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8/4/2019 Justification for PM1
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An Integrated ProjectManagement System -
Owner/Client Wealth
Maximization Focus
FEASIBILITY
RESEARCH Market analysis
Market priceSelling priceMarket growth rate
Etc.
Financial/Investment analysis
Economic analysisMicroMacro
Technical analysis
Legal analysis
Social analysis
Labor analysis
Environmental &
Responsibility analysis
Et c.
RESEARCH, ACCUMULATION AND ANALYSIS OFINFORMATION:
1. RISK/RETURN ANALYSIS ( Project & Role Players)
Risk averter
Risk neutral
Ris k t aker
2. INVESTMENT TRADE-OFF ANALYSIS
3. FINANCING/INVESTMENT REQUIREMENTS
Debt/Equity ratios
Liquidity/Solvency ratios
Ownership forms
Tax strategies.
4. OTHER MONEY MANAGEMENT ISSUES
5. COMPREHENSIVE MANAGEMENT ANALYSIS
6. ETCETERA
Benchmarks
AN INTEGRATED PROJECT MANAGEMENT SYSTEM OWNER/CLIENT PERSPECTIVE- by MJF Kster
(AN INTERACTIVE PROCESS)
Project Managerand Consultant
Team
START
PM Team
DETAILED FORMULATION (REVISITING CERTAIN
EARLIER CRITERIA)
Client/Investor/Financiers real requirements
SWOT Analysis
Prioritizing and ranking of: Goals/Objectives/Needs/Wants
Revisiting Vision/Mission Statements
Strengths/Weaknesses (SWOT analysis)
Risk/Return preferences &Utility
Tax strategies
Value system, chemistry analysis & client DNA analysis E tc .
DEPARTMENTS
LINEAR RESPONSIBILITY
CHART (LRC)
X Y Z
A
B
A
B
C
A
B
ORGANIZATIONAL STRUCTURE
Standards
Industry Norms
Feasibility
study
Feasible?
Budget/Cost
expenditure plan
Formal
WBS
Capital budget
Operational budget
Life-cycle
benefit/cost analysis
Value management
Expenditure-plan-of-
action
HOWMUCH
$?
Minorchangesmight be
introduced
Blueprinting of
Client
WBS
Client
CLIENT
BRIEF
PRIMARY OBJECTIVE
Wealth Maximization
$$$$$$
NO
YES
Etc.
Constructability analysis
Required TOMS
Required Specs.
Rough WBS
Revisited Scope Def.
Revisited SOW
PRELIMANIRY
(EARLY)
STATEMENTS
AND INTENTS Statement of Work
(SOW)
Goals/Objectives
Vision/Mission
Scope definition
Very rough WBS (if
needed)
Design/Engineering Consulting
team
PROBABILITY
100
80
60
40
20
$2000 $3000
UTILITY
8
TQMS
WBS
?
VISUALIZING/CONTEMPLATING
Project Idea/Concept/Brainwave
Need/Want/Desire/Requirement(s)
Expansion/Market gap/Market niche
New product/Patent, Etc.
Take-over/Merger/Swopetc.
O ther
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10 20 30 40(Major Component
Level)
11
12
21
22
13
31
32
41
42
43
44
(Task
Level)
Detailed SOW
Detailed plans& Specs
Design/EngineeringConsultants
Etc.
Work Packages
Networks
Time/Cost/
Performance
SCHEDULING
Gantt Charts
PERT
CPM
Etc .
Schedule N
Schedule 2
Master Schedule
Estimates
Other
Manpower
Contractors
& Subcontractors
THE
CONSTRUCTION
PROCESS
Debugging
Pre-Planned
Termination
Control and
Payment Certificates
Interpretation
Terminate
Flow Chart
10
20
30
11
12
13
21
22
31
32
A B A B
ORG
WBS
X Y
Linear ResponsibilityChart
WBS
On Time
Within budget
Within
Performance
Expectations
(TOMS)
Benchmarks.
Standards
Industry norms
Material
Budget update
Project ChangeManagement(Control)
Formatting
Go to clients
databank at
Start - Save
for future
planning
purposes
Control
Progress
payments
Final
account
The
How
?
Project
Plan
Evaluation
Consultants
Bid
evaluation
Negotiations
Adjustments
Bid
acceptance
Asking for
Bids
Claims
settlement
Operation
Post Mortem
analysisStart-up
Networks
BUDGETING AND CONTROL
Time
$
Time
$
S F
S F
What is
A Project
andwhat represents
Project Management?
