CIPS Exam Report for Learner Community:

CIPS Exam Report for Learner Community: Qualification: Professional diploma in procurement and supply Unit: PD5 - Programme and project management Exam series: Nov 2016 Each element of a question carries equal weighting unless otherwise stated. Question 1 (a) Learning Outcome 1 Describe the differences between leadership and management in the context of programmes and projects. 12 marks Learning outcome addressed: 1.3 Command word explanation: Describe give a full account of something The question required candidates to describe the differences between leadership and management in the context of programmes or projects. Candidates often started by acknowledgment that a key resource in any project are people. This can be in the project team or the supply chain and they will have to be managed and led. A project manager can be described as the person responsible for directing and coordinating human and material resources, but this definition tends to focus on the administrative aspects of project work. However, there is a distinction between the style of leaders and managers according to their primary focus. The respective positions of leaders and managers on a number of issues are shown below. It is a well-known truism that leadership focuses on doing "the right things" while managers focus on doing "the things right", and many candidates will cite this. The course book gives the following definition: Management is the process through which efforts of members of the organisation are co-ordinated, directed and guided to the achievement of organisational goals: the clarification of objectives, planning, organising, directing and controlling other people s work. Leadership is a relationship through which one person influences behaviour and actions of people. Noteworthy that the terms are frequently used interchangeably and there is a myriad of different academic views and variation in definition. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 1/11

Kotter suggests that management involves: Planning and budgeting Organising and Staffing Controlling and Problem Solving David Boddy summarises the differences between leadership and management getting things done (management) bringing innovation (leader) i.e. leadership is about where we are going and management is about how we get there. Managing a Project Most writers on project management involve the following: Goals and objectives Telling how and when Shorter range Organisation and structure Autocracy Restraining Maintaining Conforming Imitating Administrating Managing and controlling Procedures Consistency Risk Avoidance Bottom line Leadership on projects Similarly most writers on project management agree that leaders focus on the following in relation to projects: Vision Selling what and why Longer range People Democracy Enabling Developing Challenging Originating Innovating Inspiring Trust Policy Flexibility Risk-opportunity Top line NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 2/11

Examples of content for merit/distinction grade answers: Better candidates would consider each role and highlight the differences between them. Succinct and accurate definitions of both Following instruction of the question to link to a context of programmes and projects Examples of poorer content/ poorer approaches in answers: Basic description given only Very generic/irrelevant discussion material Not providing technically correct definitions Not following the command word and no evidence of distinguishing Concluding comment: Generally answered fairly well, few distinction answers, with most candidates able to describe the two concepts with a degree of differentiation. There were few candidates who actually, as per the question, explicitly linked to a context of programmes or projects and thus few very high marks. Question 1 (b) Learning Outcome 1 Assess the advantages and disadvantages using project management software in the management of projects. 13 marks Learning outcome addressed: 1.3 Command word explanation: Assess evaluate or judge the importance of something The question required candidates to assess the advantages and disadvantages of using project management software in the management of projects. Project management software can hold detailed project plans in the form of Gantt charts and network diagrams, CPA, budgetary information and facilitate the creation, update and distribution of project plans and status reports such as planned v. actual comparisons. The software can be used to breakdown the content of each project phase into low level work packages/tasks which can be scheduled and resourced at a detailed operational level. Once the relevant data is entered it can provide weekly task lists and create critical paths. It will also help in the allocation of resources, setting start and completion dates and calculating the expected time to complete the various aspects of the individual tasks. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 3/11

The software can also offer contingency planning and what if analysis, allowing the review and communication of different solutions. Any agreed schedule changes can be communicated quickly to participants and stakeholders. Shared access to project plans and information can be arranged. The software can help in the production of attractive reports and professional print-outs, to update stakeholders with the appropriate level of detail. Financial/budget and control features of project software will assist at the various stages of the project life cycle, so that actual costs can be compared with budget costs, at the end of the project, it will be useful in providing completion reports. However the use of software comes with a cost. Depending on the complexity of the project there will be a training, licensing, maintenance and time cost. Often a third party input will be required which again can prove expensive. Candidates who developed credible points not mentioned above were credited accordingly. Examples of content for merit/distinction grade answers: Covering advantages and disadvantages Following the command word to develop the assessment within the answer Use of practical examples /personal experience Examples of poorer content/ poorer approaches in answers: Basic overview given Use of bullet points providing only an abstract list Not following the command word Concluding comment: This question on the whole was well tackled with the majority of candidates seemingly comfortable to tackle the question and combine both theory and personal experience. In a small number of submissions very short or bullet answers limited mark award. Some examples of very deep and thorough knowledge in this area. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 4/11

