Project Management Notes 2Module 1 Introduction 1. What is a Project? 2. What is Project Management? 3. Characteristics of Project Management 4. Potential Benefits and Challenges of Project Management 5. The History of Project Management 6. Project Management Today

Module 2 Individual and Team Issues 1. Introduction 2. The Project Manager 3. The Project Team 4. Project Team Staffing Profile and Operation 5. Project Team Evolution 6. Project Team Motivation 7. Project Team Communications 8. Project Team Stress 9. Conflict Identification and Resolution

Module 3 Project Risk Management 1. Introduction 2. Background to Risk 3. Risk Handling 4. Types of Risk 5. Risk Conditions and Decision making 6. The Concept of Risk Management 7. Risk, Contracts and Procurement

Module 4 Project Management Organisational Structures and Standards1. Introduction2. Organisational Theory and Structures3. Examples of Organisational Structures 4. Project Management Standards

Module 5 Project Time Planning and Control1. The Concept of Project Time Planning and Control2. The Process of Project Time Planning3. Project Replanning4. Trade-off Analysis5. Resource Scheduling 6. Project Planning Software

Module 6 Project Cost Planning and Control 1. Introduction 2. Project Cost Planning and Control Systems 3. The Project Cost Control System

Module 7 Project Quality Management 1. Introduction 2. Quality Management as a Concept 3. The Quality Gurus 4. The Quality Management ‘Six Pack’ 5. Total Quality Management 6. Configuration Management 7. Concurrent Engineering and Time-Based Competition

Module 8 Case Study 1. Aims and Objectives of the Case Study 2. Introduction (Module 1) 3. Individual and Team Issues (Module 2) 4. Risk Management (Module 3) 5. Case Study First Supplement 6. Organisational Structures (Module 4) 7. Case Study Second Supplement 8. Time Planning and Control (Module 5) 9. Cost Planning and Control (Module 6)10. Quality Management (Module 7)

Module 1 - Introduction 1 What Is a Project?

Project – one-off process with single definable end-result or product.

Three key variables: Time, Cost, Quality.

Production system takes resource inputs, passes through transformation, changes into desired outputs.

Projects and Other Production Systems

Mass production – large number of repetitive items, maximum efficiency, capital intensive, mechanistic, little managementBatch production – non-continuous demand, modifications at intervals, less mechanistic, more management, functional groupingsProject production – one-off, non-repetitive, no learning curve, complex management planning and control

A programme is a set of identifiable projects aimed at achieving some goal or objective. Some no specified end date until decision taken to stop or replace them.

Characteristics of Projects Single definable purpose, product or result Defined constraints, targets Skills & talents from multiple professions/ organisations Unique, unfamiliar Temporary Interlinked process; directed at achieving goal Secondary importance to organisation Complex

Project management

Plans, coordinates, controls complex & diverse activities in projects Is in essence the General management of an organisation Requires skills

- Financial awareness- Marketing appreciation- Technical knowledge- Planning skills- Strategic awareness- Quality management

Project types

External (revenue source) Internal (improve operations)& Hardware (tangible physical result) Software (end result is system or process)

Definition of Project Management Achieving time, cost, quality targets Within context of overall strategic and tactical client

requirements By using project resources Planning and controlling from inception to completion (life cycle) Decide on success criteria (time, cost, quality) Running the project as single entity Driving the team to success

The Basic Project Management StructuresInternal (non-executive) Project Management

Project members also part of functional structure Single designated responsible (the project manager) Acts independently (outside functional structure) Equal authority to functional managers Single leader coordinates resources to achieve objectives Multidisciplinary group to integrate Negotiates with functional managers shared resources Two lines of authority for members Decision-making, accountability, rewards shared Temporary structure Can originate from any organisational level (pdt dev from Mkg, IT systems upgrade…) Require assistance from support structures (FI, HR, IT)

External Project Management

Agent on behalf of client More flexible than internal system Instructions/communications cross organisational boundary Lower team allegiance PM has direct control Functional structure not relevant Requirement for risk transfer and contractual control No built-in knowledge of firm

Characteristics of Project Management

Differences to traditional management

Uses both international standards and industry-specific benchmarks Advise on the full life-cycle

Multiple Objectives

Ensure project-success criteria are met within changing constraints of time-cost-quality continuum.

International Co-operation and Standards

IPMA International Project Management Association

National agencies allow for cultural and economic differences:- APM Association for Project Management (UK)- PMI Project Management Institute (US)

Multi-Industry/Multidisciplinary Practitioners

Largest membership groups in APM:- Information Technology (IT)- Process engineering- Construction

Generic BenchmarksBS6079 – current UK standard for PM practiceISO10006 – European code of practicePRINCE2 – controlled environment industries and UK governmentCny-specific responses: British Telecom and Construction Industry Council codes of practice

Specific Provisions

Professional project manager – specialist manager, trained in PM with relevant industry experience in PM

Project Life Cycle

Inception – assemble basic proposal Feasibility – validate the proposal (financial, time-dependent, technological, political perspectives) Prototype Full design development Tendering and contractual arrangements Manufacturing Commissioning (switching system on) Operation (may be longest part but not always, e.g. moon rockets) Decommissioning (switching system off) Removal and recycling (legislative and environmental concerns)

Potential Benefits and Challenges of PM

Potential Benefits of PM

Focus on objectives Efficient use of resources Accountability Competition with functional units Reduced disruption Visibility Life-cycle costs Release speed Communications Control multiple objectives Security of project information Team spirit/cohesion Innovation Skill development

Potential Challenges to PM

Impact on functional performance Detrimental effect to compete for resources Conflicting orders Functional manager deprives resources Additional level of authority Contingency on flexible approach/attitude Readjustment to functional working after project

The History of Project ManagementPyramids, Great Wall, Roman roads/aqueductsIndustrial Revolution: traditional management practices – worked well for batch/mass production1900s – Gantt chart1940s – Los Alamos/ Manhattan Project – first complex, high-tech project1950 – Network diagrams for industrial processes1957 – DuPont – CPM Critical Path Method1958 – US Navy – PERT Program Evaluation and Review Technique

Late 1960s – Project Management Institute (PMI) & Association for Project Management (APM)1988 – APM Body of Knowledge (BoK)1996 – BS60791997 – ISO10006

Module 2 - Individual and Team IssuesNo urgent need for developing tools further. People make projects succeed or fail.

The term “project manager” means different things to different peopleWide variation in roles and duties

Selecting the Project Manager Charged with organising and managing a project team to meet objectives Sole responsibility for outcome Responsible to project sponsor Temporary role without traditional hierarchical power Authority to make decisions about priorities No authority to issue direct orders Sources of influence:

Competency Professionalism

Project Reputation FunctionalManager Skill Managers

Interpersonal skills Alliances

May manage across functional, departmental, organisational and geographic boundaries Central position High volume of communications Intellect to devise strategy and diligence to ensure execution

Primary requirements - Planning- Organising team- Interfacing- Negotiating- Managing resources- Monitoring/controlling status- Identifying issues- Finding solutions- Resolving conflicts

Interface management – with a balance between managerial and technical functionsTo control project creep or creeping scope i.e. any changes. Only changes agreed are authorized or contracted for.

Soft management skills - Flexibility- Parallel focus- Initiative- Persuasiveness- Communications- Organization- Generalist rather than specialist- Planning & Implementing- Problem identification- Time management- Negotiation / influence / diplomacy

Hard skills - Team set-up and management- Complex time/ cost plans- Contracts, procurement, purchasing,

personnel- Training / Development- Technology- Business strategy – translate into objectives

Selection - Internal (best) good functional manager with PM skills – should not retain functional role!- External consultant is alternative – Learning curve – Disparity of interest (no allegiance)

Some Essential Project Manager Requirements

Functions1. Project planning2. Authorizing3. Team organizing4. Controlling5. Directing6. Team building7. Leadership8. Life-cycle leadership

Constraints/ success-failure criteria:Time – Cost – Quality –Risk level – Environmental impact – Health and safety

1. Project Planning Time, cost, quality Define authority linkages with Task Responsibility Matrix (TRM)

- Milestones- Important activities- General & Specific responsibilities- responsibilities- Dates

2. Authorising Accumulate sufficient authority to get the job done Delegate to others Authority is the ability to control and direct (Power is given)

Approval Preparation Checking Making and input Authorising

3. Team organising Classical/ traditional theory

- People are merely components of a production process (e.g. automotive)- Emphasis on the produced goods or services

Empirical theory - Essential similarities between systems and processes- Observation and interpretation- Correct process will materialise from sample and data set- e.g. trains

Behavioural theory - Human relations school

Interpersonal relationship between people and work/ organization (Intrinsic links) Profit sharing Expectancy theory

- Social system school Social characteristics of organisations and individuals Evolution as people leave/join External influences e.g. smoking ban, health and safety regulations

Decision theory - Mathematical: management science - operations research

Systems management theory - Organisation characterised by throughput of resources- Input – processing – output

Functional managers favour Classical, Empirical, Behavioural theory. Project managers favour Decision and Systems management theory.

