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Project Management Framework: Definition of Project

Project Management Framework: Definition of Project
Definition of Project
Definition of Project
1. Temporary in nature with a well defined beginning and end known before you start doing
1. Temporary in nature with a well defined beginning and end
known before you start doing the project (i.e. has limited life), and
2. Creates a unique product, service or result (i.e. each project by definition is unique and
2. Creates a unique product, service or result (i.e. each project by
definition is unique and done only once in life time)
Project Management Framework: Definition of Project Definition of Project 1. Temporary in nature with a well

Develop a website to advertize our product Provide one time training to improve the efficiency of our sales force

Project Management Framework: Definition of Project Definition of Project 1. Temporary in nature with a well
Project Management Framework: Definition of Project Definition of Project 1. Temporary in nature with a well

Help new customers to use our product Recording attendance online at office

Project Management Framework: Definition of Project Definition of Project 1. Temporary in nature with a well

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Organizational Building Blocks (P5)

Organizational Building Blocks (P5)
Project
Project
Program
Program
Portfolio
Portfolio
Process Product
Process
Product
• A specific work with a beginning and an end. Done only once.
• A specific work with a beginning and an end. Done only once.
• A set of closely related projects (Loss of one would impact others)
• A set of closely related projects (Loss of one would impact others)
• Combination of projects mostly unrelated and some related to each other (Loss of one has
• Combination of projects mostly unrelated and some related to each
other (Loss of one has little impact on others)
• Eternal activity (In theory). Repetitive
• Eternal activity (In theory). Repetitive
• A combination of projects and processes
• A combination of projects and processes

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Project Management: Why Initiate projects?

Project Management: Why Initiate projects?
3 Key Reasons to Initiate Projects
3 Key Reasons to Initiate Projects
1. Taking advantage of business/Market opportunities
1. Taking advantage of business/Market opportunities
2. Legal requirements etc
2. Legal requirements etc
3. As a result of completion of projects, teams gain valuable experience which could be useful
3. As a result of completion of projects, teams gain valuable experience
which could be useful for next projects (Called as “lessons learned”)
To initiate a project you need a sponsor (someone who can provide project funding)
To initiate a project you need a sponsor (someone who can provide project funding)

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Project Management: Key Document- Charter

Project Management: Key Document- Charter

A Project Charter is

The most important document to manage a project.
The most important document to manage a project.
Project Management: Key Document- Charter A Project Charter is The most important document to manage a

The license to manage a project (Just like how driving license is required for driving) Project Title and Number Start Date & Closing Date Description Project Manager and authority level

Business Case- Why a project is initiated? Resources assigned Stakeholders, Their Requirements

Product description/deliverables

Project objectives Approval requirements High level risks Project sponsor

Copyright: Nucleus Group

Project Code: TD X Const ruction -

 

Date of receipt of problem:

Tec hnical publications

10 th May, 2012

Project Ti tle: Root C ause Analysis for TDX Cus tomer Quality Audit NC s

Obj ective: Conduc t DI VE project to ident fi y root c ause and implement c orrection and

correc tive ac tions f or all the non-conf ormances ident ified by the cus tomer and t hereby

increas e c ust omer satisf act ion ..

 

Background:

TDX publications s ystem reques ted a quote f or the migration projec t of all its const ruction

sit es. In this regard t he customer audit ed the exist ing proc ess es for awarding the projec t

and raised N on conformities t o address by materials t eam.

 

Impact: Achieving t he project objec tives will result in the customer aw arding t he migrat ion

project and improve the exist ing proc ess deliveries t o c ust omer expectation.

Probl em statement: 8 Major and 4 Minor non conformances identified in the customer

Quality audit.

DI VE steps

Mil estones

D

el iverables

Defi ne Probl em – Identify problem

16

th may , 2012

Project charter

Statement & conv ert as a project

Investigate Process –Identify

   

sipoc , proces s flow map &probable

16

th may , 2012

SI POC , Process flow map

root caus es

 

Veri fy Solution – Confirm root

caus e and identify

correction,

correc tive ac tions

25

th may , 2012

Ac tion plan wit h c orrection,

c

orrective actions and

s olutions for Non

   

c

onformities

Ensure Improvement – Develop

 

D

IVE ppt package wit h

solut ions to eliminat e reoccurrence

30

th may , 2012

act ion plan for customer

of the root causes

   

rev iew

Customer

TDX

Project Team:

 

Krishnamurt hy K, Praveen Mani, Sairam P, Nagaraj

D , Srinivas AVN , Baiju G.

 

Support Team:

R ajashekar N , Chidrupa

 

Role of PMO (Project Management Office)

Role of PMO (Project Management Office)

A PMO is an organization entity/Department and not a person’s designation or role

A PMO in general would have the following roles

  • I. Provide policies, methodologies and templates to manage projects Provide support and guidance to others in the organization on how to manage projects, train others in PM or PM software and assist with specific PM tools Provide project managers for different projects and take responsibility for the projects

II.

III.

Role of PMO (Project Management Office) A PMO is an organization entity/Department and not a person’s
Type –I and II are more common than type-III (AT&T and some other Telecom companies) Sometimes
Type –I and II are more common than type-III (AT&T and some other Telecom companies)
Sometimes combinations exist (PMI suggests it is better to have one role)

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Project Constraints (Six constraints called “Triple constraint”)

Project Constraints (Six constraints called “Triple constraint”)

Constraints are

1. Time 2. Cost 3. Risk 4. Scope 5. Quality 6. Resources
1.
Time
2.
Cost
3.
Risk
4.
Scope
5.
Quality
6.
Resources

Iron Triangle

  • 1. Law of constraints: If you change one constraint- you will have to change at-least one of the other constraints

  • 2. There could be other specific factors (Customer satisfaction etc)

  • 3. Constraints help evaluate competing demands (help us see the trade offs to make)

    • a) Top Management directly or indirectly sets the priority for each constraint

    • b) PM uses this prioritization to plan the project and evaluate impact of changes

    • c) PM is responsible for analyzing the changes requested to the project and identifying its impact on all constraints through change control (we will see this later)

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Sponsor (Of a project)

Sponsor (Of a project)

Sponsor

  • 1. Outside the project team

  • 2. Inside the organization

  • 3. Provides funding to the team

  • 4. Sometimes sponsor is customer (NOT always)

Customer Sponsor PM
Customer
Sponsor
PM

E.G. The person you will have to talk to in your company, to increase allocated budget by 50% is the sponsor

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Organizational Structures

Organizational Structures

Type of Organization

Comments

Functional

Most people (> 60%) grouped by specialty (marketing, manufacturing, accounting, HR etc). Very few people are on projects at any point in time.

Projectized

Most people (>60%) are organized by projects (e.g. Dam construction, TCS, Infosys etc)

Matrix

Combination of Functional and Projectized. Everyone belongs to a department and most people are on projects at any point in time.

In a strong matrix, power rests with the project manager while in a weak matrix power rests with the functional manager. In a balanced matrix, both are equally powerful.

Project manager’s role in a weak matrix could be Expediter: Acting as a staff assistant and communications coordinator. He cannot personally make or enforce decisions. He reports to functional manager. Coordinator: Similar to expeditor, except he has some power to make decisions and reports to higher level manager

The project manager will have a organizations

part time

role

in

both weak matrix and functional

A “tight matrix” refers to locating the entire project team in the same room “ War

location”. It has NOTHING to do with Matrix Organization structure.

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Organizational Structures: How it Impacts Projects

Organizational Structures: How it Impacts Projects Advantages Disadvantages Easier management of specialists, Easy coordination of members,

Advantages

Disadvantages

Easier management of specialists, Easy coordination of members, group learning

People place more importance to functions and projects suffer

Clearly defined career paths

No career path in project management

Only one supervisor

PM has no authority

Advantages

Disadvantages

Efficient projects

Lack of professionalization in disciplines

Loyalty to projects

No “Home” (i.e. Home department)

Effective communication

Less efficient use of resources

Advantages

Disadvantages

Visible project objective

Extra project administration

Better PM control on resources

More than one boss

Better support from functions

More difficult resource allocation

Life cycles in PMI world

Life cycles in PMI world

There are three different life cycles

Project management life cycle: The project management life cycle is made up of the 47 unique processes grouped by 5 process groups and describes project management activities. This is usually common across industries.

Project life cycle: The Project lifecycle is a grouping of a number of sequential phases which make up the project from the beginning to end. They are usually industry specific, or can be based on company methodology. Project life cycle is also called as the department’s procedure to run the projects

Product life cycle: The product lifecycle is also industry specific and sequential. Also there can be many different project lifecycles within a product lifecycle. Conception of product to withdrawal. This does not change as much with industry as project life cycle does.

An example: Product life cycle of a Desktop.

1)

Project life cycle-1 (or project-1): Manufacturing the Desktops.

2)

Project life cycle-2 (or project-2): Deploy 50,000 Desktops in a bank.

3)

Project life cycle-3 (or project-3): Hardware and software upgrades to the Desktops.

4)

Project life cycle-4 (or project-4): Replacement of the Desktops with iPADS.

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Life cycles Hierarchy

Life cycles Hierarchy
Design Version-1 Develop Life cycle of car Upgrade: Version-2 Copyright: Nucleus Group
Design
Version-1
Develop
Life cycle of car
Upgrade: Version-2
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Project Management Process Groups

Project Management Process Groups I P Initiation Planning C Closing M&C E Monitor & Executing Control
I P Initiation Planning C Closing M&C E Monitor & Executing Control Design Develop Business changes
I
P
Initiation
Planning
C
Closing
M&C
E
Monitor &
Executing
Control
Design
Develop
Business changes

Deploy

Project Management Process Groups I P Initiation Planning C Closing M&C E Monitor & Executing Control
Project Management Process Groups I P Initiation Planning C Closing M&C E Monitor & Executing Control
Project Management Process Groups I P Initiation Planning C Closing M&C E Monitor & Executing Control

Large projects have several phases and each phase has all the above five processes.

Breaking down projects into phases and working is called as life cycle approach. It helps to control the

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project by providing a flow and structure to work (People understand when to do work etc).

