PROJECT PLANNING AND SCHEDULING

Developing project network

A network is graphical representation of a project showing the flow and sequence of activities and events. There
are two network models - Project evaluation and Review Techniques (PERT).
Network analysis entails a group of techniques used for presenting information relating to time and resources so
as to assist in the planning, scheduling and controlling projects.
The information usually represented by a network includes the sequences, Inter-dependencies, inter- relationships
and criticality of various activities of the project.
 Project planning calls for detailing the project into activities, estimating resources and time for each
activity and describing activity interrelationships.
 Scheduling requires the details of starting and completion dates for each activity. Control requires not
only current status information but also insight into possible trade-offs when difficulties arise.

The main objectives of project management can be described in terms of a successful project, which has been
finished on time, within the budgeted cost and to technical specifications that satisfy the end users.

Objectives of network analysis

The following are some of the objectives of network analysis:
1) It’s a powerful tool for planning, scheduling 5) Minimization of cost for a given total time.
and control. 6) Minimization of time for a given cost.
2) It shows in a simple way the interrelationship 7) Minimization of idle resources.
of the various activities constituting a project. 8) To minimize production delays, interruptions and
3) Minimization of total cost conflicts
4) Minimization of total time.
Definition of terms
- Activity: is the actual work to be done – arcs
- Event: marks the start or end of an activity, usually denoted by modes in the network.

Start Finish
Event
Event

A path is a series of adjacent activities leading from one event to another.

Dummy activity: it is represented by a dashed arrow on the project network and is inserted in the network to
clarify activity pattern in the following situations:-
Project Evaluation and Review Technique(PERT) and Critical Path Method (CPM)
These are useful in planning, analyzing, scheduling and controlling the progress and completion of large
projects.
PERT and CPM consists of the following steps;
1) Analyses the project and schedule it into specific activities and events
2) Determine the interdependence of the activities i.e. the order of precedence and sketch the network.
3) Assign the estimates of time and cost to all the activities of the network.
4) Identify the critical path i.e. the longest time required to complete the project
5) Monitor, evaluate and control the progress of the project, by checking whether the project can be
“crashed” i.e. completed in a shorter period.
PERT and CPM are similar in nature except that PERT is concerned with the way activity time is estimated
while CPM is concerned with the cost estimates for completion of various activities.
PERT activity time estimates are probabilistic i.e. there are three different time estimates.
1) Most optimistic time devoted by
a , Most likely time i.e. most realistic time required to complete the Project devoted by m. and Most
pessimistic time devoted by b.
- In CPM the activity times are deterministic i.e. under specific conditions and are given in two sets, Normal
cost and crash cost, Normal time and crash time.
Worked examples
Example 1.
• Draw a network diagram from the following activities

Activity Immediate predecessor Activity Immediate

predecessor

A None G C
B A H C&D
C A I E&F
D A J G&H
E B K I&J
F C
Example 2
Draw a network for a project of erection of steel works for a shed. The various elements of the project are as
shown in the table

Activity code Description Prerequisites

A Erect site workshop None

B Fence site None
C Bend reinforcement A
D Dig foundation B
E Fabricate steel works A
F Install concrete plant B
G Place reinforcement C, D
H Concrete foundation G, F
I Paint steel works E
J Erect steel work H, I
K Give finishing touch J

Example 3:
A National hospital is considering installing a medical equipment . The following activities have been
identified. Required : Draw the appropriate PERT network and determine Earliest expected event time
(TE), Latest allowable event time(TL) and Slack time (S) for each event.

Activity Description te(weeks)

