PROGECT MANAGEMENT

MODULE

ADDIS ABABA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

Compiled by: Tsegabrhan Mekonen (PhD)

Organization of the Module

This module addresses the practices, opportunities and challenges posed by various

levels of project complexity by introducing an approach to profiling projects and

discussing the implications to project management. The module provides an overview

of project management and uses the industry standard definitions of the divisions of

project management knowledge as described by authorities in the area and also the

Project Management Institute (PMI).

Students also learn more about specific topics in chapters devoted to Initiating,

planning, execution, monitoring and controlling, and closure. Specifically, they learn

about the knowledge, skills, and tools used in each of these chapters.

The module comprises 6 chapters. Chapter 1, Project Management Concepts, is a

foundation chapter that discusses the definition of a project and its attributes; Project

management, managing a project within the constraints of scope, quality, schedule,

budget, and resources; project management knowledge areas. Chapter 2 deals with

the project life cycle of initiating, planning, executing, monitoring and controlling, and

closing of a project. It also discusses the project management structure. The

remaining four chapters follow the five process groups of project management:

initiating, planning, executing, monitoring and controlling, and closing. These four

chapters apply various tools and techniques in each of these process groups.

Project Management in a Complex World

Over the last decades projects have become increasingly important as a way to

organize work. More than ever before, projects are used to solve big tasks of public

utility. They operate across organizations, and are terminated when the planned task

is completed. Faster, cheaper, and better has become the mantra of not only profit-

making organizations seeking to increase market share and profits but also nonprofits

and governmental organizations seeking to increase their value to clients.

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Organizations are increasingly using projects to meet these goals. Projects are goal

directed and time framed, and when managed well, projects deliver on time and within

budget. This module is about how to manage projects well.

All projects have common characteristics: every project has a scope, budget, and

schedule. Projects also differ. Understanding how projects differ and what that

difference means to the management of the project is critical to successfully manage a

project. Large, complex projects need project management tools, systems, and

processes that are very different from the small and less complex projects. With this in

mind, this would provide a tool for profiling a project based on the complexity of the

project and describe the different project management approaches needed for the

different projects. Project management is complicated. In some ways, this is a good

thing because students who learn how to manage projects well will find it a rewarding

career, and there will always be a demand for their services. Project management is

complicated because projects consist of many activities that are interrelated, and the

actions taken in one activity affect several other aspects of the project. Project

management is complex because project managers must understand several

knowledge areas and develop a variety of tools and techniques to successfully

manage a project. This complexity makes it challenging to learn about project

management because regardless of which activity you begin to study, you need to

know something about the other activities to which it is related.

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TABLE OF CONTENTS

Page

Organization of the Module 1

Chapter One: Project Management Concepts 7

Chapter Two: Project Life Cycle and Project Management Structure 40

Chapter Three: Project Initiation and Definition 60

Chapter Four: Project Planning 79

Chapter Five: Project Execution, Monitoring and Controlling 134

Chapter Six: Project Closure 154

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Aims of the Module

The aims of this Module are:

 To broaden the student’s knowledge of Project Management so that he/she is

able to relate to a real business situation.

 To enhance the technical and management aspects associated with effectively

managing projects.

 To enable students to plan, establish and manage a simple to moderately

complex project and project team whilst using a variety of routine and non-

routine processes.

 Equip students with the necessary skills so that they are able to take full

responsibility for the nature, quantity and quality of output.

 To enhance students’ skills and ability to confidently take responsibility for work

group output as required.

 Equip students with a wide range of scholastic and/or technical skills applicable

in the field of project management.

Outcomes of the Module

At the end of this course the student will be able to:

 Initiate and plan a project.

 Execute, monitor and control a project.

 Hand over and close a project.

 Use and apply concepts and terminology of project management

How to use this Module

 This study module describes and discusses the topics covered in a reasonable

level of detail and its objective is to focus and guide students in their learning

of the course content.

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 The study module must be used in connection with the reference books where

students will get the details of the subject matter. To broaden their knowledge

base, students are encouraged to cover material in the recommended books,

journals, papers and any other material they can find covering the project

management subject.

 At the beginning of each section, you will find a list of outcomes. These

outcomes outline the main points that you should understand when you have

completed the section.

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Reference Materials

 Chandra, P. 2009. Projects: Planning Analysis, Financing, Implementation, and

Review, 7th ed. New Delhi: Tata McGraw Hill.

 Gido, C. and Clements, J.P. 2015. Successful Project Management. 6th ed.
USA: South-Western Cengage Learning.

 Gray, C.F and Larson, E.W. 2011. Project Management: The Managerial
Process, 5th ed. USA: McGraw-Hill.

 Gray, C.F and Larson, E.W. 2017. Project Management: The Managerial
Process, 7th ed. USA: McGraw-Hill

 Heagney, J. 2012. Fundamentals of Project Management, 4th ed. USA: American

 Kerzner, H. 2009. PROJECT MANAGEMENT: A Systems Approach to Planning,

Scheduling, and Controlling, 10th ed. USA: John Wiley & Sons, Inc.

 Lester, A. 2014. Project Management, Planning and Control, 6 th ed. Elsevier Ltd.

 Lewis, J.P. 2007. Fundamentals of project management, 3 rd ed. USA: American

Management Association

 Meredith, J.R. and Mantel, S.J. 2012. PROJECT MANAGEMENT: A Managerial

Approach, 8th ed. USA: John Wiley & Sons, Inc.

 Project Management Institute. 2013. A guide to the project management body of

knowledge, 5th ed. USA: Project Management Institute, Inc.

 Schwalbe, K. 2012. Introduction to Project Managemen, 4th ed.. USA: Cengage

Learning.

 Taylor III, B.W. 2013. . Introduction to Management Science, 11th ed. USA:
Pearson

 UNIDO, 1991. A Manual for the Preparations of Industrial Feasibility Studies

 Any project management book

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 Chapter One: Project Management Concepts

1.1 Introduction to Project management

Organizations perform work. Work generally involves either operations or projects,

although the two may overlap. Operations and projects share many characteristics; for

example, they are performed by people, and planned, executed, and controlled. They

differ primarily in that operations are ongoing and repetitive while projects are

temporary and unique. Temporary means that every project has a definite beginning

and a definite end. Unique means that the product or service is different in some

distinguishable way from all similar products or services. Projects are undertaken at

all levels of the organization. They may involve a single person or many thousands.

They may require less than 100 hours to complete or several million hours. Projects

may involve a single unit of one organization or may cross organizational boundaries

as in joint ventures and partnerships. Projects are often critical components of the

performing organization's business strategy.

Project Management is the way of living; it is the way we manage our lives and affairs

to achieve our goals. The difference is that we plan and execute these activities

without realizing that they are in the form of projects. Knowingly or unknowingly

mankind has practiced project management long ago. Gray and Larson (2011:3) have

explained the situation as follows, “All of mankind’s greatest accomplishments—from

building the great pyramids to discovering a cure for polio to putting a man on the

moon—began as a project’’. The project approach has long been the style of doing

business in many industries and sectors. In the contemporary world too, project

management has spread to all avenues of work and many organizations are now

more aware of the benefits of restructuring themselves into a project type environment

because projects by their very nature may fall into portfolios and programs, which are

used as tools to achieve the strategic objectives of these firms. Project management

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can be applied across a range of disciplines, industries, professions whilst the basic

methodology remains generic across such disciplines. This implies that project

management fundamentals are universal. Project management is not also limited to

the private sector but applies to all forms of organizations as it is a tool for doing

business and solving social problems.

This chapter provides an overview of project management, defining both projects and

project management and exploring the difference between project management and

operations management. Advances in technology are driving the speed of innovation

and the ability of organizations to shorten the time needed to develop and deliver new

products and services that increase an organization’s competitive advantage. This

drive to develop new and unique products or services creates a perfect environment

for the application of project management methodologies and skills. Also provided are

a brief overview of the knowledge areas of project management and the skills needed

to be a successful project manager.

LEARNING OBJECTIVES

Upon successful completion of this chapter, the student will be able to:

 Understand the growing importance of project management.

 Define a project and it attributes

 Define project management and its application.

 Describe project management and key elements of the project management

framework.

 Understand the nine knowledge areas

 Discuss the relationship between project, program, and portfolio management

and their contribution to organizational success

 Understand the role of project manager

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1.2. Project Defined

A project is a temporary endeavor undertaken to create a unique product, service or

result (Gido and Clements, 2015; Project Management Institute, 2013). Project is a

sequence of unique activities performed to meet a specific objective within a specified

time, budget and performance requirements. Like most organizational effort, the major

goal of a project is to satisfy a customer’s need. Beyond this fundamental similarity,

we note the following characteristics of a project from the definition that a project:

 has an established objective,

 has a defined life span with a beginning and an end,

 usually involves several departments and professionals,

 is unique, and

 has a time, cost, and performance requirement.

If one draws a comparison between projects and operations, it is notable that projects

have a specified objective with defined start and endpoint which is contrary to the

ongoing duties and responsibilities of traditional jobs operations which also are

repetitive in nature. Therefore operations have dedicated resources, and have a

longer lifespan than projects. The objectives of operations are to sustain businesses,

on the other hand, projects are undertaken to address specific operational challenges

and as mentioned above, they have a definite start and end date. A project manager

needs a different set of skills to both define and successfully execute temporary

projects. Because projects are temporary, they have a defined beginning and end.

Project managers must manage start-up activities and project closeout activities. The

processes for developing teams, organizing work, and establishing priorities require a

different set of knowledge and skills because members of the project management

team recognize that it is temporary. They seldom report directly to the project

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manager and the effect of success or failure of the project might not affect their

reputations or careers the same way as with assignments in their parent departments.

Another point worth mentioning about a project is its orientation towards delivering a

unique product, service, or result which also changes the management approach to

the work. A project manager must take time to understand the deliverables of a

project, develop a plan for producing the deliverables in the time available, and then

execute that plan.

Projects are authorized as a result of the following strategic intents (adapted from

Gido and Clements (2015) :

 A market demand e.g. building of a new cement plant to supply cement shortages

for infrastructure projects;

 A legal requirement e.g. the government authorizes a new project to legislate use of

unleaded fuel to substitute leaded fuel;

 An organizational need e.g. an organization authorizes a project management

course for its employees to improve its project competencies;

 A customer request e.g. a body corporate of a townhouse complex authorizes a

project to build a crèche to serve its tenants;

 A technological advance e.g. the department of transport authorizes a project to

automate its business processes;

 The environmental consideration e.g. the mining company authorizes a project to

rehabilitate a closed down mining operation.

Projects come in different forms. For example there are IT, engineering, energy and

research and development projects, to mention a few. All these projects have different

characteristics. For example energy projects such as designing and building of power

stations take a long time to execute because of the capital expenditure, risks and

complexities involved. Research and development projects can be open ended

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projects with uncertain contract values and periods because of their long term

approach.

Projects vary in size, monetary value, and time durations depending on their

complexities. Normally complex projects have high financial values, and involve high

risks, which demand a high level of planning. For example, hosting a FIFA soccer

world cup is a complex project with a high budget. Therefore this project would

demand a high level of planning compared to building a house. Even though different

projects require different levels of planning, the basic project management principles

remain the same.

Projects demand that thorough planning is conducted to reduce risks and increase the

probability of success. When organizations undertake projects, not only do they stand

to lose money if they don’t succeed but also their reputation and goodwill. An

organization’s reputation is built over time and if it is lost it can take a lifetime to re-

gain it. Therefore this means that projects are not just about schedules and budgets

but also about the ability of firms to execute them successfully.

1.3 Attributes of Projects

According to Gido and Clements (2015); and Larson and Gray (2017), there are a

number of attributes that define a project. These are:

 A project has a clear objective that establishes what is to be accomplished.

 A project is carried through a series of interdependent tasks

 Projects cut across organizational lines.

 A project has a specific time frame, or finite life span.

 A project may be unique or a one-time endeavor.

 A project involves a degree of uncertainty.

 A project is the process of working to achieve a goal.

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The above attributes are explained below.

The above are key project characteristics. These characteristics are elements that

make a project a project. To put it simplistically, if what you are doing does not

conform to all of the items in this short list, then it just isn’t a project.

Every project has a single definable purpose, end-item or result. This is usually

specified in terms of cost, schedule and performance requirements. It is the specific

time, cost, and performance requirements that bind projects. Projects are evaluated

according to accomplishment, cost, and time spent. These triple constraints impose a

higher degree of accountability than you typically find in most jobs. These three also

highlight one of the primary functions of project management, which is balancing the

trade-offs between time, cost, and performance while ultimately satisfying the

customer.

A project is carried out through a number of non-repetitive tasks that need to be

accomplished in a certain sequence in order to achieve the project objective. Unlike

much organizational work that is segmented according to functional specialty, projects

typically require the combined efforts of a variety of specialists. Instead of working in

separate offices under separate managers, project participants, whether they be

engineers, financial analysts, marketing professionals, or quality control specialists,

work closely together under the guidance of a project manager to complete a project.

Projects always cut across the regular organizational lines and structures within a

firm. They do this because the project needs to draw the skills and the talents of

multiple professions and departments within the organization. These creates task

interdependencies that may help do project activities successfully.

Projects are temporary activities. A project is an ad hoc organization of staff, material,

equipment and facilities that is put together to accomplish a goal. This goal is within a

specific time-frame. Once the goal is achieved, the organization created for it is

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disbanded or sometimes it is reconstituted to begin work on a new goal (project). The

temporary nature of projects indicates that a project has a definite beginning and end.

The end is reached when the project’s objectives have been achieved or when the

project is terminated because its objectives will not or cannot be met, or when the

need for the project no longer exists. Temporary does not necessarily mean the

duration of the project is short. It refers to the project’s engagement and its longevity.

Temporary does not typically apply to the product, service, or result created by the

project; most projects are undertaken to create a lasting outcome. For example, a

project to build a national monument will create a result expected to last for centuries.

Projects can also have social, economic, and environmental impacts that far outlive

the projects themselves.

Every project creates a unique product, service, or result. The outcome of the project

may be tangible or intangible. Although repetitive elements may be present in some

project deliverables and activities, this repetition does not change the fundamental,

unique characteristics of the project work. For example, office buildings can be

constructed with the same or similar materials and by the same or different teams.

However, each building project remains unique with a different location, different

design, different circumstances and situations, different stakeholders, and so on.

Therefore, a project is a one-time, once-off activity, never to be repeated exactly the

same way again. An ongoing work effort is generally a repetitive process that follows

an organization’s existing procedures. In contrast, because of the unique nature of

projects, there may be uncertainties or differences in the products, services, or results

that the project creates. Project activities can be new to members of a project team,

which may necessitate more dedicated planning than other routine work. In addition,

projects are undertaken at all organizational levels. A project can involve a single

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individual or multiple individuals, a single organizational unit, or multiple organizational

units from multiple organizations.

Projects also involve unfamiliarity. Because a project differs from what was previously

done, it also involves unfamiliarity with significant elements of uncertainty and risk.

Projects pass through several distinct processes or phases, which are called the

project life cycle. The tasks, people, organizations, and other resources will change as

the project moves from one phase to the next. The organizational structure and the

resource expenditures build with each succeeding phase; peak; and then decline as

the project nears completion.

Further to the above features, to meet the primary objectives of a project, it is

essential to clearly define a project. Clear definition of a project encompasses that it is

specific, measurable, achievable, relevant and time bound. These are discussed

underneath.

A clearly defined project must be specific that includes the project’s structure, goals,

benefits, milestones and costs. All these requires careful planning and inputs from the

project team members. Detailed reporting and planning including command structure,

personnel list, responsibilities, communication avenues, timeline, costs and work to be

performed by the people involved in the project. It is also important to have periodic

project meetings in order to update progress and discuss relevant issue that arise

from executing the project.

A project must be measurable in terms of its benefits and achievements. This should

not only be in terms of monetary benefits but also other tangible and intangible

benefits derived from the project’s execution. A clear and precise plan devised during

the project’s planning stage will enable to have objective measurements of

achievements.

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A project will only be meaningful if it is achievable. It is always important to be

realistic and work towards crafting attainable project objectives. The project should not

be too ambitious and doing so may result in the project being unachievable. This may

also lead to the project team morale being affected and time and cost overrun.

A project needs to bring relevant benefits to the organization concerned. This may be

in the form of reducing its overall production costs, increasing its operational efficiency

or other specific purposes relevant to the organization. If it fails to do this, the project

will not be beneficial to the organization and will ultimately result in a waste of

resources.

A project must be time bound with a time frame for all stages of project completion. It

is important to manage and exercise control based on the time frame developed to

avoid delays and cost overrun. There might be a possibility for time adjustment but

this has to be clearly justified by the parties involved bearing in mind the costs

associated with the adjustment.

