HAPPY WEEK - 2

Project Management
 Activity
• Consider a personal project that
you have been involved with in
the last few years, such as
moving your residence or buying
a Vehicle. Describe the activities
related to that project that fit into
each of the four project phases.
Case Studies
Consider a project that involves the
merger of computer systems of two
banks. The acquiring bank wants to
convert the other bank’s computer
system to its own software, and the
project is to convert all the client
account files. The software used by
the acquiring bank is relatively new,
and only about a third of the project
team is familiar with it.
A steel company in Indiana purchased a new coal
injection technology that would improve the quality
of steel, reduce the cost to produce the steel, and
reduce air and water pollution. The contract to
design and construct the new plant was awarded to
an engineering and construction company. No one
on the engineering and construction team had
experience with the coal injection technology.
The client’s team understood the technology and
provided guidance to both the project engineering
and construction teams. The client owned the coal
injection technology, and the engineering and
construction team brought the project management
technology.
 Project Classification
There is no standard classification of the
projects. However considering project goals,
these can be classified into two broad groups,
Industrial and Developmental.
Each of these groups can be further classified
considering nature of work (repetitive, non-
repetitive), completion time (long term, short
term etc.), cost (large, small, etc.), level of risk
(high, low, no-risk), mode of operation ( build,
build-operate-transfer etc.).
 A ) Industrial Projects
Industrial projects also referred as
commercial projects, which are undertaken
to provide goods or services for meeting the
growing needs of the customers and
providing attractive returns to the
investors/stake holders.

These projects are further grouped into two

categories i.e., Demand based and resource
/ Supply based.
 Demand Based Projects
Are designed to satisfy the
customers’ felt as well the
latent needs such as complex
fertilizers, agro-processing
infrastructure etc.
Resource/ Supply Based Projects
Are those which take advantage of the available
resources like Land, water, agricultural produce, raw
material, minerals and even Human resource.
Projects triggered by successful R&D are also
considered as supply based projects.
Examples of resource based projects include Food
Product Units, Metallurgical Industries, Oil
Refineries etc.
Examples of projects based on human resource
(skilled) availability include projects In IT sector,
Clinical Research projects in bio services and
others.
 B ) Development Projects
Are undertaken to facilitate the promotion
and acceleration of overall economic
development. These projects act as
catalysts for economic development
providing a cascading effect. Development
projects cover sectors like Irrigation,
Agriculture, Infrastructure, Health and
Education.
 Difference between Industrial and Developmental Projects
Dimension Industrial Project Developmental Project
Scale of Project Limited Large
Promoters Entrepreneurs or corporates Government, Public Sectors,
NGOs

Investment ---- High

Gestation Period ----- High
Profitability High, Considered on IRR Modest, Considered on ERR
(Internal Rate of Return) (Economic Rate of Return)

Source of fund National stock markets and International organizations

from domestic financial like World Bank,
institutions IMF,ADB,DFID and others
mostly as loan ,yet times
providing for some grants.
Resource requirement for a Project

Human Resources
Material Resources
Financial Resources
Time Resources
Project Management is the application of
Knowledge, Skills, Tools and Techniques to
project activities to meet project requirements.

Project management is accomplished through

the use of the processes such as −
Initiating
Planning
Executing
Monitor and Controlling
Closing
 A program consists of a group of related projects and
Program management is the process of managing multiple
on going projects. An example would be that of designing,
manufacturing and providing support infrastructure for an
automobile make.

 Program management involves centrally managing and

coordinating groups of related projects to meet the
objectives of the program.

 In some cases Project Management is a subset of Program

Management. The project manager may report to the
program manager in such cases. A portfolio consists of
multiple programs.
Why do we need Project Management?
 Project management is needed to manage projects effectively and drive
them to success. Project Management starts with the decision to start a
project upon weighing its need and viability. Once a project starts, it is
crucial to watch the project progress at every step so as to ensure it
delivers what all is required, in the stipulated time, within the allocated
budget.
Other drivers influencing the need of project management are −
 Exponential expansion of human knowledge
 Global demand for goods and services
 Global competition
 Team is required to meet the demand with quality and
standard.
 Improved control over the project
 Improved performance
 Improved budget and quality
Project Scope Management
 Project Scope Management
 Product Scope : the features and functions that characterise
a product or service.

 Project Scope : the work that must be done to deliver a

product with the specified features and functions.

 Project scope management consists to ensure that the

project includes all the work required, and only the work
required, to complete the product successfully.
 Project Scope Management
A subset of project management
that includes the processes
required to ensure that the project
includes all of the work required,
and only the work required, to
complete the project successfully.
It consists of initiation, scope
planning, scope definition, scope
verification, and scope change
control.
 Scope Definition. Subdividing the major deliverables into
smaller, more manageable components to provide better
control.
 Scope Planning. The process of progressively elaborating
the work of the project, which includes developing a written
scope statement that includes the project justification, the
major deliverables, and the project objectives.
 Scope Statement. The scope statement provides a
documented basis for making future project decisions and
for confirming or developing common understanding of
project scope among the stakeholders. As the project
progresses, the scope statement may need to be revised or
refined to reflect approved changes to the scope of the
project.
 Scope Verification. Formalizing acceptance of the project
scope.
Project Scope Change Management
 Project Scope Change Management
 Any change to product and/or project scope must follow a
formal process.
 This process must finish with the formal acceptance of the
change by the different stakeholders.
A Change Request May Be The Result Of :
 An external event (e.g.. Change in a government regulation)
 an error or omission in defining the scope of the product
(adding a failure system regulation).
 an error in defining the scope of the project (a missing
inspection)
 a value adding change (positive opportunity)
 a response to an identified risk (see section about risk
management)
Possible Evolutions In Product Scope
Monitoring Project scope during the project
 Monitoring Project scope during the project

A universal tool ……
Portfolio Management
 Portfolio Management
 A portfolio is a collection of projects, programs sub portfolios, and
operations that are grouped together to facilitate effective management of
that work to meet strategic business objectives. Organizations manage
their portfolios based on specific goals.

 Senior managers or senior management teams typically take on the

responsibility of portfolio management for an organization.

 Portfolio management encompasses managing the collections of

programs and projects in the portfolio. This includes weighing the value of
each project, or potential project, against the portfolio's strategic
objectives.

 Portfolio management also concerns monitoring active projects for

adherence to objectives, balancing the portfolio among the other
investments of the organization, and assuring the efficient use of
resources.
 Examples of Portfolio Management
An infrastructure firm that has the strategic
objective of maximizing the return on its
investments may have a portfolio of:
Projects in oil & gas
Projects in power
Projects in water
Projects in roads
Projects in rail
Projects in airports
Program Management
 Program Management
Program Management is defined as a group
of related projects managed in a coordinated
way to obtain benefits and control not
available from managing them individually.

Programs may include elements of related

work outside the scope of the discrete
projects in the program.

A program will always have projects.

 Program Management
It focuses on the project interdependencies
and help to determine the optimal approach
for managing them.
Resolve resource constraints & conflicts
Aligning organizational direction
Resolve issues and change management
within a shared governance structure
 Example of a Program Management
A new communication satellite system:
Designing of a satellite and ground
system
Construction of a satellite and ground
station
Integration of the system
Launching of the satellite
 Project Management
Vs
Operation Management

Operations are permanent endeavors that

produce repetitive outputs with resources
assigned to do same set of tasks
It is an ongoing nature of operations
Projects are unique
Projects are temporary endeavors
Difference between Project and
Production
 A project has a defined beginning and end in time and is
unique in that it is not a routine operation, but a specific set of
operations designed to accomplish a singular goal and often
includes people who don’t usually work together. At the end
of a project, the team is usually disbanded and assigned to
new projects with new team members.

 A product is a good, service, platform, application, system,

etc. that is created, maintained and supported by solving
problems and providing benefits to specific customer and
business needs. Products tend to be maintained by a stable
group of individuals who do work together regularly and who
bring in others as needed.
Product Management Vs Project Management

 Product management deals with the processes of

planning, forecasting and marketing of a product or
service throughout all the stages of the product
lifecycle.

Project management, on the other hand, involves

the achievement of the goals of a specific project by
implementing methods, processes, knowledge, and
experience. Project managers require technical
expertise in particular disciplines and have sector-
relevant backgrounds.
 Laws of Project Management

 Projects progress quickly until they are 90%

complete. Then they remain at 90% complete
forever.

 When things are going well, something will go wrong.

When things just can’t get worse, they will. When
things appear to be going better, you have
overlooked something.

 If project content is allowed to change freely, the rate

of change will exceed the rate of progress.

