Introduction to Project Management 1Day Seminar

LB0010 Introduction to Project Management 1Day Seminar Program Notes

This manual, its contents and layout and all its inclusions are the intellectual property of ProjectWare, and may not be reproduced in any form without the written permission of ProjectWare. The information contained in this manual and materials handed out during the course are designed for educational purposes only. Neither ProjectWare nor the course facilitators can be held accountable for the content, accuracy or technical correctness of the material. Trademarks, brands and product names are either trademarks or registered trademarks of their respective holders and are used for identification purposes only. All rights reserved - ProjectWare ABN 40 494 745 672 PO Box 2064 Parkdale, VIC 3195 Phone +03 9515 5381 Melbourne, Australia Rob Jeges iii

Overview Aims of the program This program introduces participants to the modern techniques of Project

Table of Contents Overview...iv Aims of the program... iv Course Objective... iv Additional resources... iv Table of Contents...v Processes and Organisation...7 Learning Objectives... 7 What is a Project?... 7 Project Management... 7 Activity 1.1... 7 The Project Constraints... 8 Project Stakeholders... 9 Advantages of Project Management... 9 Project Phases and the Project Life Cycle... 9 The Project Sequence... 10 Product Life Cycles... 10 Business Description of Each Phase... 11 Project Management Process... 11 The Project Management Functions... 11 Activities in the Initiation and Planning Phases... 12 Activities in the Execution, Control and Finalisation Phases... 12 Understanding Organisations... 13 Functional Organisation... 13 Project Organisation... 13 Matrix Organisation... 14 Organisation Structure Influences on Projects... 14 Maturity Levels... 14 Amateur Project Manager... 15 Semi-professional Project Manager... 15 Professional Project Manager... 15 Core Functions...17 Learning Objectives... 17 Scope Management Activities... 17 Methods for Selecting Projects... 17 Concept Statement... 17 Activity 2.1... 18 The Work Breakdown Structure... 19 Approaches for Developing a WBS... 19 Activity 2.2... 19 Time Management Activities... 20 Task Sequencing... 20 Types of Work... 20 Estimating Task Duration... 21 Gantt Charts... 21 Critical Path Method (CPM)... 22 Controlling Changes to the Project Schedule... 22 Project Cost Management Activities... 22 Estimating Resources... 23 Cost Estimation Tools and Techniques... 23 Monitoring and Control of the Budget... 23 Rob Jeges v

Table of Contents Project Integration...25 Learning Objectives... 25 Integration Management Activities... 25 The Project Plan... 25 Stakeholders... 26 Stakeholder Categories... 26 Management of Stakeholders... 26 Activity 3.1... 27 Communications Management Activities... 27 Stakeholder Communications Analysis... 27 Activity 3.2... 27 Performance Reporting... 27 Common Reporting Problems... 28 Conducting Effective Team Meetings (4P Model)... 28 Risk Management Activities... 29 Risk Identification... 29 Types of Analysis... 29 Qualitative Measures of Impact... 29 Qualitative Measures of Likelihood... 30 Qualitative Risk Analysis Matrix... 30 Activity 3.3... 30 Risk Quantification... 30 Risk Response Development... 30 Risk Response Control... 31 Support Functions...33 Learning Objectives... 33 Human Resource Management Activities... 33 Organisational Planning... 33 Organisation Breakdown Structure (OBS)... 33 Responsibility Assignment Matrix (RAM)... 34 Work Packages... 34 Project Staff Acquisition... 34 Team Development... 34 Procurement Management Activities... 35 The Procurement Management Process... 35 Statement of Work... 36 Source Selection... 36 Balanced Scorecard Model... 36 Activity 4.1... 36 Project Quality Management Activities... 37 Characteristics of a Quality Control System... 37 Improving Project Quality... 37 Project Management Maturity Model... 37 Glossary...39 Index...44 References...47 vi Rob Jeges

Processes and Organisation Learning Objectives On completion of this module you should be able to:!" Discuss the 4 project constraints!" Identify the major project stakeholders!" Describe the Processes and Functions of Project Management!" Differentiate between projects phases and product phases!" Describe 3 types of organisational structures!" Discuss Project Management Maturity Levels What is a Project? A project is a unique set of inter-related activities designed to achieve a common objective, with defined start and finish times. Characteristics of a project:!" Delivers a unique outcome!" Has defined start and end dates (although these can change)!" Uses multiple skilled resources, with specific skills in different disciplines!" Has a primary sponsor(s) and customer(s)!" Involves uncertainty!" Deals with conflict. This can originate internally within the project team, or externally due to conflicting objectives Project Management Projects are the means by which resources can be deployed to produce outcomes and tangible benefits. This usually involves a team of individuals faced with a common task. A project is an intense and focused activity driven by a specific outcome. Successful completion means delivering scope on time and within budget, without accountability for benefit realisation. It is important to differentiate between the direct benefit of delivering the product or service, and the business benefits that that product or service will deliver to its end users. Activity 1.1 Identify a project and determine its characteristics. This document is known as the Project Charter and is usually the first document to be produced when developing a project. At a later stage it is developed into a Concept Statement. Rob Jeges 7

