Stakeholders Engagement

(in project)
What is Stakeholder Analysis ?
It is a method for –
- identifying internal
& external stakeholders,
their concern and objectives,
their potential influence,

and how to deal with them ?

 Why important
to work effectively with your stakeholders?
 Managing the stakeholders relationships
is an imp. key in reaching a successful project outcome.

 Such analysis is important to define the project purpose,

objectives and success criteria, in respect of the key-stakeholders.

 It becomes the foundation for –

a. organizing the project, developing contract strategies for
issues outside the contractual requirements, and
b. for developing communication plans with the internal and
external stakeholders.
Management vs Engagement

Stakeholder Management – to Control, Direct or Tell

Stakeholder Engagement – to Interact, Involve or Empower

Stakeholder Engagement

The 4 C’s of engagement:

 Communicate: to pro-actively share the information.

Consult: to understand and respond to stakeholder concerns.
Collaborate: to work in partnership with stakeholders.
Co-create: to create innovative solutions.
Stakeholder Engagement Process

IDENTIFY ANALYSE PLAN ENGAGE

Stakeholder Engagement Process

What makes someone a stakeholder?

 Someone who has something to gain or lose
through the outcomes of your program
 Someone who can potentially influence, champion
or block your program’s implementation.
(including Govt. Agencies, Social activists)

IDENTIFY
Stakeholder Engagement Process
Ask -
 Who will be impacted by the program?
 Who should contribute towards the outcome?
 Who can champion the program?
 Who will be involved in the program?
 Who is accountable for the program?
 Who may object to the program?

IDENTIFY
 Identifying Stakeholders

 Internal stakeholders include the project sponsor, project team,

support staff, and internal customers for the project.
Others include top management, other Functional
Managers, and other project managers
 External stakeholders include the project’s customers,
competitors, suppliers, and other ext. groups that are
potentially involved in the project or affected by it,
such as Govt. officials and Concerned Citizens

IDENTIFY
11
Additional Stakeholders
 Other stakeholders include:
 Program director
 Labor unions
 Potential customers

 Also necessary to focus on

stakeholders with the most direct ties to a project,
e.g. Key Suppliers

IDENTIFY
12
 Stakeholder Register
 A stakeholder register includes basic information on stakeholders:

 Identification information: The stakeholders’ names, positions,

locations, roles in the project, and contact information
 Assessment information: The stakeholders’ major requirements
& Expectations, potential influences, and phases of the
project in which stakeholders have the most interest
 Stakeholder classification: Is the stakeholder internal or external?
Is the stakeholder a supporter of the project
or resistant to it?

IDENTIFY
13
 Sample Stakeholder Register

IDENTIFY
14
Stakeholder Engagement Process

 Stakeholders can be rated based on

their level of impact and
their level of interest in your program.
 A stakeholder analysis grid is an easy way to
categorize each stakeholder.

ANALYSE
 Stakeholder Analysis Grid

Keep satisfied Manage closely

Level of impact (low to high)

(ENGAGE) (COLLABORATE)

Monitor Keep informed

(MAINTAIN (COMMUNICATE)
AWARENESS)

Level of interest (low to high)

ANALYSE
Stakeholder Engagement Process
 Info. gathered during the identification and analysis
phases, can now be used to plan your engagement
activities.
 The purpose of the Grid plan is to define the level of
stakeholder engagement and to proactively manage
these activities.

PLAN
 Stakeholder Engagement Process
Communication Strategies
Keep satisfied (engage) Manage relationship closely (collaborate)
• Share the info reqd • Request to champion the
Level of impact (low to high)

• Meet frequently project.

• Build good • Participate in critical reviews
relationship • Build healthy relationship
Monitor Keep informed
• Provide the • Provide the specific info
general updates • Meet as and when required
• Meet occasionally

PLAN Level of interest (low to high)

Stakeholder Engagement Process
 Make sure every stakeholder has an appropriate way to
participate and offer input.
 Engage stakeholders in a timely manner to avoid last-
minute problems.
 Solicit the help of other stakeholders (champions).
 Sometimes you just cannot agree – an ability to disagree
without damaging relationships is a major asset

ENGAGE
Stakeholder Engagement Process

 Communication needs to be clear & timely,

so that there can be no confusion by either party.
 Follow-up with stakeholders, ensure their understanding.
 Ensure roles & responsibilities (among project team) are
clear and documented.

ENGAGE
 Understand Engagement Levels
and Monitor the same -

 Unaware: Unaware of the project and its potential impacts on them.

 Resistant: Aware of the project, yet resistant to change,
 Neutral: Aware of the project, yet neither supportive nor resistant
 Supportive: Aware of the project, and supportive of change
 Leading: Aware of the project

22
Co-Creation
Why co-creation ?

 Because of the increasing shift of value, the Product -Centric

approach is replaced by a Costumer Experience Approach,
where users can become partners of the organisation.
 This perspective changes the markets & processes,
 Users not to be seen anymore as preys (Bakra),
but to be engaged as Active part of the innovation process.
What is Co-creation ?
 It is a social and participative experience where all key
stakeholders are engaged in a constructive activity to better
understand reciprocal points of view and collaboratively create
concepts that are valuable for all stakeholders involved – the
organization, the users, the developers.

 Co-creation is not only about getting ideas from the users, or

understanding the rational thoughts behind their behaviours, co-
creation is about users’ empowered engagement and creativity,
to generate insights and latent opportunities.
Risk Management

Ref. Book :
Project Management
by Gray and Larson
 Why manage risks ?

 It is a fact of life that - chance events will occur

and affect the outcome of your project.

But a wise-man does not does not stop his attempt,

just because the risk may occur
 Project Risk Management

• Project Risks are defined as the undesirable event,

the chance this event might occur and
the consequences of all possible outcomes.
• Risk Management attempts to identify such events,
minimize their impact & provide a response
if the event is detected.
The essence of Project Management is Risk Management !

Be prepared ...... in case the un-wanted event occurs !!

