Operations Management Concepts PDF

CHAPTER 1 Operations Management Concepts 1.1 Introduction Operation is that part of as organization, which is concerned with the transformation of a range of inputs into the required output (services) having the requisite quality level...

CHAPTER 1 Operations Management Concepts 1.1 Introduction Operation is that part of as organization, which is concerned with the transformation of a range of inputs into the required output (services) having the requisite quality level. Management is the process, which combines and transforms various resources used in the operations subsystem of the organization into value added services in a controlled manner as per the policies of the organization. The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. If the same concept is extended to services management, then the corresponding set of management activities is called as operations management. 1.2 Historical Development The traditional view of manufacturing management began in eighteenth century when Adam Smith recognized the economic benefits of specialization of labor. He recommended breaking of jobs down into subtasks and recognizes workers to specialized tasks in which they would become highly skilled and efficient. In the early twentieth century, F.W. Taylor implemented Smith’s theories and developed scientific management. From then till 1930, many techniques were developed prevailing the traditional view. Production Management becomes the acceptable term from 1930s to 1950s. As F.W. Taylor’s works become more widely known, managers developed techniques that focused on economic efficiency in manufacturing. Workers were studied in great detail to eliminate wasteful efforts and achieve greater efficiency. At the same time, psychologists, socialists and other social scientists began to study people and human behavior in the working environment. With the 1970s emerge two distinct changes in our views. The most obvious of these, reflected in the new name Operations Management was a shift in the service and manufacturing sectors of the economy. As service sector became more prominent, the change from ‘production’ to ‘operations’ emphasized the broadening of our field to service organizations. 1.3 Concept of Production Production function is ‘the part of an organization, which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level’. Production is defined as ‘the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user’ Edwood Buffa defines production as ‘a process by which goods and services are created’. Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc.,and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc. 1.4 Production System The production system is ‘that part of an organization, which produces products of an organization. It is that activity whereby resources, flowing within a defined system, are combined and transformed in a controlled manner to add value in accordance with the policies communicated by management’. 1.5 Classification of production System Production systems can be classified as Job-shop, Batch, Mass and Continuous production systems. Job-Shop Production Job-shop production are characterized by manufacturing one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. ✓ High variety of products and low volume. ✓ Use of general purpose machines and facilities. ✓ Highly skilled operators ✓ Large inventory of materials, tools, parts. ✓ Detailed planning for sequencing the requirements of each product. Advantages 1. Because of general purpose machines and facilities variety of products can be produced. 2. Operators will become more skilled and competent, as each job gives them learning opportunities. 3. Full potential of operators can be utilized. 4. Opportunity exists for Creative methods and innovative ideas.  Batch Production It is characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales. ✓ Shorter production runs. ✓ Plant and machinery are flexible. ✓ Plant and machinery set up is used for the production of item in a batch. ✓ Manufacturing lead-time and cost are lower.. Advantages 1. Better utilization of plant and machinery. 2. Promotes functional specialization. 3. Cost per unit is lower as compared to job order production. 4. Lower investment in plant and machinery. 5. Flexibility to accommodate and process number of products. 6. Job satisfaction exists for operators. Mass Production Manufacture of discrete parts or assemblies using a continuous process are called Mass Production. This production system is justified by very large volume of production. ✓ Standardization of product and process sequence. ✓ Machines having higher production capacities and output rates. ✓ Large volume of products. ✓ Shorter cycle time of production. ✓ Lower in process inventory. Perfectly balanced production lines. ✓ Flow of materials, components and parts is continuous. ✓ Production planning and control is easy. ✓ Material handling can be completely automatic Advantages 1. Higher rate of production with reduced cycle time. 2. Higher capacity utilization due to line balancing. 3. Less skilled operators are required. 4. Low process inventory. 5. Manufacturing cost per unit is low. Continuous Production Production facilities are arranged as per the sequence of production operations from the first operations to the finished product. The items are made to flow through the sequence of operations through material handling devices such as conveyors, transfer devices, etc. ✓ Dedicated plant and equipment with zero flexibility. ✓ Material handling is fully automated. ✓ Process follows a predetermined sequence of operations. ✓ Component materials cannot be readily identified with final product. ✓ Planning and scheduling is a routine action. Advantages 1. Standardization of product and process sequence. 2. Higher rate of production with reduced cycle time. 3. Higher capacity utilization due to line balancing. 4. Manpower is not required for material handling as it is completely automatic. 1.6 Production Management Production management is ‘a process of planning, organizing, directing and controlling the activities of the production function. It combines and transforms various resources used in the production subsystem of the organization into value added product in a controlled manner as per the policies of the organization’. E.S.Buffa defines production management as follows: ‘Production management deals with decision-making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost’. Objectives of production Management 1. Right Quality 2. Right Quantity 3. Right Time 4. Right Manufacturing Cost 1.7 Operations System Operations system converts inputs in order to provide outputs, which are required by a customer. It converts physical resources into outputs, the function of which is to satisfy customer wants. (a) Manufacturing Operations (b) Service Operations Everett E. Adam & Ronald J. Ebert defines as ‘An operating system is the part of an organization that produces the organization’s physical goods and services’. Ray Wild defines operations system as ‘a configuration of resources combined for the provision of goods or services’. A departmental store's has an input like land upon which the building is located, labor as a stock clerk, capital in the form of building, equipment and merchandise, management skills in the form of the stores manager. Output will be serviced customer with desired merchandise. Random fluctuations will be from external or internal sources, monitored through a feedback system.  Operations system for department stores A Framework of Managing Operations Planning The activity that establishes a course of action and guide future decision-making. Organizing They determine the activities required to achieve the goals and assign authority and responsibility for carrying them out. Controlling The activities that assure the actual performance in accordance with planned performance. 1.8 Operations Management Joseph G.Monks defines Operations Management as the process whereby resources, flowing within a defined system, are combined and transformed by a controlled manner to add value in accordance with policies communicated by management.  