Processes and Organisation Project name: Purpose: (A brief description of the project background and the rationale, including the problem or opportunity that the project seeks to address). Start Date: End date: Skills: (What are the main skills required to complete the project and where are these skills going to be sourced). Sponsor: (The highest project authority, and who will ultimately receive the benefits of the project). Customers: (Who are the main beneficiaries of the project). The Project Constraints Every project is constrained in different ways by its:!" Quality goals this is a combination of the scope and quality of the deliverable!" Cost goals this can be either explicit cost or implicit in the use of corporate resources!" Time goals time can be specified as a deadline for completion or be implicit as a "window of opportunity" It is the project manager's duty to balance these competing goals. It is usually possible to achieve 2 of the goals at the expense of the third goal. For instance cutting corners on scope or quality may help to meet budget and the schedule. 8 Rob Jeges

Processes and Organisation Project Stakeholders Stakeholders are individuals and organisations affected by the project activities and its outcome. Stakeholders include:!" Customers and suppliers!" Sponsor!" Project manager!" Steering Committee!" Performing organisation!" Opponents to the project!" Regulatory bodies Advantages of Project Management Good project management provides assurance and reduces risk. It provides the tools and environment to plan, monitor, track, and manage schedules, resources, costs, and quality. It also provides a history or metrics base for future planning as well as good documentation. Project members learn and grow by working in a cross-functional team environment. Project Phases and the Project Life Cycle A project life cycle is a collection of project phases. The phases are a natural progression of activity throughout the life of the project. Each phase is characterised by the type of activity and the skills required, such as analysis, planning and technical execution. Project phases vary by project or industry, but some general phases include:!" Concept and Scope definition!" Analysis and Business case development Rob Jeges 9

Processes and Organisation!" Planning and Development!" Implementation and Commissioning!" On-going Support The project life cycle is the time sequence of the project phases. The Project Sequence The natural sequence of events usually commences by the identification of needs, or statement of requirements. This answers the question "What is the problem or opportunity". The next step is to determine the best approach to resolve this problem or take advantage of the opportunity. This is the question of "What is the best solution". The third step is to decide how to implement the selected solution. At this point work can commence and the objective will be to deliver the outcome within the resource limitations. Once the project is finished, a review of the management processes will deliver valuable lessons for future projects. These should be documented. Product Life Cycles The objective of the project is to deliver a product or service. Products also have life cycles, and these should not be confused with the project life cycle. The Systems Development Life Cycle (SDLC) is a framework for describing the phases involved in developing and maintaining information systems. Typical SDLC phases include planning, analysis, design, implementation, and support. Although there are great similarities between project and product phases, it is important to make the distinction, so we can emphasise the importance of project management against the technical management 10 Rob Jeges

Processes and Organisation Business Description of Each Phase required to develop a product in a particular industry. Whilst the management techniques vary from industry to industry, the techniques to manage a project are common across all industries. Project Management Process Project management process include the following Phases: Initiation establishment of the project objectives and approval to proceed Planning creation of management framework and work plans Execution execution of the work plans Control adherence to objectives and correction of deviations Finalisation administrative closure of the project Note the iterative process between planning, execution and control. The Project Management Functions Knowledge areas define the key competencies that project managers must develop. Rob Jeges 11

Processes and Organisation Activities in the Initiation and Planning Phases There is a single activity in the definition phase, and that is the Project initiation. This is a mandatory activity to commence a project. There are mandatory (light) and discretionary (dark) activities during the planning phase. Activities in the Execution, Control and Finalisation Phases 12 Rob Jeges

Processes and Organisation Understanding Organisations A model of an organisation comprises four major elements: Structural dimension the structural dimension documents the formal roles and responsibilities as described in the organisational chart and job descriptions. Political dimension there is a difference between formal roles and informal authority. The political dimension relates to the informal power and influence. HR dimension the HR dimension provides a balance between needs of the organisation and needs of the team members. Symbolic dimension this dimension takes into account the Cultural values that distinguish an organisation from the others. Functional Organisation The functional organisation is aligned to the main functions of the organisation. CEO Marketing Production Sales Data Processing Marketing Staff Production Staff Sales Staff DP Staff Advantages!" Individual experts can be used across multiple projects!" Specialists can be grouped!" Provides technical continuity!" Provides promotion paths Disadvantages!" The client is not the focus of activity and concern!" Fragmented responsibility for a project!" Poor integration across divisions!" Too many layers of management Project Organisation The project organisation sees the project as the main unit of management. CEO IT Project Manager New Plant Project Acquisition Project IT Project Staff New Plant Project Staff Acquisition Project Staff Advantages!" Project manager has full line authority!" All team members are directly responsible to the project manager!" Short lines of communication Rob Jeges 13