 Project teams detest progress reporting because it

manifests their lack of progress.
 How it should go
Requirements
Analysis

Design

Implementation

System Testing

Delivery and Installation

 How it often goes
Requirements
Analysis

D
E
L
A
Y
Vaporware
Project Management Activities
Initiation

Problem statement
definition

Initial top-level Initial milestones

design planning

Team formation Communication

infrastructure setup

Project kickoff
 Project kickoff
Steady state

Status monitoring Risk management

Project replanning Project agreement

Termination

Installation Client acceptance test Postmortem

 Project: Functions, Activities and Tasks

f1:Function
p:Project
f2:Function

a1:Activity a2:Activity a3:Activity

a2.1:Activity a2.2:Activity a2.3:Activity

t1:Task t2:Task t3:Task t4:Task

 Functions
• Activity or set of activities that span the duration of the
project
f1:Function
p:Project
f2:Function

a1:Activity a2:Activity a3:Activity

a2.1:Activity a2.2:Activity a2.3:Activity

t1:Task t2:Task t3:Task t4:Task

 Tasks
 Smallest unit of management accountability
– Atomic unit of planning and tracking
– Finite duration, need resources, produce tangible result
(documents, code)
 Specification of a task: Work package
– Name, description of work to be done
– Preconditions for starting, duration, required resources
– Work product to be produced, acceptance criteria for it
– Risk involved
 Completion criteria
– Includes the acceptance criteria for the work products
(deliverables) produced by the task.
 Tasks
f1:Function
p:Project
f2:Function

• Smallest unit of
work subject to
a1:Activity a2:Activity
management

• Small enough for

adequate planning
a2.1:Activity a2.2:Activity and tracking

• Large enough to
avoid micro
t1:Task t2:Task t3:Task management
 Activities
f1:Function
p:Project
f2:Function

a1:Activity a2:Activity
• Major unit of work
with precise dates

a2.1:Activity a2.2:Activity
• Consists of smaller
activities or tasks

t1:Task t2:Task t3:Task

• Culminates in project
milestone.
Project Manager
 Project Manager
The primary role of the project manager is to lead,
to provide a vision of success, to connect everyone
involved in the project to that vision, and to provide
the means and methods to achieve success. The
project manager creates a goal-directed and time-
focused project culture. The project manager
provides leadership.
On some projects, the project manager may
provide direction to the technical team on the
project. On other projects, the technical leadership
might come from the technical division of the parent
organization.
 Project Manager

Focuses on a specific project objective

Controls resources to best meet project
objectives
Manages the constraints (scope, schedule,
cost and quality etc) of individual project
Main Functions of a Project Manager
Define scope of project
Identify stakeholders & Leadership (decision
makers: Client, Parent organization, Project Team,
Publics)
Evaluate project requirements
Develop detailed task list (work breakdown,
structures)
Develop initial project management flow chart
Estimate time requirements
Identify cost estimation and budget
Identify required resources and evaluate risks
Main Functions of a Project Manager
Prepare contingency plan
Identify interdependencies
Identify and track critical milestones
Secure needed resources, manpower
Participate in project phase review
Manage the change control process
Report project status
 Project Management Skills
Three dimensions ( 3-D )of project management competencies are :-

 Project Management Knowledge Competency − This refers

to what the project management team knows about project
management.
 Project Management Performance Competency − This
refers to what the project management team is able to do or
accomplish while applying their project management
knowledge.
 Personal Competency − This refers to how the project
management team behaves when performing the project or
activity.
 Interpersonal Skills Management
The management of interpersonal relationships includes −

 Effective communication − The exchange of information

 Influencing the organization − The ability to "get things done"
 Leadership − Developing a vision and strategy, and motivating people
to achieve that vision and strategy
 Motivation − Energizing people to achieve high levels of performance
and to overcome barriers to change
 Negotiation and conflict management − Conferring with others to come
to terms with them or to reach an agreement
 Decision Making − Ability to take decision independently.
 Political and cultural awareness − Important to handle various personal
and professional issues.
 Team Building − Ability to create a productive team.
 Project Management Body of Knowledge
PMBOK
PMBOK Guide is the bible for Project Management. There are ten knowledge areas defined in
PMBOK Guide, which are as follows −

 Project Integration Management

 Project Scope Management
 Project Cost Management
 Project Time Management
 Project Risk Management
 Project Quality Management
 Project HR Management
 Project Communication Management
 Project Procurement Management
 Project Stakeholder Management
 Project Roles
 Management roles
 Organization and execution of the project within constraints.
Examples: project manager, team leader.
 Development roles
 Specification, design and construction of subsystems. Examples:
Analyst, system architect, implementor.
 Cross functional roles
 Coordination of more than one team. Example: API Engineer,
configuration manager, tester
 Consultant roles
 Support in areas where the project participants lack expertise.
Examples: End user, client, application domain specialist (
problem domain), technical consultant (solution domain).
 Promoter roles
 Promote change through an organization.
 Promoter Roles

Promoters are self appointed individuals who

identify themselves with the outcome of the project.

They are member of the corporate organization and

may not necessarily be directly involved with the
project. Instead, they are interfaces to the rest of
the corporate organization.

Because of the power, knowledge of technology, or

familiarity with the project’s processes, they are
able to promote and push specific changes through
the organization.
 Power Promoter
 Also called executive champion
 Pushes the change through the existing organizational
hierarchy.
not necessarily at the top of the organization, but must
have protection from top level management, otherwise
project opponents might be able to prevent the success
of the project.
 Tasks:
constantly identify difficulties, resolve issues, and
communicate with the project members, especially with
the developers.
 Example at project level: Project Manager.
 Example at corporate level: Chief Executive Officer (CEO).
 Knowledge Promoter
 Also called the technologist,
 Promotes change arising in the application domain or the
solution domain. Usually associated with the power
promoter.
 Tasks: Acquire information iteratively, understand the
benefits and limitations of new technologies, and argue its
adoption with the other developers.
 Example at project level: System architect.
Reports to project manager
Does not have any direct subordinate in the reporting
hierarchy
Has final say over all technical decisions in the system.
 Example at corporate level: Chief Technical Officer (CTO).
 Process Promoter
 The process promoter has intimate knowledge of the
projects processes and procedures.
 The process promoter is in constant interaction with the
power promoter to get consensus on the overall goals.
 Tasks: Bridge between the power and knowledge
promoters, who often do not speak or understand the
same language.
 Example at project level: Development lead. Responsible
for the administrative aspects of a project, including
planning, milestones definition, budgeting and
communication infrastructure.
 Example at corporate level: Chief Information Officer (CIO
 MSME & SSI
MSME - Micro, Small and Medium Enterprises
SSI – Small Scale Industry
Group Activity
 Laws of Project Management

 Projects progress quickly until they are 90%

complete. Then they remain at 90% complete
forever.

 When things are going well, something will go

wrong. When things just can’t get worse, they will.
When things appear to be going better, you have
overlooked something.

 If project content is allowed to change freely, the

rate of change will exceed the rate of progress.

 Project teams detest progress reporting because it

manifests their lack of progress.
 Project: Functions, Activities and Tasks

• Activity or set of activities that span the duration of the

project
f1:Function
p:Project
f2:Function

a1:Activity a2:Activity a3:Activity

a2.1:Activity a2.2:Activity a2.3:Activity

t1:Task t2:Task t3:Task t4:Task

 Tasks

 Smallest unit of management accountability

– Atomic unit of planning and tracking
– Finite duration, need resources, produce tangible
result (documents, code)
 Specification of a task: Work package
– Name, description of work to be done
– Preconditions for starting, duration, required
resources
– Work product to be produced, acceptance criteria for
it
– Risk involved
 Completion criteria
– Includes the acceptance criteria for the work products
(deliverables) produced by the task.
Project Manager
 Project Manager

 The primary role of the project manager is to lead,

to provide a vision of success, to connect
everyone involved in the project to that vision, and
to provide the means and methods to achieve
success. The project manager creates a goal-
directed and time-focused project culture. The
project manager provides leadership.
 On some projects, the project manager may
provide direction to the technical team on the
project. On other projects, the technical leadership
might come from the technical division of the
parent organization.
 Project Manager

Focuses on a specific project

objective
Controls resources to best meet
project objectives
Manages the constraints (scope,
schedule, cost and quality etc) of
individual project
Main Functions of a Project Manager

 Define scope of project

 Identify stakeholders & Leadership (decision
makers: Client, Parent organization, Project
Team, Publics)
 Evaluate project requirements
 Develop detailed task list (work breakdown,
structures)
 Develop initial project management flow chart
 Estimate time requirements
 Identify cost estimation and budget
 Identify required resources and evaluate risks
Main Functions of a Project Manager

Prepare contingency plan

Identify interdependencies
Identify and track critical
milestones
Secure needed resources,
manpower
Participate in project phase
review
Manage the change control
 Project Management
Skills
Three dimensions ( 3-D )of project management competencies are :-

 Project Management Knowledge Competency − This refers

to what the project management team knows about project
management.
 Project Management Performance Competency − This
refers to what the project management team is able to do
or accomplish while applying their project management
knowledge.
 Personal Competency − This refers to how the project
management team behaves when performing the project or
activity.
 Interpersonal Skills Management

 Effective communication − The exchange of information

 Influencing the organization − The ability to "get things done"
 Leadership − Developing a vision and strategy, and motivating people to
achieve that vision and strategy
 Motivation − Energizing people to achieve high levels of performance and to
overcome barriers to change
 Negotiation & Conflict Management − Conferring with others to come to
terms with them or to reach an agreement
 Decision Making − Ability to take decision independently.
 Political & Cultural Awareness − Important to handle various personal and
professional issues.
 Team Building − Ability to create a productive team.
 Project Management Body of Knowledge
PMBOK

