ENMF 527 - Project Management Concepts PDF

ENMF 527 – Project Management Concepts PM Concepts: Learning Objectives  Definition of a project and its attributes  Key constraints within which a project must be managed  Life cycle of a project  Definition of project management  Elements of the project management proc...

ENMF 527 – Project Management Concepts PM Concepts: Learning Objectives  Definition of a project and its attributes  Key constraints within which a project must be managed  Life cycle of a project  Definition of project management  Elements of the project management process  Implications of global project management  Project Management Institute (PMI)  Benefits of project management Project, Defined  A project is an endeavour to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. Attributes of a Project  Has a well-defined objective defined in terms of: end product or deliverable, schedule, and budget  Composed of a series of interdependent tasks  Utilizes various resources  Has a specific time frame   May be unique or one-time endeavor  Has a sponsor or customer  Involves a degree of uncertainty ENMF 527 Notes – Project Management Concepts Page 2 of 9  Examples of Projects  Planning a wedding  Designing and implementing a computer system  Hosting a holiday party  Designing and producing a brochure  Executing an environmental clean-up of a contaminated site  Holding a high school reunion  Performing a series of surgeries on an accident victim Constraints  Scope o deliverables must meet the requirements or acceptance criteria agreed upon  Quality o Customer expectations.  Schedule: Timetable  Budget o amount the sponsor or customer has agreed to pay for the accepted project deliverables  Resources o People, materials, equipment, facilities, and so on.  Risks  Customer satisfaction ENMF 527 Notes – Project Management Concepts Page 3 of 9  Unforeseen Circumstances  Unforeseen circumstances may jeopardize achievement of the project objective.  The challenge facing the project manager is to prevent, anticipate, and/or overcome such circumstances.  Good planning and communication are essential o to prevent problems from occurring & minimize their impact The Project Life Cycle  Projects are “born” when a need is identified by the customer.  Project life cycles vary in length, from a few weeks to several years.  Not all projects formally go through all four phases of the project life cycle. Phase 1 Initiating  The first phase involves the identification of a need, problem, or opportunity.  The need and requirements are usually written by the customer into a document called a project charter or request for proposal (RFP).  In terms of RFP, contractors will develop and submit proposals.  The winning contractor and customer will sign a contract. ENMF 527 Notes – Project Management Concepts Page 4 of 9  Phase 2 Planning  This phase ends with a roadmap, or game plan, that shows how the project scope will be accomplished within budget and on schedule, i.e. a feasible project plan.  Project plan determines what needs to be done (scope, deliverables), how it will get done (activities, sequence), who will do it (resources, responsibility), how much it will cost (budget), and what the risks are. Phase 3 Performing  The third phase is performing the project.  Different types of resources are utilized  Results in the accomplishment of the project objective Phase 4 Closing  The final phase is closing the project.  Perform close-out activities  Evaluate performance  Invite customer feedback ENMF 527 Notes – Project Management Concepts Page 5 of 9 ENMF 527 Notes – Project Management Concepts Page 6 of 9  The Project Management Process  The project management process involves planning the work and then working the plan. i.e., project management involves a process of first establishing a plan and then implementing that plan to accomplish the project objective 1 Establish project objective. 2 Define scope 3 Create a work breakdown structure (Figure 1.3) a. Subdivide project scope into “work packages” 4 Assign responsibility (Figure 1.3). 5 Define the specific activities that need to be performed. 6 Sequence activities: project network diagram (Figure 1.4) 7 Estimate activity resources 8 Estimate activity durations. a. How long will it take to complete each activity? 9 Develop project schedule (Figure 1.5) 10 Estimate activity cost. a. Based on the types and quantities of resources required for each activity. 11 Determine budget. ENMF 527 Notes – Project Management Concepts Page 7 of 9  Controlling Projects  Performing the work.  Baseline plan: a graphical or tabular “road map”.  Monitor and control progress.  Measure actual progress and compare it to planned progress.  