1-2 Testing 3
 2-3 Feasibility study 3

3-4 Government approval 1

4-6 City licence 1

2-7 Signing of contract 1

4-5 State licence 1

5-10 Electrical work 3

6-8 Staffing 2

7-8 Purchasing 4

8-9 Installation 3

5-8 Safety licencing 1

9-10 Testing equipment 1

7-10 Training staff 2

Example 5 : Present the following activities in the form of a network chart and determine Critical path,
Earliest and latest expected time, and standard deviation of the project
Completion time
Activity Optimistic (a) Most expected (m) Pessimistic (b)
1–2 4 8 12
2–3 1 4 7
2–4 8 12 16
3–5 3 5 7
4–5 0 0 0
4–6 3 6 9
5–7 3 6 9
5–8 4 6 8
7–9 4 8 12
8–9 2 5 8
9 – 10 4 10 16
6 - 10 4 6 8
Work Breakdown Structures (WBS)
The project planning and scheduling of activities is facilitated/enabled /made possible by WBS. Modern
methods of project management uses breakdown structures for work and organization.
A) Work Breakdown Structure (WBS)
Work Break Down Structure is a process by which the whole project is divided (i.e., broken down) into
various sub-projects, the sub-projects into various 'tasks, the tasks into various sub-tasks and finally the sub-
tasks into work-packages. In the process of building up WBS, the project manager, all connected functional
managers and all the connected staff work together and analyze all aspects of the project. under following
stages or levels:
1. Project
2. Sub-project
3. Task
4. Sub-task
5. work-package
There is no hard and fast rule as to the number of levels into which the project is to be broken down. The
number of stages (levels) should be neither too few nor too large. If a project is broken into only one or two
levels, integration of activities may become difficult. On the other hand, if a project is broken into too many
levels, it will make the analysis complex and unproductive and will lead to additional cost and time. The
question naturally arises as to what should be the level up to which WBS can go. The answer to this question
is that building up of WBS should be carried on till such time the 'work-package available is capable of giving
a good definition of the work content, the resources required, the cost and time requirement. The WBS and the
constituent work-packages become the basis for project planning, scheduling and controlling.
Numbering system for WBS: The numbering system is such that it follows the work break down structure.
The project is represented by the number "01". The subproject is identified by the second number. The
number "01-01" for a sub-project represents sub-project "01" of project "01"; "01-05" represents sub-project
"05" of project "01". The third number identifies the task. The number "01-02-03 represents the third task of
the second sub-project. Fig. below indicates the WBS numbering system

Activity: Students to develop work breakdown structures based on the water projects proposal started in the
initial sessions

Resource allocation
Resources include
Land
Includes all natural resources (“gifts of nature”) used in the production process, such as arable land,
forests, mineral and oil deposits, and water resources.
Labor
Consists of the physical and mental talents of individuals used in producing goods and services.
Capital
Refers not to money but to tools, machinery, and other productive equipment .
Resource allocation is used to assign the available resources in an economic way.
In project management, resource allocation is the scheduling of activities and the resources required
By those activities while taking into consideration both the resource availability and the project time.
Resource allocation mechanisms include ;-
a) Basic allocation decision
• The choice of which items to fund in the plan
• What level of funding it should receive
• Which to leave unfunded
• The resources are allocated to some items, not to others
b) Contingency mechanisms
A. There is a priority ranking of items excluded from the plan, showing which items to fund if more
resources should become available.
B. There is a priority ranking of some items included in the plan, showing which items should be
sacrificed if total funding must be reduced.
Resource levelling

This is a project management technique used to examine unbalanced use of resources (usually people
or equipment) over time, and for resolving over-allocations or conflicts.

Leveling resources involves redistributing an imbalance of allocated work. It assists project team
members by keeping them from becoming overwhelmed, working overtime, or running into project
burnout.

Techniques that help avoid resource overloading

a) Resource Leveling
In this method, the project manager can either level resources by hand (complicated, but perhaps more
sound) or use a software program such as Microsoft Project to level resources.
b) Prioritize Projects
By prioritizing projects, when a resource allocation overload is apparent or a task conflict exists, it can be
resolved without piling pressure on the individual or team (or requiring the individual or team to put in a
couple twelve-hour days).
c) Linking Tasks
 Linking tasks is more of a logistical solution. If the resource has been assigned to research the markets for
project A and project B, these tasks could be linked. In this manner, when it appears that a resource has
been over-allocated, really the tasks are similar enough to count for two projects. By linking these tasks
from the different projects, the problem can be resolved.

d) Leaving Breathing Room

When scheduling the project, it is vital to leave breathing room between tasks. However, it is
important to not under-allocate resources as this could lead to a loss of budget monies meaning
resource allocations problems will affect your project's health. A fine balance must be achieved
between breathing room and not moving forward quickly enough.

e) Avoid the “Putting out fires” approach to project management

If your team is consistently putting out fires, it makes it difficult to focus on the project.
Moreover, by putting out fires, the team becomes knee-deep in ash, while project tasks pile up.
This is where project management techniques such as Scrum come in handy

Contract and contract types

In the world of business, contracts are used for establishing business deals and partnerships. The
parties involved in the business engagement decide the type of the contract.
Usually, the type of the contract used for the business engagement varies depending on the type of
the work and the nature of the industry.
The contract is simply an elaborated agreement between two or more parties. One or more parties
may provide products or services in return to something provided by other parties (client).
The contract type is the key relationship between the parties engaged in the business and the contract
type determines the project risk.
The main types of contracts include
a) Fixed price (lump sum) contract
This is the simplest type of all contracts. The terms are quite straightforward and easy to understand.
To put in simple, the service provider agrees to provide a defined service for a specific period of time
and the client agrees to pay a fixed amount of money for the service.
This contract type may define various milestones for the deliveries as well as KPIs (Key
Performance Indicators). In addition, the contractor may have an acceptance criteria defined for the
milestones and the final delivery.
The main advantages of this type of contract is that the contractor knows the total project cost before
the project commences.

