BE COMPUTER ENGG.

SEM VIII

Lecture
On
Project Management
ILO 8021
By
Prof.Prasad D.Pulekar
Objectives:

1.To familiarize the students with the use of a structured

methodology/approach for each and every unique project
undertaken, including utilizing project management concepts,
tools and techniques.

2.To appraise the students with the project management life cycle
and make them knowledgeable about the various phases from
project initiation through closure
Outcomes:
Learner will be able to…

1. Apply selection criteria and select an appropriate project from

different options.
2 . Write work break down structure for a project and develop a
schedule based on it.
3 . Identify opportunities and threats to the project and decide an
approach to deal with them strategically.
4 . Use Earned value technique and determine & predict status of the
project.
5 . Capture lessons learned during project phases and document them
for future reference.
 Syllabus

Module Detailed Contents Hrs

1 Project Management Foundation: 5
Definition of a project, Project Vs Operations, Necessity of project
management, Triple constraints, Project life cycles (typical & atypical)
Project phases and stage gate process. Role of project manager,
Negotiations and resolving conflicts, Project management in various
organization structures, PM knowledge areas as per Project Management
Institute (PMI)
2 Initiating Projects: 6
How to get a project started, Selecting project strategically, Project
selection models (Numeric /Scoring Models and Non-numeric models),
Project portfolio process, Project sponsor and creating charter; Project
proposal. Effective project team, Stages of team development & growth
(forming, storming, norming &performing), team dynamics
3 Project Planning and Scheduling: 8
Work Breakdown structure (WBS) and linear responsibility chart,
Interface Co-ordination and concurrent engineering, Project cost
estimation and budgeting, Top down and bottoms up budgeting,
Networking and Scheduling techniques. PERT, CPM, GANTT chart,
Introduction to Project Management Information System (PMIS).
Module Detailed Contents Hrs
4 6
Planning Projects:
Crashing project time, Resource loading and levelling, Goldratt's critical chain, Project
Stakeholders and Communication plan

Risk Management in projects: Risk management planning, Risk identification and risk
register, Qualitative and quantitative risk assessment, Probability and impact matrix. Risk
response strategies for positive and negative risks

5 5.1Executing Projects: 8
Planning monitoring and controlling cycle, Information needs and reporting, engaging
with all stakeholders of the projects, Team management, communication and project
meetings
5.2 Monitoring and Controlling Projects:
Earned Value Management techniques for measuring value of work completed; Using
milestones for measurement; change requests and scope creep, Project audit
5.3 Project Contracting
Project procurement management, contracting and outsourcing,
6 6.1Project Leadership and Ethics: 6
Introduction to project leadership, ethics in projects, Multicultural and virtual projects
6.2Closing the Project:
Customer acceptance; Reasons of project termination, Various types of project
terminations (Extinction, Addition, Integration, Starvation), Process of project
termination, completing a final report; doing a lessons learned analysis; acknowledging
successes and failures; Project management templates and other
resources; Managing without authority; Areas of further study
 Assessment:

Internal Assessment for 20 marks:

Consisting Two Compulsory Class Tests
First test based on approximately 40% of contents and second test based on
remaining contents (approximately 40% but excluding contents covered in Test I)

End Semester Examination:

Weightage of each module in end semester examination will be proportional to
number of respective lecture hours mentioned in the curriculum.

1.Question paper will comprise of total six questions, each carrying 20 marks
2.Question 1 will be compulsory and should cover maximum contents of the
curriculum
3.Remaining questions will be mixed in nature (for example if Q.2 has part (a)
from module 3 then part (b) will be from any module other than module 3)
Only Four questions need to be solved
REFERENCES:

1)Project Management: A managerial approach, Jack Meredith &

Samuel
Mantel, 7thEdition, Wiley India

2) A Guide to the Project Management Body of Knowledge

(PMBOK® Guide), 5th Ed, Project Management Institute PA,
USA

3)Project Management,Gido Clements, Cengage Learning

4)Project Management,Gopalan, Wiley India

5)Project Management,Dennis Lock, 9th Edition, Gower Publishing

England
 Module No.2

❖Initiating Projects:

•How to get a project started,

•Selecting project strategically,
•Project selection models (Numeric /Scoring Models and Non-numeric models),
•Project portfolio process,
•Project sponsor and creating charter; Project proposal.
•Effective project team,
•Stages of team development & growth (forming, storming, norming &performing),
•team dynamics
❑Initiation Phase

Initiation is also referred to as the identification phase.