Control changes: take corrective action if the project is behind schedule, overrunning the budget, or not meeting technical specifications. Global Project Management  An adding unique dimension to managing project.  Culture differences and multinational economic transactions  Multinational project team  Global project management requires an additional set of competencies  Technology helps global project management. Project Management Associations  Project Management Institute (PMI): founded in 1969, 350,000 members in more than 170 countries  PMI publishes A Guide to the Project Management Body of Knowledge (PMBOK® Guide)  PMI offers a certification program ENMF 527 Notes – Project Management Concepts Page 8 of 9   Some other associations can be found from Appendix C Benefits of Project Management  Satisfied customers  Additional business  Expansion of career opportunities  Satisfaction of being on a winning team  Improved knowledge and skills  When projects are successful, everybody WINS ENMF 527 Notes – Project Management Concepts Page 9 of 9  ENMF 527 – Identifying and Selecting Projects Learning objectives  How projects are identified and selected  A project charter  Outsourcing projects using a request for proposal (RFP)  The proposal solicitation process Identifying Needs, Problems, or Opportunities  Recognize a need, problem, or opportunity Problem: is an unknown gap between the present state and the  Clearly define the problem or need expected state.  Quantify the problem  Determine the budget Opportunity: is a known gap between the present state and the expected state  Prepare a request for proposal  Select the project(s) with the greatest benefit for the cost expended  Project Selection  Develop a set of criteria against which the project will be evaluated  List assumptions  Gather data and information for each opportunity  Evaluate each opportunity against the criteria Project Charter  Project charter is a formal project authorization document, it is also called project authorization or project initiation document.  The main contents in project charter include the fund approval from the sponsor, the key conditions and parameters, and the framework for developing a detailed baseline plan  There is no standard format for this document.  General guidelines for drafting a project charter: 1) Project title 2) Purpose 3) Description 4) Objectives 5) Success criteria or expected benefits 6) Funding 7) Major deliverables 8) Acceptance criteria 9) Milestones schedule 10) Key assumptions 11) Constraints ENMF 527 Notes – Needs Identification Page 2 of 6  12) Major risks 13) Approval requirements 14) Project Manager 15) Reporting requirements 16) Sponsor designee 17) Approval signature and date ENMF 527 Notes – Needs Identification Page 3 of 6  Request for Proposal (RFP)  State, comprehensively and in detail, what is required, from the customer’s point of view  Enable contractors or a project team to understand what the customer expects so that they can prepare a thorough proposal  The need may be communicated informally—and sometimes only orally  Guidelines for drafting a formal RFP to external contractors: 1) Project objectives 2) Statement of work (SOW) 3) Customer requirements 4) Deliverables 5) Acceptance criteria 6) customer-supplied items 7) approvals required by the customer 8) type of contract 9) the payment terms 10) the required schedule for completion 11) instructions for the format and content of the contractor proposals 12) due date for proposals 13) evaluation criteria 14) occasionally will indicate the funds the customer has available ENMF 527 Notes – Needs Identification Page 4 of 6  Soliciting Proposals  Methods: o Identify a selected group of contractors in advance and sending each an RFP o Advertise in certain business newspapers  Process considered a competitive situation  Don’t provide information that is not provided to all contractors  May hold a bidders’ meeting to explain the RFP and answer questions  Not all use RFP A Good RFP  A good RFP allows contractors or a project team to understand what the customer expects so that they can prepare a thorough proposal that will satisfy the customer’s requirements at a realistic price. ENMF 527 Notes – Needs Identification Page 5 of 6 ENMF 527 Notes – Needs Identification Page 6 of 6  ENMF 527 – Developing Project Proposals Learning Objectives  Building relationships with customers and partners  Proposal marketing strategies  Decision making to develop a proposal  Creating winning proposals o proposal preparation process and elements that may be included in a proposal o pricing considerations o customer evaluation of proposals o types of contracts between the customer and the contractor o Measuring success of proposal efforts Building Relationships with Customers and Partners  Relationships establish the foundation for successful funding and contract opportunities.  