Project Management Process Groups

Project Management Process Groups
Initiation Requirements Pre-analysis Scope
Initiation
Requirements
Pre-analysis
Scope
Monitor & Control Operations controls Control of Changes Validation and Verification Status updates Planning Analysis Design
Monitor & Control
Operations controls
Control of Changes
Validation and Verification
Status updates
Planning
Analysis
Design
Prototyping
Execution
Integration
Testing, Deployment
Training
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Closure

Documentation Archival Resource Release

Overview

A process is a routine work which happens repetitively. It consists of 1. Series of Activities
A
process
is
a
routine
work which happens
repetitively. It consists of
1.
Series of Activities (or tasks) connected with
each other
2.
Inputs (What is needed for the process to go
through)
3.
Outputs (What comes out of the process)
4.
Tools & Techniques (A procedure or a
method to do a process)
Overview A process is a routine work which happens repetitively. It consists of 1. Series of
In PMBOK a set of related processes are combined into a group and is called process
In PMBOK a set of related processes are combined into a group
and is called process group. We work with both activities (easy to
understand), process groups and processes.

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Overview of Processes/Process Activities/Process Groups

Overview of Processes/Process Activities/Process Groups
Process Groups (5)
Process Groups (5)

√√√√

Processes (47)
Processes (47)
Process Activities (80)
Process Activities (80)

√√√√

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Overview or Process Groups and Knowledge Areas

Overview or Process Groups and Knowledge Areas

Process Groups (5)

Initiation

Planning

Execution

Monitoring and Controlling

Closing

Knowledge Areas (10)

Integration Management

Stakeholder Management

Scope Management

Time Management

Cost Management

Quality Management

HR Management

Communication Management

Risk Management

Procurement Management

47 Total processes across all the process groups and knowledge areas

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Introduction to PM activities

Introduction to PM activities
Initiating Planning Executing Monitoring and Control Closing Select PM Study Ent Env Factors Identify Org process
Initiating
Planning
Executing
Monitoring and
Control
Closing
Select PM
Study Ent Env Factors
Identify Org process assets
Divide into phases
Define Business case
Document business need
Define project objectives
Develop project charter
Key Stakeholders
Stakeholder Management
Decide how to plan
Finalize requirements
Scope statement
Identify procurement needs
Select Team/Designers
WBS/WBS dictionary
Activity List
Network Diagram
Estimate resources
Cost and Time
Critical Path
Schedule
Budget
Identify Quality standards
Process improvement plan
Roles and responsibilities
Communications requirement
Risk analysis
Iterations
Prepare procurement docs
Finalize “how to execute plan”
Execute PM plan
Finish product scope
Recommend corr/prev actions
Implement corr/prev actions
Common understanding
Action to control project
Measure perf baselines
Measure as per plan
Find variances and if important
Implement work authorization system
Continuous improvement
Follow process
Quality assurance
Quality audits
Final Team
Manage People
Progress meetings
Team building
Rewards and recognition
Use issue log
Manage conflict resolution
Send and receive Info
Hold meetings
Select sellers
Influence factors for change
Request changes
Do integrated change control
Recommend corr/prev actions
Approve corr/prev actions
Inform stakeholders
Manage configuration
Create forecasts
Get interim acceptance
Perform quality control
Report on performance
Risk audits
Manage Reserves
Administer contracts
Confirm work done to specs
Complete contract closure
Get formal approval
Final performance reporting
Index and archive
Update lessons learned
Hand off final product
Release resources
Develop final PM plan and baselines
Obtain formal approval
Hold kickoff meeting
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Quick overview of the Five process groups 1. Initiation 2. Planning 3. Execution 4. Monitoring and
Quick overview of the Five process groups 1. Initiation 2. Planning 3. Execution 4. Monitoring and
Quick overview of the Five process groups
1.
Initiation
2.
Planning
3.
Execution
4.
Monitoring and controlling
5.
Closing

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Initiating Process Group

Initiating Process Group

The initiating process group formally starts a new project/phase by officially authorizing the project and project manager with the information necessary to begin the project.

Once a project is selected, it is chartered and therefore authorized

Project Manager

He is assigned early during a project and is hence involved in project initiation

Most high level planning is done during the Initiation process

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Planning process group

Planning process group
  • 1. Planning involves walking through the project and getting organized before it is actually done

  • 2. If work cannot be planned, it cannot be done

  • 3. Time spent on planning must be appropriate to the project needs (Not all projects require same level of effort for planning)

  • 4. Everyone needs to

be involved during

planning process (This increases the

ownership among the team members)

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Executing Process Group

Executing Process Group

The purpose of executing process is to complete work defined in the project management plan and to meet the objectives set out in the charter

Focus on managing people, following processes and managing information flow

Meetings are most important part of executing. Number of meetings can be reduced by better planning.

The meetings are way too important to discuss status of a project. These must be used to review risks and upcoming contingency plans.

Planning 1) Tasks 2) 3) 4) 5) 6) Roles (Who will do what) Inputs Outputs Formats
Planning
1)
Tasks
2)
3)
4)
5)
6)
Roles (Who will do what)
Inputs
Outputs
Formats
Locations
7) Shared, Centrally located Project
Management Plan
Executing Process Group The purpose of executing process is to complete work defined in the project

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Monitoring and controlling process group

Monitoring and controlling process group
  • 1. the

Measuring

performance

of

project

to

PM

plan

and

approving

change

requests.

  • 2. Recommended corrective/preventive actions and defect repair

  • 3. This group runs in parallel to Executing group (and NOT after its completion). We choose to categorize some activities to be belonging to this group- does not mean they happen after execution.

  • 4. Usually customers make decisions to purchase based on metrics and these are measured in this group.

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Closing process group

Closing process group
  • 1. Project is not completed even if all the activities are completed. It gets completed in the closing process group.

  • 2. Completion of product scope is not completion of project. Closing involves administrative closure, documentation of lessons learned, formal release of resources

  • 3. Celebration and final performance reporting are important elements of closing a project.

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Overview

Overview
Initiation
Initiation

Planning

Executing
Executing
Monitoring & Controlling
Monitoring &
Controlling
Closing
Closing
Integration Management Monitor & control project work Develop charter Develop PM Plan Direct and manage project
Integration Management
Monitor & control
project work
Develop charter
Develop PM Plan
Direct and manage
project execution
Close project/phase
Perform integrated
change control
Collect
Requirements
Verify scope
Define Scope
Control Scope

Create WBS

Define activities

Identify Stakeholders
Identify
Stakeholders

Plan

Communications

Distribute Information
Distribute
Information
Manage stakeholder expectation
Manage stakeholder
expectation
Report Performance
Report
Performance

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Integration Management

Integration Management 1. The main role of a project manager is to perform integration management. Integration
  • 1. The main role of a project manager is to perform integration management. Integration management is the act of putting all the pieces of the project into a single unit.

  • 2. Integration involves balancing all the processes in knowledge areas of

scope,

time, cost,

quality, HR,

communications, risk and procurement

management with each other.

  • 3. PM is responsible for the integration. Team members must focus on completing the work packages and sponsor must protect the project from undue influences.

  • 4. Sponsor is required to sign the charter and provide the final approval for project management plan. Project manager is responsible for getting these approvals.

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Integration Management

Integration Management Copyright: Nucleus Group

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Integration Management: Roles of a PM

Integration Management: Roles of a PM Copyright: Nucleus Group

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Project Selection Methods

Economic models (Financial Models), Quantitative methods

  • 1. Present Value (PV)

  • 2. Net present value (NPV)

  • 3. Internal rate of return (IRR)

  • 4. Economic Value Added (EVA)

  • 5. Return on Investment (ROI)

  • 6. Payback period

  • 7. Benefit-cost ratio

  • 8. Marginal Revenue

  • 9. Opportunity Cost

Project Selection Methods Economic models (Financial Models), Quantitative methods 1. Present Value (PV) 2. Net present

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Project Selection: Motivation Exercise

Project Selection: Motivation Exercise
 

Year-1

Year-2

Year-3

Total

Project-1 (Profits $)

100

200

300

600

Project-2 (Profits $)

300

200

100

600

Assume the project is ONLY for 3 years (Nothing after that) Which is a better project and Why?

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PV (Present value) and NPV (Net present value)

PV (Present value) and NPV (Net present value)

PV = FV/ (1+r) n,

“FV” stands for Future Value, “r” is rate of interest (Decimal form), “n” is number of years

If rate is 10% then 100$ next year is worth only 91$ today

NPV is the PV value of all future profits. Higher NPV is better

Exercise-1: If project A gets 10,000$ in year 1 and 20,000$ in year 2. What is its PV. Assume the interest cost is 10%.

Exercise-2: For project B, you have to spend 2,000$ at the end of one year and 4,000$ at the end of year 2. The revenue at the end of year 1 is 10,000$ and revenue at end of year 2 is 20,000$. What is the NPV? (r = 10%)

Exercise-1: r = 0.1 (10%) Year1- Rev = 10,000 => PV = 10,000/(1+0.1) = 9,100 Year2-Rev= 20,000=> PV = 20,000/(1+0.1) 2 = 16,500 PV of project A = 9,100+16,500 = 25,600

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Exercise-2: r = 0.1 (10%)

Year1- Profit = 10,000-2,000 = 8,000

=> NPV = 8,000/(1+0.1) = 7,300

Year2- Profit = 20,000-4,000 = 16,000

=> NPV = 16,000/(1+0.1) 2 = 13,200

NPV of project B = 7,300+13,200 = 20,500

Group

IRR (Internal rate of return)

IRR (Internal rate of return)

IRR is the equivalent interest rate of the future cash flows. Higher IRR is better (exceptions)

Exercise-1: Project A requires you spend 10,000$ today but will result in a total money of 12,000$ at the end of one year. What is IRR for project A?

Exercise-2: For project B, you have to spend 12,000$ at the end of one year and 4,000$ at the end of year 2. The revenue at end of year 2 is 20,000$. What is the IRR?

