure clarifies authorty and power. “Avoids Duplication of Work : The organization structure helps in avoiding duplication of work and overlapping in responsibilities among vanous employees and work unis. This is because specific jobs are assigned to individuals and work groups Coordination : The organization structure serves as a mechanism for coordination and unification of efforts of people. Harmony of work is brought about by higher level manages exercising thew authority over interconnected activities of lower-level managers. 4.14.3 Some of the Most Common Organization Structures are (a) Line Organization = Line organization is the simplest form of organization and is most common among small companies. Here, authority is embedded in the hierarchical structure and it flows from the top of the managerial hierarchy down to. different levels of managers and subordinates and further down to the operative levels of workers. It clearly identifies authority, responsibilty and accountability at each level These relationships in the hierarchy connect the position and tasks of each level with thove above and below it. ‘There is clear unity of command so that the person at each level ts reasonably independent of any other person at the same level and is responsible only to the person above him. The line personnel are directly involved in achieving the objectives of the company. Because of the small size of the company, the line structure is simple and the authority and responsibility are clear-cut, easily assignable and traceable. It is easy to develop a sense of belonging to the organization, ‘communication is fast and easy and feedback from the employees can be acted upon faster, (b) Line and Staff Organization pecialists. This type of organization is most common in our business world and especially among large enterprises Staffs © basically advisory in nature and do not possess and command authority over line mangers. The staffs consist of two fn this type of organization, the functional specialists are added to the line, thus giving the line the advantages of v pes: ‘Scanned wih CamScanner39 Project Management Foundation, 2. General Staff : This group has a gener: background usually similar to executives and serves as assistants 1o top management. They are not specialists and generally have no authority or responsibilty of their own. They may be known as special assistants, assistant managers or in a college setting as deputy chairpersons, 2. Specialized staff Inlike the general staffs whe generally assist only one line executive, the specialized statts provide ‘expert advice and service to all employees on a company wide basis. This group has a specialized background in some functional area and it could serve in any of the following capacities : (Advisory Capacity : The primary purpose of this group is to render specialized advice and assistance to management when needed. Some typical areas covered by advisory staff are legal, public relations and economic development. (i) Service Capacity : This group provides a service that is useful to the organization as a whole and not just to any specific division or function. An example would be the personnel department serving the enterprise by procuring the needed personnel for all departments. Other areas of service include research and development, purchasing, statistical analysis, insurance problems and so on. (i) Control! Capacity : This group includes quality control staffs who may have the authority to control the quality and enforce standards. The line and staff type of organization uses the expertise of specialists without diluting the unity of command. With the advice of these specialists, the line managers also become more effective and develop a sense of objective analysis of business problems. ‘The line and staff type of organization is widely used and is advantageous as the specialized advice improves the quality of decisions resulting in operational effectiveness. Staff specialists are conceptually oriented towards looking ahead and have the time to do strategic planning and analyze the possible effects of expected future events. Its main disadvantages are the confusion and conflict that arises between line and staff, the high cost that is associated with hiring specialists and the tendency of staff personnel to build their own image that is sometimes at the cost of undermining the authority and responsibility of line executives. {c) Functional Organization — One of the disadvantages of the line organization is that the line executives lack specialization. Additionally, a line manager cannot be a specialist in all areas. In the line and staff type of organization, the staff specialist does not have the authority to enforce his recommendations. The functional organizational concept, originated with F W Taylor permits a specialist in a given area to enforce his directive within the clearly defined scope of his authority. ‘The following Fig. 1.14.1 is an example of functional organization = Function 7] [Function || Function [Function || Function |" Function Manager-A || Manager-B || Manager-A || Manager-8 || Manager-A || Manager-8 Fig. 1.14.1: Functional Organization Structure ‘Scanned wih CamScanner20 Project Management Foundation S_ Project Management (MU) {A functional manager can make decisions and issue orders to the persons in divisions other than his own, with a right to enforce his advice. Some good examples of specialists who have been given functional authority In some organizations are in the areas of quality control, safety and labour relations. ~The functional organization creates a separate hierarchy for each function creating 2 larger scale version of functional departments. Functional departmentalization is the basis for grouping together jobs that relate to g single organizational function or specialized skill such as marketing, finance, production, and so on. The chain of ‘command in each function leads to a functional head who in turn reports to the top manager. ~The funetional design enhances operational efficiency as well as improvement in the quality of the produc, because of specialists being involved in each functional area and also because resources are allocated by function rather than being duplicated or diffused throughout the organization. ~ One of the main disadvantages of the functional design is that it encourages narrow specialization rather than general management skills so that the functional managers are not well prepared for top executive positions, Also, functional units may be so concerned with their own areas that they may be less responsive to overal ‘organizational needs. — _ The divisional or departmental organization involves grouping of people or activities with similar characteristics into a single department or unit. These departments operate like small organizations under a large organizational umbrella meeting divisional goals as prescribed by organizational policies and plans. The decisions are generally decentralized so that the departments guide their own activities. This facilitates ‘communication, coordination and control, which contributes to the organizational success. As the divisional units are independent and semi-autonomous, they provide satisfaction to the managers. It further improves efficiency and effectiveness. This division and concentration of related activities int (_ Departmentalization by Product : In this case, the units are formed according to the type of products and are more useful in multiline corporations where product expansion and diversification of the products are of Primary concem. The general policies are decided upon by the top management within the philosophical itegrated units is categorized on the following basis : {uidelines of the organization. Departmentalization by Customers :Departmentalization is used by those organizations that deal differently with different types of customers. Thus, the customers are the key to the way the activities are grouped. Many banks have priority services for customers who deposit a given amount of money with the bank for a given period of time. Similarly, business customers get better attention in the banks than other individuals. (ii) Departmentalization by Region : f an organization serves different geographical regions, the division may be based upon geographical basis. Such divisions are especially useful for large scale enterprises that are ‘geographically spread out such as banking, insurance, chain department stores or a product that is nationally distributed. (iv) Departmentalization by Time : Hospitals and other public utility companies such as telecom companies that work around the clock are generally departmentalized on the basis of time shifts. For example, the telephone company may have a day shift, on evening shift and a night shift, and for each shift a different department ‘may exist, even though they are all alike in terms of objectives. ‘Scanned wih CamScanner .AG URS ait - Aa 7 3H Projoct Management (MU) 421 Project Management Foundation, (0) Project Organization = These are temporary organizational structures formed for