44 study notes Paper E2 Enterprise Management Before youstart tackling complex 2 project, scenarios, it may help you te commit the terms and processes of project management tomemory byapplying them toasetting closer tohome Byenny Hughes E2¢utor London SchoolofBusiness& Finance rojects usually follow a life cycle com- prising separate stages that occur in sequence. There are numerous models that detail these (see diagram, below). but, whichever model you follow, it’s important to understand what happens at each stage, This article ~ the fist in a two-part series - focuses on the following stages of a project entitled “building the house of your dreams": ‘Initiation (including feasibility) Planning Execution © Monitoring and control © Completion. ‘The process of building a house starts long before the foundations are laid. To avoid costly mistakes during the construction you will need to find answers to specific questions in order to decide whether it’s feasible to proceed. You will have to consider how much your new property is likely to cost. The chances are that you will need The traditional stages of aproject ord Prec Coed prea Cee eee Cont Prete both a construction loan and a mortgage to fund the project. Knowing the approximate costs at this stage will help you to modify your building plans to meet the budget. Next you might need to consider the location. Whether you're choosing to build your home ina suburban development or on asite with sweeping ‘ocean views, you will need to choose a plot and investigate factors such as soil conditions, drain- age and building costs in the area. Having agood idea of your preferred architectural style will determine the size and characteristics of the build- ing site, ‘As you can see, a number of questions need to be asked before any commitment to proceed is made, all of which are part ofthe first stage of pro- ject management: initiation. You are undertaking a feasibility study, aiming to objectively and rationally uncover the strengths and weaknesses of the proposed venture; opportunities and threats presented by the environment; the resources required to carry the project through; and, ulti- mately, its prospects of success. Feasibility is a term used to determine how achievable various project options are. Such studies are normally con- ducted on a number of potential strategies. The aim is to decide which to choose, Each study will generate a feasibility report dealing with the eval- uation criteria, analysing the findings and making recommendations. Any risks to the project will also be assessed at this point. ‘Once you have decided that you still wantto go ahead and build the house of your dreams, the next task is to compile a project initiation docu- ‘ment (also known as project charter). Its purpose isto define the mission, scope and “deliverables” = the project management term for the products and/or services that will be produced ~ along with the roles and responsibilities of all the stake- holders. This will provide the overriding terms of reference for the life of the project. ‘The next stage is planning, which isthe arrange- ‘ment of activities to achieve the project's aims. ‘This means determining exactly which tasks have tobe undertaken. The project plan articulates: © What needs to be done (don’t forget the swimming pool). ‘© How this is to be achieved ~ and when. © By whom (an architect would be useful, as well as visionary interior designers and good builders). I>46 Study notes Paper E2 Enterprise Management ‘This plan is a benchmark against which the results can be compared and monitored, Planning isa vital part of any project. It's important to make “road map” that shows clearly how the tasks will be accomplished within budget and to schedule. ‘The detailed planning starts with the develop- ment of a work breakdown structure. Here, the project is split into components until there are manageable units of work that don’t need to be subdivided any further. Once the basic structure is complete, numbers are added to each of the vat- ious elements to indicate the percentage of the total work they represent. These should add up to 100 per cent, which equates to the work for the whole project (see diagram, below), A statement of work (or work package) is then compiled for each component in the work break- down structure, A statement of work for the build- ing of the walls will include: © A detailed description of the work ‘© Where this is to be undertaken. ©The completion date. © The standards required. © Who is responsible for the work. Awork breakdown structure ee (work 15%) ars (work 15%) aor (work 15%) Cea 4.Services osresi} Bos Prey (work 30%) a cot) A product breakdown structure should also be completed. This will include all of the resources required to complete the building of the walls, Costs can be attached to each resource so that a detailed budget can also be completed. Building the walls will require the following resources: Labour. Bricks, cement. sand, eTrowels. spirit levels. Buckets, In order to calculate the minimum overall