Exercise-1:

10,000*(1+r) = 12,000 => r = 0.2 = 20%

Exercise-2:

12,000*(1+r)+4,000 = 20,000

1+r = 16,000/12,000 = 1.33

r = 33%

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Payback period method Number of time periods it takes to recover initial money invested in the

Payback period method

Number of time periods it takes to recover initial money invested in the project Exercise-1: Project A requires you spend 3,000$ and will yield 1,000$ each year starting at the end of year-1. What is the payback period

Benefit cost ratio

Benefit cost ratio present value of total revenue with present value of total costs BCR = PV of revenue/ PV of Costs

Exercise-2: For project B, you have to spend 10,000$ now and 10,000$ at the end of one year. You will receive 5,000 at the end of one year and 20,000 at the end of second year. What is BCR? r = 10%

Exercise-1:

Cost = 3,000. Benefit for n years = 1,000*n 3,000 = 1,000*n => n = 3

Exercise-2:

PV of revenues = (5,000/1.1)+(20,000/1.1 2 ) = 21,000

PV of costs = 10,000+(10,000/1.1) = 19,100

BCR = 21,000/19,100 = 1.1

(BCR > 1 is good project)

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Economic value added (EVA)

Economic value added (EVA)

Additional value generated after covering for the financing cost (Like interest cost etc)

This is one of the best methods to determine the value of an internal project.

Exercise-1: Project A requires you to spend 10,000$ today. It will generate 13,000$ at the end of one year. You have an option to invest in a partner company which will give you 20% returns. What is the economic value of undertaking project A?

Exercise-1:

Revenue generated = 13,000 Cash to invest = 10,000 FV @ 20% = 10,000 * 1.2 = 12,000 EV of project A = 13,000-12,000 = 1,000 (10%)

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Return on Investment (ROI)

Returns generated compared to investments made

Exercise-1: Project A requires an investment of 100,000$ and will result in a total money of 150,000$ in one year. What is ROI.

Exercise-1:

Returns generated = 150,000-100,000 = 50,000 ROI = 100% * (50,000/100,000) = 50%

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Marginal Revenue

Marginal Revenue

Choose the project which will generate highest marginal benefits (Marginal revenue is the revenue generated for the last unit of output)

Exercise-1: Playject, a project simulation software provides 200 features in a year with a cost of 10,000$. It will generate a revenue of 25,000$ in a year. To create 201 st feature the total cost will be 10,200$ and will result in a total revenue of 25,150$. Should we implement 201 st feature?

Exercise-1:

Marginal revenue = 150-200 = -50$. Hence must NOT pursue.

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Opportunity cost

Opportunity cost

Opportunity given up by choosing one project over another (It is value of lost opportunities). Remember

the key is the money lost (and no comparison to what is gained).

Minimize opportunity cost.

Sales Department Customer-1 (Flexible): Will buy 50 units each at a cost of 5$. He is
Sales Department
Customer-1 (Flexible): Will buy 50 units
each at a cost of 5$. He
is in a position to
Make 100
widgets/month
EVERY month
wait and can buy later if needed
Cost = 0
Customer-2 (Rigid): Will ONLY buy 100
units each at a cost of 2$ (or none). The
need is urgent and cannot wait
Which customer would you choose?
Which customer would you choose?

Exercise-1: Project A requires you to spend 100$ today and will complete after a year with profit of 50. Project B requires you to spend 50$ and will complete after year one with a profit of 35. What is the opportunity cost of project A.

Exercise-1 Solution:

You will lose project B with profit of 35

=> Opportunity cost of A = 35

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Sunk cost and Sunk cost fallacy

Sunk cost and Sunk cost fallacy

Sunk cost

Money already expended and hence lost. This should not make an impact for any

future decisions and should be ignored for future decisions. Making a mistake here and considering past for making future decisions is called “Sunk Cost Fallacy”.

Exercise-1: You have a project to replace all the CRT monitors in your office with LCD monitors. There are 100 monitors and you have already replaced 50 of them, each at a cost of 100 $. A new technology based monitor (OLED) is available in the market. This monitor costs only 50 $ and has better quality than LCD. What should you pursue? LCD or OLED? (For reasons of compatibility there must be only one kind of monitors in office. Also remember there is no Resale value for these kind of equipment)

Exercise-1:

Total cost of LCD = 100*100 = 10,000 $ Money to spend now = 100*50 = 5,000 $ Money with OLED = 50*100=5,000 $

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OLED is better

Depreciation

Depreciation

Assets lose value overtime which is called depreciation

  • 1. Straight line depreciation (Equal value is lost EACH year of usage)

  • 2. Accelerated depreciation (More value is lost in the beginning of usage)

    • a) Double declining balance (Double the rate of straight line depreciation)

    • b) Sum of the years digits (Based on formula for sum of years)

Exercise-1: Project A requires you to buy an equipment with 1000$ which is useful for 10 years. What is the straight line depreciation in first year.

Exercise-2: Project A requires you to buy an equipment with 1000$ which is useful for 5 years. What is the sum of years depreciation for first year.

Exercise-1:

Depreciation = 1000/10 = 100$

Exercise-2:

Digits are 5, 4, 3, 2, 1 Sum of digits = 5+4+3+2+1 = 15 First year depreciation = (5/15)*1000 Second year depreciation = (4/15)*1000

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Depreciation (Continued)

Depreciation (Continued)

Exercise-3: You are working as a project manager for Novartis and have to buy a large biological reactor for making insulin injections. The same identical reactor is for sale both in China and Germany. The cost of reactor from China is 96 million while from Germany it is 100 million. Government requires you do straight line depreciation with china imported equipment but allows double declining depreciation with Germany. Where would you buy. Assume useful life of 3 years and interest rate of 10%.

(Corporate

tax

rate

=

33%,

Depreciation

rules

are

set

by

government,

On

any

investment

on

R&D, Manufacturing equipment etc you can claimTax rebate on depreciated value)

China case:

1 st year depreciation: 32 million 2 nd year depreciation: 32 million 3 rd year depreciation: 32 million

Tax saving:

1 st year case: 10/1.1 2 nd year case: 10/1.1 2 3 rd year case: 10/1.1 3

Total benefit = 25 million

Germany case:

1 st year depreciation: 66 million 2 nd year depreciation: 34 million 3 rd year depreciation: 0 million

Tax saving:

1 st year case: 22/1.1 2 nd year case: 11/1.1 2 3 rd year case: 0/1.1 3

Total benefit = 30 million

Copyright: Nucleus Group

Tax benefit from Germany is more than cost difference and hence is a good option.

Statement of work (Procurement/contract statement of work)

Statement of work (Procurement/contract statement of work)

Created by the sponsor/customer and describes the needs, product scope and how project fits their strategic needs

Copyright: Nucleus Group
Copyright: Nucleus Group

Enterprise environmental factors

Existing systems and company “culture”. Even the best project managers can’t control everything that

affects their projects. The way your company is set up, the way people are managed, the processes

your team needs to follow to do their jobs

...

they all can have a big impact on how you manage your

project ..

A few examples

  • 1. Organizational culture & structure, Infrastructure,

  • 2. Government rules, guidelines, regulations or industry standards,

  • 3. Marketplace conditions,

  • 4. Stakeholder risk tolerances,

  • 5. Project management information systems (PMIS) and management software (like SAP),

  • 6. Existing human resources factors like skills, knowledge, disciplines,

  • 7. Personnel administration like hiring, performance review guidelines, training,

  • 8. Published commercial information or databases for estimations, risk data

  • 9. Company work authorization system

Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything
Enterprise environmental factors Existing systems and company “culture”. Even the best project managers can’t control everything

Copyright: Nucleus Group

Organizational process assets

Software

(Non

management

software

like

OS, word processing applications

etc), documents, historical information, guidelines, templates, Intellectual Property, lessons

learned etc

Copyright: Nucleus Group

Management Plans

Management Plans

There is a strategy for managing the project and the processes in each knowledge area. One has to consider how to plan the project based on the needs, how to manage and control the project and formally document them. This is what is accomplishedwith the help of various management plans.

Creatingmanagement plans is an integral and key part of PM’s job.

  • a) How many management plans exist?

  • b) How many knowledge areas exist in PMP?

Copyright: Nucleus Group

Project management plan

Project management plan

PM Plan is an integral function- integrating management plans of all knowledge areas and includes baseline for the project

The baseline includes

  • 1. Scope baseline (WBS + WBS Dictionary + Scope Statement)

  • 2. Schedule baseline (The Project Schedule)

  • 3. Cost baseline (The Project Budget)

Baselines once fixed should be difficult to change and changes must be asked for in the monitoring & controlling process group (Even if the change is obviously beneficial for the project, you want to follow a protocol).

  • a) What would happen if you allow baselines to change easily?

  • b) How do you make it difficult to change baselines?

Deviations frombaselines are always due to inadequate risk identification

Copyright: Nucleus Group

Requirements and change management plan

Requirements and change management plan

Requirements management plan describes how requirements will be identified, managed and controlled

Controlling a project to the baselines and the rest of the project management plan is so important that the PM needs to think twice in advance about where there might be changes and what to do to limit the negative effects of changes

Changes are much more costly than if work was included from the beginning

Copyright: Nucleus Group

Change control system Change control system is part of organization assets and includes standard forms,reports, processes,

Change control system

Change

control

system

is

part

of

organization

assets

and

includes

standard

forms,reports, processes, procedures and software to track and control changes

Configuration management plan

Configuration management plan will address how to manage the version of scope, schedule and other components of the project management plan changing. It is also useful to address how to manage and track the version of product features etc.

Examples are document sharing systems, distributed code sharing systems with check-in and check-out etc.

PMIS CMS Change Control Copyright: Nucleus Group
PMIS
CMS
Change
Control
Copyright: Nucleus Group
Configuration management Configuration management system contains organization’s standard configuration management tools, processes and procedures. It will

Configuration management

Configuration management system contains organization’s standard configuration management tools, processes and procedures. It will include the change control systemand is part of the PMIS

Process improvement plan

As part of project planning the PM identifies existing processes to use on the system and may also create his own. These efforts improve efficiency of work completion by teammembers.

Example: Project team has to fill the time sheet each day on time spent for various tasks. The PM decides to invest in purchasing a software which automates the time sheet filling each day, thereby saving time for all the team members to spend more productively.

Copyright: Nucleus Group

Project documents and project management plan approval Project documents are the documents used to manage a

Project documents and project management plan approval

Project documents are the documents used to manage a project and are not part of project management plan. e.g. SOW, Charter, contracts etc.

Project management plan approval

Project management plan is a formal document used to manage the execution of the project and must receive formal approval by the management.

Before you can complete the “develop project management plan” process and project execution starts a kickoff meeting should be held. It is like sounding bell before a war starts.

Copyright: Nucleus Group

Monitor and control project work

Monitor and control project work

It is a control function (process) done from initiation to closing of the project. This results in change requests and updates to PM plan and project documents.

This is different from the Monitoring and controlling process group.

