PM0010 - Introduction to Project Management

Master of Business Administration-MBA Semester 3Introduction to Project Management – PM0010

Assignment Set- 1

Q.1 Explain the following a. Project Vs. Program Vs. Portfolio b. Project work and Traditional functional workAns:a. Project Vs. Program Vs. Portfolio: Businesses use various terms to represent a range of project management services. Unfortunately these terms are often used interchangeably and inconsistently. This article attempts to clear the confusion and establish a common definition.Project ManagementHopefully we all know what a project is. PMBOK defines a project as “a temporary endeavor undertaken to create a unique product, service or result”. In my terms, a project has a specific start and end date with a clearly defined deliverable produced. Project management is the application of knowledge, skill, tools, techniques and processes to effectively manage a team towards this final deliverable.In real life this means the management of a specific project (e.g. implementing a new accounting system). This project will start on a specific date and end according to our project plan with the delivery of your new accounting system.Pretty simple … something we can all understand.Program ManagementThis is where the confusion seems to start. A program is a group of related projects managed together to obtain specific benefits and controls that would likely not occur if these projects were managed individually. While project management focuses on delivering the specific objectives of the project – program management is focused on achieving the strategic objectives and benefits of the integrated program.The implementation of an Enterprise Resource Planning (ERP) system is often performed as a program. The ERP system will include several specific individual projects (i.e. Finance, Purchasing, Materials Management, etc.). Each of these specific projects should be run by a project manager using a formal project management approach. The overall grouping of these related projects will be run by a Program Manager.The Program Manager will be responsible for the rolling up of information from each of the projects and ensuring the overall program is driving towards achieving the business objectives. This requires each of the project managers to manage their individual projects in a fashion that easily integrates into the overall program plan (easily said – more challenging in actual practice).The Program Manager is also responsible for tracking and analyzing across the entire program. This involves considering risk management strategies not only for each individual project but also analyzing the ‘collective’ risk across the program.The same goes for quality management, schedule management, cost management, communications, etc.Portfolio ManagementA portfolio is a collection of projects or programs grouped together to facilitate effective management of efforts to meet strategic business objectives. These projects or programs are not necessarily interdependent or directly related. Portfolio management is the centralized management of multiple projects, programs and possibly portfolios. This typically includes identifying, prioritizing and authorizing projects and programs to achieve specific strategic business objectives.The group of projects and programs within a specific business division could be an example of a portfolio. This might include the implementation of a Customer Relationship Management (CRM) program; Sales Data Warehouse program; Commission Tracking project; and a project to launch a new product within the Sales & Marketing Division. In this case the Portfolio Manager is managing this broad range of somewhat unrelated programs and projects towards a specific set of strategic divisional business objectives.The Portfolio Manager will become very involved in the frontend activities of identifying, prioritizing and initiating projects and programs. All of these activities will be within the context of achieving the strategic business objectives. The Portfolio Manager will also track these

PM0010 – Introduction to Project ManagementPage 1 of 20

projects/programs to ensure they continue to deliver towards the expected strategic outcome in terms of quality, cost, schedule and scope. They will also be responsible for analyzing and tracking project management elements across the entire portfolio – looking for ways to leverage economies of scale, reduce risk and improve the probability of successfully delivering expected business results.

b. Project work and Traditional functional workAns:Project work and traditional functional work differ in significant ways, and it is important to understand these differences.

Functional WorkFunctional work is routine, ongoing work. Each day, secretaries, financial analysts, and car salespeople perform functional work that is routine, even if their activities vary somewhat from day to day. A manager assigned to the specific function provides training and supervision, and manages them according to standards of productivity in terms of typing speed or sales quotas.The following are distinguishing characteristics of functional work:

Functional work is ongoing, routine work. Managers manage the specific function and provide technical direction. People and other resources are assigned to the functional department. Functional departments are responsible for the approved objectives of the function, such

as technical competency, standards of performance and quality, and efficient use of resources.

Functional work is typically structured as a hierarchical organization with traditional formal lines of authority, as shown in Diagram 1.

Diagram 1Functional Organizational Structure

Project Work

In contrast to ongoing, functional work, a project is “a temporary endeavor undertaken to create a unique product or service” (A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Project Management Institute, 2000, p. 4). Projects are temporary because they have a definite beginning and a definite end. They are unique because the product or service they create is different in some distinguishing way from similar products or services. The construction of a headquarters building for ABC Industries is an example of a project. The unique work is defined by the building plans and has a specific beginning and end. A project manager is responsible for the project, overseeing the contractors and managing the schedule and budget.The following are distinguishing characteristics of project work:

Project work is a unique, temporary endeavor. A project manager manages a specific project. People and other resources are not assigned to project managers on an ongoing basis,

except for project management support.


Vice President

Director

Manager, EditingManager, Writing Manager, Design

Writer Editor Designer

Writer Designer

Writer

A project manager is responsible for the approved objectives of a project, such as budget, schedule, and scope.

