LESSON 23

WBS used to structure work for reaching - Objectives as:

1.Lowering Cost
2.Reducing Absenteeism
3. Improving morale
4.Lowering scrap factors

CWBS elements” to Ensure Correlation with:

a) Specification tree
b) Contract line items
c) End-items of Contract
d) Data items required
e) Work statement Tasks
f) Configuration management requirements

Typical reasons why plans fail:

1.Corporate goals not understood at lower organizational levels.
2. Plans encompass too much in too little time.
3. Poor Financial Estimates.
4. Plans based on insufficient data.
5. No attempt to systematize “Planning Process”.
6.Planning Performed by a Planning Group.
No one knows:
a) Ultimate objectives.
b) staffing requirements.
c) Major Milestone dates, including written reports.
8. If there would be Personnel available with necesary skills.
9. Project estimates best guess: not based on standard history.
10. Not enough time for proper estimate.
11. Not working toward same specs.
12. People consistently shuffled in & out of Project.
13. With little regard for schedule.

 A Hedge Position.
 A Situation in which contractor may not be able to meet Customer's Milestone Date
without “Incurring a Risk”, or may not be able to meet “Activity Requirements”
following a Milestone date because of Contractual Requirements.

 Primary Objectives of “Detailed Schedule” is to coordinate activities into a “Master Plan”

(M/P).
IOT complete Project with:
 Best time
 Least cost
 Least risk
Objectives can be constrained by:
 Calendar completion dates
 Cash flow restrictions
  Limited Resources
 Approvals

Secondary “Objectives of Schedule”:

 Obtaining Good Project Control
 Providing for easy Review
 Studying Alternatives
 Developing an Optimal Schedule
 Using resources effect
 Communicating
 Refining Estimates Criteria

P/P Provides Framework:

1.Eliminate conflicts between Functional Managers.
2.Elimimate conflicts between Functional Management & Program management.
3. Provide: Standard Communication Tool throughout “Long time of Program” (Should be geared
to WBS).
4. Provide Verification: Contractor understand: Customer’s “Objectives & Requirements”.
5. Mean: “Identifying Inconsistencies in Planning Phase”.
6. Mean: Early Identification of “Problem areas & Risks” so that no surprises occur.
7. Contains all “Schedules” Defined Earlier on Basis for Program Analysis & Reporting

Key Factors affecting Delegation of Authority :

a. Maturity of “Project Management Functions”.
b. Size, nature, Business/ base of Company.
c. Size & Nature of Project.
d. Life Cycle of Project.
e. Capabilities of management at all levels.

Difference Between Business Case, Project Charter and Scope Document?

A business case is usually prepared before project approval. If you are a contractor, your
proposal would be similar a business case.
A project charter providing the project manager with formal authorization to proceed with the
project is issued to a team by the project sponsor before the project starts.
Project scope document defines the project scope. It should be attached to the business case and
to the project charter. The project scope will be refined as you proceed through the project.

The Management Plan

a. Resource Requirement & Man loading. (if known)
b. Résumés of key Personnel.
c. Organizational relationships & structures.
d. Responsibility Assignment Matrix.
e. Support Required from other organizations.
f. Project Policies & Procedures (P & P).
g. Change in Management Plan.
h. Management Approval of Above.
SCOPE
 Scope is what the “Project Contains or Delivers”.

Scope Creep
 Uncontrolled changes in a project's scope.
 Also called Requirement creep, feature creep, & sometimes kitchen sink syndrome.
 Phenomenon Occur when Scope of a project is not properly defined, documented, or controlled.

 Scope Creep can be a result of:

a. Poor Change control
b. Lack of Proper initial identification of what is Required to bring about Project Objectives.
c. Weak Project Manager/ Executive sponsor.

 Scope Creep is a Risk in most Projects.

 Most “Mega Projects” fall “Victim to Scope Creep ”.
 Scope Creep often results in Cost Overrun.

Features (Technology) of scope creep management

 Where scope creep developed by technologists, for customer pleasing or technical gold-plating
purposes where features are added to Project (IT) by technologists causing scope creep.
 Customer-pleasing scope creep results from an organization/or individual whose ultimate goal is
to please customer while acting reluctant to reject proposed changes in requirements of Project.
 Gold-plating scope creep is different, and is a result of technologists adding substance or
additions to original requirements, because of lack of details in initial business’ requirements.

 “Scope Management Plan” is One of Major Scope Documents.

 Project Scope Management Plan document:
a) how Project scope is defined.
b) Managed, controlled, verified & Committed to Project Team & Share Holders/customers.
 Also includes all “Work Required to Complete Project”.
 “Scope Management Plan is a Document used to control What is In & Out of Scope of Project By
use of a “Change Management System”.
 Items deemed out of scope Go directly through “Change Control Process” & Not automatically
added to “Project work items”.

 Project Scope Management Plan” is included as one of section in overall Project Management
Plan:
 It can be very:
a. Detailed
b. Formal
c. Loosely Framed
` d. Informal depending on “Common Needs of Project”.

Scope Management
Processes used to identify all the work required to successfully complete the project
 Initiation
  Scope Planning
 Scope Definition
 Scope Verification
 Scope Change Control

Project Initiation
• Appointment of Project Team
• Introduction
• Needs Identification
• Market Research
• Opportunity Studies
• Political Input
• Tendering
• Project Objectives & Constraints
• Characteristics of Objectives
• Strategic Plan & Objectives
• Constraints
• Project Cost Limit
• Performance Measures
• Additional input to Project Selection & Initiation

Project Charter
 Formally recognizes Existence of a Project.
 Refers to the Business needs, the project is addressing.
 Describes Products to be delivered.
 Gives Project Manager authority to apply resources to Project.

Scope Planning
• A written statement Includes:
Project Justification
Major deliverables
Project objectives
• Criteria used to determine: If Project or Phase has been successfully completed.