Organising throughout the life-cycle but greatest organisational development at beginning. Clarify at first meeting:

- Individual responsibilities- Organisational Breakdown Structure OBS- Task Responsibility Matrix TRM- Communication links- Authority links- Configuration Management System CMS- Project programme

4. Controlling1. Targeting

- Aligned with success and failure criteria- Cost, output, quality

2. Measuring - Formal (objective eg EVA), informal (subjective)

3. Evaluating - Identification/isolation of problem- Alternative options- Corrective action- Variance analysis in conjunction with forecasting

4. Correcting - Identify source of problem- Correct it- Monitor actual and planned correction performance (2nd level variance analysis)

5. Directing Setting up project team Training and development Supervision

- Individual targets, evaluation, discipline, definition of objectives and responsibilities Motivation (team and individual)

- Rewards, evaluation, feedback, reconciliation of individual/organisational goals Co-ordination

- Prioritisation of work; monitoring resources

6. Team buildingEarly stages most critical (initial culture often continues)1. Team/ Individual commitment

- Common objectives, reward system, motivation drivers2. Team spirit (not same as commitment)3. Obtaining necessary resources

- Number of people, mix of skills4. Clear team/individual goals and success criteria5. Formalisation of visible management support (attendance at key meetings)6. Effective programme leadership

- Accuracy of planning, efficiency of monitoring/control. Ownership of large problems7. Open formal/informal communications8. Rewards and retribution systems (good performers rewarded, poor performers reprimanded)9. Identification /management of conflict

- High pressure is common source- Sudden change in energy levels can be a sign

10. Heterogeneity and cohesiveness

7. Leadership Decision-making ability Problem-solving ability Integration of new members (flexibility, provision of sufficient learning time) Interpersonal skills (comradeship and trust) Identify and manage conflict (when objectives/limitations are changed) Communication skills (most important tool) Interface management (upward, downward, horizontal) Factor-balancing skills

8. Life-cycle leadership- Project teams last relatively short period of time- Project team changes to meet needs/challenges

Phase Characteristic Task People Effect1 Inception High Low Telling2 Development High High Persuading3 Stabilisation Low High Participating4 Maturity Low Low Delegating

The Project Team

Project Teams within Functional Organisations Allocated to most appropriate department Using resources from one function or across several Contrast with Pure project organisation for relatively large one-off projects (e.g. Millennium Dome)

Advantages of projects within functional organisation - Flexibility and full use of employees- Employees gain new experience/skills- Cross-functional working attitude- Experts create new synergies outside rigid functional structure- Follow primary career path within function or new career path through project- Less costly than external consultants

Disadvantages - Function is depleted of resources- Functional managers offload less efficient people- Difficulty in adapting to the demands of project environment- Prioritisation of simultaneous projects- Communication barriers (compared established channels of functional units)- Motivation (unless senior management support)

Team Multi-disciplinary & Heterogeneity Issues Sentience : tendency to identify with own profession/background rather than with project and organisation

Interdependency : tendency for teams to depend on input from more than one individual- Pooled interdependency (sections/divisions make contributions)- Sequential interdependency (input from multiple individuals required to move to next phase)- Reciprocal interdependency

Integration : process of defining responsibilities and control, ensuring everyone adheres to same definition

Differentiation (specialism) contributes to sentience

Multidisciplinary nature tends to increase sentience and interdependency

Greater range of backgrounds reduces overall bias (but more discussion and conflict)

Group and Team Processes Group : collection of individuals with common objective

Team : group working under direction of team leader

Organisation contains many formal and informal groups. Informal tend to form quickly and voluntarily for social reasons.

Groups better at problem solving than individuals. Groups tend to:- Brainstorm- Consider wider range of factors- Enhanced logic flow- Generate more original ideas- More potential solutions- Solve problems more accurately and quickly

Project Team Performance Most important factors contributing to performance:

- Heterogeneity – in qualifications, experience, outlook…- Cohesiveness – alignment of personal and team goals; commitment and morale of members

Project Team Staffing Profile and Operation

Project Team Staffing Balance of skills:

- Technical- Management- Administrative- Interpersonal

Other considerations:- Immediate and long-term availability- Ability- Continuity requirements- Teamworking skills- Special skills

Trade-off between continuity and ability

Mix of internal and external staff

Guidelines:- Voluntary staffing- Staffed to add value to project- Operated less formally than functional teams- PMgr Lead by example- Flexible and responsive- Interface across organisational boundaries- Teams innovate and evolve- Functional managers receive recognition and credit for provided resources- Conflict should be promoted during staffing (the sooner the better)

Project Team Profile Widest interpretation of project team:

- Contractor’s personnel- Subcontractors- Clients- In-house staff- Other interested bodies (inspectors, government, lobby groups…)

In almost everyone’s interests to meet objectives in timely and cost-effective manner

Project office: focal point, physical hub of project

Three specials project-management positions:- Project manager (“managing director”)- Project planner (“operations director”)- Project controller (“financial director”)

Project Team Operation1. Establish measurable objectives

- Identify and acknowledge stakeholders- Establish dimensions of success- Agree on criteria for success

2. Stakeholder management- “Invisible team” can provide great source of support- Protect image of team- Develop network of useful contacts- Exploit network for quality project resources

3. Establish/plan measurable targets- Understandable and practicable- Multi-level- Plan for unknown (contingencies)- Realistic milestones

4. Plan and establish processes- Firm ground rules- Create open environment to be creative and take responsibility- Develop relationships- Flexible environment when needed

5. Leadership- Clear direction, stimulate high performance- Reward good performance

6. Membership and identity- Members must trust PM- Active followership more valuable than passive- Temporary drafts must be seen in positive light- Clear understanding of roles- Members recognise their own value

7. Communication systems- Formal/informal meetings to confirm identity, provide opportunities, reinforce rules, celebrate success- Accept and address conflict- Efficient communication with external bodies- Meetings result in actions, documented with time scales and responsibilities

8. Team separation- Members can rely on fellow team members- Commitment and momentum maintained even when physically separated- Regular contact enables clear communications

9. Information technologyAdvantages- Reduced need for specific facilities (video…)- Reduced direct interaction – fewer personality clashes- Record keeping, simplified accountability and audit- Less direct supervision- Less control bureaucracy

Disadvantages- Expensive remote support- Loneliness- Loss of managerial control- Time difference – coordination- IT can go wrong- Cohesion severely restricted

10. Teams in general (optimal when)- Regular face-to-face meetings- Performance measures and criteria are clear- Members have responsibility and accountability- Clear time commitments established

Project Team Evolution

Project Life Cycles Conception and feasibility Outline proposals and definition Tooling up Operation and production Decommissioning

Project Change Control and ManagementHistorically little attempt to standardise life-cycle phasesBS6079 proposes Strategic Project Plan (SPP) defining standard planning & control system

Project Team Evolution Forming

- TRM Task Responsibility Matrix - OBS Organisational Breakdown Structure- Project staff register- Baseline set of team and project objectives

Storming- Establish cohesiveness- Increasing tendency of conflict- Attempts to depose leader

Norming- Formal/informal- Behaviour- Performance

Performing- Team members satisfied that team is balanced- New conflicts dealt with by team

GroupthinkGroupthink is the tendency for teams to delude themselves over the quality and reliability of the product. Most often encountered in long-term teams where there has been initial success.

Typical symptoms: Absolute commitment to the project Lack of respect for competitors Intolerance of dissenters Fear (of authority or majority) Self-delusion (invincibility) – common in successful teams with high cohesion and commitment Selective reporting

Project Team MotivationMcGregor

Theory X – operatives are basically lazy and unmotivated. Require threat and punishment. (Often espoused by autocratic functional managers.)

Theory Y – operatives are willing to work and complete job without close supervision. Want to success because it generates greater self-respect. (Typically preferred by project managers.)

Maslow’s hierarchy of needs Self-actualisation Esteem Belongingness Safety Physiology

Implications:

Relative importance of needs Time-based requirements (higher levels require more time) Unsatisfied needs (no “guarantee”) Complex needs (higher level needs more subjective) Anticipation (fulfilled needs become hygiene factors rather than motivators)

Equity theory – perceived fairness compared to others

Choices during perceived inequity Seek promotion Seek increased reward level Reduce contribution Increase other inputs

Expectancy theory – motivated in obtaining desired rewards

Project Team Communications Inward and outward – Formal and informal

Project Communication High-quality information sharing and exchange Quantity and Quality of face-to-face meeting

Access to meetings should be open to all team members – Encouraged to attend Communication methods:

- Meetings- Telephone- Letters/memos- Email- Notice boards- Chats- Seminars- Project plans and reports- Newsletters

Formal and Informal Communication Operational islands : sections defined by power and functional boundaries Formal lines of communication essential for collecting and disseminating project information Formal communication tools:

- Frequent reports on all aspects with clearly defined distribution lists- Regular project meetings (debate encouraged)- Project memos- Newsletters- Notice-board- Away-days and events

Informal communication revolves around the ‘grapevine’ – Influence it – a gauge of feeling- Identify and expose issues quickly- unhealthy “grapevine” harbours resentment and disillusionment

Lunch and dinner- Telephone- Coffee breaks- Evenings in the bar- Social events

Internal and External Communications Typically internal are informal – Open communication encouraged

External is formal, explicit – require absolute control on dissemination of information

Project Team Stress

Origins and Symptoms of Team Member Stress Sources of project stress

- Dual reporting – project manager & functional manager- Strict time, cost and quality limits- Short life span of teams- Project complexity- Frequently changing environment

Main sources of stress- Personal- Work (project and functional)- Environment

Symptoms- Psychological- Physiological- Behavioural

Stress Management Individual stress management

- Diet- Reduced alcohol, tobacco- Exercise- Physiological awareness- Communication (most important single element)- Realignment of goals and self-limits- Psychological self-examination- Breaks/holidays

Project-team stress management- Deregulation (rigid to flexible working times)- Reasonableness- Fairness- Open-mindedness- Flexibility- Approachableness

Conflict Identification and Resolution

Constructive/ meaningful conflict

Sources of Conflict Onerous resource constraints Pressure to increase speed/reduce costs Imposition of new aims/objectives Change and realignment Conflicting function and project demands Personality clashes Different interpretations of requirements Incorrect/ late information/ communication Perceived inequalities Underlying resentment

Conflict Characteristics Potential for conflict increased by

- Heterogeneity, multidisciplinary nature- Lower PM authority in functional organisation- Lower degree of specified/ quantifiable objectives- Lower communication and accountability- Greater degree of change- Lower perceived prestige of project

Approaches to Conflict Areas of conflict

- Onerous deadlines- Change occurs- Errors/ omissions discovered- Resources reduced or inadequate- Personality clash- Agreeing on areas for concentration- Agreeing on priorities- High uncertainty

Questions to ask- What is source- Why?- Impact?- How to reduce or eliminate- How to foresee and avoid in future

Project objectives should be SMART, and also:- Compatible with strategic plan- Agreed by senior management- Communicated to team- Communicated to stakeholders

Conflict Management Conflict avoidance Conflict absorption Conflict resolution imposition Negotiated conflict resolution

Module 3 - Project Risk ManagementHuman beings naturally consider risk and reward as part of the decision-making process.Project manager inherent risk takerPrimary Function to identify and control risk

Background to RiskThe Concept of RiskRisk management evolved from design of nuclear reactors (1950s),Energy source is inherently dangerous, consequences catastrophic, no point in examining single events

Risk – measure of probability and consequence of not achieving specific goal.