PMBOK Guide is the bible for Project Management. There are ten knowledge areas defined in PMBOK Guide, which are as
follows −

 Project Integration Management

 Project Scope Management
 Project Cost Management
 Project Time Management
 Project Risk Management
 Project Quality Management
 Project HR Management
 Project Communication Management
 Project Procurement Management
 Project Stakeholder Management
 Project Roles

 Management roles
 Organization and execution of the project within constraints.
Examples: Project Manager, Team Leader.
 Development roles
 Specification, design and construction of subsystems.
Examples: Analyst, System Architect, Implementor.
 Cross functional roles
 Coordination of more than one team. Example: API Engineer,
Configuration Manager, Tester
 Consultant roles
 Support in areas where the project participants lack expertise.
Examples: End User, Client, Application Domain Specialist (
problem domain), Technical Consultant (solution domain).
 Promoter roles
 Promote change through an organization.
Group Activity
 MSME & SSI

MSME - Micro, Small and Medium

Enterprises
SSI – Small Scale Industry
Case Study
 An assistant project manager, Mary, had the opportunity to be
promoted and manage a new large project that was about to
begin. She needed her manager’s permission to accept the new
assignment, but if she left, her manager would have to perform her
work in addition to his own for at least three months. The project
manager refused to release her, and the project manager
developed a reputation of preventing people from being promoted
while working on his project.
 In the first month of a twelve-month project, the project manager
realized that the end date was optimistic, but he purposely
withheld information from the customer in hopes that a miracle
would occur. Ten months later, the project manager was still
withholding information waiting for the miracle. In the eleventh
month, the customer was told the truth. People then labeled the
project manager as an individual who would rather lie than tell the
truth because it was easier.
 To maintain the customer’s schedule, the project manager
demanded that employees work excessive overtime, knowing that
this often led to more mistakes. The company fired a tired worker
who inadvertently withdrew the wrong raw materials from
inventory, resulting in a $55,000 manufacturing mistake.
Case Studies
 An assistant project manager, Mary, had the opportunity to be
promoted and manage a new large project that was about to begin.
She needed her manager’s permission to accept the new
assignment, but if she left, her manager would have to perform her
work in addition to his own for at least three months. The project
manager refused to release her, and the project manager developed
a reputation of preventing people from being promoted while
working on his project.
 In the first month of a twelve-month project, the project manager
realized that the end date was optimistic, but he purposely withheld
information from the customer in hopes that a miracle would occur.
Ten months later, the project manager was still withholding
information waiting for the miracle. In the eleventh month, the
customer was told the truth. People then labeled the project
manager as an individual who would rather lie than tell the truth
because it was easier.
 To maintain the customer’s schedule, the project manager
demanded that employees work excessive overtime, knowing that
this often led to more mistakes. The company fired a tired worker
who inadvertently withdrew the wrong raw materials from inventory,
resulting in a $55,000 manufacturing mistake.
MGT1034

Project Planning
:Project Scheduling
Project planning involves a series of
steps that determine how to achieve a
particular community or organizational
goal or set of related goals. This goal can
be identified in a community plan or a
strategic plan. Project plans can also be
based on community goals or action
strategies developed through community
meetings and gatherings, tribal council or
board meetings, or other planning
processes.
 Project Planning

Identifies specific community problems that

stand in the way of meeting community
goals.
Creates a work plan for addressing
problems and attaining the goals.
Describes measurable beneficial impacts to
the community that result from the project’s
implementation.
 Determines the level of resources or
funding necessary to implement the project.
 Stages of Project Planning
Risk Management
Project Scheduling.
– The goal of the Risk Management stage is to
identify project risks and take the necessary
precautions.
– The goal of Project Scheduling is to make a
detailed schedule of all the tasks that need to
performed, with specific time frames and
resource allocations.
Project Scheduling
Project scheduling is the process of putting
together a time line for all the activities in the
project. This involves examining the
interdependencies of all of the activities, and
coordinating all the tasks to ensure a smooth
transition from the beginning to the end of the
project. There are many different methods of
scheduling, which can address the requirements of
the type of project resulting in different pictorial
representations of the schedules.
The Statement of Work
(SoW)
The SoW is the document that captures
and defines all aspects of the project.
The activities, deliverables and timetable
for the project. It’s an extremely detailed
document as it will lay the groundwork
for the Project Plan.
It is one of the first documents a project
manager create to lay out the entire
landscape of the project before he plan
and execute.
The Statement of Work is a detailed
overview of the project in all its
dimensions. It’s also a way to share
what the project entails with those who
are working on the project, whether
they are collaborating or are contracted
to work on the project.
This includes stakeholders like vendors
and contractors who are bidding to
work on the project.
 Contents of The Statement of Work

Basic Information about your project like

project name, current date, projected
completion date, project manager, high-level
team members, key service providers, and
client names.
A brief introduction or Project Outline that
describes your project context and approach,
and establishes who will be working on it.
Relevant Project Background Information.
A Purpose Statement that describes the
purpose of the project and outlines why it's
interesting, necessary, or useful.
A scope of work.
A Timeline that encompasses key
deliverables, milestones, project objectives,
due dates, and projected end dates.
A Task Breakdown, Work
Breakdown or Work Breakdown Structure
(WBS).
Project Budget, payment terms, or
other financial information.
Any special requirements, resources, or
specific terms and conditions.
General Communication criteria and
expectations.
Criteria for Modifications Of The Statement of
work.
Project Closure Protocols.
SoW Acceptance Criteria & Authorization
Documents.
Work Breakdown Structure
WBS describes the
deliverables needed to
complete the project.
i.e. the “what” of the project. It
doesn’t include timelines or
resources.
 Definition
A deliverable-oriented hierarchical
decomposition of the work to be executed by
the project team to accomplish the project
objectives and create the required
deliverables.
A work breakdown structure defines all the
things a project needs to accomplish,
organized into multiple levels, and displayed
graphically.
The WBS is the breaking down of the
statement of work into smaller elements for
better visibility and control.
The first major step in the planning process
after project requirements definition is the
development of the work breakdown
structure (WBS).
A WBS is a product-oriented family tree
subdivision of the hardware, services, and
data required to produce the end product.
When creating the WBS, the simple rule is :

WBS = Nouns
Schedule Activities = Verbs

All WBS deliverables are mutually exclusive

in that all the work associated with a given
WBS deliverable appears with that
deliverable and only that deliverable.
Resource Breakdown Structure
For Better Understanding : Examples
The numbers next to each item indicate the number of hours or resources

required to complete the work.

Creating a Work Breakdown Structure
1. Understand the Project’s Scope:-
Project scope management is a
process that helps in determining
and documenting the list of all the
project goals, tasks, deliverables,
deadlines, and budgets as a part
of the planning process.
2. Determine Major Deliverables:-
Have an understanding of the project scope, start the
WBS development process by figuring out the key
deliverables. For example, if your goal is to “build a
house”, you might have the following three broad
deliverables at Level 2.
3. Determine Work Packages
Determining work packages would be the next step
after identifying major deliverables. This is one of the
most important parts of the WBS development process
and one that will require extensive input from your
project team and stakeholders.
Work Package must be:
Independent: The work package must be
mutually exclusive and have no dependence
on other ongoing elements.
Definable: The work package should have a
definite beginning and end, and should be
understood by all project participants.
Manageable: The package must
represent a "meaningful unit of work", i.e.
it must accomplish something concrete,
and can be assigned to an individual or
team. It should also be measurable.
Integratable: The package must integrate
with other elements to create the parent
level.
Adaptable: Ideally, the package must be
able to accommodate changes in scope
as per the project's requirements.
Examples of Work Packages and Activities
Building a School
Building a shed
Organizing a big party
4. Create a WBS Dictionary
The WBS dictionary is a document that outlines the definition
and scope of each element contained in the WBS. It is a
supporting document meant to help incoming project teams
understand each work package better.

• Work package ID (see the ID convention below)

• Work package name
• Work package description
• Assigned to (individual or team name)
• Department
• Date of assignment
• Due date
• Estimated cost
Sample WBS dictionary
5. Use the Right WBS Format
There are several WBS formats. The simplest
way to do this is to create text-based
hierarchical groupings. By convention, use
numbers and decimal points to indicate the
level of the element.
For example, the number 1.1.1.3 means that
referencing the 3rd element of the 4th level of
the WBS.
Samples
A Text-based WBS
Visual Tabular Structure
Create a flowchart
WBS - Samples
Network Scheduling
A graphical display of the logical order of activities
that defines the sequence of work in a project
Where the activities are represented by boxes.

Networks are usually drawn from left to right

With lines drawn between the boxes
To show the "precedence" relationships
between them.

Arrow heads are sometimes placed on the lines to

indicate the direction of the flow through time.
 Project Network Diagram
1. Project Network Diagram – Meaning
2. Project Dependencies & Types
3. Three Ways To Project Network Diagram
Project Network Diagrams are used
for schedule preparation and analysis.
They use a combination of nodes and
arrows to pictorially represent
activities and relationships among
those activities. They are also called
Project Schedule Network Diagrams
and Logical Network Diagrams.
Project Network Diagrams are drawn to
depict Project Dependencies or
relationships between two activities
and/or milestones.

