Project Management

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Project management
Relevant to Paper P3 When was a student! saw an ad"ert in my college maga#ine loo$ing for people to go on a road trip. %ight of us would buy an old minibus! dri"e it across the continent! and sell it at the end for about the same price we paid for it. &he idea was immediately attracti"e ' companionship! new people! new places! new e(periences! low cost ' and we soon embar$ed on our ad"enture. It was a disaster. What went wrong?: We were interested in different things, some of us preferring magnificent scenery, others preferring cities. We had different personalities. For e ample, some were punctual, others laid!"ac#. $ome were free!spending, some were careful with money. $ome li#ed roc# music, others fol# music. %here were constant arguments and discussions a"out where to go, what routes to ta#e, how long to spend in different places. %he discussions went on and on "ecause no!one felt a"le to ta#e the lead. &osts spiralled "ecause the van "ro#e down a few times. It sold for much less than we had hoped. We eventually discovered that the self!appointed map reader had no sense of direction. 'elays meant that we couldn(t get to where most of us thought we were going. 'elays meant that I missed my flight home, and I certainly did not come "ac# refreshed and enlightened. %his trip had many of the typical features of a pro)ect, and highlights many of the ris#s. In general, a pro)ect * such as implementing a new I% system * has the following characteristics: It is different to one(s normal activities. It has a start, an end, and a duration. +ften there is initial enthusiasm a"out "eing included in the pro)ect team, that is going to solve an important pro"lem and herald in the splendid new I% system. +ften uni-ue tas#s and pro"lems are addressed. .ew I% system implementation is li#ely to "e rare. %eam mem"ers are drawn from many different "ac#grounds, each with their own priorities, outloo#s, s#ills and terminologies. %he accounts department wants certain reports, the sales department wants others, and I% wants high specification e-uipment. %he team mem"ers might never have wor#ed together "efore. +ften, no "enefit is o"tained until the pro)ect is completed. /"andonment part way through will

Project Management
have incurred costs without yielding "enefits. %hese characteristics should scream 0danger(, and many pro)ects are much less successful than hoped, )ust as our holiday was. If you are aware that danger accompanies an underta#ing, then it ma#es sense to understand the nature of the underta#ing and how the danger can "e managed. P)*+%,&- ./0 -&).&%12 %he rational strategic planning model 13igure 42 is usually presented as three stages: analysis, strategic choice, and implementation. +ften these are set out as a linear se-uence, "ut it is prefera"le to arrange them in a triangle to ac#nowledge that the three stages inform one another. For e ample, when the organisation starts implementation, it will undou"tedly discover information which may ma#e it reconsider its analysis and choice. FI34R5 6: R/%I+./7 $%R/%53I& P7/..I.3 8+'57 Whether shown linearly, or as in 3igure 4, strategic analysis and choice should "e relatively -uic#. Planning, of itself, neither ma#es money nor improves performance. $ome people thin# that deciding on a plan is the same as realising the plan, "ut it is only when the right plans are successfully implemented that gains and improvements are made * and implementation is where the really hard wor# lies, with effort needed, possi"ly for years, long after the plan was agreed. / strategic plan 1typically long term and corporate!wide2 can never "e implemented as a single, monolithic tas#. / strategy of e panding a"road, for e ample, would consist of a series of smaller tas#s such as finding premises, recruiting, training, e-uipping the factory, mar#eting, and esta"lishing a distri"ution networ#. 5ach of these smaller tas#s can "e regarded as a pro)ect, with a start, end, o")ectives, deadline, "udget, and re-uired delivera"les. Realising a strategic plan therefore depends on carrying out a comple )igsaw of pro)ects, and if one piece goes missing the whole strategic plan will "e in )eopardy. %herefore, successful pro)ect management is at the heart of successful strategic planning. &5% P)*+%,& 6 3%,2,6% %here are a num"er of different versions of the pro)ect lifecycle, perhaps using slightly different terminology and dividing up each stage differently. $ometimes the differences are there )ust to differentiate a commercial product such as pro)ect management software. 'espite differences in detail, all pro)ect lifecycles can "e depicted as in 3igure 7. FI34R5 9: $%/35$ +F %:5 PR+;5&% 7IF5&<&75 /ll pro)ects will start from an initial idea, perhaps em"edded in the strategic plan. / pro)ect will then progress to the initiation stage when a pro)ect manager will "e appointed. %he pro)ect manager will choose a pro)ect team and they will carry out a feasi"ility study. %he feasi"ility study is necessary to esta"lish the following: &ommercial feasi"ility * will the li#ely "enefits e ceed the cost?