b) Unit Price
In this model, the project is divided into units and the charge for each unit is defined. This contract
type can be introduced as one of the more flexible methods compared to fixed price contract.
Usually, the owner (contractor/client) of the project decides on the estimates and asks the bidders to
bid of each element of the project.
After bidding, depending on the bid amounts and the qualifications of bidders, the entire project may
be given to the same service provider or different units may be allocated to different service
providers.
This is a good approach when different project units require different expertise to complete.
c) Cost Plus
In this contract model, the services provider is reimbursed for their machinery, labour and other
costs, in addition to contractor paying an agreed fee to the service provider.
In this method, the service provider should offer a detailed schedule and the resource allocation for
the project. Apart from that, all the costs should be properly listed and should be reported to the
contractor periodically.
The payments may be paid by the contractor at a certain frequency (such as monthly, quarterly) or by
the end of milestones.
d) Incentive
Incentive contracts are usually used when there is some level of uncertainty in the project cost.
Although there are nearly-accurate estimations, the technological challenges may impact on the
overall resources as well as the effort.
This type of contract is common for the projects involving pilot programs or the project that harness
new technologies.
There are three cost factors in an Incentive contract; target price, target profit and the maximum cost.
The main mechanism of Incentive contract is to divide any target price overrun between the client
and the service provider in order to minimize the business risks for both parties.
e) Retainer (Time and Material – T&M)
This is one of the most beautiful engagements that two or more parties can get into. This engagement
type is the most risk-free type where the time and material used for the project are priced.
The contractor only requires knowing the time and material for the project in order to make the
payments. This type of contract has short delivery cycles, and for each cycle, separate estimates are
sent of the contractor.
Once the contractor signs off the estimate and Statement of Work (SOW), the service provider can
start work.
Unlike most of the other contract types, retainer contracts are mostly used for long term business
engagements.
f) Percentage of construction fee contract
This type of contracts is used for engineering projects. Based on the resources and material required,
the cost for the construction is estimated.
Then, the client contracts a service provider and pays a percentage of the cost of the project as the fee
for the service provider.
As an example, take the scenario of constructing a house. Assume that the estimate comes up to
$230,000.
When this project is contracted to a service provider, the client may agree to pay 30% of the total
cost as the construction fee which comes up to $69,000.

Conclusion
Selecting the contract type is the most crucial step of establishing a business agreement with another
party. This step determines the possible engagement risks.
Therefore, companies should get into contracts where there is a minimum risk for their business. It is
always a good idea to engage in fixed bids (fixed priced) whenever the project is short termed and
predictable.
If the project nature is exploratory, it is always best to adopt retainer or cost plus contract types.
Contract negotiation
There are methods suggested on negotiating tactics. Many tips are silly. For example, suggesting that
you provide caffeinated drinks and food with MSG (without partaking yourself) and then waiting for
your negotiation partners to give away the store in a drug-induced daze. Other negotiation tactics are
devious and have the potential to backfire -- for example, pretending to have another suitor in the
wings, or insisting on negotiating items you don't really care about, so you can pretend to "give in"
on those and get all of the things you really want.
The following are some of the more common and popular contract negotiation tactics. Some of these
may seem like common sense (even obvious) strategies, but they're proven to work.
i) Break the negotiation into parts. Some negotiations disintegrate because the parties take an
"all or nothing" approach, in which the other party must agree to all of their terms in order to
move forward. A good way past this type of roadblock is to break the
ii) The "I'm only asking for what's fair" approach. This approach emphasizes that one party's
requests are simply in line with industry standards or current market prices.
iii) The Getting to Yes approach. To reach agreement (to get to "yes") the negotiating parties must
separate the people from the issues (that is, remove the emotion from the equation), look beyond
the negotiating parties to see who or what is the real interest or influence affecting each party,
generate options to create a problem-solving environment, and neutralize conflict by sticking to
objective and easy-to-justify principles of fairness.
iv) Take control. Controlling the location, timing, topics, and pace of negotiation (sometimes
called "controlling the agenda") may create an advantage.
v) Prioritize, prioritize, prioritize. Contract negotiations typically focus on revenue and risks.
But clearly, some revenues and risks are more important than others.
vi) The "offer-concession" strategy. Make sure the other side leaves the negotiation feeling
they've made a good deal. The offers you make should always leave you a good chance to make
acceptable concessions to the other side.
vii) Question rather than demand. If the other party is taking a hard line on certain issues, ask
why. Questions open up the discussion; arguments often close communication down.
viii) Find points of agreement and end on a positive note. This upbeat approach requires that you
find opportunities to say, "You're right about that," or "I agree." Establishing a collaborative
tone that is more likely to be conducive to progress and result in an agreement.
ix) Do your research. The party with more information usually has more leverage. For example, if
you know that the people who put an offer on your house have already sold their own house and
must move quickly, that gives you more leverage and some extra bargaining chips.
x) Dealing with burnouts and ultimatums. If the other party resorts to threats ("Agree to these
terms or there's no deal") or wages a war of attrition by dragging out the negotiations, you'll
have to decide what the underlying deal is really worth to you.
xi) Use facts, not feelings. Successful negotiators separate business from personal, facts from
feelings. They avoid letting an unpleasant personality or style drag down the negotiations. They
also avoid making the negotiations seem personal by using language such as "I believe" or "I
think," focusing instead on statements of fact ("If we pay this price, both parties to the venture
will beat risk.")
Project Monitoring and Control
Project Monitoring and Control process help oversee all the tasks and metrics. This is necessary to
ensure that the approved and authorized project is within scope, on time, and on budget so that the
project proceeds with minimal risk. This process involves comparing actual performance with
planned performance and taking corrective action to yield the desired outcome when significant
differences exist. Monitoring and Controlling process is continuously performed throughout the life
of the project.
 Monitoring is about collecting sufficient data to measure progress and making sure that the
project team implements the plan correctly. It involves collecting, recording and reporting
information concerning project performance that project manager and others wish to know.
 Control is the process of ensuring that the project delivers everything it is supposed to
according to schedule, cost and quality by taking corrective action when necessary. Data from
monitor activity to bring actual performance to planned performance