The definition of the operations Management contains following keywords: Resources Resources are the human, material and capital inputs to the production process. Human resources are the key assets of an organization. Systems\ Systems are the arrangement of components designed to achieve objectives according to the plan. The business systems are subsystem of large social systems. Transformation and Value Adding Activities The objective of combining resources under controlled conditions is to transform them into goods and services having a higher value than the original inputs. The transformation process applied will be in the form of technology to the inputs Schematic model for operations/production system 1,9 Operations Management Objectives CUSTOMER SERVICE The first objective of operating systems is to utilize resources for the satisfaction of customer wants. Therefore, customer service is a key objective of operations management. The operating system must provide something to a specification, which can satisfy the customer in terms of cost and timing. Thus, providing the ‘right thing at a right price at the right time’ can satisfy primary objective. Principal Principal customer wants function Primary considerations Other considerations Manufacture Goods of a given, requested Cost, i.e. purchase price or cost of obtaining  or acceptable specification goods. Timing, i.e. delivery delay from order or request to receipt of goods. Transport Management of a given, Cost, i.e. cost of movements. Timing, i.e. requested or acceptable 1. Duration or time to move. specification 2. Wait or delay from requesting to its commencement. Supply Goods of a given, requested or Cost, i.e. purchase price or cost of obtaining acceptable specification goods. Timing, i.e. delivery delay from order or request to receipt of goods. Service Treatment of a given, requested Cost, i.e. cost of movements. Timing, i.e. or acceptable specification 1. Duration or time required for treatment. 2. Wait or delay from requesting treatment to its commencement. RESOURCE UTILIZATION Another major objective of operating systems is to utilize resources for the satisfaction of customer wants effectively. Customer service must be provided with the achievement of effective operations through efficient use of resources. Inefficient use of resources or inadequate customer service leads to commercial failure of an operating system. The customer service objective The resource utilizations objective i.e. to provide agreed/adequate levels of customer i.e. to achieve adequate levels of resource  service (and hence customer satisfaction) by providing utilizations (or productivity) e.g. to achieve goods or services with the right specification, at the right agreed levels of utilizations of materials, cost and at the right time. machines and labour. 1.10 Strategic Role of Operations (a) A STRATEGIC PERSPECTIVE Overall organizational strategy must be developed: ✓ Quality (product performance). ✓ Cost efficiency (low product price). ✓ Dependability (reliable, timely delivery of orders to customers). ✓ Flexibility (responding rapidly with new products or changes in volume). (b) OPERATIONS OBJECTIVES Product/service characteristics. Process characteristics. Product/service quality. Efficiency Effective employee relations and cost control of labor. Cost control of material. Cost control in facility utilization. Customer service (schedule) Producing quantities to meet expected demand. Meeting the required delivery date for goods or services. Adaptability for future survival. (c) OPERATIONS ALTERNATIVES AND TRADEOFFS The operations sub-goals can be attained through the decisions that are made in the various operations areas. Once a decision is made, it leads to many choices. Where should facilities be located? How large should they be? What degree of automation should be used? How skilled must labor be to operate the automated equipment? Will the product be produced on site? How do these decisions impact quality, efficiency, schedule (customer service), and adaptability? Are we prepared for changes in product or service, or do these decisions lock in our operations? 1.11 The Strategic Planning Strategic Planning for Production and Operations In the production or operations function, strategic planning is the broad, overall planning that precedes the more detailed operational planning. Executives who head the production and operations function are actively involved in strategic planning, developing plans that are consistent with the firm’s overall strategies as well as such functions as marketing, finance accounting and engineering. Production and operations strategic plans are the basis for (1) operational planning of facilities (design) and (2) operational planning for the use of these facilities. Strategic Planning—Forced Choice Model One of many planning models that have been used in strategic planning is a forced choice model, shown in figure. In-group sessions or individually, analysts assess environmental considerations together with the organization’s current production/operations position, thus forcing management to develop strategic options for operations. A forced choice model of strategic planning for operations Strategic Planning Approaches for Production/Operations There are many approaches to strategic planning. The key point is that operations strategies must be consistent with the overall strategies of the firm. Operations typically utilize the overall corporate approach to strategic planning, with special modifications and a focus upon operations issues and opportunities. One general approach to strategic planning is a forced choice model given by Adam and Ebert. A Strategic Planning Operations Model One feature of this approach that is crucial to competitiveness is market-based view of strategic planning. It suggests that any strategic business unit of a company operates in the context of its corporate resources, the general and competitive industry environment, and the specific corporate goals of the company. In any area in which the company chooses to compete is a set of specific market-based criteria for success. 1.12 The Trend: Information and Non Manufacturing Systems Manufacturing is characterized by tangible outputs (products). Consumption of outputs at overtime. Following characteristics can be considered for distinguishing Manufacturing Operations with Service Operations: ✓ Tangible/Intangible nature of output ✓ Production and consumption ✓ Nature of work (job) ✓ Degree of customer contact ✓ Customer participation in conversion ✓ Measurement of performance ✓ Quality of output ✓ Inventory accumulated 1.13 Productivity Productivity is defined in terms of utilization of resources, like material and labor. In simple terms, productivity is the ratio of output to input. Productivity can be improved by (a) controlling inputs (b) improving process so that the same input yields higher output, and (c) by improvement of technology. Modern Dynamic Concept of Productivity  1.14 Factors Affecting Productivity ⚫ Capital/labor ratio ⚫ Scarcity of some resources ⚫ Work-force changes ⚫ Innovations and technology ⚫ Regulatory effects Bargaining power ⚫ Managerial factors ⚫ Quality of work life 1.16 Scope of Operations Management  Location of facilities.  Plant layouts and Material Handling  Product Design.  Process Design.  Production and Planning Control.  Quality Control  Materials Management.  Maintenance Management.  CHAPTER 2 Operations Decision-Making 1. Management as a Science Management scientists hold that, education, scientific training and experience can improve a person’s ability to make decisions. Scientific decision -making rests upon organized principles of knowledge and depends largely upon the collection of empirical data and analysis of the data in a way that repeatable results will be obtained. Thus management as a science is characterized by 1. Organized principle of knowledge. 2. Use of empirical data. 3. Systematic analysis of data. 4. Repeatable results. 2. Characteristics of decisions-making Operations decision range from simple judgments to complex analyses, which also involves judgment. Ju dgment typically incorporates basic knowledge, experience, and common sense. They enable to blend objectives and sub-objective data to arrive at a choice. The appropriateness of a given type of analysis depends on: a. The significant or long lasting decisions, b. The time availability and the cost of analysis, and c. The degree of complexity of the decision. The significant or long lasting decisions deserve more considerations than routine ones. Plant investment, which is a long-range decision, may deserve more thorough analysis. The time availability and the cost of analysis also influence the amount of analysis. The degree of complexity of the decision increases when many variables are involved, variables are highly independent and the data describing the variables are uncertain. Business decision-makers have always had to work with incomplete and uncertain data. Figure on the right depicts the information environment of decisions. In some situations a decision-maker has complete information about the decision variables; at the other extremes, no information is available. Operations management decisions are made all along this continuum. 