In this stage, the project manager defines the project’s objectives and authorizes the
information related to the project, which forms the base of the project.

The project manager is responsible for making the base strong by collecting and
analyzing as much information as possible in this stage.

In Initial Phase, Project Manager does the following things:

•Defines the purpose, vision, and mission of the project.

•Interprets the objectives and success criteria of the project.
•Does the scheduling of the task and defines the budget of the project.
•Looks at the availability of resources in the organization.
❑ How to get a project started
• The project initiation phase is the first phase within the project management
life cycle, as it involves starting up a new project.

• Within the initiation phase, the business problem or opportunity is

identified, a solution is defined, a project is formed, and a project team is
appointed to build and deliver the solution to the customer.

• Six key steps to follow for Project initiation,

• Create Business case
• Feasibility study
• Project Charter
• Team
• Project Office
• Review
 Steps to follow for Project initiation
1)Create Business case
Business case is a document describing the goals of the project and how to succeed it.
Documents elaborate on the company that spends on financial and technical and manpower's
of the projects. Business case documents help get approval from management for the project.

2)Feasibility study
Feasibility study is to find the project causes and identify its success. This study identifies the
top-level constraints and assumptions of the project and determines whether the project is
worthwhile or not.

3)Project Charter
Project charter describes how to create a structured project and how to execute it. It assists in
determining the scope/purpose, team members and potential project timeframe

4)Team
Find the people with right skill and experience to execute the process.

5)Project Office
Project office is the place where Project Manager, team members, clients can meet to guide the
project. Finding the right skilled candidate and assigning the roles and responsibilities based
on the project plans
6)Review.
Review the project at initiation phase is ensure that you made everything perfect.
❑ Selecting project strategically,

The Need For Strategic Project Selection

All organizations operate under limitations.

In an ideal situation, organizational leadership could initiate an unlimited

number of projects in order to create a multitude of outcome benefits.

Unfortunately, resources are limited.

Time, financing, human resources, material, and skills are just a few of the top
items on a long list of constrained organizational resources.

The constraints of the organization force choices in all areas of operation,

including project selection.

There simply isn’t enough of what is needed to go around and undertake every
potential project.
Because of these limitations, project selection needs to be approached in a
structured, strategic way.

The goal should be to select projects with the most benefit to the organization;
the greatest efficiency for the resources used.

Exactly what that means will be different for every organization.

It may even change depending on a given situation.

By having a number of different selection tools and techniques at our disposal,

we will be in a better position to select the best projects to undertake
 Selection of Strategic Projects

Strategic projects are large scale, complex, and require significant investments
and resources.

These projects aim at gaining long-term social and economic benefits.

Therefore, organizations focusing on strategic projects should use a consistent

approach that suits their strategy, capability, and long-term expectations.

Strategic projects can be categorized based on time, investments, sustainability, or

long-term business or social values.

These projects require significant investments and resources; therefore, their

alignment with the long-term organizational capability and sustainability
becomes very important.

Therefore, strategic projects are prioritized for immediate take-up or

holding, or cancellation
 Public-sector and private sector strategic projects

Regardless of whether projects are deployed using portfolio management or

program management, their prioritization becomes challenging, especially in
the public sector.

In public-sector strategic projects, national priorities over the long-term

become necessary;
therefore, project selection should also focus on operational sustainability.

On the other hand, strategic project selection in the private sector should
focus on survivability and capability improvements.

Such private sector projects can be for a new product line or a change in the
business model
❑ Project selection models (Numeric /Scoring Models and Non-numeric
models),

Project Selection

Project selection refers to the process of outlining and choosing the next
venture for a team.

Projects typically compete for resources, so you must consider the demands and
goals of each potential project and prioritize them accordingly.

Most organizations have several potential projects in the pipeline at any given
time.