ƒ (event, uncertainty, consequence) = 1st level equation for riskRisk – something – or the lack of something – causes a risky situation.

ƒ (event, hazard, safeguard) = 2nd level equation for riskHazard – source of dangerSafeguard – mitigation against the hazard

Exposure: vulnerability of parts of organisation to risk impacts

Sensitivity to risk composed of 3 elements: significance (severity/impact), likelihood, ability to manage implications

Effective Risk Exploitation (ERE) makes use of non-balance-sheet assets (SCM, IP, KM)

Risk is the distribution of possible outcomes in performance over time due to changes in key variables (greater range = greater risk)

Considerations: World is uncertain – Risk cannot always be eliminated Risk is a function of opportunity Risk can be an advantage (intimidates competition) Risk management is set of analytical tools – Operates at all levels Risks may be foreseeable, partially foreseeable and wholly unforeseeable. No risk management is infallible

The Human Cognitive Process

Cognitive process in risk assessment: Pattern recognition Attention Memory Bounded Rationality

- Generally we opt for rational behaviour within constraints- Examine possible actions and possible outcomes- Risk forecasting

Based on experience, present, extrapolation (aka Prediction Momentum) Combination of subjective and complex modelling (chaos theory) Success factors:

Accurate data Time limits Cost (effort) Vision

o Intuition – combination of experience and extrapolationso Bias – tendency to misinterpret data because of own perceptions/preferences

Risk HandlingRisk Assessment and Control

Risk analysis determination of probability of risk events and establishing measure of consequence together with monitoring and control systemRisk handling process of dealing with riskRisk feedback occurred risks are analysed and results fed back to system for future strategiesRisk control risk analysis, handling and feedback

Typically risk management considered: risk assessment and risk control.

Risk assessment – iterative process identifying and assessing all potential risksRisk – combination of uncertainty and constraint (e.g. legislative deadline)

Risk control – investigation of entire project (project plans, scrutiny of critical path)

Risk identification – source and effects Individual perception of risks will vary according to:

- Organisational position- Power level- Area of authority- Responsibilities

Project and Strategic RiskProject risk limited to risk considered entirely within project (delays, errors, cost increases…)Strategic risk long-term, complex, difficult to model (economy, competition…)Variance envelope allows divergence to a certain limit

Types of Risk

Generic Risk HeadingsStrategic risk long-term performance of organisationOperational risk process itself, asset base, project members, legal controls (e.g. project risk)Financial risk market, credit, capital structure, reportingKnowledge risk IT hw/ sw, IM, KMCatastrophic risk cannot be predicted or quantified, usually covered with reserve/contingency sum

Market Risk and Static RiskMarket risk (Dynamic risk) – potential gains/losses – Cannot be reduced or controlled – only diversified

Market business risk (MBR) company trading with its assets – concern to all stakeholders (shareholders, creditors, employees…) Market financial risk – gearing ratio, concern to equity holders

Static risk (specific risk or insurable risk) – losses only; potential losses and safeguards. Insurance policy Fire insurance, tortuous liability insurance (professional indemnity), personnel insurance…

External Risk and Internal RiskExternal risks

Competitor risk Market demand risk Innovation risk Exposure risk (e.g. gearing ratio) Shareholder risk Political risk Statute risk Impact risk

Internal risk Operational processes risk

- Resource availability- Production capacity- Process failure- Time-based competition

Financial risk- Borrowing- Cash flow- Exchange rate

Management risk- Management error- Strategy implementation- Communications

IT and Technology risk- System obsolescence- Breakdown and failure- Malicious virus- Capacity limit

Predictable Risks (known unknowns) and Unpredictable Risks (unknown unknowns)

Risk Conditions and Decision making

Conditions of certainty – gravity Conditions of risk – weather/rain Conditions of uncertainty – earthquake, hurricane

Decision Making under Conditions of CertaintyExample: when same strategy optimal for all possible states/conditions (pay-off matrix)

Decision Making under Conditions of RiskTypically: higher profits implies higher potential risks/losses

Payoff-matrix: Profit-matrix for strategy x state, whereby each state has assigned probabilityMultiply payoff by probability – – – sum for each strategy

Decision making under Conditions of UncertaintyAssigned probabilities are not known. Sources of uncertainty can be

Externally driven – environment: inflation, interest rates, demographic changes Internally driven – process: motivation, loyalty, new products, innovation Decision-driven – information: strategy planning, R&D, investment

Maximax / Hurwicz criterion – always optimistic, maximise profits irrespective of lossMaximin / Wald criterion – pessimistic, minimise losses (minimum profits in worst-case scenario)Minimax / Savage criterion – minimise maximum regretLaplace criterion – assign equal probabilities to all outcomes (assumes Bayesian theory)

The Need for a Risk Management Strategy

Total Strategic Risk Management (TSRM) must be holistic and pre-emptive (similar to TQM)

The Concept of Risk ManagementRisk management system must be

Practical Realistic Compliant (with internal & external standards) Cost-efficient

Risk Management areas identification classification analysis attitude response control, policy and reporting

Risk Identification

Detailed and thorough, identify source of risk

Internal risks use WBS to identify most obvious risk areas (3-4 level)External risks e.g. interest rates, economic activity – difficult to identify and evaluateProject risks project administration and control techniques – e.g. OBS, team membership, leadership, communications

Risk Objective sources – sum total of past experienceRisk Subjective sources – sum total of current knowledge (e.g. PERT analysis)

Brainstorming (Delphi, Nominal group, SWOT M7)1. Creative phase2. Evaluation phase

Risk Classification

Portfolio theory – considers from a financial point of view (beta coefficient)Classify as market risk (business/ dynamic risk) or static risk (systemic risk)

Three-level classification Risk type Risk extent Risk impact (consequence)

- Maximum probably loss- Most likely cost of loss- Cost of covering loss- Cost of insuring against event- Reliability of predictions about event

Risk Analysis

1. Evaluate all options2. Consider risk attitude3. Consider characteristics of risks (internal/external, controllable)4. Establish measurement system5. Interpret results6. Make decision

Alternative methodology1. Identify source2. SWOT analysis – Map risk drivers3. Assess probably and impact – Actual risk map4. Consider all options – Develop target risk map5. Assess value added with recommended risk response6. Set up monitoring and reporting

Risk mapping = Risk profiling (aka Risk footprinting) – 4 quadrants reflecting high/low probability and impactRisk migration – from actual to target risk map – selected risks = controllable & internalShape (e.g. ellipse) versus point reflects variation limits

Risk grid – table Dimensions: multiple levels of probability and severity Cell: indicates action (e.g. Retain, Part insurance, Full insurance, Cease activity)

Risk Attitude Risk seeking AGAP = all goes according to plan Risk averse WHIF = what happens if

Individuals more risk averse than teamsInclination to risk increases with age of team (time since formed)Multidisciplinary teams seek more risk than unidisciplinary teams.

Risk ResponseConsiderations

Company policy Missing information on cause/effect Time of exposure Individual/team interests Involuntary/voluntary risk Alternatives

Risk distributionContract – tool to allocate/share riskConsiderations

Is the outcome worth the risk? Who controls most risk Who is most liable? Incentives?

Response Options

C3

C2

C1

Probability

Impact – Damage

D

C

BA

Probability

Impact – Damage

Probability

Impact – Damage

High impactLow probability(Quadrant 2)

High impactHigh probability

(Quadrant 1)

Low impactLow probability(Quadrant 4)

Low impactHigh probability

(Quadrant 3)

Effort

Averse

Impact Ie. max. reward or opportunity available

Seeker Neutral

Retention – ignore risk (low-probability, low-impact) Reduction Transfer (insurance – contract: General Terms and Condition)

- Insurability of risk (not all are insurable)- Cost of insurance- Maximum probable loss- Likely loss- Likely cost of covering loss

Avoidance- Pre-contract negotiations- Rescission- Exemption clauses- Scope redefinition

Seeking further information

Risk Control, Policy and Reporting

Risk handbook – it documents experience with risk and risk managementRisk reports should be regular and integral to strategy

Risk policy: Overall aims and objectives Accountability for managers (TRM) Formalised reporting channels Risk tolerances (variance) Authorisation

Risk, Contracts and Procurement

Contract is tool for risk transfer and mitigation. It transfers liability. To insurance company for premium Between suppliers/subcontractors Tender price reflects risk absorption

Reasons for conflict Defective documentation Inappropriate arrangements Incorrect estimating/pricing Unreasonable risk allocation Communications breakdown Insolvency Ambiguity

Contract defines rights, dues, obligations, liabilities.