 Risk during the project
 Risk varies over the project life cycle
( so also the Associated Cost to address the risk),
 For initial phase there is high chance of risk events, but the cost impact is low.
 Towards final phase there is low chance of risk events, but cost impact is high
 Identifying and managing risks, will greatly affect project success

Figure from
“Project
Management” by
Gray and Larson
 Risk Management Steps
 Four major steps to develop a risk management plan
1. Identify all the possible risk events
that could affect the project
2. Assess each risk in terms of probability,
impact severity & controllability
3. Develop a strategy and Contingency
for responding to each risk
4. Monitor and control risks dynamically
 A Risk Mgmt. Plan should be developed during the
initial project phase and immediately implemented
 The plan should be reviewed & revised
as needed, during each project phase

Figure from “Project Management” by Gray and Larson

 Identify the Project Risks

 Generate list of all possible risks by “brain-storming”

among team members
 Understand the sources of risk and the categories.

 Also seek inputs from sources outside your group

 Emphasize critical thinking (negative thoughts)

Risk Statement Articulation
 When ? Where ?

 What risk ?

 What consequence / Impact ?

e.g. :

 During <Time and Phase>, due to < condition >, there may be
occurrence of < event name> resulting in < consequence(s)>

 During <the ……… Phase>, due to the <lack of sufficient

expertise of ….. >, there may be <ambiguous requirements>
impacting the <quality of the requirements, higher costs,
slippage of quality goals.>
 Risk Break-down Structure – RBS Template

Organizations use RBS in conjunction with WBS , to identify and eventually analyze the Risks
Risk Sources
Determine Risk sources
Identify both Internal & External to a project, where risks can originate.
Examples:
Uncertain requirement : NOT estimated properly earlier,
In-feasible design affecting quality attribute
Unavailable technology
Unrealistic schedule estimates (or Allocation)
Inadequate staffing and skills
Cost or Funding issues
Uncertain or Inadequate sub-contractor capability, OR capability
Inadequate communication with customers or with their representatives
- causing disruptions to the continuity of operations
Regulatory constraints (e.g. security, safety, environment)
Determine - Risk Categories
 Identifying risk categories helps to consolidate various activities
( to prepare Risk Mitigation plan later).
 The following factors can be considered,
while determining risk categories:
 As per Phases of the project’s lifecycle model (e.g., Design,
Manufacturing, Test & Evaluation, Delivery, Disposal)
Types of processes used
Types of products used
 Project Mgmt. Risks (e.g., contract risks, budget risks,
schedule risks, resource risks)
Technical performance risks
(e.g. - Quality related risks, Supportability risks)
Risk Parameters

Risk Likelihood (i.e. Probability of occurrence)

Risk Consequence (i.e. Impact )

Thresholds to trigger management activities

 Ranking the risk importance : Risk Severity Matrix

 Rank risks : from Neglect to Extra Vigilance

 Risk Severity Matrix : helpful in prioritizing
the risks
 Plot of event probability versus impact
 Red zone : the most critical & imp. events
 Yellow risks : moderately critical & imp.
 Green risks: probably can be ignored

• Note : Zones not symmetrical across matrix.

• High impact low probability events much
more imp., than low impact events
Based on figure from “Project Management”
by Gray and Larson
13
Develop a Response for Risks

 A risk response plan identifies the primary components

necessary for managing the risk –

What response strategy will be used

How will the risk event be detected
and the response triggered
What plan will be put in place in response to the event
Who will be responsible for monitoring and controlling the
risk
 How to respond ? - Risk Response Strategies
12
1. Mitigating risk
 Actions taken either – A) Reduce the likelihood of a risk,
or B) Reduce the impact of the risk
e.g. - Use proven technology, (with maintenance contract )
2. Accepting & Sharing risk
 Usually for events with low probability, but high impact
when no alternate strategy is feasible.
 Have a contingency plan ready in case event occurs
 Multiple units associated with the project assume common risk
3. Risk Avoidance:
 Avoiding the option that is likely to cause a risk.
( e. g. do not use unfamiliar technology)
4. Transferring risk e.g. Taking an insurance
 Finally : Contingency Planning
1. Risks associated with the tech. aspects can have the most sever outcomes
 Can be mitigated by building and testing prototypes of critical components
 Have available backup or alternate designs that have much lower risk
2. Risks associated with the Time- schedule usually require a trade-off
 Manage slack time to provide resources for delayed components
 Bring in more people (increase costs) or reduce performance
3. Risks associated with costs usually result from estimate errors & omissions
 Time & cost are related; trade-off schedule delays with lower cost
 De-scope options that remove components of the project,
but still allow the primary mission to proceed
 All budgets(schedule, cost etc.) should include a reserve percentage
that can be expended as risk events occur
Project Closure
Project Closure
It involves –
handing over the deliverables to your customer,
passing the documents (for billing etc.)
closing supplier contracts,
2
releasing staff and equipment, and
informing stakeholders of the closure.

+ Review (for future).

Types
of Project closure

▹ Normal
▹ Premature 3

▹ Perpetual
▹ Failed Project
▹ Changed Priority
Six major activities in
implementing closure

1. Getting delivery acceptance from the customer.

2. Shutting down resources & releasing to new uses.
3. Re-assigning project team members.
4
4. Closing account and seeing all bills are paid.
5. Creating Punch-list.
6. Creating a final report (for review ).
Project closure deliverables

5
6
 Project Punch List
During Project Closure :
- PM to create a project punch-list
(that didn’t get accomplished yet),
and assign team members to 7

complete them.
Perform a final project budget and
prepare a final project report.
Creating the Final report.

▹ Executive summary
8
▹ Review and analysis

▹ Recommendations

▹ Lessons learned
Post Implementation
Evaluation
The purpose of post
implementation project
evaluation is – 9

to assess how well

the Project Team,
Team members, &
Project Manager
performed.
Post-Implementation
Evaluation

1. Team Evaluation
2. Individual Evaluation
10
- Individual Team member review
- PM performance review
Team Evaluation
The evaluation of a team's effectiveness
may include indicators such as:

• Skill improvements needed that allow members

to perform assignments more effectively,
11
• Competencies improvements needed that may
help the team perform better as a team,
• Reduced staff-attrition rate,
• Increased team cohesiveness, where team
members share info. & experiences
openly, and help each-other to improve
the overall project performance.
Individual Evaluation

The main purpose of an individual

evaluation is two dimensional.
• It analyses individual experience
of working in project. 12

• On the other, it looks into

Individual Development &
future strategy, to meet success.
 Individual Review
Generally, they center on
the Technical & Social skills
brought to the project and team.

