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Project Management and Engineering Project Management and Engineering EconomicsEconomics
Unit- 1Unit- 1
By, Kodam R. P.By, Kodam R. P.
Unit- 1
Introduction To Project Management
•.•2
LEARNING GOALS
TO STUDY BASIC PROJECT MANAGEMENT AND
ITS IMPORTANCE
TO STUDY AND ABLE TO UNDERSTAND OF LIFE
CYCLE CONCEPT AND COST COMPONENTS
TO KNOW PROJECT PMBOK AND PMP•.•3
ContentImportance, objectives & functions of management ,
Principles of Management, Categories of project , Project Failure,
Project- life cycle Concept and Cost Components ,Project Management Book of Knowledge {PMBOK} –
Different Domain Areas, Project management Institute and Certified Project Management Professionals (PMP )
Importance of organizational Structure in Management- Authority / Responsibility Relation
.4
What is the Project?
A project is a temporary endeavor undertaken
to create a unique product or service
Projects can be large or small and take a short
or long time to complete
.5
Project Attributes or Characteristics
A project:
Has a unique purpose: every project should have a well
defined objective.
each project has a definite beginning and a definite end.
Requires resources, often from various areas
Should have a primary customer or sponsor
Examples
.6
What is Project Management?
Project management is “the application of
knowledge, skills, tools and techniques to project
activities to meet project requirements”
.7
Introduction to Project management & organizationManagement
Art of getting work done through people with satisfaction of
employer, employees and public.
Management – Art as well as science
Scientific basis – Work done can be measured
Art – getting work done through others.
.8
9
Importance of ManagementNo enterprise can survive without management – huge money, excellent m/c, expert manpower lead to confusion.Guide and control activitiesCoordinates different activities of departmentsProvide new ideas and visionTackles business problemsMeet challenge of changeProvides stability to the enterpriseHelps personality development.
.9
Functions of Management
1. Forecasting2. Planning3. Organizing4. Staffing5. Directing – leadership, communication, motivation,
supervision6. Coordinating7. Controlling8. Decision making
10.
10
11
1. Forecastingestimates future work – sales or productionRelates to cost, finance, purchase, profit or loss
1. PlanningManager anticipates future and discovers alternativesSystematic way of making decisionsEssential for utilizing available facilities
1. OrganizingOrganizing people, materials, jobs, time, etcDetermining activities
.11
4. StaffingManager select, train, promote and retire their
subordinatesDeveloping and placing of qualified people in jobs
5. DirectingMotivating, guiding and supervising subordinates
LeadershipQuality of behaviors of managerGet max cooperation from subordinate and guide them
CommunicationProcess –ideas are transmittedVerbal, written, orders, reports, instruction
.12
Ineffective communicationconfusion, misunderstanding, dissatisfaction or strike.
MotivationInspiring subordinates – work effectively and efficiently
SupervisionWork is going as planWorkers are doing as they directed
6.CoordinatingAchieving harmony of individual effect towards the
accomplishment of company objectivesMaking plan to coordinate activities of subordinate.
.13
7. ControllingMeasures current performanceControlling set standards, measure job perfection, take
correct action.
8. Decision makingSelecting course of action for getting desired results.
.14
Various Definitions of ManagementDonald J. Cough defines, "Management is the art and
science of decision making and leadership.”Henry Fayol defines,“ Management as to manage is to
forecast and to plan, to organize, to command, to co-ordinate and to control.”
Peter F Drucker defines, “Management is a "multi-purpose organ that manages a business and manages managers, and manages worker and work.”
.15
Objectives of Management:
Getting Maximum Results with Minimumum Efforts
To secure maximum outputs with minimum efforts & resources.
Management is basically concerned with thinking & utilizing human, material & financial resources in such a manner that would result in best combination.
This combination results in reduction of various costs..
16
Increasing the Efficiency of factors of ProductionEfficiency can be increased to a great extent which can be obtained by
reducing spoilage, wastages and breakage of all kinds, this in turn leads to saving of time, effort and money which is essential for the growth & prosperity of the enterprise
Maximum Prosperity for Employer & EmployeesManagement ensures smooth and coordinated functioning of the
enterprise. This in turn helps in providing maximum benefits to the employee in the shape of good working condition, suitable wage system, incentive plans on the one hand and higher profits to the employer on the other hand.
Human betterment & Social JusticeManagement serves as a tool for the upliftment as well as betterment of the
society. Through increased productivity & employment, management ensures better standards of living for the society. It provides justice through its uniform policies.