“Scope”
 Term “scope” refers to:
 Product Scope
 Project Scope
 Product Scope includes:
 Work to deliver a Project’s Products/services with “Specific” “features & functions”.
 Result can be a “Single Product” or have “Several Components”.
Features, Functions, & Characteristics to be Included in a Product:
 Measured against “Set Product Requirements”
 Managed “Throughout life cycle”

Project Scope
 Defined in “Project Charter”.
 It is a subject of “Project Plan”.
  Project Scope is the Work that must be done in order to Deliver a Product, service, result with
Specified Features & Functions.
 Project Scope is a “Start/end” date which
Possess unique Characteristics or attributes to Produce specific “Results during Life Cycle”.

“Scope Management”
 Concerned with “defining & controlling” “Scope of Project”.
 Project Scope includes:
 “Product description”.
 Any known constraints/assumptions.
 Project Scope is defined in “Project Charter”.
 Project scope is the “Basis for development of WBS”.
 It must be “verified & controlled throughout” “Life of Project.

Project Scope Management

 Includes “Processes Required to ensure” that Project includes all Work Required to complete
the Project successfully.
 It is Primarily concerned with Defining & Controlling:
 What is or is not Included in Project.

Scope Management Processes

 Project initiation: Approve Business Case, feasibility, budget
 Scope planning: gather requirements
 Scope definition: create scope components, divided work
 Scope verification: get approval from all stake holders
 Scope change control: manage scope change requests
 Uses Business Process Management (BPM)

Project Scope Planning

 Creating a Project Scope management plan that documents how Project Scope will be:
 Defined
 Verified
 Controlled
 How WBS is Created & Defined?

Identify Project Environment

 What Processes of Project & Planning are already in Place?
 If Process is fundamental to:
 Achieving Organization’s Goals?
 High business Risk involved?
 Where are the Problem Areas?
 Organizational Culture?
 Early adopters or adverse to change?
 What are supporting requirements?

Scope Verification (SV):

 SV is the Process of obtaining Stake holders’ Formal acceptance of Work Completed.
 SV Process is Carried out whenever One or more deliverables are ready to be handed over.
  Verifying Project Scope includes Reviewing deliverables to ensure that each deliverable is
Completed Satisfactorily.
 If Project is Terminated Early, “Project’s SV Process” Should Establish & Document “Level &
Extent of Completion”.

Scope Verification Vs. Quality Control

 “SV” is Primarily concerned with “Acceptance of Deliverables” whereas Quality Control is
Concerned with: Meeting “Quality Requirements” Specified for Deliverables.
 Quality Control is Generally Performed before “Scope Verification" but both can be in parallel.

Benefits of PERT
1. It forms basis of all Planning & Predicting
2. It Enables management to plan for best possible use of Resources to “Achieve given Goal”
within “Time & Cost” Limitations.
3. It provides “Visibility & Enables management to Control '‘One-of-a-Kind" Program as opposed to
“Repetitive Situation”.
4. It Helps management to handle “uncertainties involved” by answering such Questions as:
a. How time delays in certain/elements which “Influence Project Completion?
b. Where “Slack exists between elements”?
c. “Elements are crucial to meet” Completion Date.

 It Provides basis for “Obtaining Necessary Facts for decision making”.

 Utilizes “Time network analyses” as basic method to determine manpower, material,& capital
requirements in addition to Checking Progress.
 It Provides Basic structure for Reporting information.
 It reveals “independencies of activities”.
 It facilitates "what if" exercise.
 It Identifies “Longest Path” or Critical paths.
 It performs ‘Schedules” and Risk analysis.

Advantages of PERT
1. A Big “Advantage of PERT is a Kind of Planning required to Create a major network.
 Network development & Critical Path analysis reveal interdependencies & Problem
areas that are Neither “Obvious nor Well defined” by other Planning Methods.
 Technique to Determine where Greatest effort should be made for a Project to stay on
“Schedule”.
2. Help determine Probability of meeting Specified Deadlines by “Development of Alternate Plans”.
 If decision is statistically Sophisticated, he Can Exam standard Deviation & “Probability
of Accomplishment data”.
3. Ability to Evaluate “Effect of changes in Programs”.
 PERT can Evaluate effect of “Shift of Resources” from “Less Critical/ activities” to
Activities “identified as Probable bottlenecks”.
 Other Resources & Performance is Trade-offs which May also be “Evaluated”.
 4. PERT can also “evaluate effect of a Deviation” in “Actual time required” for an Activity “from
what had “Predicted”.
  5. PERT allows a large amount of Sophisticated data to be Presented in a well-”organized
diagram” from which both Contractor and customer make joint Decisions.

 Management information obtained from such Representation:

1. Interdependencies of Activities
2. Project completion time
3. Impact of Late Starts
4.Impact of Early starts
5.Trade-offs between “Resources & Time”
6."What if" exercise
7.Cost of a Crash Program
8.Slipages in Planning/Performance
9. Evaluation of Performance

Difference between PERT & CPM

 1. PERT uses 3 time Estimates i.e.
(Optimistic, Most/likely, & Pessimistic).
 From These estimates expected Time is Derived.
 CPM uses one Time estimate.
 It Represents Normal Time (better Estimated Accuracy with CPM).
2. PERT is probabilistic in nature:
a. Based on a ‘Beta Distribution”
for “each activity time”.
b. A “Normal distribution for expected Time Duration”.
 This allows us to Calculate “Risk" in completing a Project.
 CPM is based on a “Single Time Estimate” that is “Deterministic in Nature”.
3. Both PERT & CPM Permit Use of Dummy Activities in order to Develop Logic.
4. PERT is used for R&D projects where “Risks” in calculating Time durations have high variability.
 CPM is used for construction of projects” that are Resource Dependent & based on “Accurate
Time Estimates”.
3. Both PERT & CPM Permit Use of Dummy Activities in order to Develop Logic.
4. PERT is used for R&D projects where “Risks” in calculating Time durations have high variability.
 CPM is used for construction of projects” that are Resource Dependent & based on “Accurate
Time Estimates”.

 GERT is similar to PERT

 It has Distinct Advantages For allowing Looping, Branching, Multiple Project end results.
 With PERT, you can’t easily show If “Test Fails”, we may have to Repeat test several times”.
 With “PERT”, we cannot show that “Based upon Results of a Test” we can select one of several
different branches to continue Project.
 These Problems easily overcome using GERT.