13
Following are some popular
Individual Review Techniques:
• Informal discussion bet. PM & Team member.
• Using rating scale.
• Submitting written descriptive evaluation.
 Team-member & PM
review technique
Team member review is imp. not just for analyzing
the team but also for evaluating the PM.
For this, a Popular techniques used is 360-degree
review technique.
14
360-degree review feedback provides : ‘
Each employee gets the opportunity to receive own
performance feedback from his or her supervisor
. or manager and 4 - 8 peers, staff members,
co-workers, and customers.

360 degree feedback tool is also responded

by each individual (as Self-Assessment).
 Retrospectives
This methodology is for analysis of a past project
event to determine :
What worked, (and what didn’t),
Lessons learned, and thereby creating an action
plan to ensure improvements in future projects.
15
Characteristics of retrospectives methodology:
• Uses an independent facilitator.
• Includes min. 3 in-process learning gates
during the project life cycle.
• Develops a repository that is easy to use.
• Mandates a discipline that ensures retrospectives
are used.
Characteristics of facilitator.
A project facilitator is a guide who does
Thorough Analysis of project activities
that went well, (or Did not go well),
What needs improvement, and development of
a follow up action plan with by suggesting
clearer processes & accountability.
16

Following are his characteristics:

• No direct involvement/ direct interest in the project.
• Perceived as impartial and fair,
Broad based experienced in industry.
• Respect of Sr. Mgmt. and other stake holders.
• Willingness to listen.
• Independent Authority to report review results.
• Perceived in best interest of org. in making decision.
Managing a Retrospective

17
 OVERSEEING A POST PROJECT
RETROSPECTIVE
There are 2 methods of overseeing a post project retrospective:

1. Process & Method Review - It begins with a

review of strategic intent of project, selection criteria,
project charter, project objective, project scope, 18
and acceptance criteria.
2. Organizational review- Project Performance is
strongly influenced by Organizational Culture.
Hence it is important to review - what & how
organizational culture properties affect
project success and failure.
 Project
Procurement Management
Learning Objectives

 Importance of Project Procurement &

and increasing use of Outsourcing.
 Procurement planning Process, Tools & Techniques,
Types of Contracts, and SOW.
 Solicitation Planning & Solicitation Process
 Source Selection Process and
Evaluate Proposals for Selecting Suppliers
 Good Contract Administration.
 Contract Close-Out process
Why Outsource ?

 To reduce our own CAPEX :

- fixed & recurrent costs
 To focus on Core business
 To access new skills & technologies,
- unknown to us, thru’ vendors
 To provide flexibility
- in case of internal shut-down.
 To increase Vendor Accountability/ involvement.
 Benefits of Outsourcing
Time spent by Sr. Mgmt. on various activities
in outsourced and non – outsourced environments

10 %
Strategic Admin.

Tactical 30 % Tactical

Admin. 60 %
Strategic

Without Outsourcing With Outsourcing

Project
Procurement Mgmt. Processes

1. Procurement planning:
determining what to procure and when ?
2. Solicitation planning: documenting our NEEDs
& identifying potential sources
3. Solicitation: obtaining quotations, bids, offers,
or proposals as appropriate
4. Source selection: choosing from among
potential vendors
5. Contract administration: managing the
relationship with the vendor
6. Contract close-out: completion and
settlement of the contract
Project Procurement
- Processes and Key Outputs
Procurement Planning

 It involves : -
- identifying which project-needs can be
best met, by procuring from outside the org.

 It includes deciding
 whether to procure
 how to procure
 what to procure
 how much to procure
 when to procure
Procurement Planning
Tools & Techniques
 Make-or-Buy Analysis: determining whether a
particular product or service should be
made /performed inside the organization
or purchased from someone else.
Often involves financial analysis
 Experts ( both internal and external) can provide
valuable inputs in procurement decisions.
 Spend Analysis: SAP Software Pkg.
GEP
Make-or Buy Example

 You can lease a Pump you need for a project

Rent per Day = $150/day.
New pump purchase costs $1,000,
and daily maintenance cost = $50/day.
 How long will it take for the lease cost to be
the same as the purchase cost?
 If you need the item for 12 days, should you
lease it or purchase it?
Make-or Buy Solution

 Let d be the number of days to use the item.

$150 d = $1,000 + $50 d
 Solve for d as follows:
$150d -$ 50 d = 100 d = $1,000
d = 10 days
 The Buy-lease cost & Own purchasing cost
are same at 10 days
 If you need the item for 12 days, it would be
more economical to purchase it
Types of Contracts
 Fixed-price or Lump-sum: involve a fixed total
price for a well-defined product or service
 Cost-Reimbursable: involve payment to the
seller for direct and indirect costs
 Time and material contracts: hybrid of both
fixed-price and cost-reimbursable,
often used by consultants
 Unit price contracts: require the buyer to pay
the seller a pre-determined amount per unit
of service
 FIXED PRICE CONTRACT
 Under a fixed price or lump-sum agreement, the
contractor agrees to perform all work specified
in the contract at a fixed price.
e.g. : A Chinese Lap-top manufacture would enter into
a fixed-price contract for a standard model – if he
knows what it takes to complete the model and the
associated cost. Also when he is confident that he
would be able to deliver in the given time.
 In fixed-price contract bids, the price & completion
schedule cannot be adjusted once agreed upon.
 If it is over-estimated he may loose the contact and
 if the estimation is too low, he may win the job but make little or no profit.

12
Continued….

 Contracts with long lead time such as construction

and production project may include escalation
provisions that protect the contractor against
external cost increase in material, labor rates or
overhead expenses.

e.g. : In the same Lap-top example, if the client wants

Lap-Top with an Operating System for one year,
the contractor could ask for escalation clause to
adjust the overall price of the contract based on the
cost of the OS.

13
 FIXED PRICE CONTRACT

ADVANTAGES DISADVANTAGES
 Preferred (by both owners  It is more difficult and costly
for the client (Project Owner)
and contractors), where the to prepare (considering the
scope of the project is well future period hikes).
defined.
 Here clients do not have to  The primary disadvantage for the
be concerned with project contractor is that they run the risk
cost and can focus on of under-estimating.
monitoring work.
 Contractors prefer fixed-cost  The contractors profit is determined
because it is less likely for by the difference between the bid
clients to request for a and the actual cost, there is some
change or addition to the incentive for the contractor to use
contract. cheaper quality material.

14
 How to safe-guard the
Dis-Advantages in Fixed Price Contract
 Under-estimating risk can be avoided by investing
significant time & money, to ensure that their
estimates are accurate.

