Project Management Fundamentals

What is a Project

• Projects can be new structures, processes, replacements, renewals, or removals, varying in size.
• Project completion requires financial investment.
• Projects are temporary and have set timelines.
• Electrical projects include power generation and distribution systems, nuclear power, and hydroelectric plants.
• Projects consist of coordinated activities with defined start and end points.
• Projects require the involvement of individuals or organizations.
• Projects must meet objectives with set schedules, costs and performance metrics.
• Projects are temporary, unique, and have specific objectives.
• Projects causes change and involves risk and uncertainty.
• Projects require commitment of human, material, and financial resources.
• Risk management reduces risks related to a pre-selected domain of acceptance.
• Threats come from the environment, technology, humans, other organizations, and politics.
• Risk management prioritizes risks, handling those with the greatest potential loss first.
• Lower probability risks with lower losses are handled in descending order.
• Balances must be found between high probability/low loss risks and high loss/low probability risks.
• Risk management needs allocation of resources, which may cause opportunity costs.
• Ideal risk management minimizes spending and maximizes reduction of negative risk effects.

Project Management

• Engineering management is the functional management of technical professionals.
• Engineering areas include product development, manufacturing, construction, and design.
• Project management involves planning, organization, monitoring, and control.
• All stakeholders must be motivated to achieve project objectives safely, on time, within budget, and to a high standard.

Management Functions

• Management functions include planning, organizing, staffing, directing, and controlling.

Planning

• Planning is the basic function of management.
• Planning defines goals, establishes strategies, and coordinates activities.
• Planning charts a future course of action and identifies steps to achieve set goals.
• Planning ensures proper utilization of human and non-human resources.

Organizing

• Organizing brings together physical, financial, and human resources.
• Organizing develops productive relationships for achieving organizational goals.
• Organizing involves identifying and grouping activities.
• Organizing assigns duties, delegates authority, and creates responsibility.
• Organizing coordinates authority and responsibility relationships.

Staffing

• Staffing mans the organization structure.
• Staffing puts the right person in the right job.
• Staffing includes manpower planning, recruitment, selection, and placement.
• Staffing also includes training, development, performance appraisal, promotions, and transfers.

Directing

• Direction influences, guides, supervises, and motivates subordinates.
• Supervision watches and directs work.
• Motivation inspires and encourages subordinates using incentives.
• Leadership guides subordinates.
• Communication passes information between people.

Controlling

• Controlling measures accomplishment against standards and corrects deviations.
• Controlling ensures everything conforms to standards.
• Controlling involves establishing standard performance, measuring actual performance, and comparing performance against standards.
• Corrective action takes to address any deviations.

Project Resources

• Project resources include time, cost (money), labor, materials, and equipment (machines).
• The 4Ms (money, manpower, materials, machines) can be improved for efficiency and productivity.
• Enhancements must be made on manpower, machines, materials and funds.

Project Participants

• Three main parties take part in any project: the Owner, Engineer/Designer, and Contractor.
• Other participants include consultants, suppliers and subcontractors.
• A Project Manager coordinates all parties to deliver the final product.

Owner Duties

• The owner provides financial supply and formal licenses.
• The owner identifies project responsibilities.

Engineer Duties

• The engineer supervises work execution according to contract documents.
• The engineer accepts or rejects non-conforming works.
• The engineer warns the contractor for delays.
• The engineer reports on work progress.
• The engineer supervises all inspection and testing.
• The engineer issues written orders for rejections, rework, and work stoppage.

Contractor Duties

• The contractor supplies construction materials, labor, and machines.
• The contractor provides power resources and temporary buildings at the project site.
• The contractor plans the job layout.
• The contractor executes all works according to contract conditions and specifications.
• The contractor employs efficient representatives and safeguards the project site.

The Resident Engineer

• The resident engineer ensures works are carried out according to contract documents, construction drawings, and authorities' requirements.
• The engineer compiles essential job information, such as soil test data and geological information.

Records the resident engineer should maintain

• Soil test data on which the design has been based
• Geological information
• Levels and benchmarks used
• Rainfall and runoff data
• Details of special materials or equipment to be incorporated in the job
• Addresses of authorities and personnel who are involved in the job
• Brief history of how the job came about and the dates of major decisions
• The pre-tender Health and Safety Plan

Types of Records

• Historical record: Weekly reports on work progress, changes, discussions, decisions, and weather data.
• Quantitative and Financial Record: Measures work quantities, time, rates, expenditure, and costs.
• Qualitative Record: Includes work measurements, material observations, test results, and performance tests.
• 'As-built' Record: Includes drawings of completed work, dimensions, material origins, supplier names, and equipment manuals.