Monitoring

and

controlling

management plan

project

involves

measuring

against

the

project

Copyright: Nucleus Group

Work authorization system

Work authorization system

It

helps

PM

to

authorize

environmental factors.

start

of

work

packages

and

is

part

of

enterprise

It makes sure work is properly sequenced and starts only when authorized.

Remember, the focus is on activity sequencing and not people sequencing. Sequencing of people is only a consequence and not primary goal.

Copyright: Nucleus Group

Corrective Action

Corrective Action

Any action to bring expected future project performance in line with the project management plan. It is not about rectifying something which went wrong.

This requires the existence of a performance measurement baseline to compare with.

A = 10 Days

10 Days

B = 15 Days
B = 15 Days

20 Days

C = 25 Days

Copyright: Nucleus Group

Integrated change control

Integrated change control

During monitoring and controlling processes, changes may be requested that affect any part of the project. These can be accepted or rejected in the integrated change control process. This looks at the impact of change on all knowledge areas like quality, risk, time, cost,HR etc

Changes are usually controlled by the change control board which comprises of PM, customers, experts, sponsors etc

Copyright: Nucleus Group

Procedure to make a change (Or when something unexpected happens)

Procedure to make a change (Or when something unexpected happens)
  • 1. Evaluate the impact (First step)

  • 2. Create options

  • 3. Get the change request approved internally

  • 4. Get customer buy-in (Last step)

ONLY then make a change

Do not take any actions in haste (as you have a large team which may face
Do not take any actions in haste (as you have a large team which may
face severe impact if the decision is incorrect).
All decisions to be implemented ONLY after due thought and getting
buy-in from both internal and external stakeholders.

Copyright: Nucleus Group

Overview (Stakeholder Management)

Overview (Stakeholder Management)
Initiation Planning Executing Monitoring & Controlling Identify Stakeholders Plan Stakeholder Management Manage Stakeholder Management Control Stakeholder
Initiation
Planning
Executing
Monitoring &
Controlling
Identify
Stakeholders
Plan Stakeholder
Management
Manage Stakeholder
Management
Control Stakeholder
Management
Closing
Closing

Copyright: Nucleus Group

Importance of Stakeholder Management

1.

The

purpose

of

project

stakeholder

management

is

to

identify

all

people

or

organizations affected by a project.

  • 2. In addition this will help to analyze stakeholder

expectations,

stakeholders

and

to

effectively

engage

Copyright: Nucleus Group

Dealing with changes

  • 1. Projects often cause changes in organizations, and some people may lose their jobs when a project is completed. Project managers might be viewed as enemies if the project resulted in job losses for some stakeholders

  • 2. By contrast, they could be viewed as allies if they lead a project that helps increase profits, produce new jobs, or increase pay for certain stakeholders

  • 3. In any case, project work involve people politics and

project

managers

must

learn

to

identify,

understand,

and

work

with

a

variety

of

stakeholders.

Copyright: Nucleus Group

How projects go wrong

  • 1. Changing the way work is done can send a shock wave through an organization, leaving many people afraid and even thinking about ways to stop or sabotage a project(if it negatively effects them).

2.

Donald

White,

founder

and

program

manager

at

Defense

Systems

Leaders

in

Washington, D.C., described situations that can lead to projectsabotage:

Buy-in blues (Implementing without getting buy-in)

Short-term profits (Stakeholders looking for short term comfort)

Overachieving

(Trying

to

implement

more

necessary) Lack of respect (Things do not work anyway…)

Copyright: Nucleus Group

than

Processes of Stakeholder Management

  • 1. Identifying stakeholders: Identifying everyone involved in the project or affected by

it,

and

manage relationshipswith them.

determining the best ways to

  • 2. Planning stakeholder management: Determining strategies to effectively engage stakeholders

  • 3. Managing stakeholder engagement: Communicating and working with project stakeholders to satisfy their needs and expectations, resolving issues, and fostering engagement in projectdecisions and activities

  • 4. Controlling stakeholder

engagement: Monitoring stakeholder

relationships and adjusting plans and strategies for engaging

stakeholdersas needed

Copyright: Nucleus Group

Processes of Stakeholder Management

Processes of Stakeholder Management Copyright: Nucleus Group

Copyright: Nucleus Group

Stakeholder Identification

  • 1. Internal project stakeholders generally include the project sponsor, project team, support staff, and internal customers for the project. Other internal stakeholders include top management, other functional managers, and other project managers because organizations have limited resources

  • 2. External project stakeholders include the project’s customers (if they are external to the

organization), competitors, suppliers, and

other

external groups that are potentially involved in the project or affected by it, such as government officials and concerned citizens

Copyright: Nucleus Group

Provided as handout Copyright: Nucleus Group
Provided as handout
Copyright: Nucleus Group

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 and expectations, potential influences, and phases of the project in which stakeholders have the most interest

Stakeholder classification: Is the stakeholder internal or external to the organization? Is the stakeholder a supporter of the project or resistant to it?

Copyright: Nucleus Group

Stakeholder Register: Example

Stakeholder Register: Example Copyright: Nucleus Group

Copyright: Nucleus Group

Stakeholder Classification

  • 1. After identifying key project stakeholders, you can use different classification models to determine an approach for managing stakeholder relationships

  • 2. A power/interest grid can be used to group stakeholders based on their level of authority (power) and their level of concern (interest) for project outcomes

Copyright: Nucleus Group

Power Interest Grid

Power Interest Grid Copyright: Nucleus Group

Copyright: Nucleus Group

Stakeholder analysis - matrix

1.List the stakeholders

2.Estimate attitude Mark degree of confidence in estimate

3.Estimate Influence Mark degree of confidence in estimate

4.Discuss and record actions needed;

To affirm attitude or influence To improve attitude To improve (or negate) influence Indicate importance Individual or special notes Strategy for engagement

Stakeholder analysis - matrix 1.List the stakeholders 2.Estimate attitude Mark degree of confidence in estimate 3.Estimate

E- Estimate C- Confident

Copyright: Nucleus Group

Stakeholder Engagement Levels

Unaware:

Unaware

of

the

project

and

potential impacts on them

its

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 and championing

Copyright: Nucleus Group

How to work with stakeholders

  • 1. Instead of just saying “no” when your project sponsor asks for something unreasonable, it is better to explain what is wrong with the request and then present a realistic way to solve the problem at hand

  • 2. For example, Christa Ferguson, an independent program manager in San Francisco, described how she handled a request from a project sponsor to deliver a new tablet device in two months when she knew she would need more time. Based on her experience, she knew the RFQ for the effort alone would take almost a month. Christa quickly researched the facts to propose a realisticdelivery schedule.

  • 3. The project sponsor reset expectations once he learned what it took to produce the tablets

Copyright: Nucleus Group

Plan Stakeholder Management

  • 1. After identifying and analyzing stakeholders, project teams should develop a plan for management them

  • 2. The stakeholder management plan can include:

Current and desired engagement levels Interrelationships between stakeholders Communication requirements

Potential management strategies for each stakeholders

Methods for updating the stakeholder management plan

Copyright: Nucleus Group

Plan Stakeholder Management

  • 1. Because a stakeholder management plan often includes sensitive information, it should not be part of the official project documents,

which are normally stakeholdersto review.

available

for

all

  • 2. In many cases, only project managers and a few other team members should prepare the stakeholdermanagement plan.

  • 3. Parts of the stakeholder management plan

are

not

written

down,

and

if

they

are,

distribution is strictly limited.

Copyright: Nucleus Group

Plan Stakeholder Management: Sample Analysis

Copyright: Nucleus Group
Copyright: Nucleus Group

Managing Stakeholder Engagement

  • 1. Project success is often measured in terms of customer/sponsorsatisfaction

  • 2. Project sponsors often rank scope, time, and cost goals in order of importance and provide

guidelines

on

how

to

balance

the

triple

constraint

  • 3. This ranking can be shown in an expectations

management

matrix

to

help

clarify

expectations

Copyright: Nucleus Group

Expectations Management Matrix

Expectations Management Matrix Copyright: Nucleus Group

Copyright: Nucleus Group

Issue Logs

  • 1. Understanding

the

stakeholders’

expectations can help in managing issues

  • 2. Issues

should

be documented

in

an

issue

log, a tool used to document, monitor, and

track issues that need resolution

  • 3. Unresolved issues can be a major source of

conflict

and

result

in

stakeholder

expectations not being met

  • 4. Issue logs can address other knowledge areas as well

Copyright: Nucleus Group

Issue Logs: Sample

Issue Logs: Sample Copyright: Nucleus Group

Copyright: Nucleus Group

Stakeholder Management Best Practices

1.

Project

managers

are

often

faced

with

challenges, especially in managing stakeholders

  • 2. Sometimes they simply cannot meet requests from important stakeholders

  • 3. Suggestions for handling these situations include the following:

Be clear from the start

Explain the consequences Have a contingencyplan Avoid surprises

– – Take a stand

Copyright: Nucleus Group

Control Stakeholder Engagement

  • 1. You cannot control stakeholders, but you can control their level of engagement

  • 2. Engagement involves a dialogue in which people seek understanding and solutions to issues of mutual concern

  • 3. e.g. Many managers are familiar with various techniques for engaging team members. It is important to set the proper tone at the start of a project

Copyright: Nucleus Group

Control Stakeholder Engagement: Example of engaging

1.

If a manager does nothing but lecture on the first day of meeting or criticizes the first person who offers a comment, workers will quickly decide that their best strategy is to keep quiet and maybe just follow the orders without thinking.

2.

On

the other

hand, if

the manager uses

a

lot

of

activities to

get all participants to

speak

or

use

technology to participate, they will expect to be

active participants in future meetings.

Copyright: Nucleus Group

Ways to control engagement

  • 1. Key stakeholders should be invited to actively participate in a kick-off meeting rather than merely attending it

  • 2. The project manager should emphasize that a dialogue is expected at the meeting, including texts or whatever means of communication the stakeholders prefer. The project manager should also meet with important stakeholders before the kick-off meeting

  • 3. The project schedule should include activities and deliverables related to stakeholder engagement, such as surveys, reviews, demonstrations, and sign-offs.

  • 4. In the “Information Distribution” procedure which is part of controlling stakeholders, the manager distributes information to the stakeholders as per the plan.

Copyright: Nucleus Group

Control Stakeholder Management: Information distribution

  • 1. Project Managers have to distribute information to

various stakeholders all along the project.