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Etymological derivation of certain terminology
1. Lecture Objectives and Learning Outcomes
To define projects and project management (P.M)
To analyze their uniqueness
Identify the differences between P.M. and continuousoperations
To truly understand the crux of basic P.M. and projects
per SE
2. Etymological Derivation
The Latin Proicio and Inceptium
to throw or cast forward
The Latin Manus and Manu Pularo to physically do or do by hand
Summary:
Something physically to happen in the future!
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3. What is a project?
A project generally exhibits most of the following conditions:
A project is homogeneous
A project is finite
Usually complex
It is unique
Non-repetitive
Requires multiple resourcesfrom a finite resource pool It is the contraor 180 opposite of a continuing
operation
A group of tasks (activities) performed within adefinable time period (schedule) in order to meet a
specific set of goals/objectives (performance) within abudget (cost plan)
4. The So-called P.M. Triangle
TIM
ECO
ST
PERFORMANCEincluding QUALITY
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5. P.M.Contrasted with a continuous operation
(say a production line)
PROJECTS VERSUS OPERATIONS
PROJECTS OPERATIONS(CONTINUOUS SYSTEMS)
Unique Repetitive Finite Eternal (ongoing)
Revolutionary change Evolutionary change
Uncertainty
Steady state
(a project)
Virgin ideaUncertainty
Contractor Client/Design
TeamWorkers Management
Uncertainty
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PROJECTS VERSUS OPERATIONS (continued)
PROJECTS OPERATIONS(CONTINUOUS SYSTEMS)
Unbalanced forces (objectives Quasi-balanced forces indisequilibrium) (objectives more or less in
equilibrium)
Transient resources Stable resources
Success highly visible Success less visible
Tasks are newly formulated Tasks well defined (standardtask)
Emphasis more on effectiveness Emphasis more on efficiency
Uncertainty Certainty More or less certainenvironment
Generally more emphasis on Generally more emphasis on
goals roles
6. Self-test Questions
6.2 Please define a project in your own words
6.1 Please identify a list of projects you have been involvedwith (or which you can envisage)
6.3 What other quantitative (excluding quality) as well as
qualitative dimensions (criteria) could be included in theterm performance (third leg of the P.M. triangle) ?
6.4 What do you think is easier to manage:
a major project
a large production line? (Please give reasons anddiscuss)
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BASICVERY
PROJECTMANAGEMENT
INTEGRATED
MODEL
Start
Rough(Pre-liminary
StatementOf Work)
Owner/client
ProjectManager and
ConsultantTeam
Idea
Creation/
Identification
needwantfacility expansionnew productmarket niche/gapbrain wave/patentmerger/take overby default/courtetc.
goalsobjectivesvisionmissionSWOT [SOW]
Rough ScopeDefinition
specs
rough schedule
rough budget
norms/standards/benchmarks
FeasibleOK?
FeasibilityAnalysis
N
Final SOWandScope Definition
yes
Work
BreakdownStructure
CEO
Organizational Structure
etc
XY
Z
LinearResponsibility
Chart (LRC)
ResourcePool
(7 Ms)
Work Packages
Network Schedules
S F
Materials and
Resource Lists
(Requirements)
Bidding/Tendering/
Negotiation andAcceptance
Construction
Measurement
and Control
including
Progress
Payments
Bid/TenderDocumentation
Handover,
Debugging
Commissioning/
Start-up
Final Account
Hopefully NoArbitration,Litigation or
ADR!
Feedback,Data
Reworkand
Storage
End
x y z
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Start
Owner/client
ProjectManagerand
ConsultantTeam
needwant facility expansion new product
market niche/gap brain wave/patent merger/take overby default/court etc.
IdeaCreation/
Identification
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Rough(Pre-liminaryStatementOf Work)
goals
objectives vision mission SWOT
[SOW]
Rough Scope
Definition specs
rough schedule rough budget
norms/standards/
benchmarks
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FeasibleOK?
FeasibilityAnalysis
N
Start
Idea
Rough(Pre-liminary
StatementOf Work)
Rough Scope
Definition
FeasibleOK?
Feasibility
Analysis
N
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Feasible
OK?
