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OPERATIONS MANAGEMENT
CHECK POINT 80: PROJECT AND CONTRACT MANAGEMENT

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1. what is project management?
2. main elements of project management
3. project and contract definition and purpose
4. project life cycle
5. project selection
6. two main project types
7. an operational project
8. a capital expenditure project
9. financial evaluation of projects
10. risk analysis
11. project manager
12. project organization
13. a project team
14. small business example
project task summary schedule
15. the project planning stages
16. elements of a project plan
17. systems integration and action planning
18. small business example
project plan of action report
19. project budgeting
20. small business example
project budgeting report
21. project scheduling
22. gantt chart
23. small business example
gantt chart
24. tools for project scheduling
25. program evaluation and review technique
26. small business example
pert network diagram and analysis
27. the critical path method
28. small business example
the critical path method
29. advantages of network scheduling
30. project monitoring and control
31. small business example
project monitoring and control report
32. project cost control
33. small business example
project cost control report
34. conflict management during a project implementation
35. negotiation techniques for resolving conflicts
36. for serious business owners only
37. the latest information online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

OPERATIONS MANAGEMENT
CHECK POINT 80: PROJECT AND CONTRACT MANAGEMENT

Please Select Any Topic In Check Point 80 Below And Click..

1. what is project management?
2. main elements of project management
3. project and contract definition and purpose
4. project life cycle
5. project selection
6. two main project types
7. an operational project
8. a capital expenditure project
9. financial evaluation of projects
10. risk analysis
11. project manager
12. project organization
13. a project team
14. small business example
project task summary schedule
15. the project planning stages
16. elements of a project plan
17. systems integration and action planning
18. small business example
project plan of action report
19. project budgeting
20. small business example
project budgeting report
21. project scheduling
22. gantt chart
23. small business example
gantt chart
24. tools for project scheduling
25. program evaluation and review technique
26. small business example
pert network diagram and analysis
27. the critical path method
28. small business example
the critical path method
29. advantages of network scheduling
30. project monitoring and control
31. small business example
project monitoring and control report
32. project cost control
33. small business example
project cost control report
34. conflict management during a project implementation
35. negotiation techniques for resolving conflicts
36. for serious business owners only
37. the latest information online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

WELCOME TO CHECK POINT 80

TUTORIAL 1 General Management TUTORIAL 2 Human
Resources Management
TUTORIAL 3 Financial Management TUTORIAL 4 Operations Management TUTORIAL 5 Marketing
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HOW CAN YOU BENEFIT FROM CHECK POINT 80?

 
The main purpose of this check point is to provide you and your management team with detailed information about Project And Contract Management and how to apply this information to maximize your company's performance.
 
In this check point you will learn:
 
• About main elements of project management.
• About various examples of projects and contracts.
• About four phases in a project life cycle.
• About project selection criteria factors.
• About various types of operational projects.
• About details related to capital expenditure projects.
• About three financial methods for project evaluation
• About three types of financial evaluation related to risk analysis.
• About project management functions and activities.
• About project organizational options... and much more.
 

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 80

 
You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.
 
You and your team should adhere to basic lean management guidelines on a continuous basis:
 
Treat your customers as the most important part of your business.
Provide your customers with the best possible value of products and services.
Meet your customers' requirements with a positive energy on a timely basis.
Provide your customers with consistent and reliable after-sales service.
Treat your customers, employees, suppliers, and business associates with genuine respect.
Identify your company's operational weaknesses, non-value-added activities, and waste.
Implement the process of continuous improvements on organization-wide basis.
Eliminate or minimize your company's non-value-added activities and waste.
Streamline your company's operational processes and maximize overall flow efficiency.
Reduce your company's operational costs in all areas of business activities.
Maximize the quality at the source of all operational processes and activities.
Ensure regular evaluation of your employees' performance and required level of knowledge.
Implement fair compensation of your employees based on their overall performance.
Motivate your partners and employees to adhere to high ethical standards of behavior.
Maximize safety for your customers, employees, suppliers, and business associates.
Provide opportunities for a continuous professional growth of partners and employees.
Pay attention to "how" positive results are achieved and constantly try to improve them.
Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. WHAT IS PROJECT MANAGEMENT?

HAVE YOU SEEN THE PYRAMIDS?

Business owners and operations managers engaged in project or contract management must be fully familiar with all relevant operational aspects to succeed in business.

If you have traveled to other countries, you may have seen such attractions as the Pyramids in Egypt, or the Coliseum in Rome, or the Acropolis in Athens. Besides admiring these phenomenal human achievements, you have, probably, asked yourself this question: "How was this really done?" 

Well, unless you believe in UFOs and aliens (which are not impossible...), the answer lies in one short sentence: "Good project managers!" If those project managers could have used a good software program such as Microsoft Project 2013 or Clarizen, the Pyramids would have been built at least 500 years earlier.

So, what really is Project Management?

PROJECT MANAGEMENT

Project Management represents a broad range of management activities related to the development, initiation, planning, controlling, leading, and completing a specific project.

It is apparent, the decisions to build the Pyramids, the Coliseum, and the Acropolis, were taken by a few people, who also had to select and appoint effective Project Managers to complete their respective tasks (probably just to stay alive).

Although, some project managers are still involved in monumental tasks, even small projects necessitate prudence in project management. Hence, project managers need to be familiar with various principles related to project management in order to succeed in their respective efforts.

POPULAR PROJECT MANAGEMENT SOFTWARE

There are several excellent project management software programs available to small business owners at present. Some of the most popular project management software packages are presented below:

Microsoft Project 2013
Clarizen
Genius Project
AtTask
Project Insight
Project Manager
 

ADDITIONAL INFORMATION ONLINE

Project Management Software By ClarizenInc.
Microsoft Project 2013 Tutorial By Simon Sez IT.
Learn Microsoft Project In 16 Minutes Flat By Dave Litten.
Microsoft Project 2013 Training - Critical Path By Simon Sez.

2. MAIN ELEMENTS OF PROJECT MANAGEMENT

PROJECT MANAGEMENT

Project Management represents a broad and detailed management science which will be discussed briefly in this program. The main elements of project management are outlined below.

MAIN ELEMENTS OF PROJECT MANAGEMENT

1.

Project definition and purpose.

2.

Project life cycle.

3.

Project selection criteria.

4.

Project types.

5.

Project evaluation.

6.

Project risk analysis.

7.

Project manager's functions and responsibilities.

8.

Project organization and organizational forms.

9.

Project team and human factors.

10.

Project planning and related phases.

11.

Negotiation and conflict management during a project.

12.

Project implementation procedures.

13.

Project budgeting and cost estimating.

14.

Project scheduling and network techniques.

15.

Resource allocation, loading, and leveling.

16.

Project monitoring and information systems.

17.

Project control and related issues.

18.

Project termination and evaluation.

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt and ProjectManager:

Project Management Intro By Jennifer Witt, ProjectManagerVideos.
How To Write PM Charter By Jennifer Witt, ProjectManagerVideos.
Guide To Project Management By Jennifer Witt, ProjectManagerVideos.
How To Create Projects Using PM Software By ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

3. PROJECT AND CONTRACT DEFINITION AND PURPOSE

WHAT IS A PROJECT?

A Project is a time-limited and usually non-repetitive activity, which utilizes a variety of resources, such as human, material, and equipment, to accomplish specific goals in accordance with pre-determined objectives.

