PROJECT MANAGEMENT

MODULE 7 NOTES

A Successful Project is Administratively Closed Out

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Project Management

CONTENTS
1. Introduction 3
2. Closing a project 3
3. Decommissioning a project 4
4. Identifying follow-on actions 5
5. Project evaluation review 5
6. Analysing project risks 7
7. Process of closing out 8
8. Wrap-up 9

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PROJECT MANAGEMENT | MODULE 7 NOTES | A SUCCESSFUL PROJECT IS ADMINISTRATIVELY CLOSED OUT
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1. INTRODUCTION
The purpose of the closing out process is to execute a controlled close to your project. The process covers
your task (as project manager) to wrap up your project, either at its end or premature close. Most of your work
is to prepare a report to your project board, to obtain its confirmation that your project may close.
The objectives of closing a project are, therefore, to:
• Check the extent to which your objectives or aims set out in your project initiation document (PID) have
been met
• Confirm the scope of the fulfilment of PID and your customer’s satisfaction
with the deliverables
• Obtain formal acceptance of your deliverables
• Confirm to what extent all expected products have been handed over and
accepted by your customer
• Confirm that maintenance and operation arrangements are in place (where appropriate)
• Make any recommendations for follow-on actions
• Capture lessons resulting from your project and complete the lessons learnt report
• Prepare an end-of-project report
• Notify your host organisation of the intention to disband your project
organisation and resources

By the end of this module, you should be able to:

• Describe the project close-out phase and your role within it
• Discuss and identify successes and areas for improvement
• Evaluate whether your project was successful
• Use the success parameters
• Explain the risk assessment
• Define the process of closure

2. CLOSING A PROJECT
In this stage, you must ensure that you bring the project to its proper closure. The closure phase is
characterised by a written formal project review report, containing the following components: a formal
acceptance of the final product by the client, and matching the initial requirements specified by your client
with the final delivered project. Included at this stage is the necessary rewarding of your team, a list of lessons
learnt, releasing project resources, and a formal project closure notification to higher management.
Your project must be closed down in an orderly and firm manner. The end of a project may arise when all the
planned work is complete, and the deliverables finished and signed off, as having met their stated quality
criteria. Alternatively, you can bring a project to a premature close because of changes to requirements,
removal of resources, or unacceptable slippage of time, effort or costs. Most of the work involved in this major
process is concerned with the preparation of information for your project board, to make the decision to close
the project, or not.
Rather like project initiation and stage initiation, this process provides a decision support structure; closing a
project aims to:
• Ensure that the objectives of your project have been met
• Confirm that your customer is satisfied with the outcome
• Obtain formal acceptance of your project products or deliverables
• Confirm that all products or deliverables have been handed over to the customer and that these have
been accepted

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• Ensure that where ongoing support, enhancement, and maintenance is appropriate (and required), you
have made suitable provision
• Identify any recommendations for follow-on actions and document
• Capture “lessons learned” and publish these in a suitable report for your project board
• Prepare an “end project report” for sign-off by your project board; and
• Notify your customer, sponsor, or host organisation, as appropriate, of the intention to close your project,
disband your project organisation and release the resources

Obviously, it will be difficult to close down a project in an orderly manner, if the expectations and criteria for
completion and close-down have not been agreed at the outset, and this will normally have been done, and
the final acceptance criteria included within the project initiation document. Provide project staff and managers
with as much notice as possible for them to plan their return to normal operations. A ‘thanks’ to those parties
who have contributed to the project are also in order (Bradley, 2005).

3. DECOMMISSIONING A PROJECT

The main aim of this process is to bring the project to an orderly close, ensuring that your
customer is happy with the outcome and demonstrates this by providing a customer
acceptance sign-off.

Assurance that the outcome is supported and that a proper audit trail exists for your project documentation,
should it be needed in the future, must also be forthcoming.
Key features of this part of closing out a project are:
1. Check that all project issues have been addressed
2. Check that all products have been completed, documented and handed over
3. Confirm that your customer’s specification has been addressed
4. Confirm that the outcome can be supported, operationally
5. Archive all your project documentation mainly for audit purposes
6. Notify all concerned that your project is coming to a conclusion and that resources will be returned

This process is primarily your responsibility as the project manager, as it marks the conclusion of the work
performed, over what will often be, a considerable period. There will be a need for close contact between you
and project board members, to ensure that there are no surprises at the final meeting, where your project will
be formally closed (Bradley, 2005).