 If cost over-run, the contractor absorbs only partially.

A formula could be evolved based on cost-sharing ratio
(CSR). e.g. : A CSR of 75/25 indicates that for every dollar spent
above target costs, the client pays 75 % and contractor pays 25 %.

 Clients can ensure quality, by preventing the use of

cheaper quality material, by insisting on RIGID SPECs.
OR appointing 3rd party consultant/ inspector. 15
 Cost Reimbursable Contracts

An agreement specifying –
Client to pay the contractor for all the expenses
of the project detailed in the contract, plus an
additional % to provide contractor with the profit.

 Cost plus incentive fee (CPIF)

 Cost plus fixed fee (CPFF)
 Cost plus % age of costs (CPPC)
 COST-PLUS CONTRACT
 The buyer absorbs more risk, which has 3 forms:

(a) Cost plus incentive fee (CPIF) : the client pays the
contractor for allowable performance costs + incentive
bonus (for which the METHODOLOGY to be fixed in adv.)
(b) Cost plus fixed fee (CPFF) : the client pays the contractor
for allowable performance costs + a fixed fee payment
usually based on percentage of estimated costs.
(c) Cost plus % age of costs (CPPC) : the client pays the
contactor for allowable performance costs plus a
predetermined percentage based on total costs
 COST PLUS CONTACT
ADVANTAGES DISADVANTAGES

 Higher quality- since the  The contract can not

contractor has the indicate what the project
incentive to use the best would cost until the end.
labor and material.
 There is little formal
 The design or scope of incentive for the
the work can be subjected
contractor to control cost
to change.
or finish on time.
 For contractor there is a
chance of additional  Contractor puts the major
profit with better risk on the client.
performance incentives.
18
Examples of Cost-Plus Contract

Mobile App development :

If for the first time, an app of it’s kind was developed
 Use CPIF type of contract, putting risk on both
client & contractor. But also motivates the
contractor to complete quality work.
 CPFF contract : The contactor would provide all the
legitimate cost. Based on this, the contactor would
include a fixed-fee that is a % of legitimate cost.
 If we enter into a CPPC contract as the client, we
would set check-points within the project work to
determine- if awarded fees were worthwhile.
 DIFFERENCE

FIXED PRICE CONTRACT COST PLUS CONTRACT

 Contractor assumes risk (may  Client assumes the risk
earn, may lose)
 Contractor is paid cost plus
 Client – NO risk. His anticipated additional amount for overhead
profit is sure. and profit.
 Contractor is independent and  Low RISK to contractor.
performs the work as it sees fit
 Client may direct work
 Scope of the work is clearly
defined to enable an accurate
estimate.  The scope of work and cost may
not be clearly defined.

20
CONTRACT TYPES v/s RISK

 The risk depends upon the type of contract.

 The figure below summaries the spectrum of risk
of buyer (client) and seller (contractor).
 A low risk option for a buyer will be high risk for
seller and the visa-versa.

21
 WHEN TO USE……

FIXED PRICE CONTRACT COST PLUS CONTRACT

 Clear requirements  When there is a high

 Sure deadlines probability that the
actual costs might
 Limited or fixed reduce.
budget
 Project scope is not yet
 Small projects, with fully known
limited features
 Flexibility is required
22
Statement of Work (SOW)

 SOW is a description of the work required

for the purpose of procurement
 Many contracts, or mutually binding
agreements, include SOW
 A good SOW gives bidders 
a better understanding of
the buyer’s expectations
 SOW Template : Typical contents
I. Scope of Work: Describe the work to be done to detail. Specify the hardware and
software involved and the exact nature of the work.
II. Location of Work: Describe where the work must be performed. Specify the
location of hardware and software and where the people must perform the work
III. Period of Performance: Specify when the work is expected to start and end,
working hours, number of hours that can be billed per week, where the work must
be performed, and related schedule information.
IV. Deliverables Schedule: List specific deliverables, describe them in detail, and
specify when they are due.
V. Applicable Standards: Specify any company or industry-specific standards that
are relevant to performing the work.
VI. Acceptance Criteria: Describe how the buyer organization will determine if the
work is acceptable.
VII. Special Requirements: Specify any special requirements such as hardware or
software certifications, minimum degree or experience level of personnel, travel
requirements, and so on.
Solicitation Planning

 Solicitation planning
involves preparing RFP
and will contain the following:

 Request for Proposals:

outlined in the next slides
RFP Contents -
Summary & Background
To provide a high level description of what RFP is for, and the
purpose of the requirement. (It may provide background info.
of the org. All detailing will be in subsequent sections)

Proposal Guidelines for Vendors

This section provides a description of what each responding
organization’s proposal should contain.
It shd. also include a timeline for proposals submission.

Project Purpose and Description

This part provides the purpose & description of the project or
work to be performed in as much detail as possible.
(exactly what work needs to be performed).
The purpose of the work is imp. (because sometimes bidders
may be able to provide diff. but more effective solutions
RFP Contents -
Project Scope
this includes - what exactly is required for the project
(as well as what is not included as part of the project)

Timelines for Request Process, & Project Timeline

Provide here known info. about the timeline for the
RFP process as well as the project itself.

Budget
This section explains what bidders to include in their
proposals regarding budget items mentioned in the scope.

Often, an RFP will ask bidders to list pricing a certain way or

describe what exactly shd. be included in the pricing
for the proposal
RFP Contents -
Bidder Qualifications
This describes the criteria for successful bidder’s
organization. (work already done by the bidders,
Co. history, Executive background, Info. on Co. size,
Organisation charts, or such other info. to aid in the
decision making process.

Proposal Evaluation Criteria

Here- describe exactly how proposals will be
evaluated. (List of criteria that will be reviewed and
describe what is suitable for each of the criteria).

