Project Management Course

Summary
1. What is a Project
Definition :
A project is a temporary endeavor undertaken to create a unique product,
service, or result.
Characteristics:
definite beginning and end
uniqueness
objectives
flexibility and complexity
multiple parties and collaboration
constraints, risk taking and innovation
Sources:
external clients
internal clients
1

What Is a Project
A project is a temporary endeavour undertaken to create a unique product
or service.
A company like L&T executes very complicated projects and the profit
margins for the company as a whole are determined majorly by Engineering
and Construction (Projects).
Some characteristics common to all projects are:
o Objectives, uniqueness
o Multiple parties and collaboration
o Flexibility and complexity
o Constraints, risk taking and innovation
The main sources of projects may be external clients or internal clients
Manufacturing, commercial and company concessions are the main
industries that generate projects.
A project life cycle consists of four parts:
o Project definition
o Project planning
o Project execution
o Project closure

Nature of Project
Objectives are the goals or aims that you want to attain.
Objectives must be aligned with the company goals and take into account:
o People and their development
o Clients objectives for the project
o Beneficial change for the project owner or sponsor
Projects are multi-disciplined and require knowledge and expertise from
many areas of work.
Project management skills will reduce the rework, optimize resources of all
agencies and bring about progress.

Projects can be successful only if you take advantage of the opportunities

and plan to make the based use of it.
Performance measurement involves setting quantitative targets and goals
against which actual performance can be measured.
Pareto or ABC analysis or 30-70 principle is a tool used in performance
control systems. Parameters which need to be measured for performance
are time, events, work volumes, delivery, productivity and finance.
Performance control process helps us to take corrective action.
When traditional or accumulated knowledge does not deliver performance,
then you need to question tradition and come up with innovative solutions.

Benefits of Project Management

When you encounter standardized work, we arrange it as a production line.
When work is unique, varying and limited in its scope, we arrange it in a
project type of set up.
Organizations use the pyramid or hierarchical structure having many levels
to monitor and control people.
Bureaucracy, delay in decision making and distortion of information are
some of the disadvantages of the pyramid structure.
Project management benefits organizations by:
o Providing mediums like meetings to encourage communication
o Encourages solutions by cutting across red tape and hierarchies
o Removes rigidity and loss of flexibility by job rotation
o Making members work as a team and appreciate each others skills.
Large organizations suffer due to withholding or distortion of communication
Project setup makes use of various tools like meetings, progress reports,
networking sites, software and video conferencing to remove the barriers in
communication.
Improved communication leads to better coordination among team
members.
Better coordination leads to the members working as a team and brings
about credit focussed efforts.
Project management provides a number of opportunities to people to learn
other skills in order to attain higher positions.

Pre-tendering & Tendering process

The major processes through which projects are generated are:
o BOOT or BOT
o Tenders or bids
o Sub-contract
o In-House use
Clients insist on pre-tendering so that only qualified bidders can participate
in the bidding process
Tendering helps the client get the best prices, while the bidder is assured of
a transparent process.
After pre-tendering, tendering becomes a two part process- technical bids
and financial bids.
In order to enable us to make a meaningful or competitive bid, we have to :
o Update cost data
o Estimate materials, costs and overheads
o Assemble required documents
o Determine price
o Arrange for earnest money deposit
We also need to estimate the changes in cost due to inflation, oil price rise,
commodity price rise and foreign exchange fluctuations.

SWOT Analysis
SWOT refers to Strengths, Weaknesses, Opportunities and Threats.
SWOT is the process of self-examination or introspection that every
organization needs to undertake periodically for its own benefit.
The various parts of SWOT are:
o Strengths We have to identify our demonstrated and relevant strengths
and exploit them so that we can be more successful.
Examples Manpower, experience, area knowledge, adequate finance,
teamwork, technology, machinery and established vendors.
Weaknesses We have to identify our liabilities or weaknesses. We need
to cover our weaknesses by eliminating them or taking corrective action.
Examples Incomplete designs, lack of funds, lack of support, changing
goals and frequent changes.
Opportunities Opportunities need to be exploited by first recognizing
them and then acting on them.
Examples People development, business growth and first mover
advantage
Threats We need to foresee the problems or threats that are likely to
materialize in the future. In addition, we also need to have a plan ready to
ensure that the potential threat is adequately met without causing too
much harm.
Examples Rules and regulations, land availability, local opposition, land
squatters, material shortages and weather.

