EXERCISES/HANDOUTS

CREATING PROJECT PLANS

XYZ is a large scientific instruments company. Senior management became
alarmed about a rash of late product development projects. For some months,
the development budget had been rising even, as the number of completed
projects declined, and many of the projects in the development pipeline no longer
seemed to reflect the needs of the market. Management was especially troubled
because it had believed its annual business plan provided the guidance that the
marketing and engineering departments needed to generate and schedule
projects.

To get to the root of the problem, the chief executive first asked senior managers
to compile a list of all the current development projects. They discovered that 30
projects were under way—far more than anticipated, and, they suspected, far
more than the organization could support. Further analysis revealed that the
company had two to three times more development ‘work than it was capable of
completing over its three-year development-planning horizon.

With such a strain on resources, delays were inevitable. When a project ran into
trouble, engineers from other projects were reassigned or, more commonly,
asked to add the crisis project to their already long list of active projects. The
more projects they added, the more their productivity dropped. The reshuffling
caused delays in other projects, and the effects cascaded. Furthermore, as
deadlines slipped and development costs rose, project managers faced pressure
to cut corners and compromise quality just to keep their projects moving
forward.

The senior management team also discovered that the majority of XYZ’s
development resources—primarily engineers and. support staff—was not
focused on the projects most critical to the business. When questioned, project
leaders admitted that the strategic objectives outlined in the annual, business
plan had little bearing on project selection. Instead, they chose projects because
engineers found the technical problems challenging o because customers or the
marketing department requested them. XYZ had no formal process for choosing
among development projects. As long as there was money in the budget or. The
person making the request had sufficient clout; the head of the development
department had no option but to accept additional project requests.

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Many engineers were not only working on non-critical projects but also spending
as much as 50% of their time on non-project-related work. They responded to
requests from manufacturing for help with problems on previous products, from
field sales for help with customer problems, from quality assurance for help with
reliability problems, and from purchasing for help with qualifying vendors. In
addition to spending considerable time fixing problems on previously introduced
products, engineers spent many hours in “information” and “update” meetings.
In short, they spent too little time developing the right new products,
experimenting with new technologies, or addressing new markets.

Required

▪ What are the problem organizations is facing?

▪ What is the solution? What is the short term and long term action need to
be undertaken to resolve the problems?

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 PROJECT CHARTER
Project Title and Description (What is the project?) Customer Satisfaction Fix-It Project
Over the last few months, the quality assurance department has discovered many of our customers’
orders for our XYZ equipment have taken the customer ten times longer to place through our
computer network than our competitors’ networks. The purpose of this project is to investigate the
reasons for the problem and propose a solution. The solution will be authorized as a subsequent
project. Quality Control has detailed records of their findings that can be used to speed up this
project.
Project Manager Assigned and Authority Level (Who is given authority to lead the project, and
can he/she determine, manage, and approve changes to budget, schedule, staffing, etc.?)
Jan Navratil shall be the project manager for this project and have authority to select team members
and determine the final project budget.
Business Case (Why is the project being done? On what financial or other basis can we justify
doing this project? Describe the project purpose and justification.)
This project is being completed in order to prevent a further breakdown of customer satisfaction.
We expect that improved customer satisfaction will increase revenue to the company in the first
year by at least $200,000 due to a decrease in service calls. As a side benefit, we hope that the
project will generate ideas on improving customer satisfaction while fixing this problem.
Resources Preassigned (How many or which resources will be provided?)
Steve Peterson and Julie Dirksen are already dedicated to the project because of their expertise in
computer networks of this type. Other resources will be determined by the project manager.
Stakeholders (Who will affect or be affected by the project (influence the project), as known to
date?)
Stakeholders include Jason Craft representing Quality Control, Jennie Rutter in Customer Service,
and Eric Rudolf in Marketing. These resources are available to assist the project as needed by the
project manager.
Stakeholder Requirements As Known (Requirements related to both project and product scope)
Attached to this document are the detailed specifications for the existing system, the requirements
that the existing system was designed to meet. It is expected that this project will not change how
the system affects the existing requirements.
The project must include utilizing the data available from Quality Control.
Product Description/Deliverables (What specific product deliverables are wanted, and what will
be the end result of the project?)
1. A work breakdown structure, due within two weeks, that outlines the plan for accomplishing
the project, followed one week later by a list of risks in completing the project.
2. A report that outlines what can be changed, how much each change will cost, and the expected
decrease in the time it takes to place an order resulting from each change. Few words are
necessary in the report, but it must be created electronically and be agreed to by the