Certain projects are handled by people for their own purposes, while other projects are handled by Project Managers and Contractors for their clients as a part of their business. Projects are also supported by written or verbal agreements, or Contracts, between project managers or contractors and their clients.

WHAT IS A CONTRACT?

A Contract is a legal agreement which stipulates a broad range of duties and responsibilities of both parties to the contract and summarizes all related issues.

Contractors may also sub-contract a part of their contract with clients to Sub-Contractors, who are legally responsible to the main contractor for the completion of a particular task. This type of arrangement is quite popular in several industries, including the building trade and civil engineering industry. In this case there are two types of contracts outlined below.

TWO TYPES OF CONTRACTS

1.

A contract between the main contractor and the client.

2.

A contract between the main contractor and the sub-contractor.

Some examples of Special Projects and Contractors in the context of small business management are presented below.

EXAMPLES OF SPECIAL PROJECTS AND CONTRACTORS

Special Projects

Contractors

  • Advertising.
  • Actors and artists.
  • Architects and designers.
  • Film producers and writers.
  • Performing musicians.
  • Product and service designers.
  • Publishers.
  • Science researchers.
  • Software program developers.
  • Song writers.
  • Writers.
  • Air conditioning contractors.
  • Building contractors.
  • Carpenters.
  • Civil contractors.
  • Electrical contractors.
  • Framing contractors.
  • Masonry contractors.
  • Painting contractors.
  • Plumbing contractors.
  • Roofing contractors.
  • Swimming pool contractors.

Project Management has several applications in business outlined below.

PROJECT MANAGEMENT APPLICATIONS

1.

Individual project managers who are engaged in a project for themselves or their company.

2.

Project managers or project management companies which are engaged in a project for their clients.

3.

Contractors who are engaged in a project for their clients.

4.

Sub-contractors who are engaged in a project for clients through a main contractor.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt and ProjectManager:

Top Project Management Tools By Jennifer Witt, ProjectManagerVideos.
How To Communicate On Projects By Jennifer Witt, ProjectManagerVideos.
Avoiding Project Management Pitfalls By Jennifer Witt, ProjectManagerVideos.
Project Management And Planning By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

4. PROJECT LIFE CYCLE

PROJECT LIFE CYCLE

Any project has a distinctive life cycle, known as the Project Life Cycle, which relates to various phases of project development. A typical project life cycle comprises four phases illustrated below.

FOUR PHASES IN A PROJECT LIFE CYCLE

Phase 1: Project Conceptualization.

This phase represents the initial phase of the project. At this stage, managers are expected to determine whether the project is necessary. In addition, managers are also expected to determine preliminary project objectives and specify alternative  project approaches, and possible ways to accomplish these objectives.

Phase 2: Project Planning.

At this stage, managers are expected to formulate specific plans to accomplish the project's objectives. Project planning also entails scheduling of specific tasks and sub-tasks, preparing accurate cost estimates or budgets, and allocating available resources to meet the project's objectives.

Phase 3: Project Execution.

At this stage, managers are expected to carry out the actual work related to a specific project. Project execution entails cost-effective utilization of all related materials, human resources, and equipment, necessary for the completion of various tasks and sub-tasks related to the project. This stage also entails a thorough project control to ensure the progress of all stages according to a pre-determined project progress schedule.

Phase 4: Project Termination.

This phase represents the final stage of the project development and procurement. At this stage, all final activities must be completed in accordance with the pre-determined project progress schedule. This stage also entails releasing all material, human and other resources which were dedicated to the execution of the project. The project must be formally signed-off and transferred to the client, and all members engaged in that project must be reassigned to other duties.

A typical Project Life Cycle is illustrated below. This illustration also explains the relationship between Labor Costs and Time during all four phases of the project life cycle.

PROJECT LIFE CYCLE

 

ADDITIONAL INFORMATION ONLINE

Project Life Cycle By Graeme Cain, Ready2Train.
Project Management Life Cycle By James Clements.
Project Life Cycle By iZenBridge Consultancy Pvt Ltd.
Project Life Cycle And Organization By Karen Hughes, Project Management 101.

5. PROJECT SELECTION

PROJECT SELECTION

Project Selection represents the beginning of any project management process. During this stage, management must evaluate a broad range of aspects which may relate directly or indirectly to a particular pending project.

To ensure an effective project selection process, managers must adhere to the following Project Selection Criteria Factors outlined below. (38)

PROJECT SELECTION CRITERIA FACTORS

1.

The project should be realistic in terms of its overall purpose and specific objectives.

2.

The project should be realistic in terms of internal capabilities of the company regarding its financial, human, and material resources.

3.

The project should be realistic in terms of external environment surrounding the company, i.e. marketplace, competition, economic and political conditions.

4.

The project should be flexible in terms of the company's existing activities, priorities, and capabilities.

5.

The project should be based on KISS principles (Keep It Simple, Sir), ensuring its simple start, planning, execution, and completion, without getting involved in unnecessary complications.

6.

The project should include inexpensive cost gathering methods to ensure that the complete project is accomplished in a cost-effective manner. In today's environment, the project cost data gathering should be carried out by utilizing an appropriate software program.

A typical Project Selection Process necessitates management to consider a broad range of additional factors which may have consequences in all areas of the company's activities. These factors are summarized below.

ADDITIONAL PROJECT SELECTION FACTORS

1. General Management And Administrative Factors:

  • • Impact on the existing company's strategic and operational plans.
  • • Impact on information system and computer utilization.
  • • Reaction by other executives and shareholders in the company.
  • • Patents and trade secrets protection issues.

2. Human Resources Management Factors:

  • • Additional training requirements for managers.
  • • Additional labor skills and training requirements for workers.
  • • Availability of suitable employees for the project.
  • • Impact on the existing employees.
  • • Possible resistance to change and potential conflict among employees.
  • • Cost of additional training requirements.
  • • Possible need for outside consultants and related cost considerations.

3. Financial Management Factors:

  • • Impact on the existing cash flow and cash requirements.
  • • Long-term investment and commitment requirements.
  • • Need for additional capital equipment and payback evaluation.
  • • Impact on the future income, expenses and profitability.
  • • Possible financial risk and related issues.
  • • Impact on cash flow as a result of seasonal or cyclic business fluctuations.

4. Operations Management Factors:

  • • Impact on the existing operations schedules.
  • • Impact on the existing operational capacity and labor utilization.
  • • Impact on the existing operational facility.
  • • Impact on plant maintenance and labor safety considerations.
  • • Need for new technology and its potential cost.
  • • Need for new materials or components and their availability.
  • • Impact on the existing product or process quality.
  • • Impact on the existing productivity within the operational facility.
  • • Meeting government safety and environmental standards.

5. Marketing And Sales Management Factors:

  • • Impact on the existing marketing efforts by the company in the marketplace.
  • • Impact on the existing marketing budget.
  • • Impact on the existing position of the company in the marketplace.
  • • Impact on the existing customers.
  • • Potential increase of the existing customer base.
  • • Impact on the existing product or service line.
  • • Impact on the existing sales force.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt and ProjectManager:

How To Prevent Scope Creep By Jennifer Witt, ProjectManagerVideos.
Top Portfolio Management Tips By Jennifer Witt, ProjectManagerVideos.
How To Run Performance Review By Jennifer Witt, ProjectManagerVideos.
Top 10 Terms Project Managers Use By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

6. TWO MAIN PROJECT TYPES

PROJECT TYPES

Various Projects, which may be undertaken by management at any particular time, are classified into two basic types illustrated below.