Stakeholders and their Management

Stakeholders may be defined as:
o Persons or organizations that can have a positive or negative effect
on the project of alternately, those who may be affected in a positive
or negative manner on account of the project.
Types of stakeholders are:
o Internal Formal and informal
o External Formal and informal
Stakeholders, whether internal or external, are very important for the
success of a project.
Stakeholders can affect the project positively as well as negatively
In order to deal with stakeholders effectively, we need to know the interest
of each stakeholder in the project.
We need to anticipate the hidden agendas of the stakeholders in order to
tackle them.
Stakeholders with a hidden agenda seriously interfere, hinder or block the
project.
Stakeholders also have certain legal rights like the right to ask for progress
reports and billing reports.
We should try to acquire non-arable land for industrial purposes.
Corporate Social Responsibility (CSR) is the way in which a company
integrates social, environmental and economic concerns into their projects.
We can use the valuable experience and knowledge of the stakeholders like
Villagers, Consultants and Electricity Board.
The best way to deal with stakeholders is as follows:
o Assess stakeholders
o Understand stakeholders
o Inform stakeholders
o Involve stakeholders

Quality systems & planning

The American Society for Quality Control has defined quality as A totality of

Features and Characteristics of a Product [Project] or a Service that bear on

its ability to satisfy Stated or Implied Needs.
One of the most important benefits of quality is customer retention and
cross selling.
The modern emphasis on customers has shifted from one-time dealing to
lifetime dealing with them.
The main aim of quality is customer satisfaction.
There are two approaches to quality
o Top-down approach In this approach, the top management of the
company imposes quality norms and standards to the lower levels of
operation
o Bottoms-up approach In this approach even the lowest level
employee can contribute to the quality process. This approach brings
about improvement in quality.
Quality needs to be planned for the following
o Vendor supplied items
o Items produced in-house
o Items produced by vendors
Vendors should be selected based on their commitment to quality and the
quality certifications available with them
We need to study the project thoroughly in order to know what different
types of work have to be executed and then make a quality plan accordingly.
The quality control in charge is responsible for quality and the QC teams
should report to an independent authority.
Quality is not an accidental outcome of work but a well-planned and
meticulously executed part of the job.

Budgeting
Budget is an estimation of the revenue and expenses over a specified future
period of time.
All budgets have two common components income and expenses.
Excess of income over expenses is called surplus, while excess of expenses
over income is called deficit
The process of budgeting is essential under the following circumstances:
o Preparing tender bid or pricing
o Making profits by managing costs
The budge process is as follows
o Estimate work
Divide work into various heads
Divide each work head into various sub-heads
o Estimate cost
Financial, Raw Material, Fabricated Material and Labour Cost
Variable, Per use and Fixed Cost
o Estimate Additions
Inflation
Currency fluctuations
Contingency
We may have to make certain changes to the budget even after we are
awarded the contract.
In order to create a resource budget we need to:
o First estimate the quantity expenditure for each type of work
o Similarly, based on the bill of quantities, budgets should be prepared
for each of the major resources that we will directly engage.

Changes and their Management

Changes are a fact of life for projects.

The reasons for changes in a project are: Inadequate funds, technical, cost
reduction, schedule, conceptual change, and execution difficulties.
The entities who are authorised to make the changes to a project are: Client,
Consultant, Vendor, Government and Site Personnel.
You need to properly analyze the impact of changes on the project work so
that you can take preventive measures to lessen the impact of the changes.
The process to make systematic changes to the project are:
o Enter details of the change in the change request form
o Check the impact of changes in the project
o Check the impact of changes on the project budget
o Document the changes of the project and inform the concerned
personnel regarding the changes.