3. Framework of Decision-Making An analytical and scientific framework for decision implies the following systematic steps ✓ Defining the problem. ✓ Establish the decision criteria. ✓ Formulation of a model. ✓ Generating alternatives. ✓ Evaluation of the alternatives. ✓ Implementation and monitoring. DEFINING THE PROBLEM Defining the problem enables to identify the relevant variables and the cause of the problem. Careful definition of the problem is crucial. Finding the root cause of a problem needs some questioning and detective work. If a problem defined is too narrow, relevant variable may be omitted. If it is broader, many tangible aspects may be included which leads to the complex relationships. ESTABLISH THE DECISION CRITERIA Establish the decision criterion is important because the criterion reflects the goals and purpose of the work efforts. For many years profits served as a convenient and accepted goal for many organizations based on economic theory. Nowadays organization will have multiple goals such as employee welfare, high productivity, stability, market share, growth, industrial leadership and other social objectives. FORMULATION OF A MODEL Formulation of a model lies at the heart of the scientific decision-making process. Model describes the essence of a problem or relationship by abstracting relevant variables from the real world situation. Models are used to simplify or approximate reality, so the relationships can be expressed in tangible form and studied in isolation. Modeling a decision situation usually requires both formulating a model and collecting the relevant data to use in the model. Mathematical and statistical models are most useful models for understanding the complex business of the problem. Mathematical models can incorporate factor that cannot readily be visualized. With the aid of computers and simulation techniques, these quantitative models reflexible. GENERATING ALTERNATIVES Alternatives are generated by varying the values of the parameters. Mathematical and statistical models are particularly suitable for generating alternatives because they can be easily modified. The model builder can experiment with a model by substituting different values for controllable and uncontrollable variable. EVALUATION OF THE ALTERNATIVES Evaluation of the alternatives is relatively objective in an analytical decision process because the criteria for evaluating the alternatives have been precisely defined. The best alternative is the one that most closely satisfies the criteria. Some models like LPP model automatically seek out a maximizing or minimizing solution. In problems various heuristic and statistical techniques can be used to suggest the best course of action. IMPLEMENTATION AND MONITORING Implementation and monitoring are essential for completing the managerial action. The best course of action or the solution to a problem determined through a model is implemented in the business world. Other managers have to be convinced of the merit of the solution. Then the follow-up procedures are required to ensure about appropriate action taken. This includes an analysis and evaluation of the solution along with the recommendations for changes or adjustments. 4. Decision Methodology The kind and amount of information available helps to determine which analytical methods are most appropriate for modeling a given decision.  This illustrates some useful quantitative methods that are classified according to the amount of certainty that exists with respect to the decision variables and possible outcomes. These analytical techniques often serve as the basis for formulating models, which help to reach operational decisions. The degree of certainty is classified as complete certainty, risk and uncertainty and extreme uncertainty. 2.5.1 Complete Certainty methods Under complete certainty conditions, all relevant information about the decision variables and outcomes is known or assumed to be known. Following are some of the methods used: Algebra: This basic mathematical logic is very useful for both certainty and uncertainty analysis. With valid assumptions, algebra provides deterministic solutions such as break-even analysis and benefit cost analysis. Calculus : The branch of mathematics provides a useful tool for determining optimal value where functions such as inventory costs, are to be maximized or minimized. Mathematical programming: Programming techniques have found extensive applications in making a product mix decisions; minimizing transportation costs, planning and scheduling production and other areas. (All information) (Some information) (No information) Algebra: Statistical analysis: Game theory Break-even z Objective and subjective probabilities Flip coin Benefit/cost z Estimation and tests of hypothesis Calculus z Bayesian statistics Mathematical programming: z Decision theory Linear z Correlation and regression Non-linear z Analysis of variance Integer z Non-parametric methods Dynamic Queuing theory Goal Simulation  Heuristic methods Network analysis techniques: Decision trees PERT and CPM Utility theory Quantitative methods as a function of degree of certainty 2.5.2 Risks and uncertainty Methods In risk and uncertainty situations, information about the decision variables or the outcomes is probabilistic. Following are some of the useful approaches: Statistical analysis: Objective and subjective probabilities with the use of probability and probability distribution, Estimation and tests of hypothesis, Bayesian statistics, Decision theory, Correlation and regression technique for forecasting demand and Analysis of variance are some of the techniques used for decision-making. Queuing theory:  The analysis of queues in terms of waiting-time length and mean waiting time is useful in analyzing service systems, maintenance activities, and shop floor control activities. Simulation: Simulation duplicates the essence of an activity. Computer simulations are valuable tools for the analysis of investment outcomes, production processes, scheduling and maintenance activities. Heuristic methods: Heuristic methods involve set of rules, which facilitate solutions of scheduling, layout and distribution problems when applied in a consistent manner. Network analysis techniques:  Network approaches include decision trees, CPM and PERT methods. They are helpful in identifying alternative course of action and controlling the project activities. Utility theory: Utility theory or preference theory allows decision-makers to incorporate their own experience and values into a relatively formalized decision structure. 2.5.3 extreme Uncertainty Methods Under extreme uncertainty, no information is available to assess the likelihood of alternative outcomes. Following are some of strategies to solve this : 1. Game theory: Game theory helps decision-makers to choose course of action when there is no information about what conditions will prevail. 2. Coin flip: Flipping a coin is sometimes used in situation where the decision- makers are wholly indifferent. 2.5.4 Decision-Making Under Uncertainty No information is available on how likely the various states of nature are under those conditions. Four possible decision criteria are : 1. Maximin, 2. Maximax, 3. Laplace, and 4. Minimax regret. Maximin: Determine the worst possible pay-off for each alternative, and choose the alternative that has the “best worst.” The Maximin approach is essentially a pessimistic one because it takes into account only the worst possible outcome for each alternative. The actual outcome may not be as bad as that, but this approach establishes a “guaranteed minimum. Maximax:  Determine the best possible pay-off, and choose the alternative with that pay- off. The Maximax approach is an optimistic, “go for it” strategy; it does not take into account any pay-off other than the best. Minimax regret: Determine the worst regret for each alternative, and choose the alternative with the “best worst.” This approach seeks to minimize the difference between the pay- off that is realized and the best pay-off for each state of nature. Laplace: Determine the average pay-off for each alternative, and choose the alternative with the best average. The Laplace approach treats the states of nature as equally likely. 