TWO MAIN PROJECT TYPES

 

Operational Projects

These types of projects include such projects as a Sacred Cow, or a Pet Project, an Operational Need Project, or a Marketing Need Project.

 

Capital Expenditure Projects

These projects generally relate to capital equipment or major investment issues, and their selection is based on the economic viability of a specific project.

 

ADDITIONAL INFORMATION ONLINE

Capital Expenditures Vs. Operating Expenditures By Swagat, Soni Bros.
Capital And Operating Cost Implications By Mark Muter, JamCem Consulting.
7 Warning Cost Recovery Signs In Capital Projects By Bill Mansfield, Sirius Solutions.

7. AN OPERATIONAL PROJECT

Operational Projects may include several types outlined below.

OPERATIONAL PROJECTS

Type 1: A Sacred Cow Project.

Any project which may be initiated by one of the company's top executives is often tagged as a sacred cow project. This applies to companies in the US and other countries, in addition, of course, to India, where cows are really sacred. In the US, this type of project is also known as a "Pet Project".

Type 2: An Operational Need Project.

This type of project may be initiated as a result of a specific operational necessity by the company. For example, if a company wants to purchase a special plant, it may have to rebuild the foundation supports in the production facility to ensure sufficient floor strength, and provide additional utility lines.

Type 3: A Product Or Service Line Extension Project.

This type of project may be initiated by management in accordance with new marketing plans which call for additional products or services to be offered by the company. Product or service extension line projects may necessitate purchase of new plant and equipment, reorganization or rebuilding of the existing production facility, and provision of new utilities.

Type 4: A Marketing Need Project.

This type of project may be initiated by management in accordance with new marketing plans which recognize the need for additional marketing offerings by the company to ensure its long-term competitiveness in the marketplace. This type of a project may include a reorganization of the company, or acquisition and absorption of another company within the framework of the existing organization.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt and ProjectManager:

How To Manage Change By Devon Dean, ProjectManagerVideos.
How To Be A Great Leader By Jennifer Witt, ProjectManagerVideos.
How To Get Testing Done By Devon Dean, ProjectManagerVideos.
How To Manage Team Performance By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

8. A CAPITAL EXPENDITURE PROJECT

A CAPITAL EXPENDITURE PROJECT

A Capital Expenditure Project is based on financial considerations and economic viability of a particular project. This type of a project may be required for several reasons outlined below.

THE  PURPOSE OF A CAPITAL EXPENDITURE PROJECT

1.

Purchase of new capital assets, e.g. property, equipment, vehicles.

2.

Replacement of existing capital assets.

3.

Expansion of the current product and service range.

4.

Research and development of new products and services.

5.

Acquisition of an additional company.

All details related to a particular capital expenditure project must be summarized in a Capital Expenditure Request and supported by a detailed description pertaining to a particular long-term project, e.g. new product development, or acquisition of a new property. Additional details that should be included in this request are summarized below.

DETAILS RELATED TO A CAPITAL EXPENDITURE REQUEST

1.

Calculation of the capital cost of the project and determination of its operational life period, e.g. equipment replacement study.

2.

Calculation of additional working capital required by the new project and determination of possible operating savings.

3.

A forecast of additional cash flow, i.e. cash receipts and cash payments - not revenues and expenses - arising out of the new project.

4.

A forecast of tax liability arising from additional earnings and possible tax savings accruing from the above investment.

9. FINANCIAL EVALUATION OF PROJECTS

FINANCIAL EVALUATION

Whatever the purpose of the project is, its viability must be evaluated first. This may be accomplished by means of one of the three Financial Evaluation Methods outlined below.

THREE FINANCIAL EVALUATION METHODS

1. Accounting Rate Of Return.

Accounting Rate-Of-Return Method is a crude, but simple, approach for estimating the performance of capital investment. Because of its simplicity, this method is often used to obtain a preliminary indication of the viability of the proposed capital  expenditure. Accounting Rate Of Return can be determined as follows:

Accounting        Project's Average Annual
 Rate               =  After-Tax Net Income         
 Of Return           Average Investment Cost

2. Payback Period Method.

Payback Period Method is the second method for measuring the economic viability of a specific capital expenditure proposal. This method is concerned with measuring the period of time it will take to recover the capital investment from future cash inflows. The Payback Period can be determined as follows:

Payback  Period  = Total Investment Cost (In $)              
(In Years)               Average Annual Net Cash Inflow (In $)

3. Discounted Cash Flow Method.

The Discounted Cash Flow Method is the most accurate method for measuring the economic viability of a specific capital expenditure proposal. Instead of measuring the accounting rate of return or payback period on a particular investment, this method measures Present Cash Flow values generated from such an investment. This approach to capital investment analysis is termed the Present-Value Method and it has two basic variables:

  • • Annual interest rate or minimum desired rate of return.
  • • A period of time during which the cash flow is discounted.

All three Financial Evaluation Methods are explained in detail and illustrated by examples in Tutorial 3.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Ronald Moy:

Capital Budgeting - Relevant Cash Flows By Ronald Moy.
Capital Budgeting - Accounting Rate Of Return By Ronald Moy.
Capital Budgeting - Internal Rate Of Return By Ronald Moy.
Capital Budgeting - Modified Internal Rate Of Return By Ronald Moy.
Internal Rate Of Return For Mutually Exclusive Projects By Ronald Moy.

© 2014 Ronald Moy. All rights reserved.

10. RISK ANALYSIS

RISK ANALYSIS

Any Capital Intensive Decision-Making Process is associated with a degree of Risk regarding the final outcome of the project expressed in financial terms. This may relate to the purchase of a new computer, or long-term lease of an expensive plant. 

Hence, business owners and managers need to understand that capital investment decisions must accommodate the potential consequences associated with Investment Decisions Risk Variables. These variables are usually taken into account during a Risk Analysis Process.

The term "Risk Analysis" is generally credited to David Hertz, who identified a range of variables which must be taken into consideration during a capital investment decision-making process. Hertz also identified three different types of processes which are associated with a Capital Investment Decision-Making Analysis as illustrated below. (39)

THREE TYPES OF ANALYSIS ASSOCIATED WITH RISK ANALYSIS

   
Traditional
Financial Analysis
  Risk
Analysis
  Decision
Analysis

Traditional Financial Analysis Of A Capital Investment Proposal entails a number of steps illustrated below.

TRADITIONAL FINANCIAL ANALYSIS OF A CAPITAL INVESTMENT PROPOSAL

Step 1: Evaluate Relevant Capital Investment Information.

 

Prepare Financial Forecasts.

 

Collate Intangible Investment Factors.

 

Step 2: Determine The Rate Of Return On Proposed Capital Investment.

Step 3: Complete Management Review Of The Capital Investment.

Step 4: Make Final Capital Investment Decision.

 

Risk Analysis Of A Capital Investment Proposal also entails a number of steps illustrated below.

RISK ANALYSIS OF A CAPITAL INVESTMENT PROPOSAL

Step 1: Evaluate Relevant Capital Investment Information.

 

Evaluate Probability Distributions For Decision Variables.

 

Evaluate Intangible Investment Factors.

 

Step 2: Determine The Probable Rate Of Return On Proposed Capital Investment.

Step 3: Complete Management Review Of The Capital Investment.

Step 4: Make Final Capital Investment Decision.

 

Decision Analysis Of A Capital Investment Proposal also entails a number of steps illustrated below.

DECISION ANALYSIS OF A CAPITAL INVESTMENT PROPOSAL

Step 1: Evaluate Relevant Capital Investment Information.