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4. IDENTIFYING FOLLOW-ON ACTIONS

Follow-on actions refer to picking up any loose ends that remain at the conclusion of the project. It could
include any remaining changes in requirements raised as project issues, not actioned for fear of prejudicing
a contractual situation, or because time and budget did not allow the introduction of changes. There might
also have been some general technical improvements; that would benefit the project’s outcome which your
supplier wishes to bring to the customer’s attention.
A major output from this process is the post-project review plan, which will be used to set up a future project,
intended to review whether the business benefits identified at the outset of your project (and reviewed and
updated at each formal review), have been achieved. It will usually take place between six and 12 months after
the project formally closes.

The follow-on recommendations will provide the basis for project mandates, for any future
projects which may arise from the recommendations made (Bradley, 2005).

5. PROJECT EVALUATION REVIEW

The lessons learned during your project must be captured as it progresses, and disseminated to those in
the host organisation that would benefit from it, at the conclusion of your project. There is also the need to
compare what was intended to be achieved by your project, against achievement.

This review addresses your project and its outcome, rather than the outcome itself, which will
be the subject of a post-project review.

The lessons learnt report (log) is a prime input to this process, along with the various logs needed to provide a
comprehensive view of the performance of your project.
The outputs are:

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As a project manager, you have the responsibility to produce these analyses and will present them to your
project board (Bradley, 2005). Closing a project provides the “housework” tasks, to properly complete the
process. Your project board can only give authority for closure. The process is essential for an orderly and
effective shut down of the project.

Was the Project Successful?

Traditionally, you would measure the success of a project through the completion of your project within the
constraints of time, cost and performance. These parameters have been expanded to include more factors.
These are:
• Within the allocated period
• Within the budgeted cost
• At the proper performance or specification level
• With acceptance by your customer or user
• With minimum or mutually agreed-upon scope changes
• Without disturbing the main workflow of the organisation
• Without changing the corporate culture

You must be prepared to manage within the guidelines, policies, procedures, rules and directives of the parent
organisation. The production of the business must continue as normal, and uninterrupted. After all, this is where
the funds are generated. Remember that having one successful project does not mean a successful company,
or future projects, will be successful. It is especially true where success has come about through formal
authority and executive interference. A strong commitment to project management must exist.

Analysing Cost-time Trade-offs as a Measure of Success

Time and budget are the two primary objectives of project management. Execute the project at minimum cost
at all times, but there are some cost-time trade-offs. A project can be completed earlier than the deadline if
you institute double shifts or extra workers are brought in but will incur additional costs, and you will do so only
if there is a financial benefit to finishing early. The total project costs are calculated through the sum of direct
costs, indirect costs, and penalty costs.
• Direct costs
Direct costs include labour, materials and any other expenses directly related to project activities.
• Indirect costs
Indirect costs are administration, finance and other variables which can be reduced when the project
finishes early.
• Penalty costs
Penalty costs incur when a project runs overtime. It is, therefore, in some instances, necessary for you to
crash or expedite, to make the deadline.

It is assumed that direct costs increase linearly, as activity time is reduced from the normal time (NT). Cost to
crash is measured per period (one week) and is calculated as follows:
Where NT is normal time, NC is normal cost; CT is crash time and CC is crash cost.
Naturally, your objective is to minimise the cost. Determining the minimum project duration can be done
through using the crash periods of each activity for scheduling purposes, but costs might be prohibitive. The
minimum-cost schedule has to receive priority.

COST TO CRASH CALCULATION.

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The minimum-cost schedule has to receive priority. There are three steps involved;
1. determine critical path
2. find activities on the critical path with lowest crash cost
3. reduce the time for this activity as much as possible

It might be that another path becomes critical due to the time reduction. Project managers have to be careful
that the cost of crashing does not exceed the benefit thereof. Repeat the steps until the increase in direct cost
is larger than the savings generated by shortening the project.

6. ANALYSING PROJECT RISKS

In project management, the risk is the probability of reaching the project goals with regards to time, budget,
and specifications. When risks are adequately assessed and managed through analysis and corrective actions,
the closure of the project will be according to the objectives set and customer requirements. Many variables
could impact on the risk of a project, such as labour shortages, weather, supplier failure, and workmanship.
As a project manager, you have to assess the risks on an ongoing basis and make adjustments accordingly.
Various tools can be used to evaluate risk and to develop a risk management plan. The key risks are identified
and a plan designed to circumvent them. Examine the potential risks in four categories, namely the strategic
fit, service or product attributes, project team capability, and operations. Tools that can be used to identify any
of the risks in the four categories include simulation and PERT/CPM networks are useful to quantify risks with
regards to project timing.
The second tool used is statistical analysis. This approach requires you to state the times in three options; the
optimistic time, most likely time, and the pessimistic time. The probability that your project will be delivered on
time is then calculated. The mean and variance of the probability distribution for each activity are calculated.
Having done this, it is assumed that pessimistic time estimates (b), optimistic time (a) and most likely time (m),
are determined correctly and that the standard deviation (σ), is one-sixth of the range between a and b.
The mean of the beta distribution is calculated as follows:

BETA DISTRIBUTION CALCULATION.

