Course : MGMT8003-Project and Change Management

Effective Period: September 2016

Project Management
Knowledge Areas (3&4)

Session 03
 Project Management Knowledge
Areas (3 of 4)

 Project Time Management, and

 Project Cost Management
 Project Management Framework
Project
Portfolio
Nine Knowledge Areas Core To ols and
Techniques Project 1
Functions Project 2
Project 3
Scope Time Cost Quality
Project 4
Management Management Management Management

Project
Project Integration Management
Success
Stakeholder s’
needs and
expectations Procurement
HR Communication Risk
Management Management Management Management

Facilitating Functions
 Project Time Management
 Project Time Management – The process required to ensure
timely completion of a project
 For project managers, time is the least forgiving, and
least flexible variable in the project.
 Time cannot be stopped, no matter what changes have been
requested, what resource conflicts are occurring, or what
problems have been encountered.

 As a result, project time management is:

 Considered one of the most difficult tasks to both improve
and successfully achieve.
 Considered critically important in determining the overall success
of a project.
 Project Time The Basic Processes
 The main processes involved in project time management
include:
 Activity definition.
• This involves identifying the specific activities that the
project team members and stakeholders must perform to
produce the project deliverables.
• In some projects identifying all of the tasks is a feat unto
itself. Therefore it is very important to ensure that as many
as possible are identified, because those that are missed
will ultimately throw the project of schedule.
Project Time Management The Basic Processes
 Activity sequencing.
 This involves identifying and documenting the relationships between
project activities.
 It is important to know which tasks can be performed at the same time
and which ones are dependant on a previous task being completed first.
 Activity duration estimating.
 This involves estimating the number of work periods that are needed to
complete individual activities. (Remember an unwritten rule is a work
package can represent about 80 hours of work.) remember this comes
from the WBS.
 Here the project manager must work closely with his team leaders to
take a best guess at how long it will take to complete a task. They must
be careful not to estimate to much or to little.
Project Time Management The Basic Processes
 Schedule development.
• This involves analyzing the activity sequences, activity duration
estimates, and resource requirements to create the project schedule.
• Here the activity sequences and activity duration estimates are double
checked and matched to available resources. Once it is verified the
projects schedule is committed to documentation for sign-off. (At this
point the project schedule is almost law.)
 Schedule control.
• This involves controlling and managing the changes to the projects
schedule.
• This is where the law gets broken, and most often this is where the
proverbial back of the project gets broken.
 Activity Sequencing
 After defining project activities, the next step is activity
sequencing
– Involves reviewing the activity list and attributes, project
scope statement, milestone list and approved change
requests to determine the relationships between activities
 A dependency or relationship is the sequencing of project
activities or tasks
 You must determine dependencies in order to use critical path
analysis
 Three Types of Dependencies
 Mandatory dependencies: inherent in the nature of the
work being performed on a project, sometimes referred to
as hard logic
 Discretionary dependencies: defined by the project team;
sometimes referred to as soft logic and should be used with
care since they may limit later scheduling options
 Don’t start detailed design work until users sign-off on all
the analysis – good practice but can delay project
 External dependencies: involve relationships between
project and non-project activities
 Delivery of new hardware; if delayed can impact project
schedule
 Network Diagrams
 Network diagrams are the preferred technique for showing
activity sequencing
 A network diagram is a schematic display of the logical
relationships among, or sequencing of, project activities
 Two main formats are the arrow diagramming method (ADM)
and precedence diagramming methods (PDM)
Arrow Diagramming Method (ADM)
 Also called activity-on-arrow (AOA) network diagrams
 Activities are represented by arrows
 Nodes or circles are the starting and ending points of
activities
 Can only show finish-to-start dependencies
 Can omit activities that have no dependencies
Precedence Diagramming Method (PDM)