   
Prepare Financial
Forecasts.
  Evaluate Probability Distributions For Decision Variables.   Evaluate Intangible Investment Factors.
   

Step 2: Determine The Probable Rate Of Return On Proposed Investment.

Step 3: Complete Management Review And Evaluate The Usefulness Of The Capital Investment.

Step 4: Make Final Capital Investment Decision.

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean, and ProjectManager:

How To Plot PM Risk By Devon Dean, ProjectManagerVideos.
Top 10 Reasons Projects Fail By Jennifer Witt, ProjectManagerVideos.
When Your Project Is In Trouble By Jennifer Witt, ProjectManagerVideos.
How To Manage High Risk Projects By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt, Devon Dean and ProjectManager.com. All rights reserved.

11. PROJECT MANAGER

PROJECT MANAGER

As mentioned earlier, one of the reasons why the Pyramids, the Coliseum, and the Acropolis exist today is probably because of the quality of project managers, employed on those jobs. 

In general terms, a Project Manager is the person who is in charge of a particular project’s execution. Since every project, even a small one, has certain elements of uniqueness, it is essential that the project manager possesses certain qualities. Some of the required Project Management Qualities are outlined below.

PROJECT MANAGEMENT QUALITIES

1.

Extensive project management experience in a specialized area.

2.

Overall technical experience in related areas.

3.

High degree of maturity.

4.

Willingness and ability to meet deadlines.

5.

Ability to motivate and lead employees.

6.

Ability to get along well with management.

7.

Ability to get along well with clients, if appropriate.

8.

Ability to communicate effectively with all related parties.

9.

Ability to work hard without counting hours.

10.

Ability to handle stressful situations without losing efficiency.

11.

Ability to be analytical, systematic, and goal-oriented.

12.

Ability to solve problems in a cost-efficient manner.

13.

Ability to break the project into smaller components, and handle each component separately.

Depending upon the specific nature of the company and its participation in a particular project, the project manager may get involved in a broad variety of Project Management Activities outlined below.

PROJECT MANAGEMENT ACTIVITIES

1.

Planning activities.

2.

Organizing activities.

3.

Leading activities.

4.

Controlling activities.

5.

Financial activities.

6.

Manufacturing activities.

7.

Engineering activities.

8.

Quality control activities.

9.

Project procurement activities.

It appears, therefore, that a Successful Project Manager must be a mature generalist and be able to "wear different hats" at different times to ensure successful initiation, planning, implementation, control, and completion of a project.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt and ProjectManager:

Good Vs. Bad Project Managers By Jennifer Witt, ProjectManagerVideos.
The Role Of The Project Manager By Jennifer Witt, ProjectManagerVideos.
Your First Step As A Project Manager By Jennifer Witt, ProjectManagerVideos.
Start Out Right As A Project Manager By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

12. PROJECT ORGANIZATION

PROJECT ORGANIZATION

The Project Organization in a small company depends primarily upon the specific nature and objectives of that company. There are several situations which may dictate different approaches to developing a suitable project organization as outlined below.

PROJECT ORGANIZATION - SITUATION 1

A company plans to undertake a particular project for its own specific needs on an irregular basis.

Example

1.

Small service company engaged in providing service to clients may need to purchase new capital equipment to broaden its range of services.

2.

Small wholesale or retail company engaged in selling goods to clients may need  to enlarge it operational facility.

3.

Small manufacturing company engaged in manufacture and sale of goods to clients may need to develop a new range of products.

 

PROJECT ORGANIZATIONAL OPTIONS

Since most small business organizations utilize a Functional Structure, which is described in detail in Tutorial 1, it will be most appropriate to select a project manager for a special one-time project from the existing management team. The project manager may be selected on the basis of his or her personal knowledge and experience in the specialized area related to the pending project. 

Subsequently, it will be up to the project manager to select additional project members from the existing pool of the company's employees, or to hire additional temporary people for the duration of the project, or to hire Independent Contractors. Once the project is completed, all company employees will return to their original positions, while all temporary employees and independent contractors will be paid in full for their services.

Larger companies often use a Matrix Structure for project management. This structure has specific advantages in the project management environment, as discussed in detail in Tutorial 1.

PROJECT ORGANIZATION - SITUATION 2

A company is engaged in project management on a continuous basis for other clients.

Example

1.

Small firm of architects provides architectural service to clients on a continuous basis.

2.

Small computer systems design and installation firm provides computer system design and installation on a continuous basis.

3.

Small general building contractor erects custom-build homes for clients on a continuous basis.

4.

Small air-conditioning contractor acts as a sub-contractor to several general building contractors and installs air-conditioning systems for their clients.

Some small companies, which specialize in providing services to clients on a project basis, may utilize a Functional Structure to accomplish their specific tasks. This type of structure is discussed in detail in Tutorial 1 and is illustrated below.

FUNCTIONAL STRUCTURE

President

General Administration Department

In charge of planning, organizing, leading, and controlling all operational activities

     
Vice President,
Projects:
Market-Type 1
 

Vice President,
Projects:
Market-Type 2

  Vice President,
Marketing
  Vice President,
Finance
In charge of all operational project activities: Market-Type 1 and in charge of all allocated employees.   In charge of operational project activities: Market-Type 2 and in charge of all allocated employees.   In charge of all overall marketing and sales management activities and allocated employees.   In charge of all overall financial management activities and allocated employees.
 

ADDITIONAL INFORMATION ONLINE

How To Run A Job Interview By Jennifer Witt, ProjectManagerVideos.
Top Project Management Tools By Jennifer Witt, ProjectManagerVideos.
Keep Everyone On The Same Page By Devon Dean, ProjectManagerVideos.
Improving Your PM Communication By Jennifer Witt, ProjectManagerVideos.
Tips For Developing A Work Breakdown Structure By Sarah Sabell And Michael Meere.

13. A PROJECT TEAM

A PROJECT TEAM

You may have a perfect project on a piece of paper, but it will not "fly" until a project team is put together. A Project Team is generally assembled by the project manager, and its main function is to implement all facets of the project design in reality.

An effective implementation of the project is based on the project organization, which has been discussed earlier. The main Principles Of A Project Organization which should be adhered to during the project development stage are summarized below.

A project team may include a different number of people, depending upon the specific nature and needs of a particular project and in accordance with the project organization.

MAIN PRINCIPLES OF A PROJECT ORGANIZATION

1.

The project's mission and purpose must be clearly defined.

2.

All relevant tasks and objectives must be clearly spelled out.

3.

All tasks must be sub-divided into smaller sub-tasks and arranged into small working groups.

4.

All tasks and sub-tasks must be evaluated and described in terms of employees, financial and operational requirements, possible conflicts, and problems.

5.

The implementation of all tasks and sub-tasks must be assigned to specific employees who will comprise the project team.

6.

The project organization must be completed to ensure the most cost-effective project execution.

 

POSSIBLE MEMBERS OF A PROJECT TEAM

1.

Contract Administrator.
The contract administrator is in charge of all administrative tasks related to a particular project.

2.

Project Engineer.
The project engineer is in charge of all engineering design and related tasks.

3.

Project Controller.
The project controller is in charge of all financial and budget control issues related to a particular project.

4.

Field Supervisor.
The field supervisor in charge of all field activities related to a particular project.