Commensurate risk – inability to fulfill obligation due to own inadequacy, incapacity, inadvertence or errorUberrimae fidei (utmost good faith) obligation to disclose all relevant information to contract

Basic Contract TheoryContract items

- Signature block & project title- Definition of terms and scope- Information/facilities provided by client- Project approvals- Payment systems- Working drawing- Specification- Schedules- General conditions (sector-generic)- Specific conditions- Provisions for change- Form of tender- Dispute resolution- Bonds and warranties

Contract requisites- Offer and acceptance- Consideration (e.g. deposit) – depending on legal system- Capacity- Legal relations- Communication (acceptance to offeror)

Performance – all parties complete all duties and liabilities

Alternatives to performance- Breach – one party in contravention to terms- Frustration – cannot be fulfilled although both parties wish to- Rescission – error or misunderstanding, rescinded by court if terms are not acceptable (contradictory terms)- Rectification- Void (e.g. if goods are illegal)- Termination/determination – in accordance with provisions of contract

ProcurementMost large organisations have “Legal Services” for procurement of contractsStrategic vs. Project procurement

Procurement phases Objective phase Exposure phase (advertisement, investigation into possible sources) Alternatives phase (sources analysis) Documentation (of requirements) Tendering Award Contract administration

Characteristics of ContractsControllable (e.g. human error, decision making) vs. uncontrollable (adverse weather)

Fundamental contractual risks Design defects – latent and patent Project cost Safety and indemnification 3rd party insurance Fire, flood… Completion deadlines: Damages may be punitive, liquidative (cash) or ascertained (actual)

Express/implied terms (e.g. PII professional indemnity/ liability insurance)

Transfer of Risk in Contracts

Indemnity clause transfers riskCourts unsympathetic to excessive transfer

Variation Orders (EU) & Change Notices (US)

Variations – allow for changes to contract without invalidating itMust be possible to price to compensate affected party

Claims Risk

Client risks Failure to provide information Late instructions Errors/omissions in contract documents Delays by nominated subcontractors or client consultants Changes in statute Non-availability of labour Civil commotion, war, natural disasters Adverse weather Determination of contract by contractor

Obligation of client to insure against: Fire Flood Lightning Impact of aerial devices Radiation

Contractor insurance Employer liability for employees Liability for damage to 3rd party persons and property Escape of hazardous materials

Module 4 – PM Organisational Structures and StandardsInternal (operational, non-executive) project managementExternal (executive) project managementInternal with external specialist support

Organisational Theory and Structures

People make projects succeed or failPeople are more difficult to predict/control than schedule/cost

1. The Project within an Existing Organisation

Most common form of PM groupingFundamental consideration is relationship between organisation and project; dependent on:

Size, status and importance of project Resources available Strategic fit

Functional organisational structure

Most common; preferred by inflexible organisations, examples:- Government- Police forces- Military- Most large private companies

Power/status defined by vertical hierarchy Horizontal communications only at top levels Projects may be contained within function

Benefits:- Clear reporting, rules, responsibilities, chain of command- Mirrors traditional authority structures- Simple; intuitive- Specialisation & focus (shared knowledge)

Disadvantages:- Inflexible- Cross-functional activity discouraged- Boundaries, barriers- Greater need for central support- Development of organisational and operational islands

Pure project structure Can exist within functional structure Often have complete freedom within limits of final accountability Set up to deliver very visible projects

Benefits:- Flexible & responsive to change- Encourages innovation and evolution- Operational costs can be adjusted to workload variations- No need to negotiate with functional manager for resources- Shorter in/formal communication lines- Authority contained within project- Team members not distracted by functional loyalty- Easier to incorporate external consultants- Easier to execute related projects as programme- In summary, best structure for a project

Disadvantages:

- Concurrent projects may lead to duplication of effort- High initial operating costs (until any projects are completed)- Centralized direction- Increased early operating costs if PMs “think ahead” to resources needed- Team members’ concern about long-term- Competition between project teams- Deadlines may force to cut corners- Prolonged absence from function can dilute specialisation

Matrix structure (internal, Non-executive) Blend of mechanistic/ repititive (pure functional) and research/ innovative (project) Very popular for organisations undertaking projects Generally restricted to large organisations with constant/ predictable workload Main characteristics

- Functional (vertical) boundaries- Power/status (horizontal) boundaries- Organisational islands- Project sponsor

Adjudicate disputes Allocate resources Make executive decisions

- PM chair Four legs: PM, sponsor, functional manager, team Three interfaces for PM Three levels of control (subordinate, peer, superior)

- Interfaces- Bidding- Time-recording and cost-centre charging

Most internal structures make at least some use of external resources

2. The Project External to the Existing Organisation

Project team may comprise All internal resources managed by external PM All external consultants managed by consultant PM Mixture of internal and external resources

Surrogacy – extent to which client wishes to delegate control/authorityRisk transfer – normally cover non-performance/ negligence but not supplier breaches

External (Executive) PM means PM has full authority (does not need to negotiate over resources)

Distinctive characteristics Multidisciplinary nature / shared loyalty Open and competitive fee structures

- Fee bid package- Paid in Tranches

Pre-contract works Post-contract works Final account

- Percentages based on ‘measured works totals’ or ‘final account total’

External contractual linkages- Primary types

Completion contracts Term contracts (long-term agreements) Service-level agreements

- Competitive contracts (tender) versus negotiated contracts- Pricing forms

Fixed-price – lowest client’s risk Cost/cost-plus – greatest client’s risk Reimbursement + a fee Target-price + a fee

- Forms Standard form (clear terms and conditions) Professional services (implied terms) Supply contracts (supply of goods) Subcontract agreements

o Domestic subcontractor (free choice by contractor)o Nominated subcontractor (stipulated by client)

- Pro-forma contracts – near/ monopoly- Links

Client to PM and design team – professional service contracts Client to main contractor Client to service authorities – gas/ electricity/ water… pro-forma contracts Client to nominated subcontractors and suppliers Client to local authority

External non-contractual linkages- Authority links – classic agency arrangement, contractual risk of consultants borne by client- Communication links– creeping scope = uncontrolled changes,

is the classic tendency for poorly controlled projects to gradually increase in size and content

Advantages of external PM Flexible, responsive New ideas/approaches Outsource where no internal expertise Quick ramp-up / easy disbanding Internal risks (resources) avoided

Disadvantages Expensive Lack of loyalty Difficult recourse over poor performance New administrative and control system More stringent communication and coordination systems Risk profile changes Arbitration and litigation possibility Complexity for PM

3. Criteria for Selecting the Organisational Structure Authority (project has shorter accountability lines) Communication (matrix reduces barriers) Knowledge transfer (e.g. between function and project) Loyalty Technology/ Innovation Cost (pure project has lower running costs, function has large fixed costs) Coordination (function has formal reporting, therefore low coordination requirement) Support functions (pure project requires less)

Function Matrix Pure projectWorkload Constant Variable Significant variance

Project Frequency Infrequent Frequent Frequent / dominantFocus Functional objectives P secondary, though of significant importance Project focusInformal Communications Not required AcceptableR&D / Innovation Some HighCentralised support Required Present Little or noneClear authority Required Split authority ok Devolved to PMChange propensity Unlikely Some HighSize Small Small to medium Large, resource intensiveResponse time Not fast Fast not generally required Fast

Project Management Standards

For any given industry/ profession there are three standards: IPMA guidelines for UK APM BoK – US PMI BoK: = standards and areas of responsibilities for PMgrs BS6079 (UK) – ISO10006 (EU) - - - Working guidelines for PM practice, such as SPP Industry-specific (e.g. PRINCE2) - - - PRoject management IN a Controlled Environment (IT industry)

APM and APM Body of Knowledge

AMP Objectives: 1st point of contact (national authority on PM) Lead professional development Champion interest representation Standardise qualifications Develop national branch network Establish practice and procedures for training

APM BoK Profile – 4 primary areas (UK and US)1. Project Management Project life cycles, Project strategy, Project environments2. Organisation and people Leadership, communication and team building3. Techniques and procedures Planning, estimating, control, monitoring4. General management Finance, law

BS6079

Focus is standardization – E.g. different methods of planning and control measurement

Most important section is standard strategic project plan (SPP)

1. Preliminaries Title page, project description, contents list, introduction, names Control reference, Security levels for different team members

2. Project aims and objectives Time, cost, quality…health and safety, environmental

3. Subject-specific sections BS6079 proposes standard numbering Scheduling, cost control, project history, project policy, certification procedures

Acts as both a document and benchmarkClients may use SPP (up to baseline stage) as basis for competitive bids

PRINCE2

PRoject management IN a Controlled Environment version 2Alternative to BS6079 – developed by Central Computer Telecommunications Agency (CCTA) in 1989 for IT PM in UK government

Based on process model of a project Project breakdown into processes with key inputs/ outputs and aims/ objectives Driven by project business case

Advantages Standard project structure – start, middle, end Regular detailed reviews – measured against business case and planned progress Flexible decision points Automatic control of deviations Optimises involvement of stakeholders Encourages communications For bureaucratique and IT-driven project

Module 5 - Project Time Planning and Control5.1 The Concept of Project Time Planning and Control

Time-planning intrinsically linked to life cycle (separate from implementation) Not static – replanning in parallel with implementation Variance – comparison of actual with planned performance – basis of management reporting Also feedback for future projects Extrapolation allows prediction of future performance – predictive/ proactive analysis

Aims and Objectives of the Planning Process Plot course from current position to end position Establish variance limits Allow contingencies and resources for divergences Ensure correction for divergences

More specifically Consider strategic objectives Establish project objectives Compartmentalise work Determine interdependencies Determine resources Determine cost/duration/sequence of packages Establish communications system Define responsibilities, deadlines Set up organisational structure Identify critical activities Motivation Produce Strategic Project Plan

Project Time Planning and Control and the Generic Project PlanSPP includes time, cost, quality and planning for:

Organisational and authority Risk management Communications system Finance Conflict and stress management Authorisation and compliance Health and safety Change management

Project Time Planning involves identifying, sequencing and scheduling activities and resources.