“Dependencies”
Three Basic Types of “Interrelationships/Dependencies”:
1. Mandatory dependencies (hard Logic):
These Cannot Change.
2. Discretionary Dependencies (soft Logic):
At Discretion of Project Manager may Change from Project Planning.
Bills of Materials: Prior to beginning of Procurement.
3. External Dependency: Beyond control of Project Manager.
Slack Time (S/T)
 “Time differential” between “Schedule” completion Date” & “Required Date” to meet critical
path is referred to as Slack Time.
 Since there is only one “Path through network”: that is longest, others are either:
a) “Equal in length”:
b) “Shorter than that Path”.
 So there must exist Events/activities that can be completed before Time when they are actually
needed.
 Critical Path is vital for:
a. Resources
b. Allocation
 Because Project manager, With coordination from Functional manager, can reschedule those
events, not on critical path for accomplishment during other “Time Periods”.
 This type of Rescheduling Through use of Slack Time Provides for better “Balance of Resources”.
 Company may Reduce Project Costs
by Eliminating “Idle or Waiting Time”.

Bill Gates' Success Factors for Microsoft:

1. Long-term Approach
2. Passion for Products & Technology
3. Teamwork
4. Results
5. Customer Feedback
6. Individual Excellence

 Slack can be defined as the difference between the “Latest Allowable Date” and the “Earliest
Expected” data based on the nomenclature below:
TE = The earliest time (date) on which an event can be expected to take place.
TL = The latest date on which an event can take place without extending the completion date of the
project.

Slack Time = TL – TE

Transferring resources from slack paths to more critical paths is only one method for reducing
expected project time. Several other methods are available:
1. Elimination of some parts of the project.
2. Addition of more resources.
3. Substitution of less time-consuming components or activities.
4. Parallelization of activities.
5. Shortening critical path activities.
6. Shortening early activities.
7. Shortening longest activities.
8. Shortening easiest activities.
 9. Shortening activities that are least costly to speed up.
10. Shortening activities for which you have more resources.
11. Increasing the number of work hours per day.
Primary objectives on a schedule are:
1. Best time
2. Least cost
3. Least risk
Secondary objectives include:
 Studying alternatives
 Optimum schedules
 Effective use of resources
 Communications
 Refinement of the estimating process
 Ease of project control
 Ease of time or cost revisions
Obviously, these objectives are limited by such constraints as:
 Management approvals
 Limited resources
 Cash or cash flow restrictions
 Calendar completion

Cost Estimation Relationship (CERs)

Cost estimating relationships (CERs) are generally the output of cost models. Typical CERs might be:
1. Mathematical equations based on regression analysis.
2. Cost–quantity relationships such as learning curves.
3. Cost–Cost relationships.
4. Cost–non-cost relationships based on:
A. Physical characteristics
B. Technical parameters
C. Performance characteristics

Types of Estimates
1. Order-of-magnitude analysis.
2. Approximate estimate.
3. Definitive estimates or grassroots buildup estimate.
4. Learning curves.

 Major Estimating Tools

 Cataloged equipment costs
 Automated investment data system
 Automated estimate system
 Computerized methods and procedures
 Classes of Estimates
 Definitive estimate
 Capital cost estimate
 Appropriation estimate
 Feasibility estimate
 Order of magnitude
  Charts— estimate specifications quantity and pricing guidelines
 Data Required
 Chart— comparing data required for preparation of classes of estimates
 Presentation Specifications
 Estimate procedure— general
 Estimate procedure for definitive estimate
 Estimate procedure for capital cost estimate
 Estimate procedure for appropriation estimate
 Estimate procedure for feasibility estimate

 Example 2. Assume that KLM Mfg must write an interim report for task 1 of project 1 during
regular shift or on overtime. The project will require 500 man-hours at Rs15.00 per hour. The
overhead burden is 75 percent on regular shift but only 5 percent on overtime. Overtime,
however, is paid at a rate of time and a half.
 Assuming that the report can be written on either time, which is cost-effective— regular time or
overtime?
 On regular time the total cost is: (500 hours) × (Rs. 15.00/hour) × (100% + 75% burden) = Rs.
13,125
 On overtime, the total cost: (500 hours) × (Rs. 15.00/hour × 1.5 overtime) × (100% + 5% burden)
= Rs . 11,812.50
Therefore, company can save Rs1,312.50 by performing the work on overtime

Materials Support Costs

Four major pricing input requirements are:
a) The salary structure.
b) Overhead structure.
c) Labor hours.
d) Cost for materials and support.
Six subtopics are included under materials/support:
1. Materials
2. Purchased Parts
3. Subcontracts
4. Freight
5. Travel
6. Others

Steps provide a logical Sequence in order to better Control Company's Limited resources.
1. Step 1: Provide a complete definition of the work.
2. Step 2: Establish a logic network with checkpoints.
3. Step 3: Develop the work breakdown structure.
4. Step 4: Price out the work breakdown structure.
5. Step 5: Review WBS costs with each functional manager.
6. Step 6: Decide on the basic course of action.
7. Step 7: Establish reasonable costs for each WBS element.
8. Step 8: Review the base case costs with upper-level management.
9. Step 9: Negotiate with functional managers for qualified personnel.
10. Step 10: Develop the linear responsibility chart.
11. Step 11: Develop the final detailed and PERT/CPM schedules.
 12. Step 12: Establish pricing cost summary reports.
13. Step 13: Document the result in a program plan.

cash flow for raw materials based on:

a) Vendor lead times
b) Payment schedules
c) Commitments
d) Termination liability

Key to Competitiveness in Project Management:

 Cost
 Quality
 Speed
 Value
Definition of Quality
 Conformance to agreed requirements.
 Fitness for Purpose/ use.
 “The Totality of Characteristics of an: Entity that Bear on its Ability to Satisfy Stated & implied
needs.”

PRINCIPAL QUALITY DIMENSIONS

1. Performance

2. Features

3. Reliability

4. Conformance

5. Durability

6. Serviceability

7. Aesthetics

8. Perceived quality

9. Affordability, Variety, simplicity etc.

DEFINING QUALITY

 Perfection

 Consistency

 Eliminating waste

 Speed of delivery
  Compliance with policies & procedures

 Providing good, usable products

 Doing it right thing the first time

 Delighting or pleasing customers

 Total customer service & satisfaction

WHAT GOOD CAN QUALITY DO ?