The summary of all tasks related to a particular project may be summarized in a Project Task Summary Schedule illustrated next.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean, and ProjectManager:

How To Build PM Teams By Devon Dean, ProjectManagerVideos.
How To Motivate Your PM Team By Jennifer Witt, ProjectManagerVideos.
How To Run Team Meeting By Jennifer Witt, ProjectManagerVideos.
How To Manage Remote Teams By Devon Dean, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt, Devon Dean and ProjectManager.com. All rights reserved.

14. SMALL BUSINESS EXAMPLE
 PROJECT TASK SUMMARY SCHEDULE

PROJECT TASK SUMMARY SCHEDULE

15. THE PROJECT PLANNING STAGES

PROJECT PLANNING

Project Planning represents a critical phase in the entire project management process. Project planning must be initiated and carried out by the project manager and it generally comprises of a number of stages outlined below. (40)

THE PROJECT PLANNING STAGES

Stage 1: Project Definition.

At this stage you must define the project's overall requirements through appropriate documentation.

Stage 2: Project Analysis.

At this stage you must define the project's functional specifications in details through appropriate documentation.

Stage 3: Project Design.

At this stage you must address all project requirements through relevant functional solutions which are consolidated into an overall project design.

Stage 4: Project Implementation.

At this stage you must implement all elements of the project in accordance with the pre-determined action schedule and based on the project design parameters.

Stage 5: Project Systems Testing.

At this stage you must separately test all elements of the project as a total unit in accordance with the project design parameters.

Stage 6: Project Acceptance.

At this stage you must complete the entire project and transfer the ownership to the client, who pays for the project.

Stage 7: Project Operation.

At this stage the client starts the usage of the project and identifies any latent defects which must be rectified by the contractor in accordance with the contract between both parties.

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean and ProjectManager:

5 Steps To Project Planning By Jennifer Witt, ProjectManagerVideos.
How To Get Things Done In PM By Jennifer Witt, ProjectManagerVideos.
Negotiating Rates With Suppliers By Devon Dean, ProjectManagerVideos.
Interview Tips For A Project Manager By Devon Dean, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt, Devon Dean and ProjectManager.com. All rights reserved.

16. ELEMENTS OF A PROJECT PLAN

PROJECT PLAN

Irrespective of the project type and its specific objectives, each Project Plan should include a number of elements outlined below. (41)

ELEMENTS OF A PROJECT PLAN

1.

Project Overview.
Prepare a brief summary of the project's scope, purpose, and objectives. This may also include a brief explanation about the project's objectives in terms of the overall company's objectives and provide major elements of the project's schedule.

2.

Project Objectives.
Summarize a detailed statement of the project's technical and financial objectives.

3.

Project General Details.
Prepare a detailed statement summarizing the managerial and technical aspects of the proposed project, including a possible use of sub-contractors.

4.

Project Contractual Details.
Prepare a detailed statement summarizing all reporting requirements related to the project, resources supplied by the client, liaison between the contractor and the client, project review and monitoring procedures, various management agreements with sub-contractors and suppliers, technical specifications of parts or components, delivery schedules, and project change-order and cancellation procedures.

5.

Project Performance Schedules.
Prepare a detailed statement summarizing all major dates related to the project progress schedule based on individual progress steps.

6.

Project Resources.
Prepare a detailed statement summarizing all relevant information related to various resources utilized during the project implementation stage. This may include an operating budget and capital expenditure budget related to the project.

7.

Project Team.
Prepare a detailed statement summarizing all relevant information related to employees, and possibly, independent contractors, which will be engaged during the project implementation and completion stages.

8.

Project Evaluation Methods.
Prepare a detailed statement summarizing all relevant information related to methods which will be used to evaluate the project in terms of its technical and financial performance and progress.

9.

Project Contingencies And Potential Problems.
Prepare a detailed statement summarizing all relevant information related to potential problems during the project implementation and completion stages. It may also include a list of contingencies which must be provided for the project completion purposes.

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean, and ProjectManager:

Top Deliverables In PM By Jennifer Witt, ProjectManagerVideos.
How To Kick Off Your Project By Devin Dean, ProjectManagerVideos.
How To Manage Your Priorities By Jennifer Witt, ProjectManagerVideos.
Typical Phases In Project Management By Devon Dean, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt, Devon Dean and ProjectManager.com. All rights reserved.

17. SYSTEMS INTEGRATION AND ACTION PLANNING

 SYSTEMS INTEGRATION

Systems Integration, which is sometimes called Systems Engineering, plays a crucial role during the entire project implementation process.

Irrespective of the nature of the project, the systems integration is concerned with three main objectives illustrated below. (42)

THREE MAIN OBJECTIVES OF A SYSTEM INTEGRATION

   

System 
Performance

 

System 
Effectiveness

 

System 
Cost

System performance relates to system design, reliability and quality of its components, degree of required maintenance and flexibility of its components
in terms of possible need for change (change orders).
  System effectiveness relates to the design of its individual components, with an objective to achieve maximum cost-effectiveness during the entire project implementation.   System cost includes a broad range of costs related to the design of the system and its components, production costs, quality control and other relevant costs.
 

PROJECT PLANNING

Once all elements of the project are integrated into one system, the actual Project Planning may begin. The project planning process must summarize four essential elements illustrated next.

All relevant elements of the project planning may be conveniently summarized in a Project Plan Of Action Report outlined below.

FOUR ELEMENTS IN THE PROJECT PLANNING PROCESS

1.

A range of related activities.

2.

Projected start and completion dates.

3.

Assigned responsibility.

4.

Work center allocation.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt and ProjectManager:

How To Manage Project Issues By Jennifer Witt, ProjectManagerVideos.
How To Manage Project Finances By Jennifer Witt, ProjectManagerVideos.
How To Manage Multiple Projects By Jennifer Witt, ProjectManagerVideos.
Managing Small Vs. Large Projects By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

18. SMALL BUSINESS EXAMPLE
 PROJECT PLAN OF ACTION REPORT

PROJECT PLAN OF ACTION REPORT

19. PROJECT BUDGETING

PROJECT BUDGETING

In accounting terms, a Budget is defined as: "A comprehensive quantitative plan for utilizing the resources of the organization within a specified period of time".

Project Budgeting, therefore, represents a comprehensive quantitative plan for utilizing the company's resources to accomplish specific project objectives within a pre-determined period of time. 

Preparation of budgets entails a number of decisions related to the following elements outlined below.

DECISIONS DURING THE PROJECT BUDGETING STAGE

1.

What are the specific project objectives?

2.

What project activities are required to fulfill specific project objectives?

3.

Which facilities will be required in carrying out project activities?

4.

What is the cost of facilities required in carrying out project activities?

The Project Budgeting Process has several important advantages, as outlined below.

ADVANTAGES OF A PROJECT BUDGETING PROCESS

1.

Management ideas related to a specific project can be converted into tangible objectives and formal plans.

2.

Objectives and plans can be communicated throughout the project team.

3.

Project operational plans can be implemented efficiently to achieve overall organizational objectives.

4.

Coordination of operational activities within the project team can be improved.

5.

Effective project management control is facilitated.

A Project Budgeting Procedure in a small company may entail a simple summary of all cost elements related to a particular project, as outlined next. These cost elements should be summarized in a Project Budgeting Report which is illustrated below.

ELEMENTS OF A PROJECT BUDGETING PROCEDURE

1.

Estimated quantity, unit cost, and total cost of all materials, components, parts, equipment, and tools which are planned to be used during a specific project.

2.

Estimated number of man-hours of hourly paid labor and estimated cost of management employees, based on a company's overhead recovery rates.

3.