Successful organizations create a standard process for comparing these projects

against each other to determine the next best fit.

The leaders of a company will often ultimately rank project priority, but a project
manager’s expertise is also often welcome in the selection process.
 Common Management Focus Areas in Project Selection

Management will often focus on criteria such as total budget and payback period,
availability of resources, and potentials for profit and growth.

Conversely, a project manager may understand factors like timeline management,

risks, and the success of past projects.
Project Selection Criteria

•Project manager should select only those projects that ensure returns in the near
future. This is because it helps in allocating the resources that aim at ensuring better
returns. Therefore, proper decision-making process is essential for the selection of the
project.

•While selecting a project, the following project selection criteria should be kept in
mind:

•Realism: The project selection model should consider all the risk factors such as the
cost and time that influence the decisions of a project manager. The model should
also explain the objectives of the project manager and the firm.

•Capability: The selection model should help the project manager take appropriate
decisions by considering the risk and constraints involved in the project. The
selection model should be capable of evaluating the future project proposals on
the basis of the expected returns of the project.
•Cost: The various costs associated with the right project selection model should be
kept at the minimum level. The costs incurred in designing a project selection
model consists of data generation, processing and storage expenses. The objective
here is to identify the best project selection model.

•Flexibility: The project selection model provides the desired results within the stated
conditions of the firm. The model should be flexible enough to adjust with the
environmental changes of the firm.

•Easy usage: The project selection model is convenient enough to implement inside
the firm.
 Project Selection Process

The process of project selection consists of the following stages:

1. Pre-Screening
2. Individual Project Evaluation
3. Screening
4. Portfolio Selection
5. Portfolio Balancing and Adjustment
6. Model Selection and Development
i)Pre-Screening
In this stage, all infeasible projects are eliminated from funding eligibility. Projects
that fail to deliver overall country development goal or goal of the development
programme’s and restricted by regulations are eliminated first.

Pre-screening targets to minimize the workload or information overload for later stages.
Duplicate projects competing for same funds are normally eliminated if it coincides
with existing projects‘ benefit.

ii)Individual Project Evaluation

During this stage, all input from a common form of all projects under contention after
pre-screening is taken for further analysis. Based on chosen method the inputs would
be analyzed against cost and return at each phase or along with risk factors.

Quantitative techniques like Net Present Value (NPV), Payback period, Internal Rate of
Return (IRR), Expected Commercial Value (ECV), etc are more often used in this stage
and qualitative inputs are considered under a common scale (e.g. satisfactory or
dissatisfactory).
iii)Screening
If there is any pre-set economic criteria in the guidelines form of the programme’s
those are considered in this stage.

The results found in previous stage are considered for each project and any
non-mandatory projects failing to meet pre-set economic criteria are taken out.

iv)Portfolio Selection

This stage tries to combine the results of earlier stage and makes a portfolio of
project that satisfies the programme’s development goals best.

Based on the objectives of the programme’s a ranking of the projects is made by the
selection committee and resources are allocated to the maximum available.
v)Portfolio Balancing and Adjustment

Decision makers apply judgement to adjust the mix of projects in the portfolio to
get highest benefit from the overall set of projects.

Interactions among the projects such as interdependence and mutual exclusivity

are taken into account.

vi)Model Selection and Development

According to Archer & Ghasemzadeh (1996) cited in Dye & Pennypacker (1999),
this would normally be a onetime process for the organisations with minor and
infrequent adjustments.

During the life span of the programme, management tries to have a set procedure,
models based on the organisation‘s culture, experience and availability of the
information needed for using specific techniques.

Several recommended tools, which can best fit certain selection stages.
❑ Types of Project Selection Models
❑ Nonnumeric Models

Models that do not return a numeric value for a project to be compared

with other projects

These are really not “models” but rather justifications for projects

Just because they are not true models does not make them all “bad”

These models use discussions and suggestions as input for

selecting a project.

These models are constructed on the basis of subjective

evaluation of the ideas and opinions of the project manager and
the project team.
❑ Types of Nonnumeric Models

Sacred Cow
A project, often suggested by the top management, that has taken on a life of its
own.
The project is “sacred” in the sense that it will be maintained until successfully
concluded, or until the boss, personally, recognizes the idea as a failure and
terminates it.