Project teams typically are not organized in the same hierarchical structure as that of traditional functional groups.

Diagram 2Functional and Project Responsibilities

Diagram 2 illustrates how functional and project responsibility fit together, using the functional departments in a publishing company, with project managers assigned to accomplish specific publication projects. Solid vertical lines show the functional responsibilities of the writing, editing, design, printing, and distribution departments. Broken horizontal lines show the project responsibilities of specific project managers assigned to given publications (projects). Because not all projects require the services of every functional department, circles indicate where people are assigned to a project. Project #2 uses outsourced resources. Project #3 is a video that uses an external video duplication company rather than the internal printing facility.

A project manager manages horizontally via projects rather than vertically via functional experts. Diagram 2 shows that Dennis is responsible for Project #1. To get the job done, he must enlist the help of editors and designers from one functional manager, and printers and distributors from another functional manager. In some organizations, functional managers are called resource managers because they are responsible for assigning resources to the project.

In the real world, there are at times overlaps between project and functional managers. If functional resources (other than a project management staff) are assigned to a project manager, then the manager has functional responsibility and is acting as both project manager and functional manager. If projects are assigned to a functional manager, then the functional manager also has project responsibility and is acting in both roles. Diagram 3 compares functional and project work.

Diagram 3Comparison of Project and Functional Work


Q.2 Compare Operation and project procurement. Also list and explain the project procurement process. Ans:Operations Procurement and Project ProcurementThe differences between the procurement carried out for the overall operation of an organization, and the procurement carried out for a specific project, are shown in Table 1.Table 1: Differences between Operations Procurement and Project Procurement

Project Procurement Management ProcessThe project procurement method varies depending on the category of the contracted product or service. The broad categories are:

· Materials or products· Equipment or tools· Labors · Professional services· Totally engineered systems· Total project

Project Procurement Management generally involves the following:· Deciding to ‘Make or Buy’


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· Outsourcing the work for a ‘Buy’ decision.· Managing risk (although risk management is often addressed separately, it is noteworthy

that contracts are, at their core, risk management tools.)

All procurement requires some level of planning. The intensity and the effort required in planning depend on the complexity of the scope of work in the procurement package.

For a manufacturing company deciding to starts a project, the ‘make or buy’ decision forms the first step in the procurement planning. This decision is based on a cost comparison between ‘make’ and ‘buy’, and the timely availability of the manufacturing equipment or shop personnel for meeting deliveries without adversely affecting their other job orders. Several companies in India exist, wherein; the company or a division of the company already manufactures a product, and the company is also executing projects for its clients which require the same product as part of another project scope. For example, Larsen & Turbo manufactures switchgear, pressure vessels, heat exchangers etc. These products are also required in several electrical projects or petrochemical projects that they execute for clients. Another example, Kamani Engineering manufactures transmission towers, and also executes large power transmission projects for Power Grid Corporation of India, where the bulk of the transmission towers are their in-house supply. The Table 2 shows the comparison of costs for in-house development and outsourcing.Table 2: Comparison of Costs for In-house Development and Outsourcing

The additional investment of Rs 30000 for In-house option will break even if the software usage is for more than 20 months i.e. (Rs. 3500/month – Rs. 2500/month) x 20 months.

Therefore if you plan to use the software for less than 20 months then go for outsourcing but if plan to use the software for more than 20 months then go for In-house development. The market scenario for the product or service to be procured gives rise to any of the following three conditions:

· Sole Source: In this case there is only one qualified seller in the market. For example, Dow Chemicals under their patent was the only manufacturer Reverse Osmosis (RO) membranes which were utilized for desalinating saline water and all water treatment package vendors had to buy RO membranes only from them or their licensee in a country.

· Single Source: This is a case when your organization prefers to work with an identified seller, even though other sellers may offer a lower price. Sometimes companies show a preference for a supplier with a view to create a long term relationship for a niche product which the company may require to procure often.

· Oligopoly: This is a condition where the providers of the product or service are so few in number that the actions and pricing of one seller affect the actions and pricing of the other sellers. Examples of airline fares, oil prices, and hardware prices can fall in this category.

The Table 3 summarizes the actual procurement processes involved in each of the process groups.The function performed by each process is explained below.Plan Purchases and Acquisition Plan Purchases and Acquisitions is the process for deciding what to buy or acquire and when and how to buy that. It is a process of identifying the risks involved in each make or buy decision. It also reviews the type of contract with regard to mitigating the risk by determining what risks can be transferred to seller.The outputs of this process are:

· Project management plan describing how procurement process will be managed starting with development of procurement documentation and culminating in contract closure.



· Contract Statement of Work (SOW) (describes the portion of the project scope which is included in the particular contract).