Estimated quantity, unit and total cost of all sub-contracting services which are planned to be used during a specific project.

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean, and ProjectManager:

How To Use PM Software By Jennifer Witt, ProjectManagerVideos.
Project Management Budgets By Devon Dean, ProjectManagerVideos.
PM And Keeping Project Under Budget By Devon Dean, ProjectManagerVideos.
How To Deliver A Great Presentation By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt, Devon Dean, and ProjectManager.com. All rights reserved.

20. SMALL BUSINESS EXAMPLE
 PROJECT BUDGETING REPORT

PROJECT BUDGETING REPORT

21. PROJECT SCHEDULING

PROJECT SCHEDULING

A Project Schedule represents a detailed timetable developed in accordance with the basic project tasks and time parameters. It is essential, therefore, to identify and summarize all major elements of the Project Activities and allocate specific dates for the start and completion of each task. 

Not all activities must be scheduled with the same degree of details. However, all important Project Tasks should be scheduled with a reasonably high degree of accuracy to ensure a realistic overall project schedule.

The Project Scheduling Process is based on a Network Approach, and it uses a network of activities related to a particular project. The network approach represents a useful tool for project planning and controlling purposes, and offers several advantages outlined below. (43)

ADVANTAGES OF PROJECT SCHEDULING

1.

Provides a detailed framework for project planning, scheduling, monitoring, and controlling.

2.

Provides a better understanding regarding the interrelationship between various elements in a project.

3.

Provides specific time parameters regarding the start and completion dates for various tasks in a project to ensure that the project will remain on schedule.

4.

Provides guidance to various project team members regarding their specific time allocation in a project.

5.

Provides an improved basis for communication between project team members.

6.

Identifies specific critical activities during the project which must be addressed with particular care, because their delay may cause substantial problems for the entire project.

7.

Identifies specific project tasks which must be coordinated to ensure that the project will remain on schedule, and that there are no conflicts of resources or timing problems.

8.

Helps to avoid potential problems and minimize conflicts between various members of the project team by providing specific guidance for implementation of various activities, and showing task interrelationships.

There are several practical methods frequently used by project managers for Project Scheduling purposes as illustrated next. Each of the above project scheduling methods will be explained below.

THREE MAIN METHODS OF PROJECT SCHEDULING

   

Gantt
Chart

 

Program Evaluation And Review Technique (PERT)

 

Critical Path
Method (CPM)

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean, and ProjectManager:

Accelerating PM Success By Jennifer Witt, ProjectManagerVideos.
How To Meet PM Targets By Devon Dean, ProjectManagerVideos.
How To Prevent PM Failure By Devon Dean, ProjectManagerVideos.
How To Control Scope Changes In PM By Devon Dean, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt, Devon Dean, and ProjectManager.com. All rights reserved.

22. GANTT CHART

GANTT CHART

The Gantt Chart was developed by one of the management pioneers, Henry L. Gantt in the beginning of the 20th century and it represents a practical tool for project planning and control. 

A simplified example of the Gantt Chart is illustrated below. This example is based on a project which may be familiar to you - a Preparation For A Wedding (this is not your typical small business, although for some it is actually a big business).

ADDITIONAL INFORMATION ONLINE

Gantt Chart Excel Demo By Chris Croft.
Create A Basic Gantt Chart In Excel By Doug H.
Chartgantt Ultimate 3-0 With reporting By Marcus Tarrant.
How To Create A Basic Gantt Chart In Excel 2010 By Eugene O'Loughlin.
Developing A Basic Gantt Chart/Bar Chart By Project Management Tutorials.

23. SMALL BUSINESS EXAMPLE
 GANTT CHART

 GANTT CHART

24. TOOLS FOR PROJECT SCHEDULING

PROJECT SCHEDULING TECHNIQUES

Two important Project Scheduling Techniques were developed independently in the late 1950's with a purpose of providing a tool for planning and control of larger projects. Both techniques are illustrated below. (44)

TWO IMPORTANT TOOLS FOR PROJECT SCHEDULING

 

Program Evaluation And
Review Technique (PERT)

PERT was developed as a result of a joint effort between Lockheed Aircraft,
The US Navy Special Projects
and the consulting firm of Booz, Allen & Hamilton.

 

Critical Path
Method(CPM)

CPM was developed by James E. Kelley Jr of Remington Rand Corporation and Morgan R. Walker of Du Pont Corporation.

Both, PERT and CPM, provide project managers with the following important advantages of project planning and control, as outlined below.

ADVANTAGES OF PERT AND CPM

1.

A graphical presentation of project activities.

2.

An estimate of the project duration period.

3.

An indication of all critical activities of the project.

4.

An indication of additional time which may be taken on specific tasks without causing project delay.

 

ADDITIONAL INFORMATION ONLINE

PERT CPM Part 1 By Romriodemarco.
PERT CPM Part 2 By Romriodemarco.
PERT CPM Part 3 By Romriodemarco.
PERT CPM Part 4 By Romriodemarco.
CPM And PERT By Pamela Zelbst, Sam Huston State University TV.

25. PROGRAM EVALUATION AND REVIEW TECHNIQUE

PROGRAM EVALUATION AND REVIEW TECHNIQUE

One of the main features of the Program Evaluation And Review Technique (PERT) and related techniques, is their use of Network Diagram, or Precedence Diagram. 

A network diagram shows projected activities in a sequence by using Arrows and Nodes. There are Two Rules, or Conventions, of presenting PERT Diagrams as outlined below.

TWO RULES OR CONVENTIONS OF PRESENTING PERT DIAGRAMS

1.

According to A-O-A Rules (Activity-On-Arrow), the arrow represents an activity.

2.

According to A-O-N Rules (Activity-On-Node), the node represents an activity.

Several new concepts have been introduced with the development of the PERT Network Rules. Some of these terms are summarized below.(45)

CONCEPTS RELATED TO PERT NETWORK RULES

Concept

Explanation

Activity-On-Arrow

Network diagram rules in which arrows designate activities.

Activity-On-Node

Network diagram rules in which nodes designate activities.

Activities

Project steps that use resources and/or time.

Events

The starting and finishing of activities, designated by nodes according to A-O-A Rules.

Path

A sequence of activities that leads from starting node to the finishing node.

Critical Path

The longest path which determines expected duration of a project.

Critical Activities

Activities on the critical path.

Slack

Allowable slippage for a path; the difference between the length of a path and the length of the critical path.

 

PERT NETWORK RULES

A typical illustration of the procedures related to PERT Network Rules (Conventions) is summarized below. This illustration provides some basic elements of the network graphical presentation through a Precedence Diagram. One of the main features of this diagram is that it shows which activities must be performed in sequence, i.e. which activities must precede other activities in order to complete the whole project. (46)

PROCEDURES RELATED TO PERT NETWORK RULES
(BASED ON A-O-A RULES)

Explanation
Of Activities
(Example)

The Network
Graphical Presentation

Activity "a" must be completed before activity "b" can begin, and activity "b" must be completed before activity "c" can begin.

Both, activity "a" and activity "b" must be completed before activity "c" can begin.

Activity "a" must be completed before both activities "b" and "c" can begin.

Both activities "a" and "b" must be completed before activities "c" and "d" can begin.

When two activities, "a" and "b", have the same beginning and ending
nodes, a dummy node and activity are used to preserve the separate identity of each activity. Both activities "a" and "b" must precede activity "c".

Note: 
A dummy activity has a zero time value

Activities "a" and "b" must precede activity "c". However, activity "d" can start only when activity "b" is completed, irrespective of activity "a". Hence there is a dummy activity between two nodes. (dotted line).