An activity ‘Y’ is said to be dependent on

another activity ‘X’ if Y requires some
input from X.
 Project Dependencies
A project dependency can defined as an
association between two activities, in which
one activity requires input from the other. It
simply means that one activity is reliant on the
other for its start or completion.
A dependency in project management can be
characterized as a schedule dependency. It
can be defined between any two tasks like
activities or work packages. It can also be
defined between milestones.
 Types Of Dependencies
Mandatory Dependency
Discretionary Dependency
External Dependency
Internal Dependency
 Mandatory Dependency
Consider 2 activities A and B. If B has a Mandatory
Dependency on A then it means action on B cannot be
performed until Action on A has been completed.
A: Requirements Documentation; B: Client Approval
– Client cannot approve requirements until
documentation is complete
A: Lay Building Foundation; B: Construct a Floor – A
floor of a building cannot be constructed until
foundation is laid.
A: Build Car Prototype; B: Perform Crash Testing –
Crash testing on a care prototype cannot be
performed unless the prototype itself is available.
 Discretionary Dependency
Discretionary Dependencies are defined by the Project Team as
a certain order of activities is more suitable for the nature of work.

 Consider 2 activities A and B. A and B can be independently

performed or one can be performed after the other. The project
team can chose to make B dependent on A.
 A:-develop system module X; B: develop system module Y –
the project team can develop either X first or Y first but they
decide to develop X first.
 A: furnish room r; b: furnish room s – the project team can
furnish either room r first or s first but they decide to furnish s
first.
 A: book airline ticket; b: buy travel insurance – the project team
can book an airline ticket before buying travel insurance or do
it other way around.
 External Dependency
External Dependencies are defined between
Project Activities and Non-project Activities.
 The Project Activities are done by the
Project Team.
The Non-project Activities are done by
people who are external to the Project Team
e.g. representatives from Client’s
organization, Vendors’ organization or any
other external groups within the same
organization
Consider 2 activities A and B. If B has an external
dependency on A then it would signify that B is a
project activity while A is a non-project activity.

A: Client go-ahead; d: Initiate Project: a project

cannot be initiated before the client gives a go-
ahead.
A: Delivery of Equipment; d: Start Development:
project development cannot start until equipment is
delivered.
A: Approval of Building Plans; d: Start Construction:
construction of a building cannot be started unless
the building plans are approved.
 Internal Dependency
Internal Dependencies are defined between two project
activities. consider 2 activities A and B. If B has an
Internal Dependency on A then it would signify that
both A and B are project activities. These are
performed by the Project Team members. There is no
involvement of any external party.

 A: Develop System; B: Test System

 A: Construct Wall; B: Paint Wall
 A: Assemble Machine; B: Pack Machine
Project Scheduling Steps and Techniques
 Project Scheduling Steps

Define Activities
Sequence activities
Estimate time and
Develop schedule
 Project Scheduling Techniques
 Gantt chart- This is represented by the graph or bar chart with
a specific bar for activities in the project that shows the
passage of time. Gantt chart limits a clear indication of
interrelation between the activities.
 CPM- Critical path method was developed for industrial
projects where activity times are generally known.
 PERT- Program evaluation and review technique were
developed for R&D projects where activity times are generally
uncertain. Its prime objective is taking the shortest possible
time.
 Microsoft projects- All the work is performed on the computer
memory and changes can be saved only when the program is
asked to operate.
Project Managers Uses Three Principal
Types Network Diagrams
Precedence Diagramming Method (PDM)
Arrow Diagramming Method (ADM)
Conditional Diagramming Methods
 Precedence Diagramming Method (PDM)

Uses nodes to represent activities.

Arrows join the nodes together and indicate the
dependencies between activities.
This technique is also known as activity-on-node
(AON)
It is the method most widely used by project
management software.
The precedence diagramming method is based on
four types of dependencies or logical relationships.
4 types of logical relationships between two dependent
activities/milestones.
FS Relationship – Start Event of a Successor
is dependent Finish event of Predecessor.
SS Relationship – Start Event of a Successor
is dependent Start event of Predecessor.
FF Relationship – Finish Event of a Successor
is dependent Finish event of Predecessor.
SF Relationship – Finish Event of a
Successor is dependent Start event of
Predecessor
Finish to Start is a Logical Relationship in which a Successor
Activity cannot start until a Predecessor Activity has finished.
Consider 2 activities A and B. Let us
also consider A to be the predecessor
and B to be the successor.
A – document requirements, b – get
approval
A – design machine, B – develop
prototype
A – write user manual, B – print user
manual
Start to Start is a Logical Relationship in which a Successor
Activity cannot start until a Predecessor Activity has started.
The "from" activity must start before the
"to" activity can start.
on a telemarketing project the compilation of
phone lists must be started before people can
actually be called.

• A – Write Code for S/W Module X, B – Write DB

Scripts for S/W Module X
• A – Write User Manual, B – Review User Manual
Finish to Finish is a Logical Relationship in which a
Successor Activity cannot finish until a Predecessor Activity
has finished.
 Car body and engine production can be started
at the same time. The last step in the engine
production phase is to install it in the body.
Therefore, the body must be finished before the
engine can be finished.

Consider 2 activities A and B. Let us also

consider A to be the predecessor and B to be
the successor.
A – write code for s/w module x, b – unit test s/w
module x
A – lay electrical wires, B – inspect electrical
wires
In SF relationship, the Finish of Second Activity is dependent on
the Start of First Activity. The Second Activity is called the
Successor and the First Activity is called the Predecessor
 if your car refuses to start, you may need to
jump start the battery with booster cables. The
engine must start before you can finish jump
starting the car.
X – Duty of Evening Guard (E), Y – Duty of
Morning Guard (M). M cannot Finish her/his
duty till E Starts. M cannot abandon the post
even if E gets delayed.
X – Start using New Software System (N), Y –
Phase out Old Software System (O). It is
assumed that N & O cannot be used in parallel.
O cannot be phased out until N is started.
 Modifiers
1. Lead
The amount of time whereby a successor
activity can be advanced with respect to a
predecessor activity.
2. Lag
The amount of time whereby a successor
activity is required to be delayed with respect to
a predecessor activity.
LAG
A – Lay ceiling for Floor I, B – Construct
Columns for Floor II.
A – Ship goods to a customer, B – Check if
shipment has been delivered.
LEAD
A – Collect Requirements, B – Create
Design.
A – Interior work of a Building, B – Exterior
landscaping of the Building.
Basic Terms in Network Diagram
1. Activity
2. Event
3. Sequencing
 Activity
Any individual operation which makes use of resources and has an end and
a starting is called as activity.
An arrow is generally used to characterize an activity with its head
representing the direction of progress in the project. These are divided into
four classes.
• Predecessor activity - Activities that ought to be completed immediately
previous to the start of another activity are known as predecessor
activities.
• Successor activity - These are those activities that cannot be started until
one or more of other activities are finished but immediately succeed them.
• Concurrent activity - These are activities which can be achieved
concurrently. It may be noted that an activity can be a successor or a
predecessor for an event or it may be concurrent with one or more
activities.
• Dummy activity - An activity which does not use any type of resource but
simply depicts the technological dependence is known as dummy activity.
 Event
An event signifies a point in time representing the completion of
several activities and the starting of new ones. This is typically
symbolizes by a circle in a network which is also known as node
or connector.
Merge event - Event in which more than one activity comes and
connects an event is called as merge event.
Burst event - It is event in which more than one activity leaves an
event.
Merge and Burst event - An activity can be merge and burst event
simultaneously, as regard some activities it can be a merge event
and with some other activities it may be a burst event.
 Sequencing
The first requirement in the development of
network is to keep the precedence
relationships. In order to prepare a network,
the subsequent points must be taken into
considerations
What job or jobs follow it?
What job or jobs could run concurrently?
What job or jobs precede it?
What controls the start and finish of a job?
Rules For Network Diagram
Rule 1:
Each of the activity is symbolized by one and
only one arrow in the network

Rule 2 :
No two activities can be recognized by the same
end events
Rule 3 :
To assure the correct precedence relationship in
the arrow diagram, various questions must be
tested every time any activity is added to the
network
What activity must be finished immediately
before this activity can start?
What activities must occur at the same time
with this activity?
What activities must follow this activity?
 For preparation of Paneer (Cottage Cheese)
the following list represents major activities
I. Receive whole cow/buffalo milk
ii) Standardize milk to obtain desired level of fat percentage
iii) Take citric acid and prepare 1% solution
iv) Heat the citric acid to 70 o C
v) Bring the standardized milk to boil on medium heat
vi) Cool the milk to 70 o C and add slowly the solution of citric acid till
yellowish whey separates
vii) Strain the mixture through a clean muslin cloth.
viii) Hold it under running water for a minute and then press out the excess
water.
ix) Hang the muslin for 15-20 minutes so that all the whey is drained out.
x) Prepare mould to form Paneer block
xi) Fill the mass into the block and tie the muslin
xii) Place it under something heavy for up to two hours
xiii) Cut the paneer into chunks and used as required.
 Precedence table
Activity Description Preceding Activity

A Receive whole cow/buffalo milk -

B Standardize milk to obtain desired level of fat percentage A

C Take citric acid and prepare 1% solution -

D Heat the citric acid to 70 o C C

E Bring the standardized milk to boil on medium heat B

F Cool the milk to 70 o C and add slowly the solution of citric acid till D,E
yellowish whey separates.