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 representatives for Quality Control, Customer Service, and Marketing, in addition to the
project team.
3. A list of the interactions with our customers necessary to complete the changes.
Measurable Project Objectives (How does the project tie into the organization’s strategic goals?
What project objectives support those goals? The objectives need to be measurable and will
depend on the defined priority of the project constraints.)
The objective of this project is to improve customer satisfaction by reducing the time customers
spend placing orders via the computer network to 10 percent of the current time. Scope and
customer satisfaction are the top priorities on this project, closely followed by schedule and then
cost.
• Summary milestone schedule: Due no later than September 1, 20XX.
• Summary budget: U.S. $50,000.
Project Approval Requirements (What items need to be approved for the project, and who will
have sign-off? What designates success?)
Approvals for this project include:
• The sponsor will approve the WBS before planning efforts continue.
• The sponsor will approve the list of risks before planning efforts continue.
Final project approval will be determined by the sponsor.
High-Level Project Risks (Potential threats and opportunities for the project)
• Because this project analyzes customer satisfaction, the project may help generate ideas to
improve customer satisfaction, resulting in higher levels of customer retention.
• Because we have little experience in this area, implementing an inadequate solution could
cause more frustration and more time delays for customers, resulting in additional lost
business.
• Because this problem is greatly troubling to our customers, project delay could result in lost
customers, jeopardizing the likelihood of meeting this year’s sales goals.
• Because assessment of this system is difficult, changes to the system could affect the
requirements the system was designed to meet, resulting in impacts to other business functions.

Project Sponsor Authorizing This Project:

___________________________________ _________________________
Connor Mulcahy, Executive Vice President Kerry Mulcahy, Vice
President

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Baluchistan Disaster Management Project

6
Baluchistan Disaster Management
Project

Grant Amount: US$ 5 Million

Project Effectiveness Date: July 19, 2012
Project Closing Date: June 30, 2015
Geographical Area: Quetta, Baluchistan.

Implementing Agency

Provincial Disaster Management Authority (PDMA) Baluchistan.

PCNA Priority (Pillar)

Strategic Objective 1: Build responsive and effectiveness of the State.

Objective

To strengthen capacity of PDMA, Baluchistan to prepare for and respond to natural disasters.

Beneficiaries

Go through enhanced capacity

The people of Baluchistan through greater awareness of disaster management and preparedness

Expected Results

Enhanced capacity at PDMA Baluchistan to collect, manage and communicate information;

Development and effective implementation of disaster response procedures at PDMA;

Increased technical capacity at PDMA to manage the implementation and dissemination of

hazard and risk assessments; and

Increased capacity of PDMA Baluchistan to engage with local communities for improved
preparedness.

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 Power/Interest Grid with A-H representing the placement of generic stakeholders

Sample Stakeholder Analysis Matrix

Stakeholder Interest(s) Assessment of Potential Strategies for

Stakeholder in the Project Stakeholder Power Gaining Support or
(HIGH, LOW) (HIGH, LOW) Reducing Obstacles

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 EXAMPLE OF PROJECT SCOPE STATEMENT

PROJECT OBJECTIVE
To construct a high-quality, custom home within five months at cost not to exceed $150,000.

DELIVERABLES
• A 2,200-square-foot, 2½-bath, 3-bedroom, finished home.
• A finished garage, insulated and sheetrocked.
• Kitchen appliances to include range, oven, microwave, and dishwasher.
• High-efficiency gas furnace with programmable thermostat.