Personal basis  Contacts with potential clients should be frequent.  Focus on customer needs rather than potential contract opportunities.  Establish and build trust  Ethical behaviour   First impression  Maintain a positive and can-do attitude  Build credibility based on performance  Put the client first  Build a personal network rather than rely on an individual. ENMF 527 Notes – Proposed Solutions Page 2 of 12  Contracts & the Tendering Process  There are two separate contracts arising in the tendering process  Contract A: o Owner’s request for tenders constitutes an offer o Contract A is formed when this offer is accepted (upon the submission of each bid)  Contract B o The construction contract itself Pre-RFP/Proposal Marketing  Should not wait until formal RFP solicitations are announced before starting to develop proposals  Develop relationships with potential customers  Maintain frequent contacts with past and current customers  Be familiar with a customer’s needs and requirements  Consider this marketing or business development; no cost to the customer  May prepare an unsolicited proposal  Efforts are crucial to the foundation for winning a contract ENMF 527 Notes – Proposed Solutions Page 3 of 12  Decision to Develop a Proposal  Factors to consider: o competition o risk o mission o extension of capabilities o reputation o customer funds o proposal resources o project resources  Be realistic about probability of winning the contract  A lot of non-winning proposals can hurt a contractor’s reputation Creating a Winning Proposal  A selling document – not a technical report  Convince the customer that you are the best one to solve the problem  Highlight the unique factors that differentiate you from competing contractors  Emphasize the benefits to the customer  Write in a simple, concise manner  Address requirements as laid out in the RFP  Be realistic in scope, cost, and schedule ENMF 527 Notes – Proposed Solutions Page 4 of 12  Proposal Preparation  Can be a straightforward task performed by one person or a resource-intensive effort requiring a team  May designate a proposal manager  Schedule must allow time for review and approval by management  Can be a few pages or hundreds of pages  Customers do not pay contractors to prepare proposals Proposal Contents  Proposals are organized into three sections:  Objective of Technical Section Convince the customer that the contractor understands the need or problem and can provide the least risky and most beneficial solution.  Technical Section o understanding of the problem  must show the customer that the contractor thoroughly understands the problem o proposed approach or solution  must convince the customer that the proposed approach or solution is logical and realistic o benefits to the customer  must convince the customer of the value of the proposed approach ENMF 527 Notes – Proposed Solutions Page 5 of 12  Proposal Contents (Cont.)  Objective of the Management Section o convince the customer that the contractor can do the proposed work (the project) and achieve the intended results.  Management Section o description of work tasks o deliverables o project schedule o project organization o related experience o equipment and facilities Proposal Contents (Cont.)  Objective of the Cost Section convince the customer that the contractor’s price for the proposed project is realistic and reasonable.  Cost Section o labour o materials o equipment o facilities o subcontractors and consultants ENMF 527 Notes – Proposed Solutions Page 6 of 12  o travel o documentation o overhead o escalation o contingency or management reserve o profit ENMF 527 Notes – Proposed Solutions Page 7 of 12  Pricing Considerations  Be careful not to overprice or underprice the proposed project  Consider: o reliability of the cost estimates o risk o value of the project to the contractor o customer’s budget o competition Simplified Project Proposal  A contractor may submit an unsolicited proposal (or simplified proposal) prior to the customer’s preparation of an RFP.  