Project Time Planning and the Project Life CycleContinuous planning/ replanning throughout the life cycle but intensity varies

Most intense in early stages Critical changes increase replanning Replanning process critical in large projects Becomes more complex as project progresses

Examples of replanning reasons: Internal (optional) change – client-initiated External (imposed) change – e.g. supplier/subcontractor fails Sequential disruption – resource reallocation (within project) Miscalculation

5.2 The Process of Project Time Planning

Factors Affecting the Time Planning Process

Sources of time planning data Knowledge, experience, environmental conditions, form of contract

Project uniqueness Extent of knowledge transfer Geographical location Objectives Availability of contractors, suppliers Contractual conditions Client characteristics Time of year Local conditions, government regulations, environment

People issues Stakeholder buy-in View as fair, reasonable and achievable

Complexity – Analyze components for Position in sequence Importance of package Criticality of package Acceptable time/cost overrun Resources required

Uncertainty & Change Not possible to eliminate risks completely Not cost-effective to eliminate some risks Eliminating some risks may give rise to others Difficult to assess some risks Relative importance may change over time

Accuracy & Reliability Unfamiliarity with software Misguided assumptions Insufficient data Incomplete understanding of implications and linkages

Communication Software promotes tendency to issue too much information

The Planning Process

1. Statement of Work (SOW)2. Work breakdown structure (WBS)3. Project Logic Evaluation (PLE)4. Separate time, cost, quality planning5. Network analysis (CPM, PERT…) to generate DMS6. Trade-off analysis to replan7. Project Master Schedule (PMS)

Statement of Work – defines overall content and limits of work; all required information for tender/bid Signature block, project title Terms and scope Information/ facilities provided by client Approval requirements Payment terms Working drawings Specification, schedules General and specific conditions Variations procedures Dispute resolution Bonds/ insurance

Work Breakdown Structure Purpose

- Improve accuracy of estimates- Define baseline for performance measurement and control- Identify tasks and responsibilities

Levels of definition (typically six) Logical numbering system

- Align with Cost Accounting Codes (CAC) in use- Typically generated by Computerised Database Estimating System (CDES)

Dividing the WBS- Work type- Responsibility- Location

Project Logic Evaluation (PLE) Define sequence of individual packages

- Resource driven- Logic driven

Sequential, parallel- Precedence diagrams with resource sheet

Draft Master Schedule (DMS) Purposes & uses

- Project completion date- Supply order/delivery dates- Subcontractor notification dates- Milestones for progress planning- Risk management system- Logic incompatibilities- Contractual compatibilities- Basis for Replanning & trade-off analysis, Resource levelling , Earned value analysis

Critical Path Method (CPM) – deterministic Program Evaluation and Review Technique (PERT) – probabilistic Gantt Charts Network Diagrams (precedence diagram with activity durations)

- Activity on arc (AOA) Activities shown as arcs Events shown as nodes (circles) with duration Dummy activities required represent dependencies (shown as broken line)

- Activity on node (AON) Activities as nodes (boxes) Temporal relationship dependent on placement of arrow end-points

Finish to start (most common, simplest) Finish to finish Start to start Start to finish

Critical Path Method (CPM) – DuPont 1960

- Assign durations for each activity Modular technique (decompose activities) Benchmark technique (recorded time for similar works) Modelling technique (generate formula/model from previous activities) Computerised Database Estimating System (CDES) technique Parametric technique (dependent/independent variables e.g. time& length of digging tunnel)

- Identify start & finish window for each activity Forward pass: Identify Earliest Event Times (EET)

Earliest Start time (EST) Earliest Finish time (EFT)

Backward pass: Identify Latest Event time (LET)- Critical path (no float window i.e. EET=LET)- Replan/ Rationalise resources

Import new activities Decrease work (cut corners) Reshuffle resources Re-evaluate sequence Increase workload Overlap phases Speed up approvals Smooth resource utilisation Prioritise activities (allocate resources to critical path…)

- Form Draft Master Schedule (DMS)- Refine into Project Master Schedule (PMS)

Program Evaluation and Review Technique (PERT) - Assign three durations to each activity

optimistic, most likely, pessimistic

- Calculate mean duration and standard deviation for each activity (Beta distribution)

Activity Duration (Beta Average): T = (a + 4 m + b) a = optimistic time

6 m = most likely time Activity Standard Deviation: s = (b − a) b = pessimistic time

6- Forward/ Backward pass, CP- Calculate project mean duration and standard deviation

Project Mean Duration: Σ TCP

Project Standard Deviation: Σ √ (SCP)2

- Identify target completion date and calculate variance about target (Normal distribution)

Nb. of standard deviations between Project Mean Duration and Target Duration (client-requested)

Project Mean Difference = PMD – Target Project Duration

Standardised Mean Difference = PMDiff PSD

Event within 1 standard deviation of the Mean ~ 68% of meeting deadlineEvent within 1 standard deviation above Average mean ~ 84% (50%+68% of 50%)Event within 1 standard deviation bellow Average mean ~ 16% (50%−68% of 50%)Event within 2 standard deviation ~ 95% Event within 3 standard deviation ~ 99%

- Replan/ Rationalise resources- DMS- PMS

5.3 Project Replanning

Quality = performance in following sections. Elsewhere it may refer to specific measurable aspect of quality

Crash analysis – how much can project be accelerated and at what cost?

Crash Analysis

Trade-off between time and cost. Assumes Quality is fixed.

Process:1. Define project logic2. Add duration to each activity3. Establish critical path4. Calculate crash cost per activity5. Calculate crash cost per unit time6. Determine most cost-effective crash sequence7. Check critical path8. Crash network to limit

- Optimum cost point (starting point) --- additional time beyond this will accrue fixed overhead- First crash point (using cheapest critical path component to crash)- Maximum crash point

5.4 Trade-off Analysis

Methodology for Trade-off Analysis1. Identify the reason for the problem2. Reevaluate the project objectives3. Allow for any other relevant factors4. Assemble a shortlist of solutions scenarios5. Select and test the best (or approved) alternative6. Implement the best alternative

1. Identify reason for problem Pre-execution trade-offs (during DMS)

- Change in client requirements; strategic objectives- Design incompatibilities- Subcontractors/ suppliers/ external consultants changes- Misunderstandings/ miscommunications

Execution trade-offs- Client requirements- Human error- Execution problems- Emerging risk- Project-specific

2. Re-evaluate project objectives Competitor behaviour, customer demand, economy, technology, legislation…

3. Allow for other relevant factors Strategic and/or operational

4. Shortlist solutions

5. Select and test the best alternative

6. Implement

Trade-off Classification

Type 1: Time is fixedType 2: Cost is fixedType 3: Performance is fixed

Type 4: Time & Cost are fixedType 5: Time & Performance are fixedType 6: Cost & Performance are fixed

Type 7: Everything is fixed- Unusual; typically in small, simple projects- Unlikely change

Type 8: Nothing is fixed- Also unusual- Emergency works- Stop-lossing (fulfill contractual obligations as soon as possible)-

5.5 Resource Scheduling

Seven types of resources:1. People2. Materials3. Equipment4. Funds5. Information6. Technology7. Space

Considerations: Resource productivity – Project productivity not a simple sum of individual productivity Resource availability

Resource Aggregationis a way of estimating the total resource requirements on an ongoing basis throughout the life cycle of the project

Large variations may lead to periodic idle time if resources cannot be easily redeployed

Resource Utilisation (Efficiency)

Resource Utilisation = # of person days worked on project t # of person days available for project

Resource Levelling (or Resource Smoothing)

Levelling out peaks and troughs in resource demand so that utilisation approaches an average

Depends on: Flexibility of completion date Availability of resources

Benefits: Reduced peaks in demand means fewer people on project at any one time reduces coordination and control Individuals work for longer period of time – Benefits in team dvpt & learning curve Reduced float times lead to greater continuity Reduce overall time subcontractors are required

5.6 Project Planning Software

Advantages of Computer-based Project Planning and Control Speed Cost Capacity Reliability Combined analysis (e.g. simultaneous planning for time and cost)

Disadvantages of Computer-Based Project Planning and Control Reliance – protected and backup Over-emphasis on time-consuming detail Information dump Potential misdirection – Excessive trust in well-presented material if based on erroneous data

General Factors for Consideration

Lead-in time – implementation time of the software Transition Training Software Updates Networking – CMS, security and access implications Wider compatibility – in linking the configuration management system to external consultants/ contractors/ suppliers

Critical success factors Usable – user-friendly Familiar displays CMS compatibility Extendable

General Features of Project Planning and Control Software Systems

Project planning – Automatic – Gantt charts, network diagrams, critical path analysis Resource management – resource loading, conflicts, costs, budgets, forecasts Tracking and monitoring – compared to baseline Report generation – status, budget, cash flow, resources, schedules Analysis and decision aiding – what-if analysis, at least straightforward analysis