G Strain the mixture through a clean muslin cloth. F

H Hold it under running water for a minute and press out the excess G
water.
I Hang the muslin for 15-20 minutes and drain out all the whey. H

J Prepare mould to form Paneer block H

K Fill the mass into the block and tie the muslin J

L Place it under something heavy for up to two hours. K

M Cut the paneer into chunks and use as required. L

The activity A has no preceding
activity and it is represented by an
arrow line.
Likewise activity C has no preceding
activity and both activities A and C
can be done simultaneously so they
are shown as concurrent activities.
Activities B and D are preceded by
the activities A and C respectively.
 Guidelines for Drawing Network Diagram
a) Each activity is represented by one and only one arrow in the network.
This implies that no single activity can be represented twice in the
network. This is to be distinguished from the case where one activity is
broken into segments. In such a case each segment may be
represented by a separate arrow.

b) No two activities can be identified by the same beginning and end

event. In such cases, a dummy activity is introduced to resolve the
problem
 c) Inorder to ensure the correct precedence relationship in arrow diagram
following question must be checked whenever any activity is added to a
network.
What activity must be completed immediately before this activity can start?
What activities must follow this activity?
What activities must occur simultaneously with this activity?

d) Thus a network should be developed on the basis of logical or technical

dependence.

e) The arrows depicting various activities are indicative of logical

precedence only; hence length and bearing of the arrows are of no significance.

f) The flow of the diagram should be from left to right.

g) Two events are numbered in such a way that the event of higher number
can happen only after the event of lower number is completed.
h) Arrows should be kept straight and not
curved. Avoid arrow which cross each other.
i) Avoid mixing two directions vertical and
standing arrows may be used if necessary.
j) Use dummy activity freely in rough graph
but final network should have only reluctant
dummy.
k) The network has only one entry point
called the start event and one point of
emergence called end event.
l) Angle between the arrows should be as
large as possible.
 Labeling of a Network Diagram
A standard procedure called i-j rule developed by D.R.F Fulkerson is most
commonly used for this purpose.
 Step 1: First, a start event is one which has arrows
emerging from it but not entering it. Find the start event and
label it as number1.
 Step 2: Delete all arrows emerging from all numbered
events. This will create at least one new start event out of
the preceding events.
 Step 3: Number all new start events �2�, �3� and so on.
No definite rule is necessary but numbering from top to
bottom may facilitate other users using the network when
there are more than one new start event.
 Step 4: Go on repeating step no. 2 & 3 until the end
reached.
For preparation of Paneer (Cottage Cheese)
 Common Errors in Drawing Networks

1.Dangling
2. Looping or Cycling
3.Redundancy
Two activities starting from a tail event must not have a same
end event. To ensure this, it is absolutely necessary to introduce
a dummy activity
Looping error should not be formed in a network, as it
represents performance
of activities repeatedly in a cyclic manner
In a network, there should be only one start
event and one ending event
The direction of arrows should flow from left to
right avoiding mixing of direction
 Dangling

Whenever an activity is disconnected from the network it

is called dangling error.

C Dangling
A B D E G

Dangling

F
 Looping
Looping error is also called as cycling error in a network
diagram. Making an endless loop in a network is called as
error of looping.

A
 Redundancy
When the dummy activity is introduced and it is not
required, it is called redundancy errors.

C
B

A D
A B C D
 Event: An event (or node) will always occur at the
beginning and end of an activity. The event has no
resources and is represented by a circle. The ith event and
jth event are the tail event and head event respectively,
(Figure 8.2).
 Activity Types
• Predecessor activity - Activities that
ought to be completed immediately
previous to the start of another activity
are known as predecessor activities.
• Successor activity - These are those
activities that cannot be started until one
or more of other activities are finished
but immediately succeed them.
 Dummy Activity
An imaginary activity which does not consume any resource and time is
called a dummy activity. Dummy activities are simply used to
represent a connection between events in order to maintain a logic in
the network. It is represented by a dotted line in a network.
 Event
An event signifies a point in time representing the completion of several activities
and the starting of new ones. This is typically symbolizes by a circle in a network
which is also known as node or connector.
Merge event - Event in which more than one activity comes and connects an event is
called as merge event.
Burst event - It is event in which more than one activity leaves an event.
Merge and Burst event - An activity can be merge and burst event simultaneously,
as regard some activities it can be a merge event and with some other activities it
may be a burst event.
 Guidelines for Drawing Network Diagram

a) Each activity is represented by one and only one arrow in the network. This implies that no
single activity can be represented twice in the network. This is to be distinguished from the
case where one activity is broken into segments. In such a case each segment may be
represented by a separate arrow.

b) No two activities can be identified by the same beginning and end event. In such cases, a
dummy activity is introduced to resolve the problem
 c) In order to ensure the correct precedence relationship in arrow diagram following
question must be checked whenever any activity is added to a network.
What activity must be completed immediately before this activity can start?
What activities must follow this activity?
What activities must occur simultaneously with this activity?

d) Thus a network should be developed on the basis of logical or technical dependence.

e) The arrows depicting various activities are indicative of logical precedence only; hence length
and bearing of the arrows are of no significance.

f) The flow of the diagram should be from left to right.

g) Two events are numbered in such a way that the event of higher number can happen only
after the event of lower number is completed.
 Labeling of a Network Diagram
A standard procedure called i-j rule developed by D.R.F Fulkerson is most
commonly used for this purpose.
 Step 1: First, a start event is one which has arrows
emerging from it but not entering it. Find the start event
and label it as number1.
 Step 2: Delete all arrows emerging from all numbered
events. This will create at least one new start event out of
the preceding events.
 Step 3: Number all new start events �2�, �3� and so on.
No definite rule is necessary but numbering from top to
bottom may facilitate other users using the network when
there are more than one new start event.
 Step 4: Go on repeating step no. 2 & 3 until the end
reached.
 ERRORS TO BE AVOIDED IN
CONSTRUCTING A NETWORK

a.Two activities starting from a

tail event must not have a same
end event. To ensure this, it is
absolutely necessary to introduce
a dummy activity, as shown in
Figure 8.6.
b.Looping error should not be
formed in a network, as it
represents performance of
activities repeatedly in a cyclic
manner, as shown below in
Figure 8.7.

c.In a network, there should be

only one start event and one
ending event as shown below,
in Figure 8.8.
 Common Errors

1.Dangling
2. Looping or Cycling
3.Redundancy
Two activities starting from a tail event must not have a same
end event. To ensure this, it is absolutely necessary to introduce
a dummy activity
In a network, there should be only one start event

and one ending event

Looping error should not be formed in a network, as it
represents performance
of activities repeatedly in a cyclic manner
 Looping
Looping error is also called as cycling error in a network
diagram. Making an endless loop in a network is called as
error of looping.

A
The direction of arrows should flow from left to right
avoiding mixing of direction
 Dangling
Whenever an activity is disconnected from the network it
is called dangling error.

C
A B Dangli E G
ng
D
Dangli
F ng
 Redunda
ncy
When the dummy activity is introduced and it is not
required, it is called redundancy errors.

C
B

A D
A B C D
 Example - 1
Extension to the Recreation center
 Creating Facility For Lift Irrigation
1.
In A Farm
It is assumed that the competent authority has approved the
project and the project scheduling starts with the activity of “Site
selection”.
2. Irrigation would be provided from a newly dug well.
3. Field channels from the well would be laid after its digging.
4. Suitable pump would be procured and installed for lifting water.
5. Specification for the pump is finalized based on the groundwater
prospecting data before digging.
6. Pump and other inputs would not be procured until the site is
selected.
7. Pump would be installed after digging the well.
Step 1: Identify the activities

Identify all the activities to be

undergone and place it in a
table.
Table 1: List of Activity
 Step-2: Define the inter relationship among the activities

The relationship among the activities could be defined by

specifying the preceding and succeeding activity. Preceding
activity for an activity is its immediate predecessor, i.e. the activity
that needs to be completed before the start of the new activity.
In this case study, the site needs to be selected before digging of
the well. Thus the activity “Selection of site” becomes proceeding
/preceeding activity to the activity of “Digging the well”
Succeeding activity is the one that immediately starts after
completion of the activity. “Digging well” is the succeeding activity
to “Selection of site”
Table 2: Interrelationship of
activities
Step 3: Estimation of activity time
• The activity time is the time, which is
actually expected to be expended in
carrying out the activity. In
deterministic cases as in CPM one
time estimate is used. In probabilistic
cases as 25 in PERT, the activity time
has some kind of probabilistic
distribution and is the weighted
average of three time estimates (
Optimistic time, Pessimistic time and
Most likely time) for each activity.
Purchase of a New
Car
 Example -3
Preparation of Paneer
I. Receive whole cow/buffalo milk
ii) Standardize milk to obtain desired level of fat percentage
iii) Take citric acid and prepare 1% solution
iv) Heat the citric acid to 70 o C
v) Bring the standardized milk to boil on medium heat
vi) Cool the milk to 70 o C and add slowly the solution of citric acid till yellowish
whey separates
vii) Strain the mixture through a clean muslin cloth.
viii) Hold it under running water for a minute and then press out the excess water.
ix) Hang the muslin for 15-20 minutes so that all the whey is drained out.
x) Prepare mould to form Paneer block
xi) Fill the mass into the block and tie the muslin
xii) Place it under something heavy for up to two hours
xiii) Cut the paneer into chunks and used as required.
Activity
Precedence table Description Preceding Activity

A Receive whole cow/buffalo milk -

B Standardize milk to obtain desired level of fat percentage A
C Take citric acid and prepare 1% solution -
D Heat the citric acid to 70 o C C
E Bring the standardized milk to boil on medium heat B
F Cool the milk to 70 o C and add slowly the solution of citric acid till D,E
yellowish whey separates.