completion time for the house of your dreams, a critical path analysis should be produced. This will show all ofthe activities (from the work break- down structure) that must be performed in order tocomplete the house, the sequence in which they need to take place and budgeted times for each activity. Monitoring the project's progress against the critical path analysis regularly will give you valuable information to help you ensure that the projectis completed on time. In the planning stage Eras Pee Further reading CIMA Official Study Text ~ Enterprise Management (2011-12 edition), CIMA Publishing, 2011,study notes, 47 you should draw up a number of separate detailed plans for everything that needs to be managed on the project. Once you have completed a detailed plan for everything you'll need to help you in the control stage when building the house, you can start the construction, You will need to decide whether to manage the project yourself or hire a project manager. You'll have to consider whether you have enough time and the right skills to do this jab effectively. You are now at the execution stage of the project. This stage is linked closely with the monitoring and control stage because, once the construction process has started, the project man- ager will need to monitor and control its progress towards completion The successful completion of the project's objective is usually constrained by three factors: time, cost and quality. Once the project is under way the time-cost-quality triangle is a useful con- cept to keep in mind throughout the construction (see diagram, right). The triangle works on the principle that as more emphasis is placed on one element, less is placed on the others and it’s hard GLOBAL CONTACT DETAILS ciMAcorporatecentie | 7:86 (01065900751 aschaptersect, Erbejingstcimaglobacom London swieaNe ‘CIMA China-chongaing ‘Treatiozosea92251 oom 1202 tropa Bremaconcts Plas, 8 ZouRang Ron, Esmaglobal com ‘YushongDistrit ‘rrr cimaglobal com (Chengaing 400010 ‘MA Australi ‘ress pinsesms856 Sttunersucet Sydney Esinfochinasetmaglobalcom Nswa000. 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CIMA Malaysiasheadomce CIMANIayua Lats LOE 108, Level KPMG Tower, Sire avente Bands ‘iain, e700 Petaling Te -60 (0877280280 Euelatunpure ‘lmaslobal com CIMA Naaysias awa Soblo6 et Foot sian Bulte Mat, 93100 Kuching, sseawai 2 Jalan Stan Ahmad Sash. eoso Penang eso (oiaz26 7488 E:penangecimaglabal coms CIMA Middle East Oe BOL, st Hoo. Blok, Knowledge Vilage, Asofoun Rs, Debs, Gnited Arn Emirates rmiddiceastteimagiobal com: The time-cost-quality triangle Time Quality Cost to balance all three. The time constraint refers to the number of days available to complete the pro- ject. The cost constraint refers to the funds or resources available for the project. The quality constraint refers to what needs to be done to pro- duce the end result ~ in this case, the house of your dreams. 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Increasing the quality of the construction typically means increasing the time taken and the cost incurred; tightening the time constraint could entail increasing the cost and reducing the quality; and tightening the budget could mean increasing the time taken and reducing the quality. So, with the house of your dreams you might need to consider whether you: Design and build the home quickly and toa high standard - it will not be cheap. ‘© Design and build the home quickly and cheaply ~ it will not be of high quality ‘Design and build the home cheaply and to a high standard - it will take a long time, ‘Throughout the execution stage, actual project. data will need to be collected and this will need to be compared against the project plan as part of the monitoring and control process. Ifa devi- ation from the plan is discovered - e.g. if more money is being spent or the project is taking Ionger than anticipated ~ then corrective action will need to be taken. Project decisions on the “Reducing expenditure may mean using fewer or lower-quality which could affect the overall scope of the house of your dreams’ actions to implement in order to bring the pro- ject back on track will often require a trade-off in cost, time and quality. For example, getting the construction back on schedule may require extra resources and therefore incur additional costs, or you may need to compromise on the orig- inal scope. Reducing excess expenditure may mean using fewer or lower-quality resources, which could affect the overall scope of the house of your dreams. ‘When the building has been completed, an eval- uation and review should be conducted to assess how well the project was managed and the extent to which deadlines were met, quality standards were maintained and budgets were adhered to Lessons learned from the review can be used to improve the building of the next house of your dreams. This final stage is referred to as project completion, or closure ‘The next article in this series will offer guidance on how best to approach project management questions in the E2 exam. caller stock