Table 3: Procurement Management Processes (As per PMBoK)

Plan ContractingThis process includes preparation of a procurement document for each contract planned. This document is issued to prospective sellers who are invited to bid. The invitation is termed Invitation To Bid (ITB), Request For Quotation (RFQ), tender notice, Request For Proposal (RFP), invitation for negotiation or contractor initial response.ITB and RFQ (both imply the same type of invitation) are focused on getting the seller’s price, and not his ideas. For example if RFP asks for a price that means in addition, it necessarily asks for the sellers’ and ideas on how the project work should be done, which implies that there is a bit of consultancy service demanded from the sellers in their response.Evaluation criteria: The first category of evaluation relates to prequalification of a firm for receiving the ITB. Here, a prior assessment of the capability of a firm to perform the intended scope of work is made. For large value contracts, the ITB is preceded by an invitation to submit a prequalification offer, in which the seller is asked to submit his experience list for similar works carried out by enumerating the following:

· List of projects completed with contract value, completion period, and scope of work.· Audited financial statements like balance sheet, Profit and Loss (P & L) account for the

last 3 to 5 years.· Contract completion certificates from his clients.· Firm’s organizational structure· List of key personnel of the firm· List of construction equipment/production machinery owned.· Any other technical/financial/organizational data considered relevant by the owner.

This data submitted by all prospective bidders is analyzed to arrive at a list of pre-qualified bidders, eligible to receive the ITB/RFP.The second category of evaluation criteria relates to evaluating the bids received in response to the ITB/RFP. These may involve price loading criteria for technical and commercial deviations stipulated by the bidders in their bids, as well as specific criteria for price loading on utilities consumption (electricity, water etc.) where system performance is evaluated based on system life-cycle costs.Request Seller ResponsesWhile the prospective sellers are expected to submit their bids in response to the ITB/RFP as issued to them, it is a common practice in large value contracts to host a bidders’ conference, where all bidders are present and are permitted to ask questions concerning the SOW. This method is followed to ensure that all bidders possess the same information on which to base their prices and proposals. After satisfactory completion of this step, a due date for submission of the bid/proposal is communicated to all bidders. This process is called solicitation.



The output of this process is a bunch of bids proposals from the bidders. The proposals are the seller’s prepared document that describes the seller’s ability to provide the requested products/services at his quoted price.Select SellersThis process involves complete evaluation (techno-commercial evaluation and price evaluation) of the bids received, followed by negotiations with the bidders. Here the bidders have been pre-qualified following a fairly extensive evaluation; the final selection of the seller is usually based on the lowest evaluated price.The outputs of this process are:

· The Contract: This can be a simple purchase order or a complex document. A contract is a legal document backed by the country’s legal system (as long as it does not include illegal activities).

· Contract Management Plan: This covers contract administration activities through the life of the contract.

Contract AdministrationContract administration is a process of managing the contract between buyer and seller. It is also provides:

· Regular review of seller’s performance in executing the SOW, as well as documentation of this performance.

· Continuously manage contract related changes.· Provide a basis for future relationship with the seller.

Contract Closure Contract closure is a process of completing the contract by resolving all open items. Sometimes, a contract may be foreclosed or terminated by mutual agreement between buyer and seller.

Q.3 Describe the role of project managers in Human resource management and communication management. Ans: Role of Project Manager in HR and Communications ManagementA project manager is responsible for managing various tasks, activities and processes to ensure that the project is delivered in the defined time. He is responsible for defining the goals and objectives of the project and ensures that the resources that are required for the smooth working of the project are available. He also monitors and controls the project process to keep track of the status of the work. This ensures that the progress, schedule, procedures and the cost of the project are well monitored. Apart from monitoring and controlling the implementation and execution of the project, a project manager also plays a vital role in Human Resources and communications management such as:

· Assists in effective communications among the team members,· Consistency in methodology,· Consistency in process, documentation, procedure,· Meet deadlines and commitments· Facilitate formal metrics and reporting to upper management/project sponsors.· Entrusted with the authority and accountability necessary to get the job done.· Able to cope with conflicting scope, quality, schedule, risk, and other requirements.· Single point of integration to meet customer’s needs.· Held accountable for project failure.· Maintain control over the project by measuring performance and correcting as necessary.

Q.4 If the optimistic estimate of an activity is 12 days & pessimistic estimate is 18 days. What is the variance of this activity? Ans:If three standard deviations are chosen for the optimistic and pessimistic times, then there will be six standard deviations between them. In this case the variance of each activity completion time is given bytp = 18 daysto = 12 daysVariance = [(tp - to) / 6]2

= [(18 – 12) / 6]2= 2 days


Q.5 Describe the following quality control tools: a. Ishikawa diagram b. Flow chart c. Pareto chart d. Scatter diagram Ans:

a. Ishikawa diagrams (also called fishbone diagrams, cause-and-effect diagrams or Fishikawa) are diagrams that show the causes of a certain event -- created by Kaoru

Ishikawa (1990). Ishikawa diagram, in fishbone shape, showing factors of Equipment, Process, People, Materials, Environment and Management, all affecting the overall problem. Smaller

arrows connect the sub-causes to major causes.