1.4 Project Management Defined

Project Management is the application of knowledge, skills, tools and techniques to

project activities to meet the project requirements and thereby satisfy stakeholder

expectations (PMI, 2013; Meredith and Mantel, 2012). Project management is

achieved by applying and integrating project management processes which include:

initiating, planning, executing, control and monitoring, and closing. These are referred

to as process groups and they dictate the life cycle of a project.

Apart from process groups there are knowledge areas, which are the backbone and

knowledge base of project management. The knowledge areas consist of project

integration, scope, time, cost, quality, human resources, communications, risk, and

procurement management. These different knowledge base focus areas have to be

applied to specific parts of the project. It must always be remembered that in a project

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environment, knowledge areas are applied concurrently to different project areas and

are not applied in isolation.

Meredith and Mantel (2012) discussed project management in terms of producing

project outcomes within the three objectives of cost, schedule, and specifications.

Project managers are then expected to develop and execute a project plan that meets

cost, schedule, and specification parameters. According to this view, project

management is the application of everything a project manager does to meet these

parameters. This approach to defining project management shares Project

Management Institute’s focus on the project outcomes in terms of requirements.

Meredith and Mantel added a fourth aspect of project management—the expectations

of the client. One client-centered definition of project management is the application of

knowledge, skills, tools, and techniques to meet or exceed the expectations of the

client. This definition focuses on delivering a product or service to the client that meets

expectations rather than project specifications. It is possible to meet all project

specifications and not meet client expectations or fail to meet one or more

specifications and still meet or exceed a client’s expectation. These authors noted that

expectations often increase during the life of a project in a form of scope increase. A

project scope is a carefully crafted document that reflects the performance

specifications of the project deliverables. Defining the project scope and managing

scope change is a very different process from developing an understanding of a

client’s expectations and managing those expectations. Defining and managing client

expectations are critical project management skill that is distinct from scope

development and management. Client expectations encompass an emotional

component that includes many client desires that are not easily captured within a

specification document. Although closely correlated with project specifications, client

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expectations are driven by different needs. It is possible for a project team to exceed

every project specification and end up with an unsatisfied client.

1.5 The Triple Constraint

Like any human undertaking, projects need to be performed and delivered under

certain constraints. Traditionally, these constraints have been listed as "scope," "time,"

and cost". These are also referred to as the "project management triangle" or the

Triple Constraint, where each side represents a constraint. One side of the triangle

cannot be changed without affecting the others. A further refinement of the constraints

separates product "quality" or "performance" from scope, and turns quality into a

fourth constraint.

The Three Goals of a Project - Performance, Cost, and Time - Project Targets

A successful project management implies meeting all the three.

The time constraint refers to the amount of time available to complete a project. The

cost constraint refers to the budgeted amount available for the project. The scope

constraint refers to what must be done to produce the project's end result. These

three constraints are often competing constraints: increased scope typically means

increased time and increased cost, a tight time constraint could mean increased costs

and reduced scope, and a tight budget could mean increased time and reduced
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scope. Successful completion of a project requires finishing the scope of work within

budget and a certain time frame whilst managing resource utilization, meeting quality

expectations and managing risks. All this must be done while assuring customer

satisfaction.

1.6 Operations Management versus Project Management

One way to improve understanding of project management is to contrast project

management with operations management. Whether in economic, socioreligious, or

government organization, managers are charged with effectively and efficiently

achieving the purpose of the organization. Typically, a manager of an economic

organization focuses on maximizing profits and stockholder value. Leaders with

socioreligious organizations focus on effective and efficient delivery of a service to a

community or constituency, and governmental managers are focused on meeting

goals established by governmental leaders.

Operations managers focus on the work processes of the operation. More effective

work processes will produce a better product or service, and a more efficient work

process will reduce costs. Operations managers analyze work processes and explore

opportunities to make improvements. Total quality management, continuous process

improvement, lean manufacturing, and other aspects of the quality movement provide

tools and techniques for examining organizational culture and work processes to

create a more effective and efficient organization. Operations managers are process

focused, oriented toward capturing and standardizing improvement to work processes

and creating an organizational culture focused on the long-term goals of the

organization.

Project managers focus on the goals of the project. Project success is connected to

achieving the project goals within the project timeline. Project managers are goal

directed and time sensitive. Project managers apply project management tools and

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techniques to clearly define the project goals, develop an execution plan to meet

those goals, and meet the milestones and end date of the project.

An operations manager creates a culture to focus on the long-term health of the

organization. Operations managers build teams over time that focus on standardizing

and improving work processes, that search for and nurture team members who will “fit

in,” and that contribute to both the effectiveness of the team and the team culture.

Project managers create a team that is goal focused and energized around the

success of the project. Project team members know that the project assignment is

temporary because the project, by definition, is temporary. Project team members are

often members of organizational teams that have a larger potential to affect long-term

advancement potential. Project managers create clear goals and clear expectations

for team members and tie project success to the overall success of the organization.

Operations managers are long-term focused and process oriented. Project managers

are goal directed and milestone oriented. The following table summarizes the

difference between the two.

Organization Comparison
Projects
To attain specific objectives
terminate, Start and end date
Unique product or services
Temporary organization
Catalyst for change
Heterogeneous teams
Functional/operations
and To sustain the business; Ongoing
Standard product or services
Somehow permanent organization
Maintain status quo
Homogeneous teams

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Examples of comparison of projects with routine work.

Projects Routine, Repetitive Work

Writing a term paper Taking class notes

Building a house
Designing a car
Setting up a filing system
Developing a supply-chain information
system
Writing a new piano piece
Designing an iPod that is approximately
2 X 4 inches, interfaces with PC, and
stores 10,000 songs
Manufacturing bricks
Mass-production of cars
Doing the filing
Responding to a supply-chain request
Practicing scales on the piano
Routine manufacture of an Apple iPod

1.7 Project Management Processes and Project Management Knowledge

Areas
1.7.1 Project Management Processes

According to PMI (2013), project management is the application of knowledge, skills,

tools, and techniques to project activities to meet the project requirements. This

application of knowledge requires the effective management of the project

management processes. A process refers to a set of interrelated actions and activities

performed to create a specified product, service, or result. Each process is

characterized by its inputs, the tools and techniques that can be applied, and the

resulting outputs. The knowledge areas are applied to successfully carry out

processes. The project management processes ensure the effective flow of the

project throughout its life cycle. These processes encompass the tools and techniques

involved in applying the skills and capabilities described in the Knowledge Areas.

Project management processes is a universal process that apply globally and across

industry groups. This does not mean that the knowledge, skills, and processes

described should always be applied uniformly on all projects. The project manager is

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always responsible for determining the appropriate degree of rigor for each process.

Project manager should consider the situation and nature of the project and determine

the overall approach and methodology to be followed for the project. This effort is

known as tailoring.

Project management is an integrative undertaking that requires each project and

product process to be appropriately aligned and connected with the other processes

to facilitate coordination. Actions taken during one process typically affect that process

and other related processes. For example, a scope change typically affects project

cost, but it may not affect the communications management plan or level of risk.

These process interactions often require tradeoffs among project requirements and

objectives, and the specific performance tradeoffs will vary from project to project and

organization to organization. Successful project management includes actively

managing these interactions to meet sponsor, customer, and other stakeholder

requirements. In some circumstances, a process or set of processes will need to be

iterated several times in order to achieve the required outcome.

Projects exist within an organization and do not operate as a closed system. They

require input data from the organization and beyond, and deliver capabilities back to

the organization. The project processes may generate information to improve the

management of future projects and organizational process assets (PMI, 2013).

The project management processes are described in terms of the integration between

the processes, their interactions, and the purposes they serve. Project management

processes are grouped into five categories known as Project Management Process

Groups. The five basic process groups are:

1. Initiating

2. Planning

3. Executing

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4. Monitoring and Controlling

5. Closing

Diagrammatic representation of the Project Management Process

A brief account of the process group is given below.

 Initiating Process Group. A process performed to define a new project or a new

phase of an existing project by obtaining authorization to start the project or phase.

Within the Initiating processes, the initial scope is defined and initial financial

resources are committed. Internal and external stakeholders who will interact and

influence the overall outcome of the project are identified. If not already assigned,

the project manager will be selected. This information is captured in the project

charter and stakeholder register. When the project charter is approved, the project

becomes officially authorized

 Planning Process Group. A process required to establish the scope of the

project, refine the objectives, and define the course of action required to attain the

objectives that the project was undertaken to achieve. The planning processes

develop the project management plan and the project documents that will be used

to carry out the project. The project management plan and project documents

developed as outputs from the planning process group will explore all aspects of

the scope, time, cost, quality, communications, human resources, risks,

procurements, and stakeholder engagement.

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 Executing Process Group. A process performed to complete the work defined in

the project management plan to satisfy the project specifications. This Process

Group involves coordinating people and resources, managing stakeholder

expectations, as well as integrating and performing the activities of the project in

accordance with the project management plan.

 Monitoring and Controlling Process Group. A process required to track, review,

and regulate the progress and performance of the project; identify any areas in

which changes to the plan are required; and initiate the corresponding changes.

The key benefit of this process group is that project performance is measured and

analyzed at regular intervals, appropriate events, or exception conditions to

identify variances from the project management plan.

 Closing Process Group. A process performed to finalize all activities across all

process groups to formally close the project or phase. This process group, when

completed, verifies that the defined processes are completed within all of the

process groups to close the project or a project phase, as appropriate, and

formally establishes that the project or project phase is complete.

1.7.2. Project Management Body of Knowledge

PMI (2013) provides the framework of processes and guidelines for the association of

project management concepts, practices and techniques. The guideline recognizes

five basic process groups which are discussed above and nine knowledge areas

typical of almost all projects. The nine knowledge areas are:

1. Project Integration Management

2. Project Scope Management

3. Project Time Management

4. Project Cost Management

5. Project Quality Management

23
6. Project Human Resource Management

7. Project Communications Management

8. Project Risk Management

9. Project Procurement Management

The body of knowledge is subdivided in two as core and facilitating group. There are

four core elements which determine the deliverable objectives of the project. These

are:

• Scope

• Time

• Cost

• Quality

The other knowledge areas play a facilitating role and provide the means for achieving

the deliverable objectives, namely:

• Integration

• Human resources

• Communication

• Risk

• Procurement.

The knowledge areas are described below.

24
 Project Scope Management: Deals with the processes required to ensure that

the project includes all the work required to complete the project successfully. It is

primarily concerned with defining and controlling what is or is not included in the

project, to meet the client’s and stakeholders' goals and objectives. It consists of

authorization, scope planning, scope definition, scope change management and

scope verification.

 Project Time Management: Includes the process required to ensure timely

performance of the project. It consists of activity definition, activity sequencing,

duration estimating, schedule development and time control.

 Project Cost Management: Includes the process required to ensure that the

project is completed within the approved budget. It consists of resource planning,

cost estimating, cost budgeting, cash flow and cost control.

 Project Quality Management: Includes the process required to ensure that the

project will satisfy the needs for which it was undertaken. It consists of determining

the required condition, quality planning, assurance and control.

 Project Human Resource Management: Includes the process required to make

the most effective use of the people involved with the project. It consists of

organization planning, staff acquisition and team development.

 Project Communications Management: Includes the process required to ensure

proper collection and dissemination of project information. It consists of

communication planning, information distribution, project meetings, progress

reporting and administrative closure.

 Project Risk Management: Includes the process concerned with identifying,

quantifying, and responding to project risk. It consists of controlling the risk

management plan and being prepared for disaster recovery.

25
 Project Procurement Management: Includes the process required to acquire

goods and services from outside the company. It consists of procurement

planning, solicitation, source selection, contract administration and contract

closeout.

 Project Integration: Integrates the three main project management processes of

planning, execution and control - where inputs from several knowledge areas are

brought together.

The diagram below summarizes major activities accomplished by the knowledge area.

The table below best illustrates the relationship between the project life cycle and the

nine knowledge areas. (Adapted from PMI, 2013).

26
Knowledge Project Management Process Groups
areas Initiating Planning Executing Monitoring & Closing
Controlling
Project Develop Develop Project Direct and Monitor and Close Project
Integration Project Charter Management Plan Manage Project Control Project or Phase
Management Work Work
 Perform
Integrated
Change
Control
Project Scope  Plan Scope  Validate
Management Management Scope
 Collect  Control Scope
Requirements
 Define Scope
 Create WBS
Project Time  Plan Control
Management Schedule Schedule
Management
 Define
Activities
 Sequence
Activities
 Estimate
Activity
Resources
 Estimate
Activity
Durations
 Develop
Schedule
Project Cost  Plan Cost Control Costs
Management Management
 Estimate Costs
 Determine
Budget
Project Plan Quality Perform Quality Control Quality
Quality Management Assurance
Management
Project Plan Human  Acquire Project
Human Resource Team
Resource Management  Develop Project
Management Team
 Manage Project
Team
Project Plan Manage Control
Communicati Communications Communications Communications
ons Management
Management
Project Risk  Plan Risk Control Risks
Management Management
 Identify Risks
 Perform
Qualitative Risk
Analysis
 Perform
Quantitative Risk
Analysis
 Plan Risk
Responses
Project Plan Conduct Control Close
Procurement Procurement Procurements Procurements Procurements
Management Management

27
1.8 Relationships among Portfolio Management, Program Management and

Project Management

In order to understand portfolio, program, and project management, it is important to

recognize the similarities and differences among these disciplines. It is also helpful to

understand how they relate to organizational project management (OPM). OPM is a

strategy execution framework utilizing project, program, and portfolio management as

well as organizational enabling practices to consistently and predictably deliver

organizational strategy producing better performance, better results, and a

sustainable competitive advantage.

Portfolio, program, and project management are aligned with or driven by

organizational strategies. Conversely, portfolio, program, and project management

differ in the way each contributes to the achievement of strategic goals. Portfolio

management aligns with organizational strategies by selecting the right programs or

projects, prioritizing the work, and providing the needed resources, whereas program

management harmonizes its projects and program components and controls

interdependencies in order to realize specified benefits. Project management

develops and implements plans to achieve a specific scope that is driven by the

objectives of the program or portfolio it is subjected to and, ultimately, to

organizational strategies. OPM advances organizational capability by linking project,

program, and portfolio management principles and practices with organizational

enablers (e.g. structural, cultural, technological, and human resource practices) to

support strategic goals. An organization measures its capabilities, then plans and

implements improvements towards the systematic achievement of best practices.

28
Relationship between the P’s

1.8.1 Portfolio Management

Portfolio management refers to the centralized management of one or more portfolios

to achieve strategic objectives. Portfolio management focuses on ensuring that

projects and programs are reviewed to prioritize resource allocation, and that the

management of the portfolio is consistent with and aligned to organizational

strategies. A portfolio is comprised of programs and projects managed as a group to

achieve strategic objectives. The projects or programs of the portfolio may not

necessarily be interdependent or directly related. For example, an infrastructure firm

that has the strategic objective of “maximizing the return on its investments” may put

together a portfolio that includes a mix of projects in oil and gas, power, water, roads,

rail, and airports. From this mix, the firm may choose to manage related projects as

one program. All of the power projects may be grouped together as a power program.

Similarly, all of the water projects may be grouped together as a water program. Thus,

the power program and the water program become integral components of the

enterprise portfolio of the infrastructure firm.

29
1.8.2 Program Management

A program is defined as a group of related projects, subprograms, and program

activities managed in a coordinated way to obtain benefits not available from

managing them individually. Programs may include elements of related work outside

the scope of the discrete projects in the program. A project may or may not be part of

a program but a program will always have projects. Program management is the

application of knowledge, skills, tools, and techniques to a program in order to meet

the program requirements and to obtain benefits and control not available by

managing projects individually. Projects within a program are related through the

common outcome or collective capability. Program management focuses on the

project interdependencies and helps to determine the optimal approach for managing

them.

1.8.3 Projects and Strategic Management /Planning

Strategic management is the process of assessing “what we are” and deciding and

implementing “what we intend to be and how we are going to get there.” Strategy

describes how an organization intends to compete with the resources available in the

existing and perceived future environment. The two major dimensions of strategic

management are scanning both the external and internal environment and responding

to changes in the external environment and allocating scarce resources of the firm to

improve its competitive position of a firm. Constant scanning of the external

environment for changes is a major requirement for survival in a dynamic competitive

environment.

The components of strategic management are closely linked, and all are directed

toward the future success of the organization. Strategic management requires strong

links among mission, goals, objectives, strategy, and implementation. The mission

gives the general purpose of the organization. Goals give global targets within the

30
mission. Objectives give specific targets to goals. Objectives give rise to formulation of

strategies to reach objectives. Finally, strategies require actions and tasks to be

implemented. In most cases the actions to be taken represent projects. Therefore,

projects are often utilized as a means of directly or indirectly achieving objectives

within an organization’s strategic plan. Projects have to be aligned with corporate

objectives.

