Project Management

Agenda
Introductions
Course Objective
Unit 4:
Project Implementation:
Course Objectives
Systematic approach to understand Project Implementation,
Estimation of a project, Cost, Price and Value, Scheduling,
Network techniques for Project management-CPM &
PERT(Network diagram & critical path identification
Information about Project Risk & Project Communication
INTRODUCTION: Estimation of a
Project
Estimating is a critical part of project management in
planning and implementation, involving a quantitative
estimate of project costs, resources or duration. One
conundrum in estimating, especially for public-sector
projects, is that bidders sometimes make overly
optimistic estimates in order to win the business.
Estimation to determine the overall effort and cost.
Estimation of a Project
Estimation of a future project always beset with
uncertainties
The estimator estimates time and cost based on
historical data, facts & figures, information available
from books, periodicals, gazettes, journals, company
reports and his/her own professional expertise and
experience.
project estimation
Estimation of the total cost and total duration of the
Project tasks.
Based on above, there are 3 major parts to project
estimation mainly:-
Effort estimation & time estimation,
Cost estimation, and
Resource estimate
Cost, Price and Value Estimation
Project Cost Estimation-Financial aspects
Since cost estimation is about the prediction of costs
rather than counting the actual cost, a certain degree of
uncertainty is involved. This uncertainty arises from the
fact that the project scope definition is never entirely
complete until the project has been finished, at which
point all expenses have been made and an accountant
can determine the exact amount of money spent on
resources.
Cost Estimation

Cost estimating is the practice of forecasting the cost

of completing a project with a defined scope. It is the
primary element of project cost management, a
knowledge area that involves planning, monitoring, and
controlling a project's monetary costs.
Cost factor, Profit Factor, Price Factor
Project Price Estimation:-Prices reflect value
Project Price Factor:-Competitive Price
Cost price pegging with reasonable amount of profit
Profit over actual minimum cost
Cost factor
Project Estimation:-Cost Factor
Estimating cost of a new product
Use of factor price-mark-up over cost to arriving the
market price (reasonable amount of profit)
Cost+Profit=Price
Price-Profit=cost
Price-Cost=Profit
A reasonable amount of profit(mark-up:-Factor) is
added to arrive selling price.
Profit Factor
Focus shifts from cost to profit margin
Profit margin is primarily fixed or cost plus contracts
where contractor is allowed to make particular
percentage of profit
In highly competitive market, price cannot be different
from that of the competitive product.
Percentage is fixed or the contractor is allowed to make
a particular percentage of profit. Known as cost-plus
contracts
List of Various Cost Heads