The more detail that can be included, the more thorough

and complete the proposals should be.
Solicitation
 Solicitation involves obtaining proposals
or bids from prospective sellers / bidders

 Organizations can advertise to procure goods and

services in several ways -
 approaching some Preferred vendor
 approaching several potential vendors
 Open advertising to anyone interested

 A bidders’ conference can help clarify

the buyer’s expectations
Source Selection
 Source selection involves
 evaluating bidders’ proposals
 choosing the best one
 negotiating the contract
 awarding the contract
 It is helpful to prepare formal
evaluation procedures for selecting vendors
 Buyers often create a “short list”
Sample
Proposal Evaluation Sheet
Be Careful in Selecting Suppliers
and Writing Their Contracts
 Check the stability of suppliers
Many dot-com cos. were created to meet
potential market needs, but went out of business,
mainly due to poor business planning, lack of Sr.
Management operations experience, lack of
leadership, and lack of visions.
 Even well-known suppliers can impede project
success.
 Be sure to write and manage contracts well with
all suppliers
Contract Administration

 Contract administration - to ensure that the

seller’s performance meets contractual
requirements

 Contracts are legal relationships, so it is imp.

that legal and contracting professionals be
involved in writing and administering contracts

 Many project managers ignore contractual

issues, which can result in serious problems
 Suggestions on
Change Control for Contracts
 Changes to any part of the project need to be
 reviewed, approved, and documented
 by the same people in the same way
that the original part of the plan was approved

 Any change should include an impact analysis.

How will the change affect  the scope, time, cost,
& quality of the goods & services provided?

 Changes must be documented in writing.

Project team members should also document
all imp. meetings and telephone calls
Contract Close-out
 After meeting the contract needs,
the close-out process to be completed.
 product / service verification to determine
if all work was completed
correctly & satisfactorily
 Admin. Activities to update records
to reflect final results
 Archiving info. for future use.
 Procurement Audits identify
lessons learned in the procurement process
 Project
Human Resource Mgmt.
What is HRM in Projects ?

• “The processes that

Build,
Organize
and Manage
the project team.
 How do we perform HRM ?

• 4 Processes -
–Develop HR Plan
–Acquire Project Team
–Develop Project Team
–Manage Project Team

Develop Human Acquire Project Develop Project Manage Project

Resources Plan Team Team Team
Develop HR Plan

• HR Plan describes : How the PM would

- Build & Manage a coherent team

• Define the Roles & Responsibilities

and create the Resp. Assignment Matrix (RAM)

• Defines the Organization Structure of the project

• Finally, the Plan defines how the PM would

Assess, Improve / Reward & Motivate
the Project Team
 Roles & Responsibilities
• Clearly defined roles & responsibilities are
essential for the successful project

• Roles & Responsibilities need to be assigned

in 6 groups
–Project Sponsor
–Senior Management
–Project Team
–Stakeholders
–Functional Heads.
–Project Manager
 Responsibilities
• Project Sponsor
– Sponsors & Accepts the product
– Provides key dates
– Bridge between Sr. Mgmt. & Project Team

Senior Management • Stakeholders

 Provide planning time – Approve project scope/
 Prioritize projects
Deliverables/ Changes
 Prioritize triple constraint
– Verify Scope
 Approve project charter
– Become Risk-Owners
 Protect the project
Responsibilities
Project Manager
 Integrate project components

 In-charge of project

(not necessarily resources)

 Accountable for project success/ failure

 Measures performance & Act accordingly

 Does NOT sign the project charter

Project Team Members Functional Heads

 Perform work  Assigns individuals to

 Liaise with stakeholders the project team

 Comply with processes  Assist with team member

and procedures on performance issues

 Deliver right project  Notify the PM of other

performance project resources demands

Acquire Project team

• Identify the Positions to meet diff. Roles

(needed for the project).
• Determine the skill-set requirements
(in various phases of the project)
• Check within the in-house talent pool
• Plan for recruitment (from External Resources)
• Check for outsourcing possibility of that skills
(like Designers, Quality Certifiers)
• Also identify need for virtual teams
Develop Project team

• Even if you assemble a ‘perfect’ team for your project,

still there is a need to bring that team together

– Open & effective communication

– Develop trust amongst members
– Constructive management of conflicts
– Coach/ mentor the teams
– Encourage collaborative problem-solving
– Encourage collaborative decision-making
 How to build trust ?
Onus lies on the PM.
Leadership Qualities are
much beyond Managerial Qualities

Competence Connection –
– be capable be empathetic

Project
Leadership
Honesty – Communication
be reliable – be clear
How to motivate ?

Certainty Challenge
Significance -clarity - drive
- praise

Contribution Human Growth -

-why needs Advancement

Variety Connection
- Rotation - Belonging
Some imp. HR Concepts / Theories

• Emotional Intelligence
• McGregor
• Maslow
• Hertzberg
 Emotional Intelligence

• EI is the capability of individuals –

to recognize their own (& other's) emotions,
discern between different feelings
and label them appropriately.
• Use emotional information
to guide (thinking, behaviour, manage or) adjust
emotions to adapt to the environments
in order to achieve individual’s goals (+ Org. Goals)
5 Essential Competencies of EI

• Self-Awareness
Relate to
• Self-Regulation
Ourselves
• Self-Motivation

• Empathy Relate to
• Effective Relationships Others
Personal Benefits of EI

• Greater career success

• Stronger personal relationships

• Increased optimism and confidence

• Better health
Motivation Theories
• McGregor’s Theory of X and Y
– X: People need to be watched every minute.
They are – incapable, avoid responsibility,
and avoid work wherever possible.

– Y: People are willing to work without

supervision and want to achieve.
They can drive their own efforts

X X

Y
Motivation Theories
• Maslow’s Hierarchy of Needs
People work for self actualization – the desire for self-
fulfilment, viz. the tendency for oneself, to become
actualized in what he is potentially

Self
Actualization
Esteem

Social

Safety

Physiological
Motivation Theories
• Hertzberg's Theory:
(to improve Job Attitude & Productivity )
– Poor Hygiene Factors (which destroy motivation)
• Working Conditions
• Salary
• Personal Life
• Relationships at Work
• Security

– Motivating Agents ( to work harder)

• Challenging work, Opportunity for Advancement
• Self Actualization,
• Professional Growth,
• Recognition, Involvement in Decision Making
How to manage Project teams ?
Planning
Establish Project
strategy & goals
Align goals of employee
with Project goals
Determine performance
level criteria (KPIs)

Assessment
Career Development ORG Mission On-going feedback
Create Individual ORG Values & Goals
Development Plan (IDP) Annual discussion
Project Goals
Utilize rotations & trainings
Individual Goals Talent Discussion
Talent Discussion (MIS System)
(Development)

Recognition
Correlate promotions
and bonuses
Utilize low-cost,
no-cost ideas
Conflict Management