MILESTONES
1. Permits approved—March 5
2. Foundation poured—March 14
3. Dry in. Framing, sheathing, plumbing, electrical, and mechanical inspections passed—May 25
4. Final inspection—June 7

TECHNICAL REQUIREMENTS
1. Home must meet local building codes.
2. All windows and doors must pass NFRC class 40 energy ratings.
3. Exterior wall insulation must meet an “A” factor of 21.
4. Ceiling insulation must meet an “R” factor of 38.
5. Floor insulation must meet an “R” factor of 25.
6. Garage will accommodate two large-size cars and one 20-foot Winnebago.
7. Structure must pass seismic stability codes.

LIMITS AND EXCLUSIONS

1. The home will be built to the specifications and design of the original blueprints provided by
the customer.
2. Owner responsible for landscaping.
3. Refrigerator is not included among kitchen appliances.
4. Air conditioning is not included but prewiring is included.
5. Contractor reserves the right to contract out services.
6. Contractor responsible for subcontracted work.
7. Site work limited to Monday through Friday, 8:00 A.M. to 6:00 P.M.

CUSTOMER REVIEW
John and Joan Smith

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 Accounting System Project
Manual accounting system is tedious and time consuming. In order to meet the requirements of
regulatory bodies and upcoming challenges a new project is being initiated to have a computerized
accounting system. A senior level executive with a team of system analyst and programmers is being
assigned to develop and implement the new automated accounting system.

Scope of work
The scope of work includes hardware procurement, software development, training as well as
deployment of the new accounting system. The project should also include setting up all activities needed
to effectively perform project management.

The major component of this project is in-house software development. A team of system analyst
identifies that software development should include major elements like requirement analysis, detailed
designing, building software components, integrating components, test at the system level and finally
user acceptance testing. At this stage it is very difficult for system analyst to highlight the sequence of
these jobs.

Programs also provide their input by indicating three major elements for developing software
components mainly designing database, client software and web based application interface.

Required

• Draw a three level work breakdown structure(WBS)

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Machinery Instillation
Consider a project involving the installation of a new machine and training the operator.
Assume that the training of the operator can begin as soon as he is hired and the machine
is installed. The training is to start immediately after installation and is not to be delayed
for inspection of the machine. The inspection is to be made after the installation is
complete.

*************************************************************************************************

Market Survey
Consider now a project to prepare and conduct a market survey. Assume that the project
will begin by planning the survey. After the plan is completed, data collection personnel
may be hired, and the survey questionnaire may be designed, the personnel may be
trained in the use of the questionnaire. Once the questionnaire has been designed the
design staff can select the households to be surveyed.

Also, after the questionnaire has been designed it may be printed in volume for use in the
survey. After the households have been selected, the personnel trained, and the
questionnaires printed, the survey can begin. When the survey is complete the results
may be analyzed.

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 ACTIVITY SCHEDULING
EXERCISE-1

No. Activity Duration Predecessor

1 A 14 DAYS -
2 B 3 DAYS A
3 C 7 DAYS A
4 D 4 DAYS C
5 E 10 DAYS B,D

EXERCISE-2

No. Activity Duration Predecessor

1 A 10 DAYS -
2 B 13 DAYS A
3 C 7 DAYS A
4 D 14 DAYS A
5 E 12 DAYS B,C
6 F 15 DAYS B,C,D
7 G 8 DAYS E,F

EXERCISE-3

No. Activity Duration Predecessor

1 A 5 DAYS -
2 B 8 DAYS -
3 C 12 DAYS A
4 D 6 DAYS B,C
5 E 9 DAYS C
6 F 10 DAYS D
7 G 4 DAYS E,F

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EXERCISE-4

No. Activity Duration Predecessor

1 A 2 WEEKS -
2 B 1 WEEK A
3 C 4 WEEK -
4 D 6 WEEKS B
5 E 9 WEEKS C,D
6 F 1 WEEK D
7 G 2 WEEKS E
8 H 3 WEEKS F,G
9 I 2 WEEKS H
10 J 1 WEEK I