Projects are becoming the tools of implementing the business strategy of an

organization. Every project in an organization should contribute to its strategic plan.

How can we ensure this linkage? We need to make sure that we integrate projects

within the strategic plan. This integration requires a process for prioritizing projects by

their contribution to the plan. Projects are typically authorized as a result of one or

more of the following strategic considerations:

 Market demand (e.g., a car company authorizing a project to build more fuel-

efficient cars in response to gasoline shortages);

 Strategic opportunity/business need (e.g., a training company authorizing a project

to create a new course to increase its revenues);

 Social need (e.g., a nongovernmental organization in a developing country

authorizing a project to provide potable water systems, latrines, and sanitation

education to communities suffering from high rates of infectious diseases);

 Environmental consideration (e.g., a public company authorizing a project to

create a new service for electric car sharing to reduce pollution);

 Customer request (e.g., an electric utility authorizing a project to build a new

substation to serve a new industrial park);

 Technological advance (e.g., an electronics firm authorizing a new project to

develop a faster, cheaper, and smaller laptop based on advances in computer

memory and electronics technology); and

31
 Legal requirement (e.g., a chemical manufacturer authorizing a project to establish

guidelines for proper handling of a new toxic material).

The table below shows the comparison of project, program, and portfolio views

across several dimensions within an organization.

32
Link between Plans, Portfolio, Programs and Projects

1.9. Project Management Office and the Project Manager

1.9.1 Project Management Office

A project management office (PMO) is a management structure that standardizes the

project related governance processes and facilitates the sharing of resources,

methodologies, tools, and techniques. The responsibilities of a PMO can range from

providing project management support functions to actually being responsible for the

direct management of one or more projects. There are several types of PMO

structures in organizations, each varying in the degree of control and influence they

have on projects within the organization, such as:

 Supportive. Supportive PMOs provide a consultative role to projects by supplying

templates, best practices, training, access to information and lessons learned from

other projects. This type of PMO serves as a project repository. The degree of

control provided by the PMO is low.

33
 Controlling. Controlling PMOs provide support and require compliance through

various means. Compliance may involve adopting project management

frameworks or methodologies, using specific templates, forms and tools, or

conformance to governance. The degree of control provided by the PMO is

moderate.

 Directive. Directive PMOs take control of the projects by directly managing the

projects. The degree of control provided by the PMO is high.

The PMO integrates data and information from corporate strategic projects and

evaluates how higher level strategic objectives are being fulfilled. The PMO is the

natural liaison between the organization’s portfolios, programs, projects, and the

corporate measurement systems (e.g. balanced scorecard).

The projects supported or administered by the PMO may not be related, other than by

being managed together. The specific form, function, and structure of a PMO are

dependent upon the needs of the organization that it supports. A PMO may have the

authority to act as an integral stakeholder and a key decision maker throughout the

life of each project, to make recommendations, or to terminate projects or take other

actions, as required, to remain aligned with the business objectives. In addition, the

PMO may be involved in the selection, management, and deployment of shared or

dedicated project resources.

A primary function of a PMO is to support project managers in a variety of ways which

may include, but are not limited to:

 Managing shared resources across all projects administered by the PMO;

 Identifying and developing project management methodology, best practices, and

standards;

 Coaching, mentoring, training, and oversight;

34
 Monitoring compliance with project management standards, policies, procedures,

and templates by means of project audits;

 Developing and managing project policies, procedures, templates, and other

shared documentation (organizational process assets); and

 Coordinating communication across projects.(PMI, 2013)

1.9.2 Role of the Project Manager

The project manager is the person assigned by the performing organization to lead

the team that is responsible for achieving the project objectives. The role of a project

manager is distinct from a functional manager or operations manager. Typically the

functional manager is focused on providing management oversight for a functional or

a business unit, and operations managers are responsible for ensuring that business

operations are efficient.

Depending on the organizational structure, a project manager may report to a

functional manager. In other cases, a project manager may be one of several project

managers who report to a program or portfolio manager who is ultimately responsible

for enterprise-wide projects. In this type of structure, the project manager works

closely with the program or portfolio manager to achieve the project objectives and to

ensure the project management plan aligns with the overarching program plan. The

project manager also works closely and in collaboration with other roles, such as a

business analyst, quality assurance manager, and subject matter experts. (PMI, 2013)

1.9.3 Responsibilities and Competencies of the Project Manager

In general, project managers have the responsibility to satisfy the needs: task needs,

team needs, and individual needs. As project management is a critical strategic

discipline, the project manager becomes the link between the strategy and the team.

Projects are essential to the growth and survival of organizations. Projects create

value in the form of improved business processes, are indispensable in the

35
development of new products and services, and make it easier for companies to

respond to changes in the environment, competition, and the marketplace. The project

manager’s role therefore becomes increasingly strategic. However, understanding

and applying the knowledge, tools, and techniques that are recognized as good

practice are not sufficient for effective project management. In addition to any area

specific skills and general management proficiencies required for the project, effective

project management requires that the project manager possess the following

competencies: (PMI, 2013)

• Knowledge—Refers to what the project manager knows about project

management.

• Performance—Refers to what the project manager is able to do or accomplish

while applying his or her project management knowledge.

• Personal—Refers to how the project manager behaves when performing the

project or related activity. Personal effectiveness encompasses attitudes, core

personality characteristics, and leadership, which provides the ability to guide the

project team while achieving project objectives and balancing the project

constraints.

Project managers accomplish work through the project team and other stakeholders.

Effective project managers require a balance of ethical, interpersonal, and conceptual

skills that help them analyze situations and interact appropriately.

1.9.4 Project manager and Project Management Office

Project managers and PMOs pursue different objectives and, as such, are driven by

different requirements. All of these efforts are aligned with the strategic needs of the

organization. Differences between the role of project managers and a PMO may

include the following:

36
• The project manager focuses on the specified project objectives, while the PMO

manages major program scope changes, which may be seen as potential

opportunities to better achieve business objectives.

• The project manager controls the assigned project resources to best meet project

objectives, while the PMO optimizes the use of shared organizational resources

across all projects.

• The project manager manages the constraints (scope, schedule, cost, quality, etc.)

of the individual projects, while the PMO manages the methodologies, standards,

overall risks/opportunities and interdependencies among projects at the enterprise

level. (PMI, 2013)

1.10 Project Stakeholders

Project stakeholders include organizations and individuals who are interested or

affected by the project being executed. Stakeholders may have an influence over the

project objectives or outcomes. The success of the project is dependent on the

stakeholders as they may decide to embrace and support it or they may also decide to

stop the project.

It is the responsibility of the project management team to identify stakeholders, and to

determine their roles, requirements and expectations, so that they are able to analyze

and manage them properly in the interest of the project. Stakeholders cannot be

classified under one umbrella as they have varying levels of authority and

responsibilities, which is why the project management team needs to conduct an

analysis of its stakeholders so that they understand each stakeholder’s needs and

interest. There are positive stakeholders who have a positive influence on the project.

These are the stakeholders who tend to benefit from the project or see some benefit

of the project.

37
On the other hand negative stakeholders have a negative influence on the project

because they feel threatened by it. These may be people who have vested interest in

the area such as indigenous people who have been living in the area for a long time

with their ancestor’s graves in the area, for example .The project management team

needs to focus more energy on the negative stakeholders to ensure buy-in from them

and success of the project. The following is a list of typical key stakeholders in any

industry or sector: Project sponsor, project manager, PMO, customer or user, project

management team, influencers, investors, contractors and the government.

Review Questions

1. Define a project. List at least five characteristics that help differentiate projects

from other functions carried out in the daily operations of the organization?

2. Define Project Management and outline its features clearly.

3. Discuss the key objectives of project management.

4. Explain the meaning and purpose of project management.

5. What do you understand by the Triple Constraint and how are they managed?

6. Identify and briefly explain the project management processes.

7. Discuss the objectives of executing a project.

8. Why is the implementation of projects important to strategic planning and the

project?

9. Clearly differentiate between strategic plan, portfolio, programs and projects.

Discuss also their relationships.

10. What do understand when somebody says projects are tools of strategic

management?

11. Describe the major components of the strategic management process.

12. Explain the role projects play in the strategic management process.

13. How are projects linked to the strategic plan?

38
14. How can project management offices (PMOs) support effective project

management?

15. List down vital role of a project manager.

16. Differential and list project management knowledge areas as core and facilitating

area.

17. Who are the possible project stakeholders? Why the concern about them in project

management?

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 Chapter Two

2.1 Project Management Life Cycle and Organizational Structure

This chapter provides an overview of the organizational structure and phases of a

project. The complexity level of a project influences the organizational structure and

the resources and skills needed at each phase. This chapter also provides an

overview of the typical functions within the organizational structure of a project.

LEARNING OBJECTIVES

Upon successful completion of this chapter, the student will be able to:

 Defining project cycle and why the need

 Identify the different stages of a project life cycle.

 Describe the types of activities in each phase of a project.

 To Identify and understand the different types of project organization

 To choose the appropriate project management structure

 To appreciate the role of culture in project organization

2.2 Introduction

Projects, by definition, have a beginning and an end. They also have defined phases

between the project kickoff and project closeout. A phase represents a grouping of

similar activities that has a very loosely defined beginning and end. Phases are also

typically sequential, where the prior phase is essentially complete before the

beginning of the next phase. Phases do not have clear-cut end dates and some

activities in an early phase of the project may continue into the later phases. This is in

contrast to project beginning and ending dates and milestone dates, which do have

clearly defined dates with the expectation that these dates will be met.

The project life cycle refers to the different stages undertaken in a project to achieve

its goals and objectives. The project life cycle is different from operations life cycle or

40
product life cycle in that it is normally of a shorter duration. It is also different because

a project has a specific time frame with start and end dates.

The nature and type of project informs the project life cycle process and the stages

needed for a specific project. Similar projects can have different life cycles because

the approach and perhaps the project implementation plans are different. Project life

cycle is useful in the sense that it serves as the cornerstone for managing projects.

The life cycle recognizes that projects have a limited life span and that there are

predictable changes in level of effort and focus over the life of the project. Gido and

Clements (2015); PMI (2013) and Larson and Gray (2017) identified a generic life

cycle that passes sequentially through four stages: defining/initiating, planning,

executing, and delivering/closing. These are discussed below.

2.3 The Project Life Cycle Process

Larson and Gray (2017); PMI (2013) and Gido and Clements (2015) maintain that

there are four phases in a typical project life cycle. These are: initiating/ defining,

planning, performing/ executing and closing of the project. The four phases are

depicted in the following figure.

41
Defining Phase

In the initiating phase projects are identified, selected, defined and objectives

established. This means, the phase represents the activities associated with starting

up the project. This phase relates to a project set-up and it facilitates the formal

authorization to start a new project or phase. The result of this process is the

development of a project charter and a preliminary scope of the project. The project

charter ensures that all stakeholders involved in the project are aligned regarding the

purpose and objectives of the project.

This process includes forming and mobilizing the project team, resources, work areas,

assigning responsibilities, holding a kick-off meeting and alignment sessions to ensure

that all involved understand the business problem that the project is striving to

address at this early stage. This process is critical in defining the real business

problem, which is the main reason why the project was initiated. On projects where

the scope of work for the project is not well defined, the project team will invest time

and resources in developing a clearer scope of work. Many projects fail because the

business problem is not defined thoroughly and the project ends up addressing the

symptoms and not the real cause of the problem that the organization intends to

resolve.

The knowledge, skills, and experience needed on the project can vary in each phase.

During the early phases of a project, the project leadership needs good conceptual

skills, the ability to build a team, and the experience to build a project roadmap.

During project closeout, the project leadership provides a high degree of motivation

and attention to details. The activities that occur within the initiation phase of the

project vary on each project. They include all the activities necessary to begin

planning the project. The initiation phase typically begins with the assignment of the

project manager and ends when the project team has sufficient information to begin

42
developing a detailed schedule and budget. This takes the project to the planning or

formulation stage.

Planning Phase

In this phase the level of effort increases, and plans are developed to determine what

the project will entail, when it will be scheduled, whom it will benefit, what quality level

should be maintained, and what the budget will be. The objective of this phase is to

plan and manage various activities with the ultimate result of achieving project goals

within specified time frames. The output of the project planning process is the

development of a project management plan, which incorporates different plans such

as the controls plan, scope management plan, budgets, schedules, risks,

communications plan, procurement strategy, human resources plan, and quality

plans. These plans are integrated into one overall plan called the project management

plan. Stakeholders play a vital role in this phase of the project as their input and

influence is high. As the project progresses and plans are implemented the influence

of stakeholders diminishes because the confidence of the project grows and

uncertainty is reduced. As stated above, the emphasis of the planning phase is to

develop an understanding of how the project will be executed and a plan for acquiring

the resources needed to execute it. Although much of the planning activity takes place

during the planning phase, the project plan may continue to be adjusted to respond to

new challenges and opportunities in the environment.

Executing/Performing Phase

The performing / executing phase ensures that the major activities and the project

management plan’s deliverables are executed accordingly. This process group

involves proper allocation, coordination and management of human resources and

other resources such as material, equipment, and budgets. The level of integration of

activities will determine the success of project execution. The focus of the execution

43
plan is the methodology to be followed to execute the project. The greater percentage

of the project budget is spent on this process group therefore it indicates the level of

significance it has in the entire lifecycle. Execution, for instance, on a construction

project would include the design and construction activities. On an information

technology (IT) project, this would include the development of the software code. On a

training project, this would include the development and delivery of the training

Closing/ Delivery Phase

This is the final stage of a project which is concerned with formalizing acceptance of

the product or service that brings the project or phase to an orderly end. This process

verifies that all the other process groups have been completed, and formally

establishes that the project or project phase is completed. The closing process group

consists of three activities: delivering the project product to the customer, redeploying

project resources, and post-project review. Delivery of the project might include

customer training and transferring documents for archival. Redeployment usually

involves releasing project equipment/materials to other projects and finding new

assignments for team members. Post-project reviews include not only assessing

performance but also capturing lessons learned. This a phase where the project client

takes control of the product of the project, and the project office is closed down. In the

entire project life cycle the closing phase is considered to be the most ignored phase

which is not handled properly resulting for many projects not to be closed off properly.

It must be noted that, inherent in the phases is always the monitoring and controlling

function. This is exercised throughout the life cycle of the project on a continual basis.

This involves comparing the actual work done against the project management plan at

every stage of project progress.

44
2.4 Project Organization and Organizational Culture

Once management approves a project, then the question becomes, how will the

project be implemented? This section examines three different project management

structures used by firms to implement projects. These are functional organization,

pure project organization or dedicated project teams, and matrix structure. Although

not exhaustive, these structures and their differences give the basis for organizing

projects. The advantages and disadvantages of each of these structures are

discussed as well as some of the critical factors that might lead a firm to choose one

form over others are addressed. Both the project management structure and the

culture of the organization constitute major elements of the enterprise environment in

which projects are implemented. It is important for project managers and participants

to know the cultural context so that they can avoid obstacles and take advantage of

the situation to complete their projects.

2.4.1 Project Management Structure

A project management system provides a framework for launching and implementing

project activities within a parent organization. A good system appropriately balances

the needs of both the parent organization and the project by defining the interface

between the project and parent organization in terms of authority, allocation of

resources, and eventual integration of project outcomes into mainstream operations.

There is no single organizational approach to projects. Each project is organized to

accomplish the work effectively and efficiently. Several factors influence the

management approach to execute a project. The complexity profile of a project, the

culture of the parent organization, the preferences of the project manager, the

knowledge and skills of the team are some of the factors that influence the project’s

structure. In this section three types of project management structures are discussed.

These are: Functional organization, pure project organization and matrix organization.

45
Organizing Projects within the Functional Organization

According to Larson and Gray (2017) and Kerzner (2009), one approach to organizing

projects is to simply manage them within the existing functional hierarchy of the

organization. Once management decides to implement a project, the different

segments of the project are delegated to the respective functional units with each unit

responsible for completing its segment of the project. This could mean the functional

structure follows the traditional organization structure. Employees report to a single

supervisor and are grouped by specific functions into departments i.e. information

technology, marketing, accounting, engineering etc. Project work within a department

occurs independently of other departments. Project managers have little influence and

are primarily responsible for coordinating project efforts through functional managers.

Project resources, budget, and staff are provided at the discretion of functional

managers and staffs provided often assist with projects as supplemental tasks while

maintaining functional area primary responsibility.

The functional manager is at the top of the hierarchy in the functional organizational

structure. It is important to note that coordination is maintained through normal

management channels. Consider the following example to understand how this would

function. Suppose there is an equipment manufacturing company that decides to

differentiate its product line by manufacturing a variety tools that would serve left-

handed individuals. Top level management decides to implement the project, and then

accordingly distributed the different segments of the project to the appropriate

functional areas. Since the production department plays a dominant role in completing

the project or has a dominant interest in the success of the project, the functional

manager is given the responsibility of coordinating the project. Accordingly, the

production manager, in addition to coordination, is responsible for devising the means

for producing new tools according to the new design specifications. The marketing

46
department will be responsible for gauging demand and price as well as identifying

distribution outlets. Other departments will also take their responsibility implying that

the overall project will be managed within the normal hierarchy, with the project being

part of the working agenda of top management (Larson and Gray, 2017). The

following figure is an example of functional type of organization.