2.

This helps in setting the right expectations and also

presentsinformation about the project in time.

3.

The

information

distributed

could

include

performance information, reports, memos etc.

Copyright: Nucleus Group

Levels of engagement

Levels of engagement Funding agency Management Beneficiary Copyright: Nucleus Group
Funding agency
Funding agency
Management
Management

Beneficiary

Copyright: Nucleus Group

Overview

Overview
Initiation Planning Executing Monitoring & Controlling Monitor & control project work Develop charter Develop PM Plan
Initiation
Planning
Executing
Monitoring &
Controlling
Monitor & control
project work
Develop charter
Develop PM Plan
Direct and manage
project execution
Perform integrated
change control
Plan Scope
Management
Validate Scope
Collect
Requirements
Control Scope
Define Scope
Scope Management
Create WBS
Distribute
Information
Identify
Plan
Report
Stakeholders
Communications
Performance
Manage stakeholder
expectation
Closing
Closing
Close project/phase
Close project/phase

Copyright: Nucleus Group

Scope Management

Scope Management
  • 1. Scope management is the process of

    • a) Defining what work is required

    • b) Making sure all of that work and

    • c) ONLY that work is done

  • 2. “Define scope” is a process which is concerned with what is a part of project and what is not a part of project.

  • 3. You must plan in advance how you will determine the scope, manage it and control it

  • 4. Scope must be clear and formally approved before work starts

  • 5. Requirements are gathered from all stakeholders and assigned the project

  • not

    just the

    person who

    • 6. WBS must be used as this can help find additional scope

    • 7. Gold plating (Doing extra) is not allowed (Why do gold plating?). Related to step-5.

    • 8. All scope changes must be through integrated change control

    Copyright: Nucleus Group

    Product Scope Vs Project Scope

    Product Scope Vs Project Scope

    Product scope refers to the outcome; the specifics of the product or service that the project is expected to deliver.

    Project scope refers everything that has to happen to get the product created and delivered. It also refers to the things that can't happen, to get the product delivered (i.e. scope "exclusions")

    Project Scope

    focuses

    on

    the

    Project Management aspect for delivering the

    product/service. The Project Management aspect comprises the

    budget, the

    schedule, the quality. On the other hand, product scope focuses on the end product, for example, cost to own, services/benefits that this product will offer to the end user.

    Scope management will involve both project scope and product scope

    Project Scope (Aircraft) 1) 2) 3) Development cost Development Schedule Engine in-source or out- source
    Project Scope (Aircraft)
    1)
    2)
    3)
    Development cost
    Development Schedule
    Engine in-source or out-
    source

    Product Scope (Aircraft)

    1)

    Price of Aircraft

    2)

    Cost of Aircraft

    3)

    Capacity of Aircraft

    4)

    Benefits of Aircraft to consumer

    Copyright: Nucleus Group

    Collection of requirements

    Collection of requirements
    1. Interviewing: Talking to stakeholders 2. Focus groups: A grouping of SMEs or Experts 3. Facilitated
    1.
    Interviewing: Talking to stakeholders
    2.
    Focus groups: A grouping of SMEs or Experts
    3.
    Facilitated workshops: Potential customers guided by an Expert
    4.
    Brainstorming: Team members sitting and giving out lots of ideas
    5.
    Delphi technique: A way to anonymously generate consensus
    6.
    Mind maps: A nice and hierarchical way to show data
    7.
    Affinity diagrams: A way to categorize data and information
    8.
    Questionnaires and surveys
    9.
    Observation
    10. Prototypes
    Group decision making
    Dictatorial, majority, plurality and consensus
    Majority: At least 50% must support
    Plurality: Largest block (May not be majority) will decide.
    Copyright: Nucleus Group

    Collection of requirements: QFD

    Collection of requirements: QFD

    Size of buttons Color of remote Material of remote Shape of remote

    Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirements and translating them into specific product / service features ( CTQs) .

    • 1. Relates multiple requirements to features.

    • 2. Identifies important requirements (from customer) and important features.

    • 3. Helps in making trade-offs.

    Collection of requirements: QFD Size of buttons Color of remote Material of remote Shape of remote

    Copyright: Nucleus Group

    Design of a TV Remote
    Design of a TV Remote

    Want easy to hold Want to easy to find Want it light weight Want big buttons

    x

    x

    x

    x

    Resolving competing requirements

    Resolving competing requirements

    Some issues are very complex and require management intervention. Broad guidelines exist however which prefer this order

    • 1. Business case for starting the project (Most important)

    • 2. Project charter

    • 3. Project scope statement

    • 4. Project constraints (Least important)

    For example, a company XYZ decides to develop mobile applications and want to learn new technology related to mobile applications. As requirements are being gathered, a requirement was found which will increase the cost of project marginally but will provide a lot of learning which may be used on future projects. Should you take it?

    Copyright: Nucleus Group

    Requirements Traceability Matrix

    Requirements Traceability Matrix
    • 1. Requirements traceability matrix helps track the requirements over the life of the project (Initiation to closure) to ensure they are accomplished

    Requirement

    Requirement

    Source

    SRS #

    Module Affected

    Test Case (s)

    Test Run

    Notification of

    Comments

    Number

    Results

    Requirement

    1

                   

    2

                   

    3

                   

    Copyright: Nucleus Group

    Product analysis and project scope statement

    Product analysis and project scope statement
    • 1. Product analysis helps analyze the objectives and description of the product stated by the customer and turn into tangible deliverables FOR the PROJECT.

    • 2. Project scope statement is the output of “Define Scope Process”

    • 3. The project scope statement along with the WBS and WBS dictionary comprise the scope baseline which is part of project management plan

    Copyright: Nucleus Group

    WBS (work Breakdown Structure)

    WBS (work Breakdown Structure)

    WBS breaks the project into smaller and more manageable tasks

    The rules to keep in mind while making WBS

    • 1. Must be done with help of the team

    • 2. First level is to be done before further levels are done

    • 3. Each level of WBS is a smaller piece of the level above

    • 4. Entire project is included in the upper levels. Some levels are deeper than others

    • 5. WBS includes only deliverables that are absolutely needed

    • 6. Deliverables not in the WBS are not part of the project

    Work packages are reached when they include deliverables that

    • 1. Can be realistically and confidently estimated in terms of cost and time, logical units

    • 2. Can be completed quickly (80 hours for a 1 year project - roughly)

    • 3. Can be completed without interruption

    • 4. May be outsourced or contracted out

    Use easy to identify numbering system: Helps in easy communication

    Copyright: Nucleus Group

    What are the benefits of WBS? 1. Helps understand the scope 2. Communicate costs 3. Communicate
    What are the benefits of WBS? 1. Helps understand the scope 2. Communicate costs
    What are the benefits of WBS?
    1.
    Helps understand the scope
    2.
    Communicate costs
    • 3. Communicate responsibilities (Kind of competencies needed)

    Copyright: Nucleus Group

    WBS Dictionary

    WBS Dictionary
    • 1. It is the output of create WBS process

    • 2. It helps the project by putting boundaries on what is included in the work package

    • 3. It is the analogue of a Help file used in many software applications

    WBS Dictionary consists of

    • 1. A number identifier

    • 2. Related control account (Control center Information)

    • 3. A statement of the work to be done

    • 4. Who is responsible

    • 5. Any schedule mile stones

    • 6. Interdependencies

    Copyright: Nucleus Group

    Validate Scope (Verify Scope)

    Validate Scope (Verify Scope)
    • 1. Involves meeting the customer or sponsor to gain formal acceptance of the deliverables during monitoring and controlling phase

    • 2. This can be done at the end of each project phase

    • 3. Quality control and Validate scope are similar in that both involve checking for the correctness of work. The difference is the focus on effort and who is doing the checking.

    • 4. In QC, the QC department checks to see if the quality requirements specified for the deliverables are met, In validate scope it is the customer who checks before accepting the deliverables.

    • 5. User Acceptance Testing (UAT) is an example of “Validate Scope”

    Copyright: Nucleus Group

    Control Scope

    Control Scope
    • 1. Control scope involves measuring project and product scope performance and managing scope baseline changes and preventing scope creep (changes made without the formal change approval process).

    • 2. Need to measure scope performance against the baseline to see magnitude of any variances. Next see if any updates to scope baselines or other parts of project management plan are needed

    Copyright: Nucleus Group

    Overview

    Overview

    Initiation

    Planning

    Executing

    Monitoring & Controlling
    Monitoring &
    Controlling
    Closing
    Closing
    Plan Schedule Management Define Activities Sequence Activities Control Schedule Estimate Activity Resources Estimate Activity Durations Time
    Plan Schedule
    Management
    Define Activities
    Sequence Activities
    Control Schedule
    Estimate Activity
    Resources
    Estimate Activity
    Durations
    Time Management
    Develop Schedule

    Copyright: Nucleus Group

    Time Management

    Time Management
    • 1. Remember that unrealistic schedule is a project manager’s fault and not that of

    senior management schedule)

    (This assumes that the

    PM

    is

    the

    one who

    created the

    • 2. It is PM’s job to see if the needed end date can be met and create options to make it happen, all BEFORE project execution even starts

    • 3. PM software can be of extreme help with scheduling, scenario analysis and performance tracking but it cannot tell how to manage a project

    Copyright: Nucleus Group

    Process: Define Activities

    Process: Define Activities

    The process involves taking the work package in WBS and breaking down further to reach activity level (also called tasks which are usually done by one person for a few days). In order to do this you need the scope baseline and the team so that activities can be defined more accurately and make estimates better.

    Two methods of defining activities

    Rolling Wave Planning: Plan at higher level and then wait until project work begins

    to start next level of planning (contrast with progressive elaboration where you plan next phase after the work ends & not when work begins)

    Execution

    Process: Define Activities The process involves taking the work package in WBS and breaking down further

    Planning

    Process: Define Activities The process involves taking the work package in WBS and breaking down further

    Rolling wave

    When in hurry Work is known

    Execution

     
    Execution Planning Execution

    Planning

     

    Execution

    Working on new tasks Learning is involved Not familiar with work

    Progressive Elaboration

    Copyright: Nucleus Group

    Terminology: Milestones

    Terminology: Milestones
    • a) Milestones are significant events within the project schedule.

    • b) A milestone is also a zero duration task.