Ishikawa diagram

One of the Seven Basic Tools of Quality

First described by Kaoru Ishikawa

Purpose To break down (in successive layers of detail) root causes that potentially contribute to a particular effect

Common uses of the Ishikawa diagram are product design and quality defect prevention, to identify potential factors causing an overall effect. Each cause or reason for imperfection is a source of variation. Causes are usually grouped into major categories to identify these sources of variation. The categories typically include: People: Anyone involved with the process Methods: How the process is performed and the specific requirements for doing it,

such as policies, procedures, rules, regulations and laws Machines: Any equipment, computers, tools etc. required to accomplish the job


http://en.wikipedia.org/wiki/File:Ishikawa_Fishbone_Diagram.svg

Materials: Raw materials, parts, pens, paper, etc. used to produce the final product Measurements: Data generated from the process that are used to evaluate its quality Environment: The conditions, such as location, time, temperature, and culture in

which the process operates

b. Flowchart: is a type of diagram that represents an algorithm or process, showing the steps as boxes of various kinds, and their order by connecting these with arrows. This diagrammatic representation can give a step-by-step solution to a given problem. Process operations are represented in these boxes, and arrows connecting them represent flow of control. Data flows are not typically represented in a flowchart, in contrast with data flow diagrams; rather, they are implied by the sequencing of operations. Flowcharts are used in analyzing, designing, documenting or managing a process or program in various fields.

A simple flowchart representing a process for dealing with a non-functioning lamp.

c. A Pareto chart, named after Vilfredo Pareto, is a type of chart that contains both bars and a line graph, where individual values are represented in descending order by bars, and the cumulative total is represented by the line.The left vertical axis is the frequency of occurrence, but it can alternatively represent cost or another important unit of measure. The right vertical axis is the cumulative percentage of the total number of occurrences, total cost, or total of the particular unit of measure. Because the reasons are in decreasing order, the cumulative function is a concave function. To take the example above, in order to lower the amount of late arriving by 80%, it is sufficient to solve the first three issues.The purpose of the Pareto chart is to highlight the most important among a (typically large) set of factors. In quality control, it often represents the most common sources of defects, the highest occurring type of defect, or the most frequent reasons for customer complaints, and so on.


Simple example of a Pareto chart using hypothetical data showing the relative frequency of reasons for arriving late at work

Pareto chart


First described byJoseph M. Juran

PurposeTo assess the most frequently-occurring defects by category

d. Scatter Diagram: A scatter plot or scattergraph is a type of mathematical diagram using Cartesian coordinates to display values for two variables for a set of data.The data is displayed as a collection of points, each having the value of one variable determining the position on the horizontal axis and the value of the other variable determining the position on the vertical axis. This kind of plot is also called a scatter chart, scatter diagram and scatter graph.A scatter plot is used when a variable exists that is under the control of the experimenter. If a parameter exists that is systematically incremented and/or decremented by the other, it is called the control parameter or independent variable and is customarily plotted along the horizontal axis. The measured or dependent variable is customarily plotted along the vertical axis. If no dependent variable exists, either type of variable can be plotted on either axis and a scatter plot will illustrate only the degree of correlation (not causation) between two variables.A scatter plot can suggest various kinds of correlations between variables with a certain confidence interval. Correlations may be positive (rising), negative (falling), or null


(uncorrelated). If the pattern of dots slopes from lower left to upper right, it suggests a positive correlation between the variables being studied. If the pattern of dots slopes from upper left to lower right, it suggests a negative correlation. A line of best fit (alternatively called 'trendline') can be drawn in order to study the correlation between the variables. An equation for the correlation between the variables can be determined by established best-fit procedures. For a linear correlation, the best-fit procedure is known as linear regression and is guaranteed to generate a correct solution in a finite time. Unfortunately, no universal best-fit procedure is guaranteed to generate a correct solution for arbitrary relationships.A scatter plot is also very useful when we wish to see how two comparable data sets agree with each other. In this case, an identity line, i.e., a y=x line, or a 1:1 line, is often drawn as a reference. The more the two data sets agree, the more the scatters tend to concentrate in the vicinity of the identity line; if the two data sets are numerically identical, the scatters fall on the identity line exactly.One of the most powerful aspects of a scatter plot, however, is its ability to show nonlinear relationships between variables. Furthermore, if the data is represented by a mixture model of simple relationships, these relationships will be visually evident as superimposed patterns.The scatter diagram is one of the basic tools of quality control.