A Project as part of the functional organization

There are advantages and disadvantages for using the existing functional

organization to administer and complete projects (Larson and Gray, 2017). The major

advantages are the following:

 No Change. Projects are completed within the basic functional structure of the

parent organization. There is no radical alteration in the design and operation of

the parent organization.

 Flexibility. There is maximum flexibility in the use of staff. Appropriate specialists

in different functional units can temporarily be assigned to work on the project and

then return to their normal work. With a broad base of technical personnel

available within each functional department, people can be switched among

different projects with relative ease.

47
 In-Depth Expertise. If the scope of the project is narrow and the proper functional

unit is assigned primary responsibility, then in-depth expertise can be brought to

bear on the most crucial aspects of the project.

 Easy Post-Project Transition. Normal career paths within a functional division

are maintained. While specialists can make significant contributions to projects,

their functional field is their professional home and the focus of their professional

growth and advancement.

As there are advantages for organizing projects within the existing functional

organization, there are also disadvantages. These disadvantages are particularly

pronounced when the scope of the project is broad and one functional department

does not take the dominant technological and managerial lead on the project:

 Lack of Focus. Each functional unit has its own core routine work to do;

sometimes project responsibilities get pushed aside to meet primary obligations.

This difficulty is compounded when the project has different priorities for different

units.

 Poor Integration. There may be poor integration across functional units.

Functional specialists tend to be concerned only with their segment of the project

and not with what is best for the total project.

 Slow. It generally takes longer to complete projects through this functional

arrangement. This is in part attributable to slow response time—project information

and decisions have to be circulated through normal management channels.

Furthermore, the lack of horizontal, direct communication among functional groups

contributes to rework as specialists realize the implications of others’ actions after

the fact.

 Lack of Ownership. The motivation of people assigned to the project can be

weak. The project may be seen as an additional burden that is not directly linked to

48
 their professional development or advancement. Furthermore, because they are

working on only a segment of the project, professionals do not identify with the

project.

Pure Product (Projectized) Organization or dedicated project team

A projectized structure is the other end of organizational spectrum or structures. The

pure product organization develops as a division within the organization and operates

as separate units from the rest of the parent organization. Usually a full-time project

manager is designated to pull together a core group of specialists who work full time

on the project. In this form of structure, there exists a continuous flow of projects, work

is stable and conflicts are at a minimum. The major advantage of this organizational

flow is that one individual, the program manager, maintains complete line authority

over the entire project. Not only does he/she assign work, but he/she also conducts

merit reviews. Because each individual reports to only one person, a strong

communication channel develops that result in a very rapid reaction time.

Furthermore, the project manager has significant authority and independence over

project resources, budget, and staff. The project manager is at the top of the hierarchy

in the projectized organizational structure. (Kerzner, 2009)

The following are examples of pure project organizations.

CEO

Project Project Project

Manager Manager Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

(Circled boxes represent staff engaged in project activities.)

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The following summarizes the advantages and disadvantages of this organizational

form. (Kerzner, 2009)

Advantages of the product organizational form

 Provides complete line authority over the project (i.e., strong control through a

single project authority).

 Participants work directly for the project manager. Unprofitable product lines are

easily identified and can be eliminated.

 Strong communications channels.

 Staffs can maintain expertise on a given project without sharing key personnel.

 Very rapid reaction time is provided.

 Personnel demonstrate loyalty to the project; better morale with product

identification.

 A focal point develops for out-of-company customer relations.

 Flexibility in determining time (schedule), cost, and performance trade-offs.

 Interface management becomes easier as unit size is decreased.

 Upper-level management maintains more free time for executive decision-making.

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Disadvantages of the product organizational form

 Cost of maintaining this form in a multiproduct company would be prohibitive due

to duplication of effort, facilities, and personnel; inefficient usage.

 A tendency to retain personnel on a project long after they are needed. Upper-

level management must balance workloads as projects start up and are phased

out.

 Technology suffers because, without strong functional groups, outlook of the future

to improve company’s capabilities for new programs would be hampered (i.e., no

perpetuation of technology)

 Control of functional (i.e., organizational) specialists requires top-level

coordination.

 Lack of opportunities for technical interchange between projects.

 Lack of career continuity and opportunities for project personnel.

Organizing Projects: Matrix Structure

A matrix structure is a hybrid form that combines properties of both functional and

projectized structures. The organizational structure (matrix) is overlaid on the normal

functional structure with two chains of command: functional and project. The matrix

organizational form combines the advantages of the pure functional structure and the

product organizational structure. It, therefore, provides us with the best of two worlds:

the traditional structure and the matrix structure.

The basis for the matrix approach is an attempt to create synergism through shared

responsibility between project and functional management. This arrangement draws

people from different functional areas and the people will return to their home

departments after completion of the project.

Matrix organization can be categorized as weak, balanced or strong based on how

closely the structure aligns with a functional or projectized structure. Influence and

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power over project resources, budget, and staff vary depending on the type of matrix

organizational structure. A weak matrix is more similar to a functional structure, while

a strong matrix is more similar to a projectized structure. A balanced matrix is when

the project manager and functional manager share equal or near equal influence on

the project. The following diagrams show the types of matrix project structures.

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From the above pictures we understand that project managers report directly to the

president or CEO as the power and authority used by the project manager come

directly from the president. The project manager has total responsibility and

accountability for project success. The functional departments, on the other hand,

have functional responsibility to maintain technical excellence on the project. Each

functional unit is headed by a department manager whose prime responsibility is to

ensure that a unified technical base is maintained and that all available information

can be exchanged for each project. Project management is a coordinative function,

whereas matrix management is a collaborative function of project management. In the

coordinative or project organization, work is generally assigned to specific people or

units who “do their own thing.” In the collaborative or matrix organization, information

sharing may be mandatory, and several people may be required for the same piece of

work. In a project organization, authority for decision making and direction rests with

the project leader, whereas in a matrix it rests with the team.

Advantages of a Pure Matrix Organizational Form

 The project manager maintains maximum project control (through the line

managers) over all resources, including cost and personnel.

 Policies and procedures can be set up independently for each project, provided

that they do not contradict company policies and procedures.

 Rapid responses are possible to changes, conflict resolution, and project needs

(as technology or schedule).

 The functional organizations exist primarily as support for the project.

 Each person has a “home” after project completion. People are susceptible to

motivation and end-item identification. Each person can be shown a career path.

 Because key people can be shared, the program cost is minimized. People can

work on a variety of problems

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 A strong technical base can be developed, and much more time can be devoted to

complex problem solving. Knowledge is available for all projects on an equal basis.

 Rapid development of specialists and generalists occurs.

 Authority and responsibility are shared.

Matrix organizational structure also suffers from certain disadvantages as listed

below.

 There is a multidimensional information and work flow which my end up in

confusion if coordination is not maintained.

 There is a dual reporting which may result in a conflict

 Management goals different from project goals.

 Difficulty in monitoring and control because of dual responsibility

 The organizational structure is not cost-effective because more people than

necessary are required, primarily administrative.

 Each project organization operates independently. Care must be taken that

duplication of efforts does not occur.

 More effort and time are needed initially to define policies and procedures,

compared to traditional form.

 Functional managers may be biased according to their own set of priorities.

 Employees and managers are more susceptible to role ambiguity than in

traditional form.

 Conflicts and their resolution may be a continuous process

The following table summarizes and compares the project management structures in

terms of their characteristics.

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2.4.2 Choosing the Appropriate Project Management Structure

Organizations may have one type or a mix of management structures. A structure that

is appropriate for one organization may not fit another. This is because of the

uniqueness of the projects and different nature of the organization. There for

understanding of the type of organization and nature of the project is important in

selecting the right project management structure. In selecting appropriate project

organization, we must consider the cultural aspect and characteristics of an

organization and the nature of the specific project. As projects are tools of strategic

plan to meet overall organizational objective, it is important to consider the

preferences of the parent organization so that the objectives of the projects fit in to the

overall organizational goal. In organizational consideration we should be able to

determine the importance of the project to the success of the entire organization and

the percentage of core work that the project involves. If for instance over 75 percent of

work involves projects, then an organization may consider a fully projectized

organization. If an organization has both standard products and projects, then a matrix

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arrangement may appear to be appropriate. In determining the appropriate structure it

is also important to consider the availability of resources. For example, matrix

arrangement evolves out of the need to share resources from the functional domain.

So, for an organization with this orientation and insufficient resource, the entity may

not afford to tie up critical personnel on individual projects. In such a case a matrix

arrangement would seem to be an appropriate choice.

In deciding the appropriate structure, it is reasonable to consider the nature of the

project in terms of the degree of autonomy that it needs in order to be successfully

completed. Further to the above, Larson and Gray (2017) identified seven

factors/considerations that influence the choice of project management structure .

These are:

 Size of project

 Strategic importance

 Novelty and need for innovation

 Need for integration (number of departments involved)

 Environmental complexity (number of external interfaces)

 Budget and time constraints

 Stability of resource requirements

The higher the levels of these seven factors, the more autonomy and authority the

project manager and project team need to be successful. This translates into using

either a pure project team or a project matrix structure. For example, these structures

should be used for large projects that are strategically critical and are new to the

organization, thus requiring much innovation. These structures would also be

appropriate for complex, multidisciplinary projects that require input from many

departments, as well as for projects that require constant contact with customers to

assess their expectations.

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2.4.3 Organizational Culture and project management structure

Organizational culture may be defined as a system of shared norms, beliefs, values,

and assumptions which bind people together, thereby creating shared meanings. This

system is manifested by customs and habits that exemplify the values and beliefs of

an organization. Organizational Culture is the personality of the organization that

distinguishes it from other organizations. As every one of us has a unique personality,

so does every organization. In deciding the type of management structure we have to

account the unique culture of organizations. Project managers must be aware of the

cultural settings in which they are expected to operate. It is important for them to be

“culture sensitive” so that they can develop appropriate strategies and responses that

would enable them respect key norms and ensure effectiveness within the

organization. (Larson and Gray, 2017)

Project managers have to be able to operate in several, potentially diverse,

organizational cultures. First, they have to interact with the culture of their parent

organization as well as the subcultures of various departments (e.g., production,

marketing, and accounting). Second, they have to interact with the project’s client or

customer organizations. Finally, they have to interact with different stakeholders other

than clients that include suppliers and vendors, subcontractors, consulting firms,

government and regulatory agencies, and, in many cases, community groups. Many

of these organizations are likely to have very different cultures. Project managers

have to be able to fit in to the culture they are working in and consider the cultural

issue in deciding the appropriate project management structure. Larson and Gray

(2017) suggest that the following mechanisms would serve to know and understand

the norms, customs and values of a particular organization.

 Study the physical characteristics of an organization. What does the external

architecture look like? What image does it convey? Is it unique? Are the buildings

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 and offices the same quality for all employees? Or are modern buildings and

fancier offices reserved for senior executives or managers from a specific

department? What are the customs concerning dress? What symbols does the

organization use to signal authority and status within the organization? These

physical characteristics can shed light on who has real power within the

organization, the extent to which the organization is internally differentiated, and

how formal the organization is in its business dealings.

 Read about the organization. Examine annual reports, mission statements,

press releases, and internal newsletters. What do they describe? What principles

are espoused in these documents? Do the reports emphasize the people who

work for the organization and what they do or the financial performance of the

firm? Each emphasis reflects a different culture. The first demonstrates concern for

the people who make up the company. The second may suggest a concern for

results and the bottom line.

 Observe how people interact within the organization. What is their pace—is it

slow and methodical or urgent and spontaneous? What rituals exist within the

organization? What values do they express? Who are the people at the meetings?

What is usually the focus of the meetings? How long do the meetings take? all

these would inform about cultural values of the organization.

 Interpret stories and folklore in the organization. Understand and interpret

stories told by members of the organization. Those that are told repeatedly may

reflect what is important to an organization’s culture.

The points highlighted above would help understand the cultural context of an

organization and serve as an important input in designing project management

structure.

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Review Questions

1. Define the concept of project life cycle and the purpose it serves.

2. What are the different stages of a project life cycle?

3. What are the different types of project organization?

4. What are the pros and cons of the different project management structures?

5. How do we choose the appropriate project management structure?

6. What distinguishes a weak matrix from a strong matrix?

7. Why is it important to assess the culture of an organization before deciding what

project management structure should be used to complete a project?

8. Other than culture, what other organizational factors should be used to determine

which project management structure should be used?

9. What do you believe is more important for successfully completing a project—the

formal project management structure or the culture of the parent organization

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 Chapter Three Project Initiation and Definition

3.1 Introduction

Identification of a new project is a complex process. Project selection process starts

with the generation of project ideas where these ideas are provoked by a need or a

problem that were not addressed sufficiently or initiated due to existence of an

opportunity not exploited or availability of abundant resources not used. Project

identification can also results from issues emerging from the external environment.

You might pick up on these issues in the environment by reading reports on trends in

the geographical area where you work and speak to stakeholders about the local

issues arising. With this in mind, this chapter discusses sources of project ideas,

screening project ideas, project selection and defining projects.

LEARNING OBJECTIVES

Upon successful completion of this chapter, the student will be able to:

 Discuss how projects are identified

 Explain how projects are selected

 Understand how projects are defined

 Identify key elements of a project scope statement

 Understand why it is important to establish project priorities in terms of cost,

time, and performance.

 Demonstrate the importance of a work breakdown structure (WBS)

3.2 Idea Generation for Project Identification

Every project starts with ideas and these ideas are considered as investment

opportunities which can be transformed into a project. The project idea stage is the

first stage of a project cycle. The idea about a project arises from a variety of sources

within the local community, market place or macroeconomic environment. Project

identification should be an integral part of the macro-planning exercise of the state

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with sectored information and strategies as the main source of the ideas. New project

ideas could originate from within an organization or from outside it. In a public sector

organization, it emanates mainly from the assigned roles of the relevant body. For

instance, a rural area agricultural extension programs or fertilizer distribution

programs most likely will emanate from the ministry of agriculture. A project idea to

provide medical services in a rural area is also likely to originate from the ministry of

health. The project ideas as a process of identification of a project can also begin when

an analytical survey of the economy (pre-investment surveys) are conducted by various

stakeholders.

In the private sector, project ideas could emanate from within an organization or from

outside. From within, it could arise out of contacts between salesmen and customers.

It could also arise from outside if customers specifically request for possible bigger or

better products. A project idea can also come from the surrounding community in

order to address a specific problem.

For projects to be properly conceived, the characteristics below must be clearly

defined:

 Objectives

 Expected outputs

 Intended beneficiaries

 Planned lifespan

 Extended outcome of the project

 Principle stakeholders

 Financial plan and source of financing

3.2.1 Sources of Project Ideas

Project ideas can come from different sources. A project manager should analyze the

business environment that consists of the economic sector, the governmental sector,

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the technological sector, the socio-demographic sector, the competition sector and the

supplier sector in order to generate and come up with a pool of ideas. Project ideas or

investment opportunities (or project ideas) may come from individuals and institutions

in the society that include:

 Unions/ cooperatives: Producers organizations, Customer, trade unions

 Product marketing organizations;

 Public and private sector companies(local/multinational);

 Government ministries, authorities, agencies;

 Aid and development agencies, NGOs and self-aid associations- Local or

international;

 Local governments and regional states;

 Local political and pressure groups such as opposition parties

 Individuals

 Groups of individuals (community)

 Local leaders

 International development agencies

A project idea may also stem from opportunity studies compiled by various institutions

such as chamber of commerce, investment promotion agencies, entrepreneurial

group and city administrations. These are sketchy in nature and depend more on

aggregate/crude estimates than on detailed cost- benefits analysis. The objectives are

refinement of business ideas, preliminary evaluation of alternatives, and preliminary

assessment of strengths and weakness of concepts. Its features are that, it does not

make detailed analysis.

There are generally two levels where project ideas are born. These are macro and

micro level sources. These sources usually produce a pool of project ideas that can

be scaled up for further considerations.

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Macro level sources of project ideas may include central or regional governments

development plans, bilateral and multilateral agreements, international development

agencies. Many project ideas are derived from a formal planning process at a macro

level. The other source of project ideas is the micro level which includes the

community, organizational units, households, customers or intended beneficiaries and

technical specialists.

Key Steps in Identification

The following three formal steps may help to follow in the identification process.