 Provides competitive advantage

 Reduces costs

 Lesser returns, rework & scrap

 Increases productivity & profits

 Generates satisfied customers

 “ No Quality, Less Acceptance of Project. No new Project, no profit. No profits, no jobs.”

COMPETITIVE ADVANTAGE OF GOOD QUALITY

 Denotes firm’s ability to achieve market superiority.

 Driven by customer needs & wants.

 Provides value to customers that competitors do not.

 Makes significant contribution to business success.

 Allows a firm to use its Resources effectively.

Development of Quality

 Five Level Model

1. Inspection

 After Event screening - Detection based.

2. Quality Control

 Introduction of “Basic Systems” - Still Detection Based.

3. “Quality Assurance”

 Development of Complex System - Prevention Based.

4. Quality Management
5.Total Quality Management

 Development of Culture - People based.

Quality Assurance

 “All the planned and systematic activities implemented within the quality system, &
demonstrated as needed to “Provide adequate confidence “t hat an entity will fulfill
requirements for quality”.

 PMBOK defines Quality Assurance as “Management Section” of “Quality Management” where

Program Manager have Greatest Impact “On Quality” of His Project.

 Program Manager Needs to Establishes Administrative Procedures & Policies Necessary to

ensure Scope statement conforms to Actual Request of customer.

What is Total Quality

Total Quality means: Quality of work, Quality of Service, Quality of information, Quality Process, Quality
of Organization, Quality of People, Quality of Company & Quality of Objectives.

The Profile of TQM

TQM is a:

• Scientific

• Systematic

• Company – Wide

Activity in which a company is devoted to customers through its products and services.

Total Quality Management

 Traditional:

 Establish “Acceptable Quality” levels.

 “Detect & Rework” or “Scrap Defects”.

 TQM (Total Quality Management)

 Focus Entire Company on all Aspects of Quality.

 Emphasis on Customer’s Perspective.

 Customer is interested in Value Which combines “Quality & Control”.

 Represents the Most Advance “Stage of Quality Development”.

 A Management Philosophy.
  Application of “Quality Management to all Aspects of Business”:

 Focused on “Requests of the Customer”.

 Recognizes –”Importance of Suppliers”.

 Company wide Approaches:

 Continual Improvement.

 Integration of all Quality systems & Procedures.

 Development of organizational culture.

QM (Total Quality Management) is application of:

 1. Quantitative Methods

 2. Human Resource to Improve:

 a) The “material & services” supplied.

 b) All Processes within an organization.

TQM
(Total Quality Management) Integrates

a. Fundamental mgt techniques.

b. Existing improvement Efforts.

c. Technical Tools.

Under a Disciplined Approach With Focused Continuous Improvement.

 ISO 8402 states that TQM is a:

 “Management approach of an organization, centered on quality, based on the

participation of all its members and aiming at long term success through customer
satisfaction, and benefits to all members of the organization and to society”.

A TQM Approach To Project Management

 A Unique Blending of :

1. Objectives, Practical, & Quantitative Aspects of Management. e.g.

a) Focus on Processes.

b) Reliance on Quantitative Data for use of Statistical Analysis for decision making.

2. “Soft” Aspects of Management, e.g.

  Providing Visionary Leadership.

 Promoting Spirit of Cooperation, and Teamwork.

 Practicing Participative Management.

A Fully Successful Effort Requirement is Balanced attention to both.

 TQM (Total Quality Management) “Tools & Technical Methods”.

 Means of Implementing TQM (Total Quality Management).

 Can be Used by Everyone in Organization to:

 Identify Problem Areas.

 Structured Data Collection Efforts.

 Analyze data.

 Focus “Problem Solving Efforts” on “Areas of Specific Concern”.

 Disseminate Information Throughout Organization.

Quality Audit

An independent “Evaluation Performed” by “Qualified Personal” to Ensures that the Project is

Conforming to Project's Quality Requirements & Is following the Established “Quality Procedures &
Policies”.

Total Quality Management) Principles

 Internal customer supplier relationship
 Continuous Improvement
 Teamwork
 Employee participation/ Empowerment
 Training & Education
 Suppliers & Customers integrated into Process
 Honesty, sincerity & care

WHO IS A CUSTOMER ?
 Ultimate “Purchaser of Product or service.
 External customers Purchase product or service from other companies/ Plants.
 Internal customer
Receive goods/services from within the company

WHY IS IT IMPORTANT TO MEET CUSTOMER EXPECTATIONS?

 Needs of customers have to be met.
 Understanding of one’s customers “Leads to Customers Satisfaction”.
 Japanese Relate “Quality to Customers Satisfaction”.
Deming’s Dreadful Diseases
1. Looking elsewhere for examples, or concluding “our Problems are Different”.
2. “Creative Accounting” Rather than “Commitment”.
3. Purchasing to an ”Acceptable Level of Quality”.
4. Management’s Failure to: Delegate Responsibility
5. That Employees Cause All the Problems.
6. Quality can be “Assured by Inspection”.
7. False starts: no organization-wide commitment.

P&G TQM DEFINITION

Total Quality is the unyielding & continually improving effort by everyone is an organization to
understand, meet, & exceed the expectations of customers.

A V. Feigenbaum introduces comprehensive approach to Quality in 50s. Quality of Product & Services
influenced by 9Ms

1. Market

2. Money

3. Material

4. Management

5. Machines

6. Men/Women

7. Motivation

8. Mechanizations

9. Modern Information Methods

10. Mounting Products Requirements

Total Quality Practices

 Encouraging openness.
 Creating climates of trust & eliminate fear.
 Listening & providing feedback.
 Leading & participating in group meetings.
 Solving problems with data.
 Clarifying goals & resolving conflicts.
 Delegating & coaching.
 Implementing change.
 Making continuous improvement a way of life.

Principles of Total Quality

  Customer Focus.

 Participation and Team work.

 Continuous improvement (CI) & learning.

Infrastructure, Practices, & Tools

Practices- “Activities that occurs

within a management system to achieve high performance objectives”.

