Bachelor of Commerce

in Project Management

INTRODUCTION TO PROJECT
MANAGEMENT

Module Guide

Copyright © 2023
MANCOSA
All rights reserved; no part of this book may be reproduced in any form or by any means, including photocopying
machines, without the written permission of the publisher. Please report all errors and omissions to the following email
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 Bachelor of Commerce
in Project Management (Year 1)
INTRODUCTION TO PROJECT MANAGEMENT

List of Content ..................................................................................................................................... 2

Preface ................................................................................................................................................ 4

Unit 1: Introduction to Project Management ..................................................................................... 13

Unit 2: Key Concepts in Project Management ................................................................................. 39

Unit 3: Organisational Strategy and Project Selection ..................................................................... 62

Unit 4: Project Life Cycle .................................................................................................................. 84

Unit 5: Project Management Knowledge Areas ................................................................................ 98

Answers to Revision Questions ....................................................................................................... 152

Reference List ................................................................................................................................. 156

Bibliography..................................................................................................................................... 157
Introduction to Project Management

List of Content
List of Figures

Figure 1.2: SAA Aircraft Procurement Programme.................................................................................... 23

Figure 1.3 SAA Portfolio ............................................................................................................................ 24

Figure 2.1 Functional Organisational Structure ......................................................................................... 45

Figure 2.2 Projectised Structure ................................................................................................................ 47

Figure 2.3 Matrix Structure ........................................................................................................................ 48

Figure 4.1 Project Life Cycle ..................................................................................................................... 87

Figure 4.2 Cost and Staffing level patterns ............................................................................................... 89

Figure 4.3 Risk and Cost changes pattern ................................................................................................ 89

Figure 5.1 AOA Diagram ......................................................................................................................... 113

Figure 5.2 AON Diagram ......................................................................................................................... 113

Figure 5.3 AON Solution.......................................................................................................................... 115

Figure 5.4: Solution AOA Diagram .......................................................................................................... 116

Figure 5.5 Resource Histogram............................................................................................................... 122

List of Tables

Table 1.1: Types of Projects and Characteristics ...................................................................................... 19

Table 1.2: Organisational Processes versus Projects ............................................................................... 22

Table 1.3: Programme vs Projects ............................................................................................................ 24

Table 2.1: Project Management Process Groups ...................................................................................... 41

Table 3.1: Checklist Model ........................................................................................................................ 68

Table 3.2: Multi-Weighted Scoring Matrix .................................................................................................. 69

Table 3.3: Uneven Cash flow .................................................................................................................... 72

Table 3.4: Net Present Value Calculations ................................................................................................ 74

Table 3.5: Activity 3.1 ................................................................................................................................ 81

Table 3.6: Activity 3.3 ................................................................................................................................ 82

Table 3.7: Activity 3.4 ................................................................................................................................ 83

Table 3.8: Payback................................................................................................................................... 83

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 Introduction to Project Management

Table 5.1. Process Groups and Knowledge Areas Integration ............................................................... 102

Table 5.2: Project Kick off Meeting Agenda ............................................................................................ 105

Table 5.3: Gantt Chart ............................................................................................................................. 111

Table 5.4: Activity Precedence Table ...................................................................................................... 111

Table 5.5: Solution .................................................................................................................................. 111

Table 5.6: Gantt Chart Solution ............................................................................................................... 112

Table 5.7: Precedence Table .................................................................................................................. 115

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Introduction to Project Management

Preface
A. Welcome
Dear Student
It is a great pleasure to welcome you to Introduction to Project Management (IPM5). To make sure that you
share our passion about this area of study, we encourage you to read this overview thoroughly. Refer to it as
often as you need to, since it will certainly make studying this module a lot easier. The intention of this module
is to develop both your confidence and proficiency in this module.

The field of Project Management is extremely dynamic and challenging. The learning content, activities
and self- study questions contained in this guide will therefore provide you with opportunities to explore the
latest developments in this field and help you to discover the field of Project Management as it is practiced
today.

This is a distance-learning module. Since you do not have a tutor standing next to you while you study, you
need to apply self-discipline. You will have the opportunity to collaborate with each other via social media
tools. Your study skills will include self-direction and responsibility. However, you will gain a lot from the
experience! These study skills will contribute to your life skills, which will help you to succeed in all areas of
life.

We hope you enjoy the module.

MANCOSA does not own or purport to own, unless explicitly stated otherwise, any intellectual property rights
in or to multimedia used or provided in this module guide. Such multimedia is copyrighted by the respective
creators thereto and used by MANCOSA for educational purposes only. Should you wish to use copyrighted
material from this guide for purposes of your own that extend beyond fair dealing/use, you must obtain
permission from the copyright owner.

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 Introduction to Project Management

B. Module Overview
The Module is a 15 credit module at NQF level 5.
The purpose of this module is to provide you with a sound theoretical framework creating an understanding
and overview of the key concepts which will be used throughout this program. You will be introduced to the
concept of projects and project management. We will unpack the phases in a project life cycle and consider
the respective international standards and project management global trends.

C. Exit Level Outcomes and Associated Assessment Criteria of the

Programme
Exit Level Outcomes (ELOs) Associated Assessment Criteria (AACs)

 Know and understand the tools,  Foundational knowledge of Project Management

techniques, principles, practices and is explored and understanding is reflected through
methodologies of Project Management the correct use of terminology

 Fundamental concepts in Project Management

are acquired and knowledge of appropriate
application of methodologies in managing projects
reflects understanding

 Gain an understanding of the  Similarities of Project Management and generic

interrelationship among the various management methodologies are investigated and
tools, techniques, practices and familiarity is shown by the ability to distinguish
methodologies of commerce and between the two disciplines
project management  Correlations between Project Management and
Management methodologies are analysed and
knowledge is reflected by proper integration of
various tools and techniques from both disciplines
to successfully manage projects

 Develop the practical skills to apply  The Theory of Constraints and other theories are
theory to the processes of project examined and knowledge is demonstrated
management to achieve project through the ability to strike a balance between
success within project constraints constraints and successful-delivery of projects
within the specified schedule, budget and scope
without compromising quality
 The determinants of project success are
investigated and knowledge is reflected by an
understanding of factors and criteria that most

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Introduction to Project Management

significantly enable Project Managers to replicate

successful outcomes

 Acquire the skills to undertake  Research Methodology is examined and

research in project management familiarity is reflected through an understanding of
the research process in Project Management
 Fundamental concepts in research are evaluated
and knowledge is reflected by the ability to apply
basic concepts and strategies and analysing the
study's findings

 Acquire the competencies to  The Project Management Body of Knowledge

satisfactorily complete the Project (PMBOK) is understood and applied by ensuring
Management Professional Examination a discernible knowledge of all the PMBOK
knowledge areas
 The correlation of knowledge areas and process
groups are examined and an understanding of
how to implement the approaches in the project
environment prepares the student to satisfactorily
complete the Project Management Profession
(PMP) exam

 Demonstrate an understanding to act  Ethics and Governance in Project Management is

ethically and professionally, and justify probed and knowledge is reflected through an
decisions made and actions taken understanding of the Project Management
using relevant ethical values and Institute’s Code of Ethics
approaches  Correlation between Ethics and Project success is
explored and an understanding of the ethics
knowledge, origins, linkages, and implications in
project success reflects understanding

 Communicate ideas, concepts and  Knowledge of the Project Management Processes

practical application of the project is investigated and comprehension is
life cycle, including the stages of demonstrated by an understanding of tools and
initiation, planning, implementation techniques used in each process group
and monitoring and closing  The interrelation between the process groups is
examined and familiarity is reflected by an
understanding how processes overlap, interact
and depend on each other

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 Introduction to Project Management

 Apply technology, innovation, people  The role of technology in Project Management is

and systems-thinking concepts which investigated and awareness is reflected by an
are sometimes in unfamiliar and understanding of the dynamics of managing
variable contexts to transform projects in the global marketplace
individuals, organisations and  The effects of technological advancements is
communities examined and understanding is shown by
knowledge of challenges in embracing
technological change and how to overcome
barriers to change

 Be able to exercise the necessary  Essential leadership skills for Project Managers
rational judgment and decision-making are investigated and knowledge is shown by an
skills, in a context of personal understanding of the roles and responsibility of a
responsibility and accountability, which Project Manager as well as leadership
will assist in management planning  The correlation between leadership and project
decisions and judicious use of success in explored and familiarity is reflected by
resources in a context of ensuring an understanding of competencies required to
sustainability and environmental ethics manage teams effectively and deliver successful
within the project environment projects

D. Learning Outcomes and Associated Assessment Criteria of the Module

LEARNING OUTCOMES OF THE ASSOCIATED ASSESSMENT CRITERIA OF THE
MODULE MODULE

 Define a project and its attributes  The basic principles of Project Management are
investigated and familiarity is reflected by an
understanding project attributes , factors that
differentiate organisational processes from
projects as well as critical success factors of a
project

 Discuss the project selection process  The Project selection process is examined and
knowledge is shown by the ability to apply
numeric and nonnumeric models during project
initiation

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Introduction to Project Management

 Understand how a project can be  Project Process Groups are explored and
subdivided into a number of familiarity is shown by comprehension of
phases/processes groups activities in each process group as well as their
interaction with the 10 knowledge areas

 Map the project management  The 10 knowledge areas are probed and
knowledge areas and the process familiarity is reflected by an understanding of
groups the tools and techniques that are used under
each knowledge area and how they interact with
the process groups

E. Learning Outcomes of the Units

You will find the Unit Learning Outcomes on the introductory pages of each Unit in the Module Guide. The
Unit Learning Outcomes list an overview of the areas you must demonstrate knowledge in and the practical
skills you must be able to achieve at the end of each Unit lesson in the Module Guide.

F. Notional Learning Hours

Notional Learning Hour Table for the Programme
Learning time
Types of learning activities
%
Lectures/Workshops (face to face, limited or technologically mediated) 10
Tutorials: individual groups of 30 or less 0
Syndicate groups 0
Practical workplace experience (experiential learning/work-based learning etc.) 0
Independent self-study of standard texts and references (study guides, books, 65
journal articles)
Independent self-study of specially prepared materials (case studies, multi-media, 20
etc.)
Other: Online 5
TOTAL 100

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 Introduction to Project Management

G. Acronyms
NQF National Qualifications Framework

PM Project Management

PMBOK Project Management Body of Knowledge

PMI Project Management Institute

H. How to Use this Module

This Module Guide was compiled to help you work through your units and textbook for this module, by
breaking your studies into manageable parts. The Module Guide gives you extra theory and explanations
where necessary, and so enables you to get the most from your module.

The purpose of the Module Guide is to allow you the opportunity to integrate the theoretical concepts from
the prescribed textbook and recommended readings. We suggest that you briefly skim read through the
entire guide to get an overview of its contents. At the beginning of each Unit, you will find a list of Learning
Outcomes and Associated Assessment Criteria. These outline the main points that you should understand
when you have completed the Unit/s. Do not attempt to read and study everything at once. Each study
session should be 90 minutes without a break

This module should be studied using the prescribed and recommended textbooks/readings and the relevant
sections of this Module Guide. You must read about the topic that you intend to study in the appropriate
section before you start reading the textbook in detail. Ensure that you make your own notes as you work
through both the textbook and this module. In the event that you do not have the prescribed and
recommended textbooks/readings, you must make use of any other source that deals with the sections in
this module. If you want to do further reading, and want to obtain publications that were used as source
documents when we wrote this guide, you should look at the reference list and the bibliography at the end
of the Module Guide. In addition, at the end of each Unit there may be link to the PowerPoint presentation
and other useful readings.

I. Study Material
The study material for this module includes tutorial letters, programme handbook, this Module Guide, a list
of prescribed and recommended textbooks/readings which may be supplemented by additional readings.

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J. Prescribed and Recommended Textbook/Readings

There is at least one prescribed and recommended textbooks/readings allocated for the module.
The prescribed and recommended readings/textbooks presents a tremendous amount of material in a
simple, easy-to-learn format. You should read ahead during your course. Make a point of it to re-read the
learning content in your module textbook. This will increase your retention of important concepts and skills.
You may wish to read more widely than just the Module Guide and the prescribed and recommended
textbooks/readings, the Bibliography and Reference list provides you with additional reading.

The prescribed textbooks/readings for this module is: Van der Waldt, G. and W. Fox. (2015). Guide to
Project Management. 2nd ed. Johannesburg: Juta Academic.

The recommended textbooks/readings for this module are:

 Larson, E W and Gray C F. (2018) Project Management: The Managerial Process. 7th Ed.
London: McGraw Hill International
 Pinto, J K. (2019). Project Management Achieving Competitive Advantage. 5th Edition. Pearson
Education Inc
 Heizer, J. and Render, B. (2010). “Project Management” (Ch. 3) in Operations Management. 10th
Edition. New Jersey: Pearson Education Inc.P
 MI (2017. A Guide to the Project Management Body of Knowledge (PMBOK Guide). 6th Edition.
Pennsylvania: Project Management Institute
 Burke, R. (2019). Project Management Techniques. (3rd College Edition). Auckland: Burke
Publishing International
 Clements, J.P., Gido, J., and Baker R (2018) Successful Project Management 7th edition Boston:
Cengage Learning

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 Introduction to Project Management

K. Special Features
In the Module Guide, you will find the following icons together with a description. These are designed to help
you study. It is imperative that you work through them as they also provide guidelines for examination
purposes.

Special Feature Icon Explanation

The Learning Outcomes indicate aspects of the particular Unit you

LEARNING have to master.
OUTCOMES

The Associated Assessment Criteria is the evaluation of the

ASSOCIATED
students’ understanding which are aligned to the outcomes. The
ASSESSMENT
Associated Assessment Criteria sets the standard for the
CRITERIA
successful demonstration of the understanding of a concept or skill.

A Think Point asks you to stop and think about an issue.

THINK POINT Sometimes you are asked to apply a concept to your own
experience or to think of an example.

You may come across Activities that ask you to carry out specific
tasks. In most cases, there are no right or wrong answers to these
ACTIVITY
activities. The purpose of the activities is to give you an opportunity
to apply what you have learned.

At this point, you should read the references supplied. If you are

READINGS unable to acquire the suggested readings, then you are welcome
to consult any current source that deals with the subject.

PRACTICAL Practical Application or Examples will be discussed to enhance

APPLICATION understanding of this module.

OR EXAMPLES

KNOWLEDGE You may come across Knowledge Check Questions at the end of
CHECK each Unit in the form of Knowledge Check Questions (KCQ’s) that
QUESTIONS will test your knowledge. You should refer to the Module Guide or
your textbook(s) for the answers.

You may come across Revision Questions that test your

REVISION
understanding of what you have learned so far. These may be
QUESTIONS
attempted with the aid of your textbooks, journal articles and

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Introduction to Project Management

Module Guide.

Case Studies are included in different sections in this Module

CASE STUDY Guide. This activity provides students with the opportunity to
apply theory to practice.

You may come across links to Videos Activities as well as

VIDEO instructions on activities to attend to after watching the video.
ACTIVITY

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 Introduction to Project Management

Unit
1: Introduction to Project
Management

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Introduction to Project Management

Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

1.1 Introduction  Introduce topic areas for the unit

1.2 Project Attributes  Identify project attributes

1.3 Definition of a Project  Define a project

1.4 Attributes of a Project  Explain attributes of a project

1.5 Components of a Project  Distinguish between milestones, activities and

deliverables

1.6 Definition of Project Management  Define Project Management

1.7 Project Management Body of  Recognise the importance of the Project

Knowledge Management Body of Knowledge within the field of
project management

1.8 Types of Projects  Describe the factors that classify projects

1.9 The Triple Constraint  Understand the Project Management Triple

Constraints

1.10 Understanding the differences  Distinguish between Organisational Processes and

between Organisational Projects
Processes and Projects

1.11 Differences between Portfolios,  Understand Portfolios and Programmes in Project

Programmes and Projects Management

1.12 Critical Success Factors  Describe 10 reasons why projects fail

1.13 Summary  Summarise topic areas covered in unit

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Prescribed / Recommended Reading

 Van der Waldt, G., Fox, W. (2015). Guide to Project Management.
2nd ed. Johannesburg: Juta Academic
 Clements, J.P and Gido, C (2015). Effective Project Management.
6rth edition South-Western Cengage Learning
 A Guide to the Project Management Body of Knowledge (PMBOK
Guide) Sixth Edition. Newtown Square, PA: Project Management
Institute, 2017

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Introduction to Project Management

1.1. Introduction
Project management as a management application and a field of study is seen as a powerful tool to deliver
products and services on time, within budget and according to quality specifications (Van der Waldt and
Fox, 2015).

To survive in the new World of Work, businesses and employees need to continually evolve and reinvent
themselves to improve their methods of operation to remain abreast of rapidly changing business conditions.
Projects are unique and differ vastly as far as their scope, objectives, organisational settings, stakeholders
and fields of application are concerned and can be applied in any industry and organisational sphere (Van
der Waldt and Fox, 2015). Distinguishing project management as a core competence for both organisations
and individuals will be critical for the future.

This unit provides you with an overview of project management, sets the scene and provides the context for
the theory and foundation principles of project management. We will go through the content and activities in
order to develop an understanding of project management and its attributes. We will analyse the differences
between organisational processes and project management practices and its application in business. We
will conclude the unit with an analysis of the critical success factors of a project.

Video Activity 1
Watch the following video for a more comprehensive understanding of
Project Management https://www.youtube.com/watch?v=C0ffw8jgy6o

Questions
Discuss the two ways in which project managers can deal with the project
management constraint triangle.

1.2. Project Attributes

The following key questions will be discussed in this section. Please refer to chapter 1 of your prescribed
text book.

1.3. Defining of a Project

A Project is any series of activities and tasks that have a specific objective to be completed within
specification; have defined start and end dates; have funding limits; consume human and other resources
and are multi-functional (Van der Waldt and Fox, 2015).

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 Introduction to Project Management

1.4. Attributes of a Project

 A project needs to have an established objective
 It needs to have a specified life span with a specified beginning and an end
 A project may involve something that has never been done previously
 Requires across the organisation participation and usually involves a group of people or a team;
the team may comprise of people with different skill sets and strengths to achieve the desired
outcome
 A project needs to have a specific timeframe, cost, and performance outcomes
 It is important to have all role players clear and aligned in thinking as to the desired outcomes
and method of work

Practical Application 1
You have just been appointed as a project manager for the construction of
Umhlanga new residential property. The project is scheduled for 24 months
and as with many projects the resources are never enough. Illustrate the
impact of the project management triple constraint on your new project and
the strategies you will use to balance the project triangle.

1.5. Components of a Project

Project components can be divided into milestones, activities and deliverables that must be accomplished
to achieve the project goals.
Milestone: Task of zero duration that shows an important achievement in a project.

Activity: Scheduled phase in a project plan with a distinct beginning and end. An activity usually contains
several tasks upon completion of which the whole activity is completed.

Deliverable: Tangible or intangible good or service produced as a result of a project that is intended to be
delivered to a customer

Practical Application 2
Consider a building of a new primary school in your community. You are
assigned as a project manager for this project create and discuss the
milestones, activities and deliverables of this project.

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Introduction to Project Management

1.6. Defining Project Management

The management of a project, is especially about utilising resources effectively by applying relevant
management processes and functions. According to Project Management Institute (PMI), Project
Management is the “application of knowledge, skills, tools and techniques to project activities to meet project
requirements” PMI (2004).

Further definitions include: The means by which projects are managed and change is achieved (Van der
Waldt and Fox, 2015: 5). The application of knowledge, skills, tools, and techniques to project activities to
meet or exceed stakeholder needs and expectations from a project (Oxford University Press, 2011).
Considering the definitions above and other useful sources:

Knowledge Check Question 1

Project charter can either be a summery/brief or a more detailed
document that authorises the project and the project manager to use the
organisational resources to deliver the project. True or False?

1.7. Project Management Body of Knowledge

The PMBOK provides guidelines for managing individual projects and defines project management related
concepts. It also describes the project management process groups and its related processes, as well as
the project life cycle and its stages. It provides a recognised standard and guide for the project management
profession. The PMBOK provides and promotes a common vocabulary within the project management
profession for using and applying project management concepts.

1.8. Types of Projects

The different types of project can be classified based on their specific product or end-result as well as factors
such as size, duration, industrial sector, geographical location, complexity and urgency. Based on these
factors different categories are typically used to classify projects (Van der Waldt and Fox, 2015:10). The
different types of projects are described in the table below and the classification has been based on Youker,
(2017)
a) The product or deliverable of a project
b) Degree of uncertainty and risk (construction versus new product development)
c) Level of sophistication of workers (construction, versus information systems)
d) Level of detail in plans (days or hours for maintenance versus months for research)
e) Degree of new technology involved (research versus administrative projects)
f) Degree of time pressure (maintenance or big event versus construction)

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 Introduction to Project Management

Knowledge Check Question 2

Details what the project will include and what it is that it will not include.
Fill in the missing word in the above statement.

1Table 1.1: Types of Projects and Characteristics

Type of Project Type of Degree of Time Stability Level of Cost

worker Uncertaint Pressu of Tech
y re Scope

Manufacturing Blue Low Low High Low High

Management White Medium Mediu Medium High Medium

m

Research High High Low Low High Low

Tech

Administrative White Low Low High Low Low

Construction Blue Low Low High Low Low

Systems High High Mediu Low High Low

Tech m

Event White Low Mediu High Medium Medium

m

New Product Development

White High High Low Hugh Low

Equipment Blue Low Low High Low Low

(Van der Waldt and Fox, 2015:10; Youker, 2017).

All projects are unique and involve different goals, objectives and people; extending over varying
timeframes, using different resources and producing different results. People who manage projects soon
become experienced in managing exceptions and risks because there are many surprises in project
management even when managing small projects.

Activity 1
Considering Van der Waldt and Fox, 2015:10 and Youker, 2017 and/or
any other sources, describe the various types of projects using
examples.

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Introduction to Project Management

1.9. The Triple Constraint

The following key questions will be answered as you explore this topic:

All projects are carried out under certain constraints –traditionally, they are cost, time and scope. These
three factors (commonly called 'the triple constraints') are represented as a triangle.

The Triple Constraints

Projects must be delivered within cost, to the agreed scope and on time. As a discipline, project management
provides you with the necessary skills, tools and techniques to enable the team to successfully balance
these constraints.

Case Study 1
Consider the following case studies and answer the key questions for
this topic.