Feasibility
Analysis
Final SOWandScope Definition
yes
WorkBreakdownStructure
etc
CEO
X Y Z
Organizational Structure
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LinearResponsibilityChart (LRC)Resource
Pool
(7 Ms)
Work Packages
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s f
Network Schedules
Materials and
Resource Lists
(Requirements)
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Bid/Tender
Documentation
Bidding/Tendering/Negotiation
and
Acceptance
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ConstructionMeasurement
and ControlincludingProgressPayments
Handover,Debugging
Commissioning/
Start-up
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Final Account
Hopefully NoArbitration,Litigation or
ADR!
Feedback,Data
Reworkand
Storage
End
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Start
Rough(Pre-liminary
StatementOf Work)
Owner/client
ProjectManager andConsultant
TeamIdea
Creation/Identification
need want facility expansion new product market niche/gap brain wave/patent merger/take over by default/court etc.
goals objectivesvisionmissionSWOT [SOW]
Rough Scope
Definition
specs
rough schedule
rough budget
norms/standards/benchmarks
FeasibleOK?
FeasibilityAnalysis
N
Final SOWandScope Definition
yes
WorkBreakdownStructure
etcCEO
X Y Z
Organizational Structure
LinearResponsibilityChart (LRC)
Resource
Pool
(7 Ms)
Work Packages
Network Schedules
S F
Materials and
Resource Lists
(Requirements)
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Bidding/Tendering/
Negotiation andAcceptance
Construction
Measurementand Control
includingProgressPayments
Bid/TenderDocumentation
Handover,
DebuggingCommissioning/
Start-up
Final Account
Hopefully NoArbitration,
Litigation or ADR!
Feedback,Data
ReworkandStorage
End
Project Planning
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1. Lecture Objectives and LearningOutcomes
To understand where Planning starts
To grasp the typical components (steps) of aplanning process
To understand the linkages and interfacesbetween Planning, Organizing, Schedulingand Control
To give you an overview of different types ofplanning; i.e.: Operational, strategic etc.
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2. Introduction : Planning to Plan !
Often the single biggest problem: Wheredo I start?
At the start? Where is that? Is it the start
mode ?Start
Let us think for a moment . . .
Isnt the first question:
Where am I going?
How am I going to get there?
What am I going to do?
Where is where or there?!!
or
or
or
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Many planning gurus believe planningrefers to and answers the following
questions:
what,
who,
how
when
and
3. Defining the term Planning
Planning is that managerial activity through
which decision makers (planners) decide
pro-actively what needs to be done, or
must be achieved; how they are going toaccomplish it; when they are going to
achieve a specific goal/objective, mission or
steady state.
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In its most fundamental form it calls for the
following basic steps:
Identify and define the problem
Identify your goals/objectives
Identify and study (evaluate) thealternatives
Analyze the consequences (outcomes)
Select the best solution, and
Implement it
4. To summarize Project Planning
In most Planning situations, the planner has topose the following questions:
What has to be done?
How it has to be done?
For How much?
By Whom?
In What order?
And When?
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5. The following represent a morecomprehensive list of
general planning steps: Project goals, objectives and requirements
are set
Identify the specific work activities, tasks or
jobs to achieve
A project organization is created to be
responsible for the work activities (who
does what?) A schedule is set (prepared) showing the
logic, sequencing timing of activities
A forecast is prepared of Time, Cost &
Performance projections for successful
completion of the planned project (A unique
project triangle is created)
A budget and resource plan is prepared
showing amounts and timing of resources &
expenditures required (when money is to be
spent where?)
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Keep as is and continue
Stop
Re-plan and adjust
6. Project Control
Output is measured and compared againstplanned or re-planned
Any variance has to be evaluated andmanaged
Start
Establishgoals/objectives to
meet mission andachieve desired
outcomes
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Set specificobjectives
(quantums) toachieve required
goals/mission
Identify alternatives
(projects) required
to generate required
outputs and/or
meet objectives
Identify alternatives
(projects) required
to generate required
outputs and/or
meet objectives
Plan most viablealternative (project):
identify tasks (activities)
create logic & sequence
consider interactions
estimate durations and costs
allocate resources
incorporate uncertainties/risksand provide contingencies
create master plan
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Check/Evaluate:
Project timelines (milestones)against constraints
Project resource requirements
against availability (resourcepool within and/or outsideorganization)
Do projects matchresource and
timeline constraints?
NO
YES
Create corporate
anddivisional plans
Do these matchstrategic intent?
NO
YES
Continue
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Start
Establishgoals/objectives tomeet mission andachieve desired
outcomes
Do projects matchresource and
timeline constraints?