G Strain the mixture through a clean muslin cloth. F

H Hold it under running water for a minute and press out the excess G
water.
I Hang the muslin for 15-20 minutes and drain out all the whey. H
J Prepare mould to form Paneer block H
K Fill the mass into the block and tie the muslin J
L Place it under something heavy for up to two hours. K
M Cut the paneer into chunks and use as required. L
 Example – 4

House Construction Project

Example 1:
Draw a network for a house construction project. The sequence of activities with their predecessors are given.
Activity A (preparation of house plan), has a start event 1 as well as an
ending event 2. Activity B (Construction of house) begins at event 2 and
ends at event 3. The activity B cannot start until activity A has been
completed. Activities C and D cannot begin until activity B has been
completed, but they can be performed simultaneously. Similarly, activities
E and F can start only after completion of activities C and D respectively.
Both activities E and F finish at the end of event 6.
Example - 5
PERT CPM
PERT is that technique of project management which is CPM is that technique of project management which is
used to manage uncertain (i.e., time is not known) used to manage only certain (i.e., time is known)
activities of any project. activities of any project.
It is activity oriented technique which means that
It is event oriented technique which means that network network is constructed on the basis of activities.
is constructed on the basis of event.

It is a probability model It is a deterministic model.

It majorly focuses on Time-cost trade off as minimizing
It majorly focuses on time as meeting time target or cost is more important.
estimation of percent completion is more important.
It is appropriate for high precision time estimation. It is appropriate for reasonable time estimation.
It has repetitive nature of job.
It has Non-repetitive nature of job.
There is no chance of crashing as there is no certainty There may be crashing because of certain time
of time. boundation.

It is suitable for projects which required research and It is suitable for construction projects.
development.
PERT & CPM
 PROJECT COMPLETION
TIME
Four types of time required to accomplish an activity.
 Optimistic time: The minimum possible time required to accomplish an activity (o)
or a path (O), assuming everything proceeds better than is normally expected
 Pessimistic time: The maximum possible time required to accomplish an activity
(p) or a path (P), assuming everything goes wrong (but excluding major
catastrophes).
 Most likely time: The best estimate of the time required to accomplish an activity
(m) or a path (M), assuming everything proceeds as normal.
 Expected time: the best estimate of the time required to accomplish an activity
(te) or a path (TE), accounting for the fact that things don't always proceed as
normal (the implication being that the expected time is
the average time the task would require if the task were
repeated on a number of occasions over an extended period of time.
A formula to estimate the cost and/or time required to complete a task .
TE means Estimated Time, o Optimistic Time, m Most likely Time , p Pessimistic
Time
TE= (o + 4m + p) ÷ 6
For Activity A:
o = 4 hours (Optimistic time), m = 8
hours (Most likely time), p = 16 hours
(Pessimistic time) TE is Most likely
time
TE = (o + 4m + p) ÷ 6

E = (4 + 4(8) + 16) / 6
E = 52 / 6
E = 8.7 hours
 Critical path: Critical path is the longest
sequence of activities in a project plan which
must be completed on time for the project to
complete on its due. It is the sequence of
activities which decides the total project duration
 Variables within critical path
Float or slack is a measure of the excess time and
resources available to complete a task. How long a
task can be delayed without interrupting other tasks
or the whole project
 It is the amount of time that a project task can be
delayed without causing a delay in any subsequent
tasks (free float) or the whole project (total float).
 Positive slack would indicate ahead of schedule;
Negative slack would indicate behind schedule; and
Zero slack would indicate on schedule.
A project consists of the following activities and time estimates. Construct
the network. determine the expected task time. show the critical path. what
is the project duration?
The formula for expected task time (te) =

Accordingly the expected task times for

different activities are as
follows:
Activity (te) values, days
1-2 → 7
1-3 → 6
1-4 → 14
2-5 → 5
2-6 → 11
3-6 → 7
4-7 → 11
5-7 → 4
6-7 → 5
The expected task times are shown on the network diagram to determined the critical path &
project duration.

From this network diagram 1-4-7 represents the critical path and the
duration for project completion = total time along the critical path = 14+11 =
25 days
WBS & Project Network Diagram
The WBS creation involves:
 Listing all the project outputs (deliverables and other direct
results)
 Identifying all the activities required to deliver the outputs
 Subdividing these activities into sub activities and tasks
 Identifying the deliverable and milestone(s) of each task
 Identifying the time usage of all the resources (personnel
and material) required to complete each task
The purpose of developing a WBS is to:
 Allow easier management of each component
 Allow accurate estimation of time, cost, and resource
requirements
 Allow easier assignment of human resources
 Allow easier assignment of responsibility for activities
 The WBS is not a schedule, but it is the basis for
it. The network diagram is a schedule.

 The network diagram provides important

information to the project team. It provides
information about how the tasks are related
where the risk points are in the schedule, how
long it will take as currently planned to finish the
project, and when each task needs to begin and
end.
• If I want to clean a room, I might begin by picking up clothes,
toys, and other things that have been dropped on the floor. I
could use a vacuum cleaner to get dirt out of the carpet. I
might take down the curtains and take them to the cleaners,
and then dust the furniture. All of these tasks are subtasks
performed to clean the room. As for vacuuming the room, I
might have to get the vacuum cleaner out of the closet,
connect the hose, empty the bag, and put the machine back
in the closet. These are smaller tasks to be performed in
accomplishing the subtask called vacuuming.
• It is very important to note that we do not worry about the
sequence in which the work is performed or any
dependencies between the tasks when we do a WBS. That
will be worked out when we develop the schedule
A WBS for Cleaning a Room
Multimedia Project
The Critical Path
The critical path describes the sequence of tasks that
would enable the project to be completed in the shortest
possible time.
A critical path diagram is a useful tool for scheduling
dependencies and controlling a project.
Critical path is the longest sequence of activities in a
project plan which must be completed on time for the
project to complete on its due. It is the sequence of
activities which decides the total project duration
In order to identify the critical path, the length of time
that each task will take must be calculated.
Example : Establishment of a
Mango orchard
The critical path is A-B-D-E and the project duration
is 15 days.
A project consists of the following activities and time estimates. Construct
the network. determine the expected task time. show the critical path. what
is the project duration?
The formula for expected task time (te) =

Accordingly the expected task times for

different activities are as
follows:
Activity (te) values, days
1-2 → 7
1-3 → 6
1-4 → 14
2-5 → 5
2-6 → 11
3-6 → 7
4-7 → 11
5-7 → 4
6-7 → 5
The expected task times are shown on the network diagram to determined the critical path &
project duration.

From this network diagram 1-4-7 represents the critical path and the
duration for project completion = total time along the critical path = 14+11 =
25 days
Concept, Need, Applicability

Crashing
 Crashing
 Crashing is a schedule compression technique used to
reduce or shorten the project schedule without changing
the scope. The project schedule and deliver the product, service, or
result earlier than what was originally planned
 Crashing of a project is used only in emergency
situations. The decision should then take place only
after carefully analyzing all the possible alternatives.
 The goal is to obtain the maximum reduction in project
completion time with the minimum additional cost.
 Direct impact on two constraints, ie. Planning and
Costs.
 Reasons to crash the project
 A delay in the project timeline: If organization face penalties due to
delays in the project timeline, adding more resources to move up
the completion date may be worthwhile.
 Availability of resources: If the team or organization has resources
available, using those resources can help to speed up the project
timeline.
 Avoiding a future delay: Adding resources to prevent a delay in the
future will typically add some cost, but may be more beneficial
than facing later delays that will be more costly.
 Resources available through training: When an organization is
training new staff members, they may assign those employees to
work on the project as they complete their training.
 New project: If the team is working on a project and receives the
assignment to take on a new project, you may crash the original
project to finish it faster and focus on the new project
 Two Methodologies
Method 1: Project Crashing / Increase the
number of resources