A hand - off method

Under the project hand- off method, the Hospi-Tek product development effort began with the
architectural team who developed an architectural concept and derived the high - level requirements of
the medical device from the work of the product marketing team. The architectural concept and
specifications were then handed- off to the hardware engineering team, who assumed ownership of the
project. The engineering team developed the hardware requirements, engineering specifications, and the
product design, which were then handed - off to the manufacturing team, who assumed ownership of the
project. The manufacturing team developed the manufacturing processes, retooled the factor, and
produced the physical product. The product and project ownership were then handed - off to downstream
engineering teams, such as the software development team. The software team developed the software
stack, then handed- off the combined hardware/ software product, as well as project ownership, to the
validations and test team. Finally, the validations and test team performed product- and component-
level testing to ensure the product achieved the functional, quality, usability, and reliability requirements.

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 Introduction to Project Management

Management of the project was accomplished through a project management- only model, with multiple
project managers in control of the project as it progressed through the development life cycle.
Thus, a project manager with the functional expertise specific to the phase of development the product
was currently in assumed ownership of the project.

Judgement
The hand- off method of development is common in smaller, less mature, and technically focused
companies in which true project management value is usually not well understood and the engineering
functions reign king. Unfortunately, this method is not scalable, and as a company begins to succeed and
grow, product and process complexity requires the management team to look at alternative methods to
structure and manage its product development efforts. This was the case with Hospi-Tek.

Case Study 2
1. Why, by implementing the hand - off method, are there multiple
project managers in control of the project as it progresses through
the development life cycle?
2. Do you agree with the judgment that the hand - off method is
popular in companies where true project management value is
usually not well understood? Why or why not?

1.10. Understanding the differences between Organisational Processes and Projects

Organisational Processes and Projects
As project management is of a temporary nature than the traditional permanent roles in an organisation,
projects have specific end dates, people cannot be permanently employed on a project. Projects are put in
place to improve the operation of an organisation. Once the project is completed, the normal operation of
the organisation will continue on a permanent basis. Therefore, projects are undertaken to improve
operations of an organisation in most spheres of the organisation. The table below describes the differences
between organisational processes and projects.

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Introduction to Project Management

2Table 1.2: Organisational Processes versus Projects

Organisational Processes Projects

Ongoing same processes which are Temporary: have a definite beginning and end.
annually repeated.

Produce the same output every time. Produce unique output or deliverable; may be utilised
to improve or amend existing organisational
processes.

Have predefined work assignments Have no predefined work assignments and are based
(i.e. job descriptions of staff members. on the specific nature of the project.
(Van der Waldt and Fox, 2015:8)

Considering the literature on page 8 of your prescribed text book explain in your own words why should
projects not be confused with ordinary organisational processes and provide an example of each?

Think Point 1
There is a difference between a project and project management.

Knowledge Check Question 3

A project is a task of zero duration that shows an important achievement
in a project.
Fill in the missing word in the above statement.

Activity 2
Define the following project management terms:
WBS (Work Breakdown Structure)
Baseline
Triple Constraint
Project Life Cycle
Risk Mitigation

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1.11. Differences between Portfolios, Programmes and Projects

Programs
A programme is a collection of interrelated projects working together to achieve a common objective.
A programme entails the coordinated management of a group of related projects that organisation’s use to
achieve benefits that are of strategic importance. Programmes exist Programmes deal with a specific set of
related projects existing to bridge the gap between corporate strategy and projects.

A good example is the South African Airways (SAA) Aircraft Procurement Programme. The company
requires aircrafts in order to meet their strategic objectives. The company will therefore embark on several
projects under the Procurement Programme. Some of the projects may include Research Projects,
Maintenance and Improvement of software systems as well as Purchasing Aircraft Software.

Each project has a dedicated Project Manager, however the overall responsibility lies with the Programme
Manager who is responsible for making trade-offs between projects and the maximum benefit of the entire
programme. Table 1.3 highlights some of the major differentiating factors between projects and
programmes.

SAA Aircraft
Procurement
Programme

Aircraft Procurement
Sub-Programme

Software Maintenance and Software Purchasing

Research Project Improvement Project Project

1Figure 1.2: SAA Aircraft Procurement Programme

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Introduction to Project Management

3Table 1.3: Programme vs Projects

Programme Project

Programmes have negotiated and have broad Have pre-defined and specific objectives.
objectives.

Focus on strategic goals. Focus on specific deliverables.

Programme managers are responsible for Project manager’s act as responsible persons
various project managers in their portfolio with specific technical and project related skills.
and act as creative and strategic thinkers.
(Van der Waldt and Fox, 2015)

Portfolios
A portfolio is a collection of projects, programmes and other work grouped together and managed in a
coordinated way to achieve strategic business objectives. A portfolio can include multiple programmes and
projects; it deals with all projects in the entire organisation. Each project in the portfolio should have an
undeviating impact on the entire organisation.

An example of SAA Portfolio would include other programmes like International Route Expansion
Programme where several projects are undertaken. It can also include Customer Service Improvement
Programmes along with various other projects. The figure below provides an overview of what portfolios,
programmes and projects entail.

SAA
Portfolio

SAA Sub-
Portfolio

International Customer
Route Expansion Improvement Project A Project B
Programme Programme

2Figure 1.3 SAA Portfolio

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Case Study 3
Read the following Article / Case Study and attempt the questions that
follow

Alternative Energy
Alternative and Renewable Energy entails generating energy from sources that are not fossil
fuels and that are considered self-regenerating. Sources of renewable energy include the sun,
wind, tidal, wave and current, biomass, etc.

The regulatory framework is fairly new to Local Government, a concerted effort has been made
to put the necessary processes, with authorisation from other Governmental institutions, in place
to allow local producers of ‘green electricity’ to feed into the eThekwini Municipal Electricity Grid.
It will be to the benefit of the local economy to increase the amount of locally produced renewable
energy, as the money for that energy will remain in the local economy.
1. Durban Solar City (DSC)
2. Energy Office Solar (EOS)
3. Natural Gas
4. Geo-Sun Reunion Partnership
5. Southern Africa Universities Radiometric Network (SAURAN)
6. Green Corridor
7. Solar Traffic Lights
8. Water and Sanitation Renewable Energy Program (EWSRE)
9. Wind Repowering Program

EOS
The EOS Program is aimed at promoting the use of embedded rooftop solar PV generation in
eThekwini and establishing an example for the private sector and other Municipalities to follow.
This program will allow the Municipality to get first-hand experience in understanding the barriers
to PV and also allow the Municipality to test its own policies and practices.

In the region of 500kW of PV will be installed under this contract on the roofs of various Municipal
buildings within Durban CBD.
The primary aims of the project are to:
 Provide opportunities for learning about photovoltaic installations for municipal officials
and the public and

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Introduction to Project Management

 Showcase that eThekwini Municipality in leading by example in applying renewable

energy technologies

Secondary aims of the project are:

 To reduce the carbon emissions of eThekwini Municipality
 Generate revenue by reducing electricity purchases from Eskom, and
 Contribute to the stimulation of the local PV market

Project implementation is planned for the 2015/2016 municipal financial year. Actions with time
frames that need to be met to complete the project by the end of the 2015/2016 financial year
are outlined below.
1. Project Scoping (Feb 2014 – April 2014)
a. Technology assessment and choice
b. Site assessment and selection
2. Consultation (April 2014)
3. Appointment of consulting engineers (April 2014 – Aug 2014)
4. Technical Specification Development (Sep 2014 - Dec 2014)
5. Solar PV Installation Procurement Process (Jan 2015 – June 2015)
6. Solar PV Installation (July 2015 – Dec 2015)
7. Learning and Outreach (Jan 2016 – Jun 2016)

EOS – Installation
This project is a sub-component of the broader EOS program. This project will see the actual
installation of the Solar PV systems on various rooftops in the city. This project will only
commence once the detailed technical assessment of each building has been completed.

EOS – Technical Assessment

This project is a sub component of the broader EOS program. Consultants will be required to
complete the following for the PV systems installed on the buildings:
1. Engineering Design and Construction Tender Preparation: Carry out detailed designs for
all PV systems and provide generation/yield forecasts and cost estimates for all systems
2. Construction and Contract Supervision: Supervise the construction/installation of all PV
systems and handle all contractual matters relating to this construction
3. Commissioning of PV Systems: Test and commission all PV systems
4. Preparation of Operations and Maintenance Tender: The Consultant will be required to
operate and maintain all the PV systems under this contract during the defects liability
period (2 years)

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5. Supervision of Operations and Maintenance Contract: Supervise and assist the Employer
in managing the operations and maintenance contractor

Source:http://www.durban.gov.za/City_Services/energyoffice/projects/Pages/RenewableEnerg
y.aspx#WaterSanitation
Answer the following Case Study Questions
1. Identify and explain the objectives of the EOS Program
2. Identify the projects that make up the broader EOS Program
3. Identify the attributes of the projects in the EOS Program
4. With reference to the case study, how can you use the Project Life Cycle to carry out the
project?

1.12. Critical Success Factors

Understanding why projects fail is just as important as understanding why they succeed. Referring to page
12 - 14 of your prescribed book, describe 10 reasons why projects fail and provide an example of where you
have seen this occur on a project and what you believe the project manager should have done differently.

According to Pinto and Prescott (1988), the following are critical success factors over the stages in the
project life cycle.
1. Project Mission. Clear objectives and general direction
2. Top Management Support: The readiness of top management to give the fundamental resources for
successful delivery of projects
3. Project Schedule Plan. A comprehensive description of the individual tasks and timeline required for
project implementation
4. Client Consultation. Communicating, discussing and paying attention to all impacted parties
5. Personnel. Staffing, selection, training and development of the necessary people for the project team
6. Technical Tasks. Availability of technology and expertise to complete specific technical requirements
7. Client Acceptance. The process of getting acceptance of completed project work by client
8. Monitoring and Feedback. Appropriate provision of comprehensive information and results during
project implementation process
9. Communication. The provision of an appropriate network and necessary data to all key actors in the
project implementation
10. Trouble shooting. Ability to handle unexpected crises and deviations from plan

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Think Point 2
Ineffectiveness of the above may cause waste of project resources.

Video Activity 2
What is Project Management? Mr. Gavin Wedell will help you answer
this question on his video, available on
https://www.youtube.com/watch?v=9LSnINglkQA

Questions
1. Discuss the six P’s of Project Management Mr. Wedell mentioned in
the video

Think Point 3
Project Management tools and techniques are an effective and most
efficient way to deliver projects on time, according to scope and within
budget.

Think Point 4
Projects are put in place to improve the operation of an organisation.

In most projects, different requirements and milestones have an impact on the project. This may cause
delays in the project and extension of timelines. It may result in additional costs and resources being
required. An amendment to the initial plan for the project may cause the failure of the project if the initial
planning does not make provision for variances. Having a motivated team with a healthy morale is critical to
achieving a successful project, having a satisfied client or beneficiary.

Revision Question 1
Name 5 types of Projects and explain their characteristics. Provide an
example for each type.

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Activity 3
What is the project management tool that is used for planning and
scheduling of projects of all sizes especially for simplifying complex
projects? This tool is also known as visual presentation of a project where
the activities are broken down and displayed on a chart which makes it is
easy to understand and interpret.

Think Point 5
Top Management Support, Communication and Project Schedule Plan are
some of the critical project success factors. In other words effectiveness of
these contribute to the likelihood of projects succeeding.

1.13. Summary
You have successfully made it to the end of your first unit in this exciting series. Well done! In this unit, we
have covered much of the content essential to establish a sound project management foundation.
Understanding the theory and concepts and how to ensure these are applied in a project environment is
what makes a project manager successful. At this stage, you should be able to understand what a project
is and is not, what makes for a successful project, the components and how these should be applied in a
project context.

Understanding the theory is essential but by successfully completing the activities, you will begin to
understand the theory in practice. Theory is only as good as your application of it. During the next units, we
will delve deeper into each of these areas and build on the foundation created in this unit.

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Answers to activities
Video Activity 1
Watch the following video for a more comprehensive understanding of Project Management
https://www.youtube.com/watch?v=C0ffw8jgy6o
Questions
Discuss the two ways in which project managers can deal with the project management constraint triangle.

Suggested Answer
1. First way is called the waterfall approach also known as the traditional approach
Traditional project management is an established methodology where projects are run in a sequential
cycle. It follows a fixed sequence: initiation, planning, execution, monitoring, and closure. The traditional
project management approach puts special emphasis on linear processes, documentation, upfront
planning, and prioritisation

2. Second way is the agile approach also known as iterative approach

Agile is a general approach used for software development, it relies heavily on teamwork, collaboration,
time boxing tasks, and the flexibility to respond to change as quickly as possible.
The agile manifesto has four important values:
 More focus on individuals and interactions than processes and tools
 Working software is more important than comprehensive documentation
 Customer collaboration is more vital than negotiation
 The process should respond to change rather than blindly following a plan

Practical Application 1
You have just been appointed as a project manager for the construction of Umhlanga new residential property.
The project is scheduled for 24 months and as with many projects, the resources are never enough. Illustrate
the impact of the project management triple constraint on your new project and the strategies you will use to
balance the project triangle.

Suggested Answer
Keeping the triple constraints of a Project Management Triangle in mind while you spearhead a project will
help you as the PM adapt to the changing requirements while assuring that the project is delivered on time
and doesn’t exceed the budget.

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Practical Application 2
Consider a building of a new primary school in your community. You are assigned as a project manager for
this project create and discuss the milestones, activities and deliverables of this project.

Suggested Answer
The key deliverables for the project:
 Conducting interviews as well as meeting with the decision makers and constituents of the project
 Facilitating all discussions made by the decision maker of project and project’s constituents
 Synthesising core findings that would help to start the strategic project plan for constructing primary
school
 Engaging the project’s staffs in order to internalise project’s strategic process for developing perfect
plan and then executing it through effective tools
Key Milestones:
 Finalised plan of the project
 Final design of the school
 Appearance of the construction
 Procurement of the materials etc.

Knowledge Check Question 1

Project charter can either be a summery/brief or a more detailed document that authorises the project and the
project manager to use the organisational resources to deliver the project.
True or False?

Suggested Answer
True

Knowledge Check Question 2

Details what the project will include and what it is that it will not include.
Fill in the missing word in the above statement.

Suggested Answer
Project scope statement

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Case Study 1
1. Why, by implementing the hand - off method, are there multiple project managers in control of the project
as it progresses through the development life cycle?
2. Do you agree with the judgment that the hand - off method is popular in companies where true project
management value is usually not well understood? Why or why not?

Suggested Answer
1. Yes, multiple project managers in control of the project. And the book explains why there's multiple
project managers. “Management of the project was accomplished through a project management -only
model, with multiple project managers in control of the project as it progressed through the development
lifecycle. Thus, a project manager with the functional expertise specific to the phase of development the
product was currently in assumed ownership of the project. "and from here we can understand each
phase has own project manager who will be responsible for everything at the time
2. I agree because the truth project management value is not well understood plus this method is not
scalable, and as a company begins to succeed and grow, product. Companies need a method to be
improve work in this method can't be guaranteed a clever vision for the organisation, to help managers
makes right decisions

Knowledge Check Question 3

A project is a task of zero duration that shows an important achievement in a project.
Fill in the missing word in the above statement.

Suggested Answer
Milestone

Activity 1
Define the following project management terms:

Suggested Answer
 WBS (Work Breakdown Structure)
Work Breakdown Structure is one of the important project management terms. A work breakdown structure
(WBS) is a hierarchical structure that breaks down the work into manageable work packages so that each
level of WBS could be easily understood by the project team. Project team creates WBS by analysing major
deliverables and then dividing them into sub-deliverables. This dividing process is continued until it is assigned
to a single person.

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 Baseline
The baseline is one of the most popular project management terms among project managers. A baseline is
used to measure the performance of the project. There are three baselines in project management. These
are –
 Schedule baseline
 Cost baseline
 Scope baseline

The combination of these three is considered as complete performance measurement baseline.

 Triple Constraint
All the projects are brought about under some constraints. Triple constraint is a four components group (time,
scope, cost and quality of the product) represented by a triangle with time, scope and cost. There must a
balance among all these components, as the change in any one will impact the other components.

Components of Triple Constraint (Pinto: 2017)

 Project Life Cycle

The project life cycle includes project planning, analysis, design, implementation, and budget. A project life
cycle can have many models but each model represents a single phase to build the deliverables of the project.
A project life cycle consists of initiating the project; it’s planning, executing, and closing stages.

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 Risk Mitigation
At the beginning of the project, it is important to know the risks that surrounds the project therefore; risk
mitigation is that project management term which identifies the risk. It is a risk reaction devising technique
associated with menace to the project.

Video Activity 2
What is Project Management? Mr. Gavin Wedell will help you answer this question on his video, available on
https://www.youtube.com/watch?v=9LSnINglkQA

Questions
Discuss the six P’s of Project Management Mr. Wedell mentioned in the video.

Suggested Answer
The 6 P’s of Project Management are: Prior Proper Planning Prevents Poor Performance.

Activity.2
What is the project management tool that is used for planning and scheduling of projects of all sizes especially
for simplifying complex projects? This tool is also known as visual presentation of a project where the activities
are broken down and displayed on a chart which makes it is easy to understand and interpret.

Suggested Answer
Gantt chart
Provide an example of a project and why you feel it meets the requirements of a project?
Answer: Page 3 of the prescribed textbook considering points 1 – 5

1. Describe in your own words what the difference is between a project and project management?
Answer: A Project is any series of activities and tasks that have a specific objective to be completed
within specification; have defined start and end dates; have funding limits; consume human and other
resources and are multi-functional (Van der Waldt and Fox, 2015).

Project management, the management of a project, is especially about utilising resources effectively
by applying relevant management processes and functions. It is defined by the Project Management
Institute (PMI) as the “application of knowledge, skills, tools and techniques to project activities to meet
project requirements” PMI (2004:368). The process of defining, planning, controlling and closing project
activities, and motivating the people within the parameters of scope, time, cost and quality (Van der
Waldt and Fox, 2015).

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2. Please describe in your own words “the attributes of a project”?

Answer:
 A project needs to have an established objective, what is the desired result of the initiated process.
 It needs to have a specified life span with a specified beginning and an end
 A project may involve something that has never been done previously
 Requires across the organisation participation and usually involves a group of people or a team;
the team may comprise of people with different skill sets and strengths to achieve the desired
outcome
 A project needs to have a specific timeframe, cost, and performance outcomes
 It is important to have all role players clear and aligned in thinking as to the desired outcomes and
method of work
 Answers to the what? why? and how? and by when?

3. Considering only peer reviewed academic sources, please provide me with a second description of the
attributes of a successful project?

Answer:
 A project needs to have an established objective, what is the desired result of the initiated process
 It needs to have a specified life span with a specified beginning and an end
 A project may involve something that has never been done previously
 Requires across the organisation participation and usually involves a group of people or a team; the
team may comprise of people with different skill sets and strengths to achieve the desired outcome
 A project needs to have a specific timeframe, cost, and performance outcomes
 It is important to have all role players clear and aligned in thinking as to the desired outcomes and
method of work
 Answers to the what? why? and how? and by when?

4. Describe the components of a project in your own words.

Answer: Page 6 – 7 of prescribed textbook

5. During a large ERP systems implementation project, an unexpected budget cut is imposed on your
project after the company posts poorer than expected financial results.
Question: What is the constraint and what is the impact of this constraint on the project?

Answer: The scope is cut, the quality is reduced, and the schedule is pushed back so that cheaper
resources can be found. The most significant constraint, in this case, is the cost (the money the company is
willing to spend).

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6. During a project to create a new wireless radio, your customer asks that the launch date is brought
forward by a month to coincide with a major industry show.
Question: What is the constraint and what is the impact of this constraint on the project?

Answer: Impact: Costs increase as more people are added to meet the new deadline. Some features of the
product are removed and put into a phase two release to reduce delivery time and meet the new launch
date. The most significant constraint, in this case, is time (project schedule).

7. During a development project, your sponsor increases the scope. Having signed off the functional
specification document he requests that new features be added. It is important the product includes
these new features if it is to compete successfully.
Question: What is the constraint and what is the impact of this constraint on the project?

Answer: Impact: The budget and schedule increase because of pushing up the final delivery date. More
people are added to minimise disruption to the project schedule, thereby increasing the project's overall
cost. The most significant constraint, in this case, is scope (features of the product).

8. Considering the literature on page 8 of your prescribed text book explain in your own words why should
projects not be confused with ordinary organisational processes and provide an example of each?
Answer: Section 1.3. and Table 1.1. on page 8 of the prescribed text book.

Table 1.4: Programme and Projects

Organisational Processes Projects

Ongoing same processes which are Temporary: have a definite beginning and end
annually repeated

Produce the same output every time Produce unique output or deliverable; may be utilised
to improve or amend existing organisational processes

Have predefined work assignments Have no predefined work assignments and are based
(i.e. job descriptions of staff on the specific nature of the project
members

9. Considering Van der Waldt and Fox (2015) and Youker (2017) and/or any other source, describe the
various types of projects?

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Table 1.5: Types of Projects

Type of Project Characteristic

Manufacturing Production of an item.

Arise when organisation’s develop and introduce new systems or

Management
processes.

Research projects are typically a long haul. They are more concerned
Research with quality as it takes precedence over time. It is a scholarly process
where the project scope may not be defined at all in the initiating phase

Administrative projects are comprised of knowledgeable personnel. As

Administrative the project progresses, the project scope may

change

Construction projects have a clear scope right from the beginning. The
scope is highly detailed and technical. In most cases schedule and
Construction
budget constraints are constantly monitored to make sure project is on
track.

Software projects are known to experience scope creep. In most cases

customers are constantly adding additional scope during the project.
Systems Often, they are pushing the state of the art and technological
advancements which in turn introduces high risk. Software developers
and Programmers are known for their highly individualistic behaviour.

This is a one of a kind project where scope may change during the
project and uncertainty is high. Time is critical to meet a specific date.
Event
It is probably a complex project. The Olympics or a relocation to a new
building are examples.

Developing a new product is a risky business. You are pushing the

New Product state of the art. Time to market is much more important than cost of the
Development project. Quality is also critical, and the scope may change up or down
during the project.

Equipment or System Installation: Scope is well defined, and speed is

Equipment
indispensable. Well planned projects tend to have lower risk.

10. Can you identify which stage of the project each of the above mentioned critical factors is aligned to
and in your own words why they are critical to the success of a project?