Scatter plot


First described by

Francis Galton

Purpose To identify the type of relationship (if any) between two variables

Q.6 List the benefits of WBS? Need for risk management in an organization-comment.Ans: Work Breakdown StructureWork breakdown structure (WBS) is a fundamental component of project management process that helps in defining and organizing the total scope of a project using hierarchical tree structure. According to Project Management Body of Knowledge (PMBoK), ‘WBS is a deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables’. The hierarchy structure approach of WBS helps the project team to know the requirements of total project more accurately and specifically. WBS can also be used to assign responsibilities and allocate resources to the project. It helps the team to monitor and control the project.WBS is the critical input to various project management processes and deliverables like activity definitions, project schedule network diagrams, project and program schedules, performance


reports, risk analysis and response, control tools or project organization. WBS has several levels in its hierarchy structure. These can be further used as an input to the scheduling process that supports elaboration of tasks, activities, resources and milestones which can be cost estimated, monitored, and controlled.Development of WBS WBS is a tool used in project management that defines a project and groups the discrete element of project in a way that helps to organize and define the total work scope of the project. A WBS element may be a product, data, service or any combination of it. WBS provides the necessary framework for detailed cost estimating, and controls it by providing guidance for schedule development.WBS is a dynamic tool. It can be revised and updated as required by the project manager. Each descending level of WBS represents an increased level of detailed definition of the project work. The successful implementation of any project depends on the ability of the subject professionals such as project manager to break down a large project into smaller manageable sub-projects. The process of breaking down of mammoth projects into several smaller projects is called as work breakdown structure. Although not all successful projects have a work breakdown structure, there are enough reasons to go for WBS, since WBS:

· Provides a framework for organizing and managing the approved project scope.· Helps to ensure that the project team has identified all the activities and tasks that

complete the project.· Provides a framework for planning and controlling the cost and schedule information.

It is very common that many organizations and companies’ work on many projects simultaneously. Each project is competing for the limited resources available in the company. WBS helps in distinguishing the need of one project from the other within the organization. This helps the organization to identify resource requirements and allocate resources more effectively.While developing a WBS, one must know that there are multiple ways to develop it for a given project. One way of developing a WBS may be better than the other. The two most important things to remember are that the WBS must contain all approved scope and the project manager should ensure that the developed WBS reflects the way he/she intends to manage the project. The other items to be given importance while developing a work breakdown structure for a project are:

· Reporting requirements.· Size of the project.· Resource executing the work or activities.· Complexity of the project.

WBS is a hierarchy structure where the first two levels of hierarchy are set up first. The first level is usually the name of project or project title. The second level of the WBS hierarchy consists of all the deliverables of the project. At this level, the WBS should include 100% of all the work defined in the project scope statement and project management plan. Although in actual practice, 100% may not be achieved (it will most likely be about 95 – 98%, depending on the size of the project and the diversity of its various components), the goal should be 100%. This is called the 100% rule.After setting up the first two levels in the WBS hierarchy, the project team works on the decomposition or breakdown of the larger project into smaller chunks of work. The breaking down of the deliverables into successively smaller chunks of work is continued until a work package level is reached which is the lowest level of WBS. Project manager assigns a person or a specific team to complete each work identified in the WBS. There are number of steps involved is developing a WBS of project. Every step should be given equal importance in order to ensure that the developed structure helps the project team to arrive at successful completion of the project. The steps to follow to develop the work breakdown structure of a project are:Benefits of WBSWork breakdown structure represents family tree hierarchy structure of project operations required to accomplish the objectives of the project. Tasks identified in the WBS collectively describe the overall project. It serves to describe the link between the end objective and activities required to reach that objective. Implementing work breakdown structure approach in project planning offers various benefits which are given in table 10.1.

Table 1: Benefits of Work Breakdown Structure



Master of Business Administration-MBA Semester 3Introduction to Project Management – PM0010

Assignment Set- 2

Q.1 Describe the various ways of representing network diagram logic. Ans: Network Logic DiagramsThe logic development in project planning is an iterative process. Initial logic development starts after identification of the activities of the project and before scheduling process occurs. The logic development process is further refined during schedule development and optimization. There are two common methods of logic diagramming which are referred as network logic diagrams. Before knowing the types of network logic diagrams, we should be familiar with rules to be followed while developing and analyzing it. The rules are described in the table 1.

Table 1: Rules to Develop a Network Logic Diagram

The two types of network logic diagram are:Precedence Diagramming MethodThis method is also known as Activities On Node (AON). In this network logic diagram, each activity is represented by a node and connecting lines represents the relationships between activities. Each preceding activity controls the start and finish of the succeeding activity. In precedence diagramming method, all the four dependency relationships can be implemented between the activities. Finish to Start dependency relationship is the most commonly used in this network logic diagram. Start to Finish dependency relationship is rarely used and it is typically used only by professional scheduling engineers. Usage of start-to-start, finish-to-finish, or start-to-finish relationship with project management software can produce unexpected results, since these relationships are not consistently implemented.The figure 1 shows the implementation of activities on node network logic diagram where the alphabets within the circle represents the activities of the project and linking lines shows the relationship between them.Precedence Diagramming Method network logic diagram has the various advantages, they are:

· It is amendable with most of project management software. · It is does not need introduction of a dummy activity in the network.· It offers greater flexibility as it can incorporate any of the four dependency relationships.