Operating Necessity
A project that is required in order to protect lives or property or to keep the
company in operation
If a flood is threatening the plant, a project to build a protec- tive dike does not
require much formal evaluation, which is an example of this scenario.
Competitive Necessity
A project that is required in order to maintain the company’s position in the
marketplace e.g
XYZ Steel undertook a major plant rebuilding project in the late 1960s in its
steel-bar-manufacturing facilities near Chicago. It had become apparent to XYZ’s
management that the company’s bar mill needed modernization if the firm was to
maintain its competitive position in the Chicago market area.

Product Line Extension

Often, projects to expand a product line are evaluated on how well the new
product meshes with the existing product line rather than on overall benefits

In this case, a project to develop and distribute new products would be judged on
the degree to which it fits the firm’s existing product line, fills a gap, strengthens
a weak link, or extends the line in a new, desirable direction.
Comparative Benefit
Projects are subjectively rank ordered based on their perceived benefit to
the company
For example, some projects concern potential new products, some
require the conduct of a research and development project for a
government agency, some concern changes in production methods,
others concern computerization of certain records, and still others cover a
variety of subjects not easily categorized (e.g., a proposal to create a
daycare center for employees with small children). The organization has
no formal method of select- ing projects, but members of the Selection
Committee think that some projects will benefit the firm more than
others, even if they have no precise way to define or measure “benefit.”
❑ Numeric Models

● Models that return a numeric value for a project that can be easily compared with
other projects
● Two major categories:
– Profit/profitability
– Scoring

Profit/profitability Models

● Models that look at costs and revenues

– Payback period
– Discounted cash flow (NPV)
– Internal rate of return (IRR)/ Return on Investment(ROI)
– Profitability index
● NPV and IRR are the more common methods
 Payback period Models

● The length of time until the original investment has been recovered by the
project
● A shorter payback period is better
❑ Discounted cash flow (NPV)

The value of a stream of cash inflows and outflows in today’s dollars

Also know as discounted cash flow or just discounting
Widely used to evaluate projects
Includes the time value of money

Initial cash investment

Ft Cash flow in time period t (negative for
outflows)
k The discount rate
t The number of years of life
● A higher NPV is better
● Higher the discount rate lower the NPV
 ❑ Internal rate of return (IRR)/ Return on Investment(ROI)

The higher the IRR, the better

While it is technically possible for a series to have multiple IRR’s, this is not a
practical issue

Finding the IRR requires a financial calculator or computer

If we have a set of expected cash inflows and cash outflows, the internal rate of
return is the discount rate that equates the present values of the two sets of flows.
❑ Profitability index

Benefit cost ratio

NPV divided by initial cash investment
Ratios greater than 1.0 are good

Advantages of Profitability

Easy to use and understand

Based on accounting data and forecasts
Familiar and well understood
Gives a go/no-go indication
Can be modified to include risk
❑ Scoring Models

Unweighted 0–1 factor model

Unweighted factor model

Weighted factor model

❑ Unweighted 0–1 factor model

Factors selected
Listed on a preprinted form
Raters score the project on each factor

Each project gets a total score

Main advantage is that the model uses multiple criteria

Major disadvantages are that it assumes all criteria are of equal importance
❑ Unweighted 0–1 factor model Example

columns of Figure are

summed and those projects
with a sufficient number of
qualifying factors may be
selected.

Sample project evaluation form.

❑ Unweighted factor model

Replaces X’s with factor score

Typically a 1-5 scale
Column of scores is summed
Projects with high scores are selected