NO
Plan mostviable
alternatives(project)
Check/Evaluate
Identifyalternatives(projects)required
Set specificobjectives
Establishgoals/objectives
YES
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Do projects match resource
and timeline constraints?
NO
Identifyalternatives(projects)required
Set specific
objectives
Establish
goals/objectives
Check/
EvaluatePlan most
viable
alternative (project)
Start
Create corporate
and
divisional plans
Do these match strategicintent?
YES
Continue
NO
A BASIC OPERATIONALAND STRATEGIC PLANNING
INTERFACING PROCESS
7. Operational Plans
These are often called housekeeping plans
- the short-term how-to-do plans
They generally cover a period of one year
(business / tax year) or until project is
complete and ready for start-up
They often run concurrently with Profit and
Loss accounts (tax years)
Typically generated by middle managers
/operational managers (needing top
management approval /blessing)
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8. Strategic Plans
Commonly covering a period of 5 years and
more (often the entire project/product life
cycle)
Sometimes referred as Long-Range plans
and strongly focus on capital expenditure
They typically reflect the strategic intent
(mission/vision) of where the
organization/project/product is heading or
aiming for. They are typically generated by top
management/board of directors
9. Ten rules that Randolph and Posnersuggest for creating a good project plan
The rules for planning success are not the
preserve of a divine few - they apply to all.
Randolph and Posner developed the
following ten rulesknown as:
Go-carts
Driver
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1. Set a clear goal2. Determine the objectives3. Establish checkpoints, activities, relationships and
time estimates4. Draw a picture of the venture or project
settlement
G+O+C+A+R+T+S = GO-CARTS
The underlined letters in the first four rules spellGo-carts. This is the acronym for creating a goodplan. Effective managers create good plans - Go-carts- to get them from the start of the race tothe finish line.
Even the best-build Go-carts, however, will notproduce a winner without a skilful driver. Andthats hat the underlined letters in the last sixrules spell: Driver. This is the acronym for whatneeds to happen as you implement your plan, notnecessarily in a particular order but as required inthe life of the project or venture. When you knowhow to build effective Go-cartsand how to be askilful Driver, you can get your projects orventures over the finish line without crashing.
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5. Direct people individually and as a team6. Reinforce the commitment and excitement of
the team7. Keep everyone connected with the project or
venture Informed
8. Build agreements thatVitalize team members
9. Empower yourself and others on the team
10. Encourage Risk taking and creativity
D+R+I+V+E+R = DRIVER
10. Some Planning Statements
Failing to plan is planning to fail
All planning is concerned with the future or
future directed
Planning is a trap laid to capture the
future
Planning is the avoidance of fire fighting
Planning is the starting point of all
managerial action
Planning is the simulation of a required
future
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11. Self-Test
11.1 Please give your own definition of the term
Planning______________________________________
______________________________________
______________________________________
______________________________________
11.2 What do we mean by a Failing Plan? Is it
irreversible? Please discuss.
____________________________________________________________________________
______________________________________
______________________________________
BASICSTEPSOF
DECISIONANALYSIS
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BASIC STEPS OF DECISION ANALYSIS(PROBLEM SOLVING)
1. START
2. RECOGNIZE AND IDENTIFY A NEED, PERCEIVED NEED,REQUIREMENT, MARKET DEMAND, PROBLEM, ETC.
3. DIAGNOSE THE SITUATION.
4. JUSTIFY AND DEFINE THE SITUATION
5. ESTABLISH VALUE SYSTEM(S), GOALS AND OBJECTIVES(FOR COMPARISON/EVALUATION)
6. GENERATE AND SYNTHESIZE FEASIBLE ALTERNATIVESOLUTIONS
7. ANALYZE ALTERNATIVES8. COMPARE AND EVALUATE ALTERNATIVES
9. SELECT BEST ALTERNATIVE
SUMMARY
BASIC STEPS OF DECISION ANALYSIS(PROBLEM SOLVING) (Continued)
10. IMPLEMENT DECISION
11. MONITOR DECISION
12. EVALUATE (AUDIT) DECISION (POST MORTEM)
13. STORE (SAVE)
14. END
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PM KEY POINTS &PROBLEM AREAS
A PRELUDE TO FUTURE PM
THE SO-CALLEDPM TRIANGLE
TIME
MONEY
QUALITY (PERFORMANCE)
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TIME
COST
Note that we will spend more time on this triangle later on during the course.