specific projects for a specific period of time and once the goal is achieved, these are dismantled. For example, the goal of an organization may be to develop a new ‘automobile. For this project, the specialists from different functional departments will be drawn to work together. EE = These functional departments are production, engineering. quality control, marketing research, etc. When the project is completed, these specialists go back to their respective duties. These specialists are basically selected ‘on the basis of their skills and technical expertise rather than decision-making experience or planning ability. = These structures are very useful wher (© The project is clearly defined in terms of objectives to be achieved and the target date for the completion of the project is set. An example would be the project of building a new airport. ‘The project is separate and unique and not a part of the d: 0 There must be different types of activities that require skills and specialization and these must be coordinated to achieve the desired goal. ‘work routine of the orgar © The project must be temporary in nature and not extend into other related projects. (Matrix Organization — A matrix structure can be said to be a combination of project and functional structures and is created to ‘overcome the problems associated with project and functional structures. The key features of a matrix structure ‘are that the functional and project lines of authority are superimposed with each other and are shared by both functional and project managers. ‘Chief Executive (Back bows represent staf ergaged i projet aces) Proje T Socnaton Fig. 1.162: Matrix Organization Structure | The project managers are generally responsible for overall direction and integration of activities and resources related to the project. They are responsible for accomplishing work on schedule and within the prescribed budget. ‘They are also responsible for integrating the efforts of all functional managers to accomplish the project and | directing and evaluating project activity. The functional managers are concerned with the operational aspects of | the project. ‘The functional structure is primarily responsible for : ‘Scanned wih CamScanneree Pe Se ret mormreall © Completing the project within prescribed technical spas, ‘organizational growth. These complexitie 85 @ response to growin, rer Co eels Sawn ie eet coy aoe th he pongo oer eee may need eight product groups. Yet have the resources only tg nn re TesOUreRs. For example, a comPaRY provides a convenient way for the eight groups to she 9 hie four marketing specialists. The matrix na Artes specifications. re the skis, ach matrix contains three unique sets of role relationships; ‘manager of Chief Executive Officer 0 Thetopmanager or Clef Excite Offcer who s the head and ba co Themanagersof funcional and project (oF product) dep, alances the dual chains of command 0 Thespecialsts who report to both the respective functions ‘Who share subordinates i ‘anager and project manager. 4.16 Project Management Institute (PMI) + pai stands forthe Project Management Institute. Its a not-for, for project managers and program managers. It supports and ce Profit volunteer professional membership association ives our industry forward. mii was started in 1969, and with over 250 project chapters and ‘around the globe, PMI today is the largest project management - 3 membership of more than 2.9 million professionals, “ ete nan membership group. i ject Management Institute is the organization tha ee repay recognied certente aon tht shes out the PMP (Project Management Professional credential, assures employers that a person is trained and qualified to manage projects. —_ PM in conjunction with ts volunteer membership, developed A Guide to the Project Management Body of Knowledge {PMBOK® Guide), which is the agreed upon book of standard language, terminology and principles governing project. management. In the past, there was no formal degree in project management for project managers. PMI has been instrumental in creating the Project Management Professional (PMP) certification, which professionalized the career of project management. Now, project managers worldwide have been studying the agreed upon principles and passing the PMP exam. The PMP certification is formalizing and validating the profession. Project Management Institute, Inc. (PMI) found that 52% of all project teams are a mix of professional project managers and non-project managers. In the past, experienced project managers had a couple of choices. Invest in @ high end software solution that takes a lot of training to implement, or purchase a low end tool that lacks features. Now, Project Insight bridges the gap. Project Insight is the only mid-range project software that respects and conforms to PMI's PMBOK Guide or standards body. This is important for teams that are of mixed levels of expertise. Most experienced project managers have been using Microsoft Project desktop to manage projects. More and more of these savvy project managers find that they need to collaborate on projects with dispersed project teams. Yet, they still need robust scheduling functionality. On the other end of the spectrum, the team members, vendors, contractors and other third parties they collaborate with want something that is simple to use. ‘Scanned wih CamScannerers 4 Project Management (MU) 1:23, 7.46 _PM Knowledge Are Management Foundation, integration : This s covered fist in the PMBOK Guide, but i's about bringing together everything you know so that ~ Jou are managing your project holistically and not n individual process chunks. zits the way to define what your project wil deliver. Scope management is all about making sure that everyone errieer about what the project I for and what It includes. It covers collecting requizements and preparing the work breakdown structure. __ ime: It relates to how you manage the time people are spending on their project tasks, and how long the project ‘pres overall. This knowledge area helps you understand the activities in the project, the sequence of those activities, and how long they are going to take. Cost It Is all about handling the project's finances. The big activity in this knowledge area is preparing your budget vpnch includes working out how much each task is going to cost and then determining your project's overall budget forecast. quality: This area is where you will learn about how to set up the quality control and quality management activities tn your project so that you can be confident the result will meet your customers’ expectations. _ procurement : It supports all your procurement and supplier work from planning what you need to buy, to going through the tendering and purchasing process to managing the work of the supplier and closing the contract when the project is finished. Human resources : Human resources are vital to complete your project so you need to put your team together. After that it's all about managing the people on the team including giving them extra skills to do their jobs. Communications : Given that a project manager's job Is often said to be about 80% communication, in there, the PM writes communications plan for the project and monitor all the incoming and outgoing communications. — Risk management : It involves identifying risks and understanding how to assess risks on your project that includes how you perform quantitative and qualitative risk assessments. Risk management isn't a one-off activity, it covers controlling your project rsks going forward through the project life cycle. Stakeholder management : It is one of the most important groups which take you through the journey of identifying stakeholders, understanding their role and needs in the project and ensuring that you can deliver those. | think we'll see this area develop further in the next edition of the standard. Ifyou can grasp all these knowledge areas, you will have everything you need to know as a project manager. 1.17 Certified Project Management Professional (PMP) In a highly competitive management-oriented world, management skills underline and equip project managers with the arsenal to meet the demands of global projects. PMI provides comprehensive certification programs for project ‘managers across various levels of skill and education. You can opt Project Management Professional (PMP) Certification Prep, Certified Associate in Project Management (CAPM) Certification Prep. ‘The certified Project Management Professional Course must be attended by = — Project Managers — Functional Managers ~ Team Leads = Project Executives ‘Scanned wih CamScannerProject Management (MU) 4-24 Pro} ment Foundation 4.17.1 The Demand for Project Management Professionals — The demand for Project Management Professionals is at an alltime high. Whether one works in Information Technology, healthcare, manufacturing, sales, construction or energy — all sectors require experts in project management. Its believed that job opportunities for Project Management Professionals are continuously growing at a rate of 15 million new opportunities every year. According to a report by the Project Management Institute, by 2027, project management employees in seven project-oriented sectors is estimated to increase by 33 percent, which is equal to nearly 22 million new job opportunities. Also, nearly 88 million project management employees will be required by employers, by the year 2027. This report Is 2a clear eye opener and showcases the need for PMPs in the coming years, along with demonstrating their contribution to productivity. 