The x marks in prevoius model Figure would be replaced by numbers. Often a

five-point scale is used, where 5 is very good, 4 is good, 3 is fair, 2 is poor, 1 is
very poor.
 Consider the following two simple examples. Using the criterion just mentioned, “esti- mated annual
profits in dollars,” we might construct the following scale:
Score Performance Level
5 Above $1,100,000
4 $750,001 to $1,100,000
3 $500,001 to $750,000
2 $200,000 to $500,000
1 Less than $200,000
As suggested, these ranges might have been chosen so that about 20 percent of the proj- ects considered for
funding would fall into each of the five ranges.
The criterion “no decrease in quality of the final product” would have to be restated to be scored on a
five-point scale, perhaps as follows:
Score Performance Level
The quality of the final product is:
5 significantly and visibly improved
4 significantly improved, but not visible to buyer
3 not significantly changed
2 significantly lowered, but not visible to buyer
1 significantly and visibly lowered
❑ Weighted factor model
Each factor is weighted relative to its importance
Weighting allows important factors to stand out
A good way to include nonnumeric data in the analysis
Factors need to sum to one
All weights must be set up, so higher values mean more desirable

In general, it takes the form

n
Si = a sij wj
j =1

where
Si = the total score of the ith project,
sij = the score of the ith project on the jth criterion, and
wj = the weight of the jth criterion.

The weights, wj, may be generated by any technique that is acceptable to the
organization’s policy makers.
Advantages

Allow multiple criteria

Structurally simple
Direct reflection of managerial policy
Easily altered
Allow for more important factors
Allow easy sensitivity analysis
❖Project portfolio process

Project Portfolio Management (PPM) is a management strategy that evaluates

potential projects and uses that evaluation to prioritize and implement projects.

Together, project managers and stakeholders analyze potential projects based on

data-driven conclusions that direct decision makers toward the most appropriate
and rewarding projects.

Both qualitative and quantitative factors go into the assessment of potential

projects.
❑ Symptoms of a Misaligned Portfolio

Inconsistent determination of benefits

Projects that don’t contribute to the strategy

Costs exceed benefits

No risk analysis of projects

Lack of tracking against the plan

No client for project

❑ Purpose of Project Portfolio Process

Identify non projects

Prioritize list of projects

Limit number of projects

Identify the real options for each project

Identify projects with good fit

Identify co-dependent projects

PPM helps keep projects aligned with organizational goals and strategy,
including the prioritization of resources based on the importance of projects.
❑ Project Portfolio Process
1)Establish a project council

Senior management
The project managers of major projects
The head of the Project Management Office
Particularly relevant general managers
Those who can identify key opportunities and risks facing the organization
Anyone who can derail the PPP later on

2)Identify Project categories and criteria

Derivate projects
Platform projects
Breakthrough projects
R&D projects
3) Collect Project Data

● Assemble the data

Use the project plan, a schedule of project activities, past experience, expert
opinion, whatever is available to get a good estimate of the data.
● Document assumptions
Screen out weaker projects(less score , more cost , competitor’s new entry )
● The fewer projects that need to be compared and analyzed, the easier the
work of the council

4)Assess Resource Availability

● Assess both internal and external resources

● Assess labor predictably (consider all possible unavailability's of employees)

● Timing is particularly important

5)Reduce the Project and Criteria Set

Whether there is a market for the offering

How risky the project is ?
If there is a potential partner to help with the project?
If the right resources are available at the right times
If the project is a good technological/knowledge fit with the organization
If the project is synergistic with other important projects

6) Prioritize the Projects Within Categories

Apply the scores and criterion weights

Consider in terms of benefits first and resource costs second
Summarize the returns from the projects
7)Select the Projects to be Funded and Held in Reserve

Determine the mix of projects across the categories and time periods.

Leave some percent (often 10–15 percent) of the organization’s resource capacity
free for new opportunities, crises in existing projects, errors in estimates, and so on.

Allocate the categorized projects in rank order

8)Implement the Process

Communicate results

Repeat regularly(Quarterly or yearly)

Improve process
❖ project sponsor

The project sponsor is that person or group who owns the project. Every project has
one. They are the reason for the project. They are above the project manager in
terms of project hierarchy.
According to the Project Management Body of Knowledge (PMBOK), the project
sponsor is “a person or group who provides resources and support for the project,
program or portfolio for enabling success.”
For example, a government project is going to have a state official as project
sponsor who will work with the construction company’s project manager.
❑ Project Sponsor Responsibilities
Vision

• Makes sure the business case is valid and in step with the business proposition
• Aligns project with business strategy, goals and objectives
• Stays informed of project events to keep project viable
• Defines the criteria for project success and how it fits with the overall business