PERFORMANCE
Many PM Experts believe that any uniqueproject can be defined by the differentlengths of the so-called sides or legs of atriangle; these sides beingTime/Money/Performance
Others maintain that if we were able toquantifyin monetary terms (say $s) allresources employed for the successfulcompletion of a project, the area of thatunique triangle would represent the $quantum of total resources employed
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Total Resources are generally referredto as the 7 Ms:
Minutes (Time)
Money (Finance/Investment/ Cost)
Manpower (Men/Woman Power)
Machines
Materials
Methods (Tools, Techniques)
Metres (Working Space/ Confined Space)
What is meant by the termTotal Resources?
Let us, for the moment, focus on the 3sides of the triangle What is meantby the terms:
Money
Time
Performance?
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Every project represents aunique triangle & everyproject owner needs orrequires a unique triangle
Project A = FA (Time, Money, Performance)
OwnerA = FA (Wealth Delivery Components I-J)
If, for whatever reason (say for instance change orders,etc.) the final triangle differs significantlyfrom theoriginally tendered (bid) triangle, there might besignificant legal implications
A. = ORIGINAL
(at signing of the agreement/contract)
B. = FINAL
(at completion)
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INDIVIDUALIZED WEALTHMAXIMIZATION Not only Profit!
Owner/Client DNA/Chemistry Analysis
True needs vs wants
Profiling Owner/Client for WBS creation
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PRE-PROJECT (UP-FRONT)
ACTIVITIES
Real Money is made/destroyed up-front
Dinky Toy Moneyis invariably madedownstream
Human nature naturally wants to fixproblems downstream (after the effect)
THE FUTURE NEW BREED/NEWGENERATION PROJECT MANAGER WILL
MOST LIKELY BE KNOWN AS:
HOMINIS SAPIENTIS EST ADMINISTRARE
CREANTI INCERTUM FUERIT MODO
INFORMATIONEM
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A Project Manager must not onlybe able to manage theengineering, procurement and construction aspects of a
project, he or she must also be able to manage aspectsrelating to finance, investment, taxation, cost engineering,schedule, environmental considerations, regulatory agencyrequirements, inflation & cost escalations, labourproblems, public & client relations, employee relations andchanging laws. Thats primarily on the domestic side. Oninternational projects, the list of additional functions &considerations adds totally different complications
The King Pin
Central point of integrated responsibility
Can never be appointed too early!
Position within the organization?
As close as possible to the CEO. preferably the CEO!
Lately everyone is becoming a so-called Project Manager
Project Management as Management System:
Fastest growing form of management (worldwide)
The onlyform of management that integrates strategic-, middle- &entry level management over an entire Project Life Cycle
PM actually provides all the essential Building Blocks for strategic
management Actually for all future types of management
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All businesses/ventures/products start asProjects
In essence there are only 3 types ofmanagement
Continuous Systems
Projects; and
Batch
High Tech / Future Tech?
Design/Engineering drawing boards are slowly closingon micro technology & opening up on nano technology
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DUST MITE UNDER ELECTRON MICROSCOPE
Life Cycles are becoming extremely short
Shelf lives of high tech projects oftenmeasured in months
Future?: Weeks or Days?
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More or less same management tools/techniquesapplicable to all types of business
Only the density of application per life cyclephase that changes significantly
Compare the building of a Dam with a broadband Fibre Optic Networking System
Ever-changing SOW & Scope definitions in a world of rapidchange
Do specific & comprehensive ones really exist?
If so, do they survive (creep, etc.)?
Is the focus on inputs or outcomes?
STATEMENT OF WORK (SOW) AND SCOPE DEFINITION OFWHAT IS KNOWN AS A WOMAN
(DEFINITION CREATED BY A MAN)
SOW (QUALITATIVE AND SOMEWHAT VAGUE)
ONE OF TWO MAJOR TYPES OF THE HUMAN RACE,
UNIVERSALLY KNOWN AS FEMALE. BODY TISSUE AND FLESH
GENERALLY SOFT. ON AVERAGE NOT TALLER OR HEAVIER
THAN THE OTHER COMMON SPECIE, KNOWN AS MALE. MOST
FEMALES STRIVE TO BE ATTRACTIVE, SOMEWHAT
ORNAMENTALAND HIGHLY DESIRABLE TO REAL MEN.