 More popular than ADM method and used by project

management software
 Activities are represented by boxes
 Arrows show relationships between activities
 Better at showing different types of dependencies
 Activity Resource Estimating
 Before estimating activity durations, you must have a good
idea of the quantity and type of resources that will be assigned
to each activity
 Consider important issues in estimating resources
 How difficult will it be to do specific activities on this project?
 What is the organization’s history in doing similar activities?
 Are the required resources available or need to be acquired?
 A resource breakdown structure is a hierarchical structure
that identifies the project’s resources by category and type
 Activity Duration Estimating
 Duration includes the actual amount of time worked on an
activity plus elapsed time
 Effort is the number of workdays or work hours required to
complete a task
 Effort does not normally equal duration
 People doing the work should help create estimates, and an
expert should review them
 Three-Point Estimates
• Instead of providing activity estimates as a discrete number, such as four
weeks, it’s often helpful to create a three-point estimate
– An estimate that includes an optimistic, most likely, and pessimistic
estimate, such as three weeks for the optimistic, four weeks for the
most likely, and five weeks for the pessimistic estimate
• Three-point estimates are needed for PERT and Monte Carlo simulations
 Schedule Development
 Uses results of the other time management processes to
determine the start and end date of the project
 Ultimate goal is to create a realistic project schedule that
provides a basis for monitoring project progress for the time
dimension of the project
 Important tools and techniques include Gantt charts, critical
path analysis, critical chain scheduling, and PERT analysis
 Gantt Charts
 Gantt charts provide a standard format for displaying
project schedule information by listing project activities and
their corresponding start and finish dates in a calendar
format
 Symbols include:
 Black diamonds: milestones
 Thick black bars: summary tasks
 Lighter horizontal bars: durations of tasks
 Arrows: dependencies between tasks
 The Importance Of Network Diagrams
 The construction of a network diagram is fundamental to
determining the overall project completion date.
 Gantt charts display planned and project schedule
information but don’t display relationships between tasks
and dependencies.
 A network diagram displays dependencies and is
required to perform critical path analysis.
 Importance of Critical Path
 Critical Path Method predicts total project duration and
allows project managers to make trade-offs where
necessary.
 If the project manager knows that one of the
projects tasks is behind schedule then they can
decide what to do about it. For example:
o Should they try to renegotiate the schedule?
o Should they allocate more resources to make for lost
time?
 Slack
 One of the techniques that allow project
managers to make these trade-offs is by
determining the free slack and total slack for the
project.
 Free slack is the amount of time an activity can be
delayed without delaying the early start of any
immediately following activity.
 Total slack is the amount of time an activity may be
delayed from its early start without delaying the
planned finish date.
 Critical Path Method (CPM)
 Critical path method is a tool which will help
combat schedule overruns.
 What does the critical path really mean?
 The critical path is the earliest time by which a
project can be completed.
 It is the longest path through a project network
diagram, and has the least amount of slack or
float.
 Performing Critical Path Analysis
Critical Path Approach
Build A

Dur = 15

Analysis Design Build B Implement

Dur = 10 Dur = 25 Dur = 20 Dur = 15

Build C

Dur = 30

 Critical Path = 10 + 25 + 30 + 15 = 70 days

 Clearly, Design is on the Critical path since future activities cannot proceed
unless the design is completed
 The Critical path is the longest path through the project and also when the
schedule is least flexible
 Using the Critical Path
to Shorten a Project Schedule
 Three main techniques for shortening schedules
 Shortening durations of critical activities/tasks by
adding more resources or changing their scope
 Crashing activities by obtaining the greatest amount of
schedule compression for the least incremental cost
o A 2 week task with one person working 50% could be
shortened to 1 week if the person is assigned 100% - no
increase in cost
o Or, a temporary worker could be hired to work in parallel
with the other worker to speed up the task (at a cost)
 Project Crashing
 Projects will sometimes have deadlines that are impossible to
meet using normal procedures
 By using exceptional methods it may be possible to finish the
project in less time than normally required
 However, this usually increases the cost of the project
 Reducing a project’s completion time is called crashing
Program Evaluation and Review Technique
(PERT)
 PERT is a network analysis technique used to estimate
project duration when there is a high degree of
uncertainty about the individual activity duration
estimates
 PERT uses probabilistic time estimates
 Duration estimates based on using optimistic,
most likely, and pessimistic estimates of
activity durations, or a three-point estimate
 PERT attempts to address the risk associated
with duration estimates by developing
schedules that are more realistic
o It involves more work than CPM since it requires
several duration estimates
 Schedule Control (continued)
 Goals are to know the status of the schedule, influence
factors that cause schedule changes, determine that the
schedule has changed, and manage changes when they
occur
 Tools and techniques include:
 Progress reports
 A schedule change control system
 Project management software, including schedule
comparison charts like the tracking Gantt chart
 Variance analysis, such as analyzing float or slack
 Performance management, such as earned value
 Reality Checks on Scheduling
 First review the draft schedule or estimated completion
date in the project charter
 Prepare a more detailed schedule with the project team
 Make sure the schedule is realistic and followed
 Alert top management well in advance if there are schedule
problems
 Verify schedule progress – just because a team member
says a task was completed on time doesn’t always mean
that it was
 Project Management Knowledge
Areas (3 of 4)