Project Management
%echnical feasi"ility * do we thin# this pro)ect has a good chance of wor#ing? +perational feasi"ility * will it help the organisation reach its o")ectives? $ocial feasi"ility * will our employees, customers and other sta#eholders tolerate it? / feasi"ility report should "e produced and this will have to "e studied "y senior managers, "ecause if the pro)ect goes ahead su"stantial e penditure might "e re-uired. .ote that the feasi"ility report does not merely have to present management with simple 0yes( or 0no( options, "ut can set out a range of options, each with particular "enefits, costs and time frames. Where there is some dou"t as to the potential "enefits that will arise from the pro)ect, it is particularly valua"le to offer a range of choices which allow the organisation to first try out a modest pro)ect and later allow the pro)ect to "e e tended. %his approach is a useful way to reduce ris#. If you are not sure a"out something, start in a small way and e tend later if worthwhile. &5% P)*+%,& / & .& */ 0*,8M%/& +ne of the main outputs of the initiation stage should "e the pro)ect initiation document, or PI'. %he term is poor "ecause it implies that the PI' is used only at the start of a pro)ect, when the pro)ect is "eing proposed, and 0document( might suggest a couple of pages only. In fact, the PI' is of #ey importance "oth initially and throughout the duration of the pro)ect. It should address the following -uestions: What should the pro)ect achieve? What are its delivera"les? %hese should "e specified in detail so that the pro)ect and its scope are well defined from the outset. Why is the pro)ect is needed 1including a cost "enefit analysis2? :ow will the -uality or accepta"ility of outputs "e assessed? Who will lead the pro)ect? Who will "e on the pro)ect team and what will "e the role and responsi"ility of each team mem"er? What are the ris#s? :ow have they "een assessed and prioritised, and how will they "e managed? Who will carry out the wor# on the pro)ect? Which actions will "e assigned to in!house staff and which to su"!contractors? =y when should the pro)ect and its various stages "e completed? What are the constraints on the pro)ect? What are the assumptions on which the pro)ect depends? :ow much "udget has "een allocated to the pro)ect? What other resources are needed "y the pro)ect, and have "een allocated to it? Who sponsors or owns the pro)ect? 1generally the department or client who is paying2 What are the reporting arrangements? /s this shows, the PI' is the #ey reference document and it will "e e tensive and detailed, containing all the planning information re-uired a"out the pro)ect.

Project Management
W5.& 0%&%)M /%- ) -9: Pro)ect ris# can "e said to depend on three varia"les: 6. 5ow well defined is the project: / well!defined pro)ect will set out in detail e actly what the pro)ect is to accomplish 1the delivera"les2, when each stage should "e completed, and how each stage will "e appraised 1-uality2. %hese -ualities can "e summed up in the phrase 0pro)ect scope(. /dditionally, it is important to set a cost "udget in advance. We will see later that there can "e tensions "etween cost, time, -uality and scope, "ut if these have not "een defined in the first place, the pro)ect will run into difficulties -uic#ly as each mem"er of the pro)ect team is li#ely to "e pursuing different goals. / poorly defined pro)ect will "e short on detail "ut long on grand am"ition. For e ample, stating that the new I% system will improve inventory management is almost useless. Is the firm moving to )ust!in!time? Is it going to develop sophisticated demand!forecasting algorithms? Is the warehouse to "e automated? Will la"our and machine use "e part of the system? In addition, if the pro)ect is not well defined, even if most participants happen to have a similar vision initially, the pro)ect will "e suscepti"le to drift. %his means that as the pro)ect progresses, ideas change and the pro)ect delivera"les change. %o some e tent, pro)ect drift is inevita"le "ecause as the pro)ect is wor#ed on, more information is discovered and it would "e foolish not to ta#e note and alter the pro)ect where necessary. :owever, altering pro)ects part way through is usually e pensive in terms of time and money if wor# has to "e redone or a"andoned. What must "e avoided is ongoing, 0nice!to!have( pro)ect drift, in which new features are added little "y little without proper evaluation of costs and "enefits. =y defining the pro)ect in detail at the start, the firm will have thought carefully a"out delivera"les and the need for su"se-uent amendments should "e minimised. 9. &he si#e of the project. It is pretty o"vious that there will "e more ris# associated with large pro)ects. 8ore sta#eholders will "e involved, possi"ly including customers and suppliers. %here will "e more coordination pro"lems and the financial investment will "e greater. Pro)ect failure, will cause great disruption and many people will "e affected. =y contrast, small pro)ects will "e easier to control and if they go wrong, damage is li#ely to "e confined to a smaller num"er of sta#eholders. 3. &he technical sophistication of the project. / pro)ect which depends on well understood solutions is much less li#ely to go wrong than a pro)ect which is attempting to use cutting edge, e perimental technology. $o, if you are put in charge of a large, poorly defined, sophisticated pro)ect, you might li#e to loo# round for another )o", as if the pro)ect fails to deliver 1and it pro"a"ly will2 you could "e the num"er one scapegoat. +f course, there can "e a good "usiness case for em"ar#ing on large sophisticated pro)ects, as these can allow companies to differentiate their products and services. If standard, hesitant, safe solutions are always used then more ordinary performance will result. It might "e part of a "usiness(s strategy to adopt radical solutions to gain competitive advantage. :owever, there can never "e any e cuse for a pro)ect "eing ill defined at the start. Ris#s must "e managed and the following approach can "e used:

Project Management
6. 'efine the ris#s. What could go wrong? 9. /ssess the ris#s. %his will "e a com"ination of estimating the financial effect if the ris# event occurs, and the pro"a"ility of the ris# occurring. $ome ris#s would have large financial conse-uences "ut could "e very unli#ely to happen. +thers might have trivial financial conse-uences. 3. Prioritise the ris#s. What are the really serious events that need to "e addressed first? >. 'eal with the ris#s. 3enerally, there are four approaches: %olerate the ris#, either "ecause the event is unli#ely to happen and?or the conse-uences will "e immaterial. %reat the ris#, or do something to ameliorate it. For e ample, if the conse-uences of missing a deadline are serious, have additional resources availa"le that can "e used to speed up the process if necessary. %ransfer the ris#. Insurance is a form of ris# transfer, as is su"!contracting. $o if you are worried a"out an I% pro)ect missing important delivera"les, consider su"!contracting part of it and "uild in penalty clauses. %erminate the ris#. In other words, the event would "e so serious that you do not want to ris# it occurring at all. For e ample, if there were a security "reach during a pro)ect that re-uires sensitive data to "e held, this could "e devastating to a company, so the company might decide not to hold that data, despite it possi"ly yielding good mar#eting information. &5% P)*+%,& M./.1%) <ou will see from the contents of the PI' that there are a num"er of classes of sta#eholder in pro)ects, typically: the sponsor the pro)ect team other employees, su"!contractors and regulatory authorities, such as health and safety inspectors. Funds from the sponsor flow through the pro)ect team and on to other departments and su"!contractors. In return, pro)ect delivera"les should flow "ac# towards the sponsor. %he pro)ect team will often "e multi!disciplinary and it will "e led "y a pro)ect manager. %he pro)ect manager is enormously influential as to whether or not the pro)ect ends in success, and he or she must com"ine technical #nowledge, leadership a"ility, and pro)ect management s#ills. FI34R5 3: R57/%I+.$:IP$ =5%W55. PR+;5&% 8/./35R /.' $%/@5:+7'5R$ %he tas#s of the pro)ect manager can "e summarised as: %nsuring that the P 0 is comprehensi"e. %his can "e a comple tas# "ecause it will mean ensuring that delivera"les, "udget, resources, pro)ect team, deadlines and so on have "een determined. /s was emphasised earlier, there is no point em"ar#ing on a semi!defined pro)ect,

Project Management
so the pro)ect manager should "e strong enough to resist management pressure to "e seen to "e doing something. If the pro)ect is started "efore the PI' is complete, things will "e done "ut they will pro"a"ly "e the wrong things. ,ommunication with the sponsors. 5ven when pro)ects run smoothly, sponsors will e pect updates on progress. +ften, however, even in well planned pro)ects, pro"lems will "e encountered and it is then that communication with the sponsors is particularly important. %his will #eep the sponsors informed "ut will also give the sponsors opportunities to ma#e choices, for e ample to spend more or to cut "ac# on delivera"les. &eam leading. %he pro)ect team is li#ely to consist of people from a num"er of departments with different s#ills and priorities. %he pro)ect manager should "e capa"le of creating a cohesive, well motivated team where participants wor# well together. ,ommunication with sub-contractors and regulatory authorities. &echnical appreciation of project issues. For e ample, someone running a construction pro)ect will need to understand relevant technical issues when these are raised in meetings. *rganisational ability! including the ability to delegate tas$s. &echnical competence in project management. For e ample, an understanding of critical path analysis 1to monitor and control progress through time2, and cost reports to monitor and control e penditure. .n ability to balance project cost! time! scope! and quality.