Processes and Organisation!" Highly efficient in repetitive projects of similar nature!" Motivated team Disadvantages!" Duplication of effort!" Silo specialisation reduces overall skills!" Uneven adherence to company policy!" Team member alienation and concern with career after project completion Matrix Organisation The matrix organisation is a hybrid between functional organisation and project organisation. Its main characteristic is the dual accountability and lines of authority required for it to operate successfully. CEO Program Management Sales Department Production Plant IT Department New Plant Project Staff X Staff X Staff X IT System Project Staff Y Staff Y Staff Y Advantages!" Most benefits of project organisations!" Sharing of skilled resources!" Flexibility and responsiveness to client requirements!" Company policy is implemented evenly Disadvantages!" Critical balance of power!" Generates conflict between project managers for access to critical resources!" Difficult to close projects!" Violation of the principle of unity of command Organisation Structure Influences on Projects Depending on the organisational structure of the performing organisation, the project will experience different degrees of independence and authority to perform the required tasks: Project Characteristics Functional Matrix Project Project Manager's authority Little or none Low to moderate Very high Full time staff Virtually none 15-60% 85-100% Project Manager's role Part time Full time Full time Administrative staff Part time Full time Part time Maturity Levels There are 3 types of project management capabilities, corresponding with 3 levels of organisations:!" Amateur adequate for routine-based operational organisations. 14 Rob Jeges

Processes and Organisation!" Semi-professional sufficient for organisations in transition.!" Professional required in project-based organisations where projects are the dominant management activity. Amateur Project Manager The first level is characterised by a focus in the end result with little regard or use of project management tools and techniques. They are seen more as a hindrance than assistance. This level is best described as the "just-do it" approach. Project completion is the major success factor High incidence of project failure.!" Incomplete!" Over budget!" Missed deadlines!" Quality issues Semi-professional Project Manager At this stage project management tools and techniques are recognised and used with varied results. Some work but others are difficult to implement and the results are not always satisfactory. Follows a prescribed process Includes major project management functions.!" Scope definition!" Time Management!" Cost Management!" Project Integration Professional Project Manager At the highest level of maturity there is great flexibility and careful consideration to the management approach. The selection of tools and techniques is influenced by the needs of the project and its stakeholders, not to comply with a prescribed process. Flexible application of methodology Manages the outcome, not the process. Can shorten or skip steps to achieve a result. Focuses on what needs to be done, not on what has been done. Rob Jeges 15

Core Functions Learning Objectives On completion of this module you should be able to:!" Describe the purpose of a Concept Statement!" Understand how to develop a WBS!" Explain the different types of task dependency!" Understand Critical Path Method!" Estimate resource requirements and costs!" Describe some estimating techniques Scope Management Activities There are five activities in the scope management function. Three activities are mandatory and two activities are discretionary. Initiation decision to begin a project or project phase. Scope planning preparation of the project documentation. Scope definition subdivision of de the major project deliverables into smaller, more manageable components and document for future project decisions. Scope approval formal acceptance of the project scope by stakeholders. Scope management management and control of changes to project scope. Methods for Selecting Projects There are usually more projects than available time and resources to implement them. This requires the sponsoring organisation to select the projects that will maximise value. Selection methods include:!" Focusing on strategic needs!" Financial analysis!" Weighted scoring models Other factors include allocation of capital, organisational readiness and maximisation of shareholder value. Concept Statement After deciding what project to implement, it is important to formalise its selection. A Concept Statement is a document that formally recognises the existence of a project and provides direction on the project's objectives and management organisation. Rob Jeges 17

Core Functions The key project stakeholders should sign the Concept Statement, agreeing on the need and intent of the project. The Concept Statement is used to develop and confirm a common understanding of the project scope. The main elements of the document are:!" Project justification!" Brief description of the project's objective!" Summary of all project deliverables!" Main roles and responsibilities!" A statement of what determines project success Activity 2.1 Develop a Concept Statement for your current project. Estimated Budget: An approximate cost of the project, divided into the following categories: Capex: Capital expenditure, such as equipment, royalties and property. Opex: Operational expenditure. These expenses include personnel costs, leases, licence costs, maintenance and consumables. Management Reserve: Funds allocated to contingency and unforseen expenses. The project cost should be reviewed after a detail plan is completed. Objectives: The objectives of the project are the specific outcomes to satisfy the purpose of the project. The Objectives must be Specific Measurable Achievable Realistic Timely Scope and Constraints: A list of all the specific items that the pr3(i)1illy ftal-9.2(o)teli-9.2(ta12.5 18 Rob Jeges