• Five Conflict Resolution Modes

– Withdraw Temporary Only –

– Smoothing No Resolution

– Compromising
– Forcing Provide Resolution
– Problem Solving
.
Conflict Management
Five Conflict Resolution Modes –

– Withdrawal (avoidance)
• The parties retreat or postpone a decision on a problem
– Smoothing (accommodating)
• This emphasizes agreement, rather than differences of opinion
– Compromising (reconciling)
• Brings some degree of satisfaction to both-lose-lose situation
– Forcing (directing)
• Pushing one view point at the expense of other: win-lose situation
– Problem Solving (collaborating)
• The parties openly discuss the differences and try to
incorporate multiple view points, in order to lead to consensus.
Collaboration leads to a win-win situation.
Organizational Charts
Anna
Project Manager

• Hierarchical Charts
Ed Ted Fred
Instrument Lead Painter Document Control

• Matrix Based
– Responsibility Assignment Matrix (RAM)
• RACI - Responsible, Accountable, Consult, Inform

Person
Activity Ann Ben Carlos Dina
Define A R I I
Design I A R C
Develop I A R C
Test A I I R
R = Responsible A= Accountable C= Consult I = Inform
 Develop HR Plan

Tools & Techniques

Enterprise Inputs Outputs
Environmental  Organizational charts Roles and
Factors Responsibilities
& Position
Organizational Descriptions Project
Process Assets Organizational
 Networking
Charts
Project Mgmt.
 Organizational theory Staffing
Plan
Management Plan

Acquire Develop Manage

Develop Project Project
Project
HR Plan Team Team Team
 Acquire Project Team

Enterprise
Inputs Tools & Techniques Outputs
Environmental Project Staff
Factors Assignments
Organizational  Pre-assessment Resource Availability
Process Assets
 Negotiation
Roles and Staffing
Responsibilities  Acquisition Management Plan
Updates
Project Org  Virtual teams
Charts
Staffing
Management
Plan

Acquire Develop Manage

Develop Project Project
Project
HR Plan Team Team Team
 Develop Project Team

Tools & Techniques

Inputs
Project Staff
Assignments  General mgmt. skills
Outputs
 Training Team
Staffing Mgmt.
 Team-building activities Performance
Plan
 Ground Rules Assessment
Resource
 Co-location (KPIs)
Availability
 Recognition & Rewards

Acquire Develop Manage

Develop Project Project
Project
HR Plan Team Team Team
 Manage Project Team

Tools & Techniques Outputs

Project Staff
Requested
Assignments
 Observation & Changes
Roles and
Inputs conversation Recommended
Responsibilities Corrective Actions
 Project Performance Recommended
Project Org Charts
Appraisals Preventive Actions
Staffing Mgmt. Plan
 Conflict Management Organizational
Team Performance Process Assets
Assessment (KPIs)  Issue Log Updates
Work Performance Project Mgmt.
Reports (MIS) Plan Updates

Acquire Develop Manage

Develop Project Project
Project
HR Plan Team Team Team
Project Management
THE MANAGERIAL PROCESS

Clifford F. Gray

Eric W. Larson

Chapter 15

International Projects
PowerPoint Presentation by Charlie Cook
 Your project location may be ….

1. Near the Raw Material sources

(Steel, Cement Plants )
Volume Compression Ratio
(Higher the ratio, nearer to RM source)
2. Near to Market / Customers
(FMCG, Perishables Goods, Services)
3. Better facilities & infrastructure
(IDC, Union Territories, SEZs, FTZs)
MNCs to consider
Country Factors

1. Political Risks,
Govt. Rules, Policies,
Incentives
2. Cultural & Economic Issues
3. Locations of Potential
Markets
4. Exchange Rates and
Currency risks
5. Federal Taxex
6. IPR Laws
Region / Community Factors

1. Attractiveness of region
MN
2. Labor availability, costs, attitudes
WI
towards unions
MI
3. Costs and availability of utilities
IL OH
IN 4. Environmental regulations
5. State Govt. Incentives
6. Proximity to RMs & Customers
7. Land/ Construction costs
Site Factors 1. Site Topography/ Size
and Land cost
2. Air, Rail, Highway,Port
3. Zoning Restrictions/
4. Nearness of services/
supplies needed
5. Environmental impact
issues.
6. Local issues
Approach to Location

Revenue /
Profit maximization
(Service Ind.)

Cost Minimization
(Mfg.)
Clustering

Reason for
Industry Locations
clustering
Wine makers Napa Valley (US); Natural resources
Bordeaux region Land, Climate
(France)
Software firms Silicon Valley, Boston, Talent in Sc./tech. areas,
Bangalore (India) Venture capitalists nearby

Electronic firms Northern Mexico Duty free export zones

Computer Singapore, Taiwan High tech penetration rate,

hardware Skilled/educated workforce
manufacturers with large pool of engineers,
Mass Production
Techniques
 International Assignments
• Positives issues • Negatives issues
– Increased income – Absence from home and
friends, and family
– Increased responsibilities
– Personal security risks
– Career opportunities
– Missed career opportunities
– Foreign travel
– Difficulties with foreign
– New lifetime friends
language, culture, and laws
 Environmental Factors
affecting International Projects

FIGURE 15.1
 Environmental Factors
• Legal/Political
–Political stability (in that territory)
–National and local laws and regulations
–Government, state and local bureaucracies
–Government interference or support
–Government corruption
• Security
–International terrorism
–National and local security
–Local crime and kidnapping
–Risk management
 Environmental Factors (cont’d)
• Geography
–Climate, Time and seasonal differences
–Natural obstacles
• Economic
– GDP, Per Capita Income / Expenditure)
–Protectionist strategies and policies
–Balance of payments
–Currency convertibility and exchange rates
–Inflation rates
–Local labor force: supply, educational and skill levels
 Environmental Factors (cont’d)
• Infrastructure
–Tele-communication networks
–Transportation systems
–Power distribution grids
–Unique local technologies
–Educational systems, Public health
• Culture
–Customs and social standards
–Values and philosophies
–Language
–Multi-cultural environments
 Cross-Cultural Considerations:
A Closer Look

• Culture
–A system of shared norms, beliefs, values, and
customs that bind people together, creating shared
meaning and a unique identity
• Cultural Differences.
• Geographic regions
• Ethnic or religious groups
• Language
• Economic
 Cross-Cultural Considerations… (cont’d)
• Ethno-centric Perspective
–The tendency believe that one’s cultural values and
ways of doing things are superior to all others
• Wanting to conduct business “only on your terms"
and stereo-typing other countries as lazy, corrupt, or
inefficient.
• Ignoring the “people factor” in other cultures by putting
work ahead of building relationships.
• Adjustments
–Relativity of time and punctuality
–Culture-related ethical differences
–Personal and professional relationships
–Attitudes toward work and life
 Cross-Cultural Orientations
• Relation to Nature
– How people relate to the natural world around them and to the
supernatural.
• Time Orientation
– The culture focus on the past, present, or future.
• Activity Orientation
– How to live: ―being‖ or living in the moment, doing, or controlling.
• Basic Nature of People
– Whether people viewed as good, evil, or some mix of these two.
• Relationships Among People
– The degree of responsibility one has for others.