10

Critical Path Method

The Critical Path Method (CPM) is a part of the branch of Mathematics called
Operations Research (OR).
The CPM achieves reductions in the project duration without overspending
or wastage.
The CPM process is as follows:
o Identify activities.
o Estimate activity time and links.
o Prepare Gantt Chart A Gantt chart provides a graphical illustration
of a project schedule based on the estimated time and links.
o Prepare Timetable We can prepare a project timetable from the
start to finish in the forward pass to get the earliest start and end
date for each activity.
o Backward Scheduling we can prepare the timetable in the backward
direction from finish to start to get the latest start and end date for
each activity.
o Identify critical activities and chart the critical path in order to
compress the project schedule.
A float of slack is the maximum extent to which an activity can be delayed
without increasing the project duration.
Critical activities are the activities that have zero float or slack.
Non-critical activities are the activities that have a float or slack. Such
activities can be delayed upto a period of the float or slack time.
Non-critical activities provide a great degree of flexibility to the Project
Manager.
We can compress the schedule (total time) for the project by compressing
the activities in the critical path.

11

Schedule Development
The process of preparing a project schedule is as follows:
o Prepare for the schedule
Identify tasks An activity or task is anything that involves
work or action.
Identify Milestones Milestones are special type of tasks that
are a part of the project list of activities.
Summarize Activities Summary activities are those project
activities that show significant achievement
Identify Links Three different types of links can be created
between the activities: Finish to Start Link, Start to Start Link
and Finish to Finish Link
o Create the schedule
Estimate Task Duration Duration can be estimated by
different means for different types of activities.

Estimate Work Content We need to estimate the amount of

work that needs to be carried out.
Reduce or compact the schedule
Link Changes We can achieve some time saving in the
schedule by changing the links.
Split Activities We can split the activities into sub-activities
and link the respective predecessors.
Change Land and Lead Time Lag or lead time is a type of
time delay or an advancement between activities. Another
way to reduce the project schedule is to change the lag or
lead time between the activities.
Increase Resource Allocation We can also reduce to project
schedule by increasing the resource allocation.
The project schedule is considered as the Standard or the Baseline
and is used for comparison.
A project can be divided into phases. A project divided into phases
offers numerous advantages to the owner and the contractor.
It is advantageous to divide a large project into smaller sub-projects.

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o
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Work Breakdown Structure

Work breakdown structure (WBS) is breaking the project activities into
various homogenous groups for a structured analysis of the readily available
information about the project
The process of creating a WBS is as follows:
o Identify the activities and their approximate budget.
o Identify the type of classification required.
o Classify the activities as per the pre-defined work components
o Accumulate the costs to get a component wise cost summary of the
work
This comparison of actual with the estimates is useful during variance
analysis
We can create various types of structures within the same project by
changing the rules for grouping like:
o Work components
o Products
o Execution Locations
o Departments
o Systems
o Cost Heads
o Resources
The main challenge of Project Management is to keep a balance between
time, money and quality.

13

Progress Charting
The frequency of review for a project depends on the planning horizon and
cost and effort fro the project review.
In order to conduct a review of the project, you need to consider the started
activities, finished activities and in-progress activities.
The process of progress charting consists of
o Selection of the activities for review
o Recording the actual progress
o Comparison with the original schedule
o Work completion for activities in-progress
o Recalculation of schedule
o Find the impact on the project schedule and criticality of the
activities.
o Take corrective action for the slippage

o Suggest ways and measures to bring the project back on schedule.

The main purpose of a fishbone diagram is to find the root cause of failure.
The earned value is calculated based on the actual work done and the
estimated cost.
We need to review the resources and costs, which are the main contributors
to the project cost.
Some measures to resolve conflicts are smoothing, resolving, withdrawing,
confronting and enforcing.

14

Project Cost and Resource Control

Controlling the costs and resources during the execution is essntial for the
success of a project.
The process to control the costs in given below:
Create a Project Budget We need to create a table of work related
activities containing all project parameters including resource usage, cost
budget, etc. Known as the Project Budget.
Plot to S-Curve We need to draw a cumulative curve, known as the Scurve. This cumulative curve provides information on what has happened
from the start of the project till date.
Fine differences We need to find the difference between the actual costs
and the budgeted cost as follows:
o Find BAC Set the review periods and find the budget at completion
of each review period.
o Find BCWS = % of scheduled completion BAC [Budget at
Completion]
o Find BCWP = % actual completion BAC [Budget at Completion]
o Find ACWP Actual Cost of Work Performed or the actual cash
Find Variance The following two types of variances need to be calculated:
o SV Schedule Variance (BCWP-BCWS)
o CV Cost Variance (BCWP-ACWP)
o Negative Variance is the Slippage
Analyze Differences Two courses of action need to be taken:
o Use the Fishbone diagrams to zero-in on the problem
o Determine the future course of action to rectify the current situation.

