Project Management Basics Module 4 PDF

Module Overview Discuss and understand the project life cycle:...

Module Overview Discuss and understand the project life cycle: Conception or project initiation Planning, design, and scheduling Learn about Critical Path Method PROJECT MANAGEMENT (CPM) BASICS Learn about the Program Evaluation and Review Technique (PERT) MODULE 4 Know the differences between CPM and PERT Understand the roles of internal auditors on Initiation and Planning Stages. 2 QUICK REVIEW QUICK REVIEW In general, project management is the process of combining systems, techniques, and people to complete a project’s scope within established time, budget, and quality goals. Internal Audit Planning Fieldwork Reporting All projects have a defined beginning and end. Also, projects are done to achieve unique goals and objectives. The five phases provide structure from concept, through execution, to delivery and closure. By following these phases, PMs and other stakeholders can improve the odds of bringing projects to their successful conclusion. Initiation Planning Executing Closing Project Management Monitoring and Controlling 3 4 INITIATION INITIATION The initiation phase includes defining the scope of the project, an analysis of the needs and requirements in measurable terms, a review of current operations to perform a gap analysis that highlights the transition from the current to the future state, a financial Scope Schedule Cost analysis showing the budget, and the costs and benefits expected from the project. It also includes a stakeholder analysis that identifies users and support personnel for the project, and a charter that defines the activity’s purpose, authority, responsibility, and resources.The charter should help to clarify the objective of the project, formally In Leading Project Teams, Anthony Cobb defines scope as the sum total of establish the financial, human, and other types of support for the project, and gain the all work to be done to produce the project’s deliverables—the products and necessary commitment from key stakeholders services to be delivered to the customer. Schedule, the second element, refers to the amount of time given to complete the projects, while cost is the total cost to do the project work. 5 6 INITIATION PLANNING During this phase, a plan is created that defines more clearly the precise tasks required to produce the project’s During the initiation phase, an overview of the project and the strategy that will be products and services, establishes estimates of resource needs and related costs, and the amount of time used to achieve the desired results is defined. Having clear goals and developing a required to perform the necessary work. Another important aspect of this phase is the arrangement of the tasks during the life cycle so they can form a project schedule. realistic strategy with the related steps is a key aspect of what should happen during this phase. Without a clear idea of where you want to go, it is virtually impossible to define a good roadmap and identify what resources are required to get you there. Aspirational Refined 7 8 PLANNING CRITICAL PATH METHOD (CPM) Planning is essential for success because it translates the “what” of the project into the “how.” It defines not Critical Path. When this term is used, it means the path(s) with the longest only the activities that provide the steps to achieve the goals, but should also be accompanied by the identification of the resources required to make the concept a reality. These resources, which are used to pay duration through the network; if an activity on the path is delayed, the project is for the time people spend and the materials used, involves costs. Estimating those costs under normal delayed the same amount of time. circumstances, and incorporating some contingencies for unexpected costs, overtime, expedited shipments, and repairs, is also important during the planning phase. In addition, plans allow all involved to know what to expect from each person and collectively, providing clarity of purpose, accountability, and transparency. Critical path method (CPM) is a resource-utilization algorithm for scheduling a set of project activities. The essential technique for using CPM is to construct a model of the project that includes the following: A list of all tasks required to complete the project The dependencies between the tasks The estimate of time (duration) that each activity will take to complete 9 10 CRITICAL PATH METHOD (CPM) CRITICAL PATH METHOD (CPM) KEY CONCEPTS OF CPM: BUILDING A CRITICAL PATH CHART Float. Amount of time an activity can be delayed and not delay the project. Define project scope Total Float. Time difference between when the task must be done and when the project must be completed. Negative Float. Time difference between project’s actual completion date and Identify your critical path Identify how many critical paths you need the original completion date. Consider resource constraints Calculate the length of project 11 12 CRITICAL PATH METHOD (CPM) CRITICAL PATH METHOD (CPM) BUILDING A CRITICAL PATH CHART Critical Path. When this term is used, it means the path(s) with the longest duration through the network; if an activity on the path is delayed, the project is delayed the same amount of time. Critical path method (CPM) is a resource-utilization algorithm for scheduling a set of project activities. The essential technique for using CPM is to construct a model of the project that includes the following: A list of all tasks required to complete the project The dependencies between the tasks The estimate of time (duration) that