EXERCISE-5

No. Activity Duration Predecessor

1 A 1 WEEK -
2 B 2 MONTHS A
3 C 4 WEEKS A
4 D 20 DAYS A
5 E 4 MONTHS B
6 F 6 WEEKS B
7 G 40 DAYS E
8 H 4 WEEKS F
9 I 6 WEEKS G,H
10 J 20 DAYS C,D,G,H
11 K 10 DAYS D
12 L 2 WEEKS I,J,K

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 Managing Project Resources
Resource Std rate/Day Max Units

Labor 800 10/days

No Activities Predecessors Duration 1 day Assigned Resource No of Units

1 A - 2 Labor 4

2 B - 2 Do 6

3 C - 2 Do 3

4 D - 4 Do 9

5 E 3 3 Do 8

6 F 2 2 Do 7

7 G 1,6 3 Do 2

8 H 5,7 4 Do 1

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 CROSS COUNTRY PIPELINE PROJECT
A 10-mile long, 10” pipeline is being installed cross-country between two existing lines. All that is
required is installation of the pipe and a control valve at each end. Assume a 5% allowance of
total direct costs for construction indirect cost for a project of this type. The new construction will
be in Region-3.
1) Using the attached estimating guidelines, develop an estimate of what the cost of the project
will be with following assumptions:

a. Excludes hydrostatic testing

b. No isolation valves required with control valves

c. No escalation included

d. Right-of-way costs included

e. Engineering costs included

f. Freight and taxes included

g. Environmental costs included

2) Using the attached estimating guidelines, develop an estimate of what the cost of the project
will be with following assumptions:

a. Hydrostatic testing is included

b. Isolation valves are required with the control valves

c. No escalation included

d. Right-of-way costs included

e. Engineering costs included

f. Freight and taxes included

g. Environmental costs included

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 ESTIMATION GUIDELINES FOR CROSS COUNTRY PIPELINES

COST PER MILE 3“ PIPE 4” PIPE 6” PIPE 8” PIPE 10” PIPE

LABOR $25,000 $30,000 $40,000 $60,000 $65,000
MATERIAL $19,000 $25,000 $40,000 $65,000 $73,000
SUBTOTAL L&M $44,000 $55,000 $80,000 $125,000 $138,000
FREIGHT & TAXES $2,000 $3,000 $5,000 $8,000 $10,000
ENGINEERING $1,000 $3,000 $4,000 $4,000 $4,000
ENVIRONMENTAL $1,000 $2,000 $2,000 $2,000 $2,000
RIGHT-OF-WAY $10,000 $15,000 $20,000 $20.000 $20,000
SUBTOTAL
$14,000 $23,000 $31,000 $34,000 $36,000
ADD-ONS

* Above costs are based on standardized costing. Adjustments for nearby Regions are
as follows:
REGION-1 -5%
REGION-2 0%
REGION-3 +10%
REGION-4 +20%

* Cost for hydrostatic testing of pipe:

$5,000 for less than 8”
$10,000 for pipe between 8” and 16”
$15,000 for pipe above 16”

* Cost of Control Valves

3“ PIPE 4” PIPE 6” PIPE 8” PIPE 10” PIPE

$10,000 $13,000 $20,000 $30,000 $40,000

CONTRL VALVES

CONTRL VALVE
$18,000 $25,000 $45,000 $70,000 $100,000
WITH ISOLATION VALVE

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 EARNED VALUE ANALYSIS
TERMS TO KNOW:

ACRONYM TERM INTERPREATION

Planned value (Budgeted Cost of What is the estimated value of the work I
PV (BCWS)
Work Scheduled) planned to be done?
Earned value (Budgeted Cost of What is the estimated value of the work
EV (BCWP)
Work Performed) actually accomplished?
Actual cost (Actual Cost of Work
AC (ACWP) What is the actual cost incurred?
Performed)
BAC Budget at completion How much did we BUDGET for the TOTAL JOB?
What do we currently expect the TOTAL project
EAC Estimate at completion
to cost?
From this point on, how much
ETC Estimate to complete
MORE do we expect it to cost to finish the job?
How much over or under budget do we expect
VAC Variance at completion
to be at the end of the project?