17
HENRI FAYOL’S
14 Principles of Management
the first foundations were laid for modern scientific management.
14 Principles of ManagementDivision of WorkAuthorityDisciplineUnity of CommandUnity of DirectionSubordination of
Individual Interests To The General Interests
Remuneration
•.
CentralizationScalar ChainOrderEquityStability of Tenure of
PersonnelInitiativeEspirit De Corps
•19
1. Division of Work
Work should be divided among
individuals and groups to ensure
that effort and attention are focused
on special portions of the task.
Fayol presented work specialization
as the best way to use the human
resources of the organization.
.20
2. Authority
Authority was defined by Fayol as the right to give orders
and the power to exact obedience.
Responsibility involves being accountable, and is therefore
naturally associated with authority.
.21
3. Discipl ine
A successful organization requires the common effort of
workers.
Penalties should be applied judiciously to encourage this
common effort.
22.
4. Unity of Command
Workers should receive orders from only one manager.
He should not receive instructions from more than one
person .
23.
5. Unity of Direction
The entire organization should be moving towards a
common objective in a common direction.
Without unity of direction, unity of action cannot be
achieved
24.
6. Subordination of Individual Interests To The General Interests
The interests of one person should not take priority over the
interests of the organization as a whole.
25.
7. Remuneration
Remuneration to be paid to the workers should be fair,
reasonable, satisfactory & rewarding of the efforts. It should
accord satisfaction to both employer and the employees.
26.
8. Centralization
Centralization means concentration of authority at the top
level.
In other words, centralization is a situation in which top
management retains most of the decision making authority.
27.
9. Scalar Chain
It is chain of superiors ranging from the ultimate authority to
the lowest.
Every orders, instructions etc. has to pass through Scalar
chain.
28.
10.Order
For the sake of efficiency and coordination, all materials and
people related to a specific kind of work should be treated as
equally as possible.
29.
11.Equity
All employees should be treated as equally as possible.
30.
12.Stabil ity of Tenure of Personnel
Retaining productive employees should always be a high
priority of management.
Recruitment and Selection Costs, as well as increased
product-reject rates are usually associated with hiring new
workers.
31.
13. Initiative
Initiative means eagerness to initiate actions without being
asked to do so.
Management should provide opportunity to its employees to
suggest ideas, experiences& new method of work.
32.
14. Espirit De Corps
It refers to team spirit i.e. harmony in the work groups and
mutual understanding among the members.
Management should encourage harmony and general good
feelings among employees.
33.
Conclusion on the 14 Principles of Management
The 14 principles of management can be used to manage organizations and are useful tools for forecasting, planning, process management, organization management, decision-making, coordination and control.
.34
Categories of Project:
Depending upon Location
.35
Depending Upon Size
Schedule A
Schedule B
Schedule C
.36
Project Failures:
Owner: Decision making problemsPoor estimating Goal and visionLack of integral budget and
planning Incomplete and fluid designLack of proactive risk managementUnrealistic schedule Insufficient tool and project
management infrastructure
Contractor:Inexperience or unequal
project teamPoor estimatingUnfavorable contractLack of senior management
supportDesign issueOverly aggressive scheduleLack of Risk managementLack of Project co-ordination.•.•37
Project Life CycleA project life cycle is a collection of project phases that
defines:
What work will be performed in each phase
What deliverables will be produced
Who is involved in each phase
How management will control and approve work produced in each
phase
A deliverable is a product or service produced or provided
as part of a project.38
Five Phases of the Project Life Cycle
.39
Project Management Body of Knowledge:
This book which focus on standard terminology and guidelines for Project Management.
This book is overseen by PMI (Project management Institutes).
The Latest Fifth edition was publishing in 2013.
The first PMBOK was published in 1996 by PMI.
.40
Contents of PMBOK
Inputs (documents, plans, designs, etc.)
Tools and Techniques (mechanisms applied to inputs)
Outputs (documents, plans, designs, etc.)
.41
Purpose of PMBOK
PMI global standards provideGuidelinesRules And Characteristics For ProjectProgram and portfolio management.
When consistently applied, they help you and your organization achieve professional excellence
The PMBOK Guide is also used as a support to prepare the certifications offered by the PMI
.42
Phases of the Project Life Cycle as PMBOK
1. Conception/initiation
2. Definition/planning
3. Production/acquisition
4. Operation
5. Divestment/termination
.43
Conception/initiation
First phase includes
o Determine existing needs
o Establish system concepts
o Check technical feasibility
o Examine alternatives
.44
Definition/Planning – includes
Firm identification of human and non human
resources. (human resources, such as labor and
management, and nonhuman resources, such as land,
capital goods, financial resources)
Pre of detailed plan
Prevent of cost
.45
Production/acquisition
Testing and final standardization of effort so that
operation can begin
Operation
If project is marketable product then this phase
includes life cycle phase of market introduction,
growth, maturity and portion of deterioration.