4.17.2 Careers in Project Management A career in Project Management is highly engaging, beneficial and lucrative because of the reasons mentioned as follows Increased demand There is a huge demand for Project Management Professionals. As mentioned earlier, the PMI foresee approximately 22 million project management job openings through 2027. High pay cheques ~ Project Management Professionals take home a higher pay cheque than their uncertified peers. ‘The salaries are no doubt highly competitive. — Required by almost all industries — Project Management Is one of the top skill sets that the employers are seeking today. Almost every industry is in constant need of proficient project managers. Industries such as manufacturing, construction, I, utilities, finance, business and cil and gas, among others, offer the highest level project management work to PMPs. Offers good career— As Project Management Professionals are in huge demand across industries, the opportunities never cease and good decisions provide a soaring career. Constant learning — Project managers are always learning and enhancing their skills. This is a great career move for dividuals who wish to regularly update and refresh their knowledge. 4.48 Project Management Book of Knowledge (PMBOK) PMBOK has been used as the standard by which Project management Professional Certification is obtained. PMP Certification is based upon a survey of many companies’ best practices. The advantages of using PMP Certified Project Managers and Team members are that resources have already been trained. PMBOK is valuable for both companies and ‘employees. PMBOK is valuable for many reasons. Here are three : = The first reason PMBOK is valuable is that it allows companies to standardize practices across departments. This means ‘that the people in development manage projects in the same manner as those in distribution. ‘Second, PMBOK can help project managers to work with a standardized system across companies. Someone working for company x who then moves onto company y can use the same practices. = Third, PMBOK discusses what works. The methods documented within the project management community can assist those who are uncertain of how to undertake risk management. PMBOK also discusses what doesn't work. This prevents failure of projects. ‘Scanned wih CamScannerAz? _ Qe Management (Mi 3:25, Project Management Foundation Finally, project managers who are familar with PMBOK standards can custom tallor ther project management process ee pest Bt their company's needs. There's an old saying, "To break the rules first you have to know the rules when project managers invest time into learning the rules, they also ae investing time in learning how and where rales ean be broken. 4.18.1 PMBOK Structure project management as a practice is rapidly growing and spreading worldwide, and is now seen globally as a recognized and strategic competency, 9 career path and a subject for training and education. The PMBOK framework consists of five process groups and ten domain areas. ‘The § PMBOK Process Groups Initiating ‘The initiating process group involves the processes, activities, and skills needed to effectively define the beginning of @ project. Setting all permits, authorizations, and Initial work orders in place to secure an effective and logical rrogression of initial project activites sets the stage for subsequent success throughout al project phases. Setting ‘lear phases for work to be completed, initializing teams, and having the budget in place before work begins are vital for a strong start 2. Planning “The Planning Process Group sets forth the processes needed to define the scope of the project, set strategic plans in place to maximize workflow, and begin to assemble priority lists and plan team needs. This process group also addresses a more narrow clarification of ll project goals and expectations and puts in place the project infrastructure necessary to achieve those goals according to the timeline and budgetary constraints. Executing ‘The executing process group Involves managing teams effectively wi orchestrating timeline expectations and reaching benchmark goals. Project managers utilizing this set of skills will demonstrate a high degree of organization and communication skills while addressing team concerns or other complex situations associated with getting the work done on time and within budget. Monitoring and Controlling Processing change orders, addressing on-going budget considerations, and mitigating unforeseen circumstances that may affect a team's ability to meet initial project expectations are all part of the core skills and competencies involved Jn the Monitoring Process Group. Seasoned managers keep the momentum moving forward and guard the project against stalling by actively monitoring progress and using foresight and quick response to address project challenges. ‘Monitoring and Controlling hover over the whole project. According to PMBOK GUIDE, these are "processes required to track, review and regulate the progress and performance of the project. Closing ‘The biggest challenge of this process group is to bring the project to a successful close which means completing it on time and within the budget allotted. The bottom line is that while these process groups are not necessarily easy to implement, not doing so means the tearm may never realize the full benefits of their highly strategic projects. wy: ‘Scanned wih CamScannerWhat fs Projoct nansgemant? Gate its importance, (Refer Sections 1.2 and 1.5) inst do you mean by Operations? Ditferactiate Project & Operations. (Refer Sections 1.3 and 1.3.1) az 2.3 Liphain tm acope oh Projo Management. (Rater Section 1.6) Dascnbe Project Environment. (Refer Section 1.7) as as as as 2.7 Describe tha styphcal project Ite cycle along with ts phases. (Refer Section 1.9.2) Vitua ie Stage Gate Process? Describa ts stages. (Refer Sections 4.40 and 1.10.2) ae 2.9 Describe the role and responsibilty of a project manager, (Refer Section 1.11) What is Hegotistions? What is its importance in Project Management? How shoud a project manager prepare What are Teple Constraints? How ara they significant in Project Management? (Refer Section 1.8) Explain Projerd Management Life cycle, Describe the typical Project ite cycle phases. (Refer Section 1,0) for ig, ato (Rater Baction 1.12) Descrite Confic and ts causes, Explain ways to handlo confi. (Refer Sections 1.13 and 1.13.2) an 12 Vit fs Organizational Structure? Describe its importance for a projec. (Refer Sections 1.14 and 1.14.2) 2.43 Explain Functional & Projock Structure, (Refor Sections 1.14.3 (c) and 1.14.3 ()) Explain Matrix Giaucture, (Rator Bection 1.14.3 (D) au ©. 18 Yin aster na on PM, (ator Becton 4.48) 10 Decsrto te trod eons 0 ecornne by PL (ter Section 4.46) 7 ug Ps. om eel ‘Scanned wih CamScannerInitiating Project How to got a project started, Selecting project strategically, Project selection models (Numeric [Scoring Models and Non-numeric models), Project portfolio procuss, Project sponeor and creating charter, Projet proposal. Effective project wam, Stayes of toarn development & growth (forming, storming, normning & performing), team dynamics, 24 Introduction {A project work demands a lot of planning and effort from all thove who are involved in it. The basic understanding of the project life cycle Is vital for every project manager specially. As it Is said, well begun fs half done, the successful Initiation of a project plays a very Important role In Its ultimate success. If you begin by putting the right foot forward you are in a good chance of making It to the end as desirable. Thus project initiation becomes a very important part of a project, ‘work. This chapter deals with everything that helps you develop a good understanding of project initiation. 2.2 _ Project Initiation ‘The most critical phase of a project Is Its Initiation. It Involves estimating, scoping, assigning resources, defining requirements, briefing in your team, etc. There are a serles of tasks 0 critical in giving a concrete shape to your project. A project comprises five steps. They a = Initiating, Planning, Executing, Monitoring, & Controlling and Closing. Project initiation Is the first phase of a project Ife eye. This phase describes the opportunity or reazon for the project Initiation. Objectives are defined to avail the ‘opportunities lying ahead. During thls phase of the project some of the Important tasks are like assembling a team and defining. busines case to define the project in detail, = In this phase all sorts of Information such as client proposal or the research of any research done earlier Is accumulated to set and define the project’s scope, timings and cost. This becomes the most basic set up for your project through which you identify the stakeholders, the team, goals and objectives and deliverables, the project initiation phase generally describes a project in details in terms of three important elements. They are people (Input), Processes and Products (Output). This is considered a good way to outline your project requirements and all the activities to be performed later. these ate erltical toa project. 