Question 2 Learning Outcome 2 An organisation is considering building a new facility. 25 marks Assess THREE different forms of investment appraisal that could be applied in the business case for the new facility. Learning outcome addressed: 2.4 Command word explanation: Assess evaluate or judge the importance of something Candidates were required to assess THREE different forms of investment appraisal. These typically included: Payback analysis: this assesses the time period that is required to pay back the initial investment. The method works by evaluating the inflows of funds, such as the increased profits that can be achieved from the investment and netting these inflows against the expenditures made. The effect of using the payback criterion is that it gives preference to projects which pay back quickly, even if other projects offer better returns in the long term. The average rate of return: This is another relatively simple method to evaluate investment decisions and calculates the average rate of return earned by the money invested. The drawback of the ARR method is that it takes no account of the timing of cashflows. Later cashflows are more speculative than earlier ones, but all are given equal weight in the ARR calculation. Net present value: In this method, the estimated net cashflows for each year are estimated and the appropriate discount factor is applied to calculate the present values of all cashflows over the life of the projects. By totalling these, it is possible to arrive at the net present value (NPV) of the project. A positive NPV will mean that the project will earn a higher level of interest or return than the chosen discount rate. Internal rate of return: The discount rate at which a zero NPV occurs is called the internal rate of return (IRR) of a project. Effectively, this rate can be used as a way of deciding for or against an investment project. Under this method, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects an organisation is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. Examples of content for merit/distinction grade answers: Ability to provide three types of investment appraisal Setting a relevant context and providing for worked examples NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 5/11

Examples of poorer content/ poorer approaches in answers: Basic description given only Not providing technically correct answers Not following the command word and no evidence of assessment Total confusion and providing for contracting strategies instead of forms of investment appraisal Incorrect arithmetic in examples Concluding comment: This question gave very mixed responses. Some candidates were able to cover the varying characteristics of three forms of investment appraisal. Some gave context, some didn t. Some candidates only managed one accurate form. Some totally misunderstood the question and answered a question not set on entirely different parts of the syllabus. Overall, those who identified the topic correctly tended to achieve a pass award. Few very strong answers. Question 3 Learning Outcome 3 Explain what is meant by sustainability and suggest how project and programme managers could build sustainability into major projects. 25 marks Learning outcome addressed: 3.2 Command word explanation: Explain give reasons for or account for something The question was designed to assess knowledge of sustainability in a procurement and supply context and a programme and project context. Firstly an explanation of sustainability was required of which there are many; CIPS, EU and WCED all have definitions and providing something like sustainability is often defined as managing the triple bottom line - a process by which companies manage their financial, social and environmental risks, obligations and opportunities. These three impacts are sometimes referred to as profits, people and planet. If used marks were awarded, as were any links to project management in the explanation. There are a number of best practices that foster sustainability, and help organisations move along the path from laggards to leaders. In project management terms these could be; Project Stakeholder Engagement: Organisations can learn from customers, employees and their surrounding community. Engagement is not only about pushing out messages, but understanding opposition, finding common ground and involving stakeholders in joint decision-making within projects; Environmental management systems: These systems provide the structures and processes that help embed environmental efficiency into a firm s culture and mitigate risks once the project is complete. The most widely NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 6/11

recognized standard worldwide is ISO 14001, but numerous other industry-specific and country-specific standards exist; Reporting and disclosure: Measurement and control are at the heart of instituting sustainable practices. Not only can organisations collect and collate the information, they can also be entirely transparent with outsiders. The Global Reporting Initiative is one of many examples of well-recognised reporting standards; Life cycle analysis: Those organisations wanting to take a large leap forward should systematically analyse the environmental and social impact of the products they use and produce through life cycle analysis, which measure impacts more accurately. Organisations that are sustainable have been shown to attract and retain employees more easily and experience less financial and reputation risk. These organisations are also more innovative and adaptive to their environments in their projects. All of the above can have direct links to building sustainability into projects; however candidates could also have mentioned the 4 Rs, standards from the construction industry (BREEAM etc) and given an example such as the Olympic games of 2012. The concepts of sustainability have only recently been linked to projects and project management. Projects are defined as temporary organisations that deliver (any kind of) change to organisations, products, services, business processes, policies or assets. Projects can make a contribution to the sustainable development of organizations. It should therefore be expected that the concepts of sustainability are reflected in projects and project management. And although some aspects of sustainability are found in the various standards of project management, it has to be concluded that the integration of sustainability in projects and project management is not fully recognised yet. The emerging studies on the integration of the concepts of sustainability in projects and project management point out that although the actual responsibility for sustainability may differ by project, the project manager always will have a decisive or influencing role. The project management profession should therefore also take responsibility for a more sustainable future. Candidates sometimes concluded that there is still a lot of work to be done on the implications of Sustainable Project Management and that there is a growing need of expertise, criteria and concepts to practically implement the concept in the management of projects. Examples of content for merit/distinction grade answers: Explanation of the concept and set into context Evidence of insight or experience of sustainability projects Examples of poorer content/ poorer approaches in answers: Basic description given only Expansive response with highly irrelevant content Not following the command word NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 7/11