Core Functions The Work Breakdown Structure After completing scope definition, the next step is to further define the work by breaking it into manageable pieces. Good scope definition:!" Helps improve the accuracy of time, cost, and resource estimates!" Defines a baseline for performance measurement and project control!" Aids in communicating clear work responsibilities A work Breakdown structure (WBS) is an outcome-oriented analysis of the work involved in a project that defines the total scope of the project. The WBS is a foundation document in project management because it provides the basis for planning and managing project schedules, costs, and changes. Approaches for Developing a WBS There are a number of approaches to develop a WBS. A combination of strategies is sometimes the best approach.!" Using guidelines some organisations develop guidelines for preparing a WBS.!" The analogy approach it often helps to review the WBS of similar project.!" Top-down approach start with the largest items of the project and keep breaking it down. Bottom-up approach start with the detailed tasks and roll them up. Activity 2.2 Work Breakdown Structure Develop a WBS for your current project. Phase: The first level of work subdivision Activity: Each Phase is further divided at a second level. Rob Jeges 19

Core Functions Task: Specific units of work that can be assigned to individual resources. Time Management Activities There are five activities in the time management function. Four activities are mandatory and one activity is discretionary. Activity definition Specification of the work and division of labour. Activity sequencing Establishing the dependencies. Duration estimation Elapsed time based on effort and resources. Schedule development Preparing a project network and determining the critical path. Schedule control Coordination of changes and updates to the schedule. Task Sequencing Task sequencing Involves reviewing tasks and determining dependencies:!" Mandatory dependencies inherent in the nature of the work. These dependencies cannot be altered.!" Discretionary dependencies defined by the project team, usually as the result of constraints and arbitrary priorities. Changing the assumptions that produce them can modify these dependencies.!" External dependencies involve relationships between project and non-project activities. Examples of external dependencies include approvals and external audits. You must determine dependencies in order to use critical path analysis. This is a technique to predict and manage the total project duration. Types of Work Work effort depends on the resources employed. There are 3 types of task: Perfectly divisible task the work can be distributed to any number of resources. The total effort remains constant, but the unit effort is inversely proportional to the number of resources, therefore the total time decreases as resources increase 20 Rob Jeges

Core Functions Un-divisible task the work cannot be divided, and more resources have no effect on the total time required. Complex interrelationships Division of the work requires communication and synchronisation. As the number of resources increases, a diminution of the total time is replaced by an increase of the total time required as the communication overhead increases. Estimating Task Duration The elapsed time is the total duration of the task, including unproductive time waiting for resource availability or other external event. There are two steps to determine the elapsed time or duration of a task. Firstly, the effort required to complete the task needs to be estimated. The effort divided by the amount of resources gives an indication of effective work duration. The lag time, or delays is added to this figure to arrive at the elapsed time. The effective work duration depends on the number and efficiency of the resources. A common practice is to allocate "standard productivity" resources. The plan can be revised by changing the productivity factor at a later stage. This is one of the functions of resource management. Work Effort Duration = + lag time ResourceUnits Work can be classified into different types: Discrete Effort Tasks with a specific end-result. The effort is usually proportional to the task size. Level of Effort Work that does not result in a final product, such as management and control activities. The effort is constant. Apportioned Effort Effort that by itself is not divisible into small units but is related to some other measured effort. Testing and architectural design are examples of this work. Gantt Charts Gantt charts provide a standard format for displaying project schedule information. Activities and their corresponding start and finish dates are shown in a calendar format. Dependencies are shown as connecting arrows. Rob Jeges 21

Core Functions The WBS structure can be implemented to assist with the maintenance of all related documents. Milestones are activities with no duration. They can have resources assigned to them, and denote significant events in the project life. Critical Path Method (CPM) The critical path for a project is the series of activities that determines the earliest time by which the project can be completed. Developing the Critical Path The critical path is the longest path through the network diagram that has no slack. There can be multiple paths with identical duration. In this case the critical path is the collection of all these equal paths. If one of more activities on the critical path takes longer than planned, the whole project schedule will slip unless corrective action is taken. On the other hand, if one or more activities in the critical path take less time to complete, then the project duration will reduce until another critical path becomes predominant. Controlling Changes to the Project Schedule Change is an inescapable reality during the life of a project. There are a number of tasks that can be performed to ensure that change is properly incorporated in the project plan.!" Perform reality checks on schedules. Peer reviews are a good way to validate assumptions.!" Allow for contingencies. These have to be explicitly addressed, not as inflated time estimates.!" Don't plan for everyone to work at 100% capacity all the time. Allow for holidays, study leave, sick leave, etc.!" Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues. Project Cost Management Activities There are four activities in the cost management function. Three activities are mandatory and one activity is discretionary. Resource planning determining what resources and quantities of them should be used. Cost estimating 22 Rob Jeges