Divestment/termination
Includes the real location of resources..
46
.47
Knowledge areas of PMBOK.
1. Project INTEGRATION ManagementIdentification of process and activities, defining activities, combination of
activities to achieve project objectives.
2. Project SCOPE ManagementIdentification of requirement of Project and only work required.
3. Project COST ManagementIt involves planning, estimating, budgeting, financing, finding, management
and controlling cost so that project should completed within approved budget.
4. Project QUALITY managementDetermine quiddity policities, qualitative objectives of project, and
responsibilities. So than it’s up to client satisfaction.
.48
5. Project HUMAN RESOURCES managementThis process involved organizing, managing and lead the project
them.
6. Project COMMUNICATION ManagementProject requires a timely and appropriate Planning and information.
7. Project TIME ManagementProcesses required managing timely completion of project.
8. Project RISK managementThis includes process of conducting risk management planning,
identification, analysis, response planning analysis and controlling risks.
.49
9. Project PROCUREMENT management This includes to acquire products , services and result needed.
10.Project STAKEHOLDER ManagementTo identify all people or organization impacted by project, analyzing,
and developing management strategies for effectively engaging stakeholders.
.50
Project Management Institute
The PMI provides services including the
Development Of Standards, Research, Education, Publication, Networking-opportunities In Local Chapters, Hosting Conferences And Training Seminars, And Providing Accreditation In Project Management.
.51
PMI has recruited volunteers to create industry standards, such as "A Guide to the Project Management Body of Knowledge", which has been recognized by the American National Standards Institute (ANSI).
In 2012 ISO adapted the project management processes from the PMBOK Guide 4th edition.
.52
Project Management ProfessionalPMPMost Important industry recognizing certification for
Project Mangers.Globally recognized and demanded.PMP shows that you have experience ,education and
competency to lead and direct projects.Who should apply
Experience project manager looking to solidify.Your skill stands out to employers and maximize yours earings
potentials.
.53
The PMP signifies that you speak and understand the global language of project management and connects you to a community of professionals, organizations and experts worldwide.
Become a PMP and become a project hero
.54
Certified Project Management Professionals (PMP )
You can find PMPs Leading projects in nearly every country
Geography or domain, the PMP is truly global.
As a PMP, you can work in virtually any industry, with any methodology and in any location.
.55
Examples The PMP also increases your earning potential. PMP
certification holders earn 20 percent more than their non-certified peers according to Earning Power: Project Management Salary Survey, Ninth Edition.
When more than one-third of their project managers are PMP-certified, organizations complete more of their projects on time, on budget and meeting original goals. (Pulse of the Profession® study, PMI, 2015.)
.56
.57
Organization
.58
Organization is a group of person working together to
achieve a predefined/establishment goal.
Defining and delegating responsibility and authority According to Chester Barnard, “Organizing is a function
by which the concern is able to define the role positions, the jobs related and theco-ordination between authority and responsibility.
Business executive
Importance of Organization
SpecializationWell defined jobsClarifies authorityCo-ordinationEffective administrationGrowth and diversification Sense of security Scope for new changes
.59
Importance of Organization
Specialization - Organizational structure is a
network of relationships in which the work is divided into units and departments.
This division of work is helping in bringing specialization in various activities of concern.
.60
Well defined jobs Organizational structure
helps in putting right men on right job which can be done by selecting people for various departments according to their qualifications, skill and experience.
This is helping in defining the jobs properly which clarifies the role of every person. .
61
Clarif ies authority -
.62
Organizational structure helps in clarifying the role positions to every manager .
This can be done by clarifying the powers to every manager and the way he has to exercise those powers should be clarified so that misuse of powers do not take place.
Well defined jobs and responsibilities attached helps in bringing efficiency into managers working.
This helps in increasing productivity.
Co-ordination
Organization is a means of creating co-ordination among different departments of the enterprise.
It creates clear cut relationships among positions and ensure mutual co-operation among individuals.
Harmony of work is brought by higher level managers exercising their authority over interconnected activities of lower level manager.
.63
Ef fective administration The organization structure is helpful
in defining the jobs positions.
The roles to be performed by different managers are clarified.