For reference purposes all nodes are numbered from left to right.

Starting and ending arrows are sometimes used to clarify the beginning and the end  of a particular network.

26. SMALL BUSINESS EXAMPLE  
PERT NETWORK DIAGRAM AND ANALYSIS

PERT NETWORK DIAGRAM AND ANALYSIS

A typical example of a simple PERT Network Diagram is illustrated below. This example illustrates the sequence of several activities, which were presented earlier in the Gantt Chart example.

A PERT Diagram may also provide estimated time information related to a particular project. In this case the PERT diagram summarizes all time estimates related to the above example as summarized below.

 PERT DIAGRAM - TIME ESTIMATE SUMMARY

1.

Select a wedding reception hall - 4 weeks (between week No.1 and week No. 5).

2.

Make honeymoon preparations - 12 weeks (between week No.1 and week No.13).

3.

Invite guests  -  4 weeks (between week No. 5 and week No. 9)

4.

Order catering  -  4 weeks (between week No. 9 and week No.13)

5.

Arrange music  -  2 weeks (between week No. 9 and week No.11)

6.

Order flowers  -  2 weeks (between week No.11 and week No.13)

7.

Get married and go on the honeymoon  -  4 weeks (between week No.13 and week No.17)

A PERT Diagram also helps to determine the following elements of a project outlined below.

ELEMENTS OF A PERT DIAGRAM

• The Path Length, Or Path Period, Of Each Path.

As shown in the table below, all path lengths are: 16 weeks.

• The Critical Path.

The longest path also represents critical path. In the example below all three paths are critical since they all equal the longest period of 16 weeks.

• The Expected Length Of The Project.

The expected length of the project is equal to the length of the critical path, i.e. 16 weeks.

• Amount Of Slack Time For Each Path.

The slack period for each path may be determined by subtracting the actual length of that path from the critical path period as shown in the table below. The slack period in this example is zero, since all three paths equal the critical path period of 16 weeks.

Finally, the PERT Diagram helps to summarize the Path Period and the Slack Period related to the specific project as presented below.

Path

Path Period (Weeks)

Slack Period (Weeks)

1 -  3 - 6

12 + 4 = 16

16 - 16 = 0

1 - 2 - 4 - 3 - 6

4 + 4 + 4 + 4 = 16

16 - 16 = 0

1 - 2 - 4 - 5 - 3 - 6

4 + 4 + 2 + 2 + 4 = 16

16 - 16 = 0

27. THE CRITICAL PATH METHOD

THE CRITICAL PATH METHOD

The Critical Path Method (CPM) also provides a detailed graphical representation of tasks to be performed during a specific project. The essential technique for using CPM is to construct a model of the project that includes the following:

1. A list of all activities required to complete the project (also known as Work Breakdown
    Structure
).
2. The time (duration) that each activity will take to completion.
3. The dependencies between the activities.

Using these values, CPM calculates the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are "critical" (i.e., on the longest path) and which have "total float" (i.e., can be delayed without making the project longer).

WHAT IS A CRITICAL PATH?

In project management, a Critical Path is the sequence of project network activities which add up to the longest overall duration. This determines the shortest time possible to complete the project. Any delay of an activity on the critical path directly impacts the planned project completion date (i.e. there is no float on the critical path). A project can have several, parallel, near critical paths. An additional parallel path through the network with the total duration shorter than the critical path is called a Sub-Critical or Non-Critical Path.

These results allow managers to prioritize activities for the effective management of project completion, and to shorten the planned critical path of a project by pruning critical path activities, by "fast tracking" (i.e., performing more activities in parallel), and/or by "crashing the critical path" (i.e., shortening the durations of critical path activities by adding resources).

Since project schedules change on a regular basis, CPM allows continuous monitoring of the schedule, allows the project manager to track the critical activities, and alerts the project manager to the possibility that non-critical activities may be delayed beyond their total float, thus creating a new critical path and delaying project completion. In addition, the method can easily incorporate the concepts of stochastic predictions using the Program Evaluation and Review Technique (PERT) and event chain methodology.

An example of the CPM Method, described below, relates to development and launch of a new product.

 

ADDITIONAL INFORMATION ONLINE

Critical Path Analysis By Magic Monk Tutorials.
Critical Path Method (CPM) By Shohreh Ghorbani.
Critical Path Method By iZenBridge Consultancy Pvt Ltd.
How To Perform Critical Path Method By OffPeakTraining.
Learn PMP Critical Path Method In 17 Minutes Flat By David Litten.

28. SMALL BUSINESS EXAMPLE  
THE CRITICAL PATH METHOD

THE CRITICAL PATH METHOD

29. ADVANTAGES OF NETWORK SCHEDULING

Some of the advantages of Network Scheduling are summarized below. (47)

ADVANTAGES OF NETWORK SCHEDULING

1.

CPM helps to plan all elements of a project so that all stages of the project and their intended order of accomplishment are known in advance.

2.

CPM helps to provide a fairly accurate estimate of the length of time it will take to complete each stage of the project and all activities that must be kept on time to meet the overall project schedule.

3.

CPM helps to provide a graphic presentation of each stage of the project and explain this sequence to all employees engaged in the project.

4.

CPM helps to provide a means of tracking progress of each stage of the project, i.e. show where the work is with respect to the plan.

5.

CPM helps to identify and focus attention on potentially troublesome activities to facilitate timely management action.

6.

CPM helps to provide a means of estimating the time and cost impact of changes to the project plan at any stage.

7.

CPM helps to provide an improved level of communication among employees and sub-contractors engaged  in all stages of the project implementation.

 

PROJECT MANAGEMENT SOFTWARE PROGRAMS

Effective use of both methods has recently been popularized by several computer programs. As mentioned earlier, such programs include:

Microsoft Project 2013
Clarizen
Genius Project
AtTask
Project Insight
Project Manager

These programs are particularly useful for larger projects where a substantial amount of information must be scheduled, controlled, and revised during a long period of time.

ADDITIONAL INFORMATION ONLINE

Microsoft Project 2013 Tutorial - The Workspace By Simon Sez.
Microsoft Project 2013 Training - Leveling Part 1 By Simon Sez.
Microsoft Project 2013 Training - Leveling Part 2 By Simon Zez.
Best Project Management Software, Templates And Tools By Dan Dwor.

30. PROJECT MONITORING AND CONTROL

PROJECT MONITORING AND CONTROL

Project Monitoring And Control represents another critical function of a project manager. This function relates to a continuous process of monitoring and checking the performance of all project activities and costs, comparing same with the planned performance parameters and budgets, and taking corrective action whenever necessary.

Some basic questions which relate to project monitoring and control are outlined below.

PROJECT MONITORING AND CONTROL QUESTIONS

1.

Is a particular task clearly defined?

2.

Who is responsible for accomplishing a specific task?

3.

Was the task completed on time?

4.

Were there any deviations between planned and actual results?

5.

What corrective action needs to be taken to eliminate the deviation and rectify the results?

Controlling Procedures and methods are similar in their application for all operational activities within the organization and include four basic steps outlined below.

PROJECT MONITORING AND CONTROL

Step 1: Establish The Required Standards And Methods For Measuring Performance.

Step 2: Measure The Actual Performance.

Step 3: Compare The Actual Performance With The Required Standards And Measure The Variance.

Step 4: Take Corrective Action If There Is Variance And Repeat The Process (Absence of variance means that the performance is acceptable).