Common Commercial Project Planning and Control Software

High-end Power Project Professional Primavera Project Planner Artemis Views Open Plan Cobra Enterprise PM Micro Planner X-Pert

Mid-range (up to 2000 tasks) Microsoft Project Micro-Planner Manager Primavera Suretrak

Low-end (less than £100) Milestone Simplicity Project Vision Quick Gantt

Module 6 - Project Cost Planning and Control6.2 Project Cost Planning and Control SystemsCost planning – Breaking down project into elements WBS, assigning realistic estimate of cost and rolling up costs

Strategic, establishes aims & objectives before

Cost control – Ensuring adherence to cost limits set by cost planning Tactical, reactive

Monitoring expenditures Identifying variances Determining reasons for variance Corrective action Monitoring to ensure resolution Taking further corrective action if necessary

Cost Planning and Control as a ConceptTarget costs identified by account code systemNo direct time measurement but time does affect costCost variances from internal sources easier to control than from external sources

General requirements Project schedule must be accurate Estimating system must be reliable – Typically electronic estimating system, some still use price books Clear project scope – unambiguous, non-overlapping tasks Realistic budget – fair and reasonable Clear authorisation system – multi-layer approvals filter Flexible and responsive system – variation orders (EU) = change notices (US) Reliable approach to tracking variance – CDES Time-dependent variance sensitivity – diminishes over time Flexible use of reserves and contingencies

Types of Control System: 1. Cybernetic 2. Analogue 3. FeedbackCybernetic Most common approach Automatic response mechanism = its key feature Used by animals and some plants to make decisions Set of inputs establish context Outputs subject to monitoring system Bounded rationality (see page 17) – approach to information processing i.e. analysis Multi-level cybernetic control

- Low-level: e.g. shower control with temperature sensor, instrument controls, animals Most cost-control systems Detecting time and cost variances Adjusting likely final time/cost estimates Re-programming schedule change

- Mid-level: greater flexibility, complexity; automobile engine management Adjusting estimates for individual cost rates Establishing cost of change notices Releasing contingency sums

- High-level: introduces intelligence, memory, experience, original thought Tactical solutions to programming problems Updating risk profile Developing negotiation strategy For controlling overall project performance

- Human mind operates at all three levels

Analogue Appropriate for smaller elements/packages Series of yes/no questions – elimination process

- Basis of human reasoning process- Eliminate unfeasible solutions and break feasible solutions into subsections

Every aspect – determine if preconditions met For rigid time, cost, performance limits

Feedback control Post-project evaluation and feedback to future projects

Cybernetic are automatic and therefore continuous; Analogue are invoked as neededCybernetic and analogue for ongoing use. Feedback applied after project completion

Costs and Allowances

Classification: Fixed and variable costs – depends on the level of project activity Direct and indirect costs Factory costs – total fixed/variable costs without any mark-up for profit Measured works – individual and unit prices Contingencies and reserve – empirically calculated, 10% or more Fluctuations – inflation Prime cost (pass-through) and provisional sums (foreseen but undefined work) Direct payments (local authorities or utilities) Bonds and warranties Exchange rates and currency fluctuations Insurance

Life Cycle Costs

Life-cycle costing (LCC)Considers long-term implications of early design decisions

Typical Life-Cycle Phases- Inception- Feasibility- Detailed development- Production- Project termination, system operation, maintenance- System divestment

Additional (optional) phases and costs- Research and development- Prototype- Design- Production- Commissioning- Operation- Maintenance- Decommissioning – running the project down prior to recycling- Product retirement, phase-out – demolition, dismantling, decontamination, recycling

LCC Process- Establish life-cycle characteristics- Build process cost model- Calibrate model (benchmark with standard) – accurately measuring what is supposed to be measured- Input relevant data- Generate LCC and define strategy – balance between long-term and project ramp-up

LCC Advantages- Long-range considerations- Life-cycle viability- Strategic decision making- Future awareness- Market position- Compliance/ regulation

LCC Disadvantages- Prediction accuracy – invalid assumptions- Cost – Full LCC is expensive- Sensitivity – to change may produce inaccuracy- Competition – in case of unbalanced analysis- Risk – implications of inaccuracy

6.3 The Project Cost Control System

Two cycles1. Cost planning cycle - Phase 12. Cost control cycle

- Phase 2: Work initiation- Phase 3: Cost data collection- Phase 4: Variance generation- Phase 5: Cost reporting

The PCCS Planning CycleEstimating procedure

Professional estimator- Trained, experienced, unbiased, no loyalty

Project team- Estimators are responsible- “on the ground”, best knowledge of resources and requirements- Aware of system limitations- Can confer, negotiate on resources- May cost low to win or high to succeed- Greater risk making mistake or over-optimistic estimates

Other considerations- Project success criteria – consistent with estimating assumptions- Project linkages – synergies- Standardised approach – leverage central data and systems- Feedback

Estimating elements Labour Materials Plant

Also many others, e.g. Fuel Maintenance wasteAdditional considerations for materials and equipment Packaging and shipping costs (also insurance, duties…)

= Operating Cycle

Availability (may need to pre-order or find alternate source) Detailed specifications may not be available on first issue of estimate

Data gathering Standard tables Company-specific tables Previous project data Estimator skill and knowledge; estimator categories (increasingly dangerous):

- Accurate- Pessimistic- Optimistic- Inconsistent

Presenting the Estimate The order-of-magnitude estimate – feasibility assessment Indicative estimate – based on known information and published data Definitive estimate

Project Estimating Top-down

- Strategic alignment- More stable/static- Less local influence and bias- Executive commitmentBut:- Senior management disconnect from operational costs- Team may feel budget is unrealistic => reduced motivation- Politics

Bottom-up- More team commitment if people own decisionBut:- Less status- Difficult to adapt to strategic changes- Easily overridden by senior management- Tendency to over-estimate

Iterative [based on negotiation] (interactive between task managers [operational] and senior managers [strategic]) - Prepared by operational manager- Aligned to strategic objectives- Maintains market influenceBut:- Timely and costly negotiation- Requires control procedures- Dependency on negotiation skill of operational manager (more important than estimating skill)

Bidding strategy and Estimate reporting1. Formulate estimating strategy2. ROM estimates3. Carry out preliminary refinement4. Indicative estimate5. Add for profit and risk6. Compare to cost limit7. Subjective evaluation of bid success probability8. Final/definitive estimate – final or baseline budget plan

Consider difference between type x acquisitions (one-off with no follow-on) and type y acquisitions (follow-on likely)

Computerised Database Estimating System (CDES) Scan or digitise quantity information directly from drawings Description library – collection of standard descriptions (arranged in same format as WBS) Price codes and unit rates Other database elements

- Digitised drawings- Bill preparation systems

Bill with tender, bill with estimated prices… budget plan

Project Budget Plan Perceived as the most important performance indicator Standard Method of Measurement (SMM) – standard form to measure and quantify costs

- How to measure work- What descriptions to use- What to include/exclude- Units of measurement- Assembly into bill of quantities for tenderer

Role of project budget Forecast costs to particular project tasks Budget baseline Projected cost curves (for each element) Reference for variance analysis Moderation of spending Data for trade-off analysis Estimate effects of change notices Psychological effects (motivation, demotivation)

Budget Development and Layout Objectives and activities – measurable outputs Financial resources allocated Start/finish points of each activity Facility to compare actual and planned performance Preliminary items – general project overheads Prime cost sums – work is sublet to nominated subcontractor Provisional sums – exact extend of works in not known (e.g. excavation) Direct Payments – payments made through project but not to project team Dayworks – unforeseen and unmeasurable works (e.g. specialist to debug software) Measured works – physically measured from specifications Contingencies, fees and taxes

Budget changes Transparency important – visibility of original budget, all changes, current budget Change control system (CCS) – monitors all changes and predicts implications before authorising Cost account variation notice (CAVN) – formalised process using CMS (for large projects)

The PCCS Operating Cycle = cost & control systemPhase 2: Work initiationPhase 3: Cost data collectionPhase 4: Variance generationPhase 5: Cost reporting

Phase 2: Work initiationControlled release of work: Project works order (PWO) Variation Order (VO) Describe work, standards, cost-centre to charge

Phase 3: Cost data collection Earned Value analysis (EVA) required by APM, PMI, ISO10006, BS6079 End result is generation of cost variance and schedule variance

- Basis for evaluating performance and, if necessary, corrective action Milestone monitoring

- Milestone – definitive stage in the project, appropriate point to measure performance- Most suitable when plans not very detailed- Disadvantages

Reaction time lag – intervals too great Residual accumulated overspend – in case of late detection Replanning issues – milestones rescheduled easily Time scale issues – do not allow for work in progress

- Earned Value Analysis (EVA) Dynamic Combined time/performance assessment Frequent reporting Demonstrates value as well as cost Accurate assessment of cost implications of delays Easier trade-off analysis

Earned Value Analysis

Earned Value = cost of work originally estimated

Cost variance = difference between budgeted cost and actual cost of works- Measurable effort – separate elements within defined schedule with tangible results- Support effort – project actions difficult to quantify (Project support, administrative services)

Variance analysis- Identify / validate variance- Quantify variance- Determine source- Determine impact on project- Determine impact on other elements- Determine extent of ongoing tactical response- Determine range of possible outcomes of corrective actions