Specialization is achieved through division of work.
This all leads to efficient and effective administration.
.64
Growth and diversif ication A company’s growth is totally dependant on how efficiently
and smoothly a concern works.Efficiency can be brought about by clarifying the role
positions to the managers, co-ordination between authority and responsibility and concentrating on specialization.
In addition to this, a company can diversify if its potential grow.
This is possible only when the organization structure is well- defined.
This is possible through a set of formal structure.
.65
Sense of security
.66
Organizational structure clarifies the job positions. The roles assigned to every manager is clear. Therefore, clarity of powers helps automatically in
increasing mental satisfaction and thereby a sense of security in a concern.
This is very important for job- satisfaction.
Scope for new changes Where the roles and activities to be performed are clear and
every person gets independence in his working, this provides enough space to a manager to develop his talents and flourish his knowledge.
A manager gets ready for taking independent decisions which can be a road or path to adoption of new techniques of production.
This scope for bringing new changes into the running of an enterprise is possible only through a set of organizational structure..
67
Importance of Organization
Stimulates independent, creative thinking
Permits optimum use of technical and human resources
Minimize corruption and inefficiencies
Does not generate confusion
Less wastage and expenditure.
.68
Principles of Organization1. Consideration of objectives
2. Relationship of basic components of the organization
3. Responsibility and authority
4. Span of control
5. Dividing and grouping work
6. Effective delegation
7. Communication
8. Line and staff relationship
9. Balance, stability and flexibility.69
1. Consideration of objectives
Consider that objectives which increases productivity and improve quality
2. Relationship of basic components of the organization
personnel
Objective determine type of work decides selection of
physical facilities
.70
3. Responsibility and authority
- Responsibility means accountability
- authority means right or power to act
- Must go together
- When a person is authorized then he is held
responsible for its performance.
4. Span of control No of subordinates that reports to executive or no of
subordinates that an executive can supervise directly
.71
5. Dividing and grouping work
- Divisionalisation gives a greater sense of
responsibility to personnel
- Grouping is essential for specialization and
coordination
6. Effective delegation
- Passes down tasks to his subordinates
7. Communication- Transmitting instructions and information's within
organization and to outside- Free two way communication
72.
8. Line and staff relationship
All activities in two types
primary act or line function are directly contribute to the
objectives
Supporting act or staff function add to line functions.
9. Balance, stability and flexibility
All units should be balanced
Stability refers capacity to withstand the losses
Flexibility specifies to adjust the work assignment
.73
Types of organization
1. Line, military or scalar organization
2. Functional organization
3. Line and staff organization
.74
Line, military or scalar organisation
Resembled to old military organisation
Simple form of organisation
Based upon authority and responsibility
Followed : Govt. Dpt. And autonomous engineering college
Application : all type of small firms , industries like sugar factories, paper mills etc.
.75
Line, military or scalar organization
Features: Have only direct vertical relationships between different levels in the
firm. 76
Advantages
Simple, easy to understand and flexible
Makes clear division of authority
Strong in discipline
Disadvantages
Neglects specialist
Overload few key executives
Small concern
.77
2. Functional organization
F W Taylor suggested this organization
A functional organization is a common type of organizational structure in which the organization is divided into smaller groups based on specialized functional areas, such as IT, finance, or marketing.
Application : not is used in construction industry but modified forms is used in most modern and advanced concerns
.78
2. Functional organization
Features: 1. Line and staff have direct vertical relationship
between different levels. 2. Staff specialists are responsible for advising
and assisting line managers/officers in specialized areas.
3. These types of specialized staff are (a) Advisory, (b) Service, (c) Control
.79
Functional organization
.80
at FedEx
.81
Advantages
1. Since one foreman is responsible for one
function, he can perform his duties in a better
manner
2. Reduces no of accidents, wastage
3. Quality of work improved
.82
Disadvantages
1. Difficult to maintain discipline
2. Worker remain confused about authority
3. Difficult to fix up responsibility
.83
3. Line and Staff organizationSecretary BOD Legal advisor
Acct Off GM Sales manager
personal man purchase engg
design engg WM industrial engg
stores officer
suptd A suptd B
FM FM FM FM
W O R K E R S
BOD – Board of Directors GM – General Manager
WM – Works Manager Suptd – Superitendant
FM - Foreman
.
Feature: Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure
84
.85
1. Line executives marked vertically and staff
executives are placed horizontally
2. For growing industry it is required
Advantages
1. Expert advice from specialist are available
2. Less wastage of material, man hours
3. Quality of product is improved
4. No confusion
.86
Disadvantages
Product cost will increase
Frictions and jealousies developed
Applications
Used in medium and larger enterprises.