Core Functions developing an estimate of the costs and resources needed to complete a project. Cost budgeting allocating the overall cost estimate to individual work items to establish a baseline for measuring performance. Cost control controlling changes to the project budget. Estimating Resources Cost and time estimates depend on:!" What resources are used!" For how long they are used!" Quantities used Resources include:!" People!" Contractors!" Facilities!" Materials!" Equipment Cost Estimation Tools and Techniques There are four main techniques to estimate costs. Each technique has its pros and cons.!" Analogous or top-down use the actual cost of a previous, similar project as the basis for the new estimate.!" Bottom-up or detailed estimate individual work items and sum them to get a total estimate.!" Parametric use project characteristics in a mathematical model to estimate costs.!" Unit rate apply unit rates to resources assigned to WBS elements. Monitoring and Control of the Budget The main tasks required to monitor costs are:!" Collect actual costs (in accrual form). The objective is to measure Capturing Actuals the performance of the project, not to produce accounting reports.!" Collect progress measures. This is a measure of how much work has been performed.!" Compare with the budget.!" Analyse and report variances and manage corrective action. Rob Jeges 23

Project Integration Learning Objectives On completion of this module you should be able to:!" Develop a project plan!" Identify the project stakeholders!" Develop a communications plan!" Run better meetings!" Identify sources of risk and areas of impact!" Develop risk treatment strategies Integration Management Activities There are three mandatory activities in the integration management function: Project plan development taking the results of other planning processes and putting them into a consistent, coherent document the project plan. Project plan execution carrying out the project plan. Overall change control coordination of changes across the entire project. The Project Plan These are the main elements of a project plan. This can be used to develop a table of contents. Description of the background and rationale for the project!" Strengths, weaknesses. Opportunities and Threats!" Economic and strategic justification Definition of the scope and objectives!" Deliverables and Milestones!" Budget!" Environment Assumptions and constraints!" Economic!" Technological!" Environmental Broad description of the strategy!" Time available!" Preliminary risk assessment!" Resource constraints!" Customer requirements!" Product constraints Rob Jeges 25

Project Integration!" Business constraints!" Project size and complexity Master schedule Project budget and contingency allocation Quality plan Organisational structure and resource allocation Risk plan!" Contractual matters Communications plan and stakeholder identification!" Reporting structure Change management procedures Stakeholders There are a number of people with an interest in the project. These people are known as the stakeholders. Stakeholder Categories The stakeholders will have an impact on the outcome of the project. They will have influence over the execution of the project. They will also be affected by the project; they can be supporters of the project or opponents to it. Stakeholders can be classified into a number of categories. This will help to develop strategies to manage their influence in the project.!" Members of the client organisation!" End users!" Regulatory authorities!" Members of the community!" Own organisation!" Members of the project team!" Vendors and suppliers Management of Stakeholders There are a number of key questions that can help to develop a stakeholder management plan: Who are the stakeholders of this project?!" Identification of the individuals and classification into a group What influence or impact can they have?!" What is the motivation behind a specific behaviour 26 Rob Jeges

Project Integration Activity 3.1 Stakeholder Analysis What is the level of impact?!" Low!" Medium!" High!" Critical Action plan to protect the project outcome Identify the stakeholders in your project and develop a stakeholder management plan. Communications Management Activities There are four discretionary activities in the communications management function. Communications planning determining the information and communications needs of the stakeholders. Information distribution making needed information available in a timely manner. Performance reporting collecting and disseminating performance information. Administrative closure generating, gathering, and disseminating information to formalise phase or project completion. Stakeholder Communications Analysis The purpose of the stakeholder communications analysis is to identify the group of people that need information about the project, and to select the best strategy to address that information need. The following elements need to be specified:!" Audience identification of the stakeholders that need to be kept informed of the activities and progress of the project.!" Information specific needs for information vary between stakeholders.!" Media choose the best media and distribution channel to satisfy the audience.!" Frequency how often does the information need to be communicated and also response to exceptional events? Activity 3.2 Prepare a communications plan for your project. Communications Plan Performance Reporting Status Report Performance reporting keeps stakeholders informed about how resources are being used to achieve project objectives. Status reports describe where the project stands at a specific point in time. Rob Jeges 27