Method 2: Fast Tracking

Method 1: Increase the number of resources
 Most commonly used method and involves increasing the number of
resources dedicated to certain critical activities.
 Adding resources is not always the best solution. In fact, it is sometimes
the cause of long-term loss of time. We need therefore to consider the
following:
 New resources may not be familiar with the tasks to be performed, so
they will probably be less productive than current team members.
 New members will most likely have to be teamed up and led by the most
productive members of the team, who could instead dedicate their time
completely to the task and get it done more quickly.
 Being available does not mean being qualified. Sometimes the extra
resources are qualified yes, but tangentially with respect to the activity,
and even if the new resources have the right skills, they may not be of the
same quality as the current team members.
 On the contrary, if new resources are over-qualified, conflicts may occur
within the team.
 Method 2: Fast Tracking
Fast tracking is the process of performing tasks in parallel so as to be able to
finish the project sooner
 This methodology consists of overlapping activities
that were initially programmed in sequence. These
activities will therefore take place in parallel, rather
than one after the other.
 Divide longer activities into smaller blocks in order
to concentrate more work in a shorter period of
time;
 Reduce latency times between one activity and
another;
 Review the scope of the project in order to
eliminate the tasks considered less important.
Differences between fast tracking
and crashing:
Fast tracking involves the
performance of activities in parallel,
whereas crashing involves the
addition of resources to a project.
In fast tracking, there is increased
risk, whereas in crashing there is
increased cost.
Stages of Project Crashing In Project
Management
Crashing
Module - 3
 Crashing
Crashing is a schedule compression technique used to
reduce or shorten the project schedule without changing
the scope.
Crashing of a project is used only in emergency
situations. The decision should then take place only after
carefully analyzing all the possible alternatives.
The goal is to obtain the maximum reduction in project
completion time with the minimum additional cost.
Direct impact on two constraints, ie. Planning and
Costs.
 Reasons to crash the project
A delay in the project timeline: If organization face penalties due to
delays in the project timeline, adding more resources to move up the
completion date may be worthwhile.
Availability of resources: If the team or organization has resources
available, using those resources can help to speed up the project timeline.
Avoiding a future delay: Adding resources to prevent a delay in the
future will typically add some cost, but may be more beneficial than facing
later delays that will be more costly.
Resources available through training: When an organization is training
new staff members, they may assign those employees to work on the
project as they complete their training.
New project: If the team is working on a project and receives the
assignment to take on a new project, you may crash the original project to
finish it faster and focus on the new project
 Two Methodologies
Method 1: Project Crashing / Increase the
number of resources

Method 2: Fast Tracking

Method 1: Increase the number of resources
Most commonly used method and involves increasing the number of
resources dedicated to certain critical activities.
Adding resources is not always the best solution. Sometimes the cause of
long-term loss of time. We need therefore to consider the following:
New resources may not be familiar with the tasks to be performed, so they
will probably be less productive than current team members.
New members will most likely have to be teamed up and led by the most
productive members of the team, who could instead dedicate their time
completely to the task and get it done more quickly.
Being available does not mean being qualified. Sometimes the extra
resources are qualified yes, but tangentially with respect to the activity, and
even if the new resources have the right skills, they may not be of the same
quality as the current team members.
On the contrary, if new resources are over-qualified, conflicts may occur
within the team.
 Method 2: Fast Tracking
Fast tracking is the process of performing tasks in parallel so as to be able to finish the
project sooner
This methodology consists of overlapping activities that
were initially programmed in sequence. These activities
will therefore take place in parallel, rather than one after
the other.
Divide longer activities into smaller blocks in order to
concentrate more work in a shorter period of time;
Reduce latency times between one activity and another;
Review the scope of the project in order to eliminate the
tasks considered less important.
 Differences between fast tracking and
crashing:

Fast tracking involves the performance of

activities in parallel, whereas crashing
involves the addition of resources to a
project.
In fast tracking, there is increased risk,
whereas in crashing there is increased cost.
PROJECT APPRAISAL
Critical examination of the project from all
aspects is called appraisal.
The assessment of a project in terms of its
economic, social and financial viability.
Analysis of prospective costs and benefits that
leads to desirability for committing resources.
It is carried out at two stages:
Internal Appraisal
External Appraisal
 Scope of Appraisal
 Choice of technical process and appropriate
technology

 Size and scale of operations.

 Locational aspects of the project and availability of

infrastructural facilities.
 Plant layout and factory buildings

 Technical engineering services.

 Aspects of Project Appraisal

 Social Aspects
 Economic Aspects
 Environmental Aspects Financial Aspects
 Administrative/Management Aspects
 Commercial Aspects
 Technical Aspects
 Technical Appraisal
❖Technical appraisal is an in-depth study to ensure that a project is
(i) soundly designed,
(ii) appropriately engineered and
(iii) follows accepted standards.

❖Every project must be technically feasible.

❖It provides a comprehensive review of all technical aspects of the

project.

❖It involves a critical study of Location and Site.

 Factors that influence industrial location are
 Raw material supplies

 Proximity of markets

 Transportation facilities

 Power and fuel supply

 Water

 Taxes and fees

 Technical Feasibility

★ Manufacturing process/technology selected

★ Technical collaboration arrangements made

★ Availability of physical and social infrastructural facilities.

★ Technical engineering services.

★ Plant layout and factory building

 Commercial Appraisal
 Arrangements for supply of inputs and marketing the projects output.
 Effective demand at a reasonable price.
 Where will the products be sold?
 Is the market large enough to absorb the new production without
affecting the price?
 If the price is likely to be affected, by how much? Will the project still be
financially viable at the new price ?
 Is the product for domestic consumption or for export?
Whether demand projections made for the output of
the project is reasonable?
Based on available survey
Based on industry association projection
independent market survey
Adequacy of marketing infrastructure
Distribution network
Transport facilities
Warehousing and stock level
 Demand Forecasting

Techniques of Demand Forecasting

Qualitative methods: rely on human judgment and opinion
Buyers’ Opinion
Sales Force Composite
Market Simulation Test
Delphi method
 Quantitative Method

Use mathematical or simulation models based

on historical demand or relationships between
variables
Trend Projection
Econometric techniques
 Environmental Aspect
 A specific concern is that those who enjoy the fruits of
economic development today may be making future
generations worse off by excessively degrading the earth’s
resources and polluting the earth’s environment.
 A general principal of sustainable development is that current
generations should meet their needs without compromising the
ability of future generations to do the same.
 Common applications include valuation of damage due to soil
erosion, deforestation ,air and water pollution. For
environmentally related health risks, income foregone because
of illness, or premature death can be used to measure welfare
losses.
 Financial Aspects

 Analysis encompass the financial effects of

the proposed project.
 Relates purely with finances and revenue
generation.
 Based on internal rate of return (IRR)
 Economic Aspects

 Determination of the projects contribution to the

development of economy.

 Justification of investing scarce resources to the project.

Commercial Aspects of Project
Techno-Economic Feasibility Report
 Feasibility Study is an assessment of the
practicality of a proposed project or system.

 In feasibility analysis, the project idea is

examined from the point of view whether to go in
for making a detailed investment proposal or not.

2
Feasibility means “practicability”. a feasibility analysis is necessary to
check that if we are going in the right direction or have we chosen the
right product.
Feasibility analysis has two most important aspects :
(a) Design Aspect (Technical know-how)
(b) Economic Aspect (Financially feasible)
If a product which we have chosen fails in one of the above
analysis i.e. either we are not technically sound to design it (Techno) or
we are unable to justify the cost of new product (Economic), then we
don’t proceed in this direction but choose some other alternative, say,
choosing another product or going for a job/ service.
The techno-economic analysis can be divided into 2 parts :
Technical Feasibility
Economical or Optimal Project Strategy
 Contents of TEFR
 Objective and scope of the report
 Product characteristics.
 Market position and trends.
 Raw material requirement, prices, sources and properties of raw
materials.
 Manufacturing processes, selection of process, production
schedule and techniques.
 Plant and machinery.
 Requirement of land area, building, construction schedule.
 Financial implications.
 Marketing channels, their trending practices and marketing strategies
 Requirement of personnel, labour and expenses on wage system.
Factors to be considerd while
preparing report
Technical
considerations
Economic
considerations
Financial
considerations
Managerial
consideration
Implementation
schedule

8
 Technical Considerations : It establishes whether the project is
technically feasible or not. In this various technical alternatives
on employment, ecology , infrastructure demands, capital
services , balance of payments and other factors are taken in
account.
 Economic Considerations : Economic data relates to market, the data
required for analysis of this aspect can be obtained from secondary
sources like government agencies, trade associations. Data can also
be obtained through primary sources like mailed questionnaire and
market survey.
 Financial Considerations : Financial considerations help the project to
evaluate the different measures of commercial profitability and the
magnitude of financing9 required . It requires the current status of the
market with respect to the project.
Managerial Competence : A proper assessment of the number and skills of
staff required for the project is to be considered under this aspect. For this
purpose an appropriate organization structure is decided, then the skills and
talents required by man power is determined.
 Managerial competence consideration :
 Activity analysis involving anticipated work flow and the activities involved in
the project.
 Groupingof activities into tasks which employees can perform effectively.
 Classification of tasks are the building blocks of the organization
structure.
 Determining inter-relationships between different positions
to decide the chain of command

 Implementation Schedule : The implementation schedule is prepared to ensure

timely completion of the project. It helps in saving time and cost. Delays in
project completion may
 A record to verify that the running facets of the project are
analyzed just before implementation.