.87
Matrix Organizational Structure:
It is a permanent organization designed to achieve specific results by using teams of specialists from different functional areas in the organization.
Use: Industrial like electronics, advertising, banking etc.
Feature: Superimposes a horizontal set of divisions and reporting
relationships onto a hierarchical functional structure .
88
.89
Matrix Organizational Structure:
Advantages: Disadvantages:
1. Decentralized decision making.
2. Strong product/project co-ordination.
3. Improved environmental monitoring.
4. Fast response to change. 5. Flexible use of resources. 6. Efficient use of support
systems.
1. High administration cost.
2. Potential confusion over authority and responsibility.
3. High prospects of conflict.
4. Overemphasis on group decision making.
5. Excessive focus on internal relations. •.•90
Modified Matrix Organizational Structure:
When organisation grown To avoid the difficulty Appointed as project director PD = controls all PM and reports to
GM directly
•.•91
Dif ferences between Authority and Responsibil i ty
Authority Responsibi l ity
It is the legal right of a person or a superior to command his subordinates.
Authority is attached to the position of a superior in concern.
Authority can be delegated by a superior to a subordinate
It flows from top to bottom.
It is the obligation of subordinate to perform the work assigned to him.
Responsibility arises out of superior-subordinate relationship in which subordinate agrees to carry out duty given to him.
Responsibility cannot be shifted and is absolute
It flows from bottom to top.•92
Delegation of Authority -
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority.
Delegation of Authority means division of authority and powers downwards to the subordinate.
Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
Delegation is about entrusting someone else to do parts of your job.
.93
Session OutcomesAble to understand a basic of project management and its
importance.Able to classify the categories of project and conceptualizes
the life cycle and phases come in project.Able to know about project management book of
knowledge, professional certification and its credit.Able to understand professional learning of project
management by PMI, about PMP.Able to understand organizational work on the basis of
responsibility and authority.Able to describe the different types of organization and its
work according to the same.
94
ASSIGNEMENT NO.1INTRODUCTION TO PROJECT MAMAGEMENT
Que.1 Write a short note on Project Categories.Que.2. Explain with sketch Matrix Organization, state
advantages and disadvantages.Que.3 Explain Project Life Cycle.Que.4 Explain with suitable example Line and Staff
Organization.Que.5 Explain functional type of organization in detail.Que.6 Explain functions of management.
.95
Que.7 What is PMBOK? Focus on its contents.
Que.8 What is PMI? Which type of certifications carried out
by it? Explain PMP.
Que.9 What is Project Management? State its importance.
Que.10 Explain principles and objectives of Project
Management.
Que.11 Differences between Authority and Responsibility
.96
.97
References
http://www.managementstudyguide.com/
.98
Elements of DelegationAuthority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority.Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with an equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from accountability. Accountability still rest with the person having the utmost authority.Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.Accountabil ity - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For
•.•99
Relationship between Authority and Responsibil ityAuthority is the legal right of person or superior to
command his subordinates while accountability is the obligation of individual to carry out his duties as per standards of performance Authority flows from the superiors to subordinates,in which orders and instructions are given to subordinates to complete the task.
.100
example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job. Accountability, in short, means being answerable for the end result. Accountability can’t be escaped. It arises from responsibility.For achieving delegation, a manager has to work in a system and has to perform following steps : -Assignment of tasks and dutiesGranting of authorityCreating responsibility and accountability.
101
Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation.Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors. The managers at all levels delegate authority and power which is attached to their job positions. The subdivision of powers is very important to get effective results.Creating Responsibility and Accountability - The delegation process does not end once powers are granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the standards of performance. Therefore, it is said that authority is delegated, responsibility is created and accountability is imposed. Accountability arises out of responsibility and responsibility arises out of authority. Therefore, it becomes important that with every authority position an equal and opposite responsibility should be attached.Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally important is the delegatee’s role which means his responsibility and accountability is attached with the authority over to here.
.102
It is only through authority, a manager exercises control. In a way through exercising the control the superior is demanding accountability from subordinates. If the marketing manager directs the sales supervisor for 50 units of sale to be undertaken in a month. If the above standards are not accomplished, it is the marketing manager who will be accountable to the chief executive officer. Therefore, we can say that authority flows from top to bottom and responsibility flows from bottom to top. Accountability is a result of responsibility and responsibility is result of authority. Therefore, for every authority an equal accountability is attached.
.103