Project Integration Progress reports describe what the project team has accomplished during a certain period of time. Project forecasting predicts future project status and progress based on past information and trends. Status review meetings often include performance reporting. Common Reporting Problems Too much detail puts a burden on the team and is not used upstream.!" Reduced usability!" Careless preparation Poor interface between the project report and the organisation's MIS.!" Accounting periods!" Client liaison Poor correspondence between planning and monitoring. Conducting Effective Team Meetings (4P Model) Meetings can be a very effective media to communicate wit the project team, but if not properly structure can be a waste of time and a source of frustration. Here is a simple model that can help to plan an effective meeting and to avoid the common pitfalls of ineffective meetings. Purpose!" Information sharing!" Commitment building!" Information dissemination!" Problem solving and decision making Participants!" Decision making 5!" Brainstorming 10!" Seminars 15!" Presentations unlimited Planning!" Agenda!" Time distribution and management!" Reports!" Minutes Process!" Review and introduction!" Ground rules 28 Rob Jeges

Project Integration!" Reports!" Participation Risk Management Activities There are six activities in the risk management function. One is mandatory and five are discretionary. Risk management planning defining the approach to be taken. Risk identification determining which risks are likely to affect a project. Risk qualification Risk quantification evaluating risks to assess the range of possible project outcomes. Risk response development taking steps to enhance opportunities and developing responses to threats. Risk response control responding to risks over the course of the project. Risk Identification Risk identification is the process of understanding what potential adverse outcomes are associated with a particular project. Several risk identification tools commonly used include checklists, flowcharts, and interviews. Types of Analysis There are three types of analysis, depending on the data available.!" Qualitative analysis uses words from a descriptive scale to describe the magnitude of potential consequences and the likelihood that those consequences will occur. This is a subjective analysis done in the absence of hard data.!" Semi-quantitative analysis arbitrary values are assigned to the descriptors. This enables arithmetic manipulation of the results.!" Quantitative analysis uses numeric values for both consequences and likelihood. The quality of the analysis depends on the quality of the data Qualitative Measures of Impact The following scale provides 5 points to classify the impact. A threepoint scale can be used to simplify the process. 1. Insignificant low financial loss. 2. Minor medium financial loss and some delays. 3. Moderate high financial loss and severe delays. 4. Major loss of production capability, uncertain schedule. 5. Catastrophic environmental impact, huge financial loss. Rob Jeges 29

Project Integration Qualitative Measures of Likelihood A. Almost certain it is expected to occur in most circumstances. B. Likely it will probably occur in most circumstances. C. Possible it might occur at some time. D. Unlikely it could occur at some time. E. Rare it may occur only in exceptional circumstances. Qualitative Risk Analysis Matrix Quantified risks are plotted in the grid for an overall assessment. Activity 3.3 Risk Analysis Risk Quantification Identify the major risks affecting your project. Risk quantification or risk analysis is the process of evaluating risks to assess the range of possible project outcomes. The key outcome of risk quantification is to determine the risk's probability of occurrence and its impact to the project if the risk does occur. Risk quantification techniques include expected monetary value analysis (EMV), calculation of risk factors, PERT estimations, simulations, and expert judgment. Risk Response Development There are three basic strategies to deal with risks once they have been identified and quantified:!" Risk avoidance eliminating a specific threat or risk, usually by eliminating its causes.!" Risk acceptance accepting the consequences should a risk occur.!" Risk mitigation reducing the impact of a risk event by reducing the probability of its occurrence. 30 Rob Jeges

Project Integration Risk Response Control Issues Log Risk response control involves executing the risk management processes and the risk management plan to respond to risk events. Risks must be monitored based on defined milestones and decisions made regarding risks and mitigation strategies. Sometimes workarounds or unplanned responses to risk events are needed when there are no contingency plans. Rob Jeges 31

Support Functions Learning Objectives On completion of this module you should be able to:!" Describe the allocation of work and the RAM!" Discuss staff acquisition and team development!" Describe the main procurement processes!" Explain the balanced scorecard method!" Discuss the project management quality activities!" Explain how to improve project quality Human Resource Management Activities There are three discretionary activities in the HR management function. Organisational planning Deciding on the best organisational structure for the project. Staff acquisition Selection and recruitment of the necessary skilled resources. Team development Ongoing management of the team and project needs. Organisational Planning Organisational planning involves identifying, documenting, and assigning project roles, responsibilities, and reporting relationships. Outputs and processes include:!" Project organisational charts (OBS)!" Work definition and assignment process!" Responsibility assignment matrix (RAM)!" Work packages!" Resource histograms Organisation Breakdown Structure (OBS) The organisational breakdown structure (OBS) defines the management structure in the project, and identifies each role. Organisation Breakdown Structure Required people and skills!" Numbers, expertise and availability Where will the people come from!" Internal availability v/s external recruitment!" Career management Project organisation structure!" Control and supervision v/s autonomy and specialisation Defined Roles and functions Rob Jeges 33