2.5.5 Decision-Making Under Risks Between the two extremes of certainty and uncertainty lies the case of risk: The probability of occurrence for each state of nature is known. (Note that because the states are mutually exclusive and collectively exhaustive, these probabilities must add to 1.00.) A widely used approach under such circumstances is the expected monetary value criterion. The expected value is computed for each alternative, and the one with the highest expected value is selected. The expected value is the sum of the pay-offs for an alternative where each pay-off is weighted by the probability for the relevant state of nature. 5. Decision Support System Decision support system (DSS) is computer-based systems designed to aid decision-makers of any stage of the decision process in the development of alternatives and evaluation of possible course of action. Their purpose is to provide the information and analytical support that enables managers to better control and guide the decision process. Emphasis is given for giving useful information and appropriate quantitative models that support the manager’s skills. Thus, DSS are a logical extension of the managerial decision processes. This helps the managers to learn better, how to apply data processing and modeling capabilities of computers to the analysis of ill-structured and value based decisions. 6. Economic Models ( Break Even Analysis) Break-even Analysis One of the techniques to study the total cost, total revenue and output relationship is known as Break -even Analysis. ‘A Break-even Analysis indicates at what level of output, cost and revenue are in equilibrium’. In other words, it determines the level of operations in an enterprise where the undertaking neither gains a profit nor incurs a loss. Break-even chart (BEC): It is a graph showing the variation in total costs at different levels of output (cost line) as well as the variation in the total revenues at various levels of output Break-even point: It is that point of activity (sales volume) where total revenues and total expenses are equal. It is point of zero profit, i.e. stage of no profit and no loss. BEP can be used to study the impact of variations in volume of sales and cost of production on profits. Angle of incidence: It is an angle at which total revenue line intersects total cost The line. magnitude, of this angle indicates the level of profit. Larger the angle of incidence, higher will be the profits per unit increase in sales and vice versa. Margin of safety: It is excess of budgeted or actual sales over the break-even sales volume i.e. margin of safety = (actual sales minus sales at BEP)/actual sales. A high margin of safety would mean that even with a lean period, where sales go down, the company would not come in loss area. A small margin of safety means a small reduction in sale would take company to cross BEP and come in red zone. CALCULATION OF BEP Relationship between costs and activity level (AL) is also assumed to be linear. For every elemental cost, actual cost figures at different activity levels are plotted, and by ‘least square analysis’ a ‘line of best fit’ is obtained. This would give a fixed cost component and a variable cost component for the elemental cost. This analysis is carried out for all elemental costs. The total cost function would give total fixed cost and total variable cost for the company. The Break-even Point is that volume where the fixed and variable costs are covered. But no profit exists. Thus at BEP, the total revenues equal to the total costs. Profit volume ratio (PVR) is defined as the ratio between Contribution Margin and Sales Revenue. i.e. Profit Volume Ratio (f) = Contribution ⋅ Margin /Sales. Revenue Margin of safety (MOS) is defined as the ratio between Operating Profit and Contribution Margin. It signifies the fractional reduction in the current activity level required to reach the break-even point. Sales turnover (STO) is defined as ratio between Sales Revenue and the Capital Employed. It represents the number of times capital employed is turned over to reach the sales revenue level that is called Operating management performance [OMP]. IMPROVING OMP A company interested in improving its OMP will have to improve its operating profit. Following any of the strategies given below or a combination of them can do this: (a) By reducing variable costs (b) By reducing fixed costs (c) By increasing sales price (d) By increasing the activity level. A) Reduction in variable costs will bring down BEP, increase PV ratio and increase margin of safety. To achieve a required Targeted Profit (Z), variable cost would have to be controlled at V=SR – (F+Z ) b) A reduction in fixed costs will bring down BEP and increase margin of safety. It will have no effect on PV ratio. To achieve a required TP by controlling fixed cost alone, the fixed cost would have to be controlled as F=(SR – V) – Z c) An increase in selling price will bring BEP down, it will increase PV ratio and it will also increase the margin of safety. To get the targeted profit level the increase required in selling price is given by b'= (F+Z ) xb (b-a) 2.8 Statistical Models Most business decisions are made with only limited or incomplete information. Statistical theory can help to control error associated with the amount of data used in the decision process. Decision makers utilize probabilities, which are the most basic measures of uncertainty. Probabilities attach a quantitative value (between 0 and 1) to the occurrence of an event. Events are called independent if the occurrence of one in no way affects any other one. Mutually exclusive events automatically preclude each other, such as classifying an item as good or defective. Following are the rules for applying probabilities. There are three types of probabilities. (a) Classical probabilities are based upon equally likely outcomes that can be calculated prior to an event on the basis of mathematical logic. (b) Empirical probabilities are based upon observed data and express the relative frequency of an event in the long run. (c) Subjective probabilities are based upon personal experience or judgment and are sometimes used to analyze one-time occurrences. 7. Decision Tree A decision tree is a schematic representation of the alternatives available to a decision maker and their possible consequences. The term gets its name from the tree like appearance of the diagram (see Figure 2.8 below). Although tree diagrams can be used in place of a pay-off table, they are particularly useful for analyzing situations that involve sequential decisions. A decision tree is composed of a number of nodes that have branches emanating from them (see Figure 2.8 below). Square nodes denote decision points, and circular nodes denote chance events. Read the tree from left to right. Branches leaving square nodes represent alternatives; branches leaving circular nodes represent chance events (i.e., the possible states of nature). A schematic representation of the available alternatives and their possible consequences MODULE 1 CHAPTER 3 Project Management 3.1 INTRODUCTION Project management, then, is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. Project management brings a unique focus shaped by the goals, resources and schedule of each project. The value of that focus is proved by the rapid, worldwide growth of project management: A, As a recognized and strategic organizational competence B. As a subject for training and education C. As a career path 3.2 PROJECT LIFE CYCLE A project life cycle is the sequence of phases that a project goes through from its initiation to its closure. The number and sequence of the cycle are determined by the management and various other factors like needs of the organization involved in the project, the nature of the project, and its area of application. The phases have a definite start, end, and control point and are constrained by time. The project life cycle can be defined and modified as per the needs and aspects of the organization. 3.2.1 THE INITIATION PHASE The initiation phase aims to define and authorize the project. The project manager takes the given information and creates a Project Charter. The Project Charter authorizes the project and documents the primary requirements for the project. It Project’s purpose, vision, and mission Measurable objectives and success criteria Elaborated project description, conditions, and risks  Name and authority of the project sponsor 3.2.2 THE PLANNING PHASE The purpose of this phase is to lay down a detailed strategy of how the project has to be performed and how to make it a success. Project Planning consists of two parts: 1. Strategic Planning 2. Implementation Planning In strategic planning, the overall approach to the project is developed. In implementation planning, the ways to apply those decisions are sought. 