&5% ,*/&)*6 -&.1%: ,*-&! & M%! -,*P%! ./0 ;8.6 &2 /ll pro)ects have targets relating to cost, time, scope, and -uality, these should "e defined in the PI'. FI34R5 >: %:5 &+.%R+7 $%/35 :owever, certain priorities or pressures are li#ely to apply to each varia"le, depending on the nature of the pro)ect. For e ample, a pro)ect involving safety!critical systems will rightly put great emphasis on -uality "ecause the conse-uence of technical failure will "e very serious. :owever, managers need to "e aware of the impact of the following compromises: Increased emphasis on -uality places the pro)ect in danger of ta#ing longer and costing more. Increased emphasis on meeting the cost "udget may compromise -uality, the pro)ect may ta#e longer, or the scope could "e narrowed. Increased emphasis on meeting time deadlines may also compromise -uality, cost over!runs are more li#ely 1perhaps "ecause overtime has to "e paid2, or scope could "e narrowed. If the emphasis is to ensure that the pro)ect scope is not reduced, then cost and time might increase, and -uality might decrease. .aturally, if scope is increased, whether through pro)ect drift or through more pre!meditated changes to the pro)ect, costs, time and -uality will all "e severely )eopardised. .one of these compromises is "ound to happen, "ut pro)ect managers should "e aware that such tensions e ist and that a "alance has to "e maintained "y management action, if necessary negotiating with the pro)ect sponsors to gain approval for changes.

Project Management
P)*+%,& P6.// /1 ./0 M./.1%M%/& &**6%ypically, pro)ects consist of a num"er of separately identifia"le steps which can "e "ro#en down, hierarchically, until managea"le wor# pac#ages are produced which can "e assigned to the appropriate people. %his is the process of deriving the wor# "rea#down structure for the pro)ect. 5ach wor# pac#age, or tas#, will have four components: tas# name and description costs, "oth marginal and any fi ed element duration who is responsi"le and, in particular, whether the wor# will "e carried out internally or e ternally.

$o now the pro)ect manager #nows who is doing what and how much each element should cost. 4sing a relatively simple cost accounting system, material, la"our, overheads and third party costs can "e coded to the wor# pac#ages, hence to the pro)ect, and actual costs can "e compared to "udget for control purposes. $till to "e ta#en into account is the time that each wor# pac#age will ta#e, "ut whereas costs are cumulative, times need not "e as often several tas#s can "e underta#en simultaneously. / more sophisticated approach is needed which sets out the relationship of the tas#s or activities to one another, identifying those tas#s which can "e concurrent and those which can only "e consecutive. For e ample, if the pro)ect was to set up a new we"site for the company, the tas# of choosing the internet service provider to host the we"site can "e underta#en at the same time as designing the graphics and layout of the we" pages. :owever, the layout and graphics couldn(t "e finalised "efore the company has decided what information the we" pages should show. %hese three tas#s could "e set out in a networ# diagram, or critical path analysis, as shown in 3igure <. FI34R5 A: .5%W+R@ 'I/3R/8 ? &RI%I&/7 P/%: /./7<$I$ %he num"ers represent the time that each activity ta#es 1let(s say in days2. %he pro)ect cannot proceed further until "oth content and layout have "een decided. %hese are consecutive steps, one ta#ing eight days and the ne t five days, so this small part of the pro)ect cannot "e accomplished in less than 63 days. It does not matter that it ta#es only nine days to choose the I$P: everything has to wait for the content and design activities to "e completed. %hese are critical activities, and if either were to ta#e another day, completion of the whole pro)ect would "e delayed "y a day. %herefore, the pro)ect manager has to monitor critical activities very carefully. &hoosing the I$P is a non!critical activity and it could "e delayed "y up to four days "efore impacting on pro)ect completion. +nce pro)ect slippage is li#ely, the pro)ect manager has a num"er of choices, all of which should "e discussed and perhaps negotiated with the pro)ect sponsor: live with the slippage reduce pro)ect scope reduce pro)ect -uality "ring in more resources, such as hiring su"!contractors to help out 1which will, of course,

Project Management
increase costs2 move resources from non!critical to critical activities if s#ills are interchangea"le. 5ven small pro)ects can "e "ro#en down into many tas#s, each with its own definition, personnel assigned, costs, start time, finish time and defined relationships with other tas#s. &ontrolling this manually can "e very arduous and pro)ect management software can "e very useful in trac#ing each activity and, therefore, the progress of the pro)ect as a whole. ,6*-8)% %his is the stage at which the finished pro)ect is handed over to the pro)ect sponsor * whether in!house or e ternal customer. %he sponsor needs to chec# that the agreed delivera"les have "een provided and that the pro)ect has "een successful in that respect. %here might "e some negotiation of over costs, for e ample if deadlines had "een missed. %he sponsor should formally sign!off the pro)ect to provide evidence that the pro)ect is concluded. / post!implementation review should also "e carried out, ideally involving the sponsor, the pro)ect team and some of those affected "y the pro)ect. %his will identify: what went well what didn(t go so well if the e pected "enefits had "een forthcoming if cost and time "udgets were met if anything needs to "e done to improve the outcome.

%he last -uestion is why we tal# a"out a pro)ect management lifecycle. $uccessful pro)ects will spur people on to have ideas a"out how matters can "e further improved and so the process starts again. 4nsuccessful pro)ects will result in lessons worth learning * such as "e careful with whom you go on holiday. 9en 1arrett is a freelance writer and lecturer