Support Functions Responsibility Assignment Matrix (RAM) The responsibility assignment matrix (RAM) enables to allocate tasks to the individuals identified in the OBS. Various roles can be defined, such as the main responsible, contributor or supervisor. The tasks are defined in the WBS. 34 Rob Jeges

Support Functions!" Storming during this phase of team development differences lead to conflict!" Conforming the third phase is characterised by conflict resolution through regulation and rule setting!" Performing the stage when the team is most productive.!" Adjourning A period of restlessness and uncertainty about the future after the project. Productivity is affected by the individual needs of the team members. Rewards and recognition Target behaviours and outcomes Allow for team and individual needs Procurement Management Activities There are six activities in the procurement management function. One activity is mandatory and four activities are discretionary. Procurement planning determining what to acquire and when. Tender planning documenting requirements and identifying potential sources Tendering obtaining quotations, bids, offers, or proposals. Source selection choosing from amongst potential vendors. Contract administration managing the relationship with the vendor. Contract closeout completion and settlement of contracts. The Procurement Management Process There are six major stages in the procurement process: Rob Jeges 35

Support Functions Statement of Work The Statement of Work (SOW) is the document used to communicate with the prospective vendor. Statement of Business Requirements. Provided for legal protection. Detailed User requirements and specifications. Clear and unambiguous as changes are very hard to implement after bids are received. Draft contractual arrangements. To establish legal basis of agreement. Source Selection Source selection involves the following phases:!" Evaluating tender proposals!" Choosing the best one (lowest price and risk)!" Negotiating the contract!" Awarding of the contract It is helpful to prepare formal evaluation procedures for selecting vendors. Balanced Scorecard Model A balanced scoring model provides a systematic process for selecting options based on multiple criteria:!" Identify criteria important to the selection process!" Assign weights (percentages) to each criterion so they add up to 100%!" Assign scores to each criterion for each project The higher the weighted score, the better the solution. Activity 4.1 Selection Criteria Design and apply selection criteria for a specific product. A template is available at the website. 36 Rob Jeges

Support Functions Project Quality Management Activities There are three discretionary activities in the quality management function. Quality planning identifying which quality standards are requires for this particular project. Quality assurance evaluating overall project performance to ensure the project will satisfy the relevant quality standards. Quality control monitoring specific project results to ensure that they comply with the relevant quality standards while identifying ways to improve overall quality. Characteristics of a Quality Control System A quality control system should have the following characteristics in order to be effective:!" Selection of what to control!" Set of standards as a baseline!" Establish a measurement method!" Compare actuals observations with expected values!" Act to correct deviations!" Calibration of the measurement method Improving Project Quality Several suggestions for improving quality in projects include:!" Leadership that promotes quality!" Understanding the cost of quality!" Focusing on organisational influences and workplace factors that affect quality!" Following maturity models to improve quality Project Management Maturity Model 1. Ad-Hoc no defined systems and processes. Project success depends on individual effort. 2. Abbreviated there are systems in place to track cost, schedule, and scope. 3. Organised there are standardised project management processes and systems that are integrated into the rest of the organisation. 4. Managed management collects and uses detailed measures of the effectiveness of project management. 5. Adaptive feedback from the project management process enables continuous improvement. Rob Jeges 37

Glossary Activity A unit of work defined under the work breakdown structure. It is composed of one or more tasks. Actual Cost The cost actually incurred and paid for. Actual Dates The dates of task commencement and termination as the project progresses. Baseline A copy of the project schedule before the project is started used for measuring progress against the current schedule. Bottom Up Cost Estimating A method of estimating every task in the work breakdown structure and aggregating them to provide a total project cost estimate. Budget Cost The cost anticipated at the start of a project. Concept Statement Document describing the purpose of the project and strategy to perform. Configuration Management A process to define and monitor the technical specifications of the system or product being delivered by the project. Constraints Limitations such time and cost affecting the execution of the project. Contingency A reserve of resources to cater for unforseen situations. Contract An agreement between parties where an offer has been accepted and a consideration of value exchanged. Cost Overrun The amount by which the actual cost exceeds the budgeted cost. Critical Path Series of consecutive critical activities that represent the longest path through the project network. It defined the total project duration. Dependencies Relationships between tasks that determine the sequence of execution. Direct Costs Costs that can be unequivocally related to work performed. Rob Jeges 39