    Start the Start the project project
    Start the
    Start the
    project
    project

    Documenting

    Requirements

    Implementing

    Solution

    Implemented Implemented Solution Solution
    Implemented
    Implemented
    Solution
    Solution
    Handing off Product
    Handing off
    Product
    Terminology: Milestones a) Milestones are significant events within the project schedule. b) A milestone is also
    Complete Complete Project Project
    Complete
    Complete
    Project
    Project

    Copyright: Nucleus Group

    Sequence Activities

    Sequence Activities

    Take the activities and milestones and start to sequence them into how work is performed. This will create a network diagram as shown below.

    Sequence Activities Take the activities and milestones and start to sequence them into how work is

    Copyright: Nucleus Group

    Network diagramming techniques

    Network diagramming techniques

    Uses of network diagrams

    • 1. Justify time estimate for the project

    • 2. Aid in effectively planning, organizing and controlling the project

    • 3. Show interdependencies of all activities, resource allocation

    • 4. Show workflow so the team will know what activities need to happen in a sequence

    • 5. Identify opportunities to compress schedule

    • 6. Show project progress (for example, use Green color for boxes completed, Red for active boxes and white for yet to start boxes)

    Copyright: Nucleus Group

    Network diagramming techniques

    Network diagramming techniques Precedence diagramming method (Activity on Node)- Nodes are used to represent activities and

    Precedence diagramming method (Activity on Node)- Nodes are used to represent activities and arrows show activity dependencies

    Four types of relationships Finish to Start: An activity must finish before the successor can start e.g. Quality Check done after part manufacturing fully done Start to Start: An activity must start before the successor can start e.g. IT testing protocol design can start only when design starts Leveling concrete can start as soon as pouring foundation starts. Finish to Finish: An activity must finish before the successor can finish e.g. Coding must be completed to complete code testing Electrical testing can be fully completed only when all wiring work is done. Start to Finish: An activity must start before the successor can finish e.g. Next shift supervisor must start, for current supervisor to complete his work

    GERT (Graphic Evaluation Reporting Technique)

    FF SS FF FF
    FF
    SS
    FF
    FF
    • SS
      SS

    • FF

    SS

    This allows loops within a network diagram (e.g. R&D Industry trial & error)

    Dependencies

    Mandatory Dependency: Inherent to the nature of work (Foundation after excavation) Discretionary Dependency: Can be changed (Light bulbs after ceiling fan during interior)

    Leads and Lags

    Lead may be added to start an activity before the preceding activity and lag is

    inserted waiting time between activities. Lead is negative lag and lag is –ve lead.

    Copyright: Nucleus Group

    Lead Activity-A Lag
    Lead
    Activity-A
    Lag

    Estimation Techniques

    Estimation Techniques One point estimate 1. Can force people to do padding 2. Hides important information

    One point estimate

    • 1. Can force people to do padding

    • 2. Hides important information about variability of the task (which has a direct impact on risk) etc

    Analogous Estimating

    • 1. Uses expert judgment and historical information to predict the future

    • 2. The planned hotel to construct looks similar to the hotel built five years ago, which took 2

    years to build. We plan on using similar resources and technology, hence should take 2 years.

    Parametric Estimating

    • 1. Calculates projected times based on historical records from previous projects and other information.

    • 2. Last project had 2000 lines of code and took 2 months. The current project to be done by same teamwould have about 4000 lines of code and will take about 4 months.

    • 3. Regression analysis (or scatter diagram) tells if two variables are related

    Heuristics

    • 1. It’s a rule of thumb.

    • 2. Constructing a residential house : Each floor takes about 6 months

    Three point estimate (PERT, Project Evaluation and Reporting Technique)

    • 1. Expected duration = (P+4M+O)/6, Weighted average with most weightage to Most likely case. P = Pessimistic (Worst case), M = Most likely, O = Optimistic (Best case)

    • 2. SD (Standard Deviation) = (P-O)/6

    • 3. V (Variance) = SD 2 ,

    Copyright: Nucleus Group

    • 4. For Project level estimations: Only add Expected duration or variances (V). Do not add SD.

    3 point estimate example

    3 point estimate example
    A B C P: 12 P: 9 P: 14 M: 9 M: 6 M: 6 O:
    A
    B
    C
    P: 12
    P: 9
    P: 14
    M: 9
    M: 6
    M: 6
    O: 6
    O: 3
    O: 4
    D SD = (12+4*9+6)/6 = 9 = (12-6)/6 = 1 V 1^2 = 1 = (9+4*6+3)/6
    D
    SD
    = (12+4*9+6)/6 = 9
    = (12-6)/6 = 1
    V
    1^2 = 1
    = (9+4*6+3)/6 = 6
    = (9-3)/6 = 1
    1^2 = 1
    = (14+4*6+4)/6 = 7
    = (14-4)/6 = 1.67
    1.67^2 = 2.77

    Project Duration = 9+6+7 = 22 Project Variance = 1+1+2.77 = 4.77 Project SD = sqrt (4.77) = 2.18

    Project can be done in 22 +/- 2.18 days

    Copyright: Nucleus Group

    Reserve analysis (Covered in cost chapter & risk chapter again)

    Reserve analysis (Covered in cost chapter & risk chapter again)

    Project must have reserves to accommodate for risks that remain after the completion of risk management activities. You deal with certain risks on a one-one basis, but for all other remaining risks, you allocate some lump some money (Called as reserves).

    Two types of reserves for risks- Contingency reserves and Management reserves Contingency reserves- For risks which remain after plan risk response process Management reserves- For unknown risks (Usually less than 10% of contingency cost)

    Contingency reserves are

    under

    the

    control of

    project manager while

    management

    reserves are under the control of top management.

    Copyright: Nucleus Group

    Schedule Network Analysis (we will cover this twice) Some techniques for this are 1. Critical path

    Schedule Network Analysis (we will cover this twice)

    Some techniques for this are

    • 1. Critical path method

    • 2. Schedule compression

    • 3. Resource leveling

    • 4. Critical chain method

    • 1. Critical Path Method

    Critical path is the path of longest duration in the network diagram and determines the shortest time to complete the project

    Near critical path is a path close in duration to critical path. The closer it is to critical path, the more risk project has

    Copyright: Nucleus Group

    Float or slack

    Float or slack

    Total Float/Total Slack: Time an activity can be delayed without delaying the project end date or an intermediary milestone Free Float/Free Slack: Time an activity can be delayed without delaying the early start date of its successor Project Float: Project float is the amount of time a project can be delayed without delaying the externally imposed project completion date required by the customer or management.

    Activities on critical path have zero float.

    Float = LS-ES or LF-EF

    Copyright: Nucleus Group
    Copyright: Nucleus Group

    Find ES and EF in the forward pass. Find LS and LF during the backward pass

    Schedule Network Analysis

    Schedule Network Analysis

    Some techniques for this are

    • 1. Critical path method

    • 2. Schedule compression

    • 3. Resource leveling

    • 4. Critical chain method

    Critical path is the path of longest duration in the network diagram and determines the shortest time to complete the project

    Near critical path is a path close in duration to critical path. The closer it is to critical path, the more risk project has

    Copyright: Nucleus Group

    Float or slack

    Float or slack

    Total Float/Total Slack: Time an activity can be delayed without delaying the project end date or an intermediary milestone Free Float/Free Slack: Time an activity can be delayed without delaying the early start date of its successor Project Float: Project float is the amount of time a project can be delayed without delaying the externally imposed project completion date required by the customer or management.

    Activities on critical path have zero float.

    Float = LS-ES or LF-EF

    Find ES and EF in the forward pass. Find LS and LF during the backward pass

    Copyright: Nucleus Group

    Schedule Compression

    Schedule Compression
    10 5 2 8 6
    10
    5
    2
    8
    6
    10 8 5 2 6
    10
    8
    5
    2
    6

    X

    8 6 5 2 12 8 6 2
    8
    6
    5
    2
    12
    8
    6
    2

    Copyright: Nucleus Group

    5 6
    5
    6

    Network Analysis Techniques

    Network Analysis Techniques

    2. Schedule Compression

    Fast tracking-

    Doing critical path activities

    in parallel

    that

    were originally in series.

    Increases risk and needs more communication. This involve a time vs. risk tradeoff.

    (Remember nothing comes for FREE)

    Crashing- Making cost and schedule tradeoffs to determine how to compress the schedule. Always involves increased cost. This involve a time vs. cost tradeoff.

    Network Analysis Techniques 2. Schedule Compression Fast tracking- Doing critical path activities in parallel that were
    • 3. Resource Leveling

    Resource leveling: Produce a resource limited schedule. The schedule from this is almost always longer than the project schedule.

    Network Analysis Techniques 2. Schedule Compression Fast tracking- Doing critical path activities in parallel that were
    • 4. Critical Chain Method

    Critical Chain method: It takes both activity and resource dependency directly into account. Buffers are added to the activities at few locations and these buffers are managed. This is a buffer management system.

    Copyright: Nucleus Group

    WHAT IS THE CRITICAL CHAIN OF A PROJECT?

    Critical Chain is the longest chain of resource AND task dependencies in a project
    Critical Chain is the longest chain of
    resource AND task dependencies in a project
    Day 0: X, 10d X, 10d X, 10d X, 10d T1 T2 T3 T4 X, 10d
    Day 0:
    X, 10d
    X, 10d
    X, 10d
    X, 10d
    T1
    T2
    T3
    T4
    X, 10d
    Critical Chain
    T5
    Y, 10d
    Y, 10d
    T6
    T7

    Copyright: Nucleus Group

    WHAT IS THE CRITICAL CHAIN OF A PROJECT?