= Operating Cycle

Earned Value Analysis variables- Actual Cost of Works Performed (ACWP)- Budgeted Cost of Works Performed (BCWP) = Actual earned value- Budgeted Cost of Works Scheduled (BCWS) = Planned earned value- Scheduled Time for Work Performed (STWP)- Actual Time for Work Performed (ATWP)- Cost Variance (CV) CV = BCWP – ACWP- Schedule Variance (SV) SV = BCWP – BCWS- Time Variance (TV) TV = STWP – ATWP- Budget At Completion (BAC) BAC = Σ BCWS = project baseline- Estimate To Complete (ETC)- Estimate At Completion (EAC) EAC = ACWP + ETC = planned estimate approach

EAC = BAC – CV

EAC = x BAC = current estimate approach

- Variance At Completion (VAC) VAC = BAC – EAC

- Cost Variance Index CVI =

- Schedule Variance Index SVI =

- Time Variance Index TVI =

Multi-level Earned Value Analysis- Allows roll-up analysis- Diagnostic analysis

Phase 4: Generation of Variances

Variance and Variance envelope

Earned Value AnalysisEarned Value – cost of work originally estimated

Alarm system:

Critical Ratio = x = x

Zone A: take no action eg. 0.90 – 1.00Zone B: record and monitor eg. 0.75 – 0.90Zone C: Act immediately eg. 0.60 – 0.75Zone D: Emergency response required eg. 0.50 – 0.60Zone A1: Observe and note eg. 1.00 – 1.25Zone A2: Investigate and correct (excessively pessimistic estimating or other errors)

BCWPACWP

BCWPBCWS

STWPATWP

ACWPBCWP

actual progress scheduled progress

budget cost actual cost

APSP

BCAC

Phase 5: Cost reporting

Report guidelines

- Punctual reporting- Include only relevant information- Highlight important information- Allow interrelationships- Honest and accurate- Issued to everybody involved- Where appropriate

Propose solutions Clarify responsibilities & time scales

Basic report types

- Routine reports Cost, schedule, quality, risk

- Development review reports Common for R&D Assessment of progress in relation to success criteria

- Exception reports Issued to highlight anomalies Initial report highlights exception Subsequent reports describe progress of corrective actions (audit trail)

- Subject-specific reports Monitor and control areas of concern – high impact high probability risks (M3)

- Project variance and analysis reports (PVAR)

Project Variance Analysis Reporting (PVAR)

- Common reporting tool for EVA- Shows variance (and all EVA metrics) for whole project and all 6 levels of WBS- For each cost centre

WBS identifiers CAC identifiers and budget limits Current metrics – ACWP, BCWP, BCWS, CV, SV, BAC, EAC, ETC and VAC figures Previous (Month) metrics YTD metrics Differences between current and previous metrics Summary of significant differences Current EAC, ETC, ECTC, ETTC May show graphic curves in appendix Can calculate

Earned value Earned value hours Anticipated final hours Project efficiency Project progress

Level 1: The programme 2: The project 3: The element 4: The sub-element 5: The work package 6: The wp. component

Module 7 - Project Quality ManagementProjects non-repetitive therefore standard sampling techniques for batch production are insufficient

7.2 Quality Management as a ConceptThrough 1960s low-cost was the primary priority in protected economies1970s the Japanese entered market at higher-quality and equal or better costQuality control standards (BS5750, ISO9000, BS6079, ISO10006) give equal importance to quality as to time and cost

The Traditional Japanese View Overall value of quality

- Curvilinear relationship to cost – linear at some range but asymptotic at ultra-high-quality- Must be balanced with cost of defects which can be also addressed through warranties

Not always an option (high-speed tyre blow-out)- Apparent value of quality – what people will pay for a good-quality product- True value of quality – also includes premium based on prestige/goodwill or reputation for reliability/quality- Overall value = apparent value + true value

Overall cost of defects- True cost of a defect greater than apparent cost of fixing it- Loss of customers (churn)- Bad reputation- Overall cost = apparent cost + true cost

Quality dividends- Employee motivation, company status and image- Better productivity- Industry respect/relations- Prospects in M&A, partnerships and alliances- Share price, risk profile…- True payback = overall benefit – implementation costs

Involving people- Japanese culture linked employee interest with company- Motivated employees to proactively ensure quality without expensive quality control systems

Proactive planning- Preventive rather than responsive action- Cheaper and more effective quality systems – move upstream/ more attention to pdt dvpt- Difficult / expensive for Western companies to emulate

Involving whole organisation- Extended to non-production activities (sales, marketing, R&D) – TQM

Educating customer to expect quality- Differentiation in a competitive market

Quality Standards2000 BC – Egyptian quality control for funeral goods; imprint from government inspector1963: US Military standard MIL-Q-9858A 1974: UK standard BS5179 – BS5750 first major UK Quality Management standard – Now superseded by ISO 9000***

ISO9000: Quality Management and Quality Assurance Standards – Guidelines for Selection and UseISO9001: Quality Systems – Model for Quality Assurance in Design, Development, Production, Installation and ServicingISO9002: Quality Systems – Model for Quality Assurance in Production and InstallationISO9003: Quality Systems – Model for Quality Assurance in Final Inspection and TestISO9004: Quality Management and Quality System Elements – Guidelines

Main drawbacks: Bureaucratic Measures performance at one point in time Attempts generic measure across countries with different standards, process and cultures

ISO9000 Twenty main parts:1. Management responsibility and quality policy2. Quality system

*** Superseded by ISO 9001:2008

3. Contract review4. Design control5. Document control6. Purchasing7. Purchaser-supplied product8. Product identification and traceability9. Process control

10. Inspection and testing11. Inspection measuring and test equipment12. Inspection and test status13. Control of non-conforming products14. Corrective action15. Handling, storage, packing and delivery16. Quality records17. Internal quality audits18. Training19. Servicing20. Statistical techniques

7.3 The Quality Gurus

Common agreement:1. Quality processes must be enterprise-wide2. Process defects should be considered before employee defects3. Quality processes must be structured – based on a WBS4. Processes must ensure that product exceeds customer expectations – Market research5. Must rely on commitment

Deming – 1900-1993, US (Japan)

W Edwards Deming – 1950sIntrinsic link between quality management and production15% control by workers, 85% by managementWorker-oriented, statistical analysisAppeals to democratic-type of manager

14-point plan1. Create common sense of purpose – PLC 2. New mind-set3. Build quality into system4. Procurement strategy – Prequalification, Partnering5. Research and innovate6. Invest in staff development7. Enhance supervision – Leadership, Support8. System of open communications – Pb detection & correction - Democracy – Ea. level = filter – Open door policy9. Enterprise-wide open communications

10. Avoid output standards11. Careful use of standards12. Encourage pride13. Training14. Encourage commitment

Juran – 1904-2008 (†103), US (Japan) Romania immigrate @ age 8

Joseph M JuranActive in Japan after DemingHighly structured and coordinated based on complex planning and implementation controlAppeals to boss-type managers who like a rigid control system

Ten steps1. Necessity of product evolution and improvement2. Strategic plan3. Operational system plan4. Staff training5. Address problems as projects6. Regular reporting system7. Recognise/reward performance8. Open communication9. Published performance records

10. Maintain momentum & constantly innovate

Juran trilogy1. Quality planning

- Rank customers- Identify requirements- Develop solution- Plan development- Establish goals- Implement production- Ensure accuracy/ reliability

2. Quality control3. Quality improvement

Crosby – 1926-2001, US

Philip B CrosbyQuality must be universal goalSenior management must provide leadership to uncompromising quality – prevention thru zero defectsAppeals to HR-type manager

14-stage process1. Commitment at all management levels2. Specific quality teams3. Measurement and evaluation system4. Cost implications5. Promote quality awareness6. Corrective actions7. Zero-defect planning – central to Crosby approach8. Education programmes9. Zero-defect day – milestone

10. Achievable quality improvement goals11. Remove defect sources12. Recognise/ reward good performance13. Quality forums – between senior management and operational managers14. Ensure evolution and feedback

Imai

Aimed at structured production-type managersContinuous improvement

Focus on production system (and environment) rather than products P-approach (process approach) rather than R-approach (results approach) with reward & retribution R-approach is based on MBO P-approach is aka Kaizen = Japanese word for ‘improvement’

- Change is slow and consistent- Long-term view- Less financial focus

7.4 The Quality Management ‘Six Pack’Quality – the level of performance required in order to win more orders and to acquire new customersQuality management – process of managing quality to ensure certain standards are achievedWestern (this section) separate processJapanese view – fully integratedDefine quality level, monitor and control – analogous to EVA for cost variance

Six primary areas1. Quality policy – starting point2. Quality objectives – feeds into quality plan for production system3. Quality assurance4. Quality control5. Quality audit – whole system6. Quality assurance plan and review – tools & techniques to set & monitor performance

(1) Quality PolicyPrimary components

Organisational quality objectives – vision Performance levels Reconciliation with strategy Full senior management support Consequences for non-compliance Measurement procedure Responsibility & ownership

(2) Quality ObjectivesIndividual ramifications of policy (WBS)

Requirements Achievable, in context Reconciliation with strategy Adequately resourced Operational support Measurement & evaluation procedure Responsibility & ownership To all relevant operational units Time scales & Cost limits

(3) Quality AssuranceTools and processes to ensure quality management produces results compliant with specificationsProactively sets standardsCollects external information for comparative purposes and feedbackUsually involves benchmark/target – May be backed up by customer refunds/compensation train ticket reimbursementMultifunctional, continuous improvement

Identifies minimum standards of performance Proactive – where possible Reactive – where necessary Applicable across all relevant sections Procedures for collection and analysis of performance data In context of audit and review procedures

(4) Quality ControlTools to create specific quality performance levelsQuality assurance proactively establish drivers and performance standards