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Answer
Critical Success Factors
1. Project Mission. Clear objectives and general direction
2. Top Management Support: The readiness of top management to give the fundamental resources for
successful delivery of projects
3. Project Schedule Plan. A comprehensive description of the individual tasks and timeline required for
project implementation
4. Client Consultation. Communicating, discussing and paying attention to all impacted parties
5. Personnel. Staffing, selection, training and development of the necessary people for the project team
6. Technical Tasks. Availability of technology and expertise to complete specific technical requirements
7. Client Acceptance. The process of getting acceptance of completed project work by client
8. Monitoring and Feedback. Appropriate provision of comprehensive information and results during
project implementation process
9. Communication. The provision of an appropriate network and necessary data to all key actors in the
project implementation
10. Trouble shooting. Ability to handle unexpected crises and deviations from plan

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Unit
2: Key Concepts in Project
Management

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Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

2.1 Introduction  Introduce topic areas for the unit

2.2 Project Management Process  Understand Project Management Process Groups

Groups

2.3 Organisational Structures  Demonstrate knowledge of Organisational Structures

2.4 Summary  Summarise topic areas covered in unit

Prescribed / Recommended Reading

 Van der Waldt, G., Fox, W. (2015). Guide to Project Management.
2nd ed. Johannesburg: Juta Academic
 Clements, J.P and Gido, C (2015). Effective Project Management.
6rth edition South-Western Cengage Learning
 A Guide to the Project Management Body of Knowledge (PMBOK
Guide) Sixth Edition. Newtown Square, PA: Project Management
Institute, 2017

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2.1 Introduction
This unit will explore the nature of Project Management processes in terms of how they interact as well as
the purposes they serve. Project management processes are clustered into five main classifications known
as Project Management Process Groups. These five Process Groups have clear dependencies and are
typically performed in each project and highly interact with one another. Furthermore, the unit will cover
Organisational Structures in the Management setting. The main focus will be on their impact on achieving
the goals of the project and information flows from level to level within the project environment.

2.2 Project Management Process Groups

Project management processes establish uniform procedures and mechanisms to reduce risks and make it
easier for project goals to be achieved. A project management process can be defined as a set of interrelated
actions or activities that are carried out to achieve a predetermined outcome. Process groups are a logical
grouping of project management inputs, tools and techniques, and outputs. The Project Management
Process Groups include initiating processes, planning processes, executing processes, monitoring and
controlling processes, and closing processes. Project Management Process Groups are not project life cycle
phases.

4Table 2.1: Project Management Process Groups

PM Process Description Key activities/Milestones

Initiation Also known as the idea phase of the  Business case

project. During this phase the project  Conduct feasibility studies
is selected. Developing a vision and  Establish terms of
establishing the goals and objectives reference
for the project. The core project  Appoint the team
team is formed to begin the next  Establish the project office
phase.

Planning Defining the work required to  Project Scope and

complete the project. Establishing acceptance plan
the what, when, who and how and  Kick off meeting
the budget defined.  Project team/structure
 Project budget and plan
 Communication plan

Execution/ The major part of the work on the  Building deliverables

Implementation project is carried out and control  Project meetings
measures are implemented to
monitor progress.

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PM Process Description Key activities/Milestones

 Control project delivery,
scope, costs, quality, risks
and issues

Control Watching over the project. Control  Status reports

measures are implemented to  Execution according to
monitor progress towards achieving project plan
the goals and objectives. Taking
action to ensure ‘triple constraints’
are managed.

Termination Delivering the project product to the  Project close-out

sponsor.  Hand over deliverables
Disbanding project teams and  Release project team
resources
Post project review.
(Van der Waldt and Fox, 2015; Larson and Gray, 2015)

2.2.1 Initiating Process Group

The Initiating Process Group is made up of processes that are undertaken to define a new project or a new
phase for an existing project. The main aim of this process is the alignment of project stakeholder
expectations with the project’s purpose. It helps set the vision of the project in order to identify what is
needed to be accomplished. During this process group, authorisation to begin the project or phase is
obtained. The preliminary scope as well as financial resources are defined and committed. Stakeholder
analysis is carried out to identify internal and external stakeholders who will interact and influence the
outcome of the project. During this stage, the project manager will be selected.

Knowledge Check Question 1

What is the document file used to store data like costs, calculations,
benefits of the project called?

2.2.2 Planning Process Group

The Planning Process Group is made up of processes done in order to establish the total scope of the
project, define and refine the objectives, and develop the course of action required to attain those objectives.
The main aim of planning is to delineate the strategy and tactics as well as the course of action or path to
successfully complete the project or phase. It also expresses how the project will be done, setting the route
to the desired objective.

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During this stage, the Project Management Plan is developed along with other project documents exploring
in detail all aspects of the scope, time, cost, quality, communications, human resources, risks, procurements,
and stakeholder engagement.

2.2.3 Executing Process Group

The Executing Process Group consists of those processes undertaken to complete the work defined in the
project management plan to meet project specifications and requirements. It involves synchronising people
and resources, managing stakeholder expectations, as well as integrating and performing the activities of
the project in accordance with the project management plan. A large portion of the project’s budget is
consumed during this stage. During this phase, a lot of changes may occur such as activity durations,
changes in resource productivity and availability, and unanticipated risks. Such variances may affect the
project management plan or project documents hence outcomes may require planning updates.

2.2.4 Monitoring and Controlling Process Group

While the other process groups occur chronologically, Monitoring and Controlling drifts over the whole
project. It happens throughout the project. According to PMI (2017), the group helps track, review and
regulate the progress and performance of the project. It identifies any areas in which changes to the plan
are required and initiate the corresponding changes. Monitoring and Controlling is where you get back on
track, where you compare plan to actual, measure variance and take corrective action. This continuous
monitoring provides the project team insight into the health of the project and identifies any areas requiring
additional attention.

Knowledge Check Question 2

What are the second plans if plan A in the project doesn’t work referred to?
These plans also include the situations which may or may not occur in
future.

Think Point 1
Critical Path Method (CPM) provides functions to write an algorithm for
project activities. It is particularly used for scheduling and termed as the
“critical or shortest path”. Critical Path Method (CPM) is a step-by-step
approach in which one can analyse critical and non-critical tasks.

Activity 1
Think of a project of your own choice and formulate a good Statement of
Work (SoW) for this project.

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2.2.5 Closing Process Group

From its name, it should be obvious what happens in the closing process group. Not only do you formally
close the project but you also get sign-off and acceptance from the customer. While this should be self-
evident, too often projects just fizzle out. People stop coming to meetings and everyone just shows up at
the next one. This process helps project managers to formally complete the project, phase, or contractual
obligations. It also verifies that the defined processes are completed within all of the Process Groups to
close the project or a project phase, as appropriate, and formally establishes that the project or project phase
is complete. All the lessons learned along with other historical information are centrally archived to be used
as input for future projects to prevent reinventing the wheel.

Practical Application 1
Use a project of your choice and identify activities done under each
Process Group

Video Activity 1
Watch the following video for more knowledge and even better
understanding of Project Management Process Group on
https://www.youtube.com/watch?v=5mz306qgSpg

Questions
Differentiate between project management process groups and the project
management life cycle stages

Think Point 2
For every tasks or projects, there is a commitment of required result/output
which is to be delivered to the users. That required output is known as
deliverables.

2.3 Organisational Structures

Project Management systems provide a structure for initiating and executing project activities within an
Organisation. Employees are grouped so that their efforts can be channelled for maximum efficiency.
Organisational structures consist of the following three key elements:
 An Organisational structure defines all the official reporting lines, including the number of levels in
the hierarchy and the managerial span of control

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 An Organisational structure categorises individuals into departments and departments into the total
Organisation
 An Organisational structure comprises of systems design duplication to ensure effective
communication, coordination, and integration of effort across departments

2.3.1 Functional Structure

The classic functional Organisation, shown in Figure 2.1, is a hierarchy where each employee has one clear
superior. The logic of the functional structure is to group people and departments performing similar activities
into units. Staff members are grouped by specialty, such as production, marketing, engineering, and
accounting at the top level. Specialties may be further subdivided into focused functional units, such as
mechanical and electrical engineering.

3Figure 2.1 Functional Organisational Structure

Project Management Institute (PMI) (2013)

2.3.2 Advantages of a Functional Structure

 Efficient: The functional Organisational structure is efficient as it allows efficient allocation of work
and reduces the likelihood of duplicating work or unutilised resources
 Expertise: It is easier to retain valued knowledgeable capital when all expertise is combined under
one functional department
 Flexibility: Flexibility is high as specialised resources such as programmers and engineers can be
involved in multiple projects at the same time

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 Continuity and Stability: There is continuity and stability once the project comes to an end. There
is no disruption and career paths continue to exist with functions

2.3.3 Disadvantages of a Functional Structure

 Siloing: It relates to the propensity for project team members to become more absorbed in their
work assignments at the expense of the needs of other departments
 No logical location: Functional structures provide no coherent subordinate setting for a central
project management function. Large projects will end up not receiving the necessary attention
because there is no single person championing the project
 Emphasises functional objectives: Emphasis is more on functional objectives rather than project
objectives
 Slow and ineffective communication: Senior managers from different departments are
accountable for project results and have to communicate with one another. In practice this tends
to slow and ineffective for large project

Practical Application 2
Choose any three different types of organisations you have either worked
for or familiar with and draw organisational structures for these
organisations using the following types of organisational structure:
 Functional structure
 Projectised structure
 Matrix Structure

2.3.4 Projectised Structure

A Projectised structure has dedicated teams assigned to projects. It is a collection of personnel from the
different functions assembled into a single project. It is at the opposite end of the spectrum functional
structure. Team members are often collocated with project managers having a great deal of independence
and authority. The project manager has total control over the project team and the execution of the project.
Loyalty to the function diminishes as it is directed to the project.

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4Figure 2.2 Projectised Structure

Project Management Institute (PMI) (2013)

2.3.5 Advantages of a Projectised Structure

 Clear control: The project manager does not occupy a subordinate role in this structure. All major
choices and authority remain under the control of the project manager
 Clear communication: Potential siloing in the functional structure or communication problems are
bypassed. Communication improves across the Organisation and within the project team
 Expertise: It promotes the expertise of a proficient team of Project Management professionals.
Because the focus for operations within the Organisation is project-based, everyone within the
Organisation understands and operates with the same focus
 Flexibility: It encourages flexibility and rapid response to environmental opportunities. Projects are
created, managed, and disbanded routinely; therefore, the ability to create new project teams as
needed is common and team formation can be quickly undertaken

2.3.6 Disadvantages of a Projectised Structure

 Expensive set up: The process of setting up and maintaining a number of self-contained project
teams can be expensive
 Insufficient use of resources: The potential for inefficient use of resources is a key disadvantage
of the pure project Organisation. Organisational staffing may fluctuate up and down as the number
of projects in the firm increases

2.3.7 Matrix Structure

Matrix Organisations, as shown in Figures 2.4 reflect a blend of functional and Projectised characteristics.
It is an attempt to blend the advantages of both functional and Projectised structures.

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It is therefore a hybrid of the Functional and Projectised structure. Matrix Organisations can be classified as
weak, balanced, or strong depending on the relative level of power and influence between functional and
project managers.

5Figure 2.3 Matrix Structure

Project Management Institute (PMI) (2013)

2.3.8 Advantages of a Matrix Structure

 Clear authority: It places project management parallel to functional departments in authority. This
advantage highlights the enhanced status of the project manager in this structure, who is expected
to hold a similar level of power and control over resources as department managers
 Close coordination of departments: Specifically tailored to encourage the close coordination
between departments, with an emphasis on producing projects quickly and efficiently while sharing
resources among projects as they are needed
 Expeditious performance: Balances the twin demands of external responsiveness and internal
efficiency, creating an environment in which projects can be performed expeditiously
 Diffusion of expertise: Resources are sharable and movable among multiple projects, there is a
greater likelihood that expertise will not be amassed or centred on some limited set of personnel,
as in the project Organisation, but will be diffused more widely across the firm

2.3.9 Disadvantages of a Matrix Structure

 Dual hierarchy: It is the potentially negative effect that creating multiple authority points has
on operations. When two parts of the Organisation share authority, the workers caught

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between them can experience great frustration when they receive mixed or conflicting
messages from the head of the project group and the head of their functional departments
 Time consuming: The amount of time and effort required by project managers in meetings,
negotiations, and other coordinative functions to get decisions made across multiple groups,
often with different agendas

Case Study 1
Case Studies will give you an opportunity to apply theory to practice.
Read the following Case Study:
OrganisationOrganisationOrganisationOrganisationOrganisationOrganisation

Questions
With reference to the Case Study, provide a brief overview of the matrix-type
Organisation structure, the advantages and disadvantages of such a
structure, and how to overcome the disadvantages of this structure.

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Multi Projects
Inefficient utilisation of resources, lack of an arsenal development and knowledge growth
programmer and a display of dysfunctional behaviour by individuals. The primary causes of
the above stated problems were a lack of leadership and no formal system to facilitate effective
project Integration. There also seems to be a lack of team culture in the Organisation and a
Limited understanding of the operating guidelines by which the Organisation should operate
the Matrix-type Organisation. There are also appears to be no formal communication lines
between various stakeholders in the Organisation.

The recommended solution centred around the creation and Implementation of a Project
Management Office (PMO). The creation of a PM had advantages that would simultaneously
solve a number of the systemic problems inherent in the Multi Projects Inc. Organisational
structure. This would of course require a strategic transformation project to be initiated but the
long term benefits of the change are significant and are illustrated in the report. We also
recommend that Multi Projects Inc. Should introduce a team building strategy to resolve a
number of team dynamic issues that are prevalent.

In conclusion, the problems faced by Multi Projects are not significant enough to come
detrimental to the profitability of the Organisation in the short term. The solution outlined in this
report however is a pre-requisite for continuous improvement and the long term competitive
advantage of the company. Multi Projects Incorporation Is a growing project management
consulting firm whose strategy is to focus on serving existing clients and targeting growing
companies for future business. Multi Projects Inc. Operates as a matrix-type Organisation, and
as new projects come in, a project manager is assigned to it.

The current situation faced in Multi Projects Inc. S that they have to take on a new project for a
new client, Growing Corporation, which they thought was never going to materialise. This has
caused various conflicts and anxieties to arise between two project managers, Julie Acapulco
Ana Jeff Armstrong, ten systems engineering manager, Jennifer Hernandez, and the senior
systems engineer, Tyler Vanilla. Goodly Company is the faithful existing client whose primary
reason for utilising Multi Projects is due to Teller’s expertise, knowledge and great work he
brings to their projects.

Kerzner (2018)

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Knowledge Check Question 3

Each of the process groups of any project has inputs and outputs.
Fill in the missing term in the above statement.

Video Activity 2
Learn more about Project Management Organisational Structures on
https://www.youtube.com/watch?v=0vPCN6X3FUI&pbjreload=101

Questions
1. With an aid of diagrams, demonstrate and discuss your
understanding of the following organisational structures:
 Functional
 Projectised
 Matrix
2. Discuss the influence of organisational structures on the project
manager’s authority

Think Point 3
Quality Assurance in project management is defined as the approach which
includes prevention of errors. It maintains the preferred level of the quality.

Activity 2
To deliver a project successfully, it is important to start the project with proper
identification and pre-defined goal. What is this stage of a project life cycle
called and out are the outputs of this stage?

Revision Question 2
Draw a life cycle of a project of your own choice. Illustrate the process groups
of the project and discuss the individual tasks that are undertaken in each of
the process groups.

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2.4 Summary
You have successfully made it to the end of your second unit. Well done! We have covered much content
in this unit which is essential in understanding the nature of Project Management processes, the integration
and interactions of process groups. At this stage, you should be able to understand the different structures
that can be found within a project environment. Furthermore, you should also have a better understanding
of benefits and drawbacks of different Organisational structures. Understanding the theory is essential but
by successfully completing the activities you will begin to understand the theory in practice. Theory is only
as good as your application of it.

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Answers to activities
Knowledge Check Question 1
What is the document file used to store data like costs, calculations, benefits of the project called?
Suggested Answer
Business Case

Knowledge Check Question 2

What are the second plans if plan A in the project doesn’t work referred to? These plans also include the
situations which may or may not occur in future.
Suggested Answer
Contingency plans

Activity 1
Think of a project of your own choice and formulate a good Statement of Work (SoW) for this project.
Suggested Answer
Typically, a SOW contains the following:
 The main objectives of the project
 A description of the work to be done
 Expected outcomes
 Funding
 Schedule
 Constraints if any
 A brief history of the organisation
 The need for the project
 The timelines
 Deliverables
 Milestones
 Deliverable schedule
 Place of performance

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Practical Application 1
Use a project of your choice and identify activities done under each Process Group
Suggested Answer
The five PMBOK process groups are:
 Initiating Process Group: Processes required to launch a new project or a new project phase
 Planning Process Group: Processes related to defining and planning the extent of the project, as
well as planning how it will be executed
 Executing Process Group: Processes related to the actual completion of project activities and tasks
 Monitoring & Controlling Process Group: Processes covering everything related to tracking,
monitoring, reporting on, and controlling project performance and progress
 Closing Process Group: Processes required to finalise and complete a project or project phase

Initiating
The initiating process group is generally when a project is formally approved and assigned a project manager.
The group includes two primary processes: developing the project charter and identifying the project
stakeholders. The two outcomes of this process group are the project charter document and the stakeholder
register. The stakeholder register lists who the project stakeholders are, what their stake in the project is, and
what they expect in regards to frequency and form of communication. The project charter should include the
business case for the project (why it should be completed), as well as a high-level overview of the project’s
scope, deliverables, and objectives.

Planning
The planning group is the largest of the five process groups, consisting of 24 processes in total. This group of
processes is designed to help you plan your entire project in detail, from the scope, schedule, and budget,
through to how you will manage the key stakeholders. The primary outcome of this planning stage is a project
management plan (PMP). For larger projects, the PMP may have sub-plans to further outline some of the
critical areas, such as the project schedule or quality management. For smaller projects, processes may
simply be covered in separate subsections. The PMP is a “living document” that is updated and revised
throughout the project as changes occur.

Executing
The executing group is where most of the action happens on a project. It is also, where most of the budget is
spent and where the actual project deliverables are produced. The executing process group includes ten
project management processes. It is primarily focused around managing project activities and tasks to ensure
progress is occurring, communications are happening, risk responses are being implemented, and
stakeholders are being engaged.

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The most significant role for the project manager during this phase is directing and managing the project work
and managing the project knowledge (requirements documentation, meeting minutes, lessons learned). Other
typical responsibilities of the project manager include acquiring project resources, developing and managing
the project team, and managing communications.

Controlling and monitoring

The controlling and monitoring process group is the second largest, containing twelve project processes.
These processes happen throughout the entire project and are in place to ensure there is sufficient oversight.
This will also help identify and mitigate any potential issues. Inevitably, something unexpected will come up
during the project life cycle. The processes in this process group are designed to help you update the plan,
modify your team’s activities, and get everything back on track. One of the essential processes in this group
is monitoring the project work. This requires the tracking of the overall project and its key aspects. This process
is critical in limiting overages and project errors. Often, project management software is used to monitor and
report on progress.

Closing
The closing process group only has one primary process: close out the project or phase. This process involves
ensuring the customer has accepted all final phase or project deliverables. Documentation should also be
completed and stored and any loose ends of the project or phase should be tied up.

Video Activity 1
Watch the following video for more knowledge and even better understanding of Project Management Process
Group on https://www.youtube.com/watch?v=5mz306qgSpg
Questions
Differentiate between project management process groups and the project management life cycle stages
Suggested Answer
Project phase results into deliverables. Project phase culminates into the final project deliverables or an
intermediate project deliverable.

Project management process group on the other hand comprises of project management processes. All the
project management processes create project management plans and documents, with the exception of Direct
and Manage Project Work. The deliverables from project management processes help manage the project.
OR
The project lifecycle is the whole life of the project, from start-up/initiation, through to delivery and closure.
This can be split down into smaller parts.
Whereas, project management processes are the processes/actions you go through in order to manager and
deliver a project and get it to progress through the project lifecycle.

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Practical Application 2
Choose any three different types of organisations you have either worked for or familiar with and draw
organisational structures for these organisations using the following types of organisational structure:
 Functional structure
 Projectised structure
 Matrix Structure

Suggested Answer

Functional structure

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Projectised structure

Matrix Structure

Case study Questions

With reference to the Case Study, provide a brief overview of the matrix-type organisation structure, the
advantages and disadvantages of such a structure, and how to overcome the disadvantages of this structure.
Suggested Answer
Advantages of Matrix Structure
 Clear articulation of project objectives
 Workable way of integrating project objectives with functional objectives
 Efficient use of limited human resources
 Rapid (often interdisciplinary) information flow through the project
 Retention of expert teams through the life of the project
 Rapid dispersion of team members back into the functional organisation upon project completion
without organisational disruption
 Project management trains managers to become leaders in the functional organisation
 Project structures develop team spirit and high morale
 Possibility of conflicts arising during the project carrying over to functional management

Disadvantages of Matrix Structure

 Two-boss problems, leaving project members caught in the middle
 Project members playing bosses against one another
 Increases organisational complexity

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 Requirement for high degree of cooperation between functional and project management
 Potential for conflicting management directives
 Difficulty of establishing priorities suiting both functional and project management
 Possible slowdowns in management reaction to events when two structures required for solution
 Increase in management overhead costs

Knowledge Check Questions 3

Each of the process groups of any project has inputs and outputs.
Fill in the missing term in the above statement.
Suggested Answer
Tools and techniques

Revision Question 2
Draw a life cycle of a project of your own choice. Illustrate the process groups of the project and discuss the
individual tasks that are undertaken in each of the process groups.
Suggested Answer

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The Initiation Phase: The initiation phase aims to define and authorise the project. The project manager
takes the given information and creates a Project Charter. The Project Charter authorises the project and
documents the primary requirements for the project. It includes information such as:
 Project’s purpose, vision, and mission
 Measurable objectives and success criteria
 Elaborated project description, conditions, and risks
 Name and authority of the project sponsor
 Concerned stakeholders

The Planning Phase: The purpose of this phase is to lay down a detailed strategy of how the project has to
be performed and how to make it a success.

Project Planning consists of two parts:

 Strategic Planning
 Implementation Planning
In strategic planning, the overall approach to the project is developed. In implementation planning, the ways
to apply those decisions are sought.

The Execution Phase: In this phase, the decisions and activities defined during the planning phase are
implemented. During this phase, the project manager has to supervise the project and prevent any errors from
taking place. This process is also termed as monitoring and controlling. After satisfaction from the customer,
sponsor, and stakeholder’s end, he takes the process to the next step.

The Termination/close out Phase: This is the last phase of any project, and it marks the official closure of
the project.

Activity 2
To deliver a project successfully, it is important to start the project with proper identification and pre-defined
goal. What is this stage of a project life cycle called and out are the outputs of this stage?
Suggested Answer
Initiation stage
1. Initiating phase triggers the planning process group. After preparing the required documents and
steps for initiating the project the next process group begins

Planning phase triggers the execution process group. The project must have a proper planning in order
to start the execution phase.

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Execution is the phase where the most of the project work is delivered.

