Project Management

• A project may be defined as a series of related

jobs usually directed towards some major
output and requiring a significant period of
time to perform.
• Project Management are the management
activities of planning, directing, and controlling
resources (people, equipment, material) to
meet the technical, cost, and time constraints
of a project
 Step 1:: Risk and Return analysis
Risk Analysis:: Return Analysis::
• Demand Risk
• Economic Risk
Step 3:: Scope and Schedule of the Project

Scope of a Project:: Schedule of a Project::

• Specifications of each • Estimated time required

work package. to complete each work
• Name of the person or package.
organization unit • Interrelationships
responsible. among work packages
known as networks.
 A work breakdown structure defines the
hierarchy of project tasks, subtasks, and work
packages.
• Level • Program

• 1 • Project 1 • Project 2

• 2 • Task 1.1 • Task 1.2

• 3 • Subtask 1.1.1 • Subtask 1.1.2

• 4 • Work Package 1.1.1.1 • Work Package 1.1.1.2

Step 2:: Bankable Project Report and Financial Closure
 Estimating Costs
Known Unknowns Unknown Unknowns

• Costs that are known to • Costs are unknown that

be going to occurs such they are going to occur
as digging the e.g. work stoppages,
foundation for a house. floods, delay in
• The nature of task is receiving materials,
known. accidents ets.
• Contingency allowance
 Step 4:: Management of a project
• Analyze the critical path.
• Project must be completed in time.
• Estimate the cost of project in an abstract way.
• Possible causes of variation in cost.
• Periodic review of project.
• Study of gap between actual cost and budgeted
cost.
• External quality control with internal quality
control.
Problem
 Prerequisites for Critical Path Methodology

A project must have:

well-defined jobs or tasks whose completion

marks the end of the project;

independent jobs or tasks;

and tasks that follow a given sequence.

Steps in the CPM with Single Time Estimate
• 1. Activity Identification
• 2. Activity Sequencing and Network
Construction
• 3. Determine the critical path
– From the critical path all of the project and
activity timing information can be obtained
 CPM with Single Time Estimate
Consider the following consulting project:
Activity Designation Immed. Pred. Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D, E 5
Write assessment report G F 1

Develop a critical path diagram and determine

the duration of the critical path and slack times
for all activities.
 First draw the network
Act. Imed. Pred. Time

A None2
B A 1
C B 1
D C 2
E C 5
D(2)
F D,E 5
G F 1

A(2) B(1) C(1) F(5) G(1)

E(5)
 Determine early starts and early finish times
ES=4
EF=6

ES=0 ES=2 ES=3 D(2) ES=9 ES=14

EF=2 EF=3 EF=4 EF=14 EF=15

A(2) B(1) C(1) F(5) G(1)

ES=4
EF=9

Hint:
Hint:Start
Startwith
withES=0
ES=0
and
andgogoforward
forwardininthe
the E(5)
network
networkfrom
fromAAtotoG.
G.
 Hint:
Hint:Start
Startwith
withLF=15
LF=15or
orthe
the
total
total time of the project andgo
time of the project and go
backward
backwardininthethenetwork
networkfrom
from
ES=4
Determine late starts EF=6
GGto
toA.A.
and late finish times
ES=0 ES=2 ES=3 D(2) ES=9 ES=14
EF=2 EF=3 EF=4 EF=14 EF=15
LS=7
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9
LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
LF=9
 Critical Path & Slack
ES=4
EF=6 Slack=(7-4)=(9-6)= 3 Wks