2.2A(a) Pooplo Following, the people generally associated with a project. Let us understand helr roles. Toam ()Desertbe your Team {In the Project Initiation phase, It Is Important to define and form a team on the basis of the project requirements and deliverables. You have to plan on what shape your team must be given. The following points help when you -nw@ ‘Scanned wih CamScannerWF _ Project Management (MU) 22 Initiating Proj Skis required (in the area ofthe project) Relevant Experience (Experience of working on the similar projects) = Stakeholders (thei role) = Availability = Budget required to get them onboard (i). Start with your Team It's important to begin the work by arranging a starting meeting with your team members. This helps them to understand, clarify the requirements and other details and get their involvement in the project right from the beginning. The team members must be involved while setting the project requirements, team member's roles and responsibilities and the objectives to achieve. Managing the expectations of the people is the best way to initiate 2 project in the right way. When you get your team involved right from the beginning they will feel more included and involved inthe decision making and therefore have a much more positive impression of the project asawhole. ‘Stakeholders (i) Identifying and defining their roles During project Initiation process, it is equally important to outline and define the stakeholder involvement whether the stakeholders are the client or the internal ones. You must define the role and responsibilities of each cone in terms of reviewing the deliverables and giving feedback. (i) tntiating Communication Communication with the stakeholders is always important. Its very important to define the contents and timing ‘of communication that will take place with different stakeholders. Timely communication with and updating of the stakeholders is a good approach. The communication and updating of project details should also be extended to others in the team involved. (ii) Meeting with the stakeholder Right from the project initiation phase, the role of stakeholders becomes important. So, knowing them well and getting along and creating a positive environment is quite helpful. Therefore an initial meeting with the client or stakeholders involved should be organized. The meeting should discuss everything related with the project Including all the people, their roles and responsibilities. A meeting like this breaks the ice and gets all of them onboard. 2.2.1(b) Process Following are the elements of a project process to explore before init Methodology For your process to be effective you must begin by outlining your project activities, deliverables and the team. The process often comprises a blended mix of different methodologies. Efforts should be made to identify the ‘methodologies that are suitable to give the desired outcome. You should refrain from forcing a certain methodology. Following are useful when considering the methodology : = _ Size of your project. ~ Scope, timeline and budget. — Right team (Dedicated or shared). ‘Scanned wih CamScannerWF _Project Management (MU) 23 Initiating Project, — Role of your clients and stakeholders. = Requirements and deliverables. Clarity on the Following will give you a better idea of what type of project itis and how it should proceed. 2. Tools = During the project execution you are going to require a lot of tools and therefore, itis important to identify them in the beginning so that they are available and you ca plan their utilization at the right time. Some areas to consider when selecting what tools you need are : — Resource planning and management = Project Planning and timescales = Stakeholders collaborations — Communication with your team and stakeholders — Management of Project internal tasks ‘Always get your internal team and stakeholder’s agreement while selecting the right tools. Itis also important to know how to use them effectively. Later changes can always be made depending on the requirements. 3, Managing Risks There is no project that is without any risk. Risk is an integral part of a project. Thinking and planning all the possible risks ahead Is vital in the project Initiation phase. To do this, highlight all possible Risks and then identify ways to reduce their impacts incase that happens. You should also involve your team hold a pre-mortem session with your team members where you discuss areas of risk, as they are often unexpected. 2.2.1(e) Product Requirement Analysis Right product s the outcome of a project work. Therefore, you should try to understand the requirements of your project as clearly as possible in the initial phase. It’s important to begin by outlining things that you know already such as the needs of the business, client and users. This helps you to have a clear understanding of the background and context for the project. Identifying Scope and Deliverables During the project initiation phase, you must have a clear idea of the scope and deliverables that are required. You ‘must write them in details so that every aspect of them is included and agreed upon. This will avoid any confusion at later stages. Needless to say, the involvement of your team members and the stakeholders is of utmost importance. Setting Deliverables (On the basis of the information you collect, the deliverables must be finalized in order to avoid later confusions. Therefore you must organize an internal meeting with your team members and stakeholders to go through the deliverables. Make sure to get the feedback and suggestions from everyone. During the meeting while reviewing the deliverables with your team, keep these areas in min — The deliverables = Thelr format, shape, size and specifications ‘Scanned wih CamScanner- WF _Project Management (MU) 24 Initiating P 4 = Changes required from the initial understanding = Timeline = Dependencies on any other deliverables Budgets and Timings ‘After you decide upon your list of deliverables, you establish a fair project scope and deliverables. Next is to decide op the timings to deliver and roles to be played by each team member. Therefore, you should work with the team to sey the right perimeters on estimating timings and shaping the right team. Again, you shouldn’t force a process onto projet rather make sure the process suits the requirements ofthe project. After this, the next step is to create budget as it is important to put costs against each and every item that you have agreed upon. At this stage, you don need a detailed breakdown of timings but more an overview of phases of time. } Setting Measures of Success The success of a project should regularly be measured so that you can know and understand the progress ang bottleneck, if any to be worked out. An on the track project gives the necessary confidence to the team and the stakeholders which is possible only through regular review. Therefore, you should create some measurement criteria to review. Consider areas such as : — Meeting the core deliverables = Glient satisfaction = Team satisfaction — Adherence to the set timings Adherence to the budgetary constraints 2.2.2. The Process of Initiating a Project 1 Business Case — The first step is establishing a business case in which focus is given on explaining the reasons for starting a project. The business case describes the availability of financial and other resources to support the business need. A business case considers the requirements of the project and justifies how it fits the size and risk of the proposal. The structure of a business case remains the same irrespective of the project types. A business case basically outlines the project relevance comprehensively describing its need and the likely impact. It does not reveal the technical aspect of the proposed project. = While describing the business case care should be taken to make it easy to understand, clear, logical and relevant. The key aspects need to be identified, measured and justified. There also must be accountability and. ‘commitment for the delivery of the project outcomes and costs involved in the project = Following should be the contents of a business case : © Preface © Table of contents © Executive contents of the project © Business drivers, scope of the project and financials aspect © Business analysis such as the costs and benefits, risk © Conclusion ‘Scanned wih CamScannerProject Management (MU) 25 Initiating Pro 2. Feasibility Study After the business case is prepared and approved the next step is to do a feasibility study. it describes whether it is feasible to undertake this project and what are the potential solutions to the opportunity or business problem that the project is proposed to address. It guides you and helps you take a decision on what should be the approach while undertaking the project. Through a feasibility study you can not only define the opportunity but also prepare the supporting documents ‘and tell what is required to complete this project successfully. It also identifies other possible solutions. Probable risks and issues are also identified. The study also gives the proposed solution to each problem. 