Monitoring and controlling is the only project management process group that interacts with all other
four. In this phase, the project team checks whether everything is going as planned.

Closing helps to close the project after all objectives are met.

2. Refer to table below

Table 2.2: Project Management Process Groups

PM Process Key activities/Milestones

Initiation  Business case
 Conduct feasibility studies
 Develop Project Charter
 Identify Stakeholders
 Develop terms of reference

Planning  Plan Scope Management

 Plan Schedule Management
 Plan Cost Management
 Plan Human Resource Management
 Plan Stakeholder Management

Execution/Implementation  Building deliverables

 Project meetings
 Perform Quality Assurance
 Acquire project team
 Manage Communications

Control  Status reports

 Validate Scope
 Integration change control
 Control risks
 Manage Stakeholder engagement

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PM Process Key activities/Milestones

Termination  Project close-out
 Hand over deliverables
 Release project team
 Close procurements
 Document lessons learnt

3. A Projectised structure has dedicated teams assigned to projects. It is a collection of personnel from
the different functions assembled into a single project. It is at the opposite end of the spectrum
functional structure. Team members are often collocated with project managers having a great deal of
independence and authority. The project manager has total control over the project team and the
execution of the project. Loyalty to the function diminishes as it is directed to the project.
The functional structure is a hierarchy where each employee has one clear superior. The logic of the
functional structure is to group people and departments performing similar activities into units. Staff
members are grouped by specialty, such as production, marketing, engineering, and accounting at the
top level.

4. Clear authority: It places project management equivalent to functional departments in authority. This
advantage highlights the improved status of the project manager in this structure, who is expected to
hold a similar level of power and control over resources as department managers.

Close coordination of departments: Specifically tailored to encourage the close coordination between
departments, with an emphasis on producing projects quickly and efficiently while sharing resources
among projects, as they are needed.

Expeditious performance: Balances the twin demands of external responsiveness and internal
efficiency, creating an environment in which projects can be performed expeditiously.

Diffusion of expertise: Finally, because resources are shared and “movable” among multiple projects,
there is a greater likelihood that expertise will not be hoarded or centred on some limited set of personnel,
as in the project organisation, but will be diffused more widely across the firm.

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Unit
3: Organisational Strategy and
Project Selection

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Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

3.1 Introduction  Introduce topic areas for the unit

3.2 Organisational strategy and  Understand Organisational Strategy and Projects

projects

3.3 Project Selection  Identify the steps in the project selection process

3.4 Project Selection Models  Identify the different types of Project Selection
models

3.5 Non Numeric Models  Explain non numeric models

3.6 Numeric Models  Discuss numeric models

3.7 Net Present Value  Calculate net present value

3.8 Return on Investment  Calculate return on investment

3.9 Summary  Summarise topic areas covered in unit

Prescribed / Recommended Reading

 Van der Waldt, G., Fox, W. (2015). Guide to Project Management.
2nd ed. Johannesburg: Juta Academic
 Larson, E W and Gray C F. (2014) Project Management: The
Managerial Process. 6th Ed. London: McGraw Hill International
 Pinto, J K. (2013). Project Management Achieving Competitive
Advantage. 3rd Edition. Pearson Education Inc

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3.1. Introduction
The fundamental objective of many organisations is to make a profit. In order for these organisations to
achieve this fundamental goal, they have to implement projects and programmes that will support their
business strategies in order to improve their profitability. Organisations now use projects to convert strategy
into new products, services, and processes hence it is vital for project managers to think and act strategically.
All organisations must select the projects they decide to pursue from among numerous opportunities. This
unit will cover the different project selection methods of consisting of numeric and non-numeric. These
methods also assist in making reasonable choices in selecting projects and at the same time highlight the
major pros and cons of the methods.

3.2. Organisational Strategy and Projects

Project managers need to understand their organisation’s mission and strategy to enable them to make
informed decisions and adjustments as well as being effective project sponsors. Project managers have to
be able to exhibit to senior management how their projects contribute to firm’s overall strategy. According to
(PMI, 2017) Project Managers who have no understanding of the role of projects in accomplishing the
strategy of their organisation tend to make the following serious mistakes:
 Focusing on problems or solutions that have low priority strategically
 Focusing on the immediate customer rather than the whole market place and value chain
 Overemphasising technology as an end in and of itself, resulting in projects that wander off
pursuing exotic technology that does not fit the strategy or customer need
 Trying to solve every customer’s issue with a product or service rather than focusing on the 20
percent with 80 percent of the value (Pareto’s Law)
 Engaging in a never-ending search for perfection that no one except the project team really cares
about

When projects and programmes become misaligned to the business strategy, they should be terminated. A
business strategy exists to focus the organisations resources on achieving it. Global conditions are
continuously undergoing a process of change and so are organisations. Business strategies are dynamic
because they are affected by the external forces.

Think Point 1
Why is it important to align projects to overall strategy?

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Case Study 1
Read the following the Case Study on page 299 of your prescribed text and
answer the questions that follow.

Questions
Identify and discuss the characteristics of a strategy?
How can organisations consistently prioritise projects to support their
organisational strategy?
 How can organisations use the prioritised list of projects to allocate
organisational scarce resources?
 How organisations encourage the process of bottom-up initiation of
projects that support organisational goals and strategies?

Why align projects with business strategy?

The strategy a company intends to follow can be very different from the strategy that actually gets realised
(Bower & Gilbert, 2006, p 26). If the projects that get funded, approved and resourced in an organisation
are not tied directly to the organisation's strategy, where is it going?

For decades, organisational leaders acted as though that they only needed to design and communicate
their strategy – that execution was the job of the rest of the organisation. When strategy was not realised,
executives became frustrated, as they felt their strategic directives were ignored. However, the reason
strategy was not executed was more complicated. Without determining a connection to execution, the
strategy was merely loose words – pretty, perhaps, but without relevance to the worker's day-to-day job
and the company's operations.

Disconnects happen in many places – employees don't understand the strategy, managers don't have
incentives tied to strategy, sufficient time is not dedicated to revisiting, maturing and refining the strategy
over the course of the year, and budgets are not linked to strategy (Kaplan & Norton, 1996). Many factors
impede organisational performance. The impediments can be removed if employees better understand
organisational strategy, understand the key initiatives chosen to achieve it, and select the correct
performance measures. This way they can more clearly view how what work they do contribute to results.

However, not all the great strategic ideas come from management. A truly balanced organisation includes
a feedback loop to allow strategic concepts to also flow upward. The Balanced Scorecard strategic
management system offers a framework for this communication.

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As metrics from implementation of a strategy show that the specific strategy is failing in its objective, the
project team can find a receptive audience for new ideas in refining the current strategy or implementing
a whole new one (Kaplan & Norton, 1996).

Strategies are not managed like projects

Most companies’ operational and management control systems are built around financial measures and
targets, which bear little relation to the company's progress in achieving long-term strategic objectives
(Kaplan & Norton, 1996). Companies pour good money after bad, not realising they are funding a poor
strategy. Without clear data, executives wait for performance to turn around, instead of acting.

The way strategies have been defined and managed for years is doomed to failure. Multiyear results
rarely meet projections. In order to get approved, strategy proposals include unrealistic financial
expectations. The budget ends up driving initiatives, rather than the strategy (Niven, 2002, p 224 – 227).
At many companies, strategy is a highly abstract concept, and is not something that can be easily
communicated or translated into action. But without a clear sense of where the company is headed and
why, lower levels in the organisation cannot put in place executable plans. In short, the link between
strategy and performance can't be drawn because the strategy itself is not sufficiently concrete.

So what is a strategy, and what is not? Many companies fail to distinguish between operational
effectiveness and strategy. Operational effectiveness means performing similar activities better than rivals
perform them. Greater productivity, fewer defects and faster deployment are not strategic objectives.
Improvements can be dramatic, but you can't translate those gains into a sustainable differentiator.
Competing based on operational effectiveness is mutually destructive, leading to wars of attrition (Porter,
1996).

3.3. Project Selection

Projects cannot be selected based on one’s intuition or popularity. A selection process must be carried out
and the numbers must decide which projects qualify to be selected. How do we make the most reasonable
choices in selecting projects?

3.3.1. Steps in the Project Selection Process

Clements and Gido (2012) explain in detail the steps involved in selecting projects. A summary of the steps
is given below:
1. Develop a set of criteria against which the project will be evaluated
2. List assumptions that will be used as a basis for each project
3. Gather data and information for each project to help ensure an intelligent decision regarding project
selection

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4. Evaluate each project against the criteria

Knowledge Check Question 1

What is Sensitivity Analysis?

3.4. Project selection models

Although there are many criteria for selecting projects, selection criteria are typically categorised as: numeric
and nonnumeric. Numeric models use numbers as inputs for the decision process involved in selecting
projects. These values can be derived either objectively or subjectively. On the other hand, non-numeric
models do not employ figures as decision inputs, relying instead on other data.

3.5. Non Numeric Models

Financial return, while important, does not always reflect strategic importance. The sixties and seventies
saw firms become overextended by diversifying too much. Now the prevailing thinking is that long-term
survival is dependent upon developing and maintaining core competencies. Companies have to be
disciplined in saying no to potentially profitable projects that are outside the realm of their core mission. This
requires other criteria be considered beyond direct financial return.

3.5.1. Focus on Strategy and organisational needs

Under this method, the emphasis is on aligning selected projects to strategy and organisational needs.
Projects that address competitive strategy are more likely to be successful because they add value to the
organisation’s needs. For example, if one takes the example of the best company to work for as a strategy,
a project to recognise the best performing employees will support the business strategy. A project such as,
improving employee safety will be aligned to broad organisational needs. It is not easy to estimate the value
of such a project, however, all stakeholders might agree that such a project will add value.

Knowledge Check Question 2

This technique uses historical project data to prepare time and cost
estimates. It is considered the most inaccurate estimation technique. What
is this technique called?

3.5.2. Implementing a Balanced scorecard

According to Burke (2017), Dr. Robert Kaplan and Dr. David Norton developed the balanced scorecard
approach to assist in selecting and manage projects that align with business strategy. The balanced
scorecard is a methodology that converts an organisation’s core values such as customer service,
innovation, operational efficiency and financial performance to a series of defined metrics.

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3.5.3. Checklist Model

A modest way of project selection is by developing a checklist, or a list of criteria that pertain to our choice
of projects, and then applying them to different possible projects. For example, our company, the crucial
selection criteria are cost and speed to market. Due to our strategic competitive model and the industry, we
are more inclined to select low-cost projects that can be delivered to the market within a period of one year.
We would screen each possible project against these two criteria and select the project that best fulfils them.

But depending on the type and scope of our possible projects, we may have to consider a lot of important
criteria. According to Pinto (2013) in deciding among several new product development opportunities, a firm
must weigh a variety of issues, including the following:
 Cost of development
 Potential return on investment
 Riskiness of the new venture
 Stability of the development process
 Governmental or stakeholder interference
 Product durability and future market potential

5Table 3.1: Checklist Model

Based on this analysis above, Project C is the best alternative in terms of maximising key criteria—cost of
development, return on investment, time to market and risk.

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Knowledge Check Question 3

Is a formal document that is submitted to the change control board to
request significant changes to the finalised project management plan.
Fill in the missing word in the above statement.

3.5.4. Multi-Weighted Scoring Model

A weighted scoring model typically uses several weighted selection criteria to evaluate project proposals.
Weighted scoring models will generally include qualitative and/or quantitative criteria. Each selection
criterion is assigned a weight. Scores are assigned to each criterion for the project, based on its importance
to the project being evaluated. The weights and scores are multiplied to get a total weighted score for the
project. Using these multiple screening criteria, projects can then be compared using the weighted score.
Projects with higher weighted scores are considered better.

6Table 3.2: Multi-Weighted Scoring Matrix

Video Activity 1
Learn how organisations select the right projects on
https://www.youtube.com/watch?v=dms07djR5bM

Questions
List, discuss and provide three examples of benefit measurement methods
of project selection

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Based on this analysis above, Project A is the best alternative in terms of weighted score.

Activity 1
Use a weighted scoring model to choose between two projects: A and B. The
relative weights for each criterion and the assessment of each project for these
criteria are shown in the following table.

(Assume 10 represents the preferred score and 1 represent the undesired

score.)
Which project would you choose?

3.6. Numeric Models

Another important series of models relies on financial analysis to make project selection decisions. Financial
methods are often used as part of the selection process. The advantage about these financial methods is
that their analysis is objective and based on the projected cash flows and operating costs of the project,
which means that the integrity of the numbers being used to arrive at the costs and cash flows need to be
high.

3.6.1. Payback Analysis

The payback model measures the time it will take to recoup the project’s initial investment. Shorter payback
periods are more desirable compared to longer paybacks. Payback is the modest and most widely used
model of project selection. It emphasises cash flow which is a vital factor in business.

Example (Even Cash flow)

Project A has an initial investment of R700, 000 and projected cash inflows of R225, 000 for 5 years. Project
B has an initial investment of R400, 000 and projected cash inflows of R110, 000 for 5 years.

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Project A
700 000/225 000 = 3.1 years

Project B
400 000/110 000 = 3.6 years

The payback for Project A is 3.1 years and for Project B is 3.6 years. Using the payback method both projects
are acceptable since both return the initial investment in less than five years and have returns on the
investment of 32.1 and 27.5 percent.

Activity 2
Ciprox is planning to purchase a machine known as AutoX. AutoX would
cost R25,000 and would have a useful life of 10 years with zero salvage
value. The expected annual cash inflow of the machine is R10,000.

Required: Compute payback period of AutoX and conclude whether or not

the machine would be purchased if the maximum desired payback period
of Delta company is 3 years.

Example Uneven Cash flow

An investment of R200,000 is expected to generate the following cash inflows in six years:
Year 1: R70,000
Year 2: R60,000
Year 3: R55,000
Year 4: R40,000
Year 5: R30,000
Year 6: R25,000

Required: Compute payback period of the investment. Should the investment be made if management wants
to recover the initial investment in 3 years or less?

Payback Period = A + (B/C)

In the above formula, for uneven cash flow
 A is the last period with a negative cumulative cash flow

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 B is the absolute value of cumulative cash flow at the end of the period A
 C is the total cash flow during the period after A

7Table 3.3: Uneven Cash flow

Year Cash flow Cumulative Cash flow

0 (R200 000) (R200 000)

1 R70 000 (R130 000)

2 R60 000 (R70 000)

3 R55 000 (R15 000)

4 R40 000 R25 000

5 R30 000 R55 000

6 R25 000 R80 000

Payback period = 3 + (15,000*/40,000)

= 3 + 0.375
= 3.375 Years

Activity 3

Loftus Pty Ltd wants to determine which of two project alternatives is the more
attractive investment opportunity by using a payback period approach. The
have calculated the initial investment cost of the two projects and the expected
revenues they should generate for.
Which project should they invest in?

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3.6.2. The advantages of the Payback Analysis include:

 Measures the time it will take to recoup the project investment costs
 Shorter paybacks are more desirable
 Emphasises cash flows, a key factor in business (Larson and Gray, 2014)

3.6.3. The disadvantages of the Payback Analysis include the following:

 It ignores the time value of money
 It assumes Cash flows for the investment period (and not beyond)
 It does not consider profitability (Larson and Gray, 2014)

Practical Application 1
You are working for a young, start-up IT company and your company is
considering taking up two new software projects. The first project being
project A will cost R150,000 to develop the project and is expected to have
annual net cash flow of R40,000. The second project being project B will
cost R200,000 to develop and is expected to have annual net cash flow of
R50,000. However, your company is quite concerned about their cash flow.
Using the payback period, which project should your company choose from
a cash flow standpoint and why?

3.7. Net Present Value

Net Present Value analysis is a method of calculating the expected net value (gain or loss) by discounting
all expected future cash inflows and outflows to the present time. If financial consideration is a key decider
for a project selection, then companies should only consider a project under the following:
 If the NPV is greater than or equal to zero rands, accept the project
 If the NPV is less than zero rands, reject the project
 Accept projects with higher NPV’s than lower NPV’s if all other factors are equal

Example NPV
Assume that you are considering whether or not to invest in a project that will cost R100 000 in initial
investment. Your company requires a rate of return of 10%. You anticipate a useful life of 4 years for the
project and have projected future cash flows as follows:
Year 1: R20 000
Year 2: R50 000
Year 3: R50 000
Year 4: R25 000

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The formula for determining NPV:

We can now construct a table to keep a successive score on discounted cash flows (both inflows and
outflows) to see if the project is worth its initial investment. We already know that we will need the following
categories:

Year Inflows Outflows NPV

We will also need two more categories:

Net flows: the difference between inflows and outflows
Discount factor = 1 / (1 + i) ^ n
I= interest rate
N= is number of years from start date

How did we arrive at the Discount Factor for Year 3? Using the formula, we set above, we calculated the
appropriate data:

Discount factor = 1 / (1 + 0.1) ^ 3

0.7513
Alternatively, we can use Discount Factor Tables (Appendix A)

8Table 3.4: Net Present Value Calculations

Year Inflows Outflows Net Flow Discount Factor PV

1 20 000 0 20 000 0.9091 18 182

2 50 000 0 50 000 0.8264 41 320

3 50 000 0 50 000 0.7513 37 565

4 25 000 0 25 000 0.6830 17075

Total 114 142

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Initial Investment 100 000

NPV 14 142

Now we can supply the data for the Inflows, Outflows, and Net Flow columns. Finally, we complete the table
by multiplying the Net Flow amount by the Discount Factor. The results give us the data for the Present
Value column of our table. The sum of the PV less initial investment gives us the NPV of the project. The
total is a positive number, indicating that the investment is worthwhile and should be pursued.

Activity 4
Example

A company is considering investing in a new machine, to the tune of R12

million. The expected savings (neglecting depreciation), is as given below:

Year Rands (Million)

1 5
2 7
3 6
Note: you can use discount factors from present value tables.

a. Determine the Payback Period?

b. Calculate the NPV given that the accepted rate of return is 10%

Practical Application 2
You are a project manager of a financial firm, your organisation is considering
taking on new projects in its product expansion portfolio, you are required to
as a project manager to determine the Net present value of one of the projects
the organisation is considering. The project is expected to have a five-year
lifespan with the following net cash flows, R15,000 for the first year, R25,000
for the second year, R30,000 for the third year, R20,000 for the fourth year,
and R15,000 for year five. This particular project will cost R50,000 to
implement. If the required rate of return is 20 percent, conduct a discounted
cash flow calculation to determine the NPV of this project.

3.8. Return on Investment

Return on investment is the rate of return (in percentage) an investor receives out of an investment
commitment. This percentage is the result of subtracting the project costs from the benefits accrued and
then dividing by the costs.

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Example
If an investment of R500 is made today and it is worth R550 the following year, the ROI is calculated as
follows

Calculates percentage of investment which is returned per year.

Step1 = calculate average annual profit
Step2 = return on investment = average annual profit / original investment x 100 = …%

ROI = (550 – 500)/500 x 100 = 10%

The ROI is always represented in percentage. Projects with higher ROI are selected having considered all
the other economic factors. Many organisations stipulate an acceptable rate of return for projects.

Activity 5
You are a house flipper. You purchased a house at the courthouse
auction for R75,000 and spent R35,000 in renovations. After sales,
expenses, and commission, you netted R160,000 on the sale of the
renovated house.
What is the ROI?

Think Point 2
The scoring model is an objective technique: the project selection
committee lists relevant criteria, weighs them according to their importance
and their priorities, and then adds the weighted values. Once the scoring
of these projects is completed, the project with the highest score is chosen.

Think Point 3
Organisational strategy is a major factor in project selection methods.

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Video Activity 2
Watch the following video about Project Management Organisational
Strategy on https://www.youtube.com/watch?v=YyEdredidnw

Questions
Discuss why it is very important that project have a clear link to
organisational strategy.

Revision Question 3
Nondumiso (pty) Ltd wants to expand its business and the owner of the
business is willing to invest R 10,00,000. The investment is said to bring
an inflow of R. 100,000 in first year, 250,000 in the second year, 350,000
in third year, 265,000 in fourth year and 415,000 in fifth year. Assuming
the discount rate to be 9%.

1. Calculate the NPV of this investment

A graphic design company owner is presented with two project proposals
of five year lives, the owner is not quite certain about investing the R2000
initial investment that is required for both of these projects at a discounted
rate of 10%. Project A is promising to bring in R. 350 in the first year of
the project, 800 in the second year, 900 in the third year, another 750 in
the fourth year and 200 in the firth year. Whereas, Project B is promising
to bring in R. 2180 in the first year of the project, 100 in the second year,
another 100 in the third year, 40 in the fourth year and 300 in the firth
year.

2. Calculate the NPV for each of the above project to and advise which
project should be chosen by the business owner
3. Recommend, with reasons, which project you would undertake (if
either)

3.9. Summary
The key to project selection lies in being unbiased about the process. Although a wide variety of project
selection methods exist, some over others may be more appropriate for specific companies and project
circumstances. Some projects require refined financial evidence of their viability while others may only need
to demonstrate no more than an acceptable profile when compared to other options.

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Answers to activities
Case study 1
 Identify and discuss the characteristics of a strategy?
 How can organisations consistently prioritise projects to support their organisational strategy?
 How can organisations use the prioritised list of projects to allocate organisational scarce resources?
 How organisations encourage the process of bottom-up initiation of projects that support
organisational goals and strategies?

Suggested Answer
Characteristics of a strategy are that. Organisational strategy should:

Not be tactical
People often get a strategy mixed up with a tactic. “Strategies define goals to be achieved while tactics define
the actions you’ll take to achieve those goals.
For example, a strategy would be to double sales in a specific territory. A tactic would be to hire more
salespeople in that territory to achieve their goal.

Be measurable
If organisational goals are vague, the managers won’t know if they are achieving them. “You can’t manage
what you can’t measure.”

Be actionable
Strategic goals are achievable through tactics. They are not dependent on forces that cannot be control.

Be clear
Employees should understand exactly what their organisation’s strategy is to achieve it successfully. A
strategy requires continuous and clear communication. It should guide their decisions and actions.

Include a Business Plan

“A strategy is just hot air unless there’s a tactical plan for achieving each strategic goal.”
A business strategy is an ongoing process, not something to set and forget. Strategic planning is key to looking
to the future and creating direction to for a business to be successful. The key is to do what works best rather
than trying to do everything.

Knowledge Check Question 1

What is Sensitivity Analysis?
Suggested Answer

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Sensitivity analysis is the quantitative risk assessment of how changes in a specific model variable impacts
the output of the model. For example, sensitivity analysis allows you to identify which task's duration with
uncertainty has the strongest correlation with the finish time of the project.