3.2.3 THE EXECUTION PHASE In this phase, the decisions and activities defined during the planning phase are implemented. During this phase, the project manager has to supervise the project and prevent any errors from taking place. This process is also termed as monitoring and controlling. After satisfaction from the customer, sponsor, and stakeholder’s end, he takes the process to the next step. 3.2.4 THE TERMINATION PHASE This is the last phase of any project, and it marks the official closure of the project. The generic life cycle structure commonly exhibits the following characteristics: ⚫ At the start, cost and staffing levels are low and reach a peak when the work is in progress. It again starts to drop rapidly as the project begins to halt. ⚫ The typical cost and staffing curve does not apply to all projects. Considerable expenses are required to secure essential resources early in its life cycle. ⚫ Risk and uncertainty are at their peak at the beginning of the project. These factors drop over the lifecycle of the project as decisions are reached, and deliverables are accepted. ⚫ The ability to affect the final product of the project without impacting the cost drastically is highest at the start of the project and decreases as the project advances towards completion. 3.3 BEHAVIORAL AS[ECT OF PROJECT MANAGEMENT  The behavioral aspects of project management consist of many different areas that a project manager must master. The organizational culture is one area that can take time to master for many project managers. The culture of an organization can be the success or the failure of a project. Management must share common beliefs and values and be willing to stand by them at the most critical times. To build and manage a successful project team the project manager must be skilled in many areas. The project manager has to be able to select team members that will fit in with the team, manage meetings skillfully, establish a team identity and vision, establish ways of rewarding the team as well as individuals, manage conflicts within and outside the team, and be able to rejuvenate the team over long projects. 3.3.1 ORGANIZATION CULTURES INFLUENCE Organizational culture research has identified ten primary characteristics that lead to successful or unsuccessful teams within an organization. These characteristics will in turn affect the selection, sponsorship, prioritization, and ultimate success of all projects in an organization (Gray, Larson, 2011). 1. Member Identity 2. Team Emphasis 3. Management focus 4. Unit integration 5. Control 6. Risk tolerance 7. Reward criteria 8. Conflict tolerance 3.3.2 PEOPLE CENTRIC PROJECT MANAGEMENT People centric project management emphasizes that project management should be based on Experience, Dynamics, Human Psychology rather than solely on Processes. Wise project managers focus on learning and understanding how people function in an organization – both as individuals – and as a team. It is important to figure out during project initiation how people in the performing organization behave and adapt. The aspect of projects that gives project managers sleepless nights is people behavior – especially factors emerging from them – such as push-back, resistance to change, acceptance, trust etc. There are several real life scenarios project managers encounter – that emanate from these aspects. Project managers are encouraged to implement people centric management techniques that will eventually will help them implement processes as well as manage behavioral aspects of people successfully.  3.3.3 INSTRUMENTALELEMENTS FOR SUCCESSFUL IMPLEMENTATION OF PEOPLE CENTRIC PROJECT MANAGEMENT (PCPM) 1. UNDERSTAND CULTURE – PEOPLE VS PROCESSES Culture is something that comes with people as a baggage along with them. It is imperative that a project manager understand and interpret what the culture of the performing organization is. This becomes increasingly challenging with virtual global teams. When a team member responds swiftly “It is impossible for us to carry out this work” without analyzing the work assigned – it is likely that employees are striving within an organizational culture that is not supportive of their efforts! Study: People will likely not understand this concept at the outset – since PCPM focuses on how people function and how they apply project management to be people centric. Managing triple constraints (Scope, Time and Cost) is the objective of healthy project management. Analyze: How you go about implementing PCPM varies from one organization to another. It needs to be a part of the organizational strategy. Organizations would be project based – where large parts of the workforce is involved in multiple projects. Analyzing how the organization is structured helps the project manager make some of the most important people related decisions in an effective manner. Adjust or Adapt?: Most project managers tend to enforce processes without understanding the culture and capabilities of the project team and stakeholders. In PCPM – focus should be on adjusting processes to fit the culture and behavioral responses rather than trying to adapt human nature to follow processes. Adjust the role and processes for people – do not enforce processes on people. Propose Changes: Create a governance committee or steering committee that is part of the leadership team. Ensure that the PMO, Senior Management are on board and devise a strategy on how you will move from rational to behavior centric project management. Gain Buy-In: The challenge for most project managers is to work with senior management and the team in tandem, to gain buy-in and decide on adjusting or adapting. Adjusting or adapting does not happen overnight. Implement (Kaizen): PCPM will not happen overnight but will require a cultural transformation. PMs should quickly identify strengths and weaknesses of team members and encourage people to identify their strengths and work with their strengths. Some people will have competitive strengths and it is important to leverage their competitive skills. Introspect: It is essential that project managers introspect how PCPM is being implemented. The introspection frequency will depend on several factors such as the team size, stakeholder size, location of teams and stakeholders, senior management demands etc. 2. ENGAGE TEAM MEMBERS Engaging project team members is the foundation to project success. In PCPM, it is extremely important that the groundwork be laid to engage team members and stakeholders and finally sustain in the short and long term. Focus should be setting key performance/productivity indicators for the performing team as a whole. The level of engagement of team and stakeholders should be monitored and strategies be devised to maximize the engagement levels of both at the same time. Performance, Productivity, Efficiency and Efficacy must be maximized or at a minimum balanced. 2. IMPORTANCE OF EMOTIONS & MOTIVATION Emotions have to do with hormones and neurotransmitters in the human body. Emotions drive employee motivation positively or negatively. Oh boy! Isn’t it difficult to psycho-physio-bio-logically scan a person’s mind and body to anticipate what the Expressions, Feelings, Body Language, and Actions he or she may exhibit e.g.– they are sometimes Happy, Sad, Angry, Excited, Tender, Scared etc. This has been a long standing challenge for most people managers, especially project managers! Feelings, Moods and Actions affect the manner in which team members and stakeholders carry out their work on projects and so management of emotional aspects is supreme for successful project management. A good project manager should not just be a technical person but should be a rare breed of individual who should be able to manage both the technical and emotional factors.  4. IDENTFY BEHAVIORAL RISKS USING INTUITIVE MIND-READING Behavior refers to the range of actions and mannerisms exhibited – in this case – by people. Certain desired behavior is assumed by project managers when they stitch and integrate several of the established project management processes. This assumption is based on factors such as Culture, Attitudes, Emotions, Perceptions, Values, Ethics, Authority, Rapport, Hypnosis, Mindset and Persuasion, among others. On most occasions some of these assumptions don’t hold quite valid. When people don’t behave like the way we originally assumed them to, their behavior seems unpredictable to us. And, when people behavior becomes unpredictable – project outcome is inevitably affected – either positively (success) or negatively (failure). 