3, Project Charter “The next step is to prepare a project charter. It describes the purpose for the project and its proposed structures ‘and execution. A project charter also sets the vision, objectives, scope and deliverables of the project in details. It identifies and describes the responsibilities of the project team and the stakeholders. ‘At this stage, the project charter is able to present the project in structurally organized, well documented form ‘which mentions the project plan and list all risks, ssues and assumptions. 4. Building Team ‘The next step is building of a team as.a project cannot be initiated without an effective team. Therefore, this step first prepares job descriptions for the people who will play their role in implementing the project plan. This includes their role and responsibil A project team is built by first by defining the roles for each member as clearly as possible to keep the work ‘lowing smoothly. Next comes the responsibilities that come with the role. Authority associated with each role is also clearly described. Sometimes a detailed organizational chart is built by listing the skills and experience needed for each position. It Js also helpful in defining different qualifications required for each position. The chart also includes the performance criteria, salary and working conditions. 5. Project Office {A project office is a place in the office or work site where the project manager and support staff sit and work together during the project. It is generally equipped with the communications infrastructure and other technology needed for the project. ‘The location of the project office must be near to the actual project work site. It should be large enough to house all the people associated with the project. 6. Periodical review Periodical review of each step that was identified during the initiation phase must be done to ensure that there Is. nothing that goes against the project as it is always possible to make mistakes and this is especially true with the project initiation phase as itis so critical to the success of the project. Project periodic review is an essential part of the project management. Periodical review also looks at the risks that were earlier Identified and see if any have occurred, and if so how they were controlled and resolved. At times, changes are made to a project. A review evaluates if these changes were done correctly and whether they have kept the project on track. eae ‘Scanned wih CamScannervery organization has ited resources. Time, financing, human resources, materia, and skis are just a few of top ttems on along list of constrained orpanieath including project selection. There simply fn't enough of what Is needed to 0 around ang jesources. The constraints of the organization force cholees in gh areas of operation, undertake every potential project. = Moreover, nt every proec a god Hes Inthe best of cases, we might have several good projects to selec rom, by poling asructured approach 0 project selection, project managers can Increase the chances of selecting potently successful projects with the most positive organizational impacts, therefore, the goal should always be to select projects with the maximum benefits to the organization. By having y Jer of different selection tools and techniques at our disposal, we will be in a better position ta select the best | numb projects to undertake, 23.1. Techniques used for Strategic Project Selection There are lots of ways to decide on which projects to select. Following are some basic techniques used for plekng projects to undertake. Ailof the methods isted here can be used alone, oF in combination with other techniques. 2.3.4(a) Financial Analysis ‘On many occasions, the project selection dectsion is taken on the basis of just one factor Le. financial benefits. In such situations, projects are selected on the basis of the project opportunity that gives the maximum financial benefit to the organization. ‘Such decisions are never easy. Fortunately these days, several financial analysis tools are used to determine the financial benefits a project can provide. Two of the most frequently used tools are Returns on Investment (RO!) and Payback Period. ROI measures the returns produced by a project with respect to the amount of capital invested. RO! is calculated with the following equation : ROI = (Gain from investment ~ Investment Cost) / Investment Cost Therefore, the project that provides the highest returns on investment is selected ‘The payback period of a project ts 2 tool that calculates the time period a project will take in order to recover the amount of capital invested. The calculation for payback peniod 's done by deading the amount of capital invested in the project by the income generated by the project per period of time (months, years, etc). Using payback period, the project with the shortest time to recover invested capital can be selected. In many cases, the selection of a project is also done by the measurement of the opportunity cost. Opportunity cost I ‘the measurement of the cost that an organization pays for not selecting the other projects A decision on which project is to be selected s based on financial analysis alone. It provides the best possible outcome based on the specific financial needs and objectives of the organization, 2.3.1(b) Strategic Objectives Analysis = Projects generally play a very important role in achieving the strategic objectives of an organization. Therefore if an ‘organization has clearly defined strategic objectives, projects are then selected in such a way that they help further the organization achieve the strategic objectives. weet ‘Scanned wih CamScannerProject Management (MU) 2. During the project selection care should be taken to se how well a project can support orpaniraional strategy. For via service based organization sets its mission to provide supetior customer service, then the proyeces example, tected should be such that It enhances customer service. For an organization that focuses solely on innovation to jain competitive advantage, projects that support research and development should be picked asa better option 2.3.1(c) Problom Solving Naturo COrganteations, at times, have specific problematic conditions which require to be improved. In such situations, particular projects that solves the problem and improves the conditions could be chosen. This concept of using projets fs Paecpy many organizations to solve internal problems. In auch cases, the reatons for selecting a specific project ls to vamove hindrance and impediments for smooth and efficient, organtzational operations, 2.3.4(d) Opportunity Analysis New opportunities are found in plenty all the time. It Is up to the organizational and their management to lookout for them to take advantage of. Opportunities are required to be Identified to achieve different organizational goals which sould be Increasing profits, entering new markets or developing new products and services. Though, it Is easier said than Gone as Kentiied opportunities rarely take advantage of themselves. In many cases, projects are designed, selected, and. Implemented specifically o take advantage of opportunities identified by organizational leadership. 2.3.1(0) Requirements Analysis Business environment, today, Is ever changing. Industrial, regulatory, and market conditions keep changing resulting, In the creation of new requirements. Organizations must keep a close eye on the changing requirements and fulfil them with the right projects. People should be assigned with the specific job of tracking all the changes and looking for an ‘opportunity for the organization to come up with a solution. 2.3.1(f) Time Frame Analysis ‘While selecting a project we must look at the time frame as it |s an important point of consideration in the selection of ‘a project, It is done in two ways: analyzing the time of implementation and total project life cycle time. = Time required in the Implementation of the project components is important to analyze particularly when significant portions of the project are to be implemented in a time bound manner. Analysis should be done to find out whether the organizational resources required for a project are available at the time of project planning. Project life cycle time Is the total time involved in the completion of the project starting from selection and initiation to final closing and shut-down. Time frame becomes more important if there Is a limited period of time available for the undertaking of a project. 