1. Scanning the external environment for issues

2. Undertaking preliminary research on an issue and making a decision

1. Scanning the external environment for issues. Scanning is a key part to planning

projects since it can help to identify areas where organizations are best placed to

work. Scanning is like skim reading. You are on the lookout for new issues, but at

this stage do not yet need to research deeply about the issues. Scanning can be

done by internal or external stakeholders. Scanning can occur through, for

example:

 stakeholder discussion groups with partner organizations, users, funders

 inter-organization forums

 conducting contextual analyses

 analysis of major government policies that make an impact on an issue

 sudden or unexpected changes in the external environment affecting

organizations or community

2. Undertaking preliminary research on an issue. The purpose of research at the

identification stage is to help your organization decide whether or not to begin to

work on an issue (i.e., whether to move from the identification stage to the design

stage of the project cycle). Preliminary research should not aim to be

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 comprehensive in breadth or depth because further research will be undertaken

during the feasibility stage. The information obtained from the preliminary study will

help to make an informed decision in order to move to the next stage.

There are two major approaches to project identification. These are:

(a) Top-down approach

(b) Bottom-up approach

Top–bottom approach occurs when projects are identified at higher planning (or

macro) level and implemented by the decision of top officials. This is when projects

are identified based on demands from beyond the community. In this approach,

projects are identified based on: the national plan and strategies, international

conventions (such as Kyoto Protocol/climate change) and international institutions or

NGOs that have determined particular priorities. The following are the advantages of

the top-down approach:

 It may be a rapid response to disasters like floods, war outbreak because there

is limited time and chance to consult the beneficiaries.

 It can be effective in providing important services like education, health, water,

roads.

 It can contribute to wider national or international objectives and goals

This approach also suffers from the following limitations.

 Such projects may not relate to the existing reality in a particular locality.

 Often have long-term orientations.

 May encounter resistance and/or implementation constraints as the people in

the context might lack interest to cooperate with.

 Communities have little say in planning process rendering approach devoid of

human resource development.

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  Community develops dependency syndrome on outside assistance and does

not exploit their own potential and disregards established ideas and beliefs of

people.

 Assumes external individuals know better than the beneficiaries of the service.

In bottom-up approach, community/beneficiaries are encouraged to identify and plan

the projects themselves with or without outsiders. This is based on the realities

existing in the respective locality and focuses on short-term or long-term problem

solving, fulfillment of unsatisfied needs, etc. This approach to project identification has

the following advantages.

 Such projects might be easy to implement (or realize) due to their fitness to

the reality in a given context.

 Project’s benefits might easily be visualized (or seen) by the society.

 Project might be successfully implemented– likely to get substantial

community support b/c people tend to safeguard what they have provided

for themselves.

 This can develop people’s capacity to identify problems and needs; and to

seek possible solutions to them.

 Provides opportunities of educating people.

 Helps people to work as a team and develop a “WE” attitude - makes

project progressive and sustainable

The following are limitations of bottom-up approach

 Not always effective for projects that require urgency to implement.

 Time-consuming and requires patience and tolerance.

 People sometimes dislike approach because they do not want to take

responsibility for action.

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  The agency using this approach is never in control and cannot guarantee

the results it would want.

 The priorities of communities may not fit with national or international

priorities that seek to have a broader impact

After the project idea stage, the next stage is the project identification stage. The

project identification stage consolidates the project idea stage and selects the most

promising idea for further study. This is done by developing selection criteria against

which project ideas are evaluated. Project idea screening criteria such as the following

may be consider for evaluation.

Screening Criteria:

 Compatibility with the promoter

 Consistency with government priorities

 Availability of inputs

 Adequacy of market

 Reasonableness of costs

 Acceptability of risk level

After the project idea evaluation stage, the next stage is the project selection stage.

Faced with an array of projects with different values and worth, there is need to select

which projects will be embarked upon. Besides, budgetary considerations will also

come into play since the resources for projects are limited. Project selection is a top

management responsibility. In the selection of projects, top management usually

considers the financial cost outlays involved and match them with the benefits to be

derived from a project. Projects that add positive benefits to the community should be

selected.

The following diagram summarizes the project identification process. Once a project

idea is acceptable, the next will be defining the project which is discussed here after.

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3.3 Project Definition

Project definition is a process which seeks to describe a project from the idea stage to

the stage when the project has been completed. All information about the project is

usually embodied in the definition of the project. Usually, before a project starts, it

must be properly defined so that the parties involved properly understand their clear

roles. Defining a project is developing an outline of the project called the work

breakdown structure. This ensures that all tasks are identified and that participants of

the project have an understanding of what is to be done. Once the outline and its

detail are defined, an integrated information system can be developed to schedule

work and allocate budgets. This baseline information is later used for control. This

stage is highly instrumental in the life cycle of a project as it defines the boundaries of

the project and gives clarity to all participants about the objectives, scope, cost and

timescale of the project. Project definition or initiation helps to accomplish at least the

following key things.

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  It sets the baseline for scope, cost and schedule

 Identifies the right people to involve

 Defines what is included in scope

 Identifies items not included in scope

 Breaks project into manageable pieces

 Defines major project deliverables

 Define key project risks

This is part of the project planning stage which succeed the idea generation stage has

the following key components.

1. Defining the Project Scope

2. Establishing Project Priorities

3. Creating the Work Breakdown Structure

4. Integrating the WBS with the Organization

5. Coding the WBS for the Information System

1. Defining the project scope

Defining the project scope sets the stage for developing a project plan. Project scope

is a definition of the end result or mission of your project—a product or service for

your client/customer. The primary purpose is to define as clearly as possible the

deliverable(s) for the end user and focus on project plans. The scope should be

developed under the direction of the project manager, customer, and other significant

stakeholders. The project scope definition is a document that will be published and

used by the project owner and project participants for planning and measuring project

success. The scope describes what you expect to deliver to your customer when the

project is complete. The project scope should define the results to be achieved in

specific, tangible, and measurable terms.

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As project scope is the foundation that interlocks all elements in a project, it is

important to make sure that the scope definition is complete. For this purpose, one

case use the following parameters as checklist to ensure its completeness (Larson

and Gray, 2017.

Project Scope Checklist

 Project objective

 Deliverables

 Milestones

 Technical requirements

 Limits and exclusions

 Reviews with customer

The above are highlighted below.

To define the overall objective to satisfy client’s need(s) is first step in project scope

definition. This exercise is key to the other project elements as this would answer

answers the questions of what, when, how much, and where. The second step in

defining the scope of a project is to clearly define the major deliverables or the

project’s expected, measurable outputs over its life.

The third step is to identify milestone in the project accomplishments. A milestone is a

significant event in a project that occurs at a point in time which shows major

segments of work that represent rough-cut estimates of time, cost, and resources for

the project. The milestone as a major segment of work is an important control points

in the project. To serve as control point in the project it should be easily recognizable

by all project participants and stakeholders. In the scope definition, technical

requirements have to be put in clear terms so as to ensure proper performance.

Technical requirements play key role in clarifying the deliverables or defining the

performance specifications. Another important element in the scope definition is to set

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the limits and exclusions so that false expectations and misunderstandings are

avoided. Limits and exclusions are important in defining the boundaries of a project.

The final step that can be used as checklist is to review with customers or

stakeholders what has been done in the scope definition process. The main concern

here is to create an understanding and agreement to expectations. The review is

important to answer such issues as: whether the customer can get what he or she

expects in the deliverables? Does the project definition identify key accomplishments,

budgets, timing, and performance requirements? Are questions of limits and

exclusions covered? So the review will address these concerns and pave the path for

smooth good communication to occur between the project actors and stakeholders.

2. Establishing Project Priorities

Quality and the ultimate success of a project is ensured if there is a proper

management of resources explained in terms of cost (budget), time (schedule), and

performance (scope) of the project. The interrelationship among these criteria varies.

Sometimes it may be necessary to compromise the performance and scope of the

project to get the project done quickly or less expensively. Other times project costs

can be reduced by using cheaper, less efficient labor or equipment that extends the

duration of the project. Likewise, project managers may be forced to expedite or crash

some key activities by adding additional labor, thereby raising the original cost of the

project.

One of the primary jobs of a project manager is to manage the trade-offs among time,

cost, and performance. To do so, project managers must define and understand the

nature of the priorities of the project. Failure to acknowledge priority issue will put the

project at stake/risk. For this reason project managers need to have a candid

discussion with the project customer and upper management to establish the relative

importance of each criterion.

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In the interest of project management we have to identify at the start which criterion/

decisive factor is constrained, which should be enhanced, and which can be

accepted. This could mean the following.

Constrain. The original parameter is fixed. The project must meet the completion

date, specifications and scope of the project, or budget.

Enhance. Given the scope of the project, which criterion should be optimized? In the

case of time and cost, this usually means taking advantage of opportunities to either

reduce costs or shorten the schedule. Conversely, with regard to performance,

enhancing means adding value to the project.

Accept. For which criterion is it tolerable not to meet the original parameters? When

trade-offs have to be made, is it permissible for the schedule to slip, to reduce the

scope and performance of the project, or to go over budget?

One technique found in practice that is useful for this purpose is completing a priority

matrix for the project to identify which criterion is constrained, which should be

enhanced, and which can be accepted.

Example of Project Priority Matrix

Time Performance Cost

Constrain

Enhance

Accept

To sum up, developing a priority matrix for a project before the project begins is a

useful exercise. It provides a forum for clearly establishing priorities with customers

71
and top management so as to create shared expectations and avoid

misunderstandings.

3. Creating the Work Breakdown Structure

Once the scope and deliverables have been identified, the work of the project can be

successively subdivided into smaller and smaller work elements. The outcome of this

hierarchical process is called the work breakdown structure (WBS). A Work

Breakdown Structure (WBS) is a hierarchical (from general to specific) tree structure

of deliverables and tasks that need to be performed to complete a project

The Work Breakdown Structure is the foundation for effective project planning, costing

and management

The WBS defines all the elements of the project in a hierarchical framework and

establishes their relationships to the project end item(s). Think of the project as a

large work package that is successively broken down into smaller work packages; the

total project is the summation of all the smaller work packages. This hierarchical

structure facilitates evaluation of cost, time, and technical performance at all levels in

the organization over the life of the project. The WBS also provides management with

information appropriate to each level. For example, top management deals primarily

with major deliverables, while first-line supervisors deal with smaller sub deliverables

and work packages. Each item in the WBS needs a time and cost estimate. With this

information it is possible to plan, schedule, and budget your project. The WBS also

serves as a framework for tracking cost and work performance.

Use of a WBS helps to assure project managers that all products and work elements

are identified, to integrate the project with the current organization, and to establish a

basis for control. Basically, the WBS is an outline of the project with different levels of

detail. The following figures shows hierarchical breakdown of the WBS. Adapted from

Larson and Gray, 2017.

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73
4. Integrating the WBS with the Organization

The WBS is used to link the organizational units responsible for performing the work.

In practice, the outcome of this process is the organization breakdown structure

(OBS). The OBS depicts how the firm has organized to discharge work responsibility.

The purposes of the OBS are to provide a framework to summarize organization unit

work performance, identify organization units responsible for work packages, and tie

the organizational unit to cost control accounts. The OBS defines the organization

subdeliverables in a hierarchical pattern in successively smaller and smaller units.

Frequently, the traditional organization structure can be used. Even if the project is

completely performed by a team, it is necessary to break down the team structure for

assigning responsibility for budgets, time, and technical performance. As in the WBS,

the OBS assigns the lowest organizational unit the responsibility for work packages

within a cost account.

5. Coding the WBS for the Information System

In project management coding system is used to define the breakdown structure. The

codes are used to define levels and elements in the WBS, organization elements,

work packages, and budget and cost information. The codes allow reports to be

consolidated at any level in the structure. The most commonly used scheme in

practice is numeric indention.

3.3.1 Responsibility Matrix

Further to WBS and OBS, another tool that is widely used by project managers and

task force leaders of small projects is the responsibility matrix (RM). The RM

(sometimes called a linear responsibility chart) summarizes the tasks to be

accomplished. RM consists of a chart listing all the project activities and the

participants responsible for each activity and who is responsible for what on a project.

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RM clarifies critical interfaces between units and individuals that need coordination. It

provides a means for all participants to view their responsibilities and agree on their

assignments and clarifies the extent or type of authority that can be exercised by each

participant. The following is an example of responsibility matrix for a market research

project.

Project Team
Task Bereket Hiruy Elesa Abel Hiyab

Identify target customers R S S

Develop draft questionnaire R S S
Pilot-test questionnaire R S
Finalize questionnaire R S S S
Print questionnaire R
Prepare mailing labels R
Mail questionnaires R
Receive and monitor returned questionnaires R S
Input response data R
Analyze results R
Prepare draft of report S R S S
Prepare final report R S
R= Responsible

S= Supports/Assists

For example, the above figure illustrates a RM for a market research study. In this

matrix the R is used to identify the committee member who is responsible for

coordinating the efforts of other team members assigned to the task and making sure

that the task is completed. The S is used to identify members of the five-person team

who will support and/or assist the individual responsible.

3.3.2 Project Communication Plan

Once the project deliverables and work are clearly identified, establishing an internal

communication plan is vital. Stories abound of poor communication as a major

contributor to project failure. Having a robust communications plan can go a long way

toward mitigating project problems and can ensure that customers, team members,

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and other stakeholders have the information to do their jobs. The communication plan

is usually created by the project manager and/or the project team in the early stage of

project planning. Communication is a key component in coordinating and tracking

project schedules, issues, and action items. The plan maps out the flow of information

to different stakeholders and becomes an integral part of the overall project plan. The

purpose of a project communication plan is to express what, who, how, and when

information will be transmitted to project stakeholders so schedules, issues, and

action items can be tracked.

The advantage of establishing a communication plan is that instead of responding to

information requests, you are controlling the flow of information. This reduces

confusion and unnecessary interruptions, and it can provide project managers greater

autonomy. Why? By reporting on a regular basis how things are going and what is

happening, you allow senior management to feel more comfortable about letting the

team complete the project without interference.

Project communication plans address the following core questions:

 What information needs to be collected and when?

 Who will receive the information?

 What methods will be used to gather and store information?

 What are the limits, if any, on who has access to certain kinds of information?

 When will the information be communicated?

 How will it be communicated?

The following are the basic steps considered in developing a communication plan that

help answer the what, who, when and how questions.

1. Stakeholder analysis

2. Information needs

3. Sources of information

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 4. Dissemination modes

5. Responsibility and timing

1. Stakeholder analysis. Identify the target groups. Typical groups could be the

customer, sponsor, project team, project office, or anyone who needs project

information to make decisions and/or contribute to project progress.

2. Information needs: What information is pertinent to stakeholders who contribute

to the project’s progress? For example, top management needs to know how the

project is progressing, whether it is encountering critical problems, and the extent

to which project goals are being realized. Project team members need to see

schedules, task lists, specifications, and the like, so they know what needs to be

done next. External groups need to know any changes in the schedule and

performance requirements of the components they are providing.

3. Sources of information: After information needs are identified, then sources of

information are determined. That is, where does the information reside? How will it

be collected? For example, information relating to the milestone report, team

meetings, and project status meetings would be found in the minutes and reports

of various groups.

4. Dissemination modes: Decide on the dissemination method as traditional status

report meetings, e-mail, teleconferencing, using the Web as “virtual project office”

to store project information.

5. Responsibility and timing: Determine who will send out the information to the

appropriate stakeholders. Is it secretaries of meetings, the project manager or

project office. Timing and frequency of distribution appropriate to the information

need to be established.

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Review Questions

1. What triggers Projects?

2. What do you understand by project identification? Discuss, with examples the

process involved in project identification

3. What are the possible sources of project ideas?

4. What are the purposes of project preliminary screening and selection?

5. Identify and explain the basic factors to be considered in conducting project

preliminary screening?

6. Define opportunity studies and identify their purposes.

7. What questions does a project objective answer? What would be an example of

a good project objective?

8. What does it mean if the priorities of a project include: Time-constrain, Scope -

accept, and Cost-enhance?

9. What is a work breakdown structure (WBS)?

10. What are the importance of a work breakdown structure (WBS)?

11. What kinds of information are included in a work package?

12. When would it be appropriate to create a responsibility matrix rather than a fully

blown WBS?

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 Chapter Four Project Planning

4.1 Introduction

In chapter three we have dealt with project initiation and definition. We recognize that

project definition is part of the planning process that describes or outlines the project

from its start to its completion. We will now continue with the process of planning the

work of the project in such a way that it may be translated into the “hard work” that

actually leads to the successful completion of the project. Planning is the key to a

successful project. Creating a project plan is the first thing we do when undertaking

any project.

This is an important stage in the project life cycle where we set directions in sufficient

detail to tell the project team exactly what must be done, when it must be done, what

resources will be required to produce the deliverables of the project successfully, and

when each resource will be needed. For this reason we must pay considerable

attention when planning projects. Meredith and Mantel (2012) quoted Peter Drucker

that “Plans are only good intentions unless they immediately degenerate into hard

work.” Project plan should be able to be translated in to action to ensure successful

completion of a project. Before going in to details of project planning, first we will

briefly touch on the project feasibility study as part of project preparation.