5. …AND LASTLY: COMMUNICATION, COMMUNICATION & COMMUNICATION! In PCPM, it must be the daily duty for project managers to maintain the line of communication very open so that they keep catering to the basic needs to employees. What needs to get communicated across and top things project managers need to keep in mind while implementing PCPM? ✓ Understand and believe that project managers have the most impact in opening up communication channels. ✓ Communicate what is expected of each team member ✓ Establish a clear sense of what each team member’s duty or role is. ✓ Provide recognition – this is actually part of communication! ✓ Empower team members’ with the right tools and techniques to do the job ✓ Keep your ears open to suggestions ✓ Have open conversations about every aspect that requires the PCPM framework to be adjusted. ✓ Frequently talk to team members about their progress and provide feedback – ✓ Learn from people on how they think they connect to the mission of the project team and compare that with how you think they connect. ✓ Communicate between the current state future state the gap and how is the team member is doing. ✓ Make Action Plans for the longer term to ensure you are actively managing the emotional and motivational aspects of ALL the people ✓ Gather feedback and inputs on how are people interact with each other on their communication channel.  ✓ Finally, it is the project managers duty to ensure that interactions on ALL communication channels yield positive results! 3.4 WORK BREAKDOWN STRUCTURE A work-breakdown structure (WBS)in project management and systems engineering, is a deliverable-oriented breakdown of a project into smaller components. A work breakdown structure is a key project deliverable that organizes the team's work into manageable sections. A work-breakdown structure element may be a product, data, service, or any combination thereof. A WBS also provides the necessary framework for detailed cost estimating and control along with providing guidance for schedule development and control A construction project WBS example This is a three-tier WBS with each level denoted with numerical notation (such as “1.1.2”). For each subsequent level, you’d add another decimal to the notation (such as “1.1.2.1”). Also note how the WBS is organized into broad deliverables and sub-deliverables, all of which are nouns, not activities. Further, if you were to add up all the deliverables together, you’d get the first level in the WBS, i.e. the 100% rule. This is the key defining trait of a good WBS.  3.4.1 RESOURCE BREAKDOWN STRUCTURE (rbs) A resource breakdown structure consists of both the material and human resources required to complete a deliverable. 3.4.2 HOW TO CREATE A WORK BREAKDOWN STRUCTURE The output of the WBS development process might seem simple: a short document with a list of deliverables. To create it, however, you need a thorough understanding of the project’s scope, your team’s capabilities, and your stakeholders’ requirements. 1. Understand the Project’s Scope 2. Determine Major Deliverables Once you have an understanding of the project scope, start the WBS development process by figuring out the key deliverables. 3. Determine Work Packages A work package, as you learned above, is a deliverable at the lowest level of a WBS. This is one of the most important parts of the WBS development process and one that will require extensive input from your project team and stakeholders. Your goal is to pick a major deliverable, then identify all the work necessary to complete it. This work package must be: Independent: The work package must be mutually exclusive and have no dependence on other ongoing elements. Definable: The work package should have a definite beginning and end, and should be understood by all project participants. Estimable: You should be able to estimate the work package's duration and resource requirements.  Manageable: The package must represent a "meaningful unit of work", i.e. it must accomplish something concrete, and can be assigned to an individual or team. It should also be measurable. Integratable: The package must integrate with other elements to create the parent level. Adaptable: Ideally, the package must be able to accommodate changes in scope as per the project's requirements. 4. Create a WBS Dictionary The WBS dictionary is a document that outlines the definition and scope of each element contained in the WBS. It is a supporting document meant to help incoming project teams understand each work package better. Here's an example of a more simplified WBS dictionary with element ID, name, and description: 5. Use the Right WBS Format There are several WBS formats you can follow. The simplest way to do this is to create text-based hierarchical groupings. By convention, you use numbers and decimal points to indicate the level of the element. Visual tabular structure flowchart 3.5 PLANNING AND SCHEDULING WITH GHANTT CHART Nowadays it's possible to use modern Gantt chart planning to better manage your project resources and control for unexpected situations. There's a reason why we still use this solution, because even after a century, we still haven't been able to think of anything better. In this article we'll give your a comprehensive guide to using Gantt charts for scheduling and planning. What exactly they are, the elements of classic and modern day versions, and what kind of advantages you'll see when using them. 3.5.1 WHAT IS A GHANTT CHART A Gantt chart is a visual project management tool that helps to plan and schedule projects of every size. Gantt charts look like a horizontal bar chart that shows project management timelines, task starting and ending dates, dependencies between different tasks, and general project task flow. It is a visual interpretation of the project which gives an overview of the project’s progress, timeline, and tasks over its entire time frame. A classic Gantt chart consists of Projects dates and timeline - this gives project managers an overview of all the project dates. From the start, to dates connected with project tasks, and to the finish. You have the complete time frame at your fingertips! Gantt chart bars as project tasks - projects normally consist of different tasks and the Gantt chart is a great way to see them all in one place. A visual overview helps you make sure that everything is in the right place on the timeline and nothing is forgotten. Task names are normally set on the Gantt chart. Luckily, modern charts are made so that you can easily change the location and the length of the task bar.  Milestones - milestones are the little “wins” of the projects. They are normally at the end of the task and hold some significance for the project. Usually, milestones are displayed as diamond-shaped - which feels like a bonus after the completion of the task. TIP: Always celebrate your little “wins”. They help to break your project into more achievable pieces. Dependencies - there are always tasks in your projects that need to be completed before the next task can begin or end. So one task is dependent on the other’s start or finish. In Gantt charts, dependencies between the tasks are shown with little arrows. TIP: dependencies can help you focus on the base tasks that are directly connected with the general project flow. Resources - In a classic Gantt chart, you can add a resource to your task to see who’s responsible for the task and who’s working on it. In modern Gantt charts, there are ways to make it more visual and understandable. It’s not rare to use Gantt charts for resource planning and project portfolio management, in addition to single project planning. Here are the TOP advantages of Gantt chart in scheduling management with Gantt chart software : Get a visual overview about the whole project All project-related issues in a single place Use your resources more effectively Agile and real-time changes Keep an eye on future, long-term planning Solve the problems before they happen Handle the dependencies between the tasks They can be used in every industry 3.6 PERT AND CPM Project management can be understood as a systematic way of planning, scheduling, executing, monitoring, controlling the different aspects of the project, so as to attain the goal made at the time of project formulation. PERT and CPM are the two network-based project management techniques, which exhibit the flow and sequence of the activities and events. Program (Project) Management and Review Technique (PERT) is appropriate for the projects where the time needed to complete different activities are not known. ` 3.6.1 DEFINITION OF PERT  PERT is an acronym for Program (Project) Evaluation and Review Technique, in which planning, scheduling, organizing, coordinating and controlling uncertain activities take place. The technique studies and represents the tasks undertaken to complete a project, to identify the least time for completing a task and the minimum time required to complete the whole project. It was developed in the late 1950s. It is aimed to reduce the time and cost of the project. 