The variance of the beta distribution for each activity is:

VARIANCE OF THE BETA DISTRIBUTION.

When calculating the probability for each activity, the analysis thereof will determine the likelihood of the entire
project being delivered on time. To do this, calculate the sum of the duration times and variances along the
critical path. Also, calculate a probability distribution for the critical path. The central limit theorem is applied.

It states that “the sum of a group of independent, identically distributed random variables,
approaches a normal distribution, as the number of variables increases” (Krajewski et al., 2016).

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To analyse the probabilities of completing a project by a particular date, using the normal distribution, use the
following formula:
Where “T” is the due date for the project.

NORMAL DISTRIBUTION.

7. PROCESS OF CLOSING OUT

Your project is not completed until the closing out, and until you have followed the review process.

Step 1
The first step in the course of closing out is to get formal sign-off, from your customer. Analyse the project,
the risks mitigated and that success parameters are achieved. It has to be formally acknowledged by your
customer before you can consider the project as complete. Before the resources and teams are dispersed, the
customer must sign-off the closure.

Step 2
The next step in project closure is the final analysis of the product scope. It includes a measurement of the
scope, achieved from the original project plan.

Step 3
Once sign-off has been obtained from your customer, and the scope measured against your original
specifications and scope, your resources can be released. These resources can be absorbed back into
the organisation or moved to another project. Part of releasing the resources is to close all contractual
arrangements and notify all sub-contractors.

Step 4
Project files have to be indexed and given to key stakeholders. Together with the file, compile a “lessons learnt”
document. Such a document will be of value in future projects. Use the lessons learnt document to avoid
duplication during follow-up projects. It should contain all changes requested during the project, corrective
actions taken, and the best methodologies developed.

Step 5
At the closure of a project, debrief project team members, and obtain input about their perception of the
project. Input from your team members could provide valuable feedback included in the lessons learnt
document. Reward team members adequately for contributions made and should leave the project feeling
fulfilled and fairly treated.

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8. WRAP-UP

A project is an interrelated set of activities, with a definite starting and ending point, which can be complex and
challenging. The objective is to break the complexity into smaller, simpler tasks to be executed efficiently until
the sum of all the tasks completes the project. A project will typically require a multi-disciplinary team as it will
usually permeate every department in an organisation. The goal is to finish the project according to customer
specifications, within budget, and on time, meeting the deadline.
Various resources are allocated to achieve successful closure of the project. These include human resources,
funds, plant and equipment, and materials. The structure of the business will determine your relationship with
your team. There are three structures considered; pure project, functional and matrix, which is a combination
of the first two. Like with the product or company lifecycle, a project is completed in phases, and a lifecycle
applies. The project lifecycle also consists of four phases, namely initiation, planning, execution, and closure.
Conduct scheduling through the work breakdown structure (WBS), which is a statement of all activities that
will, collectively, complete the project. It is important that every single activity required is in the WBS. Major
work components are broken down into smaller units. Upon the road to closure, a network diagram can be
used to depict the project process and to show the interrelated activities visually. It is done to enable you to
identify and organise the interrelationships between activities. It also provides a forum for managers of different
functional areas, to discuss the nature of the various activities and resources required. It allows for a clearer
understanding of completion time and shows priority activities and possible delays that could occur.
The success of a project is measured through the completion of your project within the constraints of time,
cost and performance. These parameters have been expanded to include acceptance of the customer,
minimum scope changes, production of the company undisturbed, and leaving the corporate culture
unchanged. The time-span of the project is determined by the critical path which is the longest path of the
project. The earliest starting time and finishing time, and the latest starting time and finishing time, must be
calculated, to manage the execution of the project according to timelines.
Where required, your project can be crashed or expedited through various techniques, such as double shifts,
additional workers or extra equipment. Justify the cost of crashing through the cost saving on finishing earlier
and avoiding penalty costs. The objective is to complete the project at minimum cost within the deadline, and
according to customer requirements. To achieve the objectives, risks have to be analysed and managed. A
risk-management plan is drawn up through the examination of four categories, namely strategic fit, product
attributes, team capabilities, and operations. Tools and techniques used for risk assessment are a simulation,
statistical analysis, and analysing probabilities.

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