LEARNING OBJECTIVES

Upon successful completion of this chapter, the student will be able to:

 Appreciate the importance of feasibility studies.

 Identify the components of a feasibility study

 Understand the importance of planning

 Understand the linkage between WBS and the project network.

 Diagram a project network using AON methods.

 Calculate early, late, and slack activity times.

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  Identify and understand the importance of managing the critical path.

 Understand the different reasons for crashing a project

 Perform crashing process

4.2 Project feasibility study

Feasibility literally means whether some idea will work or not. When it comes to

projects it refers to a detailed study of most promising or viable project ideas to arrive

at definitive conclusion on all the basic aspects of a project before making the final

investment decision and committing substantial resources. Feasibility study is

expected to provide conclusive information about the market, technical, financial and

economic aspects of a project so as to make final investment decision. Carrying out a

feasibility study by no means does not imply that the project under study is feasible. It

is actually conducted to determine whether it is feasible or not. Feasibility study would

enable to know beforehand whether there exists a potential and sizeable market for

the proposed product/ service, whether there is the necessary technical know- how

and human power, whether the project is environmentally friendly and so on. In other

words, feasibility study involves an examination of variability of the commercial,

technical, economic and financial aspects of the would be project. Project feasibility

analysis results in a reasonably adequate formulation of the project in terms of

location, production technology, production capacity, material inputs etc., and contains

fairly specific estimates of project cost, means of financing, sales revenues,

production costs, financial profitability and social benefits. If a project is seen to be

feasible from the results of the study, the next logical step is to proceed with it. The

information uncovered in the feasibility study will support the detailed planning. The

following are components of a feasibility study.

1. Description of the Business: The product or services to be offered and how they

will be delivered.

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2. Market Feasibility: Includes a description of the industry, current market,

anticipated future market potential, competition, sales projections, potential buyers,

etc.

3. Technical Feasibility: Details how you will deliver a product or service (i.e.,

materials, labor, transportation, where your business will be located, technology

needed, etc.).

4. Financial Feasibility: Projects how much start-up capital is needed, sources of

capital, returns on investment, etc.

5. Organizational Feasibility: Defines the legal and corporate structure of the

business (may also include professional background information about the

founders and what skills they can contribute to the business).

6. Social Cost-Benefit Analysis (Economic Analysis): Concerned with measuring the

benefits and costs of a project from the wider national, social and economic point

of view. The economic analysis focuses on benefits and costs associated with

income distribution, impact on standard of living, government revenues, creating or

shrinking employment opportunities, community development, use of local

resources, import-export activities, supply-demand of inputs and outputs,

ecological conditions, performance of other sectors, etc…

7. Conclusions: Discusses how the business can succeed. Be honest in your

assessment because investors won’t just look at your conclusions they will also

look at the data and will question your conclusions if they are unrealistic.

The following diagram depicts the major components of feasibility study and their

relationship.

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Feasibility Study: A Schematic View (Chandra, 2013:13)

The diagram shows that the first step in the feasibility study is to conduct market and

demand analysis. This analysis is expected to provide particulars about what types

of products or services that include quality, quantity, price; the market needs and size;

purchasing power of customers and so on. The output of the commercial analysis is

used as input to the technical analysis. This is a feasibility study conducted at the

second stage. The technical feasibility study is comprised of the following feasibility

studies.

1. Production Program and Plant Capacity study

2. Input (Raw Materials & Supplies) Study

3. Location, and Site Studies

4. Engineering & Technology Study

5. Organizational and Human Resource Study

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Following the technical feasibility study, the financial feasibility analysis is conducted.

The information obtained from the market and technical studies are used in order to

conduct the financial feasibility study. Financial feasibility is often a predominant factor

in feasibility analysis, as most investments are not realized if they do not generate

profit for the project owners. Financial feasibility analysis is an analytical tool used to

evaluate the economical viability of an investment. Financial feasibility analysis is

usually done during the project planning process and the results indicate how the

project will perform under a specific set of assumptions regarding technology, market

conditions and financial aspects. This study is done largely to determine how much

start-up capital is needed, sources of capital, returns on investment.

Another study conducted as part of a feasibility study is the economic or the social

cost benefit analysis (SCB). This is a study that applies to all part of a feasibility study.

This study is concerned with judging a project from a larger viewpoint of a society i.e.,

evaluating whether a proposed project will add benefit or cost to the society. The

evaluation focuses on SCB of a project which may often be different from its monetary

costs and benefits. A social cost benefit analysis is a systematic method used to

survey all the impacts caused by a project or other policy measure. It comprises not

just the financial effects (investment costs, direct benefits like profits, taxes and fees,

et cetera), but all the societal effects, like: pollution, environment, safety, health,

indirect (i.e. labour or real estate) market impacts, legal aspects, et cetera. The main

aim of a social cost benefit analysis is to attach a price to as many effects as possible

in order to uniformly weigh the above-mentioned heterogeneous effects. As a result,

these prices reflect the value a society attaches to the caused effects, enabling the

decision maker to form an opinion about the net social welfare effects of a project.

Finally, when the feasibility study determines that the project is viable or worthwhile,

then it will be implemented.

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Reporting Format

A project feasibility study should at least contain the following details.

A. Executive Summary:

This section should summarize the main findings of the feasibility study. It should also

outline project background, critical data & information used, relevant conclusions and

recommendations.

B. Content:

The following details are contained in the body of the study

• Project Background & History

• Market and Demand Analysis

• Raw Materials & Supplies Aspects

• Location, Site, and Environmental Impacts

• Engineering and Technology Aspects

• Organization and Management Issues

• Human Resource Aspects & Requirements

• Financial Analysis and Appraisal (total investment cost, COGS, operating &

financial costs, and financial benefits)

• Economic Impacts/Appraisal (SCBA)

• Project Financing

• Project Implementation Schedule

The following part will briefly discuss each of the above mentioned feasibility studies.

4.2.1 Market and Demand (Commercial) analysis

This is usually the first step in the feasibility study that determines whether there will

be sufficient and sustainable demand for the proposed products (goods and services)

of a project. This study involves experts in marketing research and economics. The

outcome of this study is the basis for all other aspects of the feasibility study. Knowing

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its outcome will lead to make a conclusive decision on whether to proceed with the

other parts of the feasibility study. That is, if the study results in no demand, it means

there is no that project, – no demand, no project.

The commercial analysis is conducted primarily to determine/estimate the potential

size of the market, the market share likely to be captured & the benefits, in monetary

terms (cash inflows) associated with the market. In conducting a market and demand

analysis, the feasibility study focuses in:

– Identify potential consumers or buyers.

– Market survey (gathering primary and/or secondary data)

– Market classification/characterization of the market

– Demand and sales forecasting (projection)

– Uncertainties in demand forecasting

– Market planning/ program (price, distribution…)

Commercial analysis provides information about the types of products the market

needs, qualities, quantities and prices after the project becomes operational. When

deciding on these issues, the commercial analysis must take into account the

technical aspects of the project as well as the environmental impact arising from

delivery and consumption of the products. Where and how to market the new

product/service is the objectives of the market and demand analysis which may be

answered by posing the following the questions.

– Who are buyers of the new product/service?

– What is the current demand for the new product/service?

– How is demand distributed temporally and geographically?

– What is the breakup of demand for the new product/service of different sizes?

– What price and warranty will ensure its acceptance?

– What channels of distribution is most suited for the new product/service?

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 – What trade margins will induce distributors to carry it?

– What are prospects of immediate sales?

The following steps may help someone develop a sound market demand analysis.

1. Situational Analysis and Specification of Objectives

2. Collection of Secondary Information

3. Conduct a market survey

4. Characterization of the Market

5. Demand Forecasting

6. Formulation of the Market Plan

These are described briefly below.

Step1. Situational Analysis and Specification of Objectives

Situational Analysis

The primary purpose of situational analysis is to generate enough data about the

market without formal study. This requires to talk, informally, to consumers or

customers, competitors, distributors, organizations, or other similar or different

producers or services providers to understand and know their preferences and

purchasing power.

Specification of Objectives

This spells out the objective clearly and comprehensively.

Specification of objectives is accomplished with the help of the following formal

questioning.

 Where is the market (domestic /foreign)? How large is it?

 Is the market expected to grow in the future?

 Who are the buyers? What demographic characteristics do they possess?

 What is the total current demand (How much can be sold)?

 What price will customers be willing to pay?

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  How can potential customers be convinced?

 What channels of distribution are most suitable?

 What are the prospects of immediate sales?

 Who and where are the competitors?

 What are the existing marketing strategies of competitors in terms of the 4Ps

…their strengths and weaknesses

 How large are these competitors? How established are they? How do they

price their goods? How will these competitors react to the entrance of the

project?

 How do we differentiate our product from those of the competitors?

 How do we plan on gaining market share?

 What marketing strategies should be followed?

 What marketing instruments – marketing mix – should be in place to win the

market?

 What resources – expressed in quantity, quality and cost – are needed to

implement, operate and maintain marketing strategies

Step 2. Collection of Secondary Information

To answer the questions posed in step 1, it is important to look for sources of

information one of which is the secondary sources. These are information that are

compiled and already available which may be obtained from central statistics office,

sample survey reports, planning reports, academic studies, opportunity studies, etc.

This may provide starting point for market and demand analysis.

Step3. Conduct Market Survey

Market survey is a tool used to gather and analyze market data, such as consumer

preferences, spending habits, purchasing power, trends in market prices and the

presence of competing products. A market survey can describe any study that gathers

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information directly from consumers by asking them questions about their

preferences, habits and experiences. A market survey can be census or a sample.

The information sought in a market survey may relate to one or more of the following:

• Total demand and rate of growth of demand,

• Demand in different segments of the market,

• Income and price elasticity of demand,

• Motives of seeking the product or service,

• Unsatisfied needs or demand,

• Purchasing power of customers,

• Satisfaction with the existing product or service,

• Distribution patterns and preferences,

• Attitude towards the product or service,

• Socio - economic conditions of the consumers,

Step 4. Characterization of Market Survey

Based on the information gathered from secondary sources and through the market

survey, the market for the product or service to be offered may be described in terms

of the following: effective demand on the past and present, breakdown of demand,

price, methods of distribution and sales promotion, consumers, supply of competition,

government Policy.

Step 5. Demand Forecasting

After gathering information, it may be possible to estimate future demand. Quantitative

and / or qualitative techniques may be used for demand forecasting. The following

methods can be used to forecast demand.

1. Qualitative Methods

A. Jury of executive method

B. Delphi method

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2. Quantitative methods

I. Time Series Projection Methods

A. Trend projection method

B. Exponential Smoothing method

C. Moving average method

II. Casual Methods

A. Chain ratio method B. Consumption level method C. End use method

D. Leading indicator method E. Econometric method

Step 6. Market Planning

Marketing plan is developed to serve the prime purpose of meeting the customer

needs better than competitors. The marketing plan should focus on customer needs,

nature of product or service offering, channel function and coverage. The market plan

should be targeted on the following:

• Customer: consider core needs and ancillary needs.

• Distribution: indicate role of distributors, whole sellers and retailers

• Promotion: which includes advertising, branding, own sale efforts.

• Pricing: indicate final price to customers, trade margins, duties on the intended

price

• Services: state warranties, after-sale service, training, installation, etc

• Market segmentation, targeting and positioning

4.2.2 Technical Analysis

The technical analysis succeeds the market feasibility study where its outputs are

used as inputs. This study is concerned with the detailed technical aspects of a

project including product design, plant layout and capacity and input requirements.

This study basically answers whether the project can be built or not. The study

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reviews the technical capability of human resource and other aspects. Actually, it is a

blueprint of manpower needs, resources, design, a choice of available technologies, &

cost estimates for each alternative. It also details how you will deliver a product or

service (i.e., materials, labor, transportation, where your business will be located,

technology needed, etc.). It is an assessment of the logistical aspects of a project. It

includes segments on necessary materials, labor and technology, and the means of

shipping or transporting good.

Technical study basically answers the following key questions.

 What type of equipment and technology will the business need? What are the

costs involved? This includes the initial purchase and installation costs of the

equipment as well as the operational costs of running the equipment.

 Who are the potential suppliers of this equipment? Where are they located? What

sort of service and warranties do they provide? How long will it take to acquire the

equipment and begin operations?

 Based on the projected business volume, how much raw product will be required?

What are the quality specifications?

 What are the possible locations for the project? What size of facility is needed?

What are the costs of the building? Does the proposed location have adequate

access to infrastructures and services such as major highways, railways, and

utilities? Will the project owner build its own facility, or purchase an existing

location?

 Where will the facility be located relative to the customers? Who will be

responsible for the transportation of goods between the facility and the market?

What are the transportation costs involved?

In technical analysis the following studies are undertaken.

1. Production Program and Plant Capacity studies

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 2. Input (Raw Materials & Supplies) Study

3. Location and Site Studies

4. Engineering & Technology Study

5. Organizational and Human resource management study

4.2.3 Financial Analysis

Financial feasibility is often a predominant factor in feasibility analysis, as most

investments are not realized if they do not generate profit for the project owners.

Financial feasibility analysis is an analytical tool used to evaluate the economical

viability of an investment. The analysis is usually done during the project planning

process and the results indicate how the project will perform under a specific set of

assumptions regarding technology, market conditions and financial aspects. The

study is usually done after the market and technical studies .The scope and objectives

of financial analysis are therefore to determine, analyze and interpret all the financial

consequences of an investment that may be relevant to and significant for the

investment and financing decisions.

The financial analysis quantifies or puts costing to the various inputs in the market and

technical studies as a basis in pursuing the project. The financial study also

determines the amount, source, availability and cost of financial resources needed to

implement the investment decision and then operate the project. In the study, financial

statements are prepared, analyzed and forecasted. It is also concerned with

determining the income that the project would generate. The financial analysis

addresses the following key questions.

 What are the total start-up costs required in order to begin operations? For

instance, what are the capital costs of the land, plant and equipment, and other

start-up costs such as legal costs?

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  What are the operating costs involved? These include the daily costs involved

in running the business, such as wages, rent, utilities, and interest payments on

outstanding debt. These will determine the cash flow requirements of the

decision maker.

 Based on the estimated demand, what are the decision maker’s revenue

projections? How will the decision maker determine its pricing arrangements?

 What are the possible sources of financing for the decision maker? Who are

potential lenders? What will be their required terms and limitations of

borrowing?

 Based on the estimated revenues and costs, what is the projected profit (loss)

of the decision maker? What is the break-even point?

The above questions are answered by performing studies on the following main

components of the financial study.

1. Initial investment cost

2. Production costs

3. Marketing costs

4. Projection of cash flow

4.2.3.1 Financial evaluation tools

In order to evaluate the financial feasibility of an investment project, relevant

measurements or criteria need to be specified. The measurement criteria are called

investment criteria or capital budgeting technique. The analysis focuses on cost-

benefit and cost of capital aspects. There are two board categories of important

investment financial appraisal criteria that can be used to evaluate project cash flows

and make accept/reject decisions. These are the “Discounting” criteria and the “Non-

Discounting” criteria. In the discounting method, there are three methods that can be

used in practice for the appraisal of investment projects. These are the net-present-

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value method (often referred to as NPV method), and the internal-rate-of-return (IRR)

method, sometimes also referred to as the discounted-cash-flow method and

profitability Index (PI) or benefit-cost ratio (BCR). The Non-Discounting criteria of

financial appraisal method include the payback period (PBP), accounting/average rate

of return (ARR) and the break-even analysis.

Project Financing

Estimating cash flows are important in investment decision, however these may not

be readily available, there might be financial constraint to finance the project so it is

important to secure the sources of finance before going through all the details of the

feasibility study. The allocation of financial resources to a project constitutes an

obvious and basic prerequisite for investment decisions, for project formulation and

pre-investment analysis, and for determining the cost of capital (without which the

decision to accept or reject a project on the basis of the NPV and IRR cannot be

made). A feasibility study would serve little purpose if it was not backed by a

reasonable assurance that resources were available for a project if the conclusions of

the study proved positive and satisfactory. A preliminary assessment of project

financing possibilities (sources of financing) should already have been made in most

cases before a feasibility study is undertaken. This is especially true if a project

opportunity or pre-feasibility study has previously been performed, as such studies

would indicate the order of magnitude of the required capital outlay. A feasibility study

should only be made if financing prospects to the extent indicated by such studies can

be defined fairly clearly.