2.3.1(g) Weighted Scoring Model = Weighted scoring models are project selection analysis tools. They are useful when the decision on project selection Is. taken on the basis of not one, but several factors. In such a case, a weighted scoring model (Also called Decision Matrix) Is considered one of the best tools to examine, rate, and select a project among multiple available options. ~ Aweighted scoring model is developed by determining the factors which are considered important to an organization In project selection. Those factors are then assigned a relative level of importance or value (weight). The factors are then examined and rated for each available project option under consideration with the rating multiplied by the relative weight of the factor. The project with the highest total score is the one that should be selected 2 ‘Scanned wih CamScannerion Initiating Pro WW Project Management (MU) 28 Project Selection Models Project selection is an important function of business organizations. A wrong selection of project may generate losses, ‘which Is undesirable. Therefore, having a thorough understanding of project selection models becomes very Importance, Following are the two important types of project selection models. 1. Non-Numeric 2. Numeric Project Selection Models 2. 2.4.1 Non-Numeric Project Selection Models Non—Numeric project selection models are described as follows : The Sacred Cow 2. The Operating Necessity 3. The Competitive Necessity 4, The Product Line Extension 5. Comparative Benefit Model 6. Q-Sort Model The Sacred Cow This is a commonly used method in which the senior members of the organization suggest a project out of their own understanding and expertise. Most of the projects using this method are those that are initiated out of an apparent opportunity available or taking chance of an un-established idea for a new product. The project is created as an Immediate result of this approach in which about whatever the boss proposes becomes thé project. ‘The sacredness of such project reflects the fact that it generally continues tll t finishes or until the senior declares it a failure of the Idea & ends it. 2. The Operating Necessity ‘Sometimes, the necessity of a project arises simply because it is capable of either enhancing the operating efficiency of the organization or solving a serious problem that’s troubling the organization. For example, if a plant is threatened by the flood then it is not much complex and effortful to start a project for developing a protective desk. Many potential projects are evaluated for selection using this criterion of project selection. Questions such as the estimated cost and its comparative effectiveness come in for analysis in front of the organization. The project cost is generally ‘analyzed to find out whether these could be maintained as minimum and compatible with the success of the project. 3. The Competitive Necessity Organization always like to stay ahead in competition and this desire becomes the basis for making decision to carry ‘out a project. Although, preference is generally given to the project whose needs is felt by the operating necessity to competitive necessity with regard to investment. Generally, both types of project selection models are considered quite useful & effective as compared to others. 4. The Product Line Extension {In this selection model called the product line extension, a project is initiated for the development & distribution of ‘new products and Is evaluated on the basis of how much it suits the company’s current product lines, how much it fortifies a weak line, fils a gap, or enhance the line.. ‘Scanned wih CamScannerW_Project Management (MU) ‘On many occasions, evaluation of profitability is not dor Jecsions on the basis of then belief about the probable influence of the addition of the new product to the line over the entire performance of system. Comparative Benefit Model ‘This model s used when there are several projects up for consideration by the organization. The selection is done (on the basis of their comparative studies and only that project is selected which can provide the maximum benefits to the company. Though, comparing various projects Is not an easy task as there are chances of committing mistakes. sometimes, this comparison is done just on the basis the perception of the selection committee members that certain projects will benefit the company more than the others even when they fail to suitably specify or measure the proposed benefit. For all such projects, instead of a formal model, the concept of comparative benefits is considered beneficial for the selection decisions, All the considered projects with positive recommendations are examined by the senior management of the funding organization. Efforts are then made to develop a plan that can effectively suit the objectives & budgets of the organization. @-Sort Model = This is the one of the most simple and straightforward techniques used for selecting projects. n this model, the available project for undertaking are first divided into three groups according to their relative merits. They are Good, Fair and Poor. The main group is further subdivided into the two types - fair-minus and fai-plus. The projects within each type are ranked from best to worst. Again relative merit of the respective projects provides the basis for determining this order. Specific eriterion is used by the rater to rank each project. Sometimes, he just uses his general entire judgment. At times, one person holds the responsibilty for carrying out the evaluation & selection process of the project. Sometimes, a selection committee is formed to perform the selection process. The ranking of the projects differ only to some degree from rater to rater. Finally the projects are selected on the order of preference, though financial basis becomes the most important criterion before final selection. 2.4.2 Numeric Project Selection Models These models use profitability as the sole measurement criterion for selection of a project. Majority of the organizations use different numeric types of project selection models. Following are some of numeric models for project selection, Payback Period Accounting Rate of Return, Break Even Analysis Cost benefit Analysis Net Present Value (N4PV) Internal Rate of Return (IRR) aya eee Payback Period Method = This method is a simple non-discounted factor method. it calculates the time period that will be required for the project to generate enough returns to recover the initial investment. It focuses on measuring the cash inflows, wy ‘Scanned wih CamScanner| ject Management (MU) 210 Initiating Project economic life of the project and the investment made in the project without looking at the time value of money, ‘This method is used to select a project proposal based on its earning capacity within a fixed time period. With simple calculations, selection or rejection of the project can be done. The results also help Identify the risks Involved. As the method doesn’t consider the time value of money, the accuracy of selection at times becomes, difficult to ascertain, = The payback period is the time period expected to be taken by the project before the investment will be returned in the form of income. When comparing two or more investments, business managers and investors typically ‘compare the projects to see which one has the shorter PBP. Projects with longer PEP are usually associated with higher risk. 2. Accounting Rate of Return Method (ARR) — This method is a better method as it overcomes the disadvantages of the payback period method. Here, the rate of return is expressed as a percentage of the earnings of the investment in a particular project. This method helps in selecting a project by using the criteria that a project that has higher Accounting rate of return than the minimum rate of returns set by the management will be considered and those below the predetermined rate of returns are rejected. = ARR takes into account the whole economic life of a project which helps in getting a better means of comparison. However, even this method ignores time value of money and doesn’t consider the length of life of the projects. 