Glossary Discrete Effort Tasks that have a specific measurable end result. Duration Length of time required for the completion of a task. Effort The number of work units necessary to complete a task. Effort is usually expressed in resource days, hours or months. Elapsed Time Elapsed time is the total number of calendar periods required to complete a task. Fixed Price Contracts A generic category of contracts based on the establishment of firm legal commitments to complete the required work. At a fixed price. The vendor wears the risk. Functional Organisation An organisational structure where the company is divided into its main operating functions. Gantt Chart Time-phased graphic display of task durations and dependencies. Impact The adverse effects of an occurring risk. Indirect Cost Resource costs that are not directly identified to any specific task. Work that does not result in a direct outcome and which cannot be effectively associated with a task. Likelihood The probability that a risk will occur. Matrix Organisation An organisational structure where the Project Manager and the Functional Managers share the responsibility of assigning priorities and for directing the work. Milestones A milestone is a task with zero duration. Monitoring Analysis and reporting of project performance as compared to the plan. Organisational Breakdown Structure (OBS) A hierarchical structure defining responsible parties for each part of a project. Overall Change Control The coordination of changes across the entire project Overhead Costs incurred in the operation of a project that cannot be directly related to the individual tasks. Overload The amount of required effort that exceeds the resource limit. 40 Rob Jeges

Glossary Overrun An overrun is the amount of money needed to complete a project, over the budget originally authorised by management. Performing Organisation The organisational unit responsible for the performance and management of resources to accomplish the project. Phase A high level hierarchical element in the work breakdown structure. Post Implementation Review A review of the outcome between 6-12 months after a project has completed. Predecessor A task that must be completed before another specified task can begin. Process A set of interrelated work activities in which value is added to the inputs to provide specific outputs. Program Evaluation and Review Technique (PERT) PERT is a technique for estimating how much time is required for a project to complete. It is based on the probabilistic distribution of time among tasks. Progress Payments Payments made to a contractor during the life of a fixed-price type contract, on the basis of some agreed formula linked to progress. Project A set of interrelated activities directed to a common goal. Project Lifecycle The series of events, from beginning to end, necessary to perform project. Project Manager The Project Manager is the individual responsible for the day-to-day management of the project. Project Matrix An organisation structure that is project based but in which the functional structures are duplicated within the project. Project Schedule Planned start dates for tasks and milestones. Project Status Report A report on the status and any variances to spending and schedule plans. Qualitative Risk Analysis Subjective methods for assessing risk. Quality The totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs. Rob Jeges 41

Glossary Quality Assurance (QA) The process of evaluating project processes on a regular basis to verify that they meet project quality standards. Quality Control (QC) The process of monitoring specific project outcomes to verify that they meet quality specifications. Recurring Costs Expenditures against specific tasks that occur on a repetitive basis. Relationship A logical connection between two tasks that establish their sequence of execution. Remaining Duration Time needed to complete the remaining work of a task. Request for Change A proposal to the project manager for a change to the project scope. Request for Proposal (RFP) A bid document used to request proposals from prospective vendors of products or services. Request for Quotation (RFQ) Equivalent to a Request for Proposal but with more specific pricing information. Resource An item required performing a task. Resources can be people, equipment, facilities, funding or anything else needed to perform the work of a project. Resource Assignment The work on a task relating to a specific resource. Resource Driven Task Durations Task durations that are driven by the use of scarce resources. Resource Histogram A chart where resource requirements, usage, and availability are shown on a time scale. Resource Levelling A resource scheduling process of determining scheduled dates by ensuring that resources are not over committed. Responsibility Assignment Matrix (RAM) The RAM correlates the work required by the project (WBS) with the element of the functional organisation responsible for accomplishing the assigned tasks (OBS). Risk The probability of an undesirable outcome multiplied by the impact of that outcome. Risk Avoidance Planning activities to avoid risks that have been identified. Risk Event A discrete occurrence that affects a project. 42 Rob Jeges

Glossary Risk Identification Determining which risk events might affect the project. Risk Matrix A matrix with risk likelihood located in rows, and with risk impact in columns. Risk Prioritising Ordering of risks according to their risk value to be considered for risk reduction, risk avoidance, and risk transfer. Risk Quantification Evaluating the likelihood and impact of risks. Scheduling Scheduling is the process of determining when project activities will take place depending on defined durations and precedent activities. Schedule constraints specify when an activity should start or end based on duration, predecessors, external predecessor relationships, resource availability, or target dates. Scope The scope is the sum of work content of a project. Slippage Slippage is the amount of slack or float time used up by the current activity due to a delayed start. If an activity without float is delayed, the entire project will slip. Sponsor A sponsor is a person or group concerned with the ultimate success of the project in terms of achieving its business objectives. Stakeholders Stakeholders are the people who have a vested interest in the outcome of the project and the manner in which it is performed. Statement of Work (SOW) A statement of requirements and description of the product or service to be procured under a contract. Successor A successor is a task whose start or finish depends on the start or finish of a predecessor task. Task A task is the smallest unit of work defined in the work breakdown structure. Tendering The process of obtaining quotes, bids or proposals. Tender Planning Identifying targets for quotes, bids or proposals. Time-Limited Resource Scheduling Scheduling of dates in which resource constraints are relaxed in order to avoid any delay in project completion. Rob Jeges 43