FORMULAS AND INTERPRETATIONS

NAME FORMULA INTERPRETATION

Cost variance (CV)
Schedule variance (SV)
Cost performance index (CPI)
Schedule performance index (SPI)
Estimate at completion (EAC)
Estimate to complete (ETC)
Variance at completion (VAC)
NEGATIVE is over budget.
EV-AC
POSIT1VA is under budget.
NEGATIVE is behind schedule,
EV-PV
POSITIVE is ahead of schedule.
EV/AC We are getting $______ out of every $1.
EV/PV We are [only] progressing at of the rat originally
planned.
As of now, how much do we expect the total
project to cost?
BAC/CPI • Used if no variances from the BAC have
occurred or you will continue at the same rate
of spending.
EAC-AC How much more will the project cost?
How much over budget will we be at the end of
BAC-EAC
the project?

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The Fence # 1
You have a project to build a new fence. The fence is four sided as shown. Each side is to take one
day to build and is budgeted fro $1,000 per side. The sides are planned to be completed one after
the other. Today is the end of day three.

Activity Day 1 Day 2 Day 3 Day 4 Status End of Day 3

Side 1 S----------F Complete, spent $1,000

Side 2 S-----------PF -----F Complete, spent $1,200

Side 3 PS---S---PF 50% done, spent $600

Side 4 PS--------PF Not yet started

Key S = Actual Start, F = Actual Finish, PS = Planned Start, and PF = Planned Finish

What Is: Calculation Answer Interpretation of the Answer

PV

EV

AC

BAC

CV

CPI

SV

SPI

EAC

ETC

VAC

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 EXERCISE

DESERT SURVIVAL

INTRODUCTION

You are a Task Team originally scheduled to meet with another team operating

from a special desert camp for the achievement of a secret National objective.

Due to mechanical difficulties, however, your airplane was forced to land at a spot

some 400 Kms from the port. During the crash-landing much of the equipment

aboard was damaged and, since survival depends on reaching the base, the

most critical item available must be chosen for the 200 mile trip. Below are listed

the 15 items left intact and undamaged after landing. Your task is to rank order them

in terms of their importance in allowing your team to reach the same. Place the

number 1 by the most important item, the number 2 by the second most important,

and so on through 15, the least important.

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 NASA DECISION FORM

STEP 4 STEP 5
STEP 1 STEP 2 STEP 3
Difference Difference
Your Individual The Team Survival Expert’s
between Step 1 between Step 2
I T E M S Ranking Ranking Ranking
and Step3 and Step 3
Box Matches
Food Concentrates
50 Feet of Nylon Rope
Woollen Blankets
Portable Heating Unit
Two 0.45 calibre pistols
One Case Dehydrated Milk
Two 5 men Tents
Regional Map
Life Raft
Magnetic Compass
5 Gallons of Water
Signal Flares
First Aid Kit
Solar-Powered FM
Receiver / Transmitter
Total: Total:

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 PROJECT CRASHING - CRASH THE PROJECT BY 4 DAYS

Activities Predecessor Duration

A - 7
B A 3
C A 4
D B,C 5
E D 2
F D 4
G E,F 5

B(3) F(4)

G(5)
A(7) D(5)

C(4) E(2)

Activity Normal Crash Normal Crash Cost/Day

Time Time Cost Cost
A 7 6 $7,000 $8,000 $1,000
B 3 2 5,000 7,000 2,000
C 4 3 9,000 10,200 1,200
D 5 4 3,000 4,500 1,500
E 2 1 2,000 3,000 1,000
F 4 2 4,000 7,000 1,500
G 5 4 5,000 8,000 3,000