Source: F. Kluckhohn and F. L. Strodtbeck, Variations in Value Orientations (Evanston, IL: Row, Peterson, 1961).
 Cross-Cultural Considerations (cont’d)

Working in
France
Working in the Working in
United States China

Working in
Mexico

Working in
Saudi Arabia
 Working in Different Cultures

• Relying on Local Intermediaries

–Translators
–Social connections
–Expeditors
–Cultural advisors and guides

• Culture Shock
–The natural psychological disorientation that people
suffer when they move into a different culture.
Culture Shock Cycle

FIGURE 15.6
 Working in Different Cultures (cont’d)
• Coping with Culture Shock
–Create ―stability zones‖ that closely create home.
(Social media groups etc.)
–Modify expectations and (own) behavior
–Re-define priorities, and develop realistic expectations
–Focus on most imp. tasks and
relish small accomplishments
–Use project work as a bridge,
until adjusted to the new environment
–Engage in regular physical exercise programs,
practice meditation and relaxation exercises,
 Selection and Training for
International Projects

• Selection Factors

–Previous overseas travel

–Work experience with cultures (other than one’s own)
–Good physical and emotional health
–Knowledge of a host nation’s language
–Recent immigration background or heritage
–Ability to adapt and function in the new culture
 Selection and Training for
International Projects (cont’d)

• Areas for Training -

to Increase Understanding of a Foreign Culture:
– Religion
– Dress codes
– Education system
– Holidays—national and religious
– Daily eating patterns
– Family life
– Business protocols
– Social etiquette
– Equal opportunity
 Selection and Training for
International Projects (cont’d)

• Learning Approaches to Cultural Fluency

–The ―information-giving‖ approach—the learning of
information or skills from a lecture-type orientation.
–The ―affective approach”—the learning of
information/ skills that raise the affective responses
on the part of the trainee and result in cultural insights.
–The ―behavioral /experiential” approach—a variant
of the affective approach technique that provides the
trainee with realistic simulations or scenarios.
 EPC

ENGINEERING, PROCUREMENT
& CONSTRUCTION
Agenda -

 Sectors in EPC
 EPC industry in India

 The E – P – C Functions

 EPC - 5 Drivers

 EPC Challenges

 Procurement Challenges

 Solution for Effective Procurement

 New Trends in Procurement

2
EPC: ENGG., PROCUREMENT & CONSTRUCTION

 EPC is a form of contract in the construction industry, wherein

end-to-end contract is made bet. the contractor & client.
 It covers all the details about the construction project
(like : Design of the project, Procurement of Material,
Labor & Eqpt. required for the project).
 It also covers the project deadlines and the amount to be paid
to the contractor.

 WHY EPC ? Over the time, the onus of managing the project
shifted from the Owner-client to specialists.
Unlike other contracts (where procurement, design execution
are considered separate processes), in EPC contracts 3
they are done simultaneously, reducing the risk & Time
SOME OF THE TOP EPC COS. IN INDIA

 Larsen & Toubro

 Nagarjuna Construction Company

 Punj Lloyd

 IVRCL

 Tata Projects

 Hindustan Construction Company

 Gammon India

 JP Associates

 GMR
4
EPC SECTORS

EPC
Specialized
Marine,
Infrastructure
Industrial,
Railways,
Tunneling,
Mining, etc.
Building Power Plants
construction General Power EPC
Residential, Oil & and Power
Commercial Natural Gas Transmission, Solar
Power,
Wind Power, 5
Nuclear Power
 E IN EPC
• Through Study
• Cost Estimate

•Basic Engineering
•Criteria & Specs.
•MTO Estimate

•Purchase Requisitions
• Calculations
• Detailed Engineering
• Definitive Estimate

Issue “Engineering Deliverables”

to Construction

• Produce “As-Built” 7
• Project Close-Out
 P IN EPC
•Develop Bidders Lists
•Purchase Order Pro-Forma
•Contracts Pro-Forma
•Transportation and Logistics

•Specifications (Eng.)
•Quantities (Eng.)
•Solicit/Evaluate Bids
•Award P.O. / Contract

•Shop Inspections
•Track Status
•Expedite per ROS Dates

•Transport & Receive

• Warehouse
•Maintain 8
•Release to Construction
 C IN EPC
• General Const. Plan
•Site Layout Plan
• Temporary Facilities

•Geo-Tech
•Mass Earth-Works
•Structural Concrete
•Structural Steel

•Equipment (mech. & elec.)

•Piping
•Raceway
•Instrumentation & Controls

•System Turn-over
•Start-Up & Commissioning
•Performance Run 9
•Turn-Over to end-user
FIVE DRIVES OF EPC
1. Effective control over Time & Cost over-run

2. Effective utilization of Resources

3. Effective fund Management

4. Effective Project Management Solutions

5. Effective Use of Technology solution

10
CHALLENGES IN PROCUREMENT

 Finding – “ Qualifying Suppliers"

 Getting proper Drawing and Layout availability
from Engineering / Clients
 Cost Reduction
 Getting - Accurate data for Supplier performance
management (SRM)
 Evaluating good suppliers for Future
 Transparency in operation
 Standardization of Procurement Process

13
PROCUREMENT PRESSURES

14
SOLUTIONS FOR EFFICIENT PROCUREMENT
• Add a Vertical in department
for continues vendor search.

• Maintain - Large vendor base

(to avoid supply fluctuations)

• Cost negotiation based on Project Time-line

Add – Incentives to Contractors

• Supplier Events /meets - for personal rapport

• CPFR with Suppliers and vendor 15

THANK YOU
18
Establishing -
Business Value
of Projects

Ref. Book – Jeffry Pinto

Ch.3: Project Selection
& Portfolio Mgmt.
 Project Selection
 Cos. often comes across multiple Project opportunities,
Ideally we should grab each & every opportunity.
 But of course, no organization enjoys infinite resources
(like funds, managerial talent etc.) to pursue each opp.
 Hence Choice must be made,
 to select the most viable projects.
 Screening Models - help managers pick
winners from a pool of project opportunities.