    Critical Chain is the longest chain of resource AND task dependencies in a project Day 0:
    Critical Chain is the longest chain of
    resource AND task dependencies in a project
    Day 0:
    X, 10d
    X, 10d
    X, 10d
    X, 10d
    25d
    T1
    T2
    T3
    T4
    PB
    X, 10d T5
    X, 10d
    T5

    Y, 10d

    T6
    T6

    Y, 10d

    10d

    T7 FB
    T7
    FB

    Copyright: Nucleus Group

    SAMPLE TREND CHART

    (Critical chain buffer

    management) -10 0 10 % Buffer Consumed
    management)
    -10
    0
    10
    % Buffer Consumed

    % Chain Complete

    Direction of wire graph tells us the trend

    Copyright: Nucleus Group

    Mile stone charts Bar charts (Gantt Charts) Detailed Task List Start and End of each task

    Mile stone charts

    Bar charts (Gantt Charts)

    Mile stone charts Bar charts (Gantt Charts) Detailed Task List Start and End of each task
    Mile stone charts Bar charts (Gantt Charts) Detailed Task List Start and End of each task
    Mile stone charts Bar charts (Gantt Charts) Detailed Task List Start and End of each task

    Detailed Task List Start and End of each task Dependencies Percentage Done

    Mile stone charts Bar charts (Gantt Charts) Detailed Task List Start and End of each task

    Only Milestones Nothing Else

    Copyright: Nucleus Group

    When to use which chart

    When to use which chart
    • 1. Network diagram and not Gantt: To show interdependencies between activities

    • 2. Milestone and not Gantt: To report to senior management

    • 3. When to use Gantt/Bar and not Network diagram: To track progress and to report to team

    Copyright: Nucleus Group

    Overview

    Overview

    Initiation

    Planning

    Executing

    Monitoring & Controlling
    Monitoring &
    Controlling
    Closing
    Closing

    Cost Management

    Plan Cost Control Costs Management Estimate Costs Determine budget
    Plan Cost
    Control Costs
    Management
    Estimate Costs
    Determine budget

    Copyright: Nucleus Group

    Cost Management

    Cost Management

    For many projects activities are used to create cost estimates. On some large projects it may be more practical to estimate and control at a higher level called control account (or cost center).

    Control accounts are placed at selected management points of the Work Breakdown Structure (WBS) to monitor cost and schedule performance of significant elements of work.

    Cost management plan is created during project management plan creation and includes

    • 1. Specifications on how estimates should be stated (In $, or millions, or Crores etc)

    • 2. Level of accuracy needed for estimates (Want 10% accuracy of 20% accuracy)

    • 3. Reporting formats to be used (Want bar charts or pie charts etc)

    • 4. Rules for measuring cost performance (Is 5% above budget, bad or very bad?). How do we determine that the project is in Red, Green or Yellow status will be agreed

    • 5. Whether costs will include both direct and indirect costs

    • 6. Control thresholds (More than 15% cost increase will trigger alert to CEO)

    Copyright: Nucleus Group

    Process: Estimate costs The estimate costs process is where the estimates for each activity are made

    Process: Estimate costs

    The estimate costs process is where the estimates for each activity are made

    • 1. Must be based on WBS

    • 2. Must be done by person doing the work and historical estimates can be used to improve accuracy

    • 3. PM must not accept constraints from management but must analyze needs of the project and come up with own estimate and reconcile any differences

    • 4. PM must meet agreed upon estimates

    • 5. A cost base line should be made and not changed till plan changes

    • 6. Corrective action is to be taken whenever cost problems occur

    Copyright: Nucleus Group

    Types of costs

    Types of costs

    Types of costs

    Fixed costs: Rent paid for the Office space (Does not change)

    Variable costs: Electricity paid (Changes with working hours)

    Direct costs: Salaries of employees working on a project Indirect costs: Cost of AC, water and other amenities

    Types of costs Types of costs Fixed costs: Rent paid for the Office space (Does not

    A fixed cost or variable cost will be either direct cost or indirect cost

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    Cost Estimation

    Cost Estimation

    Analogous Estimation

    Advantages

    • 1. Quick

    • 2. Less Costly

    • 3. Tasks need not be identified

    • 4. Causes overall project costs to be capped

    Disadvantages

    • 1. Least accurate

    • 2. Difficult to use for projects with uncertainty

    Cost Estimation Analogous Estimation Advantages 1. Quick 2. Less Costly 3. Tasks need not be identified
    • 3. Risks management politicking (About what is the definition of “Similar”)

    Bottom Up Estimation

    Advantages

    • 1. Most accurate

    • 2. Gains buy-in from team

    • 3. Provides basis for monitoring and control

    Disadvantages

    • 1. Time intensive

    • 2. Encourages padding

    Copyright: Nucleus Group

    Cost Estimation Analogous Estimation Advantages 1. Quick 2. Less Costly 3. Tasks need not be identified

    More on estimation

    More on estimation

    What helps in estimate creation for a project

    • 1. PM software (or an excel sheet)

    • 2. Resource cost rates (Average salary can be multiplied by team size)

    • 3. Risk reserve analysis (Amount of reserves to add, standard is 10%)

    • 4. Cost of quality (Money to add for quality standard maintenance)

    Estimates made during early project phase are less accurate than the ones which are made later

    Estimating Accuracy

    Range of estimates ROM (Rough order of magnitude): - 50% to 100% Budget estimate: -10 to
    Range of estimates
    ROM (Rough order of magnitude):
    - 50% to 100%
    Budget estimate: -10 to 25%
    Definite estimate: +/- 10%

    Copyright: Nucleus Group

    Forecasting: A few points to keep in mind for cost estimations

    Forecasting: A few points to keep in mind for cost estimations
    • 1. Learning Curve: Over time the cost per unit (or cost

    of

    similar

    work)

    will

    drop

    because

    repetition

    increases efficiency. This is a correction

    for

    time

    factor.

     
    • 2. Law of Diminishing Returns: As more people are added the output increases, but in lesser proportion compared to the increase in number of people. This is a correction for people scale-up factor.

    Example: A taskmay take 16 days with a 15 member team. Increasing the team to 30 will not reduce the time to 8 (Will be more).

    Copyright: Nucleus Group

    Determine budget Total cost of project needs to be computed so that the organization can set

    Determine budget

    Total cost of project needs to be computed so that the organization can set aside this money and this is called budget.

    Technique: Cost aggregation

    For a given time period, all activities to be done are noted. Activity costs are rolled into

    work package costs and work package costs are rolled into control account (cost center) costs and control account costs into project costs.

    Determine budget Total cost of project needs to be computed so that the organization can set

    Progress reporting (of a project)

    In reality, progress happens on a continual basis (every second you do some work and hence there is progress) but sometimes It is not practical to report the project progress continuously like this. For example, consider payments to vendors based on project progress (Cannot pay on a second by second basis). To deal with such situations, we develop methods to discretize the project progress (from continuous to discrete pieces).

    At a work package level use one of following 50/50 rule 20/80 rule 0/100 rule

    Copyright: Nucleus Group

    Progress reporting (Assume all activities on critical path are of same duration)

    Progress reporting (Assume all activities on critical path are of same duration)

    50/50 Rule

    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:
    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:
    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:
    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:

    Activities completed: 1+1+1+0.5+0.5 = 4, Project completed: (4/8)*100 = 50%

    20/80 Rule
    20/80 Rule
    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:

    Activities completed: 1+1+1+0.2+0.2 = 3.4, Project completed: (3.4/8)*100 = 42.5%

    0/100 Rule Milestone Rule
    0/100 Rule
    Milestone Rule

    Copyright: Nucleus Group

    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:
    Progress reporting (Assume all activities on critical path are of same duration) 50/50 Rule Activities completed:

    Activities completed: 1+1+1+0+0 = 3, Project completed: (3/8)*100 = 37.5%

    Earned value analysis

    Earned value analysis

    Measures scope, time, project performance Integrates cost, time, scope Can be used to forecast future performance and project completion date

    PV – Planned value (Value of planned work) EV – Earned value (Value of completed work) AC – Actual cost (Actual cost incurred till date) BAC – Budget at completion (Initial Budget) EAC – Estimate at completion (Revised Budget) ETC – Estimate to complete (From the day of estimate, money to spend to complete) VAC – Variance at completion (Difference between Initial budget and revised budget)

    Earned value analysis Measures scope, time, project performance Integrates cost, time, scope Can be used to
    PV, EV, AC Start End Today
    PV, EV, AC
    Start
    End
    Today

    Cost variance (CV) = EV-AC Schedule variance (SV) = EV-PV CPI = EV/AC (Cost Performance Index) SPI = EV/PV (Schedule Performance Index)

    BAC

    EAC

    EAC

    Earned value analysis Measures scope, time, project performance Integrates cost, time, scope Can be used to

    ETC

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    TCPI (To complete cost performance Index, Future Index)

    TCPI (To complete cost performance Index, Future Index)

    It is the ratio of work remaining to budget remaining for the project. TCPI is the calculated projection of cost performance that a project must achieve on the remainder of the project work to reach a specified end result.

    If TCPI is one (1.0), then the remaining project work must be executed at the same cost performance level as the completed project work. If TCPI is less than one (<1.0), then the remaining project work can be executed at a lower cost performance level than the project completed work. If TCPI is greater than one (> 1.0), then the remaining project work must be executed at a better cost performance level than the project completed work till date.

    BAC = $115,000 EV = $55,000 AC = $75,000. New budget approved is $125,000. Calculate TCPI

    CPI = EV/AC = $55,000/$75,000 = 0.733

    TCPI = (BAC - EV) ÷ (EAC - AC) = (115,000-55,000)/(125,000-75,000) = 1.2

    TCPI allows you to calculate the amount of cost performance improvement that must be

    Copyright: Nucleus Group

    made on the remaining work to reach a set goal.

    TCPI (To complete cost performance Index)

    TCPI (To complete cost performance Index)
    TCPI is like “Asking Rate/Required run rate” in a cricket match, CPI is like “run rate”
    TCPI is like “Asking Rate/Required run rate” in a cricket match, CPI is like “run rate”
    CPI = 0.1 TCPI = 1.001 Is this possible? Why/Why not?
    CPI = 0.1
    TCPI = 1.001
    Is this possible?
    Why/Why not?
    CPI = 0.99 TCPI = 100 Is this possible? Why/Why not?
    CPI = 0.99
    TCPI = 100
    Is this possible?
    Why/Why not?
    999 days
    999 days
    TCPI (To complete cost performance Index) TCPI is like “Asking Rate/Required run rate” in a cricket
    Early Stage Project
    Early Stage Project
    Late Stage Project
    Late Stage Project

    Copyright: Nucleus Group

    Overview

    Overview

    Initiation

    Planning

    Define Activities

    Sequence Activities
    Sequence Activities
    Estimate Activity Resources
    Estimate Activity
    Resources
    Estimate Activity Durations
    Estimate Activity
    Durations
    Develop Schedule
    Develop Schedule

    Executing

    Monitoring & Controlling
    Monitoring &
    Controlling
    Closing
    Closing
    Control Schedule
    Control Schedule
    Estimate Costs Control Costs Determine budget Perform Quality Perform Quality Plan Quality Assurance Control Acquire Project
    Estimate Costs
    Control Costs
    Determine budget
    Perform Quality
    Perform Quality
    Plan Quality
    Assurance
    Control
    Acquire Project
    Quality Management
    Team
    Develop HR Plan
    Develop HR Plan
    Develop Project Team
    Develop Project Team
    Manage Project Team
    Manage Project Team

    Copyright: Nucleus Group

    Quality management

    Quality management

    Lack of attention results in more rework and defects and costs time and money

    What is quality? Degree to which project fulfills requirements Implies you need to have all the stated and unstated requirements and project scope statement

    Quality management Includes creating and following policies and procedures to ensure that a project meets the defined needs it was intended to meet from the customer’s perspective. Quality plan includes the procedures, ways of making plots etc.