Knowledge Check Question 2

This technique uses historical project data to prepare time and cost estimates. It is considered the most
inaccurate estimation technique. What is this technique called?
Suggested Answer
Analogous estimating

Knowledge Check Question 3

Is a formal document that is submitted to the change control board to request significant changes to the
finalised project management plan.
Fill in the missing word in the above statement.
Suggested Answer
Change request

Video Activity 1
Learn how organisations select the right projects on https://www.youtube.com/watch?v=dms07djR5bM
Questions
List, discuss and provide three examples of benefit measurement methods of project selection
Suggested Answer
 Payback Period
The Payback Period Technique takes a look at how long it will take the company to recoup its expenses with
a particular project.

 Discounted Cash Flow (DCF)

The Discounted Cash Flow Analysis handles the problem of calculating the present value of future earned
money. This is one of the best ways to calculate value of returns that occur over a long period of time rather
than immediately after completion.

 Net Present Value (NPV)

Using Discounted Cash Flow, the Net Present Value (NPV) model helps put the whole lifecycle of the project
into perspective in terms of earnings.

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Practical Application 1
You are working for a young, start-up IT company and your company is considering taking up two new
software projects. The first project being project A will cost R150,000 to develop the project and is expected
to have annual net cash flow of R40,000. The second project being project B will cost R200,000 to develop
and is expected to have annual net cash flow of R50,000. However, your company is quite concerned about
their cash flow. Using the payback period, which project should your company choose from a cash flow
standpoint and why?
Suggested Answer
Payback period = Investment required/ Net annual cash inflow
Project A
Payback period = 150 000/40 000
3. 75 years
45 months
196 weeks

Project B
Payback period = 200 000/ 50 000
4 years
48 months
209 weeks
The company therefore, should choose project A because it has a shorter payback period.

Practical Application 2
You are a project manager of a financial firm, your organisation is considering taking on new projects in its
product expansion portfolio, you are required to as a project manager to determine the Net present value of
one of the projects the organisation is considering. The project is expected to have a five-year lifespan with
the following net cash flows, R15,000 for the first year, R25,000 for the second year, R30,000 for the third
year, R20,000 for the fourth year, and R15,000 for year five. This particular project will cost R50,000 to
implement. If the required rate of return is 20 percent, conduct a discounted cash flow calculation to determine
the NPV of this project.

Suggested Answer
Discount factor = 1 / (1 + i) ^ n

Discounted
Year Inflows Outflows Net Flow Calculations PV
factor

1 15 000 0 15 000 1/1.20 0.8333 12499.5

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2 25 000 0 25 000 1/(1.20)^2 0.6944 17360

3 30 000 0 30 000 1(1.20)^3 0.5787 17361

4 20 000 0 20 000 1/(1.20)^4 0.4823 9646

5 15 000 0 15 000 1/(1.20)^5 0.4019 6028.5

Total 62895

Initial 50 000
Investment

Rate of
return 20%
Therefore, NPV =62895 – 50 000 = 12895

Video Activity 2
Watch the following video about Project Management Organisational Strategy on
https://www.youtube.com/watch?v=YyEdredidnw
Questions
Discuss why it is very important that project have a clear link to organisational strategy.
Suggested Answer
Aligning project management to organisation strategy produces significant benefits for the organisation. This
means funds are spent to directly impact a company’s overall performance, thereby increasing profitability
and reducing unnecessary expenses. Alignment can also help improve project success rates, therefore, the
ability for the organisation to address customer needs and expectations. Research has shown a significant
increase in organisational financial performance and project success rates when projects were aligned with
business strategies. When each project directly contributes to the welfare of the company, the organisation
as a whole improves, improving customer experiences.

9Table 3.5: Activity 3.1

Project A Project B

Weight Score Weighted Score Weighted

Score Score

Strategic Fit 30 10 300 8 240

Increase profitability 20 5 100 7 140

Urgency 10 6 60 3 30

Customer service 20 4 80 7 140

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Increase 10 1 10 7 70
productivity

Reduce head 10 5 50 8 80
counts

TOTAL 600 700

Based on this analysis above, Project B is the best alternative in terms of weighted score.

Activity 3.2
Since the annual cash inflow is even in this project, we can simply divide the initial investment by the annual
cash inflow to compute the payback period. It is shown below:

Payback period = R25,000/R10,000 = 2.5 years

According to payback period analysis, the purchase of machine X is desirable because it’s payback period
is 2.5 years which is shorter than the maximum payback period of the company.

10Table 3.6: Activity 3.3

Project A Project B
Year Cash flow Cumulative Year Cash flow Cumulative

0 (500 000) (500 000) 0 (500 000) (500 000)

1 50 000 (450 000) 1 75 000 (425 000)

2 150 000 (300 000) 2 100 000 (325 000)

3 350 000 50 000 3 150 000 (175 000)

4 600 000 650 000 4 150 000 (25 000)

5 500 000 1 150 000 5 900 000 875 000

Payback = 2.857 years Payback = 4.028 years

These results suggest that Project A is a better choice over Project B, based on a shorter projected payback
period (2.857 years versus 4.028 years) and a higher rate of return (35% versus 24.8%).

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11Table 3.7: Activity 3.4

Year Net Flow Discount Factor PV

1 5 million 0.9091 4.55 million

2 7 million 0.8264 5.78 million

3 6 million 0.7513 4.51 million

Total 14.84 million

Initial Investment 12 million

NPV 2.84 million

12Table 3.8: Payback

Year Cash Flow Cumulative Cash flow

0 (12 ) (12)

1 5 (7)

2 7 0

3 6 6

Payback Period = A + (B/C)

1+ (7/7) = 2 years

Activity 3.5
Your net profit is going to be what you netted (R160,000) minus what you spent (R75,000 + R35,000), so it
is R50,000. Your total investment is also what you spent (R75,000 + R35,000), which is R110,000
ROI = Net Profit / Total Investment * 100

ROI = 50,000 / 110,000 * 100

ROI = .45 * 100

ROI = 45%

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Unit
4: Project Life Cycle

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Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

4.1 Introduction  Introduce topic areas for the unit

4.2 Project Life Cycle Phases  Understand the sequential phases of a project lifecycle

4.3 Characteristics of the  Describe what happens in each phase of a project

Project Life Cycle  Understand how the level of effort changes over the
lifecycle of a project
 Examine how the level of influence and the cost of change
are change over the lifecycle of a project

4.4 Summary  Summarise topic areas covered in unit

Prescribed / Recommended Reading

 Van der Waldt, G., Fox, W. (2015). Guide to Project Management.
2nd ed. Johannesburg: Juta Academic
 Clements, J.P and Gido, C (2015). Effective Project Management.
6rth edition South-Western Cengage Learning
 A Guide to the Project Management Body of Knowledge (PMBOK
Guide) Sixth Edition. Newtown Square, PA: Project Management
Institute, 2017

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4.1. Introduction
The project life cycle refers to the different stages undertaken in a project to achieve its goals and objectives.
It is a series of phases that a project goes through from start to finish. Project life cycle phases are generally
in chronological order thus providing a basic framework for managing the project. These phases may only
happen once at each stage of the project or the cycle may be repeated at every stage of the project
depending on the nature and the size of the project. There is no particular model that will apply to all projects.
Although collective practices in industry will often lead to the use of a preferred structure, projects in the
same industry—or even in the same organisation—may have significant variations. Generally, the project
life cycle is shaped by the exceptional features of the business, industry, or technology used.

Video Activity 1
Learn the basics of a project life cycle on
https://www.youtube.com/watch?v=GRVPQ3A31mY

Questions
Discuss five benefits of an effective project closure and five disadvantages
of an ineffective project closure.

Knowledge Check Question 1

In a network diagram, a node is a point at which dependency lines meet.
In activity-on-node diagrams, nodes represent activities. In activity-on-
arrow diagrams, they represent events or stages.
True or false?

Practical Application 1
Consider a Kitchen Renovation Project.
Prepare the following documents
 Project Charter
 Project Kick Off meeting agenda

4.2. Project Life Cycle Phases

Although every project has a definite start and finish date, the comprehensive deliverables and activities that
take place in between will vary widely with the project. Whether you are building a house, implementing a
global software roll out or organising an engagement party, any project will go through common phases.
The length of time each phases takes will vary depending on the specific requirements of the project.

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Generally, the project life cycle passes through four stages: Initiation, planning, execution, monitoring and
control and termination. The initial phase begins the moment the project is given the go-ahead. Project effort
starts slowly, builds to a peak, and then declines to delivery of the project to the customer (PMI, 2017).

Activity 1
Define qualitative risk analysis and provide two examples of these.

6Figure 4.1 Project Life Cycle

Larson and Gray (2014)

Example
The following example represents a simplified but useful illustration of a project’s life cycle. In this case, the
project objective is to complete a successful renovation of a home kitchen. The finished kitchen must meet
local and state code, function for a family of five, and be useable for large gatherings of people.

 Initiation
The first step would be to develop a sense of the project itself—what the project seeks to achieve.
Specifications of the project are defined; project objectives are established; teams are formed and major
responsibilities are assigned.

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 Planning
Once the objectives and responsibilities are clear, the next step would be to develop a plan of how we intend
to proceed with the project in order to complete it by the due date. The level of effort increases as we move
to this stage. Estimation are used to create some tentative milestones for project.

 Execution
Next, we begin to execute us plan, a major portion of the project work takes place at this phase. The actual
work involved in renovation such as demolition and construction is done. Time, cost, and specification
measures are used for control.

 Closing / Termination
Finally, the project will come to an end. Closing includes three activities: delivering the final project product
to the customer, reassigning project resources, and post-project review. At this phase we can conduct post-
project reviews in order to access the performance and capture the lessons learnt.

Knowledge Check Question 2

Comprises the budget and schedule allocations set during the initiation
and planning phases of a project. Assuming the scope of the project
remains unchanged, it may be used to determine variance from budget
or schedule.
Fill in the missing term in the above statement.

4.3. Characteristics of the Project Life Cycle

The generic life cycle structure generally displays the following characteristics:
Cost and staffing levels are low at the start, peak as the work is carried out, and drop rapidly as the project
draws to a close.

Activity 2
When is resource allocation done during a project life cycle and who is
responsible for this task?

Think Point 1
Are Project Life Cycle phases the same as Project Process Groups.

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7Figure 4.2 Cost and Staffing level patterns

Project Management Institute (PMI) (2013)

The typical cost and staffing curve above may not apply to all projects. A project may require significant
expenditures to secure needed resources early in its life cycle, for instance, or be fully staffed from a point
very early in its life cycle.

Risk and uncertainty are greatest at the start of the project. These factors decrease over the life of the project
as decisions are reached and as deliverables are accepted.
The ability to influence the final characteristics of the project’s product, without significantly impacting cost,
is highest at the start of the project and decreases as the project progresses towards completion.

8Figure 4.3 Risk and Cost changes pattern

Project Management Institute (PMI) (2013)

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Knowledge Check Question 3

1. Identify and explain the phases of the project life cycle
2. Use a diagram to depict the Project Life Cycle phases
3. Identify any 4 characteristics of the project life cycle

Video Activity 2
Get more insight on Cost and Staffing Levels in Project Life Cycle on
https://www.youtube.com/watch?v=coWYsewkbKE

Questions
With an example of a project of your own choice. Apply your understanding
of the cost and staffing levels in a project life cycle.

Revision Question 4
A master’s research thesis as a project. Draw a life cycle for this project
and discuss its 4 stages.

Case Study 1
Read the following the Case Study on page 299 of your prescribed text and
answer the question that follow.

Questions
With reference to case study, identify and discuss what cost estimating
tools and techniques Tom could have used to estimate the cost of the
project.

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Project Organisation
Debriefings began with project organisation. The transmission business line of DBA is a typical
matrix organisation. The Abacus Project has the team, consisting of a core group and support staff,
from cross- functional and cross- governmental agencies. In particular, after the project initiation in
early 2015, Tom Lennon was assigned as a project manager and the team was formed. Originally,
the team started with four to five key members from the environmental, engineering, and planning
departments. The total personnel count at the end of the project was almost 200, including
contractors and subcontractors. Also, the City of Seattle, the customer, got involved as part of the
official project organisation.

How the Implementation unfolded

After project organisation, attention was focused on project life cycle (PLC). Abacus is a construction
project with well - defined phases. They are project initiation, environmental evaluation, design and
preconstruction, construction, and clean-up and transfer to operation phases.

Project Initiation Phase

The first phase was initiated by the planning department and did not involve the project manager. In
early 2015, the planning department ran their electrical load forecasting models to get an idea of the
state of the load on the grid. The results from the models showed the potential load problems, which
were then prioritised based on their forecasted negative impact. Out of those problems, the brownouts
or blackouts in the Seattle/King County area had the highest priority. The system planners immediately
drafted alternate solutions to solve this problem. These solutions were then input back to the
forecasting models and the preferred alternative was determined. The Abacus Project was initiated.
Trian Moore, the Director of Planning, remembered clearly that at this point, the project manager was
selected. Tom Lennon was a good candidate because he had done a similar project before. Tom
started forming a team, developing a schedule, alternatives, and estimates of what the project could
cost.

Adopted from (Milosevic, Patanakul and Srivannaboon, 2016)

4.4. Summary
While these characteristics continue to some point in almost all project life cycles, they are not always
present to the same degree. Adaptive life cycle is specifically developed with the intent of keeping
stakeholder influences higher and the costs of changes lower throughout the life cycle than in predictive life
cycles.

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Answers to activities
Video Activity1
Learn the basics of a project life cycle on https://www.youtube.com/watch?v=GRVPQ3A31mY
Questions
Discuss five benefits of an effective project closure and five disadvantages of an ineffective project closure.
Suggested Answer
Project Closure benefits include the following:
 Confirmation of Objectives Being Met
 Sense of Closure: confirming that objectives have been met to the client’s satisfaction gives the client
and the project team a sense of accomplishment and closure
 Improving Future Engagements: unless we look back and reflect on each engagement, it is
impossible to learn from it. During the project closure process, it is essential that a lessons learned
meeting happen with the client and another with the internal team. Clients will respect you more for
asking the hard questions and soliciting honest feedback
 Capturing the Knowledge: as part of the lessons learned sessions, the team should identify project
assets (documents or code), that can be re-used in future engagements
 Tying up Loose Ends: there are a lot of administrative tasks that must happen at the end of a project
to make sure the project is appropriately closed from a back-office perspective. Tasks like sending
the final status report, asking for the final payment, approving all time sheets and re-assigning
resources, should all be part of the closure process to make sure they are executed in a timely
fashion
 Rewarding the Team

Failure to conduct Project Closure could potentially:

 Put the organisation at a considerable amount of risk
 Prevent the organisation from realising the anticipated benefits from the deliverables of the project
 Result in significant losses to the organisation
 Undermine the project manager and project management team's credibility

Knowledge Check Question 1

In a network diagram, a node is a point at which dependency lines meet. In activity-on-node diagrams, nodes
represent activities. In activity-on-arrow diagrams, they represent events or stages.
True or false?
Suggested Answer
True

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Activity 1
Define qualitative risk analysis and provide two examples of these.
Suggested Answer
Qualitative risk analysis can be defined as the consideration of a range of characteristics such as probability
of occurrence, degree of impact on the objectives, manageability, timing of possible impacts, relationships
with other risks, and common causes or effects.

Types of these include:

Delphi Technique
This is a form of risk brainstorming, but the essential difference between traditional risk brainstorming and
applying the Delphi Technique is that the Delphi Technique makes use of expert opinion to identify, analyse
and evaluate risks on an individual and anonymous basis. Each expert then reviews every other expert’s risks,
and a risk register is produced through continuous review and consensus between the experts.

Probability/Consequence Matrix
This has become the standard method in establishing risk severity in Qualitative Risk Analysis. Risk Matrices
will often vary in size, but they all essentially do the same thing, and that is: Provide a practical means of
ranking the overall severity of a risk by multiplying the likelihood of risk occurrence against the impact of the
risk, should it still occur. Through ranking risk probability against risk consequence, one is able to not only
determine the overall severity of the risk, but also determine the main driver of the risk severity, be it probability
or consequence. This information is then useful in helping identify suitable mitigations to manage the risk,
based on its prominent drivers.

Knowledge Check Question 2

Comprises the budget and schedule allocations set during the initiation and planning phases of a project.
Assuming the scope of the project remains unchanged, it may be used to determine variance from budget or
schedule.
Fill in the missing term in the above statement.
Suggested Answer
Project baseline

Activity 2
When is resource allocation done during a project life cycle and who is responsible for this task?
Suggested Answer
In the execution stage, by the project manager.

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Video Activity 2
Get more insight on Cost and Staffing Levels in Project Life Cycle on
https://www.youtube.com/watch?v=coWYsewkbKE
Questions
With an example of a project of your own choice. Apply your understanding of the cost and staffing levels in
a project life cycle.
Suggested Answer

The generic life cycle structure generally displays the following characteristics:
 Costs and staffing levels are low at the start, peak as the work is carried out, and drop rapidly as the
project draws to a close
 Stakeholders influences, risk, and uncertainty are greatest at the start of the project. These factors
decrease over the life of the project. Ability to influence the final characteristics of the project’s
product, without significantly impacting costs, is highest at the start of the project and decreases as
the project progresses toward completion
 The typical costs and staffing curve may not apply to all projects. A project may require significant
expenditures to secure needed resources early in its life cycle

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Case Study Question 1

With reference to case study, identify and discuss what cost estimating tools and techniques Tom could have
used to estimate the cost of the project.
Suggested Answer
1. Analogous Estimating
Through analogous estimating, a project manager calculates the expected costs of a project-based upon the
known costs associated with a similar project that was completed in the past. This method of estimation relies
upon a combination of historical data and expert judgment of the project manager.

2. Parametric Estimating
In parametric estimating, historical data and statistical modelling are used to assign a dollar value to certain
project costs. This approach determines the underlying unit cost for a particular component of a project and
then sales that unit cost as appropriate. It is much more accurate than analogous estimating but requires more
initial data to accurately assess costs.

3. Bottom-Up Estimating
In bottom-up estimating, a larger project is broken down into a number of smaller components. The project
manager then estimates costs specifically for each of these smaller work packages.

4. Three-Point Estimating
In three-point estimating, a project manager identifies three separate estimates for the costs associated with
a project. The first point represents an “optimistic” estimate, where work is done and funds spent most
efficiently; the second point represents the “pessimistic” estimate, where work is done and funds spent in the
least efficient manner; and the third point represents the “most likely” scenario, which typically falls somewhere
in the middle.

The project life cycle passes successively through four stages: defining, planning, executing, and delivering.
The starting point begins the moment the project is given the go-ahead. Project effort starts slowly, builds
to a peak, and then declines to delivery of the project to the customer.

Defining stage: Specifications of the project are defined; project objectives are established; teams are
formed; major responsibilities are assigned.

Planning stage: The level of effort increases, and plans are developed to determine what the project will
entail, when it will be scheduled, whom it will benefit, what quality level should be maintained, and what the
budget will be.

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Executing stage: A major portion of the project work takes place—both physical and mental. The physical
product is produced (a bridge, a report, a software program). Time, cost, and specification measures are
used for control. Is the project on schedule, on budget, and meeting specifications? What are the forecasts
of each of these measures? What revisions/changes are necessary?

Closing stage: Closing includes three activities: delivering the project product to the customer, redeploying
project resources, and post-project review. Delivery of the project might include customer training and
transferring documents. Post-project reviews include not only assessing performance but also capturing
lessons learned.

Think Point 1
Initiation phase is the formal start of a new project. It involves receiving formal authorisation of the project
and create a clear definition for the project.

1. Refer to diagram

Figure 4.4 Project Life Cycle

2. The generic life cycle structure generally displays the following characteristics:

Cost and staffing levels are low at the start, peak as the work is carried out, and drop rapidly as the project
draws to a close. Figure illustrates this typical pattern.

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The typical cost and staffing curve above may not apply to all projects. A project may require significant
expenditures to secure needed resources early in its life cycle, for instance, or be fully staffed from a point
very early in its life cycle.

Risk and uncertainty are greatest at the start of the project. These factors decrease over the life of the project
as decisions are reached and as deliverables are accepted.

The ability to influence the final characteristics of the project’s product, without significantly impacting cost,
is highest at the start of the project and decreases as the project progresses towards completion.

Think Point 2
A Milestone in project management indicates specific progress points or events in project timelines. They
mark progress needed to complete projects successfully.

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Unit
5: Project Management
Knowledge Areas

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Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

5.1 Introduction  Introduce topic areas for the unit

5.2 Project Integration Management  Understand how project integration management

tasks hold the overall project together and integrate it
into a unified whole

5.3 Project Scope Management  Explain what a project scope is. How it is defined
and achieved

5.4 Project Schedule Management  Understand how project schedule is planned and
managed. How activities are defined, sequenced
and estimated

5.5 Project Cost Management  Examine the process of project tasks estimation and
project budgeting

5.6 Project Quality Management  Identify project quality matrix

5.7 Project Resource Management  Explain the importance of Human Resource

Management in a project environment

5.8 Project Communications  Understand the purpose of effective communication

Management management in project management

5.9 Project Risk Management  Identify project risk sources and mitigation strategies

5.10 Project procurement management  Describe how procurement is conducted during

project management

5.11 Project Stakeholder Management  Identify the fundamental management of stakeholder

engagement during project management

5.12 Summary  Summarise topic areas covered in unit

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Prescribed / Recommended Reading

 Van der Waldt, G., Fox, W. (2015). Guide to Project Management.
2nd ed. Johannesburg: Juta Academic
 Clements, J.P and Gido, C (2015). Effective Project Management.
6rth edition South-Western Cengage Learning
 A Guide to the Project Management Body of Knowledge (PMBOK
Guide) Sixth Edition. Newtown Square, PA: Project Management
Institute, 2017

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5.1 Introduction
A Knowledge Area represents a complete set of concepts, terms, and activities that make up a professional
field or area of specialisation. In the field of Project Management these ten Knowledge Areas are used on
most projects most of the time. Project teams should utilise these ten Knowledge Areas and other
Knowledge Areas, as appropriate, for their specific project.

The Knowledge Areas are: Project Integration Management, Project Scope Management, Project Schedule
Management, Project Quality Management, Project Resource Management, Project Communications
Management, Project Risk Management, Project Procurement Management and Project Stakeholder
Management. Table 5.2 reflects the mapping of the project management processes within the 5 Project
Management Process Groups and the 10 Knowledge Areas.

Video Activity 1
Watch an Overview of the 10 Project Management Body of Knowledge
(PMBoK) Knowledge Areas of Project Management on
https://www.youtube.com/watch?v=H_FX0uYUtdo

Questions
Make use of examples to briefly discuss and demonstrate your
understanding of all the 10 Project Management Knowledge Areas.