Tools

“ A wide variety of graphical & statistical methods to plan work activities, collect data analyze results,
monitor progress, & solve problems.

Infrastructure -Basic management system necessary to function as a high performing organization.

Infra structure that Support TQM Principles:

1. Leadership

2. Strategic Planning

3. Human Resource Management

4. Process Management

5. Data & Information Management

Leadership

 “Inventories can be managed, but people must be Led”.

 Leader’s Task is to create

“Clear Quality Values” & “High Expectations”, & then build these into Company Opportunity.

Strategic Planning

 Leadership in Project Required Long Term View of Future.

 Organization address Fundamental Question like:

 Who are our customers?

 What is our mission?

 What principles do we value?

  What are our Short Range & Long Range Goals?

 How do we accomplish these goals?

Human Resource Management

Major Challenges:

 Integration of Human Resource Practices

 Selection

 Performance

 Recognition

 Training

 Career Advancement:

With Business Directions & Strategic Change Processes.

Process Management

Involves Design of Processes” To Develop & Develop Products & Services” That “Meet Needs of
Customers” so that they Perform as Required

Types of Data & Information:

Needed for Quality Improvement:

 Customer Needs
 Product & Service Performance
 Operations Performance
 Market Assessments
 Competitive Comparisons
 Supplier Performance
 Cost & Financial Performance

Why Empowerment is Effective

1. High job satisfaction;

2. Leads to reduced sick leave & lower turn over rates.

3. Understand how “Work fits into whole”; so “Include contributions improved”

Empowerment: Some Key Principles

• People are valuable resource because they have “knowledge & ideas”.

• People want to Participate.

• When people participate, they feel empowered; they think like owners.

• When people participate, they look for ways to improved opportunities.

• When people have importance into “Corporate & department decisions”, better solutions are
developed.

• People should be treated fairly & with respect.

• Organizations should make Long Term commitment for

• Development of People because:

• It makes them

• Valuable to organization.

• People can develop knowledge to make important decision about

• management of their

• Work activities.

Six Ways of Empower Employees For Quality Improvement in Projects

1. Involve employees in developing strategies for continuous improvement.

2. Provide employees with skills required solving problems & making decisions.

3. Define involvement & empowerment based on mission of organization.

4. Establish org & individual goals.

5. Establish customer-driven performance measurement at individual level.

6. Involve & empower everyone to focus on continuous improvement.

Successful Empowerment of Employees requires

• Employee be provided

– Education,

– Resources &,
 – Encouragement.

• Policies & procedures are examined for needless restrictions.

• Atmosphere of “Trust is fostered” rather than “Resentment & Punishment for Failure”.

• Information is shared “Freely” rather than “Closely Guarded” as “Source of Control & Power”.

What is Cost of Quality?

“Quality is measured by Cost of Quality which is Expense of Nonconformance– the “Cost of

Doing things Wrong.”

“COQ include those cost associated with definition, creation & control of Q, AWA evaluation &
Feedback of conformance with Q Reliability & Safety Requirement those cost associated with
consequences of failure to meet rqet both within project and in the hands of customers”

Cost of Quality into two categories & four sub categories:

1. Costs of Control

o Prevention costs

o Appraisal costs
 

2. Costs of Failure of Control

o Internal defect costs

o External defect costs

1.Prevention costs
build it right the first time
2. Appraisal costs
inspection & Testing Cost
3. Internal failure costs
Scrap & Rework
4. External failure costs
warranty, claims, recalls, lost business

Types of Quality Costs

Cost of Compliance
Preventive Costs - Prevent Product Defects
Avoiding defects,
Planning, Preparation, Training, Preventative
maintenance & Evaluation.
APPRAISAL.
Area covers finding defects by:
Inspection audit, calibration, test & measurement.
Monitor & Compensate, when prevention fails
Four segments of quality costs:
Cost of Non-compliance
INTERNAL FAILURE.
Costs borne by org itself
Scrap, rework, redesign, modifications, corrective action, down time, concessions & overtime.
Internal losses - scrap, rework
EXTERNAL FAILURE. External losses - warranty work, customer
complaint departments, litigation, product recalls
Covers costs borne by customer
Equipment failure, down time, warranty, administrative cost in dealing with failure & loss of goodwill.

Cost of Quality
Prevention
 Quality Planning
 Process Control
 Data Acquisition And Analysis
 Training And Personnel
Development
 Design Verification
 Quality System Development And
Management
 Quality Reporting
 Improvement Projects
Appraisal
 Test And Inspection Of Incoming
Material
 Lab-based Acceptance Sampling
 In-line Inspection And Testing
 Setup For Test And Inspection
 Test/Inspection Equipment And
Supplies
 Quality Audits
 Quality Endorsements (ISO,
MBNQA)
 Field Testing
 Test/Inspection Equipment
Maintenance

 Internal  External
 Scrap  Customer Complaints
 Rework  Warranty Costs
 Retest  Service And Repair Expense
 Downtown  Product Liability
 Yield Losses  Recall Expense And Management
 Disposition  Returned Material Processing
 Engineering Analysis  Credit Allowance
 Tracking And Reporting  Loss Of Goodwill
 Expediting

Four Segments of Quality Costs

1. Cost of Non-compliance.
2. Internal Failure.
3. Costs Borne By Organization itself. e.g. Scrap, Rework, Redesign, Modifications, Corrective
Action, Concessions & Overtime.
4. Internal Losses - Scrap, Rework.
Some Generic Ways to Bring About Empowerment
• Information newsletter, meetings, bulletin board.
• Represent department.
• Structure job.
• Less supervision, more accountability.
• Flex-time; quality of work life.
• Less administrative red tape.
• Skill enhancement.
• Clear promotion path.
• Occasional special assignments.
• Company-sponsored celebratory events.
• Visits to customers/suppliers.
• Role in selection of new employees.
• Role in design of workplace.
• Upward-mobility programs.

WHY IS IT IMPORTANT TO MEET CUSTOMER EXPECTATIONS?

 Needs of customers have to be met.
 Understanding of one’s customers leads to customer satisfaction.
 Japanese relate quality to customer satisfaction.