ES=0 ES=2 ES=3 D(2) ES=9 ES=14

EF=2 EF=3 EF=4 EF=14 EF=15
LS=7
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9
LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
Duration=15 weeks
LF=9
 Economic Value Management
• Measure of Economic value of the project as it
is executed.
• Economic Value Management (EVM) is a
management approach towards managing the
shareholder ‘value’ in an organization.
 .
• Schedule – It shows the estimated time for
each activity
• Budget – It shows estimated cost of each
principal part of the project
• The comparison can be made either at a
specified milestone being reached or after
specified time periods
 THE THREE QUESTIONS
Q.1 Is the project going to be finished by the
scheduled date ?
Q.2 Is the completed work going to meet the
stated specifications ?
Q.3 Is the work going to be done with the
estimated cost ?
 The Trade Off
• It is sometimes desirable to make trade offs
among time, specifications and cost using the
financial model and other available
information.
 Types of Reports
• Trouble Reports
• Progress Reports
• Financial Reports
 TROUBLED REPORTS
• They report both on trouble that has already
happened and also anticipated future trouble
• There is a need to reach the appropriate manager
so that corrective action can be taken
• Any medium can be chosen
• Precision is sacrificed in the interest of speed
• If the matter reported is significant it is
documented to keep as a record
 PROGRESS REPORTS
• These compare actual schedule and costs with
planned schedule and costs
• Overhead activities not directly involved with
the project can also be calculated similarly
• Variances associated with price, schedule
delays and similar factors can be identified
and measured quantitatively
 FINANCIAL REPORTS
• These are actual reports of project costs that must
be prepared as a basis for progress payments
• These reports are less important for management
control purposes than the cost information
contained in progress reports
• They are carefully checked for their accuracy
• Approximate information that is available quickly
is more important to project management
 Other related aspects
• Quantity of reports
• Percent complete
• Summarizing Progress
• Punch List
 QUANTITY OF REPORTS
• Sometimes more than optimum numbers of
reports are prepared
• This incurs extra costs and spends extra time
• Sometimes important information is
overlooked
• Though this is not a serious problem because
managers normally know which reports or
section of reports are important
 Project Execution

• Schedule and Budget

• The three questions????
• Trade Off – Is it required ????
 PERCENT COMPLETE
• Percentage of completion of each work
package must be estimated as a basis for
comparing actual time and actual costs with
budgeted costs
• In case of R&D and Consulting projects the
percentage of completion is subjective
 SUMMARIZING PROGRESS
• Progress payments often are made when
specified milestones are reached
• Individual work packages are aggregated
• In labor intensive project ratio of actual
person-hours on project to total person-hours
for the project
 PUNCH LIST
• List of items yet to be accomplished
• List of corrections yet to be corrected
• Punch List is negotiated with the project
manager
INFORMAL SOURCES OF INFORMATION

• Tangible reports are less useful than

information that the project manager gathers
from people
• Nevertheless, formal reports are necessary
 REVISIONS
• A trade off between scope, schedule and cost
• Is it better to track future progress against the
revised plan or to track the original plan ?
• Revised plan may be a rubber baseline
• Comparison with the original plan may also be
futile as it is obsolete
• Solution lies in comparing actual cost with
both the original plan and the revised plan
 PROJECT AUDITING
• It is done either during the progression of
project or conclusion of project
• The earlier case is preferable
• Operational Auditing – concerned with
managing standards
• Grave danger of second guessing persists
 PROJECT EVALUATION
• It has two aspects –
1) Performance in execution of the project
2) Results obtained from the project
• The purpose of the former is to assist in decisions
regarding project managers
• The purpose of latter is to discover better ways of
conducting future projects
• Evaluation of project is subjective and also entails
external factors
 COST OVERRUNS
• When actual costs exceed budgeted costs
• At best the budget represents what the costs
should have been
• Although reasonable people can differ and
only one set of conclusions is incorporated in
the budget
 HINDSIGHT
• There can be difference between the information
which is represented in the report and the
information which was available with the manager at
the time of report generation
• The sponsor may overlook budget overruns
• Evaluation may lead to changes in rules or procedures
• Evaluation may indicate reviews conducted during the
project were inadequate or timely action was not take
based on these reviews
 EVALUATION OF RESULTS
• Comparison of results with the results that
were anticipated when the project was
approved
• Assumptions are made and these assumptions
are documented
• Project can not be evaluated until enough
time has elapsed
 CRITERIA FOR SELECTING
• Project should be important enough
• The results should be quantifiable
• Effects of unanticipated variables should be
known
• Results of the evaluation should have a good
chance of leading to action
Case
 Metro Project
• Delhi Metro Rail Corporation (DMRC) was
established by the Government of India and the
Government of Delhi in March 1995.
• Project is divided into three phases.
• Phase I has been completed and cost INR105.7bn
($2.3m).
• In February 2009, the Delhi Metro project became
the first railway project in the world to be registered
for carbon credits by the United Nations.
Cont…
• DMRC saved 112,500MW of power by using
regenerative brakes in the trains, and reduced
carbon emissions by 900,004tn between 2004 and
2007. It is estimated that more than 100,000tn of
carbon dioxide will be offset each year once Phase
II becomes completely operational.
• Delhi will have 244 km of Metro rail network.
• After the completion of phase 1, DMRTS will carry
21.8 lakh passengers perday, resulting in 2500 less
buses on road.
Cont…
• Average speed of road buses increased from
10.5 kmph to 14 kmph, saving 20 lakh man
hour per day and saving of fuel cost worth
500 crores per year.
• Prime Minister declared Mr. Shreedharan to
be role models for future generation.