3.6.2 DEFINITION OF CPM Developed in the late 1950s, Critical Path Method or CPM is an algorithm used for planning, scheduling, coordination and control of activities in a project. Here, it is assumed that the activity duration is fixed and certain. CPM is used to compute the earliest and latest possible start time for each activity. The process differentiates the critical and non-critical activities to reduce the time and avoid the queue generation in the process. The reason for the identification of critical activities is that, if any activity is delayed, it will cause the whole process to suffer. That is why it is named as Critical Path Method. The following steps are required for using CPM and PERT for planning and scheduling: (i) Each project consists of several independent jobs or activities. All these jobs or activities must be separately listed. It is important to identify and distinguish the various activities required for the completion of the project and list them separately.  (ii) Once the list of various activities is ready the order of precedence for these jobs has to be determined. We must see which jobs have to be completed before others can be started. Obviously, certain jobs will have to be done first. Many jobs may be done simultaneously and certain jobs will be dependent upon the successful completion of the earlier jobs. All these relationships between the various jobs have to be clearly laid down. (iii) The next step is to draw a picture or a graph which portrays each of these jobs and shows the predecessor and successor relations among them. It shows which job comes first and which next. It also shows the time required for completion of various jobs. This is known as the project graph or the arrow diagram. In this graph jobs are shown as arrows leading from one circle on the graph to another. Thus, the arrow connecting the two circles represents a job. Circle one and two represent job a i.e. forecasting of units sale which would take 14 days. Circles 2 and 4 represent job b which will take ten days and so on. It would be seen that job c is not dependent upon job b and therefore, the two jobs can be done simultaneously. Once we reduce the project to network of activities and events and we estimate activity durations, we are in a position to determine the minimum time required for completion of the whole project. To do so, we must find the longest path or sequence connecting the activities through the network. This is called the ‘critical path’ of the project. The longest path is the critical path. In our example, there are two paths. One is connecting circle numbers 1, 2, 4 and 5. This path will take 14+10 + 10 = 34 days.  The other path, is connecting circles 1,2,3,4 and 5, this path will takes 14 + 7 + 4+ 10 = 35 days. Obviously the 2nd path is the critical path and the project of budget presentation will take this much of time. The students will however notice that this time is shorter than the total time listed under Table 1 which will be 45 days. This is because jobs b and c can be done simultaneously. 3.6.3 ADVANTAGES OF PERT 1. It compels managers to plan their projects critically and analyse all factors affecting the progress of the plan. The process of the network analysis requires that the project planning be conducted on considerable detail from the start to the finish. 2. It provides the management a tool for forecasting the impact of schedule changes and be prepared to correct such situations. The likely trouble spots are located early enough so as to apply some preventive measures or corrective actions. 3. a lot of data can be presented in a highly ordered fashion. The task relationships are graphically represented for easier evaluation and individuals in different locations can easily determine their role in the total task requirements. 4. The PERT time (Te) is based upon 3-way estimate and hence is the most objective time in the light of uncertainties and results in greater degree of accuracy in time forecasting. 5. It results in improved communication; the network provides a common ground for various parties such as designers, contractors, project managers etc. and they must all understand each other’s role and contributions. 3.7 DETERMINISTIC AND PROBABILISTIC SCHEDULING 3.7.1 DETERMINISTIC SCHEDULING Deterministic scheduling is the most commonly used scheduling technique. In this method, the schedule developed is a network of activities linked by dependencies. The values such as duration, start and finish dates for activities, are deterministic in nature and thus each one is allocated a single value estimation. The estimated values roll up to the project level to define project duration, along with start and finish dates. The statistical tool generally used is Critical Path Method (CPM). 3.7.2 PROBABILISTIC SCHEDULING This scheduling technique involves same activities as in deterministic scheduling, such as listing of tasks, allocating resources, estimating duration, defining start and completion dates, and based on the inputs develop a Gantt chart. The only difference lies in the way of estimating duration and statistical tool used to develop the schedule. 3.8 BUDGET CONTROL The term “budget” tends to conjure up in the minds of many managers images of inaccurate estimates, produced in tedious detail, which are never exactly achieved but whose shortfalls or overruns require explanations. And that is what budgets are like for many smaller businesses. This wasteful way of using budgets overlooks important managerial objectives that budgeting can help achieve. 3.8.1 PLANNING ISSUE It harmonizes the enterprise’s strategy with its organizational structure, its management and personnel, and the tasks that need to be done to implement strategy. 3.8.2 TOP-DOWN AND BOTTOM-UP SCHEDULING The top-down approach allows the owner-manager and others at the top to put forward their comprehensive views of the organization and its economic and competitive environments. Top management knows the company’s goals, strategies, and available resources. Indeed, in a small company the owner-manager may be the only one with such knowledge as others are almost totally involved with day-to-day operations. The bottom-up approach, on the other hand, makes use of operating management’s detailed knowledge of the environment and the marketplace, knowledge that is available only to those who are involved on a daily basis. The more responsibility unit managers have for innovation, the more their inputs are needed in budget formulation, for they are best able to decide courses of action and targets for their units. They know what must be done, where the opportunities lie, what weaknesses need to be addressed, and where resources should be allocated. 3.8.3 ROLLING BUDGET The advantage of a rolling budget is its coverage. As one company president stated in early 1983: “We would have cut our inventories and production early last fall if we then had a budget that looked out into the first quarter of this year. As it was, we moved too late and it cost us a lot of money. That’s why we’re changing to a rolling budget as of next July 1.” On the negative side, a rolling budget takes more of management’s time to prepare and, moreover, operations are disrupted four times a year, rather than once, for planning. Those who prefer rolling budgets argue that managers get better at budgeting with practice, and therefore need no more time to do quarterly budgets than one annual budget. And, as operating managers should always be engaged in planning, budgeting four times a year is not a disruptive process for them. 3.8.4 ACTUAL AND BUDGETED PERFORMANCE* (in thousands of dollars) * Income taxes ignored. Contribution to overhead and profit—the direct costs and revenues that each manager controls in the short run. Department profit—contribution to overhead and profit less the fixed costs that are directly attributable to each department’s operation. The department manager may control these fixed costs either by deciding to replace equipment or to move to a new location or by increasing or decreasing the department’s use of a corporate resource such as a central computer, legal department, or building space. Corporate profit—the final “bottom line” after all costs have been deducted, including costs over which department managers have no control and for which they have no direct responsibility. Budgets enhance the skills of operating managers not only by educating them about how the company functions, but also by giving them the opportunity, and the spur, to manage their subordinates in a more professional manner. This aspect of budgeting is often overlooked because the budget is viewed essentially as a tool for the owners and top management of a company. A business unit manager can use the budget, for instance, to encourage salespeople to think about their customers in terms of long-term strategic goals. Budgets also have various ramifications, some subtle and some not so subtle. For maximum effect, keep the following in mind: A budget is a plan. A budget is a control. It can guide corporate operations. It can extend the reach of top management by supporting delegation. It can coordinate company activities. It can communicate company objectives and activities during its preparation and serve as a basis for communication throughout its term. It can direct, guide, and reward operating managers and form a basis for performance evaluation. It can educate company employees as to what is to be done and assist them in doing it. It can lead to “games” involving false estimates and other counter-productive behavior. How it works depends on other management systems in place. Its effectiveness depends on the way it is used by top management. 