Importance of Customer Satisfaction (CS) in Project Management

Four key Goals for any Business:
 Satisfy customers.
 Achieve higher customer satisfaction than competitors.
 Retain customers in long run.
 Gain market share.
 To achieve aims and goals, a business must Deliver Ever-improving VALUE to its
customers.
 Value: “Quality related to Price”.
 Consumers no longer buy solely on basis of price.

Types of Customers
 Primary: “Direct receiver of output of the process” (bank loan seeker, lab test report
receiver).
 Secondary: From “outside of Process” boundaries, who also receive any process output, but
not reason for “Process’ Existence” (bank’s Head office receiver secondary output).
Indirect: when original boundaries do not receive process output directly But affected if process
output Incorrect or late (logistic department).
External Customer:
 Located outside the Organizational Boundaries and Receive End Product or service but
management not be “Actual User”. (Power supplier for computers manufacturing, distributors).

Kano Model
Matching Product & Process Quality with customer wants and needs.

Perception of Quality
It includes “Physical Product” & its:
 Quality- Dimensions
 Presale support (Ease of Ordering)
 Repaid, on-time/Accurate Delivery
 Post- Sale support (field service), warranties & technical support

Seven Steps to CS System

Step 1: Total management commitment.
Step 2: Get to know your customers.
Step 3: Develop “Performance & Process Standards” of service quality.
Step 4: Hire, train, & compensate good staff.
Step 5: Reward service accomplishments.
Step 6: Stay close to your customers.
Step 7: Work towards continuous improvement in “Service Quality Performance” level.

Seven Basic tools of Statistical Process Control

1. Data Figure
2. Pareto Analysis
3. Cause-& effect analysis
4. Trend analysis
5. Histograms
6. Scatter diagrams
7. Process Control Charts

Three approaches to Cause & Effect analysis:

 Random method
 Systematic method
 Process analysis method

Histogram-(HG)
 Graphical representation of Data as a Frequency Distribution.
 Variable tool in evaluation of both Attribute (pass/fail) & Variable (measurement) data.
 Offers “Quick look at data” at But don’t “Display:
a) Variance”
b) “Trends Over Time”

Pareto Diagram (P/D)

 Special types of Histogram Helps us to “Identification & Prioritize” Problem Areas”.
 Pareto Diagram involve: Data collected from Data Figure, Maintenance Data, Repair Data, Parts
Scrap Rates, and Other Sources.

Uses and types of Pareto analysis

  The basic Pareto analysis identifies the vital few contributors that account for most quality
problems in any system.
 The comparative Pareto analysis focuses on any number of program options or actions.
 The weighted Pareto analysis gives a measure of significance to factors that may not appear
significant at first— such additional factors as cost, time, and criticality.

Scatter Diagrams
 Another pictorial representation of process control data is the scatter plot or scatter diagram.
 A scatter diagram organizes data using two variables: an independent variable and a
dependent variable.

Control Chart Types

 There are two types of data, continuous and discrete.
 There are two types of control charts: variable charts for use with continuous data and attribute
charts for use with discrete data.
 Each type of control chart can be used with specific types of data.

Variables charts: Control charts for variable powerful tools can be used when measurements from a
Process are Variable.
Variable data: Diameter of a bearing, electrical output, or Torque on a fastener.

 Attribute charts: Attribute data have only two values (conforming/nonconforming, pass/fail,
go/no-go, present/absent), but they can still be counted, recorded, and analyzed.
 Presence of a required label, installation of all required fasteners Presence of solder drips.

Indicators of Competitiveness
Productivity: Efficiency with which goods & services are produced & provided. Determined by:
a) Previous investments.
b) Quality & Performance of Workforce.
c) Technology Innovation.
d) Quality of Plant & Equipment.
e) Efficiency with which these factors of production utilized.

Definition of Productivity
• Successful Project Management Organization Create surplus through Productive operations.
• Productivity is output input agreement on Consideration of “Quality & Time”.

Productivity = Outputs (Time /Quality) Inputs

What is Productivity
 Ratio of output to input by large number of professionals.
 ILO Definition: “Ratio between
“output of Wealth Produced”
& “input Resources used up” in “Process of Production”.
 Comparative tool for managers, industrial engineers, economists, politicians.

Taylor’s Message of Productivity

  Various pay plans based on “output” for “surplus” Increase labor productivity not possible work
order:
 Provided ample reward
 Adequate Targets
 Managerial Help

Definition of Effectiveness & Efficiency

• Productivity implies Effectiveness & Efficiency both individual & “Organization Performance”.
• Effectiveness is “Achievement of Objective”.
• “Efficiency is Achievement of Ends” with “Least Amount of Resources”.

Types of Productivity
 Total-Factor Productivity - Ratio of “Net output to sum of associated Labor & Capital” (factor)
inputs.
 Net output- total output minus intermediate goods & services purchased.

Examples of White Collar Waste

1.Poor staffing
2. Inadequate communication
3.Unproductive meeting & telephone conversations
4. Poor scheduling
5. Slack start & quiet times
6. Lack of communication between function
7. Information overload

Critical Barriers/Problems to Productivity

 Family-controlled industry-Earning easy money.
 Monopolistic market, in some segments, some high competitive Erratic Inflow of Orders.
 Lack of Productivity & Quality culture.
 Shortage of Funds Low level Codification.
 Automation -not encouraged.
 Low priority of market & commercial activities.
 Poor after service.
 Complicated government policy, rules & regulations.
 Poor Infrastructure support/Road Transport.
 Energy shortage.
 Poor working conditions, light, ventilation, safety, housekeeping).
 Non availability of basic material components (to be imported)
 Unreliable suppliers.

Causes of Productivity Decline in Organization

 Inability to measure, evaluate, & manage productivity of white collar employees. This causes
shocking waste of resources.
 Rewards & benefits given without requiring equivalent in productivity & accountability.
 Diffused authority & inefficiency in complex Organization, thereby, causing delays & time lags.
 Organization expansion - lowers productivity growth which results in soaring costs.

 -Low motivation - among rising number of affluent workers with new attitudes.
  Late Deliveries - caused by Schedule have been disrupted by limited materials.