each activity will take to complete 14 PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) PERT, is used to identify the time it takes to finish a particular task or activity. It is a A flowchart is used to depict the Project Evaluation Review Technique. Nodes system that helps in the proper scheduling and coordination of all tasks throughout represent the events, indicating the start or end of activities or tasks. The a project. It also helps in keeping track of the progress, or lack thereof, of the directorial lines indicate the tasks that need to be completed, and the arrows show overall project. the sequence of the activities. Knowing the time it should take to execute a project is crucial, as it helps project managers decide on other factors such as the budget and task delegation. No matter how big or small a project is, estimates can be too optimistic or pessimistic, but using a PERT chart will help determine realistic estimates. 15 16 PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) There are four definitions of time used to estimate project time requirements: Since these estimates range from the worst to the best possible scenario, managers should take the weighted average instead of relying on a single Optimistic time – The least amount of time it can take to complete a task estimate. To avoid putting too much emphasis on either extreme of the values, the Pessimistic time – The maximum amount of time it should take to complete a task pessimistic and optimistic values are compared to four times the most likely Most likely time – Assuming there are no problems, the best or most reasonable duration. For example, if the amount of time required to perform data analytics estimate of how long it should take to complete a task. has estimates of 2 (optimistic), 4 (most likely), and 8 (pessimistic) days, we can Expected time – Assuming there are problems, the best estimate of how much calculate the time to address the customer’s needs using the following formula: time will be required to complete a task. 17 18 PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) te = (to + 4tm + tp)/6 By substituting the values, the expected duration for the auditor to perform the data analytics in our example is: where; to = optimistic time estimate T = (2 + 4(4) + 8)/6 = 4.3 days. tm = most likely time estimate tp = pessimistic time estimate 19 20 PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT) CPM VS. PERT To implement a PERT chart: While planning projects, the manager must identify the activities necessary to achieve the project goals, and the sequence of these activities as well because there are often dependencies between them, so some activities cannot be performed unless preceding ones have been completed. Both 1. Identify the different tasks needed to complete a project. Make sure to add tools show the critical path for a project, but while the Critical Path Method (CPM) shows one these in the right order and indicate the duration of each task. time estimate for each task, Program Evaluation and Review Technique (PERT) considers optimistic, 2. Create a network diagram. Use arrows to represent the activities and use nodes most likely, and pessimistic timeframes. This way, PERT includes an element of probability to the as milestones. time estimate calculated for the project. 3. Determine the critical path and possible slack. Both techniques use a network of arrows and nodes to show the project’s activities. The arrows show the task dependencies, while the nodes show where the tasks interconnect.The arrows show the relationship and sequence of the activities, while the nodes typically have information in them, such as the activity number, the name of the task, and the amount of time needed to complete it. 21 22 INTERNAL AUDITORS’ ROLE INTERNAL AUDITORS’ ROLE Internal auditors should review the preparation, use, and monitoring of the WBS, Gantt Chart, and Sometimes the costs are under-calculated intentionally to make the project appear cheaper than it CPM/PERT during project management reviews. These are very useful tools for project is in reality, to get its approval, or secure its continued funding in smaller increments with the intent management, but sometimes underused reflecting a need for better planning. Likewise, internal of prolonging its life. This is unacceptable and auditors should check for this. Sometimes the costs auditors should consider using them during the planning and work on audits and consulting are over calculated to give the PM “wiggle room” later on. By coming in under budget later, some projects. managers may get a bonus. Auditors should check for this too. So, accuracy throughout is key. Another critical aspect of project planning that when neglected causes many problems and often The project plan freeze is the sign off on the project’s scope, timeline, and resources. This is critical results in cost overruns is the failure to link tasks and activities in the schedule with the related costs because progress reports and the related variance analyses should relate back to these parameters and resource needs. Everything done during a project has a cost related to it. Even inaction is costly as the project baseline. If changes are made to any of these three attributes, that should be noted since employees are being paid, work space is being occupied, and even idle machinery is often and tracked, and upon approval, establish a new baseline. When this is not done, as in the example leased or require monthly payments be made on them. With this in mind, effectively assigning costs above, anomalies can occur. to every activity is key. 23 24