Governance
• Ensures project is properly launched and initiated
• Maintains organizational priorities throughout project
• Offers support for project organization
• Defines project roles and reporting structure
• Acts as an escalation point for issues when something is beyond the project
manager’s control
• Gets financial resources
• Decision-maker for progress and phases of project
❑ Project charter

• A project charter is the statement of scope, objectives and people who are
participating in a project.
• It begins the process of defining the roles and responsibilities of those participants
and outlines the objectives and goals of the project.
• The charter also identifies the main stakeholders and defines the authority of the
project manager

The project charter is a document that officially starts a project or a phase. It

formally authorizes the existence of the project and provides a reference source for
the future. The charter gives a direction and a sense of purpose to the management
from start to end
❑ The project management charter
The project management charter serves as a reference document. It should define
these three main points.

What is the essence of the project? What are the goals and objectives of the
project? How are you planning to reach and achieve these goals and
objectives?

Why does this project exist? Provide a shared understanding of the project.
The charter should communicate its value and/or reason for existence to every
person who has a part in it, from the team to the project manager, stakeholders,
sponsors, etc.

Can we agree on this project? The charter acts as a contract between the
project sponsor, key stakeholders and the project team. By noting the
responsibilities of each party involved in the project, everyone is clear what
their duties are.
Project charter template and example
❖ Project Proposals
A project proposal is a document that describes a proposed project and its
purpose, outcomes, and the steps that will be taken to complete the project

The project proposal is essentially a project bid

Putting together a project proposal requires a detailed analysis of the project

Project proposals can take weeks or months to complete

A project proposal’s purpose is to communicate how a company, team, or

individual plan to approach a project.
❑ Project Proposal Contents

Cover letter
Compose a cover letter as key marketing instrument

Executive summary
Explain fundamental nature and general benefits of project
Minimally technical language
The technical approach
General description of problem to be addressed or project to be undertaken
Major subsystems of problem or project
Methodology of solving the problem Special client requirements
Test and inspection procedures
The implementation plan
Estimates of time, cost and materials for each subsystem and the whole
projectEstablish major milestones to break project into phasesList
equipment, overhead and administrative costDevelop contingency plans
(including slack time)

The plan for logistic support and administration

Control over subcontractorsNature and Timing of all reports (progress,
budget, audits)Change managementTermination Procedures“Touch of class”
capabilities (artist’s renderings, meeting facilities, video conferencing,
computer graphics)

Past experience
List all key project personnel with titles and qualifications
Include full resume of each principal
Provide all pertinent references
❖ Effective project team
• Team building is a kind of art.
• Good and effective team building is an ability to turn the group of individuals
into the strong and organized system walking towards the common goal.

• A clear goal.

• Getting the right people to do their job.

• Distributing the roles and responsibilities

• Communication is the key

• You should be the team not only in the workplace

❖Stages of team development & growth

Team development is the process by which teams come together and organize
themselves to achieve their objectives through progressing tasks and developing
effective relationships both within and outside the team.

A well-used team development model was defined by American psychologist

Bruce Tuckman.
❖Team dynamics
Team dynamics refers to the relationships and interactions between team members that
can affect their productivity and performance.

It encompasses how team members communicate, collaborate, and coordinate their

efforts to achieve a shared goal.

Team dynamics refer to the intricate patterns of communication, cooperation, and

collaboration that transpire within a team.

It is the lifeblood of an organization, intricately woven into every facet of its existence,
from innovation to productivity, from employee satisfaction to overall success.
Team dynamics, are like the secret sauce that makes a group of individuals function like
a well-oiled machine.

It's the magical blend of personalities, roles, and interactions that can turn an ordinary
team into an extraordinary one.

There are many examples of Good Team Dynamics.

One of them is as follows .

The 1992 U.S. Men's Olympic Basketball "Dream Team"

This dream sports team is the stuff of legends, with basketball icons like Michael
Jordan, Magic Johnson, and Larry Bird. But it wasn't just the talent that made them
effective.
Shared goal: Their goal was crystal clear: bring home the gold. Ego took a back seat to
team success. They trusted each other's skills and played together harmoniously,
showcasing the power of a shared objective in fostering teamwork.