 -Unresolved human conflicts Difficulties in teamwork, resulting in Project inefficiencies.

 -Include legislative intrusions.

 -Antiquated laws, Resulting in constrained “Management options & prerogatives”.

 -Specialization in work processes resulting in “Monotony & Boredom”.

 Rapid “Technology Changes & High Costs”, Resulting in “Decline in new Opportunities &
innovation”.

 -Include demand of “Leisure Time” causing “Disruption in Operations”.

 -Project Manager inability to keep pace with: Latest “Information & Knowledge.

How can Project Improve Their Productivity

Productivity composes of:
 People
 Operations variables”
To improve productivity management needs to focus on both.

 Productivity does not just happen by “trying harder”. It must be planned.

 But how do you plan for productivity, & what factors are involved?

Productivity Improvement (PI)

 Improvement means “Increase in ratio of “output of goods & service Produced divided by
“input used to Produced”.
 Ratio can be included by Either “increase output” “Reducing input” or Both.

Three Main Productivity Factor Groups

 Job-related
 Resource-related
 Environment-related
Two major Category of Productivity factors is:
 External (not controllable).
 Internal (controllable).

External & Internal Factors

 External-Beyond Control of Individual Enterprise.
 Internal –with in its control
First step towards “Productivity Improvement” is to Identify problem areas with in these factor groups.

Law of behavior
 Motivation decreases if it is either satisfied or blocked from satisfaction.
  Workers may do their jobs work order working hard (no motivation), But even if they work to
their full capacity they would not be satisfied (motivation is blocked from satisfaction).

Soft Factors-People-
Workers’ success in increasing Productivity by:
 Rewards
 Improving recognition
 Involvement
 Learning Opportunities
 Elimination of negative rewards

Financial Incentives (Individual & Group)

 Individual plan is made to give financial incentives on basis of individual performance.
 Types:
 Piece work plan.
 Standard hour plan.
 Measured day work plan.
 Emerson plan.
 Fringe benefits
 employee promotion
 job enrichment
 job enlargement
 job rotation
 workers participation & empowerment

Two Factor Theory

 “Motivators” factors leading to job satisfaction Achievement recognition, nature of work
responsibility, growth etc.
 Factors leading to dissatisfaction avoidance are “hygiene”; Company policy, administration,
supervision, pay status.

Cost control implies good cost management, which must include:

1. Cost estimating
2. Cost accounting
3. Project cash flow
4. Company cash flow
5. Direct labor costing
6. Overhead rate costing
7. Others, such as incentives, penalties, and profit-sharing

The planning and control system must, provide information that:

1. Gives a picture of true work progress.
2. Will relate cost and schedule performance.
3. Identifies potential problems with respect to their sources.
4. Provides information to project managers with a practical level of summarization.
5. Demonstrates that the milestones are valid, timely, and auditable.
The planning and control system is a tool by which objectives can be defined. i.e.
1. Hierarchy Of Objectives
2. Organization Accountability
It exists as a tool to develop:
1. Planning
2. Measure Progress
3. Control Change

Planning & Cost is as a tool for planning, the system must be able to:
1. Plan and schedule work.
2. Identify those indicators that will be used for measurement.
3. Establish direct labor budgets.
4. Establish overhead budgets.
5. Identify management reserve.

Establishing budgets requires that the planner fully understand the meaning of standards. There are
two categories of standards.
Performance results standards are quantitative measurements and include such items as:
1. Quality Of Work
2. Quantity Of Work
3. Cost Of Work
4. Time-to-complete

Process standards are qualitative, including:

1. personnel
2. functional
3. physical factors relationships
Standards are advantageous in that they provide a means for unity, a basis for effective control, and an
incentive for others.

Project benefits
Planning & Cost techniques facilitate:
1. Derivation of output specifications (project objectives).
2. Delineation of required activities (work).
3. Coordination and communication between organizational units.
4. Determination of type, amount, and timing of necessary resources.
5. Recognition of high-risk elements and assessment of uncertainties.
6. Suggestions of alternative courses of action.
7. Realization of effect of resource level changes on schedule and output performance.
8. Measurement and reporting of genuine progress.
9. Identification of potential problems.
10. Basis for problem solving, decision making, and corrective action.
11. Assurance of coupling between planning and control.

Effective management of a program during the operating cycle requires that a well-organized cost and
control system be:
1. Designed
 2. Developed
3. Implemented So That Immediate Feedback Can Be Obtained
The requirements for an effective control system (for both cost and schedule/performance) should
include:
1. Thorough planning of the work to be performed to complete the project.
2. Good estimating of time, labor, and costs.
3. Clear communication of the scope of required tasks.
4. A disciplined budget.
5. Authorization of expenditures.
6. Timely accounting of physical progress and cost expenditures.
7. Periodic re-estimation of time and cost to complete remaining work.
8. Frequent, periodic comparison of actual progress and expenditures to schedules and
budgets, both at the time of comparison and at project completion.

These Reports are helpful for timely Decision Making:

 The project plan, schedule, and budget prepared during the planning phase.
 A detailed comparison between resources expended to data and those predetermined. This
includes an estimate of the work remaining and the impact on activity completion.
 A projection of resources to be expended through program completion.

Operating Cycle (O/C)

 (MCCS) takes import during Operating cycle of Project.
 Operating Cycle Composed of four Phases:
1. Work authorization and release (phase II).
2. Cost data collection and reporting (phase III).
3. Cost analysis (phase IV).
4. Reporting: customer and management (phase V).

Four categories of cost data -normally accumulated:

1. Labor
2. Material
3. Other direct charges
4. Overheads

Budgets
 Plan budget, is final result of Planning cycle of MCCS, must be reasonable, attainable, based on:
a) Contractually negotiated costs.
b) Statement Of Work.
Basis for Budget
a) Either Historical cost
b) Best Estimation
c) Industrial Estimation standards

The budget must identify:

1. Planned Manpower Requirements.
2. Contract Allocated Funds.
3. Management reserve.
All budgets must be traceable through the budget "log" which includes:
 1. Distributed budget
2. Management reserve
3. Undistributed budget
4. Contract changes
2. Variance: A variance is defined as any schedule, technical performance, or cost deviation from
a specific plan. Variances are used by all levels of management to verify the budgeting system
and the scheduling system.
3. The budgeting and scheduling system variance must be compared together because:
1. The cost variance compares deviations only from the budget and does not provide a
measure of comparison between work scheduled and work accomplished.