Knowledge Check Question 1

What is the purpose and importance of categorising risks?

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13Table 5.1. Process Groups and Knowledge Areas Integration

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5.2 Project Integration Management

Project Integration Management is a way of making various processes work together. Meaning, it takes the
numerous processes that are being used in a project and makes sure that they’re coordinated. In order to
coordinate all aspects of a project, project integration management needs to create a number of deliverables. To
start is the development of the project charter, which is used as an input to the Project Management Plan.
Developing the Project Management Plan involves defining, preparing, and coordinating all subsidiary plans and
integrating them into a comprehensive project management plan. The key benefit of this process is a central
document that defines the basis of all project work.

Think Point 1
Why is it necessary to have a Project Charter?

Knowledge Check Question 1

Refers to gradual changes in project scope that occur without a formal
scope change procedure.
Fill in the missing term in the above statement.

5.2.1 Project Charter

A project charter refers to a document that authorises the project manager to initiate and lead the project. This
document is issued by upper management and provides the project manager with written authority to use
organisational resources for project activities. Often the charter will include a brief scope description as well as
such items as risk limits, customer needs, spending limits, and even team composition. The project charter
terminology is the most common terminology acceptable world- wide, however, it can also be called terms of
reference, or project mission. It is imperative that the project charter is signed-off by all the key stakeholders to
signify its validity.

5.2.2 The contents of a Project Charter:

 Project Title and date of authorisation
 Background to the project
 Key assumptions
 Business needs and other commercial needs
 Scope of work
 Key milestones
 Project scheduling including estimated start and finish dates
 Project estimated budget

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 Approach
 Roles and responsibilities of project team and project organisation

5.2.3 Project Management Plan

The creation of a management plan defines how the various processes in the project can work together for
greater efficiency and productivity. The project charter is included in the project plan, but the definition of the
project is described, as well as its objectives, budget, schedule, resources, what approach you plan to take to
get the project done, risk assessment, and so on. This is a formal document to help guide, control and execute
the project. It incorporates different area plans such as the controls, scope management plan, budgets,
schedules, risks, communications plan, procurement strategy, human resources plan, and quality plans.

It is at this point that there will be kick-off meetings after the planning phase but before the project is executed.
This forum is used to communicate the project responsibilities of its key stakeholders.

5.2.4 Holding a Project Kick-off Meeting

One of the most important project meetings is the kick-off meeting. A lot can go wrong in a project just because
of not having held a proper kick-off meeting. This is the first meeting where key stakeholders meet each other
formally and deliberate about the project. The primary purpose of the kick-off meeting is to integrate and align all
stakeholders so that the entire team has a common understanding of the project’s objectives. This ensures that
all the stakeholders direct and focus their resources for a common good.

Video Activity 2
Learn how projects are initiated on
https://www.youtube.com/watch?v=Am3HM_pGqHs

Questions
Discuss the inputs and outputs of the initiating process.

Knowledge Check Question 2

Define the following:
 Project plan
 Project planning
 Project scope statement

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Example of Kick Off Meeting Agenda

14Table 5.2: Project Kick off Meeting Agenda

5.3 Project Scope Management

Project Scope Management includes the processes required to ensure that the project includes all the work
required, and only the work required, to complete the project successfully. Managing the project scope is primarily
concerned with defining and controlling what is and is not included in the project. Project Scope Management
focuses on defining the business problem or need. Enough time must be dedicated here to define the project
scope thoroughly to ensure that the business problem is addressed. The project scope defines all what needs to
be done. It is all the work that must be done to produce? All the project deliverables, satisfy the sponsor or
customer that all the work and deliverables meet the requirements or acceptance criteria and accomplish the
project objective. The project charter establishes the framework for further elaboration of the project scope.
Project Scope Management can be broken down into the following processes:
 Scope planning
 Scope definition
 Creating the WBS

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 Scope Verification
 Scope Control

5.3.1 Scope Planning and the Scope Management Plan

A project’s size, complexity, importance as well as other factors determine the amount of effort to be spent on
the scope planning. The main output of scope planning is a scope management plan.

The scope management plan documents include:

 A process to prepare a detailed project scope statement based upon the preliminary project scope
statement
 A process that enables the creation of the WBS from the detailed scope statement, and establishes
how the WBS will be maintained and approved
 A process that specifies how formal verification and acceptance of the completed project deliverables
will be obtained
 A process to control how requests for changes to the detailed project scope statement will be
processed. This process is directly linked to the integrated change control process

5.3.2 Scope Statement

The preparation of a detailed project scope statement is critical to project success and builds upon the major
deliverables, assumptions, and constraints that are documented during project initiation. This document is not
written in stone, and it will be edited and revised as part of the scope management. The scope statement defines
what is part of the project and what is not part of the project. It lists all the work that will be done over the life
cycle of the project. In other words, it outlines the project deliverables and establishes a measurable criterion for
success.

Practical Application 1
Consider a Kitchen Renovation Project.
Prepare the following documents
 Project Charter
 Project Kick Off meeting agenda

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Example of Scope Statement

Project Title: Pathways Initiative Date Prepared: 12 Jan 2019

Product Scope Description

Pathways will develop and implement course maps for all certificates and degrees with the objective of
preventing students from taking courses that do not transfer or prepare them for a career. Further, we will
analyse and design student support processes and areas that increase students’ ability to successfully
navigate their way through their educational experience.

Project Deliverables

Create Transfer Pathways maps for all viable degrees and Career Pathways maps for all viable
certificates
Create Student intake and support systems that have well-defined Pathways to student completion of
educational goals
Develop Student-centred classrooms with classroom content driven by Student Learning Outcomes
(SLOs) and not textbook

Project Acceptance Criteria

Successful implementation of Degree/Certificate maps

Successful implementation of Student Support maps
Initial reduction in average credit hours to degree or certificate of 5%
Initial increase in completion rates of 5%

Project Exclusions

Since Student Success is the most important value of San Jacinto College and all areas of the College
have a direct or indirect affect student success, all employees will be expected to support Pathways with
their time and expertise. Some work will be occurring concurrently and will complement Pathways
development, such as:
 SACSCOC ten-year reaffirmation of accreditation
 Open Educational Resources textbook review and selection

Project Constraints

Pathways work should follow the Values of San Jacinto College

Transfer/Career Pathways should follow THECB and other regulatory board requirements
Pathways should be implemented by fall 2018 with review and necessary modifications in the 2018-
2019 academic year
Budget
Time/resources/personnel limitations

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College Leadership will support the project and provide timely responses to requests
Project staff will be dedicated to this project and will not be reassigned
Project team members will be backfilled as necessary to support this project
Funding for recommended and approved changes will be provided

5.3.3 Creating the Work Breakdown Structure (WBS)

The WBS breaks the project scope into smaller manageable tasks. These tasks are organised in a hierarchical
form with the lowest level more comprehensive than the upper one. The lowest levels of the WBS is referred to
as work packages. They can be treated as smaller projects, schedules, cost estimates, and can be monitored
and controlled separately. The WBS is a foundational document used in the project planning process.
Therefore, it makes sense to say that the WBS’s accuracy level needs to be taken seriously during its creation.
Steps to create a WBS:
 Identify all the project deliverables and artefacts. Keep the list textual at this stage rather than graphical.
Level 0 of the WBS will be the project. Look for any inherent categorisation and rearrange the list
necessary to organise it under main categories. These categories will be the first level of the hierarchy
in the WBS
 Do not forget to include the project management or other related activities. They are also requirements
of the project
 Decompose the deliverables down into the major activities needed to produce them
 Continue decomposing until you have a level of work packages that are applicable to the project that
can be assigned, scheduled, estimated and managed
 Review the list of deliverables, components and work packages
 Create the graphical WBS from the textual lists. Review it for clarity and visual aesthetics

5.3.4 Scope Baseline

The scope baseline is the accepted project scope statement and its associated Work Breakdown Structure. The
scope baseline acts as the basis for evaluating project performance.

5.3.5 Scope Creep

Scope creep is informally making changes to the project scope without appropriate approval. Many projects
overspend their budget or are not completed on time due to scope creep caused by additional work that was not
documented or approved, or was not communicated and in turn caused errors or reworking of other elements of
the project.

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5.4 Project Schedule Management

Project Schedule Management involves the process of defining, sequencing and estimating durations to project
activities with the view of creating a project schedule. To avoid project team members’ and project managers
overestimating/underestimating how much time it will take to complete a project and as well as avoiding
unexpected problems from jeopardising the ultimately success of the project, the PMBOK provides tools and
techniques in the Project schedule management knowledge Area within which there are following processes:
 Activity definition
 Activity sequencing
 Estimating activity resources and durations
 Develop the schedule

5.4.1 Activity Definition

The project team must define the activities that need to be performed to produce the deliverables of each work
package. An activity also referred to as a task is a defined piece of work that consumes time (Clements and Gido,
2012). It does not necessarily require the expenditure of effort by people – for example waiting for concrete to
harden can take several days but does not require any human effort.

5.4.2 Creating the Activity List and Attributes

The activity list is a comprehensive list of activities that are planned to be included on a project. It should include
the activity name, an activity identifier or number, and a brief description of the activity, such as predecessors,
successors, logical relationships, leads and lags, resource requirements, constraints, imposed dates, and
assumptions related to the activity. Both should be in agreement with the WBS and WBS dictionary and be
reviewed by key project stakeholders.

5.4.3 Creating a Milestone List

An important purpose of any plan is to produce a schedule from which project progress can be managed.
Progress checkpoints must be provided at suitable intervals throughout every network and any schedules that
are derived from it. Events or activities that have particular significance can each be designated as milestones.
A milestone is achieved when the relevant milestone activity is finished in a precedence network or when a
milestone event is achieved in an arrow network.

A milestone identifies important events or checkpoints in the project’s life at which specific reviews can be
undertaken. There is usually no cost or duration for a milestone. Senior managers and Project sponsors are
normally interested in the milestone achievements rather than activities because milestones signify a key
achievement. Milestones for many projects include: Sign off key documents, for example, project hand-over
certificate, completion of specific products, and completion of important process related work, such as awarding
a contract to a supplier.

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5.4.4 Activity Sequencing

Activity sequencing involves identifying and documenting the logical relationships among schedule activities.
Schedule activities can be logically sequenced with proper precedence relationships, as well as leads and lags
to support late development of a realistic and achievable project schedule. A dependency or relationship relates
to the sequencing of project activities or tasks.

Activity sequencing has a significant impact on developing and managing a project schedule. There are three
main types of dependencies,
 Mandatory dependencies, which are inherent in the nature of the work being performed on a project,
for example, on a building project you cannot pour concrete before digging the trenches
 Discretionary dependencies, which are procedural issues defined by the project team. A project team
might follow the practice of not starting detailed design work until key stakeholders sign off all the analysis
work
 External dependencies which involve relationships between project and non-project activities. The
installation of new software might depend on delivery of new hardware from an external supplier

5.4.5 Gantt Chart

Gantt charts provide a standard layout for displaying schedule information by listing activities with their
corresponding start and finish dates with a calendar. The activities listed should coincide with the information on
the WBS, activity and milestone lists.

A Gantt chart is a low cost, easy to understand method using horizontal bars to depict each project activity along
a time line to make sure:
 All activities are planned for
 Their order of performance is accounted for
 Activity time estimates are recorded
 Overall project time is developed

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15Table 5.3: Gantt Chart

Worked Example
Assuming the projects Starts on the 1st of March, Draw the Gantt Chart using the table below

16Table 5.4: Activity Precedence Table

17Table 5.5: Solution

Activity Predecessor Duration Start Date Finish Date

(Days)

A - 3 1 March 3 March

B - 9 1 March 9 March

C A 11 4 March 14 March

D B 7 10 March 16 March

E D,C 2 17 March 18 March

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F E 10 19 March 28 March

G E 4 19 March 22 March

H E 6 19 March 24 March

I F,G,H 8 29 March 5 April

Table

18Table 5.6: Gantt Chart Solution

Dates 01-Mar 02-Mar 03-Mar 04-Mar 05-Mar 06-Mar 07-Mar 08-Mar 09-Mar 10-Mar 11-Mar 12-Mar 13-Mar 14-Mar 15-Mar 16-Mar 17-Mar 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 23-Mar 24-Mar 25-Mar 26-Mar 27-Mar 28-Mar 29-Mar 30-Mar 31-Mar 01-Apr 02-Apr 03-Apr 04-Apr 05-Apr 06-Apr
Activity
A
B
C
D
E
F
G
H
I

Activity 1
Identify and explain the benefits of using a Gantt Charts.

5.4.6 Network Diagrams

A network diagram is a schematic display of the logical relationships among, or sequencing of, project activities.
The two approaches used in project networks are activity-on-node (AON) and activity-on-arrow (AOA). Both use
two building blocks - nodes and arrows. As the names suggests, activity-on-nodes depicts an activity on a node
while activity-on- arrow depicts an activity on an arrow.

In practice, the AON has come to dominate most projects. We will cover a basic AOA network diagram
construction in the next section but the chapter will deal primarily on the AON network diagram.

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9Figure 5.1 AOA Diagram

10Figure 5.2 AON Diagram

5.4.7 Benefits of network diagrams

Network diagrams have several benefits which include the following
 Provides the basis for scheduling labour and equipment
 Enhances communication among project participants
 Provides an estimate of the project’s duration
 Provides a basis for budgeting cash flow
 Identifies activities that are critical
 Highlights activities that are “critical” and cannot be delayed
 Help managers get and stay on plan

5.4.8 Project Network Diagrams Terminology

Gray and Larson (2014) define several terms used on the building of project networks. These include:
 Activity: an element of the project that requires time
 Merge activity: an activity that has two or more preceding activities on which it depends

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 Parallel (concurrent) activities: Activities that can occur independently and, if desired, not at the same
time
 Path: a sequence of connected, dependent activities
 Critical path: the lengthiest path through the activity network that allows for the completion of all project-
related activities; or the shortest expected time in which the entire project can be completed. Delays on
the critical path will delay completion of the entire project
 Event: a point in time when an activity is started or completed. It does not consume time
 Burst activity: an activity that has more than one activity immediately following it (more than one
dependency arrow flowing from it)

5.4.9 Drawing the Network (AON)

Step 1
Find all the activities that have no preceding activities. Draw their nodes and name them accordingly along with
the duration estimate if available.

Step 2
Continue drawing the network diagram working from left to right, looking for bursts and merges. Bursts occur when
two or more activities follow a single node and merges when two or more precede a single node.

Step 3
Continue until all activities are included. Arrowheads should face right and no arrows should cross.

5.4.10 Drawing the Network (AOA)

When drawing the AOA diagram, nodes represent the realisations of some milestones (events) of the project.
The arrow represents the activities. Node 1 the immediate predecessor node of arrow A is the start node for the
activity. Node 2, the immediate successor node of arrow A is the end node for the activity.

1 2

Arrow (1,2) = Activity (A)

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Consider the following information

19Table 5.7: Precedence Table

Activity Predecessor Duration

A - 2

B - 6

C - 4

D A 3

E C 5

F A 4

G B,D,E 2

11Figure 5.3 AON Solution

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12Figure 5.4: Solution AOA Diagram

Activity 2
Consider the following information

Draw the AON network diagram

Identify the burst and merge activities

5.4.11 Critical Path Analysis

The critical path method (CPM) is a schedule network analysis technique that is performed using the schedule
model. The critical path method calculates the theoretical early start and finishes dates and late start and finish
dates. A critical path of a project is the sequence of activities that determines the earliest time by which the project
can be completed. It is the lengthiest path through the network diagram and has the least amount of slack or
float. Slack or float is the amount of time an activity may be delayed without delaying a succeeding activity or the
project finish date. The longest path or the path containing the critical tasks drives the completion date of the
project.

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Steps involved in calculating the critical path:

 Once the network diagram is completed, identify all paths from the start that will lead you to the end.
 Calculate the durations of each path
 Select the path with the longest duration, which will be the critical path

Activity 3

Draw the network diagram

Identify the critical path

Case Study 1
Read the following the Case Study on page 299 of your prescribed text and
answer the question that follow.

Questions
1. Which of the following document can be used to guide all the work in
both project executing and project monitoring and controlling phase of a
project?
2. What is the difference between the Monitor and Control Project Work
process and the Direct and Manage Project Work process?
3. When does the Perform Integrated Change Control process when during
a project?

The Effect of Project Integration Management Process On Project Success: The Case of Berhan
Bank Data Centre Project
Project integration management is a component of project management that focuses on the individual
procedures during the execution of a process. Project integration managers coordinate plans and help
ensure that all processes within a project run efficiently and that team members stay on track toward their
final goals. Integration Management is the practice of making certain every part of the project is coordinated.
The main objective of this study is to assess the effect of project integration management process on project
success in the case of Berhan Bank Data Centre Project.

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The study considered major project integration management process i.e. project initiation, project planning,
project execution, monitoring and control and project closure; and focused on their ultimate contribution to
the project success of the data centre project in Berhan Bank. To achieve the main objective of the
research, a mixed methods approach is used. To analyse the data collected, both quantitative and
qualitative data analysis method is used. For semi-structured interview qualitative method is used; and for
the questioner quantitative analysis method is employed. The result of the study indicates a positive and
significant association between Project Initiation, Project Planning,

Project Execution, Monitoring and Control and Project Closure on project success of the data centre project
which implies the increase in Project Initiation, Project Planning, Project Execution, Monitoring and Control
and Project Closure inevitably increases in the project success of the data centre project. The result of this
research will create awareness among IT project managers of Berhan Bank about project integration
management processes and activities that contribute to project success, and how the project managers
are able to handle projects more effectively to increases the rate of project success in the future.
Furthermore, on the basis of the research findings, appropriate recommendations along with implications
for further studies have been forwarded.
Desalegn (2019)

5.5 Project Cost Management

Project Cost Management refers to the process of preparing a project budget. This is done through estimating
the identified activities and resources.
Project Cost Management involves:
 Cost estimating – part of project planning
 Cost budgeting – part of project planning
 Cost Control – Part of Cost Control

5.5.1 Cost Estimating

Cost estimating involves the process of developing an approximation of the costs of the resources needed to
complete project activities. Project teams normally prepare cost estimates at various stages of a project, and
these estimates should be updated and improved as more information becomes available over time. It is also
important to provide supporting details for the estimates, including ground rules and assumptions.

5.5.2 Cost Estimating Tools and Techniques

To develop an accurate and quality cost estimate takes a lot of time and effort and a good quality WBS needs to
be used as basis for the cost estimate. The more accurate and detailed the WBS the better the cost estimate.
The following tools and techniques are generally used to develop cost estimates:

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 Analogous Estimating
Analogous cost estimating means using the actual cost of similar projects in the past as the origin for estimating
the cost of the present project.

 Bottom-up estimating
Bottom up estimating involve estimating specific activities from the lowest level to the highest level. When different
activities are estimated at different levels of the WBS, they are then summed up to arrive at a total cost. This
estimating technique is more accurate but can also take time to complete, and is expensive to carry out.

 Parametric Modelling
Parametric estimating is a technique that uses a statistical relationship between historical data and other
variables (for example square meters in construction, lines of code in software development, required labour
hours) to calculate a cost estimate for a schedule activity resource. The cost and accuracy of parametric models
vary. They are most reliable when the historical data used to develop the model are correct, the parameters used
in the model are readily quantifiable and the model is scalable, that is, can be applied to very large as well as
very small projects.

5.5.3 Cost Budgeting

Cost budgeting involves allocating cost estimates to activities over a period of time or project duration. The
activities are based on the WBS for the project and the main goal of the cost budgeting process is to produce a
cost baseline. The cost baseline is defined as a time phased budget that is used as a basis against which to
measure, monitor, and control overall cost performance on the project.

Think Point 2
What is the difference between Cost Estimating and Cost Budgeting?

5.6 Project Quality Management

According to the PMBOK (2004), project quality management processes include all the activities of the performing
organisation that determine quality policies, objectives, and responsibilities so that the project will satisfy the
needs for which it was established. This means that quality can mean different things to different people if the
quality requirements in a project are not determined upfront. The most relevant description of quality is “fit for
purpose”.

Project quality must therefore be weighed against the project cost and time constraints. For example, if the level
of quality is increased, the result could be a higher budget and longer project duration. Project Quality
management comprises of three processes:

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 Quality planning – establishing the planning for meeting project quality requirements
 Quality assurance – ensuring the project is meeting the requirements established in the project quality
management plan
 Quality control – making sure the deliverables are meeting their quality requirements

5.6.1 Quality Management Plan

According to PMBOK Guide (2018) the quality management plan is a component of the project management
plan that describes how the organisation’s quality policies will be implemented. It describes how the project
management team plans to meet the quality requirements set for the project. The quality management plan may
be formal or informal, detailed, or broadly framed.

5.6.2 Attributes of a Project Quality Plan

A project quality plan has the following attributes:
 It describes all the quality definitions and standards relevant to the project
 It highlights the standards that must be followed (regulatory requirements)
 It describes the circumstances that the services and materials must retain in order to satisfy the
requirements and expectations of the project stakeholders
 It describes the circumstances or conditions that make an output drop below quality standards, this
information is used to gain a collective understanding among the project team to help them classify
what is above and what is below a quality standard
 The quality plan also includes the process to safeguard that the quality standards are being followed
by all project staff
 The plan also includes the compulsory steps to monitor and control quality and the authorisation
process to make changes to the quality standards and the quality plan

Think Point 3
What constitutes a good Quality Plan?

5.6.3 Quality Planning Tools and Techniques

There are numerous quality planning tools and techniques. A few are outlined below:
 Cost Benefit Analysis
Quality planning must consider cost benefit trade-offs. The primary benefit of meeting quality requirements is
less rework; the primary cost is the expense associated with project quality management activities

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 Benchmarking
In benchmarking, a comparison is done between the actual and planned activities to those of other projects to
generate ideas for improvement. It also provides a standard by which to measure performance.

 Cost of Quality (COQ)

Cost of quality includes all costs incurred over the life of the product by investment in preventing non-
conformance to requirements, appraising the product or service for conformance to requirements, and failing to
meet requirements (rework). Failure costs are often categorised into internal (found by the project) and external
(found by the customer). Failure costs are also called cost of poor quality

 Flowcharting
Flowcharts are diagrams that show how various elements of a system relate. One such example of a flow chart
is the Cause and Effect Diagram.

 Statistical Sampling
Statistical sampling involves choosing part of a population of interest for inspection (for example, selecting ten
engineering drawings at random from a list of seventy-five). Sample frequency and sizes should be determined
during the Plan Quality Management process so the cost of quality will include the number of tests, expected
scrap, and so on.