    Responsibility for Quality

    • 1. Senior management is responsible for organizational quality

    • 2. PM has ultimate responsibility for quality of product of project

    • 3. Each team member is responsible for self inspection

    Copyright: Nucleus Group

    Quality Characteristics

    Quality Characteristics
    • 1. Grade vs. Quality

      • a) Grade: meets spec requirements

    Grade talks about the Characteristics and features of a product high grade of car is one that has lots of features and benefits. Grade talks about the fancifulness of the product

    • a) Quality: Satisfies Requirements

    • 2. Prevention vs. Inspection

    • 3. Customer Satisfaction

      • a) Keep customer informed

      • b) Stick to Requirements

    Quality Planning Tools

    • 1. Standards

    • 2. Benchmarking (past analysis)

    • 3. Benefit/Cost Analysis (BCI)

    • 4. Flowchart (also used in QC)

    • 5. Design of Experiments (what input parameters make +ve influence on outputs)

    • 6. Cost of Quality (costs of conformance & non-conformance)

    • 7. Fishbone Diagram (also used in QC)

    Copyright: Nucleus Group

    Quality Theorists 1. Juran: Developed the 80/20 principle (80% of problems contributed by 20% causes) 2.

    Quality Theorists

    • 1. Juran: Developed the 80/20 principle (80% of problems contributed by 20% causes)

    • 2. Edward Deming: TQM and Deming cycle (Do small increments before making large changes)

    • 3. Philip Crosby: Prevention over inspection (Better to prevent errors than inspect later)

    Marginal analysis

    Quality Techniques

    Benefits or revenues to improving quality are equal to cost of achieving this quality. This tells when to stop trying to improve quality.

    5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 Cost
    5
    4
    3
    2
    1
    0
    1
    2
    3
    4
    5
    6
    7
    8
    9
    Cost ($)

    Quality (Increasing)

    Benefits

    Costs

    Kaizen or continuous improvement

    Making small and incremental improvements in quality over a long period of time

    Copyright: Nucleus Group

    Total Quality Management (TQM)

    Total Quality Management (TQM)

    Total quality management or TQM is an integrative philosophy of management for continuously improving the quality of products and processes. TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services offered by an organization.

    Total Quality Management (TQM) Total quality management or TQM is an integrative philosophy of management for
    Total Quality Management (TQM) Total quality management or TQM is an integrative philosophy of management for

    Copyright: Nucleus Group

    Plan quality vs Perform QA vs Perform QC

    Plan quality vs Perform QA vs Perform QC

    Plan quality

    Perform QA

    Perform QC

    Done during planning

    Done during execution

    Done throughout project

    Find existing standards

    Use measurements from QC

    Measure quality

    Create additional project specific standards

    Perform continuous improvement

    Identify quality improvements

    Determine work to be done to meet standards

    Determine if project activities comply with project and project policies

    Validate deliverables

    Determine how to measure to meet standards

    Find good practices

    Complete checklists

    Balance needs of quality with time, cost, risk etc

    Share good practices in org

    Update lessons learned

    Create Quality mgmt plan as part of PM plan

     

    Submit change requests

    About what needs to be done

    About how it is to be done

    About the final result being what was actually planned

    Copyright: Nucleus Group

    Plan quality: Techniques

    Plan quality: Techniques
    • 1. Bench marking: Comparing actual results to those of best practices (of the industry, strategic targets, competitors etc) to generate ideas for improvement and provide the basis for measuring performance.

    • 2. Cost –benefit analysis (Marginal Analysis): Analyzing benefits gained with cost to see if quality improvement is worth the effort.

    • 3. Design of experiments: A statistical technique to help understand which factors will improve the quality of the organization/process so that we can focus on these important factors. In the design of experiments, the experimenter is often interested in the effect of some inputs on improving some desired output parameters.

    Copyright: Nucleus Group

    Sigma limits (Indicative of quality standards)

    Sigma limits (Indicative of quality standards)

    +/- 1 Sigma is 68.26% +/- 2 Sigma is 95.46% +/- 3 Sigma is 99.73% +/- 6 Sigma is 99.99985%

    Industry neutral technique to compare 1. Different industries (IT vs Biotech etc) 2. Different functions (Sales
    Industry neutral technique to compare
    1.
    Different industries (IT vs Biotech etc)
    2.
    Different functions (Sales Vs Operations)
    3.
    Different departments (HR vs Programming)

    High value of Sigma indicates higher standards and lesser mistakes

    A pharmaceutical company follow 3-sigma policy. They produce 100,000 tablets a month. How many defective tablets would you find?

    Defective = (100-99.73)*100,000/100 = 270 tablets a month

    Copyright: Nucleus Group

    Basic Statistics (Indicators of Quality Standards)

    Basic Statistics (Indicators of Quality Standards)

    Important statistical terms

    • 1. Mean (Average)

    • 2. Median (Middle number if arranged ascending order)

    • 3. Range (Highest – Lowest value)

    • 4. Standard Deviation (Spread in the data about the average value)

    For a set of numbers {1, 3, 4, 5, 6}, calculate the Mean, Median, Range and standard Deviation

    Mean = (1+3+4+5+6)/5 Median = 4 Range = 6-1 = 5 Standard Deviation (SD) =

    = 3.8

    Basic Statistics (Indicators of Quality Standards) Important statistical terms 1. Mean (Average) 2. Median (Middle number

    (1

    3.8)

    2

    +

    (3

    3.8)

    2

    +

    (4

    3.8)

    2

    +

    (5

    3.8)

    2

    +

    (6

    3.8)

    2

    5

    =1.7

    x

    x

    x

    x

    x

    x

    SD is low

    Average

    • x x

    x

    x

    Average

    x

    x

    SD is High

    Copyright: Nucleus Group

    Understanding Quality with Standard Deviation

    Understanding Quality with Standard Deviation
    • x x

    x x x x x x x Average x Average x x SD is low SD
    x
    x
    x
    x
    x
    x
    x
    Average
    x
    Average
    x
    x
    SD is low
    SD is High
    High standard deviation indicates lack of predictability in the outcome of the process and
    is an undesirable property in a process

    State Govt – A: Has a power cut policy: 2 hours anytime during the day

    State Govt – B: Has a power cut policy: 2 hours from 9AM to 11AM fixed

    Copyright: Nucleus Group

    The 7 Tools of quality

    The 7 Tools of quality
    • 1. Fish bone (Cause and effect or Ishikawa Diagram) – Root cause analysis

    • 2. Flow chart – To understand where errors might creep in

    • 3. Histogram – To understand the number and type of problems

    • 4. Pareto chart- Prioritize potential causes of the problem to be solved

    • 5. Check Sheets – Organize data and facts about defects and errors

    • 6. Scatter diagram – To see if there are any variables dependent on each other

    • 7. Control chart – To control a process

    The 7 Tools of quality 1. Fish bone (Cause and effect or Ishikawa Diagram) – Root
    The 7 Tools of quality 1. Fish bone (Cause and effect or Ishikawa Diagram) – Root

    Copyright: Nucleus Group

    Tools of quality

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    Copyright: Nucleus Group

    Customer Requirements

    Create Design Document Get customer Approval Implement Hand off

    Create Design Document

    Create Design Document Get customer Approval Implement Hand off

    Get customer Approval

    Create Design Document Get customer Approval Implement Hand off

    Implement

    Create Design Document Get customer Approval Implement Hand off

    Hand off

    Tools of quality 20 10 15 20 25 30 0 5 10 0 30 40 50

    Control charts

    Control charts

    Used to monitor things like project performance figures such as cost and schedule variance. It is also useful for monitoring the quality of technical process parameters. Some examples: How long does it take to answer a customers query in a BPO. How long does it take for us to fix a bug reported by a customer. etc

    Upper and lower control limits, Specification Limits, Mean (average)

    Out of control

    • 1. A data point falls out of upper or lower control limit

    • 2. There are non-random data points like rule of 7

    Rule of 7 7 data points grouped on one side of mean (even though within control limits)

    Copyright: Nucleus Group
    Copyright: Nucleus Group
    If a process is out of control, you stop the process. Investigate the root cause and
    If a process is out of
    control, you stop the process.
    Investigate the root cause and
    fix it before going forward.

    Statistical Sampling (For QC)

    Statistical Sampling (For QC)

    There are two broad categories of sampling

    • 1. Attribute sampling – Discrete choices: You sample some number of items and you classify each item as either having some attribute, like being defective, or not. You will have some standard for what a defective item is -- like broken, scratched, non-functional, etc.

    • 2. Continuous/Variable sampling – Continuous measurable variables: When your data points are measurements on a numerical scale you have variables data -- like weight, diameter etc

    1) A Pharma company makes many tablets. If you pick tablets and see whether it is square or oval in shape it is attribute sampling. 2) If you measure the weight or diameter of the tablet it will be continuous sampling.

    Statistical Sampling (For QC) There are two broad categories of sampling 1. Attribute sampling – Discrete
    Statistical Sampling (For QC) There are two broad categories of sampling 1. Attribute sampling – Discrete
    Statistical Sampling (For QC) There are two broad categories of sampling 1. Attribute sampling – Discrete

    Copyright: Nucleus Group

    Cost of Quality

    Cost of Quality

    Cost of Conformance

    Cost of Nonconformance

    Prevention and Appraisal Costs

    Failure Costs

    Planning

    Internal

    Scrap

    Training

    (pre customer)

    Rework

    Auditing

    Expediting

    Controlling

    External