Note: 

Variance is the difference between what was planned and what was achieved.

Monitoring of project activities is very important in any organization, since most projects are known to slowly fall behind in schedule if left unchecked. The monitoring of project activities may be summarized in a Project Monitoring And Control Report illustrated below.

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Jennifer Witt, Devon Dean, and ProjectManager:

How To Monitor And Control Projects By Devon Dean, ProjectManagerVideos.
Managing Tasks And Giving Feedback By Jennifer Witt, ProjectManagerVideos.
Getting The Most From Contractors By Jennifer Witt, ProjectManagerVideos.
How To Manage Your Manager By Jennifer Witt, ProjectManagerVideos.
How To Manage Your Tasks By Jennifer Witt, ProjectManagerVideos.

© 2012 - 2013 Jennifer Witt and ProjectManager.com. All rights reserved.

31. SMALL BUSINESS EXAMPLE
 PROJECT MONITORING AND CONTROL REPORT

PROJECT MONITORING AND CONTROL REPORT

32. PROJECT COST CONTROL

PROJECT COST CONTROL

Another measure of Project Control is provided by comparing budgeted costs and actual costs related to all elements of the project activities. 

Project Budgeting
, discussed earlier, provides an important basis for control, whereby estimated values of material, labor, equipment, tooling, and sub-contracting costs are compared with the actual corresponding expenditures to determine individual variances.

Since the comparison between Actual And Budgeted Costs takes place after the costs have been incurred, this type of control is known as Feedback Control, or after-the-fact control, as discussed in detail in Tutorial 1.

The control of project expenditures usually is carried out through management accounting reports, such as a Project Cost Control Report, illustrated below.

ADDITIONAL INFORMATION ONLINE

Control Cost By Timothy S. Bergmann, True Solutions Inc.
Project Cost Control By Carolyn J. Chasteen, SBS Group USA.
How To Track Expenses By Jennifer Witt, ProjectManagerVideos.
How To Manage Costs With PM Software By ProjectManagerVideos.
Best Practices In Project Cost Control By David Dalton, SBS Group USA.

33. SMALL BUSINESS EXAMPLE
 PROJECT COST CONTROL REPORT

PROJECT COST CONTROL REPORT

34. CONFLICT MANAGEMENT DURING A PROJECT IMPLEMENTATION

POTENTIAL PROBLEMS DURING A PROJECT IMPLEMENTATION

The project manager should always keep in mind that potential Problems and Conflicts between some project team members may develop during various stages of the project implementation. Such problems and conflicts may include a number of issues outlined below. (48)

CONFLICT MANAGEMENT DURING A PROJECT

Project
Life Cycle Phase

Source
Of
Conflict

Recommendations

Project Formation
Phase

Work
Priorities

  • • Formulate clearly defined plans based on joint decision-making   and/or consultation with related parties.
  • • Emphasize the importance of the project in terms of overall   company objectives.

Operational
Procedures

  • • Develop detailed administrative and operational procedures for   project implementation.
  • • Secure approval and support from key members of the project   team.

Work
Schedules

  • • Secure commitment by key members of the project team to   project implementation schedules before the project   commencement.
  • • Forecast other company's priorities and their effect on the   project.

Project
Buildup Phase

Work
Priorities

  • • Conduct regular status review meetings and provide  an   effective feedback to support areas of forecasted project plans   and needs.

Operational
Procedures

  • • Prepare contingency plans for all key project issues and involve   the entire team in the project implementation.

Work Schedules

  • • Schedule work breakdown or sub-tasks in cooperation with   relevant project team members.

Project Work Program

Work
Progress

  • • Monitor work progress on a continuous basis.
  • • Communicate results to relevant parties.
  • • Forecast problems and develop alternatives.
  • • Identify potential problem areas which may need closer   supervision.

Technical

  • • Ensure timely identification and resolution of technical
      problems.
  • • Communicate work schedules and budget limitations to
      technical personnel.
  • • Emphasize early and adequate technical testing.
  • • Facilitate early agreement on final designs.

Employees

  • • Forecast and communicate employee requirements in advance.
  • • Establish employee requirements and priorities with functional   and staff project team members.

Project Phase Out

Work
Schedules

  • • Ensure close schedule monitoring during the project life cycle.
  • • Consider reallocation of available employees to critical project   areas which might be behind schedule.
  • • Attain prompt resolution of technical issues which may affect   project schedules.

Employees

  • • Develop plans for reallocation of employees upon project   completion.
  • • Maintain harmonious working relationships with all members of   the project team.
  • • Minimize the negative effect of stress during the project   execution and completion phases.
 

ADDITIONAL INFORMATION ONLINE

Managing Conflict In The Workplace By CRM Learning, L.P.
PMP Conflict Management By iZenBridge Consultancy Pvt Ltd.
How To Resolve Conflicts By Edward Nelson, FacilitatingChange.
Get Comfortable With Team Conflict By Mark De Rond, Harvard Business Review.

35. NEGOTIATION TECHNIQUES FOR RESOLVING CONFLICTS

DO YOU KNOW HOW TO RESOLVE CONFLICTS?

There are several guidelines designed to resolve disagreements and conflict in the workplace. These guidelines, known as Negotiation Techniques, which may apply to various conflict situations during a project implementation process. Typical negotiation techniques for resolving conflicts include four points summarized below. (49).

NEGOTIATION TECHNIQUES FOR RESOLVING CONFLICTS

1. Separate Between People And Problems.

Any potential conflict may trigger emotional actions and reactions from all sides. It is essential to separate those emotions and personalities involved in the conflict and focus on the matters at hand. This will help to minimize the negative consequences of the conflict, allow both parties to bridge the differences, and move forward in an orderly fashion.

2. Focus On Interests Instead Of Positions.

Most people often act from the strength of their positions during a possible disagreement or conflict. It is essential to avoid this and to act in the interests of a specific organization. A project manager, for example, instead of demanding action based on his managerial position, should request action from the project team members based on the interests of the project's successful implementation.

3. Develop Mutually Beneficial Options Before Trying To Reach Agreement.

Most parties to any conflict tend to "stick to their guns", i.e. positions and expectations, and exhibit inflexible behavior. It is essential, instead, to ensure that all sides to the disagreement or conflict are willing to be flexibility and try to reach a compromise based on mutually beneficial terms and conditions by creating a "win-win" situation.

4. Use Objective Criteria To Resolve Disagreements.

Many parties to a conflict tend to demonstrate an inflexible approach in terms of their own subjective criteria applied to a particular conflict issue. Instead, it is essential to base any possible conflict resolution process on objective criteria which will be generally acceptable by professional people and organizations.

 

USEFUL INFORMATION ONLINE

Additional information about various aspects related to Project And Contract Management online:

Project Management Institute.
National Contract Management Association.
International Association Of Contract And Commercial Managers.
 

ADDITIONAL INFORMATION ONLINE

TED Conflict Negotiation By William Uri, Mukul Chaudrhri.
Negotiating For Sustainable Agreements By William Ury, UCTV.
Negotiation Tips To Resolve Conflicts By Greg Williams, The Master Negotiator.
Negotiating: Getting What You Want By Margater Neale, Stanford Business School.

36. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

37. THE LATEST INFORMATION ONLINE

 

LESSON FOR TODAY:
How Does A Project Get To Be A Year Behind Schedule?
One Day At A Time!

Fred Brooks, Chief Designer, IBM

Go To The Next Open Check Point In This Promotion Program Online.