 Design of experiments (DOE)

This is an analytical technique that helps identify which variables have the most influence on the overall outcome.
An example would be in the automotive industry where automotive designers use this technique to determine
which combination of tyres and suspension will produce the most desirable ride at a reasonable cost.

Think Point 4
How can you use benchmarking to ensure quality?

5.7 Project Resource Management

Project resource management includes the processes that organise and manage the project. Resource
management is not limited to the members of the project team. The resource management process covers all
resources that will be required to undertake a project and these include – people, materials, services and
equipment. It involves the use of soft skills - interpersonal, leadership, motivational, negotiation and conflict
management. It is unlike our technical skills which can be easily measured, but the ultimate measure of success
is an efficient, effective and cohesive project team. The resource plan will include plans for material and
equipment hire if required and at what point in the project these will be needed.

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Project Human Resource Management can be broken down into four processes:
 Developing the Human Resource Plan – this is part of project planning phase
 Acquiring the Project Team - part of Project Execution Phase
 Developing the Project Team – part of Project Execution Phase
 Managing the Project Team – part of Project Execution Phase

Human resources planning is concerned with identifying and documenting project roles, responsibilities, and
reporting relationships, as well as creating the staffing management plan. Key outputs produced as part of project
human resource management planning include a project organisational chart, responsibility assignment matrix,
resource histogram, and a staffing management plan.

5.7.1 Resource Histograms

A resource histogram is a column chart that shows the number of resources required for or assigned to a
particular project over time. In planning project staffing needs, senior managers often create a resource histogram
in which columns represent the number of people needed in each skill category. By stacking the columns, you
can see the total number of people needed each month.

After resources are assigned to a project, you can view a resource histogram for each person to see how his/her
time has been allocated.

13Figure 5.5 Resource Histogram

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5.7.2 The Human Resource Management Plan

It is a component of the project management plan, providing guidance on how project human resources should
be defined, staffed, managed, and eventually released. The human resource management plan includes, but is
not limited to, the following:

 Roles and responsibilities.

The following should be addressed when listing the roles and responsibilities needed to complete a project:
Role. The function assumed by or assigned to a person in the project.
Authority. The right to use project resources, make conclusions, sign approvals, accept deliverables, and
influence others to carry out the work of the project.
Responsibility. The assigned duties and work that a project team member is expected to perform in order to
complete the project’s activities.
Competency. The skill and capacity required to complete assigned activities within the project constraints.

 Project organisation charts

A project organisation chart is a graphic display of project team members and their reporting relationships. It can
be formal or informal, highly detailed or broadly framed, based on the needs of the project.

 Staffing management plan

The staffing management plan is a component of the human resource management plan that describes when
and how project team members will be acquired and how long they will be needed. It describes how human
resource requirements will be met. The staffing management plan can be formal or informal, highly detailed, or
broadly framed, depending upon the needs of the project.

5.7.3 Establishing the Project Management Office (PMO)

The Project Management Office (PMO) version puts the project office in charge of all projects, whereby
responsibility is transferred for resource assignment, recruiting, developing project managers, project selection
and prioritisation, alignment with strategies, methodology, accountability for all projects, human process change
management, and coordination of all project activities (Xiaoyi & Wells, 2004). According to Englund, Graham and
Dinsmore (2003 :) the project office is the “linchpin for implementing and maintaining a project approach across
the organisation”. The project office facilitates project-based approaches and contributes by ensuring that
projects are performed within procedures, and are in line with organisational strategies (Gareis & Huemann,
2000).

According to PMI (2017), a Project Management Office (PMO) is a management structure that standardises the
project-related governance processes and facilitates the sharing of resources, methodologies, tools, and

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techniques. The responsibilities of a PMO can range from providing project management support functions to
actually being responsible for the direct management of one or more projects.
A PMO provides the administrative and management support to projects within policy programmes. Its main
function is to coordinate all projects with the strategic plan of the institution. As such, the PMO is the champion
for project success, but it needs to be continuously updated as new projects emerge in the institution. Project
managers need to work with the PMO to ensure proper governance is in place.

It should assist senior management with the prioritisation of projects, focus projects on strategic objectives, and
assist in institutional resource allocation (Crawford, 2006:76).

According to PMI (2017), there are several types of PMO structures in organisations, each varying in the degree
of control and influence they have on projects within the organisation, such as:
 Supportive. Supportive PMOs provide a consultative role to projects by supplying templates, best
practices, training, access to information and lessons learned from other projects. This type of PMO
serves as a project repository. The degree of control provided by the PMO is low
 Controlling. Controlling PMOs provide support and require compliance through various means.
Compliance may involve adopting project management frameworks or methodologies, using specific
templates, forms and tools, or conformance to governance. The degree of control provided by the PMO
is moderate
 Directive. Directive PMOs take control of the projects by directly managing the projects. The degree
of control provided by the PMO is high

Activity 4
Identify and explain the primary functions of a PMO

5.8 Project Communications Management

It is normally said that project managers spend about 90 percent of their time on a project communicating. This
indicates that project communications management is one of the critical areas during a project and therefore, the
project manager should take the time to plan for it thoroughly. Yet most of the challenges faced in projects are
as a result of communication breakdown, information not reaching the intended destination, information being
filtered and the message getting lost on the way.

Project Communication has the following processes:

 Identifying stakeholders – part of Project Initiation
 Communication planning – discussed in this chapter

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 Distributing information – part of Project Execution

 Manage Stakeholders Expectations – part of Project Execution
 Reporting Performance – part of Monitoring and Control

5.8.1 Communications Management Plan

The communications management plan is a guiding document, which provides communication channels, what
to communicate, with whom, and how is it going to be communicated among other things.
The communications management plan provides the following:
 Stakeholder communications requirements
 Information to be communicated, including format, content, and level of detail.
 Person responsible for communicating the information
 Person or group who will receive the information
 Methods or technologies used to convey the information, such as memoranda, e-mail, and/or press
releases
 Frequency of the communication, such as daily, weekly, monthly and so on

Think Point 5
Why is it necessary to determine the frequency of communication?

Activity 5
Identify a project of your choice and compile a communication plan for the
project.

5.9 Project Risk Management

Project risk management is one of the areas normally ignored by many project managers and yet it is one of the
most important areas to analyse. It is reported that at the early stages of a project, risks are high because of the
high uncertainty and low confidence that the project has. As the project progresses and the project’s product is
delivered, the level of uncertainty is reduced and the confidence among stakeholders is improved, thus reducing
the risk. By the time the project is completed and handed over the project risk is almost none. To reduce the
project risk, the project team needs to understand the risks that the project is exposed to so that they can be
analysed and a contingency plan developed to increase the probability of success.

Project Risk Management involves the following processes:

 Risk Identification Process

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The risk identification process must be comprehensive, as risks that have not been identified cannot be assessed,
and their emergence at a later time may threaten the success of the project and cause unpleasant surprises. The
process should be structured using the key elements to examine risks systematically, in each area of the project
to be addressed.
A number of techniques can be used for risk identification, but brainstorming is a preferred method because of
its flexibility and capability. It allows one to collect a wide range of risks. Information used in the risk identification
process may include historical data, theoretical analysis, empirical data and analysis, informed opinions of the
project team and other experts, and the concerns of stakeholders.

 Performing Qualitative risk analysis

Qualitative Risk Analysis includes the methods for prioritising the identified risks for further action. It also
assesses the priority of the identified risk using the probability of occurring, and the severity of the risk should it
occur. It also looks at other factors like the impact the identified risk will have on the schedule, cost, scope and
quality (PMBOK, 2004).

 Performing Quantitative risk analysis

This analysis is performed after the qualitative risk analysis. In quantitative risk analysis, the effect of the overall
project objectives of identified risk is numerically analysed. It is performed on risks that have been prioritised in
the qualitative risk analysis process as potentially and substantially impacting the projects competing demands
(PMBOK, 2004). Having identified, quantified and prioritised the risk, a risk response plan would need to be
developed.

 Risk Response Planning

In risk response planning, options and actions to enhance opportunities and to reduce threats to project objectives
are developed. It also includes the identification and assignment of one or more persons to take responsibility for
each agreed to and funded risk response. There are a range of responses which should be developed in advance
during the planning phase:
 Eliminate the risk
 This should be the initial consideration when dealing with the risk. Look into ways of avoiding the risk
completely by removing the cause or taking an alternate action.
 Mitigate the risk
 The word mitigate means to minimise or reduce. To reduce the risk’s probability one could develop
prototypes, simulate or conduct model testing.

 Deflect the risk

This is where the risk is transferred in part or whole to another party. This can be achieved by:
 Contracting: Here the risk is moved away from the client and onto the contractor or supplier

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 Retention: The client retains a percentage of the contractor’s income against the contractor failing to
complete the contractual obligation
 Performance bonds: Contractors often offer their clients a performance bond through a bank. The bond
could be held against lack of performance or poor work quality
 Insurance: A third party accepts the insurable risk in exchange for the payment of a premium

 Accept the risk

The consequence of the risk occurring is accepted but a contingency plan is developed to protect the organisation
from the risk event happening. It is also termed self-insurance. A contingency plan defines actions you take ahead
of time. An example would be if your backed up files in the office gets damaged, you would keep a separate set
of files offsite.

 Control Risks
The process of instigating risk response strategies, tracking known risks, monitoring residual risks, identifying
new risks, and evaluating risk process effectiveness throughout the project.

5.9.1 Risk Management Plan

The risk management plan describes how risk management will be structured and performed on the project. The
risk management plan includes the following:
 Methodology. Defines the approaches, tools, and data sources that may be used to perform risk
management on the project
 Roles and responsibilities. Define the lead, support, and risk management team
 Budgeting. Assigns resources and estimates costs needed for risk management for inclusion in the
project cost baseline
 Timing. Defines when and how often the risk management process will be performed throughout the
project life cycle
 Risk categories. Provides a structure that ensures a comprehensive process of systematically
identifying risk to a consistent level of detail and contributes to the effectiveness and quality of risk
identification
 Definition of risk probability. This also needs to be explained

Activity 6
Identify a project of your choice and discuss the methods you can use to deflect
risk

Read the following Article and answer the questions that follow

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Case Study 2
Case Studies will give you an opportunity to apply theory to practice.
The use of biometrics is set to go mainstream in South Africa, as Home
Affairs local banks roll out major identification projects. But not all biometrics
technologies are equal, and some may ‘come back to bite’ the enterprises
rolling them out, warns Marius Coetzee, CEO of South African Identity
management experts Ideco.
“Biometrics certainly presents a compelling use case across fraud and risk
management, security and access control, so major enterprises are looking
to harness biometrics in a broader way,” he says. “But it’s important that the
appropriate sensors are used, backed by the right algorithms, or risk can
actually be increased.”

There are a number of key fingerprint sensors in the market today, with use
cases and some pros and cons around most of them, he explains:

Capacitive sensors, which in some markets are appropriate and fit for use.
However, South Africa’s environment is conducive to creating static
electricity, which can quickly blow the sensor.

Optical sensors, which typically use light to illuminate the fingerprint tip and
so read light and dark areas, are which are more appropriate to South African
conditions, can be categorised by:
 A unique, patented Light Emitting Sensor technology certified by the FBI
and manufactured primarily for use in criminal investigations, civil
applications and embedded solutions such as Ideco’s BIMS terminal
 True Reflective Imaging (TRI) delivering crisp, good quality images with
obvious contrast. Most fingerprint identification systems will be able to
easily assign the matching points on these images with a high level of
accuracy, especially when the technology is certified by the FBI for its
image quality
 Multi-Spectral Imaging (MSI) designed to use various wavelengths of
light during fingerprint capture. This allows the scanner to both read the
fingerprint surface information, as well as the sub-dermal information.
This technology claims the advantage of being capable of “seeing”
through dirt or moisture on the fingerprint. But collating information from

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multiple wavelengths lowers the resulting image quality and fails to

reach the minimum FBI certification.
Supporting the scanner technology is the algorithms ‘reading’ and
matching the fingerprint information. Advanced systems will correctly
match the fingerprint patterns, or minutiae, and identify the difference
between fingerprint minutiae and wear and cuts due to manual labour,
or wrinkles due to ageing.

While the new Home Affairs’ Automated Biometric Identification System

(ABIS) system will seamlessly process TRI sensors images, others in South
Africa are rolling out MSI scanners. Ideco Labs set out to compare the
accuracy of the two technologies and achieved the following results when
scanning the same fingerprint.

Coetzee explains: “The picture on the left was obtained using a conventional
True Reflective Imaging (TRI) fingerprint scanner. Any experienced
fingerprint expert will agree with me that this is a good quality print. The
fingerprint ridges, core and delta are clearly visible. The contrast is obvious
and even the sweat pores are noticeable. Most fingerprint identification
systems will be able to easily assign the matching points with a high level of
accuracy.

The picture on the right is of the same finger but was obtained using a Multi-
Spectral Imaging (MSI) scanner. Besides the obvious difference in capture
size, this image seems to be out of focus and smudged, with many artefacts.
In many areas the fingerprint ridges look inverted and all the crisp detail is
missing. One can even argue that there is another picture superimposed on
this image.”

He notes that research carried out by the University of Colorado at Colorado

Springs found that spatial processing of fingerprints (looking beyond the two-
dimensional surface image) will produce different artefacts on different
measurements. It is therefore impossible to produce a consistent image over
time and customers may have to be re-enrolled on a regular basis. “According
to a Senior Fingerprint Experts, with years of experience in the criminal justice
system, it would be impossible to use these fingerprint images as evidence
in a Court of Law,” says Coetzee.

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In addition, if the fingerprint images do not meet the international Image

Quality Standards there is a high risk of false acceptance or failing to identify
the person; while fingerprints obtained from these devices are not suitable for
processing against their criminal database as part of the criminal
investigation process.

With inadequate scanner technology and weak algorithms, the risks of fraud
and of criminals illegally accessing areas are increased, rather than
decreased. “We tested the strength of various algorithms and it’s frightening
to see how bad some are,” says Coetzee. “We’ve seen up to 25% false
minutiae added by flawed or weak algorithms.”
Source:https://www.itnewsafrica.com/2018/05/biometric-tech-being-
deployed-in-sa-could-prove-risky/

Case Study Questions

1. Discuss how the Department of Home Affairs can use the Risk
Management Plan for the Biometric Technology Project
2. Identify the different methods that the Department of Home Affairs can
use to respond to possible risks

Practical Application 3
Which of the activities on the network have free float and what is the total
slack of the overall project?

Activity Preceding Activity Duration (Days)

A -- 6
B -- 2
C A 6
D A 8
E B,D 9
F C 3
G C 6
H E,F,G 4

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5.10 Project procurement management

It includes the processes of purchase or acquire the products, services, or results needed from outside the project
team to perform the work. The project team needs to determine the project’s needs regarding acquiring of goods
so there is a need to develop a procurement strategy that will satisfy those project’s needs. Key outputs include
make or buy analysis, procurement management plans, requests for proposals or quotes, contract statements of
work, and supplier evaluation matrices.
The processes in procurement management include:
 Procurement planning
 Conducting procurement
 Administrating procurement
 Closing procurement

The first three processes are part of project planning and the last process is part of project closure phase.

5.10.1 Procurement Management Plan

A procurement management plan is a document that describes how the procurement processes will be managed,
from developing documentation for making outside purchases or acquisitions, to contract closure.
The procurement management plan should include:
 Guidelines on types of contracts to be used in different situations
 Standard procurement documents or templates to be used, if applicable
 Guidelines for creating contract Work Breakdown Structures, Statements of Work, and other
procurements documents
 Roles and responsibilities of the project team and related departments, such as the purchasing or legal
department

5.10.2 Types of Contracts

Different types of contracts are used for different types of projects and purchases. The type of contract used and
the specific contract terms and conditions set the degree of risk being assumed by both the buyer and seller. The
three main categories of contracts are as follows:
 Fixed price or lump sum contracts
These contracts involve a fixed total price for a well-defined product or service. The assumption is that once the
price has been fixed, it cannot be changed except on customer goodwill

 Cost-reimbursable contracts
Cost-reimbursable contracts involve payments to the seller for direct and indirect actual costs

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 Time and material contracts

Time and material contracts are a hybrid type of contractual arrangement that contains aspects of both cost-
reimbursable and fixed-price type arrangements. These types of contracts resemble cost-reimbursable type
arrangements in that they are open ended

Think Point 6
What type of contract can you use when there is no uncertainty in the scope of
work?

5.11 Project Stakeholder Management

Stakeholders play an important role in determining the success and failure of a project. Getting stakeholders
involved in the project right from the beginning is crucial because they are the ones who decide on what changes
are to be made to meet their requirements. If the project manager fails to involve them at the initial stage, the
changes set forth by the stakeholders at a later stage will hamper the quality and value of the project.
The four process involved in Project Stakeholder Management:
 Identifying Stakeholders
 Plan Stakeholder Engagement
 Manage Stakeholder Engagement
 Monitor Stakeholder Engagement

5.12 Summary
In this unit, the project management knowledge areas were covered.

Revision Question 5
Discuss the importance of the following.
 Project charter
 Project kick-off meeting
 Project Scope statement

Case Study
Case Studies will give you an opportunity to apply theory to practice.

Read the following Article (Fact Sheet) and answer the question that follow.

Medupi Power Station Project

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Fact Sheet: February 2014

Medupi is a greenfield coal-fired power plant project located west of Lephalale, Limpopo
Province, South Africa. Medupi is the fourth dry-cooled, baseload station built in 20 years by
Eskom after Kendal, Majuba and Matimba power stations. The name “Medupi” is a Sepedi
word which means “rain that soaks parched lands, giving economic relief”.

The power station will be the fourth largest coal plant in the southern hemisphere, and will
be the biggest dry-cooled power station in the world. The boiler and turbine contracts for
Medupi are the largest contracts that Eskom has ever signed in its 90-year history. The
planned operational life of the station is 50 years.

Why in Lephalale?
Eskom undertook screening and feasibility studies in order to determine the most viable plant
location option for Medupi power station. Assessment criteria included:
 Availability and accessibility of primary resources, such as water and coal
 Ability of the new power station to connect to the existing Eskom network/grid
 Environmental acceptability
 Cost of production

Eskom ranked the Waterberg Coalfields and the Lephalale area in the vicinity of the existing
Matimba Power station as the most favourable option for the establishment of a new coal-
fired power station due to inter alia:
 Land availability in close proximity to the primary coal source
 Properties of coal in the area are well known due to the experience acquired
through the existing matimba power station
 Competitive coal prices
 Low environmental impact on the chosen site

Technical Information
The new power station will comprise of six units with a gross nominal capacity of 800MW
each, resulting in a total capacity of 4 800 MW. Construction activities commenced in May
2007, with the first of the six units of the power plant planned for first power by the end of
2014.

In an effort to improve efficiency of the station, supercritical boilers and turbines will be
installed. These operate at higher temperatures and pressures than Eskom’s other stations.
This baseload station will also use direct dry-cooling due to the water scarcity in the area.

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Interesting facts
 More steel is used than the world’s tallest building (the Burj in Dubai) - some 20 200
tons of structural steel was used for the Unit 6 boiler construction. The overall
forecast is 120 000 tons of structural steel for all six units
 The project uses enough concrete to build four Green Point Stadiums. Parts and
cement weighing the same as seven super tankers that need to be transported over
land – the total distance to transport materials to site is equivalent to 20 times around
the world. In excess of 1.2 million m3 of concrete has been placed on site by October
2013. Medupi also has the largest concrete batching facility in South Africa
 The Medupi boiler house will stand approximately 130 meters in height, equivalent
to Sandton City
 Job creation is expected to peak at 17 000 direct jobs during construction
 The town of Lephalale’s gross domestic product has increased by about 95% per
year as a result of the construction activities
 The power station will directly grow SA’s GDP by approximately 0.35% per year.
 About 50% of the project cost is committed and spent locally
 22 340 meals are prepared and served daily
 The 800-ton crane used in the boiler construction area has a boom that can reach
140 m; which is higher than the Sandton City Tower
 The highest point on site is the top of the chimney – 220 m
 Improved environmental performance due to air-cooled condensors, lower water
usage, air bag filters, low NO2 burners and supercritical boilers

The uniqueness of this project lies in the fact that Medupi is being built backwards -
traditionally Eskom has always started building Unit 1 and ended with Unit 6. This new
approach is the result of the rock conglomeration on the southern side which is excavated
and reused as the engineering fill on the northern side.

Construction milestones
The environmental impact assessment for this station was undertaken and a positive record
of decision was issued by the Department of Environmental Affairs and Tourism in 2006. The
Minister of Environmental Affairs and Tourism considered the appeals lodged against the
decision, and confirmed the positive record of decision at the beginning of May 2007.

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The official sod-turning ceremony was held at the construction site on 14 August 2007. The
then Minister of Public Enterprises, Mr Alec Erwin, and the Premier of Limpopo Province, Mr
Sello Moloto, were in attendance.
Medupi terracing work done by Roshcon commenced in May 2007. The Medupi first civil
concrete pouring took place on 18 July 2008. The first air cooled condenser concrete slip
forming started on 31 October 2008.
First structural concrete poured on site – 18 July 2008.
 First three air-cooled condenser columns completed – 21 November 2008
 Unit 6 boiler lift shaft completed – August 2009
 First structural steel erection on Unit 6 boiler – 9 February 2010
 First chimney completed at a height of 220m – 12 August 2010
 Unit 6 generator stator in position – 23 June 2010
 Unit 6 turbine table handed over – 7 February 2011
 The 10 000-ton coal silo complete – 8 September 2011
 Auxiliary boiler complete – 21 November 2011
 Direct-current supplies energised – 10 February 2012
 The project commenced the first 24-hour performance testing to run at maximum
 Capacity for the delivery of coal to Medupi from the Grootegeluk mine - 27
November 2012

 September 2013: The Unit 4 generator motor was threaded into the stator. This action
requires precision as the clearance is only a few millimeters. All stationary equipment
between the rotor and the stator can now be fitted and the generator coupled to the LP2
rotor

 September 2013: The wet run of the submerged scraper conveyer was successfully
completed. This system removes the ash from the bottom of the boiler – another
essential step in getting the boiler ready for first fire

 January 2014: The boiler separators which were initially installed for Unit 6 have
successfully been cut out. The new replacement separators will now be installed. The
purpose of the separators is to separate the steam and steam water droplets.

 February 2014: Following close co-operation between Team Medupi and the
contractors all boiler issues have been resolved, which allowed for the installation of the
Boiler Frame for Unit 1 to commence.

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 10 February 2014: back energising of Unit 6 generator and Unit Transformers via
the distributed control system

Environmental facts
The site was formerly the farm Naauw Ontkomen and was bought from Kumba Coal (Pty)
Ltd - now known as Exxaro Coal (Pty) Ltd. The site measures 883 hectares and was
previously used for peanut crops, game and cattle grazing.