3, Break-Even Analysis = Break-even analysisis another numeric financial tool used frequently for project selection. It is used to determine the stage at which your project, a new service or a product, will be profitable. = mother words, it's a financial calculation done to determine the number of products or services a company \ should sell to cover its costs. Break-even is defined as a situation where your incame and expenses match and thus you are neither making money nor losing money. You have enough income to recover all your costs." — This method is useful in understanding the relationship between the variable cost, fixed cost and revenue. As per this analysis it has been observed that an organization with low fixed costs will have a low break-even point of sale. For an example, a company has a fixed cost of Rs.0 (zero) will automatically have broken even upon the first sale of its product. Usage of Break-even Analysis (0) Starting a new project : For selecting every new project itis advisable to conduct a break-even analysis. Not only it helps you in deciding, whether the project idea is viable, but it will force you to be realistic about the costs. It will also guide you on the pricing strategy. (il) Launching a new product : An existing business planning to launch a new product should do a break-even analysis particularly if such a product is going to add a significant expenditure. (iii) Changing the business model: It is also useful to an organization which plans to change its business model like switching from wholesale business to retail business. As the cost incurred to the business could change considerably this method helps to figure out how much the selling prices need to change too. 4, Cost benefit analysis — Cost benefit analysis is another numeric method used to determine the viability of a new project. Through this method organizations analyze the profitability of projects. It is also used to determine the value for intangible assets. This model was built by identifying the benefits of an action as well as the associated costs, and erent Ene ‘Scanned wih CamScanner&_ Project Management (MU) 11 IntatingProjoct subtracting the costs from benefits. When completed, a cost benefit analysis gives concrete results that can be used to develop reasonable conclusions around the feasibility and/or advisability of a decision or situation. = Cost benefit analysis in project management is one more tool in your toolbox. This has been devised to evaluate ‘the cost versus the benefits in your project proposal. It begins with a list. — The list of project expense is prepared on one side and the benefits to be recelved after successfully executing the project is listed on the other side. Based on this you can calculate the returns on investment (RO}), internal rate of return (IRR), net present value (NPV) and the payback period. = The difference between the cost and the benefits determines whether action is required to be taken or not. in most cases, ifthe cost is 50 percent of the benefits and the payback period is not more than a year the action is, worth taking. Uses of Cost-Benefit Analysis () To determine the feasibility of a project : This analysis helps the management of an organization in determining whether undertaking the project will give benefits or not as nobody wants to incur losses in business, When 2 huge sum of money is invested in a project or initiative, it should at least break even or recover the cost. The costs and benefits are identified and discounted to present value to ascertain the viability. {@) To help compare projects : As you have today so many choices for investment there must be a basis for selecting the best alternative. Cost-benefit analysis is quite useful to pick through the available options. This model helps businesses to rank the projects according to their order of merit and choose the one that isthe most profitable. (ii) Evaluating Opportunity Cost : Cost-benefit analysis isa useful tool for comparing and selecting the projects and selecting best option particularly when the resources are finite but investment opportunities are many. However, while choosing the most viable project, its also important to know the Opportunity Cost which is the cost of the next best alternative foregone. It helps businesses to identify the benefits that could have arisen if the other option was chosen. (iv) Sensitivity Analysis : Sensitivity analysis is a useful tool for improving the results of Cost-benefit analysis and is ‘mainly used when there is no clarity over the discount rate. In this condition, the discount rate and the horizon value are changed to test the sensitivity of the Cost-Benefit Analysis model Net Present Value (NPV) Method —Thisis another widely used method for evaluating the returns that you can get out of an investment in a project. In this technique the cash inflow that is expected at different periods of time is discounted at a particular rate. ‘The present values of the cash inflow are compared to the original investment. If the difference between them is positive then it is accepted or otherwise rejected. This method considers the time value of money and is consistent with the objective of maximizing profits for the owners. — Net Present Value is calculated by subtracting the present value of cash outflows from the present value of cash inflows. The present value defines what will be the worth of the future sum of money as of today. While investing in certain investments or projects if it produces positive NPV then you can accept the project as. this will show the additional value to your wealth. — _Andin case of negative NPV you should not accept the project. Internal Rate of Return (IRR) = The internal rate of return (IRR) is a discounting cash flow technique. It gives a rate of return as expected to be earned by a project. It gives a discounted rate where the total of initial cash outlay and discounted cash inflows are equal to zero. In other words, its the discounting rate at which the net present value (NPV) is equal to zero. y ‘Scanned wih CamScannerBe rrpect meer 2 et For, the computation ofthe Iternal rate of return we use the same formula an NPV. Software ike Microsoft xc is aso avaiable to calculate IRR In Excel, there 1s 9 financll function thet uses cash flows 3 reguly Intervals for calculation. IRR = (Cash Flows)/(1+1)' - Initial Investment where Cash flows in the time period Cash Flows = © = Discount rate J = Time period — An ideal rate of return is the rate at which the cost of investment and the present value of future cash flows match. A project that can achieve the ideal return is a profitable project. In other words, at this rate the cash outflows and the present value of inflows are equal, making the project attractive. 2.8 _ Project Portfolio Process The project portfolio process Is a method which is used to maximize the output potential of all projects undertaken by an organization at a given time, subject to limited resource constraints. Before beginning the project portfolio management efforts, it is important to establish an environment of understanding and cooperation among key decision makers in your organization. The project portfolio process may include terminating current projects that may be successful and timely in favor of projects that have a larger economic or strategic impact on your operations. During the project portfolio management process, resources such as time, money, employee productivity, and technology are allocated to those projects that contribute the most to the company’s profitability. Before considering any specific projects, alist of priorities Is developed by which each one is judged, The organization continually monitors the priority list and adapts it to the changing strategic goals and evolving jon to revenue, marketing ity to manage business climates. Items by which to prioritize the projects can include cost, contribs Impact, time frames, and achievement of specific goals. Project portfolio process has become a key component in organizations as they look to enhance their abi multiple projects in an efficient and effective way. Project portfolio management process is the key to success because it defines how an organization approaches project prioritization, resource allocation, budgeting, scheduling, and other ‘major project components. ~The goal of Project Portfolio Process is to find the best possible combination of resources to help an enterprise achieve its objectives, and it takes into account such factors as external market conditions, customer demands, competitive environment, and government regulations. The need for Project Portfolio Process is driven by the fact that all projects require funding, time, and staff to be completed successfully. But often the resources needed are in limited supply. At the same time, it’s clear that not all projects are of equal value to an organization. As a result, stakeholders need a way to manage projects and resources to ensure that the most strategically important projects will receive the attention and resources to ensure success. To ensure success with a Project Portfolio Process, organizations can follow the following steps Identify Business Goals and Strategy The first step toward effective Project Portfolio Process is to identify organizational goals and clearly define a business strategy to achieve those goals. This will help companies develop an action plan. Each of the projects in @ portfolio should align with the organization's strategic vision. eres ‘Scanned wih CamScannerW_Project Management (MU) 243 Initiating Project ‘A common pitfall occurs when organizations identify their business strategies but lose sight of the individual projects. To avoid this, organizations should take the time to identify the business strategy as well as evaluate where projects stand in relation to business objectives. This involves taking an inventory of all current projects and resources, including evaluating the current projects in the pipeline for redundancies, stalled projects and other potential areas for cost savings, and