Concluding comment: This question was answered well by the majority with a very high pass rate. A few candidates approached by writing everything they knew seemingly about procurement projects generally and as a result after covering their core content invested a lot of time and effort drifting into less to not relevant material. Question 4 (a) Learning Outcome 4 A project for the construction of a new airport is 30% more expensive than was first estimated. Propose a range of techniques that could have been applied to achieve realistic estimated costs for such a project. 13 marks Learning outcome addressed: 4.2 Command word explanation: Propose put forward an arguement or suggestion for consideration The question required candidates to propose a range of techniques that can be applied to achieve realistic estimated costs. The answers could be drawn from the following, although other techniques were proposed: Budgets play an important role in the management of organisations and should be accurate to guide decision making and to track progress. The cost estimates used to prepare budgets applied in a project require accurate data, and the costs of the supply chain make a significant proportion of any budget due to the reliance on external suppliers to provide products and services. The budget will often be a key constraint in any project as there will almost always be a limit to the amount of money available for the project. Budgets can be created in either a top down or bottom up. Projects can adopt the use of work element costing. Under this approach, each element of work and the cost of resources are estimated. In a similar method that is adopted to calculate a critical path or Gantt chart, the project will be broken down into separate activities. Suppliers can be contacted to establish the estimated costs of a project. For producing the estimated costing, suppliers can use a variety of costing information consisting of: Material costings: Material costs will be based on the specifications created for the project. There will be estimates of the quantities of materials required together with their pricing. A contractor that is presenting a price for an activity will be reliant on accurate data from their suppliers for any purchased materials. The value of the activity is therefore calculated by the multiplying of the quantities by the prices for the materials. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 8/11

Labour costings: Each activity will comprise of operations and each operation will have been subjected to study and allowed times calculated. In the case of new work for which there is no data, predicted times for the work will be estimated. The calculation of labour costs will consist of the multiplication of estimated labour hours by the rates chargeable for different grades of labour. In addition to the labour costs, other direct costs associated with the project that involve people can be added to the budget. These can include travel and subsistence costs, which can often be significant. Overhead rates: Overheads which cover the indirect costs incurred by suppliers in the performance of project should also be estimated. Separate variable and fixed overhead rates may be established and apportioned to the cost of the activity. It was also relevant to propose the use of life cycle costing (LCC). LCC has primarily focused on the costs associated with capital or fixed assets and its aim has been to go beyond the prices quoted for the asset, as a more accurate view of the assets total costs and will take account of the costs associated with its use, its maintenance and its disposal over its lifetime. Examples of content for merit/distinction grade answers: Providing for a range of techniques Providing a good breadth of the explanation of the techniques proposed Use of examples (sometimes drawn from personal experience) Setting the answer in the context of the questions introduction Examples of poorer content/ poorer approaches in answers: Basic description given only No providing a range of techniques Lack of relevance to the context Concluding comment: Generally answered fairly well, a number of distinction answers, with most candidates able to describe a few techniques and some providing a very expansive list indeed. This was therefore a positively received question and some fresh and worthy techniques awarded marks as well as the more obvious points covered. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 9/11

Question 4 (b) Learning Outcome 4 Review the use of value engineering and/or value analysis to manage the escalating costs of a project. 12 marks Learning outcome addressed: 4.1 Command word explanation: Review Examine and assess a subject critically This question required candidates to review the application of value engineering or value analysis to manage the escalating costs a project. A vital element of strategic cost management is value engineering. Rather than focusing on the ongoing costs of an asset as LCC focuses on, the purpose of value engineering is to try and reduce costs, and prevent any unnecessary costs before carrying out a project. Value analysis refers to the process of cost reduction once products or services have been introduced to a project. Value engineering is defined as systematic approach to enhancing the value of a project by seeking optimal design solutions, thereby reducing unnecessary cost, whilst maintaining and enhancing all aspects of quality and function. The designs of major projects are inherently complex and an optimal solution to each aspect of design is not always found. This potentially gives rise to unnecessary cost (comprising all aspects of cost, including time). VE therefore seeks to identify the optimal design solution in terms of the Project Brief and to seek out and eliminate any unnecessary cost, without in any way diminishing function and quality aspects, thereby increasing its value. Unnecessary cost can be considered under five general headings: A. Unnecessary costs of design. B. Unnecessary cost of a component. C. Unnecessary cost of a material. D. Unnecessary cost of poor buildability E. Unnecessary life cycle cost VE is typically implemented through a structured analytical system carried out by a VE Team. The team may be formed from key members of the project team which can include suppliers or contractors. Both VE and Life Cycle Costing (LCC) seek to achieve value for money outcomes and there are similarities in the two techniques. VE focuses on the realisation of benefits by reviewing existing design solutions from the perspective of value, LCC focuses on the total cost of ownership, from initial purchase through to final disposal and replacement. Good candidates illustrated their answers with suitable examples from projects or programmes. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 10/11

Examples of content for merit/distinction grade answers: Succinct and accurate definition(s) Illustrating answers with suitable examples Use of headings to build answer to show where costs could be removed Examples of poorer content/ poorer approaches in answers: Basic description given only as opposed to a review Not providing technically correct definition(s) Some not attempting question at all or answering a completely different question with not link whatsoever Concluding comment: Generally candidates tackled this to a satisfactory standard and there were a few very robust answers given. Some papers were very weak on relevant content and thus did not score beyond a bare pass or indeed weren t able to achieve a pass mark. NOV16_PD5_EXAM REPORT _LEARNER_COMMUNITY_FV 11/11