Reasons for monitoring

 Because it is known that things don’t always go according to plan (no matter how much we
prepare)

 To detect and react appropriately to deviations and changes to plans

Factors normally monitored include

 human resources (labour)
 Machines
 Materials
 Money
 Space
 Time
 Tasks
 Quality/Technical Performance
Times when monitoring is done
 End of the project
 Continuously
 Regularly
 Logically
 While there is still time to react
  As soon as possible
 At task completion
 At pre-planned decision points (milestones)

Project Control
Process and activities re-planning is applied by controlling
 time (schedule)

 cost (budget, expenses, etc)

 scope

 performance (quality, specifications, testing results, etc.)

PROJECT RISK MANAGEMENT

Definition:
Risk may simply be considered to be the probability of loss.It is a chance of something happening and when it
happens it has adverse/unfavorable effects. Project risk is the possibility/probability that project may go
wrong, or at least not produce the desired results.
Thus
Project risk management is the systematic process of identifying, analyzing, and responding to risk by
applying risk management principles and processes
Risk Management is how management responds to risks. It involves the following
a) recognizing preventive measures to minimize risk
b) implementing contingency plans to counter risk
c) reduce doubts via investigation through provision of useful information
d) transfer of risk to another asset
e) risk allocations in contractual agreements
f) setting contingencies to budget allocations
4.2 Types of project risks
 Unusual climatic conditions
 Additional or heavier pollution
Zoning

 Lack of or insufficient estimate of compensating environmental measures


 Price increases for material higher than expected
Financial

 Interest rates adjustments and increase in taxes

 Possibility of bankruptcy of supplier, client e.t.c
 Withdrawal of funding at certain stage of the project
  Damage as result of work performed on third party property
Social

 Strikes
 Lack of good communication with the community directly affected by the project
 Change in the political climate
 Change in legislation
Political

 Lack of sufficient insight into the necessary permits required


Other Risks include : Technological risk , Legal risks, Acts of God, Ecological risks, Management
risks

4.3 Approaches to risk management

Organization normally uses three different approaches to risk management:
 Project Management Body of Knowledge (PMBOK),
 Project Risk Analysis and Management (PRAM) Guide
 AS/NZS 4360 Standard ( Australian and new Zealand Standard)
Project Management Body of Knowledge (PMBOK)
Developed by Project Management Institute(PMI),It focuses on the following areas
 Risk Identification  Risk Response Development
 Risk Quantification  Risk Response Control
(Please access the latest version of PMBOK, by time of this literature Feb 2017, Sixth Edition is available
Risk Quantification includes several different aspects:
 Complex calculations may result to incorrect accuracy and consistency.
 Good prospects for one stakeholder may be a downfall for another.
 A risk occurrence can have a snowball effect.
 Chance and ways to exploit this chance communicate in unexpected ways.
PMBOK…Risk Response Development
Includes preventive measures against threats. These measures fall into one of the below-mentioned
categories:
Avoidance - Abolishing a particular danger. This is by abolishing the root of the problem.
Mitigation - Lessening the cost of a risk occurrence by lessening the likelihood of this occurrence.
Acceptance - To absorb the consequences
Risk response control
 Includes the execution of the risk management plan.
 PMBOK is a process structure for management understanding. The below-drawn chart explains a
common understanding of how project risk management is broken down into :Risk identification,
Risk Quantification, Risk Response development and Risk Response control.
PMBOK project Risk Management Structure