identifying skilled employees and their current and future availability to find out who's available to work on high-value projects. Establish a Project Management Office (PMO) Companies should create a business unit to oversee Project Portfolio Process and coordinate efforts across the ‘whole organization. In many cases this unit is referred to as a PMO. ‘Many organizations might already have informal teams that support managers and projects. But for Project Portfolio Process efforts to be successful, a team needs to be given recognition and support from senior , the system of checks and balances will nat work. executives. Without th Develop Project Evaluation Ceriteria ‘The PMO can work with business leaders to create project evaluation criteria, which will help the organization review, projects to ensure that they align with strategic objectives of the enterprise. evaluate, and auth ‘Among the questions to ask when evaluating new project initiatives are = = Whether the project drives business goals — What the expected tangible outcomes will be — Whether the outcomes can be achieved by a project already underway = What the project’srisk-return profile is — What resources are needed to complete the projects Develop a Risk Management Strategy ~ Evaluating the risk-return profiles for projects is @ key step in the review phase. But developing an organizational risk management strategy is included as a best practice by itself because it's so vital to Project Portfolio Process — Companies need to evaluate each project's inherent and potential risks to the overall portfolio, rather than just, comparing project initiatives side-by-side. It’s important to conduct risk assessments several times over the course of a project's lifecycle, because this enables project managers to keep the PMO and stakeholders up-to- date on any changes. Stakeholders, in turn, can weigh new initiatives against the overall portfolio more accurately. Invest in a Project Portfolio Process Solution Finally, companies need to deploy a Project Portfolio Process solution that can increase cohesion and visibility into their processes. ~ These tools can help create a historical project archive, which business leaders can draw upon when they make future investment decisions. Organizations should thoroughly evaluate products before buying them, including. reading reviews of Project Portfolio Process platforms and scheduling product demonstrations. Project Portfolio Process platforms can identify projects that do not warrant investment and provide clarity into projects at every level, from objectives to cost. They can provide strategic insight and visibility into the most important projects that make sense for an organization, prioritize the most valuable work, and help deliver project initiatives on time and on budget. iatategs ‘Scanned wih CamScannerW_Project Management (MU) 4 ing Project 2.6 Project Sponsor 26 ‘A Project sponsor is a person or group that provides resources and support for the project, program or portfolio and is accountable for enabling its success. ‘The project sponsor is a very important part of the project management organizational chart. In fact, every project has 2 sponsor. The project sponsor is one level above the project manager. ‘They do not manage the day to day operations of the project but ensure the resources are in place, promote the project and hold overall responsibility for the project’s success, ‘They represent the business side of the project. They are generally involved since the time the project is conceived and advocate for its inception even before a project manager was assigned, Here are some examples = (For a highway construction project, the project sponsor is employed by the state. In contrast, the project ‘manager is employed by the construction company and submits project updates and requests funding changes to the project sponsor. (i) For @ house construction project, the project sponsor is ikely employed by the house building company. They are responsible for multiple house building projects, or for the success of the company on some level. In contrast, the project manager is responsible for the day to day operations and scheduling of a house building project. Gi) For an IT. project, the project sponsor might be the Chief information Officer of the company. They receive updates and approve project changes from and to the project manager who is responsible for the immediate day to day project work. 1 Roles and Responsi ‘The project sponsor generally has the following roles Promotion : They attempt to keep the project at the highest priority within the organization by promoting them. Authorization : They authorize the project and assign work to the project manager. Funding : They are responsible for ensuring that funding i Approving : They approve the project management plan and are kept aware of how the project is managed. in place and approve changes to the project budget. ‘Scoping :They are generally responsible for determining the initial project scope although the project manager is tutimately responsible for the offical project scope within the project management plan. Project Charter : This document officially creates the project and assigns the project manager. It falls directly within the project sponsor's responsibility. Informing : They receive project status updates from the project manager and disseminate the information to the relevant executives, Receiving : The project sponsor receives the project deliverables from the project manager, approves them, and Integrates them into the owner organization. Itis important for every project to have a sponsor to : Ensure separation of decision-making responsibilities between project manager and projects sponsor Ensure accountability for the re: ization of project benefits Ensure oversight ofthe project management function Carry out senior stakeholder management ‘Scanned wih CamScanner$E_Project Management (MU) 245 Initiating Project 2.6.2 Functions of Project Sponsor 1 27 Project promotion : One of the foremost functions of a project sponsor is to support and promote the importance of the project to relevant stakeholders. This is necessary to give the project visibility at higher levels and to provide @ human face to answer questions about why the project needs to happen. Putting forward the business case : Someone who is a project sponsor needs to be a believer in the necessity of the project to sincerely make the case for it. They will assist the PM and team leaders in forming the business case so that it makes a powerful argument for why it should go ahead. Ensuring funding and resources : The project sponsor also assists in making sure that the project has everything it needs Determining project scope : During the initial exploration and project planning stage, the project sponsor is often called upon to contribute their experience of the possibilities and limitations for previous projects they have worked Approval and authorization for project steps : In order to streamline the reporting structures for a project, the project sponsor will often be handed responsibility for reviewing and approving project activities, which means that a PM can get a quicker response than having to address executives or stakeholders. Overseeing project health : Although they may not have daily interactions with the project, project sponsors receive regular project reports so that they have an understanding of the overall level of project health. They assist the PM in following up on budget proposals and maintaining the funding of the project. They also assist with the hiring of hurnan. resources and implementation of new technologies. Informing stakeholders of progress : A very important function of the project sponsor is to receive information about the project and then transfer this to relevant stakeholders. This is done to ensure continued support for the project and to make sure all stakeholders are kept in the information loop. ‘Assessing final deliverables : At the final stage of the project the person who is a project sponsor should review the final deliverables to sign off on them before being handed over to the client. This isa final checking process performed by someone who has enough distance from the project to be able to judge it fairly Project Charter Project Charter is a statement that describes the objectives of a project. This statement also sets out detailed project goals, roles and responsibilities, identifies the main stakeholders, and the level of authority of a project manager. It also acts as a guideline for future projects. It defines the roles and responsibilities of the participants and outlines the objectives and goals of the project. The charter also identifies the main stakeholders and defines the authority of the project manager. 4 Roles of Project Charter Following are the roles of a Project Charter : It documents the reasons for undertaking the project. It outlines the objectives and the constraints faced by the project. It provides solutions to the problem in hand Itidentifies the main stakeholders of the project. ‘Scanned wih CamScanner