3,9 RISK MANAGEMENT’ Risks can come from various sources including uncertainty in financial markets, threats from project failures (at any phase in design, development, production, or sustaining of life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. There are two types of events i.e. negative events can be classified as risks while positive events are classified as opportunities. For the most part, these methods consist of the following elements, performed, more or less, in the following order. Identify the threats Assess the vulnerability of critical assets to specific threats Determine the risk (i.e. the expected likelihood and consequences of specific types of attacks on specific assets) Identify ways to reduce those risks Prioritize risk reduction measures The International Organization for Standardization (ISO) identifies the following principles of risk management:[ Risk management should: Create value – resources expended to mitigate risk should be less than the consequence of inaction Be an integral part of organizational processes Be part of decision making process Explicitly address uncertainty and assumptions Be a systematic and structured process Be based on the best available information Be tailorable Take human factors into account Be transparent and inclusive Be dynamic, iterative and responsive to change Be capable of continual improvement and enhancement Be continually or periodically re-assessed 3.9.1 PROJECT RISK MANAGEMENT Project risk management must be considered at the different phases of acquisition. In the beginning of a project, the advancement of technical developments, or threats presented by a competitor's projects, may cause a risk or threat assessment and subsequent evaluation of alternatives (see Analysis of Alternatives). Once a decision is made, and the project begun, more familiar project management applications can be used: Planning how risk will be managed in the particular project. Plans should include risk management tasks, responsibilities, activities and budget. Assigning a risk officer – a team member other than a project manager who is responsible for foreseeing potential project problems. Typical characteristic of risk officer is a healthy skepticism. Maintaining live project risk database. Each risk should have the following attributes: opening date, title, short description, probability and importance. Optionally a risk may have an assigned person responsible for its resolution and a date by which the risk must be resolved. Creating anonymous risk reporting channel. Each team member should have the possibility to report risks that he/she foresees in the project. Preparing mitigation plans for risks that are chosen to be mitigated. The purpose of the mitigation plan is to describe how this particular risk will be handled – what, when, by whom and how will it be done to avoid it or minimize consequences if it becomes a liability.  Summarizing planned and faced risks, effectiveness of mitigation activities, and effort spent for the risk management. 3.10 PROJECT MANAGEMENT SOFTWARE Miscommunication and inefficiencies in your project management process can lead to confusing and stressful experiences for your employees, and hinder your company's ability to satisfy your clients' needs or hit end-of-year goals. This can lead to major losses over time. Fortunately, there are plenty of free project management software options to keep your team on-track without breaking the bank. To streamline your process and ensure everyone on your team is on the same page, take a look at these ten exceptional free project management tools. Project management software (PMS) Project management software (PMS) has the capacity to help plan, organize, and manage resource tools and develop resource estimates. Depending on the sophistication of the software, it can manage estimation and planning, scheduling, cost control and budget management, resource allocation, collaboration software, communication, decision-making, quality management, time management and documentation or administration systems. Today, numerous PC and browser-based project management software and contract management software solutions exist, and are finding applications in almost every type of business. Scheduling One of the most common project management software tool types is scheduling tools. Scheduling tools are used to sequence project activities and assign dates and resources to them. The detail and sophistication of a schedule produced by a scheduling tool can vary considerably with the project management methodology used, the features provided and the scheduling methods supported. Scheduling tools may include support for: ✓ Multiple dependency relationship types between activities. ✓ Resource assignment and leveling Critical path ✓ Activity duration estimation and probability-based simulation ✓ Activity cost accounting. Providing Information Project planning software can be expected to provide information to various people or stakeholders, and can be used to measure and justify the level of effort required to complete the project(s). Typical requirements might include: ✓ Overview information on how long tasks will take to complete. ✓ Early warning of any risks to the project. ✓ Information on workload, for planning holidays. ✓ Evidence. ✓ Historical information on how projects have progressed, and in particular, how actual and planned performance are related. ✓ Optimum utilization of available resource. ✓ Cost maintenance. ✓ Collaboration with each teammates and customers. ✓ Instant communication to collaborators and customers. 3.10.1 TYPES OF PROJECT MANAGEMENT SOFTWARE Desktop Project management software has been implemented as a program that runs on the desktop of each user. Project management tools that are implemented as desktop software are typically single-user applications used by the project manager or another subject matter expert, such as a scheduler or risk manager. Web-based Project management software has been implemented as a web application to be accessed using a web browser. This may also include the ability to use a smartphone or tablet to gain access to the application. Software as a service (SaaS) is also web- based and has become a common delivery model for many business applications, including project management, project management information system (PMIS) and project portfolio management (PPM). SaaS is typically accessed by users using a thin client via a web browser. Single user  A single-user system is programmed with the assumption that only one person will ever need to edit the project plan at once. This may be used in small companies, or ones where only a few people are involved in top-down project planning. Desktop applications generally fall into this category. Collaborative A collaborative system is designed to support multiple users modifying different sections of the plan at once; for example, updating the areas they personally are responsible for such that those estimates get integrated into the overall plan. Web- based tools, including extranets, generally fall into this category, but have the limitation that they can only be used when the user has live Internet access. To address this limitation, some software tools using client–server architecture provide a rich client that runs on users' desktop computer and replicates project and task information to other project team members through a central server when users connect periodically to the network.