A thorough environmental approach was followed from the start of construction in

2007.During the clearing of the site many environmental factors were highlighted. A visual
beacon on the site was a baobab tree which is believed to be a few hundred years old. The
team immediately made plans to preserve this beautiful tree. A lengthy process was put in
place to relocate it and plant it where the entrance to the power station would ultimately be.
It was pruned before moving, including a 10-day preparation for transplanting. The aim was
to keep the tree as a 3-stem unit for aesthetic purposes. This involved cranes and a truck
being employed to move the tree and replant it, under the guidance of a tree expert. On 23
July 2011 a second baobab tree was relocated from the ash dump area to the main entrance
area.

Apart from this baobab, many nationally and provincially protected trees were either
replanted or transported to a special nursery at the adjacent Matimba power station. This
included species such as camel thorns, shepherd’s trees, leadwoods, tamboti and marulas.

Not only trees are being cared for but some game as well. Some 30 to 40 animals have been
relocated to an Eskom game reserve close by during the site clearance and approximately
50 remain which will be managed as part of the ecosystem after construction is complete.

There is also a programme to catch and relocate all snakes, reptiles and problem animals
found on site by a local professional snake catcher, including educational talks with caught
snakes to workers. 1 293 reptiles have been removed from site since 2007, which includes:
rock-and water monitors, tortoises, terrapins, chameleons, scorpions, venomous and non-
venomous snakes, baboon spiders Augacephalus junodi and burst horned baboon spiders
Ceratogyrus darlingi, and serval (Leptailurus serval).

The clearing of such a huge area involves massive amounts of vegetation and topsoil. This
was preserved and used for rehabilitation of the existing Matimba power station ash dump
as well as at the Rhino Dump at the Grootegeluk mine.

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Medupi aspires to the highest possible standards of environmental performance its

Environmental Management System is certified to the ISO 14001 standard. This transcends
aspects from conservation to mundane matters such as visual impacts and dust monitoring.
To further empower construction personnel to world class performance; the Medupi Power
Station is interrogated by a series of independent external and internal audit processes and
is visited regularly by the Department of Environmental Affairs Environmental Management
inspectors, better known as the “Green Scorpions”. These provide an objective overview of
current performance and areas of improvement.

In addition to being one of the first coal-fired stations in the Eskom fleet to deploy supercritical
technology, Medupi will also be one of the first to include abatement technology such as flue
gas desulphurisation which will reduce SO2 emissions by over 90%. It will also include pulse
jet fabric filters, which will remove approximately 99% of particulate matter, and low NOx
burners. All of this will reduce the environmental impact of its air quality emissions as well as
result in the reduction of coal used per MWh produced. Medupi will similarly be the first power
station in the fleet to implement lining for its ash dams.

One of the conditions of the Record of Decision was for the Project to establish an
independent Environmental Monitoring Committee which continuously oversees the projects
compliance to and implementation of environmental conditions. This committee consists of
an independent chairperson, members of the local community, Eskom, the Environmental
Control Officer (ECO), an ecologist and the co-ordinator of the Lephalale Development
Forum. The ECO is based permanently on site and reports to the EMC and government
authorities while the EMC meet at a minimum every quarter to review and report on progress.

Social and economic impacts

Since the beginning of the Medupi Project in August 2007, the project has invested a total of
R2.3 billion in infrastructure in Lephalale. To date, Eskom has built 995 houses and bought
321 in the Lephalale area. The contractor villages can house 6 715 workers.

Eskom invested R11.5 million in the upgrading of the initial 2.2 km of the D1675 road leading
to the project site. Eskom and Exxaro invested R180 million in the construction of the
Kuipersbult road and the expansion of Nelson Mandela road. This investment confirms the
commitment that Eskom has made to ensure the safety of its employees and contractors, as
well as the community at large.

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Eskom has also put in place a Medupi Information Centre in Lephalale, and this facility is
serviced by staff, including five information officers, from the various traditional areas.
Satellite information offices have been established at three traditional council and two civic
structure areas. This centre serves as a first point of contact that disseminates project
information to various stakeholders, including, but not limited to, suppliers, local media, and
the public, in general. Further initiatives are planned to continue Eskom’s social investment
in the community for the duration of the project.

Financial support was provided towards the town’s electricity, sewerage, and police facilities.
This included a donation of R10 million towards the upgrading of the electricity infrastructure
through the supply and installation of 10 MVA transformers to deal with the short-term
capacity constraint in the town. Secondly, R31 million was invested to upgrade the Paarl
sewerage treatment plant. This ensured the reinstatement of the sprinkler system at the
Marapong oxidation ponds (Marapong Sewerage Plant).

Support was provided to wellness clinics and medical equipment to the value of R3.8 million
was provided to clinics in Ga-Seleka, Fox Odendaal, Marapong, Shongoane, Abbortspoort,
Steenbokpan, and Onverwacht Clinics. Eskom also donated wheelchairs and HIV/Aids care
kits to the Marapong HIV/Aids Care Group. Furthermore, Eskom made a donation of six
mobile classrooms and payment of six teachers’ salaries at local schools for a period of 24
months. Ten desktop computers were donated to the local high school.
To date, a total of 1 296 houses have been built in the town at a cost of more than R1 billion.
The Marapong Contractors’ Village currently has:
 170 beds for semi-skilled labour; and
 49 houses (four-bedroomed) for artisans
 170 staff meals are prepared and served at breakfast and dinner time daily at the
village, and 14 500 lunch packs are prepared and served on site in the dining halls

Skills development (as of the end of February 2012)

Beneficiaries from trade-related training (basic trade to tertiary education) since the inception
of the project:
 Completed training – 233
 In training – 368
 Contracted end target – approximately 2000
 1 542 learners from 26 local high schools visited Medupi as part of the Education
Awareness Programme

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 Successful completion of enhanced business skills programme of 28 contractors at

the Contractors’ Training Academy. The second intake is in progress

Local procurement
Eskom and its contractors have placed contracts to the value of approximately R2.1 billion
with Lephalale and Waterberg district-based suppliers since the commencement of the
project. In this regard, Eskom alone has a procurement expenditure of R202 million, and
approximately 70% of this has been placed with black-women-owned (BWO) suppliers. In
addition, Eskom has placed a R500 million feeding contract with Lephalale Site Services, a
Moon cloud and Fedics joint venture company.

Source:http://www.eskom.co.za/Whatweredoing/NewBuild/
MedupiPowerStation/Pages/Medupi_Power_Station_Project.aspx

Question 1
1.1. Identify the following attributes for the Medupi Power Project
a. Established Project Objective
b. Specified Project Lifespan or Time frame
c. Project deliverable
1.2. Identify the stakeholders involved in the Medupi Power Project
1.3. Briefly discuss the critical success factors for the Medupi Power Project
1.4. Identify the possible risks Eskom could face during the Medupi Power Project and
discuss how they can manage them

Question 2
Use the information in the table below and answer the questions that follow:

2.1 Construct an AON network for the activities of this contract

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2.2 Calculate the duration of all possible paths on the network diagram
2.3 Identify the critical path and state its duration
2.4 Draw a Gantt chart for the activities of this contract assuming the project starts on the
1st of March 2019

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Answers to activities
Video Activity 1
Watch an Overview of the 10 Project Management Body of Knowledge (PMBoK) Knowledge Areas of Project
Management on
https://www.youtube.com/watch?v=H_FX0uYUtdo
Questions
Make use of examples to briefly discuss and demonstrate your understanding of all the 10 Project Management
Knowledge Areas.
Suggested Answer
1. Project Integration Management
It is the knowledge area which contains the tasks that withhold the overall project together and integrates the
project into a unified whole. This particular knowledge area touches the five phases of the project - Initiation,
Planning, Execution, Monitoring and Controlling, and Closing. Starting from scheduling tasks, purchasing tasks,
replacing team members, addressing risks, and re-scheduling tasks everything is covered under this particular
phase.
The Project Integration Management has seven processes included in it which are:
 Develop Project Charter
 Develop Project Management Plan
 Direct and Manage Project Work
 Manage Project Knowledge
 Monitor and Control Project Work
 Perform Integrated Change Control
 Close Project or Phase

2. Project Scope Management

Project Scope Management involves the project scope, that is, the work that is included in the project. The process
is all about making sure that everyone concerned with the project is clear about what the project is aimed at and
what it includes. Scope changes and alters mostly the project itself, so it is essential that the project boundaries
are well defined from the beginning and are carefully monitored. Changes can occur at any point of time, but even
the simplest of change can have a lasting result in the outcome of the project.

The Project Scope Management includes six processes:

 Plan Scope Management
 Collect Requirements
 Define Scope
 Create WBS
 Validate Scope

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 Control Scope

3. Project Schedule Management

Project Schedule Management is a process which refers to how the project manager manages his schedule for a
particular project. It includes the time that is catered to complete each individual tasks pertaining to the project’s
objectives with the desired skills, tools, and techniques. In order to become a successful project manager one has
to clearly understand the activities of the project and should possess the necessary skills to plan, schedule, and
control a project within its timeline. Apart from these skills, one must also be able to utilise schedule management
tools to help them analyse, measure, and assess their time management techniques.
There are six important processes in project schedule management, and they are:
 Plan Schedule Management
 Define Activities
 Sequence Activities
 Estimate Activity Duration
 Develop Schedule
 Control Schedule

4. Project Cost Management

Project Cost Management is the process that is concerned with planning and controlling the budget of the project.
This process includes activities such as planning, budgeting, estimating, financing, funding, managing, and
monitoring costs to make sure that the project is finished within the scheduled budget. It's all about handling the
project's financial requirement. This phase covers and tracks the project's total expenditure against the actual
budget to make sure that the project is moving on track and within the fixed budget.
The Project Cost Management Process are:
 Plan Cost Management
 Estimate Costs
 Determine Budget
 Control Costs

5. Project Quality Management

Project Quality Management is the main criteria when it comes to determining the value of a project. The project
at all times is required to meet the standards which were originally defined for it. The bottom-line is that the quality
of the project has to meet the needs of the stakeholders.
This Project Quality Management Knowledge Area covers three processes:
 Plan quality management
 Manage Quality
 Control Quality

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6. Project Resource Management

In this method, it’s all about how the project manager runs the project team. Firstly, he has to understand as to
what resources (people, equipment, facilities, funding) are required to complete the project at hand and then
organise a team to execute the work involved. This method mainly concentrates on how the project is carried out
utilising the desired resources to complete a project activity.
The processes included in this knowledge area are:
 Plan Resource Management
 Estimate Activity Resources
 Acquire Resources
 Develop Team
 Manage Team
 Control Resources

7. Project Communications Management

As the name suggests it is mostly about communication. 80% of the project manager's job is to do with
communication. Project communication is what keeps all the team members on the same page, if there exists a
gap in the communication level, the project can have a negative impact on the final product of the project.
Communication has to take place between the project manager, his team members, and the stakeholders involved
in the project.

This knowledge area also includes three processes:

 Plan Communications Management
 Manage Communications
 Monitor Communications

There should be planning to determine what information needs to be communicated to all stakeholders involved in
the project. This particular information must be readily available to the stakeholders and generated in a timely
fashion. The performance of the project must be accounted for by reporting the status of the project, measuring
and forecasting the project. Effective communication must be carried out through the stakeholders so that all the
requirements are met, and the existing issues are promptly resolved.

8. Project Risk Management

Initially in the Project Risk Management process the project manager should conduct risk management work, and
then identify and analyse risks, later he/she should develop risk response plan, which will control risks on an
ongoing basis. These methods are introduced one-by-one to understand and assess the risks related to the project.
It all depends on how one performs quantitative and qualitative risk assessments.

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There are seven project management processes involved in the Risk Management Knowledge Area:
 Plan Risk Management
 Identify Risks
 Perform Qualitative Risk Analysis
 Perform Quantitative Risk Analysis
 Plan Risk Responses
 Implement Risk Responses
 Monitor Risks

9. Project Procurement Management

Procurement management process isn't something that the project manager has to do on all projects, but it is quite
common. This knowledge area relates to the process of purchasing or acquiring products, services, or results from
outside the project team. This project knowledge area keeps track of all the project procurement and supplier work
starting from planning on what needs to be bought, to get involved in the surrendering and acquiring process to
executing the task of the supplier and closing the contract when the project is finished.
Project Procurement Management processes include the following:
 Plan Procurement Management
 Conduct Procurements
 Control Procurements

10. Project Stakeholder Management

This is the last knowledge area in the PMBOK 6th edition. Stakeholders play an important role in determining the
success and failure of a project. Getting stakeholders involved in the project right from the beginning is crucial
because they are the ones who decide on what changes are to be made to meet their requirements. If the project
manager fails to involve them at the initial stage, the changes set forth by the stakeholders at a later stage will
hamper the quality and value of the project.
The four process involved in Project Stakeholder Management:
 Identifying Stakeholders
 Plan Stakeholder Engagement
 Manage Stakeholder Engagement
 Monitor Stakeholder Engagement

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Knowledge Check Question 1

What is the purpose and importance of categorising risks?
Suggested Answer
 To determine the areas of the project that are the most exposed to the effects of risks or uncertainties
 To provides a systemic and structured approach in identifying the risks to a consistent level
 Another benefit is that it provides better management focus in identifying a wide range of risks
 It also helps the risk assessment by conducting meetings with participants to work with a specific risk
category

Knowledge Check Question 2

Refers to gradual changes in project scope that occur without a formal scope change procedure.
Fill in the missing term in the above statement.
Suggested Answer
Scope creep

Knowledge Check Question 3

Suggested Answer
Define the following:
 Project plan
Project plan is a document formally approved by the project manager, sponsor, and other stakeholders which
states the approved cost, schedule, and scope baselines. It guides project execution, control, and quality and
performance assessment. The project plan also forms the basis for communication between parties involved in a
project. Project plans can vary in their levels of detail.

 Project planning
Project planning is the planning of everything concerning the project, the achievement of goals, plan of action,
procurement requirements, HRM, meeting of quality standards etc. this is usually the longest phase of the project
management life cycle. It involves determining cost, schedule, and scope baselines and using these to create a
detailed roadmap for executing project activities and producing deliverables.

 Project scope statement

A project scope statement details what a project is meant to achieve and describes the deliverables expected. It
forms the basis of measurable objectives by which the success of a project will be assessed. Project scope
statements are typically part of project plans.

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Practical Application 1
 With your understanding of network diagrams, consider the following information and draw a network
diagram for this project
 Identify the critical path of the network and state the project duration
 Which of the activities on the network have free float and what is the total slack of the overall project?

Activity Preceding Activity Duration (Days)

A --- 6

B --- 2

C A 6

D A 8

E B,D 9

F C 3

G C 6

H E,F,G 4

Suggested Answer
12 F 15
20 3 23
5 5
6 C 12 12 G 18
11 6 17 17 6 23
F
S 0 0 0 i
t
0 A 6 6 D 14 23 H 27 n
a
0 6 6 6 8 14 23 4 27 i
r
s
t
h

12 0
0 B 2 14 E 23
12 2 14 14 9 23

Critical path on the network diagram

ADEH which is 6 + 8 + 9 + 4 = 27

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Activity 1
Benefits of Gantt chart
 The chart presentation is easy to assimilate
 It displays activity progress very simply and clearly
 The activity float is easier to comprehend when actually displayed using a Gantt chart
 A scheduled Gantt chart is a prerequisite for forecasting the procurement schedule and the cash flow
statement
 The revised Gantt chart is an excellent management tool
 It can be used to communicate and disseminate schedule information
 It is a key document for the management decision-making function (Burke, 2009:176)

Activity 2

Burst Activities – B, C, D
Merge Activities – E, G, H

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Activity 3

A-B-E-H = 70

A-B-F-G-H = 235

A-C-E-H = 65
A-C-F-G-H = 230
A-D-F-G-H = 225

Critical Path = A-B-F-G-H

Activity 4
A primary function of a PMO is to support project managers in a variety of ways which may include, but are not
limited to:
 Managing common resources across all projects administered by the PMO
 Categorising and developing project management procedure, best practices, and standards
 Coaching, mentoring, training, and oversight
 Monitoring compliance with project management standards, policies, procedures, and templates by
means of project audits
 Developing and managing project policies, procedures, templates, and other shared documentation
(organisational process assets); and
 Coordinating communication across projects

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Activity 5
 Deflect the risk
This is where the risk is transferred in part or whole to another party. This can be achieved by:
 Contracting: Here the risk is moved away from the client and onto the contractor or supplier
 Retention: The client retains a percentage of the contractor’s income against the contractor failing to
complete the contractual obligation
 Performance bonds: Contractors often offer their clients a performance bond through a bank. The
bond could be held against lack of performance or poor work quality
 Insurance: A third party accepts the insurable risk in exchange for the payment of a premium

Activity 6
Project Communication Plan

Think Point 1
A project charter refers to a document that authorises the project manager to initiate and lead the project. This
document is issued by upper management and provides the project manager with written authority to use
organisational resources for project activities
It is imperative that the project charter is signed-off by all the key stakeholders to signify its validity.

Video Activity 2
Student is required to apply their knowledge.

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Case Study 1
1. Student is required to apply their knowledge to the case study
2. Student is required to apply their knowledge to the case study
3. Student is required to apply their knowledge to the case study

Think Point 2
 Cost estimating involves the process of developing an approximation of the costs of the resources
needed to complete project activities
 Cost budgeting involves allocating cost estimates to activities over a period of time or project duration.
The activities are based on the WBS for the project and the main goal of the cost budgeting process is
to produce a cost baseline

Think Point 3
A good quality plan has the following attributes:
 It describes all the quality definitions and standards relevant to the project
 It highlights the standards that must be followed (regulatory requirements)
 It describes the circumstances that the services and materials must retain in order to satisfy the
requirements and expectations of the project stakeholders
 It describes the circumstances or conditions that make an output drop below quality standards, this
information is used to gain a collective understanding among the project team to help them classify what
is above and what is below a quality standard
 The quality plan also includes the process to safeguard that the quality standards are being followed by
all project staff
The plan also includes the compulsory steps to monitor and control quality and the authorisation process to make
changes to the quality standards and the quality plan

Think Point 4
Benchmarking ensures quality because it provides a standard by which to measure performance. In
benchmarking, a comparison is done between the actual and planned activities to those of other projects to
generate ideas for improvement.

Case Study 2
1. Student is required to apply their knowledge
2. Student is required to apply their knowledge

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Think Point 5
It is important to determine the frequency of the communication, as it determines the success of the project.
Frequency of communication can be daily, weekly, monthly and so on.

Think Point 6
Fixed price or lump sum contracts

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Answers to Revision Questions

Revision Question 1
Suggested Answer
Name 5 types of Projects and explain their characteristics. Provide an example for each type.

Type of Project Product of Project (Examples)

1. Administrative installing a new accounting system
2. Construction a building or road
4. Design of Plans architectural or engineering plans
6. Event or Relocation Olympiads or a move into a new building
7. Maintenance of Process Industries petro-chemical plant or electric generating station
8. New Product Development a new drug or aerospace/defence product
9. Research a feasibility study or investigating a chemical

Revision Question 2
Draw a life cycle of a project of your own choice. Illustrate the process groups of the project and discuss the
individual tasks that are undertaken in each of the process groups.
Suggested Answer

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The Initiation Phase: The initiation phase aims to define and authorise the project. The project manager takes the
given information and creates a Project Charter. The Project Charter authorises the project and documents the
primary requirements for the project. It includes information such as:
 Project’s purpose, vision, and mission
 Measurable objectives and success criteria
 Elaborated project description, conditions, and risks
 Name and authority of the project sponsor
 Concerned stakeholders

The Planning Phase: The purpose of this phase is to lay down a detailed strategy of how the project has to be
performed and how to make it a success.

Project Planning consists of two parts:

 Strategic Planning
 Implementation Planning

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In strategic planning, the overall approach to the project is developed. In implementation planning, the ways to
apply those decisions are sought.

The Execution Phase: In this phase, the decisions and activities defined during the planning phase are
implemented. During this phase, the project manager has to supervise the project and prevent any errors from
taking place. This process is also termed as monitoring and controlling. After satisfaction from the customer,
sponsor, and stakeholder’s end, he takes the process to the next step.

The Termination/close out Phase: This is the last phase of any project, and it marks the official closure of the
project.

Revision Question 3
Nondumiso (pty) Ltd wants to expand its business and the owner of the business is willing to invest R 10,00,000.
The investment is said to bring an inflow of R. 100,000 in first year, 250,000 in the second year, 350,000 in third
year, 265,000 in fourth year and 415,000 in fifth year. Assuming the discount rate to be 9%.
1. Calculate the NPV of this investment.
A graphic design company owner is presented with two project proposals of five year lives, the owner is not
quite certain about investing the R2000 initial investment that is required for both of these projects at a
discounted rate of 10%. Project A is promising to bring in R. 350 in the first year of the project, 800 in the
second year, 900 in the third year, another 750 in the fourth year and 200 in the firth year. Whereas, Project
B is promising to bring in R. 2180 in the first year of the project, 100 in the second year, another 100 in the
third year, 40 in the fourth year and 300 in the firth year
2. Calculate the NPV for each of the above project to and advise which project should be chosen by the
business owner

Recommend, with reasons, which project you would undertake (if either).

Suggested Answer
21.

Year Proposal x Discounted rate at 9% Present Value

1 1000000 0,917 917000

2 250000 0,841 210250

3 350000 0,772 270200

4 265000 0,708 187620

5 415000 0,641 266015

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 Project Management

Initial Inv. 1000000

Total 1851085

NPV = 851085

Revision Question 4
Consider a master’s research thesis as a project. Draw a life cycle for this project and discuss its 4 stages.
Student is required to apply and discuss the following 4 stages:
 The Initiation Phase
 The Planning Phase
 The Execution Phase
 The Termination/close out Phase

Revision Question 5
Discuss the importance of the following.

Suggested Answer
 Project charter
A project charter serves as an internal document and contract for the project team. It lays out the scope and
objectives of the project, and the roles and responsibilities of the project team members.

 Project kick-off meeting

Kick Off meetings are a critical point in the potential success of any project, not to mention that they set the tone
for all future project meetings. Some of your team may not have previously worked together, so a Kick Off meeting
is an opportunity to get everyone acquainted before work commences. It ensures everybody starts with the same
level of information and understanding of the project, something that a Team Meeting doesn’t quite grasp.

 Project Scope statement

Project Scope Statement is a document that is extremely important for the success of a project. The project
manager will develop the scope statement by processing the project charter. The project manager is responsible
for defining the scope of the project in this document, providing measurable goals.

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Reference List

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