Generally, there are three main sources of project financing: Equity, loan financing

and Leasing. Equity funds can be raised by issuing shares. Loan financing is usually

secured from financial institutions and commercial banks. These institutions extend

loans that represent recurrent borrowings. Loans are very important sources for

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financing for new projects, expansion & modernization of projects and replacement

investments. Leasing is another source of financing where the investor leases plant

equipment or even complete production units. In this arrangement, productive assets

could be borrowed on a long-term basis – through a lease contract. The lessor grants

the lessee the right to use an asset in return for periodic lease rental payments. This

usually requires an initial down payment and periodic payments (often annual rents) –

lease fee.

4.3 Project Planning

Project planning is one of the most significant activities of management which is the

blue print or guiding document to the attainment of project goal. Planning is not easy

task and inadequate planning is detrimental element in project management process.

As we noted in Chapter 3, the deliverables (or scope, or specifications, or objectives)

of a project are more than mere descriptions of the goods and/or services we promise

to deliver to the client at a quality level that will meet client expectations. The scope of

a project also includes the time and cost required to complete the project to the

client’s satisfaction. The purpose of planning is to facilitate later accomplishment. The

world is full of plans that never become deeds. The planning techniques covered here

are intended to smooth the path from idea to accomplishment. It is a complicated

process to manage a project, and plans act as a map of this process. The map must

have sufficient detail to determine what must be done next but be simple enough that

workers are not lost in a welter of minutiae.

Project planning is part of project management, which relates to the use of schedules

such as Gantt charts and network diagrams to plan and subsequently report progress

within the project environment. Initially, the project scope is defined and the

appropriate methods for completing the project are determined. (Meredith and Mantel,

2012)

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The project network is the tool used for planning, scheduling, and monitoring project

progress. The network is developed from the information collected for the WBS and is

a graphic flow chart of the project job plan. The network depicts the project activities

that must be completed, the logical sequences, the interdependencies of the activities

to be completed, and in most cases the times for the activities to start and finish along

with the longest path(s) through the network—the critical path. The network is the

framework for the project information system that will be used by the project

managers to make decisions concerning project time, cost, and performance.

Developing the project networks takes time for someone or some group to develop;

therefore, they cost money! Are networks really worth the struggle? The answer is

definitely yes, except in cases where the project is considered trivial or very short in

duration. The network is easily understood by others because the network presents a

graphic display of the flow and sequence of work through the project. Once the

network

is developed, it is very easy to modify or change when unexpected events occur as

the project progresses. For example, if materials for an activity are delayed, the

impact can be quickly assessed and the whole project revised in only a few minutes

with the computer. These revisions can be communicated to all project participants

quickly (for example, via e-mail or project website).

The project network provides other invaluable information and insights. It provides the

basis for scheduling labor and equipment. It enhances communication that melds all

managers and groups together in meeting the time, cost, and performance objectives

of the project. It provides an estimate of project duration rather than picking a project

completion date from a hat or someone’s preferred date. The network gives the times

when activities can start and finish and when they can be delayed. It provides the

basis for budgeting the cash flow of the project. It identifies which activities are

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“critical” and, therefore, should not be delayed if the project is to be completed as

planned. It highlights which activities to consider if the project needs to be

compressed to meet a deadline. There are other reasons project networks are worth

their weight in gold. Basically, project networks minimize surprises by getting the plan

out early and allowing corrective feedback. Before going in to the details of scheduling

resources using project network, as part of planning process, it would be reasonable

first to estimate resource requirements in terms of time and cost.

4.3.1 Estimating Resource Requirements- Time and Cost

Estimating is the process of forecasting or approximating the time and cost of

completing project deliverables. Resource estimation is a vital activity in project

management as this process would give meaning to the work breakdown structure by

assigning time and cost of accomplishing them. Sometimes the job of estimation is

given less attention by some managers due to the urgency to start work quickly.

However, the attitude to minimize or avoid the effort to make resource estimates

would be costly later on when the project runs short of resources due to erroneous

estimates. The following are some of the reasons why we should make the effort and

incur the cost to have the best estimates of resources for our projects. Estimating

Time and Cost are Important:

– To support good decisions.

– To schedule work.

– To determine how long the project should take and its cost.

– To determine whether the project is worth doing.

– To develop cash flow needs.

– To determine how well the project is progressing.

– To develop time-phased budgets and establish the project baseline

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Project stakeholders prefer accurate cost and time estimates, but they also

understand the inherent uncertainty in all projects. Inaccurate estimates lead to false

expectations and consumer dissatisfaction. To minimization dissatisfaction, we must

have a reasonable resource estimate and this is possible if greater effort is exerted.

Cost, time, and budget estimates are the lifeline for control; they serve as the

standard for comparison of actual and plan throughout the life of the project. Project

status reports depend on reliable estimates as the major input for measuring

variances and taking corrective action. Generally, the steps in project estimation and

planning are:

 Define project requirements: Define the project goals/priorities and

requirements

 Decompose the above requirement into a work-breakdown structure (WBS),

that defines each activity required to complete the project. This is subdividing

the work into smaller, more manageable “work packages.” Work packages are

the lowest level of detail

 Estimate the time, cost and resources required

 Schedule the activities in the WBS into a time and cost related plan

4.3.1.1 Approaches to estimates

Estimating processes are frequently classified as top-down and bottom-up. Top-down

estimates are usually done by senior management. Management will often derive

estimates from analogy, group consensus, or mathematical relationships. Bottom-up

estimates are typically performed by the people who are doing the work. Their

estimates are based on estimates of elements found in the work breakdown structure

(Larson and Gray, 2017).

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Top-Down approach of estimation

This is an estimation of time and cost made at a strategic or top level. The top-down

approaches for estimating project times and costs Include consensus, ratio and

apportion methods. These methods are discussed below.

Consensus Methods

This is a method that uses the pooled experiences of top and/or middle managers to

come up with the best guess of estimates about the total project duration and cost.

This process involves experts in the area where several meeting are held to discuss,

argue, and ultimately reach a consensus of project completion time and cost. It is

important to note that the estimates from top-down approach are only rough estimates

that occur during the proposal or conceptual stage of the project when much

information is not available at the initial phase of the project. However, these

estimates are helpful or may be used as input in developing a complete plan later on.

At this macro level, individual work items are not identified and estimate made.

Ratio Methods

This is a top-down methods (sometimes called parametric) that uses ratios to estimate

project times or costs. This is also an approach usually considered at the proposal or

concept stage of the project in order to have a rough estimate of project duration and

cost. For instance, if a contactor estimates the cost of building a house per square

meter is $ 5,000 and if the house is 1,000 square meters and the maximum cost

incurred in a day is $100,000, then the total cost for building the house is estimated to

be $5,000,000 with a duration of (5,000,000/100,000) 50 days.

Apportion Methods

This method is an extension to the ratio method. Apportionment is used when projects

closely follow past projects in features and costs. Given good historical data,

estimates can be made quickly with little effort and reasonable accuracy. This method

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is very common in projects that are relatively standard but have some small variation

or customization. For example, for a house building project we say foundation

consume 15%, the remaining structure 55%, finishing 30% of the total cost and the

also the same logic for time allotment. Depicted below is apportion method of

allocating project costs using the work breakdown structure.

Bottom-Up approach of estimation

This method of estimation is made at micro level of the wok activity and cascades

upward to the upper level of the work break down structure. Included in this method of

estimation are: parametric procedure, range estimates and phase estimating.

Parametric Method

This estimating method applies to specific tasks of a project. This method is just like

the ratio method highlighted above that applies the parametric techniques such as

cost per square meter to estimate both duration and cost.

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Range estimating

This is a method that works best for the WBS work packages (WP) when the WP is

routine with little uncertainty. In such a case, using a person most familiar with the

work package is usually the best approach to have the best guess of the estimates in

terms of time and cost. If the uncertainty is significant with time and cost to complete

the project, then base the estimate on three time estimates- low, average and high.

For this purpose it is important to organize a group of experienced individuals to

determine the low, average, and high cost or duration and refine the extreme

estimates by more evaluative judgments to arrive at the best guess of the duration

time and cost.

Phase estimating

This is another bottom-up approach which is used when an unusual amount of

uncertainty surrounds a project and when it becomes impractical to estimate times

and costs for the entire project. Phase estimating uses a two-estimate system over

the life of the project. A detailed estimate is developed for the immediate phase and a

macro estimate is made for the remaining phases of the project as illustrated by the

following diagram.

Phase Estimating over Product Life Cycle

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The above diagram shows the phases of a project and the progression of estimates

over its life. In phase one, for instance, when the project need is determined, a macro

estimate of the project cost and duration is made so analysis and decisions can be

made. In phase two of estimation exercise, a detailed (micro) estimate is made for

deriving project specifications along with it a macro estimate for the remainder of the

project. This process of estimation continues for the remainder of the phases until the

end of the project phase.

4.4 Developing the project plan using chart and network

Project bar chart and networks are developed from the WBS. These are visual flow

diagram of the sequence, interrelationships, and dependencies of all the activities that

must be accomplished to complete the project. An activity is an element in the project

that consumes human and nonhuman resources. From the WBS, work packages are

used to build the activities found in the project network. An activity can include one or

more work packages. The activities are placed in a sequence that provides for orderly

completion of the project. We then can develop schedules.

The basis for creating a project schedule is derived from three project time

management processes. These are activity definition, activity sequencing and activity

resource and activity duration. Schedule converts action plan into operating time table

and it usually grows out of the project charter that initiate a project which also

specifies the start, end dates and budget information about the project. Schedules

serve as a basis for monitoring and controlling projects.

Developing a schedule encompasses the following basic steps. First, define the

activities that must be performed to complete the project; second, sequence the

activities in the order in which they must be completed; third, estimate the time

required to complete each activity; fourth, develop the schedule based on the

sequencing and time estimates of the activities; fifth, implement the schedule; and

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finally, review and analyze the schedule. Project scheduling has the following

importance.

 It helps define start and fish time to every activity and entire project

 It helps managers focus on delivering projects on time as this is one of their

biggest challenges

 Deadlines are the main reason for conflicts on projects, and schedule help meet

deadlines

 Schedules help in time and resource management

4.4.1 Bar charts and project network

4.4.1.1 The Gantt Chart

A Gantt chart is a graph or bar chart with a bar for each project activity that shows the

passage of time. It is a traditional management technique for scheduling and planning

small projects that have relatively few activities and precedence relationships. This

scheduling technique was developed by Henry Gantt in 1914 (Taylor, 2013). The

Gantt chart has been a popular project scheduling tool since its inception and is still

widely used today. The chart visually displays activity start and finish times together

with extra time available. It is useful in tracking progress towards completion. The bar

chart lists all tasks and milestones from the project along the vertical axis and the time

frame along the horizontal axis. The bars represent activities of the project. Consider

below a simplified illustration of a bar chart for building a house. Assume that the

project contains seven activities which are: designing the house, laying the

foundation, ordering materials, and so forth. This is summarized together with

precedence relationships in the following table.

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Activity( No. or Description Duration ( time Immediate predecessor
Code) in Months)
1 or (A) Design house and obtain 3 None
financing
2(B) Order and receive materials 1 A
3(C) Lay foundation 2 A
4(D) Build house 3 B,C
5(E) Select paint 1 B,C
6 (F) Select carpet 1 E
7(G) Finish work 1 D,F

Example of Gantt Chart for building a house

Month
0 | 2 | 4 | 6 | 8 | 10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials
Build house

Select paint

Select carpet

Finish work

1 3 5 7 9
Month

From the bar chart, the first activity is “design house and obtain financing,” and it

requires 3 months to complete, shown by the bar from left to right across the chart.

After the first activity is finished, the next two activities, “lay foundation” and “order and

receive materials,” can start simultaneously. This set of activities demonstrates how a

precedence relationship works; the design of the house and the financing must

precede the next two activities. The activity “lay foundation” requires 2 months to

complete, so it will be finished, at the earliest, at the end of month 5. “Order and

receive materials” requires 1 month to complete, and it could be finished after month

4. However, observe that it is possible to delay the start of this activity 1 month, until
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month 4. This delay would still enable the activity to be completed by the end of month

5, when the next activity, “build house,” is scheduled to start. This extra time for the

activity “order and receive materials” is called slack. Slack is the amount of time by

which an activity can be delayed without delaying any of the activities that follow it or

the project as a whole. The remainder of the Gantt chart is constructed in a similar

manner, and the project is scheduled to be completed at the end of month 9. Finally,

A project manager can use a Gantt chart to monitor the progress of activities and see

which ones are ahead of schedule and which ones are behind schedule. A Gantt chart

also indicates the precedence relationships between activities.

4.4.1.2 The project network - Critical Path Method (CPM)/ Performance

Evaluation and Review Technique (PERT)

The project network is the tool used for planning, scheduling, and monitoring project

progress. The network is developed from the information collected from the WBS and

is put in a graphic flow chart of the project job plan. The network depicts the project

activities that must be completed, the logical sequences, the interdependencies of the

activities to be completed and in most cases the times for the activities to start and

finish along with the longest path(s) through the network (the critical path) that

represents the project duration. The network is the framework for the project

information system that will be used by the project managers to make decisions

concerning project time, cost, and performance.

The network is easily understood by others because the network presents a graphic

display of the flow and sequence of work through the project. Once the network is

developed, it is very easy to modify or change when unexpected events occur as the

project progresses. The project network provides other invaluable information and

insights. It provides the basis for scheduling labor and equipment. It enhances

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communication that melds all managers and groups together in meeting the time,

cost, and performance objectives of the project.

Networks are built using nodes (circles) and arrows (lines). Integration of the WBS

and project network is crucial to effective project management. The project manager

must be careful in integrating the WBS with the network so that proper sequencing of

activities, scheduling and controlling are ensured. Networks, in general, provide the

project schedule by identifying dependencies, sequencing, and timing of activities,

which the WBS is not designed to do. The primary inputs for developing a project

network plan are work packages. Remember, a work package is defined

independently of other work packages, has definite start and finish points, requires

specific resources, includes technical specifications, and has cost estimates for the

package. However, dependency, sequencing, and timing of each of these factors are

not included in the work package. A network activity can include one or more work

packages. Network show how projects are organized and are used to determine time

duration for completion. They also:

– Provide the basis for scheduling labor and equipment.

– Enhance communication among project participants.

– Provide an estimate of the project’s duration.

– Provide a basis for budgeting cash flow.

– Identify activities that are critical and cannot be delayed.

– Help managers get and stay on plan.

The following rules apply in general when developing a project network:

1. Networks typically flow from left to right.

2. An activity cannot begin until all preceding connected activities are complete.

3. Arrows indicate precedence and flow and can cross over each other.

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4. Each activity must have a unique identity number that is greater than any of its

predecessor activities.

5. Looping is not allowed.

6. Use common start and stop nodes.

There are two widely used network diagrams. These are:

1. Critical Path Method (CPM) which is a deterministic task times and usually

constructed on activity-on-node network (AON) and

2. Project Evaluation and Review Technique (PERT) which is a probabilistic task

time estimates and constructed on activity-on-arrow (AOA) network diagram.

Construction.

The following table compares between CPM and PERT

CPM
1 Uses network, calculate float or slack,
identify critical path and activities,
guides to monitor and controlling project
2 Uses one value of activity time
3 Used where times can be estimated with
confidence, familiar activities
4 Used for example for construction
projects, building one off machines,
ships, etc
PERT
Same as CPM
Requires 3 estimates of activity time
Calculates mean and variance of time
Used where times cannot be estimated
with confidence. Unfamiliar or new
activities
Used for example for projects involving
new activities or products, research
and development etc

Before considering the AON and AOA approaches to constructing a project network,

first we will define some of the basic terms used in building project networks.

Activity: an element of the project that requires time. A, B, C, and d are activities.

Activities can be denoted by numbers or alphabets.

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 A

D
B

Merge Activity: An activity that has two or more preceding activities on which it

depends. D is a merger activity or succeeding activity.

Burst Activity: An activity that has more than one activity immediately following it

(more than one dependency arrow flowing from it). B is a burst activity or preceding

activity.

Parallel Activities: Activities that can take place at the same time. Activities A and B

are concurrent activities.

Event: Completion or beginning of an activity in a project which does not consume

time.

Path: A sequence of connected, dependent activities.

Critical path: The longest path through the activity network that represents project

completion time; it is the shortest expected time in which the entire project can be

completed. Delays on the critical path will delay completion of the entire project.

Slack: The amount of time an activity can be delayed without delaying the project.

Activity-on-Node (AON): This is when the network diagram uses a node to depict an

activity and arrows show precedence relationships.

Activity-on-Arrow (AOA): This is when the network diagram uses an arrow to depict

an activity where the nodes represent events for points in time.

Dummy activity: A fake activity represented by a broken arrow which used in a

network to show a precedence relationship. A dummy activity does not take any

resource or represent any actual passage of time. In a network diagram two or more

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concurrent activities cannot have the same start and end nodes. Consider the

examples below.