 To make sure the suggested project/business is a effective

venture.

 Provide guideline which will help the management in easy

monitoring and controlling project implementation and
production activity.

 Helps you to convince bankers, partners, government to1a3vail

necessary help.
1. Management capacity to handle the company.

2. Government clearance and approval feasibility.

3. Marketability from the products towards the extent of production

suggested.

4. Technical feasibility of production.

5. Financial stability to make sure of profit.

14
I. Management capacity to employ THE PROJECT and keep it
check effectively:
o • Personal particulars from the marketers. Financial
o status from the marketers.
o
• Stake from the marketers / equity participation particulars. Th
o
connection between the marketers.
o Organization chart /determining clearly government bodies and
duties.
o Particulars from the key personnel.
o Write the kind of skilled persons needed for that project as well as
their availability.
15
o Bankers / auditors particulars.
II. Government clearances
to become acquired:
o Licence for production and exports
o Licence for imports of machines/ recyclables /many other
materials
o Foreign nation guidelines highly relevant to the company
o Work law and Industrial facilities act/industries act / boiler act
o Register of companies -Tax act ,Excise duty and ISO
certification
o Maximum retail cost
o Storing the raw materials , many other materials
o Packing and moving
o Investment subsidy supplied by the government
16
o Location from the project
o Government reservation list for SSI sector
III. Marketing aspects:
a) Creating the near future DEMAND /SUPPLY in quantity terms
 Projecting THE NEAR FUTURE DEMND
 Study yesteryear demand pattern
 Consumption , market size , exports , role of competition
 Starting at the present trend and future expected
demand thinking about above points
 Projecting THE NEAR FUTURE SUPPLY
 Study yesteryear supply pattern
 Production sector market , capital utilisation, imports and
quantity of models
 Starting at the present trend and future expected supply
thinking about above points
b) The scope of promoting the merchandise to at least one
 Consumer market
 Industrial market
17
 Export market
 Government and institutional market
c) The marketing mix ( product, cost, place promotion) of
competitors
Companies analyzed to reach a suitable means of organisation
d) Scope for ANCILLARY status unit to motor unit , marketing
correct arrangement , opening show rooms , acquiring job
work , captive consumption , ETC analyzed.

18
1. Quality parameters from the items suggested to
become created.
2. Product specifications.
3. Quantity to become created in every variety.
4. Suggested technology.
5. Highlights around the suggested technology.
6. Procedure for manufacture.
7. Production line balancing.
8. Listings of machines.
9. Supplier selections. 19

10. Raw material. (cost, quality etc.)

1. Price of land.
2. Price of building.
3. Price of machines.
4. Contingencies.
5. Preliminary and pre operative expenses.
6. Miscellaneous fixed assets.
20
7. Margin money for capital.
 1. Promoter’s capital.
2. Term loan from bank.
3. Investment subsidy.

Term loan component is debt promoter’s capital and

investment subsidy components may be the equity.

21
22
1. Profit on sales.
2. Profit on investment with various investment
options.
3. Break even point.
4. DET service coverage ratio.
5. Sensitivity analysis.
6. Internal rate of return.
23
Project Cost
The project cost is a cost required to procure all the needed products, services and
resources to deliver the project successfully.
Example: In an example of a construction project, the cost estimation starts from
land acquisition cost, construction cost, materials cost, administration cost, labor
cost and other direct and indirect costs.
No project starts without a budget. Project success is decided by how well the
project cost has been handled in the project. Many times it happens that, the
project may not be completed within the project cost. It means that when
compared the Project Cost Vs Project Profit, Project Cost might have exceeded
and it is of course considered as a project failure.
Hence it’s very important to come up with the correct cost estimation needed for
the project.
To come up with accurate cost estimation, it’s requiring to understand the types
of project costs involved in the project.
 Types of Project Costs

Fixed Cost
Variable Cost
Direct Cost
Indirect Cost
Sunk Cost
 Fixed Cost

Any cost which is fixed throughout the project life

cycle and would not change by quantity, time or any
other project factors called for a fixed cost.
Fixed cost example: in a software project, rent for the
company space, systems cost, software license cost,
salaries are considered as a fixed cost.
Fixed costs are not fixed permanently. They will
change over a period of time. Here we are referring to
the project fixed cost which means that they are fixed
in relation to the delivery of the project.
 Variable Cost
The variable cost is a cost which varies or changes in
proportion to product or service that the project produces.
Example: to complete a specific project on schedule, they
need 25 full-time resources, whereas the company has only
15 person’s. They have decided to hire the additional
resources externally when needed. Which means that these
additional resources will be paid based on the number of
hours they have worked or the output they have produced.
The salary for the permanent employees will be
considered as a fixed cost, while the wages of the
additional resources will be considered as a variable cost.
 Direct Costs
Costs which are directly visible and accountable to produce the project
output are called direct costs.
Example: Materials which are used to produce a product can be
considered as the direct cost. Logistics, Human Resources, project
development cost used specifically to the project can also be
considered as a direct cost.
For example, if we pick how much expenditure a business has had on
purchasing the raw materials inventory we will be able to directly
point out.
 Indirect Costs

Costs which do not directly contribute or specific to the output of

the project are called indirect costs. It may be either variable or
fixed.
if we try to understand how much rent is given for sitting of the machinery
in a place, we won’t be able to do it because the rent is paid for the entire
space, not for a particular place
Indirect cost example: overhead cost, electricity consumption,
rent, salary, administrative, security cost. These costs are not
directly related to the production. A project manager is
considered as an overhead cost or indirect cost as he is not
directly involved in the production whereas developer of a project
will be considered as a direct cost.
 Sunk Costs

Sunk Costs are costs which are already spent, but failed to
incur any business value and cannot be recovered and
permanently lost.
You have bought few vegetables and kept it in the
fridge. However, you forgot to use one of them and you
found it only when cleaning the fridge. By the time you see
it, it has got totally spoiled and hence you threw it away. The
cost of the vegetable is called a sunk cost. This cost did not
solve any purpose and also cannot be recovered and
permanently lost.
 Total Project Cost

TPC should include all the costs (fixed and

variable) of the project. The calculation should
include total estimated cost (TEC) and other
project costs (OPC). I.e., it includes but not
limited to activities Costs such as pre-planning,
feasibility, operating cost, commissioning, risk
analysis, contingency, design, development,
maintenance etc.
 Know Our Understanding
A software company has developed a software in the
mainframe. However, the customer wanted few other
features which are not possible with a mainframe. A software
company couldn’t accommodate them with the existing
software developed using the mainframe, hence with the
customer approval they started a fresh project using JAVA.
The costs spent for the mainframe project are
A) Variable
B) Direct
C) Indirect
D) Sunk
Total Capital Outlay
 Outlay
An outlay is when the company has spent
money to acquire some type of tangible asset.
For example, a company makes fixed asset
outlays when it chooses to purchase new
equipment. In some cases, companies call this a
capital expenditure, and it's also known as a
purchase of property and equipment.
 Capital outlay
Capital Outlay, also known as the capital
expenditure refers to the sum of money
spent by the company for the purpose of
investing in the purchase of the capital
assets such as plant, machinery, property,
equipment or for extending the life of its
existing assets with the motive of increasing
the production capacity of the company.
 Types of Capital Outlay
Purchase of New Assets:
When the company spends the money to purchase the new
assets that appear in the balance sheet of the company, such as
machinery, plant, land, buildings, equipment, etc., then it will
be treated as the capital outlay of the company. The company
spends the money on purchasing the new assets as it would
enable the increase in the future growth of the company.
Extending the Life of its Extending Assets:
When a company invests money in the existing assets of its
business, it leads to an increase in the life of the assets and
production capacity. Such expenses are counted under the
capital outlay of the company.
 Source of Fund
There are a wide variety of funding
sources available for projects or
programmes although the options
available depend on the nature of the
company. Key sources are through loans,
equity, investors, grants/funds and
private finance
 Sources of Short-term Project Finance
1) Overdrafts :
are useful sources of short-term finance due for repayment in less than a
year. Interest is only charged when the facility is used and the interest
payments are tax-deductible. They can be arranged at short notice and
are flexible in the amount borrowed at any time
2) Loans :
generally have higher rates of interest and are less flexible as
payments need to be made for a pre-agreed amount and at a pre-agreed
time. Loans can be repaid in stages or at the end of the loan period. The
interest is also tax deductible and return on the loan can exceed the
interest payments. The cost of borrowing money can be compared with
the return from a project by calculating the Internal Rate of Return.
 Sources of Long–term Project Finance

Capital requirements for a period of more than 5 years to 10, 15, 20

years or maybe more depending on other factors. Capital expenditures
in fixed assets like plant and machinery, land and building, etc. of
business are funded using long-term sources of finance.
Share Capital or Equity Shares
Preference Capital or Preference Shares
Debenture or Bonds
Terms Loans from Financial Institutes, Government, and Commercial
Banks
Venture Funding
International Financing
Asset Securitization