Contents of a simplified project proposal o Statement of customer’s needs o Assumptions o Project scope o Deliverables o Resources o Schedule o Price o Risks o Expected benefits The focus of the proposal should be on quality of the content, i.e., clear, concise, and convincing, within 4-8 pages. ENMF 527 Notes – Proposed Solutions Page 8 of 12  Proposal Submission and Follow-Up  Submit proposals on time  Hand deliver expensive proposals or send 2 sets by different express mail services  Continue to be proactive even after submission Customer Evaluation of proposal  Some look at the prices and select only from the three lowest- priced proposals  Some screen out prices above budget or whose technical section doesn’t meet all the requirements  Some create a proposal review team that uses a scorecard  May submit a best and final offer (BAFO)  Criteria that might be used in evaluating: o compliance with statement of work (SOW) o understanding of the problem or need o soundness of the proposed approach o contractor’s experience and past success o experience of key individuals o management capability o realism of the schedule o price – reasonableness, realism, and completeness ENMF 527 Notes – Proposed Solutions Page 9 of 12  Types of Contracts  A contract is: o A vehicle for establishing customer-contractor communications and arriving at a mutual understanding and clear expectations o An agreement between the contractor, who agrees to provide a product or service, and the customer, who agrees to pay  Must clearly spell out the deliverables  Two types of contracts: o fixed price and cost reimbursement Fixed-Price Contract  The customer and contractor agree on a price for the proposed work.  Price remains fixed unless the customer and contractor agree  Provides low risk for the customer  Provides high risk for the contractor  Is most appropriate for projects that are well defined and entail little risk ENMF 527 Notes – Proposed Solutions Page 10 of 12  Cost-Reimbursement Contract  The customer agrees to pay the contractor for all actual costs plus some agreed-upon profit.  Provides high risk for the customer  Provides low risk for the contractor  Is most appropriate for projects that involve risk  Customer usually requires that the contractor regularly compare actual expenditures with the proposed budget an d reforecast cost-at-completion Contract Terms and Conditions  Miscellaneous provisions that may be included in project contracts: o Misrepresentation of costs o Notice of cost overruns or schedule delays o Approval of subcontractor o Customer-furnished equipment or information o Patents o Disclosure of proprietary information o International considerations o Termination o Terms of payment; monthly (based on actual cost); equal monthly or quarterly; % when predefined milestones are reached; single payment at the end of the project ENMF 527 Notes – Proposed Solutions Page 11 of 12  o Bonus/penalty payments o Changes Measuring Proposal Success  The number of times their proposals are selected and/or the total dollar value of their proposals that are selected.  Win ratio: success proposals divided by the total number of proposals submitted within a particular time period.  Alternative win ratio: the total dollar value of the success proposals divided by the total dollar value of the submitted proposals within a particular time period. ENMF 527 Notes – Proposed Solutions Page 12 of 12  ENMF 527 – Planning, Performing, and Controlling the Project Learning Objectives Clearly defining the project objective Preparing a project scope document Understanding the importance of planning for quality Creating a work breakdown structure Assigning responsibility for work elements Defining specific activities Creating a network diagram utilizing a project management methodology called the systems development life cycle for information systems development projects Case: Establishing Project Objective The client has asked the engineer to design a durable bag, The project objective establishes what is to be accomplished. It designed so that she can easily carry and use a laptop computer, is often stated in project charter or request for proposal. a textbook, a notebook, a lunch box, and a water bottle. The The objective must be clear, attainable, specific, and engineer is trying to write the project objective, and also wants measurable. some more precise information from the client including a budget and a time-line for the work to be done. After talking with the The project objective should include: expected benefits, client, the engineer knows that the budget is $3000 and the lead- primary project end product or deliverables, due date, and time is one month. budget. Objective: To design a bag which is able to carry and use a laptop, a textbook, a notebook, a lunch box, and water bottle. The bag  must last at least 4 years. The project should be completed within a month. The total budget is less or equal to $3000. Define Project Scope Project Scope Who are the stakeholders? o Defines what needs done Sponsor, instructor, academic supervisor, students o Includes  Items contained in project charter, RFP, proposal Shoe making  More detail o Establishes common understanding of scope with stakeholders Project Scope Document o Usually contains  Customer requirements  Statement of Work (SOW)  Deliverables  Acceptance Criteria  