15

Project Documentation and Closure

The Project Managers responsibilities change during the life cycle of a
project.
The documents required during the planning phase are : Record of Project
Kick Off Meeting, Stakeholders Report, Project Brief, Quality Plant, Gantt
Chart, Milestone Chart, WBS and Budget.
The project stakeholder document ensures that there is no confusion
regarding who will be handling what responsibility
Project brief should cover all the aspects of the initial project document.
WBS can be prepared only after all the tasks in the project are defined and
classified.
A milestone plan will give a clear idea to the personnel about their
assignment and their responsibilities.
The documents required during the implementation or monitoring phase
are: Change Request Document, Cost Schedule Review, End of Phase
Reports.
We can define two parameters for evaluation based on the progress reports:
o Cost Performance Index (CPI) = Earned Value / Actual Cost
o Estimate to Complete (ETC)=Estimate at Completion Actual Cost
Ideally, the project progress meeting should focus on the reasons for slipped
activities

Some of the activities that are required to be completed during the project
closure phase are:
o Closing of Contractor Accounts
o Disposal of surplus materials
o Return materials left
o Redeployment of personnel
o Reasons for success or failure
o Lessons for the future

PMP Formulas
Name
No of Communication Channels

Formula
n(n-1)/2
n = number of members in the
team

Planned Value

Schedule Performance Index

PV = (Planned % complete)
BAC
EV = (% of completed work)
BAC
SPI = EV/PV

Cost Performance Index

CPI = EV/AC

Schedule Variance

SV = EV PV

Cost Variance

CV = EV AC

Estimate at Completion (EAC) if

original is flawed

EAC = AC + New ETC

Estimate at Completion (EAC) if

BAC remains the same

EAC = AC + BAC EV

Estimate at Completion (EAC) if

CPI remains the same

EAC = BAC / CPI

Estimate at Completion (EAC) if

substandard performance
continues

EAC = AC + (BAC-EV)/
(CPI*SPI)

To-Complete Performance
Index
Estimate to Completion
Variance at Completion

TCPI = (BAC-EV)/(BAC-AC)
TCPI = Remaining work /
Remaining funds
ETC = EAC AC
VAC = BAC EAC

PERT Estimation
Standard Deviation

(O+4M+P)/6
(P O) / 6

Earned Value

Interpretation
n should include the project
manager
e.g. if the no. of team
members
increase from 4 to 5, the
increase
in communication channels:
5(5-1)/2 4(4-1)/2 = 4

< 1 behind schedule

= 1 on schedule
> 1 ahead of schedule
< 1 Over budget
= 1 On budget
> 1 Under budget
sometimes the term
cumulative
CPI would be shown, which
actually is the CPI up to that
moment
< 0 Behind schedule
= 0 On schedule
> 0 Ahead of schedule
< 0 Over budget
= 0 On budget
> 0 Within budget
if the original estimate is based
on wrong data/assumptions or
circumstances have changed
the variance is caused by a
onetime
event and is not likely to
happen again
if the CPI would remain the
same till end of project, i.e. the
original estimation is not
accurate
use when the question gives all
the values (AC, BAC, EV, CPI
and SPI), otherwise, this
formula
is not likely to be used
< 1 Under budget
= 1 On budget
> 1 Over budget
< 0 Under budget
= 0 On budget
> 0 Over budget
this is a rough estimate for the

Float/slack
EV = Earned Value
PV = Planned Value
AC = Actual Cost
BAC = Budget at Completion
ETC = Estimate to Completion
EAC = Estimate at Completion

LS-ES
LF-EF

standard deviation
= 0 On critical path
< 0 Behind schedule
O = Optimistic Estimate
M = Most Likely Estimate
P = Pessimistic Estimate
LS = Late Start
ES = Early Start
EF = Early Finish
LF = Late Finish