Figure 1: Activity on Node Network Logic DiagramArrow Diagramming MethodThis method of network logic diagram is also known as Activity On Arrow (AOA). This is the historical basis for network diagrams. It was used for the development of PERT networks in the 1950s by the Department of Navy for tracking very large, complex Polaris program. In this method, each activity of the project is represented by an arrow between the nodes of the network and the nodes are mere symbols representing the connection points. In AOA method of network logic diagram, finish to start relationships is used. The activities follow the order of precedence as defined by their immediate predecessors. When there is more than one immediate predecessor for an activity, the network must show that the activity can be started only after all of its immediate predecessors activities have been completed. The dummy activity defined above is used for this depiction in the network.In AOA network logic diagram, the important points mentioned below should be followed to ensure the correct representation:

· Activities of the project are represented by Arrows.· Events are numbered and are represented by Nodes.· Two dummy activities should be introduced to show the precedence relationships.

The figure 2 shows the representation of AOA, where alphabets on the arrow are the activities of the project and nodes between them represents the relationships between the activities.

Figure 2: Activity on Arrow Network Logic Diagram

Q.2 Explain the following: a. Organizational breakdown structure.Ans: Organization Breakdown StructureOrganization Breakdown Structure (OBS) depicts the relationships within the organization. It is used as a framework for assigning the work responsibilities for every person in an organization. OBS is the next step in project planning after developing the work breakdown structure. This process defines the responsibility of each team involved in the project. It assigns each work package identified in WBS to an individual team who are held responsible to deliver the expected output of the project.The OBS, groups similar project activities together and relates them to the organization structure. OBS also defines the responsibilities of project management, costing, budgeting, and project monitoring and control. It provides an organizational based perspective of the project rather than task oriented. The hierarchical structure of the OBS aggregates the project information to higher levels. After defining the responsibilities of the project, both the OBS and WBS of the project are merged and together assure that all the elements and scope of the project are assigned to a responsible team.OBS has various functions to perform. It helps to:

· Decompose the necessary resources to perform job.· Identify and organize the resources responsible for carrying out the activities associated

with the project.


· Keep the track of specific work assignments and resource allocations.· To develop an organization breakdown structure of an organization. The steps given

below should be followed:· Draw the entire organization hierarchy structure for the resources involved in the project.· Identify all the team members after drawing the structure. Assign each team member a

position in the structure. If there are extra positions that have not been filled in the structure, fill them now. If there are additional resources left free, assign those resources so that all resources and positions are accounted for.

· Ensure that the OBS is structured from the most responsible department and followed by the performing departments at the lower levels. The lower levels of the structure are where the project responsibilities are matched up with the resource needed.

· Specify the functional group to every user where cost for the work the user does is allocated.

· Specify the approval group to every user who approves the work of the user and any leave approvals.

The figure 1 shows the organizational structure of resources which depicts the various teams involved in a software development organization.

b. Cost breakdown structure Ans: Cost Breakdown StructureCost of a specific project activity refers to the monetary value or financial pricing. It includes all anticipated expenditures that are expected to be part of the entire project, as well as the monetary value of the total sum of resources to be expended during the process.Cost estimation and control is vital for success of a project. This is the reason that Cost Breakdown Structure (CBS) is considered to be a major part of project breakdown structure. CBS describes how different cost elements contribute to the total cost of a project. According to Hundal, “the contributions to the cost of a product can be estimated in a variety of ways. These breakdowns are expressed in the forms of cost structures”. A CBS is a document which outlines the criteria and activities that should be carried out as part of project management. It provides details about the input/output cost estimates and the amount of money being spent. It provides the plan and structure necessary to control costs of the project and keep them within the limits of the project budget.In CBS, a specific project cost is broken down into sub costs, which includes number of unique categories. The identified categories of cost breakdown structure include direct labor hours, indirect labor hours and other direct/indirect costs of the project. It also includes the purchased price of any specific materials and equipment which falls into resource cost category.In a business, providing a budget that is adjusted to time is referred as a cost baseline. It is the integral part of the cost breakdown structure. A cost baseline is an essential facet of the project management plan used by companies to ensure success of the project. Most larger projects have a variety of cost baselines which should be calculated. The basic cost baselines of a project are resources baselines and production variations baselines. These cost baselines measurement ensure that the cost is evaluated in regards to the overall yield of a specific project. CBS defines and arranges all relevant cost elements suitable for a specific project. It is a framework which shows the estimated cost requirement of the project divided among different activities of the project identified at work breakdown. A cost breakdown structure must have the following characteristics shown in the table 2.