Contract Documents

• A contract is a legally binding agreement on project details and costs.
• Contract documents form the basis of the agreement.
• Contract documents include the contract format, conditions, and technical specifications.
• Also included are the bill of quantities, engineering drawings, and project timetable.
• These documents also include the contractor's classification identity and insurance cheque.

Contract Types and Financial Risk

• A contracting method defines how the contract price is set.
• The contract price is the amount the Agency pays the contractor for work.

Fixed Price or Lump Sum Contract

• The contractor performs work for a fixed price.
• Price changes require a change order.
• These contracts are suitable with clear scope and schedule.
• The contractor bears most of the financial risk.

Cost Reimbursable or Cost Plus Fees Contract

• The owner pays material, labor, and equipment costs, plus a fee for overhead and profit.
• The final cost sums reimbursable costs and actual fees.
• The Agency bears most of the financial risk.
• This contract type is used with well-known contractors.

Unit Price Contract

• Contracts are based on anticipated quantities of items and their unit prices.
• The final price depends on the quantities needed to carry out the work.
• The contract price equals the total project cost, regardless of estimated cost.
• The financial risk is evenly split between the Agency and the contractor.

Guaranteed Maximum Price (GMP) Contract

• This is similar to the unit price contract but restricts the contract price.
• It assigns financial risk evenly, though the Agency bears most of the risk.

Safety and Risk

• Risk is the likelihood of potential harm from materials, machines, and working methods.
• Engineers can follow a five-step risk assessment model.

Five-step risk assessment

• Look for hazards.
• Decide who might be harmed and how.
• Evaluate the risks and decide whether the existing precautions are adequate or more should be done.
• Record your findings.
• Review your assessment and revise if necessary.

Health and Safety Guidelines

• Guidelines include maintaining safe workplaces, preventing falls, and ensuring structural stability.
• Health and safety guidelines also include safe excavations, equipment, and emergency procedures.

Project Planning (Work Breakdown Structures)

• Work Breakdown Structures (WBS) is a schematic presentation for project execution.
• Defining a WBS controls the project by allocating resources and setting time constraints.
• A WBS provides a structure for cost allocation and scheduling.
• A bottom-up estimate can be produced by costing work packages at the lowest level.
• The result is a Cost Breakdown Structure, cost can be allocated top-down, from the top level of the WBS.

Advantages of WBS

• Work is divided into main and secondary units.
• Responsibilities and authorities are identified.
• Interference between functions is prevented.
• Planning and scheduling are facilitated.
• Communication and information follow-up is facilitated.
• Work quality control is facilitated.

Project Pricing

• Without proper cost estimation, projects can be underfunded.
• Costs include human resources, material, parts, and equipment.
• Estimates should account of potential cost escalation, risks, and accidents.
• Cost estimates are prepared when working specifications and drawings are ready.
• Detailed expense estimates comes after studying the designs, quanitity and labour

Project costings

• Total project price equals total cost plus profit.
• Total cost equals direct cost plus indirect cost.
• Direct costs include labor, material, and equipment costs.
• Indirect costs include project and office overheads.

Project Overhead

• Project overhead refers to indirect field expenses.
• Contractors may estimate this as 5%-15% of total direct costs.

Office Overhead

• Office overhead includes general company expenses.
• Office overhead averages 2%-8% of the total estimated project cost.

Project Financial Management

• Construction contracts allow owners to make partial payments to the contractor which usually occurs monthly.
• The contractor prepares monthly pay requests based onwork accomplished.
• Costs of materials stored on site and work done elsewhere are included.
• Owners retain a percentage of each payment, usually 10%, during the project's first half.
• Subsequent payments are made in full if work progresses satisfactorily.
• The owner accepts the project after engineer certification and pays the contractor the final amount.

Cash Flow Forecasting

• Involves determining the movement of cash into and out of the company during a specific period.
• Positive cash flow: total payments received from the owner for completed work.
• Negative cash flow: total costs to execute project works.
• Net cash flow: the difference between disbursements and income

Project Success Factors

• Clear project objectives
• Good project planning and scheduling
• Motivated and integrated team
• Adequate resource availability
• Comprehensive quality control procedures
• Good communication
• Risk assessment
• Good delegation of authority
• Early decisions
• Adapting to changes
• Using past experience
• Training