Quality control evaluate achievement of standards and react to deviations (reactive) Includes continuous sampling Statistical analysis of results

Requirements Measure and confirm actual performance Compare target and actual Identify significant variance Identify sources of variance Initiate corrective action Assign ownership and responsibilities Monitor effectiveness of correction Generate reports

Analogous to generation of cost and schedule variances figure

(5) Quality AuditIndependent check by impartial personnel to determine if standards are being metExternal audit stronger and more reliable than internal

Should confirm that QA procedures have been observed Quality control performance figures are correctly assembled All relevant issues are included Compliance with internal and external standards

- Processes- Analysis and reporting- Corrective actions- Monitoring and control systems- Reporting systems

areas for improvement identified plans for improvement assembled free of corruption

(6) Quality Assurance Plan and ReviewStrategic plan analogous to Project Master Schedule (PMS) and Project Cost PlanStrategic plan for the implementation and review of the Quality Management System

Breaks down quality objectives Establishes basis of monitoring and control systems Sets times scales and cost limits for implementation and review

Requirements Establish clear targets Ensure targets are achievable Allow interdependencies Allow provision for changes Include contingency planning Specify success criteria Establish risk profiles Provision for corrective actions Ownership and responsibilities Monitoring and control of effectiveness of corrective actions Reports Fully accountable for overall performance improvement

Quality Assurance Plan (QAP) Functions Strategic focus – with long-term aims and objectives, aligned with strategy Formal procedures and processes – overall coordinating mechanism Internal performance targets and benchmarking Support for tendered/bid resource allocation Data for trade-off analysis Standardisation of procedures (to produce consistent quality level)

Problems with implementation of a quality system Optimism may give rise to undervaluing QA in early stages Time/cost constraints dominate decision making Performance concerns increase in middle and later stages Beware of assumption that more time/money must improve performance Performance management is subjective

not always possible to plan and implement in a direct and structured fashion More customer-related than cost/schedule No advanced software available Tends to suffer from inadequate planning

QAP can be transformed into Quality Assurance Matrix using OBS and WBS with TRM (Task Responsibility Matrix)

Quality Control ToolsIdentification tools – Identify where problems are occurring

Pareto Analysis – histogram identifying problem areas- Basic Pareto analysis – identifies which elements account for highest proportion- Comparative Pareto analysis – compares range of processes to determine league table of problem causes- Weighted Pareto analysis – considers other non-obvious factors (such as time and cost)

Brainstorming- Creative phase- Evaluation phase

Delphi method – anonymous, individual identification of risks & responses, committee collects, redistributes, next cycle Nominal Group Technique – individual idea generation, merge, individual ranking, collective ranking SWOT analysis

Analysis tools – analyse why problem is occurring Scatter diagrams

- Highlight correlation between two variables (axes) Control charts

- Preventive approach- Mostly based on standard normal distribution (ie Gaussian distribution)- Concordance analysis – identify correlation between two variables

Identification and analysis tools Cause and effect analysis – Six major stages

- Identify source of problems (EVA, SWOT, Cause and effect…)- Brainstorm source of problem- Establish problem box (to isolate problem) and primary arrow (total inputs)- Enumerate all possible causes and effects- Identify all possible cause and effect components- Develop proposed course of corrective actions

Trend analysis- Ie. Linear regression analysis – working out best fit equation/ trend line

7.5 Total Quality Management

Japanese invention (1960s), popular in West in 1980s and 1990sProduction process and organisational structure considered integrated whole

Definition of TQMIt combines continuous enterprise-wide quality management with organisational controlNeeds committed employeesAssumes problems originate from process rather than operatives

TQM StructureEight phases

1. Commitment – developing internal resolve2. Mission – defining SMART objectives and strategy3. Customer – identifying what customer wants – market research4. Process – tactical analysis – matching customer needs with feasible production options5. Vision – Generation of eventual outcomes6. Risk management – risk assessment and management strategy7. Planning – expensive and complex, multilevel, strategic project plan8. Breakthrough and implementation – tactical move and monitoring

TQM Implementation

Breakthrough Fundamental quality improvements Quick-win activities – 5 or 6 immediate milestones

Daily Application Management (DAM) Long-term implementation of system Continues process of establishing objectives and monitoring the results

Interdepartmental or Cross-Functional Management (CFM) Integration of team activities across functional divisions to achieve organisational goals CFM is the control of the TQM system across different organizational and functional bondaries

Advantages and Disadvantages of TQM Systems

Advantages Increased organisational awareness Increased appreciation of links between processes and performance Increased efficiency Improved communications Improved employee performance Improved operational systems – after detailed analysis Improved external relationships Improved reputation Opening new markets – customer requirements for TQM

Disadvantages Cost Inconvenience – changes Selling – to the employees Distribution – geographical Training Dilution – differentiation gap vs. competition keeping up

7.6 Configuration Management CM = Configuration Change Control

Controls information that relates to changeChanges all involve time, cost or qualityCM – control technique / software package for formal review and approval of proposed changes

Configuration Management System (CMS) ComponentsFormat and layout

CMS software Electronic information network

Identification and specification System characteristics

- Scope limiting approach – design and construct a cost limits- Cost-effectiveness approach – ratio between cost of solution and its effectiveness

Project-relevant information- E.g. for a drawing – Date, revision number, author, authoriser, checker, action flags…- User information- PCs- Companies- Drawings, schedules, letters, instructions- Project change orders and history

Data analysis and classification- Assigning a code for each component- Manufacturer codes- Organisational (e.g. reporting) and personal information- Access privilege / authorisation levels

Change control system Three steps

- Identification/submission of change request- Approval/rejection- Authorisation and implementation

Considerations- Procedural – formal change request- Authority clearance – evaluation process, Change Control and Review Board (CCRB)- Schedule constraints- Gateways and checkpoints

Status Accounting and reporting (CSAR) Keep history of all changes in project Bill of variations

- Item identity (WBS element, or package identity)- Date- History of change requests- History of approvals/rejections- History of Estimated impact- History of any previous monitoring outcomes

Audit and Feedback Confirms that the product complies with the specification, regardless of the changes

Configuration Management Baselines

Baseline – windows that shows project performance at any moment in timeIt is the standard against which actual performance can be measured

Five main baselines1. Project life cycle – Functional objective, Inception, ROM2. Detailed design – Scheme design, estimate costs3. Production information – Definitive estimates, full design4. Tender stage – Definitive product baseline, Product configuration baseline5. Execution – Operational cycle, dynamic baseline

Summary

Configuration management is process by which information is communicated around project

7.7 Concurrent Engineering and Time-Based CompetitionTime-based competition (TBC) – competitive advantage by being first to market

The Concept of Concurrent Engineering - also called time compression

US – phased and fast-track approaches (John Deere and Boeing)

Concurrent engineering – overlapping and blurring of traditional life cycle phases Parallel rather than sequential scheduling Multiple and concurrent use of resources Very careful monitoring and control Immediate response to delay Efficient communications systems, extensive information sharing Good CMS Clear objectives for all levels of OBS Detailed understanding of all linkages and interdependencies within WBS Powerful change control Immediate authorizations without political influence Multidisciplinary/cross-functional working (inside/ outside) Multi-task Fast, accurate reporting

Phased and Fast-Track Concurrent Engineering

Phased concurrent engineering Separate project into work packages with separate design and execution phases Split design and execution Begin design of package as soon as design of precursor has finished (before execution has competed) Parallel vs. serial activities

Fast-track Same as phased but additionally

- Begin execution of each package before design has completed

Only works if people have used it before and know the risks – repetitive simple project, low innovationRisk approach – Requires detailed risk assessment and risk-management system

Advantages and Disadvantages of Concurrent Engineering

Advantages: Achievement of earlier completion dates Compliance with change Change control flexibility Earlier launch Improved innovation – moving goalposts anathema Improved break-even and revenue generation Improved control of creeping scope – shorter change opportunity windows Improved design and execution integration Improved performance – more control

Disadvantages: Close internal control Multi-functional working Increased risk profile Close external control

Project Management - Key Points

Chapter 1: Project versus Mass, batch production.

Chapter 2: Functional versus project structure; motivation, communications, stress

Chapter 3: Risk (probability, consequence)Risk handling: analysis, handling, feedback; external versus internalMaximax (Hurwicz), Maximin (Wald), Minimax (Savage), LaplaceClassificationContract theory

Chapter 4: Internal (Functional, Pure project, Matrix)External (surrogacy, risk transfer)IPMA, APM, PMIBS6079 (SPP) / ISO 10006PRINCE2 (industry specific: IT in UK Government)

Chapter 5: Data sourcesSOW, WBS, PLE (Precedence diagram)Network analysis (Network diagrams: AOA, AON: usually finish to start)Critical Path method (Forward pass EET, Backward pass LET)PERT (duration: T=(a+4m+b)/6; standard deviation s=(b-a)/6), project mean: sum (T), sd: sqrt(sum(s2))Crash analysis, Trade-off analysis (8 types)

Chapter 6: Control system (cybernetic, analogue, feedback)Const planning cycle; cost operating cycle (5 phases)Cost Variance BCWP-ACWPSchedule Variance BCWP-BCWSTime Variance STWP-ATWPCritical ratio: (Actual-progress/Scheduled-progress) x (Budgeted-cost/Actual-cost)

Chapter 7: Deming (democratic), Juran (autocratic), Crosby (HR), Imai (production-oriented)QM Six pack: Policy, Objectives, Assurance, Control, Audit, Assurance planTQM, Configuration ManagementConcurrent engineering (phased, fast-track): Time-based competition