Work Breakdown Structure o Establishes baseline o Change control system to avoid scope creep ENMF 527 Notes – Planning Page 2 of 8  Plan for Quality Complete work according to specifications and standards Plan for assuring quality as project progresses Include o References for specifications and standards o Written procedures for quality tools and techniques Key aspects o Monitor as the project progresses o Do work right the first time rather than rework Work Breakdown Structure (WBS) The second step is to determine what activities need to be performed. A list of all the activities must be developed. The WBS is a hierarchical tree of end items to be accomplished. A work item is one small piece of the project. A work package is the lowest-level item. ENMF 527 Notes – Planning Page 3 of 8  Responsibility Matrix Displays in tabular format the individuals responsible for the work items. “X” can be used to indicate who is responsible. “P” indicates who has primary responsibility. “S” indicates who has secondary responsibility. Activities, Defined An activity is a piece of work that consumes time. Activities can be defined by the person or team responsible for each work package Developing the Network Plan After all activities have been defined, they are graphically portrayed in a network diagram. Three network planning techniques were developed in the 1950’s: o program evaluation and review technique (PERT) o critical path method (CPM) o precedence diagramming method (PDM) ENMF 527 Notes – Planning Page 4 of 8  Gantt Charts Gantt charts, or bar charts, are popular due to their simplicity. Activities are listed down the left-hand side. A time scale is shown along the bottom. Does not display the interrelationships of activities. If one activity is delayed, it is not obvious how that will affect other activities. Most project management software shows these relationships with arrows. Network Principals Different formats can be used to draw the diagram: activity in the box (AIB) o a.k.a. activity on the node (AON) activity on the arrow (AOA) Activity in the Box (AIB) Each activity is represented by a box. The activity description is written in the box. Each box is assigned a unique activity number. Activities have a precedential relationship. Some activities may be done concurrently. ENMF 527 Notes – Planning Page 5 of 8  Case: A and B concurrently; A before C; A and B before D. Activity on the Arrow (AOA) A C Each activity is represented by an arrow. 1 2 3 The activity description is written above the arrow. B D The tail of the arrow designates the start of the activity. The head of the arrow designates the completion of the activity. A C 1 2 4 Activities are linked by circles called events. B D An event represents the finish of activities entering it and the 3 start of activities leaving it. Each event is assigned a unique activity number. Dummy activities are used in AOA to avoid mistakes. Dummy Activities AIB does not need dummy activities. Used in the AOA format. A C Consumes zero time. Represented by a dashed arrow. Needed for: B D o Helping in the unique identification of activities. o Showing certain precendential relationships. Loops Not allowed because it portrays a path of activities that perpetually repeats itself. ENMF 527 Notes – Planning Page 6 of 8  Laddering Used for projects that have a set of activities that are repeated several times. Preparing the Network Diagram Ask the following questions regarding each activity: o Which activities must be finished immediately before this activity can be started? o Which activities can be done concurrently with this activity? o Which activities cannot be started until this activity is finished? Should flow from left to right. Not drawn to a time scale. Can vary in how detailed the diagram should be. AIB vs. AOA is a matter of personal preference. AIB is the most common in project management software packages. Project Management Software Available for purchase. Allow the project manager and the project team to plan and control projects interactively. MS Project: very common in industry: used here ENMF 527 Notes – Planning Page 7 of 8  Information System  An information system (IS) is a computer-based system that accepts data as input, processes the data, and produces useful information for users.  The systems development life cycle (SDLC) is used to help plan, execute and control IS development projects. Consists of a set of phases or steps that need to be completed over the course of a development project.  Many people view the SDLC as a classic problem-solving approach.  Steps of the SDLC 1. Problem definition 2. System analysis 3. System design 4. System development 5. System testing 6. System implementation ENMF 527 Notes – Planning Page 8 of 8