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Accepted as 55kg, but known to vary from 45 kg to 225 kgATOMIC MASS:
AdamDISCOVERER:
SYMBOL:WomanELEMENT:
SCOPE DEFINITION (MORE SPECIFIC AND QUANTITATIVE)
HAZARDOUS MATERIAL DATA SHEET
PHYSICAL PROPERTIES
1. BODY SURFACE NORMALLY COVERED WITH FILM OFPOWDER AND PAINT
2. BOILS AT ABSOLUTELY NOTHING FREEZES FOR NOAPPARENT REASON
3. FOUND IN VARIOUS GRADES RANGING FROM VIRGINMATERIAL TO COMMON ORE
CHEMICAL PROPERTIES
1. REACTS WELL TO GOLD, PLATINUM AND ALL PRECIOUS STONES
2. EXPLODES SPONTANEOUSLY WITHOUT REASON OR WARNING
3. THE MOST POWERFUL MONEY REDUCING AGENT KNOWN TOMAN
COMMON USE
1. HIGHLY ORNAMENTAL, ESPECIALLY IN SPORTS CARS
2. CAN GREATLY AID RELAXATION
3. CAN BE A VERY EFFECTIVE CLEANING AGENT
HAZARDS
1. TURNS GREEN WHEN PLACED ALONGSIDE A SUPERIORSPECIMEN
2. POSSESSION OF MORE THAN ONE IS POSSIBLE BUT SPECIMENSMUST NEVER MAKE EYE CONTACT
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When Toyota decided to build the Lexus, they selected their top2,000 design engineers and other consultants, and instructedthem to build the worlds finest luxury sedan.
They further stated that this luxury sedan should directly competewith the Mercedes S-class, the BMW 7-series, the Jaguar X-range, the Cadillac and other similar luxury sedans (they did notsee Rolls Royce and Bentley as benchmarks due to their oil leaksand outdated technology!)
Furthermore, it should be the most reliable of all cars, as well asthe quietest. The Lexus should also be the benchmark for
maintaining market value, and Must be market ready within two years, mainly focusing on the
U.S. market.
SOW AND SCOPE - TOYOTA LEXUS SEDAN
Statement of Work (SOW)
4 Door sedan, accommodating 5 grown-ups in cutting edge luxuryand safety, obtaining the highest Auto Motor und Sport safetyrating.
200-220 Kw @ about 5,500 rpm
Torque of about 450 Nm @ 3,200-3,400 rpm Maximum speed 230-250 Kph
Weight 1,500-1,650 Kg
Cost $40,000-$45,000
Must be the worlds finest
SOW AND SCOPE - TOYOTA LEXUS SEDAN
Scope definition
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Change orders (engineering instructions)
The mother of all PM sin?
Which critical path should we manage?
The so-called official one?
Risk/uncertainty?
What happens after the matrix organization (whenthe project has been completed?)
POST MORTEM ANALYSIS
Is it really ever being done?
Into file 13
Keeping fresh of information not data!
Feedback Systems (loops) for decentfuture planning?
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MANAGING THE TAX MAN
MANAGING THE TAX MAN
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MANAGING THE TAX MAN(YOUR
CONSTANT BUSINESS PARTNER)Short fictitious tax shieldCase StudyPicture the following scenario:
New York based Mr George Sorros, plans to develop a $13 billionpetro-chemical plant in Dubai. Mr Sorross London basedcorporation, ABC, is going to own it. The project will consist of an$11 billionplantand a $2 billion brick and mortar component.
Mr Sorros and his advisors have seriously studied U.S./British/Islamic tax laws and treaties and wanted certain unique clauses to benegotiated into the agreement between ABC and the Contractor.
Mr Sorros is currently negotiating with Fluor and Bechtel, and they
are discussing the terms of the future agreement (It is a so-calledBuyers market and Mr Sorros can dictate). Mr Sorros has carefullyanalized ABCs expected future lean and fat years, and wants tosynchronizeplant delivery and legal ownership with Pert scheduleand tax year.
Short fictitious tax shieldCase Study (continued)
Mr Sorros is adamant that there should be a clause in the agreementstating that legal ownership passes to ABC the moment the bulk oftheplant is delivered to the jobsite. Contractor is highly upset:What about risk and insurance liability? Sorros: Not to worry, I havea longstanding relationship with Lloyds in London --- I will take careof the insurance . It is only costing me $100 m!! Contractor
agrees.ASSUME: A 20% p.a. reducing balance depreciation allowance onplant(according to tax treaties and Roman Dutch/English/Islamic taxlaws)
QUESTION: By inserting a single clause, what has Mr Sorros
earned?
8/4/2019 Justification for PM1
50/50
Finish for thetime-being