 Project Time Management, and

 Project Cost Management
 Project Management Framework
Project
Portfolio
Nine Knowledge Areas Core To ols and
Techniques Project 1
Functions Project 2
Project 3
Scope Time Cost Quality
Project 4
Management Management Management Management

Project
Project Integration Management
Success
Stakeholder s’
needs and
expectations Procurement
HR Communication Risk
Management Management Management Management

Facilitating Functions
 Problems With Cost Estimates
1. Developing an estimate for a large software project is a complex task
requiring a significant amount of effort.
 This is because many estimates must be prepared quickly, before
system requirements are clearly defined and before proper analysis
can be performed.
 A process to be followed can be as follows:
 Before the project begins a rough order of magnitude (ROM)
budget estimate should be prepared.
 This estimate is followed by a more accurate (typically higher
cost) budget estimate.
 Problem With Cost Estimates
 This in turn is followed by the definitive estimate which,
again, typically shows that it will cost more to do the
project than previously estimated.
 Something to consider…
 As with schedule management the project manager
must insist and ensure that proper cost estimates and
analysis be performed before the project begins and
that the definitive estimate needs to be revised and
updated as necessary throughout the project
 Problems With Cost Estimates
2. The people who develop software and hardware cost
estimates often do not have enough experience with cost
estimation, especially for large projects.
 Not enough accurate project data available on which to
base estimates because organizations do not properly
archive and manage historical information.
 To overcome these issues IT people should receive
training and mentoring on cost estimating.
 A proper archival and management system needs to be
developed and used for important historical project
information.
 Problems With Cost Estimates
3. Human beings have a bias towards underestimation.
 One of the reasons projects are underestimated is that senior IT
employees often make estimates based on their own abilities and
forget about junior team members working on the project.
 Another issue is that estimators typically forget about are
integration and testing costs. This occurs often in areas where
the team is only producing a small component or module within
the whole project.
 To overcome these problems project managers and senior
managers must review the cost estimates given to them by team
members and ask questions to make sure the estimates are not
biased. (I.e.. Get stakeholders or team members involved).
4. Management might ask for an estimate, but are really requesting a
number to help them create a bid to win a major contract or get
internal funding.
 Earned Value Analysis
 Earned Value (EV) = PV(to date) X (RP) percent complete
 Cost Variance (CV) = EV – AC
 Schedule Variance (SV) = EV – PV
 Cost Performance Index (CPI) = EV / AC
 Schedule Performance Index (SPI) = EV / PV
 Estimate At Completion (EAC) = BAC / CPI
 Estimate Time to Complete (ETC) = Original Time Estimate/ SPI

PV = Planned Value RP = Rate of Performance

AC = Actual Cost BAC = Budget at Completion
Benefits of Earned Value Analysis
 It is important to remember that the earned value calculations must
be performed for all project activities in order to estimate the earned
value for the entire project.
 This is because some activities will be behind schedule or over
budget while others are ahead of schedule and under budget.
 To determine how the project as a whole is performing these
earned values for all of the activities must be added together.
 Once the overall earned value is determined the CPI for the project
can be used to determine the estimate at completion (EAC).
 Benefits of Earned Value Analysis
 Estimate at Completion (EAC)
 This is an estimate of what it will cost to complete the
project based on the projects performance (CPI) to date.
 The EAC is calculated as follows:
EAC = Original Budgeted Cost / CPI
 If in the previous example the original budgeted cost for the project
was $250,000 then the EAC for the project (after the first week only)
would be:
EAC = $250,000 / 50% = $500,000
Thank You