Direct costs are related to producing a good or service. A direct cost

includes materials, labor, expense, or distribution cost associated with
producing a product.
Indirect costs, on the other hand, are expenses unrelated to producing a
good or service. An indirect cost cannot be easily traced to a product,
department, activity or project.
Fixed Costs
Fixed costs do not vary with the number of goods or services a
company produces over the short term.
Variable Costs
Variable costs fluctuate as the level of production output changes,
contrary to a fixed cost. This type of cost varies depending on the
number of products a company produces. A variable cost increases as
the production volume increases, and it falls as the production volume
decreases.
Factoring in Estimation
Factor:- multiplication factor(portion) derived from a
percentage figure of total project)
Eg. Project:- Water tank
Factoring:-The Piping work for a water tank can be
factored as 15% of the Water tank cost
Design and drafting can take 3 to 5 % of the total cost
of the project
Electrical , instrumentations and control equipments
cost 25-30 % of the plant cost
Unit Rates
Unit rates are extensively used in estimation,
particularly for construction, site assembly and
installation.
Eg. Laying of pipes in units of length( metres or
Kilometres)
Eg. Electricals cables laying in units of length ( metres
or Kilometres)
Painting of walls in units of area covered
Scheduling
What Is Scheduling in Project Management
Scheduling in project management is the listing of activities,
deliverables, and milestones within a project. A schedule also
usually includes the planned start and finish date, duration, and
resources assigned to each activity. Effective project scheduling
is a critical component of successful time management.
In fact, when people discuss the processes for building a
schedule, they are usually referring to the first six processes of
time management:
Plan schedule management.
Define project activities.
Sequence activities.
Estimate resources.
Estimate durations.
Develop the project schedule.
Scheduling
There are three main types of schedules:
Master project schedule. A master schedule tends to be a
simplified list of tasks with a timeline or project calendar.
Milestone schedule or summary schedule. This type of
schedule tracks major milestones and key deliverables, but
not every task required to complete the project.
A detailed project schedule. This is the most thorough
project schedule, as it identifies and tracks every project
activity. If you have a complex, large, or lengthy project,
it’s important to have a detailed project schedule to help
track everything.
Scheduling: Gantt chart.
The most common form of project schedule is a Gantt
chart. Both a milestone schedule and a detailed project
schedule can be created as a Gantt chart.
Also known as BAR CHART
Used for scheduling the projects
Visual representation of the project
Eg. Gantt Chart
Scheduling-Bar Chart
A tool for Preliminary understanding of the project and
helps in preparation of the feasibility report.
It is also known as Gantt chart.
A Gantt chart is a type of bar chart that illustrates
a project schedule, named after its inventor, Henry
Gantt (1861–1919), who designed such a chart around
the years 1910–1915.[1][2] Modern Gantt charts also
show the dependency relationships between activities
and current schedule status.
Gantt Chart
A Gantt chart helps in scheduling, managing, and
monitoring specific tasks and resources in a project.
The chart shows the project timeline, which includes
scheduled and completed work over a period. The
Gantt chart aids project managers in communicating
project status or plans and also helps ensure the project
remains on track.
Project scheduling provides the
following benefits:
Assists with tracking, reporting on, and communicating
progress.
Ensures everyone is on the same page as far as tasks,
dependencies, and deadlines.
Helps highlight issues and concerns, such as a lack of
resources.
Helps identify task relationships.
Can be used to monitor progress and identify issues
early.
Network Techniques
CPM:-The critical path method (CPM), or critical
path analysis (CPA), is an algorithm for scheduling a
set of project activities.[1] It is commonly used in
conjunction with the program evaluation and review
technique (PERT). A critical path is determined by
identifying the longest stretch of dependent activities
and measuring the time[2] required to complete them
from start to finish.
CPM
PERT
PERT is a project management planning tool used to
calculate the amount of time it will take to realistically
finish a project. PERT stands for Program Evaluation
Review Technique. PERT charts are tools used to plan
tasks within a project - making it easier to schedule and
coordinate team members accomplishing the work.
PERT
Project Risk
Project risk is an uncertain event or condition that, if it
occurs, has an effect on at least
one project objective. Risk management focuses on
identifying and assessing the risks to the project and
managing those risks to minimize the impact on
the project.
Project Risk
Risk Management: Organizational policy for
optimizing investments and (individual) risks to
minimize the possibility of failure.
Risk: The likelihood that a project will fail to meet its
objectives.
A risk: A single action, event or hardware component
that contributes to an effort's "Risk."
Project Risk
Most Common Project Risks
Cost risk, typically escalation of project costs due to poor cost estimating accuracy and
scope creep.
Schedule risk, the risk that activities will take longer than expected. Slippages in
schedule typically increase costs and, also, delay the receipt of project benefits, with a
possible loss of competitive advantage.
Performance risk, the risk that the project will fail to produce results consistent with
project specifications.
Other Types of Risks
There are many other types of risks of concern to projects. These risks can result in cost,
schedule, or performance problems and create other types of adverse consequences for
the organization. For example:
Governance risk relates to board and management performance with regard to ethics,
community stewardship, and company reputation.
Strategic risks result from errors in strategy, such as choosing a technology that can’t be
made to work.
Operational risk includes risks from poor implementation and process problems such as
procurement, production, and distribution.
Market risks include competition, foreign exchange, commodity markets, and interest
rate risk, as well as liquidity and credit risks.
Legal risks arise from legal and regulatory obligations, including contract risks and
litigation brought against the organization.
Risks associated with external hazards, including storms, floods, and earthquakes;
vandalism, sabotage, and terrorism; labor strikes; and civil unrest.
Two types of Risk
Systematic risk is a non-diversifiable risk or
market risk.
Unsystematic risks are often tied to a specific
company or industry and can be avoided.
What Is a Risk Assessment Matrix?
And Why Is It Important?
A risk assessment matrix, also known as a
Probability and Severity risk matrix, is a visual
tool that depicts the potential risks affecting a
business. The risk matrix is based on two
intersecting factors: the likelihood that the risk
event will occur, and the potential impact that the
risk event will have on the Project. In other words,
it’s a tool that helps you visualize the probability
vs. the severity of a potential risk.
Depending on likelihood and severity, risks can be
categorized as high, moderate, or low. As part of
the risk management process, companies use risk
matrices to help them prioritize different risks
and develop an appropriate mitigation strategy.
Advantages of RAM
• You will be able to prioritize the risks with the level
of severity.
• You get a simple process for the management of
risk.
• It helps you in finding the potential risk with
minimal effort.
• Information is recorded and audited.
• It demonstrates the organization’s ability to
managing risk.
• It helps in neutralizing any possible
consequences.
Step 1. Identify Hazards
Risk Analysis
Project communications
Communication The Key to Successful Project
Management
Communication connects all the critical links-internal
and external in a project.
Communication must be systematic, coordinated,
objective orientged.
It is a universal truth that one of the main reason why
plans fail is lack of communication or delayed
information.
What Is Project Communication
Management
Excellent communication is a critical component of project success. In fact,
according to the Project Management Institute (PMI), most project failures
are due to communication issues. Project communication management ensures
that does not happen. It consists of three processes that help make sure the right
messages are sent, received, and understood by the right people. Project
communication management is one of the ten key knowledge areas in the
PMBOK (Project Management Book of Knowledge). The processes included in
this area have changed over the years, but in the current version, there are three
primary project communication management processes.
These are:
Plan communications management
Manage communications
Monitor communications
These are the three communication areas in
project management:

Internal information exchange (decision-making

process, conduction of meetings, daily scrums etc.)
Information management (relevant project information
is communicated to all project stakeholders, changes to
the project are communicated etc.)
Project marketing (project presentation and display to
employees, customers, sponsors etc.)
Price of Poor communication
Communication—Project Management
Starts With a Big “C”
The word communication comes from the Latin word communis,
which means common. When we communicate, we are trying to
establish “commonness” with someone. That is, we are trying to
share information, an idea, or an attitude among the team
involved in that particular project.
One can never take for granted that the receiver will interpret the
message the same way as the sender intended it. Communication
is not an absolute, finite thing. To do this effectively, the project
manager needs to consider all the factors like the different
realities, the space the communication takes place in, verbal as
well as non-verbal messages, and the intended meaning versus
the perceived meaning, etc. Figure 1 depicts the cost of bad
communication.
The 7 C’s of Project
Communication
The seven C's are: clear, correct, complete,
concrete, concise, considered and courteous.
Communication of: Project Report
Information collected in projects from various sources
processed into reports and distributed to the concerned.
The frequency of reports-weekly, fortnightly, monthly &
quarterly-depends on the importance of information in the
report.
1) routine reports:-Status reports, Variance reports, Earned
value reports, Trend reports
2) Inspection reports:-Conformity report, Non-conformity
report-Rejection report
3) Exception reports:-for exceptional decisions
4) Special reports:-selectively addressed to those who would
be interested with project