Table 2: Characteristics of Cost Breakdown Structure


There are five major forms of cost breakdown structures. They are:· Grouped on the basis of the components that the product is made of and thus following

the bill of materials.· Divided on the basis of organizational departments.· Divided based on the product functionalities which are very beneficial for a product

development purposes.· Divided based on the various activities and operations of the project.· Divided based on any desired way and then the result is arranged using the Pareto chart

rule. This indicates the most important and the least important cost elements from the desired point of view.

The cost elements of a CBS are usually associated with the three basic elements. They are:· Resources · Activities· Product

Q.3 If optimistic time for an activity is 5 days, estimated time to complete the activity 85 and most likely time 10 days. What is the variance of the activity? Ans: to = 5 days te = 85 days tm = 10 days tp = ?

Estimated time of the project (te) = (to + 4*tm + tp) 85 = (5 + 4*10 + tp) 85 = (45 + tp) tp = 85-45 tp = 40

Variance = [(tp - to) / 6]2 = [(40 – 5) / 6]2 = 35/6 * 2Variance = 11.667

Q.4 Explain the following types of contract: a. Cost reimbursable and its variation b. Fixed price and lump sum contract c. Time & material contract Ans:a: Cost-reimbursable contracts: Here the seller is paid for his actual costs plus a fee to cover his profit. The actual cost includes direct cost (salaries of full-time project staff) and indirect cost (salaries of management and support staff indirectly involved in the project plus cost of office facilities like rent, electricity etc.). The variations in this category are:- Cost-Plus-Fee (CPF) or Cost-Plus-Percentage of Cost (CPPC): The payment is made for the

actual cost plus an agreed percentage of the actual cost as fee.- Cost-Plus-Fixed-Fee (CPFF): This is same as CPPC except that the fee is fixed and does not

increase or decrease with the actual cost unless project scope changes.- Cost-Plus-Incentive-Fee (CPIF); Here, in addition to the payment as per the CPPC or CPFF

mode, an incentive is paid upon achieving certain specified performance levels of the project.

b: Traditional lump sum fixed cost/time (Fixed Price Contracts)In fixed type contracts, the design is already developed by the owner (usually through a design consulting firm). Subsequently, the project is tendered and awarded to a construction contractor at a fixed price and then the construction delivery is completed. Theoretically, each of these phases, i.e., design, tendering and contract award is discrete and separate. First, the owner fixes a Design Consultant, based on which a design is generated which is as comprehensive as possible. Tenders for construction are invited for this design. Tendering can be either ‘open


tendering’ or ‘pre-qualified tendering’. By ‘pre-qualified tendering’, it is implied that bidders are pre-qualified. The evaluation of the bids received leads to selection of the seller at a fixed cost/time, on the premise that the design is complete and comprehensive.The advantage of this type of contract is that the owner is aware of the cost at the time of award based on which the design was finalized.In practice, however, the designs always have gaps which lead to the under-mentioned possible disadvantages:· The construction contractor makes extra cost claims to the owner if the design is not

complete before tendering. · Additional cost claims by the construction contractor on account of consequential damages

due to the changes are also likely.· The construction contractor is excluded from the design development phase, and thus a

substantial value addition opportunity by valuable management and constructability information is lost.

· The construction contractor becomes answerable to the principal design consultant, while he cannot make suggestions on improved design for constructability[4].

· Many owners perceive that they may be at the mercy of construction contractors looking for opportunities to create additional revenue and profit from such gaps in the tender. This may lead to a confrontational approach over disputes which may ultimately need to be settled by arbitration or a court of law.

· Notwithstanding these disadvantages, fixed contracts are in vogue where designs can be more or less frozen prior to tendering for construction, with some contractual provisions for price variations incorporated in the contract.

c: Time and Material (T&M) contracts: Here the contract contains the feature of both cost reimbursable and fixed price contracts. Unit rate contracts are an example, where the unit rates for specific items of work are fixed, but the contractor is paid for the actual quantities executed, since quantities are not known at the time of signing the contract with the contractor.

Q.5 Describe the factors to be considered when feasibility of a project is examined. Also explain the various qualities that a good project management process encompasses. Ans: Feasibility Study on ProjectFeasibility study on project defines the probabilities associated with it. Various measures are taken to identify whether a project is feasible or not. Initially, an analysis is performed to determine if the project meets all the requirements to proceed to next stage. However, when a feasibility of the project is to be examined, the following factors have to be taken into consideration:· Cost: The project management team makes a cost analysis to ensure that the estimated

costs of the project fall within the range set by the organization. However, there are certain factors that have to be considered while determining the costs of the projects. It includes the implications of the capital expenditure, the project costs, determining the effects of finances on the organization, determining the expenses required in the current year as well as the subsequent years.

· Timing: The project manager makes a timing analysis to ensure that the project meets its delivery date with the expected quality outcome. The timing phase of the project ensures that any legal or requirements from the government are complied on date. It also ensures that the finances are used by the company in the restricted period of time. Timing policies are also important for the operational concerns such as requirement of equipments or systems to meet the defined deadlines and specific procedures.