2-22
Project Screening & Selection Issues

Risk – factors reflecting unpredictability

Commercial – factors reflecting market potential

Internal operating issues, impacting internal Ops., SW

Additional issues– such as Co. Image, patent, fit, etc.

(All details in the next slide)

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3-39
Various Approaches to
Project Screening

Profile models

Financial models

Check-list

Simple scoring models

Analytic hierarchy process

 Profile Models
Project proposals judged on
- Risk- Return Options

Max. Desired X6
Risk
X2 X5
X4
R
i X3
s X1
k
Minimum Return
Desired Return
Financial Models
(Based on the time value of money principal) –

o Pay-back period
o Net Present Value (NPV)
o Internal rate of return (IRR)
o Options models

All these models use Discounted Cash Flows

 Payback Period

Determines how long it takes for a project

to reach a breakeven point

Pay back Period Investment

Annual Cash Savings
Cash flows should be discounted.

Faster pay-back period is better.

 Payback Period
A project requires an initial investment of $200,000
and will generate cash savings of $75,000 each year
for the next five years. What is the payback period?

Year Cash Flow Cumulative Divide the cumulative

amount by the cash
0 ($200,000) ($200,000) flow amount in the
1 $75,000 ($125,000) third year and subtract
from 3 to find out the
2 $75,000 ($50,000) moment the project
breaks even.
3 $75,000 $25,000
25,000
375,0002.67years
 Net Present Value
NVP depicts the change in the firm’s stock value,
if a project is undertaken.

NPV Io 
Ft
(1r pt )t
where Higher
NPV
Ft=net cashflowfor periodt values are
R=required rate of return better!
I =initial cashinvestment
Pt=inflationrateduring period t
 Net Present Value Example
Should you invest $60,000 in a project that will return
$15,000 per year for five years?
You have a minimum return of 8%, and expect inflation
to hold steady at 3% over the next five years.

Year Net flow Discount NPV

0 -$60,000 1.0000 -$60,000.00 The NPV
1 $15,000 0.9009 $13,513.51 column total is
2 $15,000 0.8116 $12,174.34 -$4561,
3 $15,000 0.7312 $10,967.87 so don’t
4 $15,000 0.6587 $9,880.96 invest!
5 $15,000 0.5935 $8,901.77
- $4,561.54
 Internal Rate of Return

A project must meet a minimum rate of return

before it is worthy of consideration.

I O 
t ACFt Higher IRR
n1 (1  IRR) t values are
better !
where
ACFt= annual after t ax cashflow for time period t
I O = initialcash outlay
N = project's expected life
IRR = the project's internal rate of return
 Check-list Model *

A checklist is a list of criteria applied to possible

projects.

 Requires agreement on criteria

 Assumes all criteria are equally important

Checklists are valuable for recording opinions

and encouraging discussion

* Demerit : This is a Subjective Method

Check-list * (Potential projects evaluated on
4 decision criteria : Cost, Profit, Time & Risk)
Projects under Performance on Criteria
Criteria
evaluation High Medium Low
Project Alpha Cost X
Profit Potential X
Time to Market X
Development Risks X
Project Beta Cost X
Profit Potential X
Time to Market X
Development Risks X
Project Gamma Cost X
Profit Potential X
Time to Market X
Development Risks X
Project Delta Cost X
Profit Potential X
Time to Market X
Development Risks X
* Demerit : This is a Subjective Method
SWeighted Scoring Models
Each project receives a score that is the weighted sum
of its grade on a list of criteria.

Scoring models require:

 agreement on criteria
 agreement on weights for criteria
 a score assigned for each criteria

Score(Weight  Score)
 Example of Weighted scoring model
Importance Weighted
Project Criteria Score (B) Total Score
weight (A) Score (A X B)
Project Cost 1 3 3
Alpha Profit Potential 2 1 2
13
Time to Market 2 1 2
Development Risks 3 2 6
Project Cost 1 2 2
Beta Profit Potential 2 2 4
19
Time to Market 2 2 4
Development Risks 3 3 9
Cost 1 3 3
Project
Gamma Profit Potential 2 3 6
Time to Market 2 3 6 18

Development Risks 3 1 3
Project Cost 1 1 1
Delta Profit Potential 2 1 2
16
Time to Market 2 2 4
Development Risks 3 3 9
 Analytic Hierarchy Process
The AHP is a four step process:

1. Construct a hierarchy of criteria and sub-criteria

2. Allocate weights to criteria
3. Assign numerical values to evaluation dimensions
4. Scores determined by summing the products of
numeric evaluations and weights
 Example of AHP
Finance (52%) Strategy (34%) Techn Total
ology score
(14%)
Short Long Market Cost
Different term term share Retentio mgt
project (30%) (70%) (30%) n (46%) (24%)
Alternatives
0.156 0.364 0.102 0.1564 0.0476 0.14
Perfect
1 1 1 1 1 1 1.000
Project
0.3 1 0.3 0.3 1 1 0.675
Aligned
1 0.3 0.3 0.6 1 0.6 0.521
Not aligned
0.3 0.6 0.3 0.6 3 0.6 0.6164
All very good
0.6 0.3 0.3 0.6 0.3 0.6 0.425
Mixed
Siemens Way of Project Handling : KYC
• Customer Analysis thru’ KYC Expectations
- Most of the times Bid-Contract Terms are brief & narrow,
whereas, Customer Expectations are too big & vague.
- Hence, to avoid future clash with the customer,
it is prudent to meet and understand his expectations.
- It’s better to get the contract terms CLARIFIED.
(In that process, sometimes the Tender gets revised,
and the Customer + competitor too, get benefitted.)
• Sometimes- Siemens charge the customer for this service .

• This results into achieving Hit Rate of 60-80 % bids won.

IGTC-DHBW BUSINESS ENVIRONMENT TRIP
19
2019