• two primary methods of measurement:

Measurable efforts: discrete increments of work with a definable schedule for accomplishment,
whose completion produces tangible results.
Level of effort: work that does not lend itself to subdivision into discrete scheduled increments of
work, such as project support and project control.
Variances are used on both types of measurement.

Few Terms
 Estimation At Completion (EAC) estimation total cost of Project at completion.
 BAC - Budget at Completion. Related to EAC.
  EAC = BAC/CPI
 ETC - Estimation to Completion.
  ETC = EAC - AC
1.“Cost Estimating” involves:
defining “Cost Estimates for Tasks”.
2. “Cost Budgeting” defines cost estimates across Time.
 Variance At Completion (VAC)
VAC = BAC – EAC
 Process of “Cost budgeting” defines:
“Time Phased Cost Estimation” - for Project.
Cost variance (CV) calculation:
 CV = BCWP - ACWP
 CV = EV - AC
 A negative cost variance indicates a cost-overrun.
 Negative Schedule variance means Project is behind in Schedule”.
 Schedule variance (SV) calculation:
SV =BCWP - BCWS
   SV = EV – PV
 In the analysis of both cost & schedule, costs are used as the lowest common denominator. In
other words, schedule variance is given as a function of cost. To alleviate this problem, the
variances are usually converted to percentages.
  As an example, consider a project that is scheduled to spend Rs. 100K for each of the first four
weeks of the project. The actual expenditures at the end of week four are Rs. 325K. Therefore,
BCWS =Rs. 400K & ACWP = Rs. 325K.
 From these two parameters alone, there are several possible explanations as to project status.
However, if BCWP is now known, say $300K, then the project is behind schedule and
overrunning costs.
 No uniform methodology for variance thresholds.
 Permitted variances dependent on:
 Life Cycle Phases
 Length of Life Cycle Phases
 Length of Project
 Type of estimation
 Accuracy of “Estimation Variance Control” Different from Program to Program.

 As an example, on December 31, the budget showed that 800 hours should have been
expended for a given task. However, only 600 hours appeared on the labor report.
 Therefore, the performance is (800/600) × 100, or 133 percent, and the task is “under running
in performance”.
 If the actual hours were 1,000, the Performance would be 80 percent, and an “Overrun would
be Occurring”.

Depreciation
 Technique used to compute Estimated value” of any object after few years.
 Three Type Straight line depreciation same amount deprecated (reduced) from cost each year.
 Double-declining balance first year - high “Deduction in value” Twice amount of straight line.
 Each year after that deduction 40% less than Previous year.
 Sum of year depreciation, If life - 5 years.
 Total of 1-5 is 15
 Ist year deduce 5/15 from cost, in 2nd year Deduce 4/15, & so on.

 Parametric Modeling Estimation Use mathematical model to make an estimation

 It has two types.
 Regression Analysis
 Mathematical model based upon historical information

What is Leadership ?
 Leadership – Art or process of influencing people so that they will strive willingly
enthusiastically toward the achievement of group goals.
 Leadership is the process of influencing people and providing an environment for them to
achieve team or organizational objectives.

 Ability to Influence, Shape & Develop:

 Vision
 Values
 Attitudes & behavior within an organization.

 A Leader:
  Empowers, Motivates & Organizes people to achieve a Common Objective, & Provides
Moral Guidance.
 Provides Service to the People & a “Vision for the future.”

Leadership Vs. Management

 Management ensures accomplishment of  Leadership aligns people work toward
Plans through Controlling & Problem vision.
Solving.  Leadership Motivates & inspires people
 Management develops capacity to carry to accomplish plan.
out Plans through Organizing & Staffing.  Leaders develop.
 Managers maintain.  Leaders focus on people.
 Managers focus on systems & structure.  Leaders inspire.
 Managers rely on control. 


Manager Leader
 Asks how & when  Asks what & why
 Eye on the bottom line  Eye on horizon
 Imitates  Originates
 Classic good soldier  Own person
 Control People  Motivate People
 Control People & things through system.  Develop people’s talents, control things
 Reward Conformance, Punish deviation. with system.
 Maintain Status Quo.  Reward effort, skill development, &
 Innovation; Empower employees.
 Look to the future through continuous
improvement.

Manager Characteristics Leader Characteristics

 Administers  Innovates
 A company  An original
 Maintains  Develops
 Focuses on systems & structure  Focuses on People
 Relies on control  Inspires Trust
 Short Range View  Long Range perspective

Relationship Between Management & Leadership

Leading is a Part of Managing:
 If you can’t influence & inspire People to work toward organizational goals, than all your
Organization & Planning will be for naught.
Management is Part of Leading:
 No matter how inspiring you may be, if you don’t Plan & Organize, so Workers have Necessary
Tools & skills to do Jobs & Reward them Accordingly, Not succeed.

What is Transformational Leadership?

 Emphasis behaviors that inspire & nurture others.
 Model of Leadership meets both challenges of a rapidly changing environment & need to
emotionally engage everyone within organization.
 Process of influencing attitudes & assumptions of organizational members & building
commitment to organization’s Mission & objectives.
 Transformational Leadership is about a range of behaviors that include:
 Developing Culture of Collaboration rather than “command & control” where Change
welcomed as an opportunity rather than a threat.
 Developing & sharing an inspiring vision of Organization’s future.

 Transactional leadership occurs when leaders & followers - in an exchange relationship in order
to get needs met.
 Transactional Leader does not have “vision” of transformational leader.

Common Characteristics of Charismatic Leadership

 Self Confidence
 Vision
 Ability to articulate
 Strong Conviction
 Out of ordinary behavior
 Change Agent
 Environmentally Sensitive
 Verbal Skills
 Self Confidence
 Inspired Skills
 High Risk Orientation
 High Energy Action
 Potential Power Base
 Minimum Internal Conflict
 Self promoting
 Visionary