· Performance: The project manager fixes the job responsibilities to the members of the team based on the skill set they possess. It is vital to monitor the performance both technically and personally. It is necessary that the performance of the members participating in the project meet the standards as specified by the client as well as the organization internally.

Quality of a Project Management ProcessThe various qualities that a good Project Management process should encompass are as listed below:· Creativity: A good Project Management process should be creative that facilitates

integrating various categories of the project into a unified structure. It should provide abilities to create enthusiasm and appeal in the process.


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· Structure: The structure of the organization will have a set of specifications, parameters, limitations as well as certain guidelines that has to be followed. The members of the organizations are expected to work effectively within the defined framework and structure of the organization.

· Intuition: Intuition is very important part of maintaining a good Project Management process. It is that ability of understanding the uncertainties and the things forth coming without the use of any rational processes. It is the foundation of emotional intelligence. It is vital to have a stronger intuition that enables to sense what the other members are feeling and thinking.

· Knowledge: Knowledge is an important part of the Project Management process. It is required for the deeper understanding of the project with ease and also to delegate the technical aspects training to the other members participating in the project team.

· Commitment: The commitment of the project manager is responsible for holding the team together to pull the project to meet its delivery dates successfully. Commitment ensures that there are fixed allotted timings for every activity to be performed in the process.

· Being Considerate: Being considerate infers that a task allotted to the members of the team can be well completed in the allotted time. It ensures that no employee is heavily loaded with unnecessary work he is not responsible for. Thus, the loyalty and humbleness of the manager will further take the project team to meet its objectives defined.

· Versatility: The primary qualities of a Project Management process include flexibility to any kind of environment. It requires versatility that enables the project manager to change any decisions with respect to resources and other constraints quickly.

· Lightness: It complements the importance of the tasks as well as provides options to resolve them. This leads to strong team results and team maintenance.

· Discipline/focus: It is very essential to be self focused and disciplined to maintain the moralities and ethics of self and the company.

· Big picture, small actions: It is very essential for a good Project Management process to visualize things in a broader perspective. This leads to thinking in a wider range meanwhile paying attention to the details of the project. However, it requires good communication skills to interact with the team members in order to establish the clear expectations of the clients. It is required that the members of the team are also given the authority to make shared decisions regarding developing the project. It gives a clear picture of the people who are assigned to the specific tasks. Effective Project Management process adopts various customs and ways in order to correspond and share the relevant information such as conducting meetings and informal conversations with the relevant and concerned people such as with the other members of the team, the clients and other senior officials of the project. This requires that the manager of the project have good communication skills and believe in listening skills than talking skills.

Q.6 Describe the following project management approaches: a. Critical chain project management approach b. Event chain methodology approach c. Incremental approach d. Phased approachAns: a. Critical Chain Project Management Approach (CCPM): It is an approach of scheduling

and managing the projects with respect to resources. It ensures planning and structuring of projects so that resources are available when the critical chain begins. It ensures that the project plan undertakes resource leveling. Resource leveling is a part of the project management process. It inspects resources that are not balanced. These resources can include people or equipment.For example, when requirements of resources such as equipment or manpower are far more than that is available at that instant, the resources need to be rescheduled. When a team member is a critical resource for multiple tasks, the responsibilities of that person need to be redistributed among other personnel in order to complete the tasks simultaneously. Project resource leveling resolves such conflicts by balancing the resources and the workload.

b. Event Chain Methodology Approach: This method allows modeling of uncertainties in an easy and simple way in the project. The various principles that event chain methodology works on are as follows:


- Probabilistic moment of risk: It monitors the uncertain risks that occur at the some point when the project is in flow.

- Event chains: An analysis is performed to determine an increasing effect of event chains in the project.

- Critical events or event chains: Critical events are defined as those events that have the ability to disturb the progressive workflow of the entire project. An analysis is performed to determine such uncertain situations in the project.

- Project tracking with events: tracking makes it possible to gather information about future events from the incomplete information available.

- Event chain visualization: Event chain diagrams are used to visualize events and event chains.

c. Incremental Approach: The incremental approach adopts a sequential approach in preparing a project for delivery. The main objective of incremental approach is to reduce development time to a large extent. This is achieved by adopting measures such as finding the most deserving and suitable people for the task, facilitating good human relations and communication within the project team and providing solutions to anticipate customer wants and queries. This approach is very useful in situations where complete funding is not readily available or when there is a delay in the delivery of the deliverables.

d. Phased Approach: A project life cycle includes initiation, planning, execution, control and close. The phased approach is responsible in fitting the requirements according to the need of the organizations of various sizes. There are various benefits of using phased approach in project development. This approach assists in laying down a firm and structured foundation for the project.


Documents

PM0010 - Introduction to Project Management