Concurrent activities Dummy activity

B
2
D A B D B Dummy
A 2 1 3
1 A
C 1 C 3 D
C Dummy
2

Incorrect precedence relationship Correct precedence relationship

4.4.1.3 Activity-on-Node (AON) and Activity-on-Arrow (AOA) Networks

AON is a network diagram where activities and activity times are represented on the

nodes (circles). The arrows that connect the nodes simply show the precedence

relationships between the activities. Also, there is no as such dummy activity in AON

network diagram because two activities can have the same start and ending nodes

without creating confusion unlike AOA network. On the other hand, AOA is another

approach to network diagram where nodes represent an event (such as the end of

one activity and the start of another) and the arrows between the nodes represent

activities and also indicate the precedence relationships between activities. In

practice, activities have identification numbers or alphabet codes and their

corresponding descriptions. In general, the two approaches accomplish the same

thing, and choosing one of them is usually a matter of individual preference.

Now we will demonstrate how an AON network is drawn and analyzed. For this

purpose we will consider the example of building a house that we used for the Gantt

chart example. The following table shows activities required to a build a house

together with activity time estimates and precedence relationships.

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Activity( No. or Description Duration ( time Immediate predecessor
Code) in Months)
1 or (A) Design house and obtain 3 None
financing
2 or (B) Site Clearing and preparation 1 A
3 (C) Order and receive materials 1 B
4 (D) Lay foundation 2 B
5 (E) Build house 3 C, D
6 (F) Select paint 1 C
7 (G) Select carpet 1 F
8 (H) Finish work 1 E, G

The following diagram represents AON for the house building project.

In the above diagram, activity 1or A is represented by node 1 which is the start for the

project. Activity 1 requires 3 weeks as indicated in the node. This activity precedes

activity 2, and 2 must be finished before activities 3 and 4 can start. Activities 3 and 4

can start once activity 2 is completed and these activities can be performed

concurrently or simultaneously. Activities 3 and 4 are considered parallel activities.

Parallel paths allow concurrent effort, which may shorten time to do a series of

activities. Activity 3 is sometimes referred to as a burst activity because more than

one arrow bursts from the node. The number of arrows indicates how many activities
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immediately follow activity 3. The same holds true for activity 4. Activity 5 is called a

merge activity because more than one activity must be completed before it can start.

The Critical Path

A network path is a sequence of connected activities that runs from the start to the

end of the network. The network shown above has four paths. The project cannot be

completed until the longest path in the network is completed. The duration for the

longest path represents project completion time. This is the minimum time required to

complete the project. The longest path that takes the maximum time in the project

network is called critical path. Now we will identify the paths and compute the length

of each path and indicate the critical path, the longest path in the network that

consume the maximum time and that also represent the minimum project duration.

Paths Activities forming the path Path duration

Path1: 1-2-3-5-8 3+1+2+3+1 = 10 months The longest path

Path2: 1-2-3-6-7-8 3+1+2+1+1+1 = 9 months

Path3: 1-2-4-5-8 3+1+1+3+1 = 9 months

Path1: 1-2-4-6-7-8 3+1+1+1+1+1 = 8 months

Path 1 is the critical path which is the longest path through the network with a

minimum project completion time of 10 months.

To demonstrate how an AOA network is drawn, we will consider the same example of

building a house that we used above for AON network. As discussed above, the

precedence relationships are reflected in this network by the arrangement of the

arrows where the arrows represent activities and the nodes an event (either the start

or finish for an activity). The first activity in the project is A (design the house and

obtain financing). This activity must be completed before any subsequent activities

can begin. Thus, activity B (site clearing and preparation) can start only when activity

A is finished. Node 2 represents the end for activity A and the start for activity B.

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Activities C and D (laying the foundation, and ordering and receiving materials) can

start only when activity B is finished. Node 3 indicates that activity B is completed. The

numbers on the arrows represent activity times. C and D can be done concurrently.

Once done with both of them, we then start with activities E and F. However, in the

AOA network diagram, two or more activities are not allowed to have same start and

end nodes. So, to show the precedence relationship we introduce a dummy activity to

give the two activities separate end nodes as show below in the diagram. This is a

fake activity that consumes no money and time but used simply to show the

precedence relationship. The process of constructing the network continues until the

last node as depicted the diagram below.

AOA Project Network for building a House

Activity Scheduling and Network Computation Process

Drawing the project network places the activities in the right sequence for computing

start and finish times of activities. Activity time estimates are taken from the task times

in the work package and added to the network. We then perform simple computations

to determine earliest times and latest times through both forward and backward pass

processes. The forward pass process allows a project manager to calculate the

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earliest start and finish times for each activity of the project. The process starts at the

start node and moves forward calculating both the earliest start (ES) and earliest

finish times (EF) to the end node. For the end node, the earliest finish time is equal to

the latest finish time. Then, we move backward to the start node calculating both the

latest finish (LF) and latest start times(LS) for each activity of the project. Both

approaches that are used in time determination are discussed below.

Forward Pass Process—Earliest Times

The forward pass approach is used to determine both the earliest start (ES) and

earliest finish times (EF) for each activity of a project. We start with the first

activity/activities (node 1) by setting it/ them to be equal to zero which is a start to the

project. We then add the activity time (t) to get the earliest finish time. The process

continues forward calculating both up to the last node. For an activity with immediate

predecessors, the earliest start time is the maximum of the earliest finish times of the

preceding activities that have been completed. In general, the earliest start and finish

times for an activity are computed using the following formula:

EF = ES + t

ES = Maximum of EF immediate predecessors

Backward Pass Process—Latest Times

The backward pass process is used to calculate both the latest finish times (LF) and

the latest start times (LS). The calculation begins at the last node and moves

backward calculating both to the start node. For the last node, the earliest finish time

(EF) is set equal to the latest finish time (LF). The latest start times (LS) are

determined by subtracting the activity time (t) from the latest finish time (LF). Rule for

the LF for activities with more than one successor is the minimum of LS of immediate

successor activities. Mathematically, LS = LF- t.

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Determining Slack (or Float) Time (S)

The forward and backward passes would help to compute the earliest and latest times

and also the slack time available on each activity. This is a time that the activity can

be delayed without delaying the project completion time. Stated differently, slack is the

amount of time an activity can be delayed beyond its earliest start time without

affecting the project end date. Slack or float for an activity is simply the difference

between the LS and ES (LS − ES = S) or between LF and EF (LF − EF = S). For

critical activities that form the critical path the slack time is zero. That is, a critical

activity will have LF = EF or a slack of zero (LF − EF = 0 or LS − ES = 0).

For the purpose of determining the earliest and latest times, we will consider the

previously presented AON for the house building project. For ease of explanation, we

will use the following activity node configuration that contains the required details.

In the following AON network for the house building project, the ES, EF, LS, LF are

determined by the forward and backward pass processes.

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The earliest start time for the first activity in the network (for which there are no

predecessor activities) is always zero, we add activity time (t=3) to get the earliest

finish time for activity 1. EF = ES + t = 0 + 3 = 3 months. The earliest start time for

activity 2 is the earliest finish time of activity 1 and its EF is 3+1 = 4 months. For

activities 3 and 4, the ES is the LF time of activity 2 which is 4 months. We add the

activity time to get their EF times which are 6 an 5 months, respectively. Now consider

activities 5 and 6 which have two predecessor activities. Their ES times are going to

be the larger of the EF time of their immediate predecessors which is 6 months. All

the remaining earliest start and finish times are computed in the same manner. For

the last activity (8), the EF time is 10 months. This figure would serve as the LF time

when we use the backward pass in determining both the LF and LS times for each

activity of the project ( for the last activity EF = LF). This represents the earliest and

latest finish times for the project as whole. Accordingly, the latest finish time for the

last node or activity is 10 months (LF=10). We now calculate the LS for each activity

by subtracting the activity times (LS = LF- t). The latest start time for activity 8 is 10-1

=9 months. This serves as the latest finish time for the preceding activities 5 and 7

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and their LS times are 9-3 = 6 months and 9-1= 8 months, respectively. For activity 6,

the LF is 8 months and the LS is 8-1 =7; for activity 5 LF is 9 months and the LS is 9-

3= 6 months. Activities 5 and 6 have two predecessors each and the LF for the

preceding activities 3 and 4 is the smaller of the LS of the succeeding activities

(activity 5 and 6) which is 6 month. The process moves backward in a similar manner

to the start node as presented in the above network diagram. Once the earliest and

latest times are determined, we can then calculate the slack time available to each

activity by subtracting the earliest time form the latest time where slack is, S = LF-EF

or LS-ES. For our example, the slack for activities 2 and 4, respectively, are: S = LF-

EF, 3-3 =0 and 5-4 = 1 month. These imply that activity 2 must be accomplished as

per the schedule set because it has no slack time, however, activity 4 can be delayed

by 1 month beyond its earliest start time without extending the project duration. The

following table presents a detailed activity time schedule for our example.

Detailed Activity schedule

Activity LS ES LF EF Slack S = LS-ES or LF-EF
*1 or (A) 0 0 3 3 0
*2 or (B) 3 3 4 4 0
*3 or (C) 4 4 6 6 0
4 (D) 5 4 6 5 1
*5 (E) 6 6 9 9 0
6 (F) 7 6 8 7 1
7 (G) 8 7 9 8 1
*8 or (H) 9 9 10 10 0

Please note that those with an asterisk (*) are the critical activities with a slack time of

zero, i.e., LS= ES or LF= EF. These are the activities that form the critical path 1-2-3-

5--8 or A-B-C-E and H.

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Probabilistic Time Estimates

Program Evaluation and Review Technique (PERT) is a network analysis technique

used to estimate project duration when there is a high degree of uncertainty about the

individual activity duration estimates. PERT applies the critical path method to a

weighted average duration estimate. If the duration of activities in a project is

uncertain then activity scheduling calculations are done by using the expected value

of the durations. In such a situation, PERT uses probabilistic time estimates instead of

one specific or discrete duration estimate. Thus, rather than estimating directly the

expected completion time of an activity, three estimates are considered in order to

come up with the expected activity time (t e). The three time estimates are:

1. Optimistic time (to or a):

This is the shortest possible time to perform an activity, assuming that everything goes

well.

2. Pessimistic time (tp or b):

This is the maximum (longest) time that is required to perform an activity, under

extremely bad conditions. However, such conditions do not include Acts of God like

earthquakes, flood, etc.

3. Most likely time (tm or m):

This is the most realistic time to complete the activity. Statistically, it is the modal

value of duration of the activity that considers the time estimate under the normal

situation

In general, the person most familiar with an activity makes these estimates to the best

of his or her knowledge and ability. In other words, the estimates are subjective. To

use the PERT method, we have to calculate the expected activity time. The most

likely time (tm) estimate may not coincide with the midpoint (to+tp)/2 and may occur to

its left or its right as shown in fig below. Because of these properties, it is justified to

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assume that the duration of each activity may follow Beta (β) distribution with uni-

model point occurring at tm and its end points at to and tp.

P (t)

0 to m1 m2 tp t(time)

Beta (β) distribution with three time estimates

In Beta distribution, the mid-point (to+tp)/2 is assumed to weight half as much as the

most likely point (tm). Thus the expected or mean (te) value of the activity duration can

be approximated as the arithmetic mean of (to+tp)/2 and 2tm.

i.e Expected activity time, te= (to+tp)/2+2tm = (to+4tm+tp)

3 6

The standard deviation of activity time (δ)3can be calculated by:

δ =tp-to te= to+4tm +tp
6
6
2
Variance of activity time, δ

δ 2= tp- to 2

Consider the following network diagram for project X with the probabilistic time

estimates and expected activity times and variances that are determined by applying

the above formula.

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 Project with Probabilistic Time Estimates for project X

The individual activity times and variances are calculated by substituting the three

time estimates in the beta distribution formulas as follows. For example, the expected

(mean) time for activity A is determined as follows.

te= to+4tm +tp = te= 6+4*8 +10 =54/6 = 8

6 6

Variance =δ 2 = [(tp-to)/6]2 = [(10-6)/6]2= 0.44

The values for the other activities are determined in the same manner. The mean and

variances are summarized in the table below.

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 Activity Time Estimates

Once we calculate the expected activity times and variances for each activity, we can

then apply the forward and backward pass processes to determine the earliest and

latest activity times and then the critical path. This is determined through the following

AON diagram and the information is summarized in the subsequent table.

AON network diagram for project X

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 Detailed Activity Schedule (Early & Late Times and Slack)

From the above table we can identify the critical path as the one containing those

activities with zero slack. Thus, the critical path is B-E-H- K with project duration

(mean) of 25 weeks and standard of 6.9 weeks. Note that the standard deviation of

project length is obtained by adding the variances of only the critical activities and

then taking the square root of the sum of the variances. Knowledge of the project

duration and standard deviation (statistical parameters) enable us to make

probabilistic statements about the project.

Probabilistic network Analysis

Using the normal distribution, probabilities can be determined by computing the

number of standard deviations a value is from the mean. This determines the

probability that project is completed within specified time. The Z value is computed

using the following formula and shown graphically below:

Z= x-


Standard deviation of the project duration=

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Where:

= project mean time

= project standard deviation

x= proposed project time

Z= number of standard deviations that x is from the mean

Probability

Z

 x Time

The following examples illustrate how probabilities of completion times are

determined.

Example 1: What is probability that project is completed within 30 weeks?

x-
Z =
2

 = 6.89 weeks
P(x  30 weeks)
 = 6.89 30 - 25
= 2.62
 = 2.62 weeks
= 1.91

 = 25 x = 30 Time (weeks)

From the normal distribution table a Z score of 1.91 corresponds to a probability of

0.4719. Thus P( 30) = 0.4719 + 0.5000 = 0.9719

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Example 2: What is probability that project is completed within 22 weeks?

x-
Z =
2

0.3729  = 6.89 weeks
P(x  22 weeks)
=0.1271  = 6.89 22- 25
= 2.62
 = 2.62 weeks
= -1.14

x = 22  = 25 Time (weeks)

From the normal distribution table a Z score of 1.14 corresponds to a probability of

0.3729. Thus P(22) = 0.5000 - 0.3729 = 0.1271.

4.5 Project Crashing and Time–Cost trade-off

So far the discussion focused on the use of CPM and PERT network analysis for

determining project time schedules which are valuable tools for a manager to plan a

project. However, in addition to scheduling projects, a project manager is frequently

confronted with the problem of having to reduce the scheduled completion time to a

certain extent to meet a deadline. In other words, the manager must finish the project

sooner than indicated by the CPM or PERT network analysis. Project duration can be

reduced by assigning more labor to project activities, often in the form of overtime,

and by assigning more resources (material, equipment, etc). However, additional

labor and resources cost money and hence increase the overall project cost. Thus,

the decision to reduce the project duration must be based on an analysis of the trade-

off between time and cost. Project crashing is a method for shortening project duration

by reducing the time of one or more of the critical project activities to a time that is

less than the normal activity time. This reduction in the normal activity times is

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referred to as crashing. Crashing is achieved by devoting more resources, measured

in terms of money, to the activities to be crashed.

The objective of project crashing is to reduce the project duration while minimizing the

cost of crashing. Because the project completion time can be shortened only by

crashing activities on the critical path, it may turn out that not all activities have to be

crashed. However, as activities are crashed, the critical path may change, requiring

crashing of previously noncritical activities to further reduce the project completion

time. We start the crashing process by looking at the critical path and seeing which

activity has the minimum crash cost per week. To do the crashing it is important to

have an information on the normal activity times (time shown on the network

activities), the cost required to complete the activity in the under the normal time

(normal activity cost), the crash time (the extent to which an activity time can be

reduced) and the crash cost (the cost for the crash period). For each activity we

calculate the maximum allowable crash time and the crash cost per period. The

maximum allowable crash (reduction) period is found by subtracting the crash time

from the normal time. The crash cost per period is calculated first by finding the

difference between the crash cost and normal cost for each activity and then dividing

it by the maximum allowable crash time for an activity.

To demonstrate how project crashing works, we will employ following network for

constructing a house having 7 major activities. Although this example network

encompasses only single-activity time estimates, the project crashing procedure can

be applied in the same manner to PERT networks with probabilistic activity time

estimates.

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 2 4
8 12
7
1
4
12 6
3 5 4
4 4

Paths Activities Duration

Path 1: 1-2-4-7 12 +8+ 12 + 4 = 36 weeks Critical path

Path 2: 1-2-5-6-7 12 +8+ 4+ 4 + 4 = 32 weeks

Path 3: 1-3-4-7 12 +4+12 +4 = 32 weeks

Path 4: 1-3-5-6-7 12 +4+4 +4 + 4 = 28 weeks

From the network diagram potential candidates for crashing are the critical activities

and crashing starts with a critical activity having the lowest crash cost per period.

Consider the following table that contains particulars on time and costs.

If we assume that the relationship between crash cost and crash time is linear, then

activity 1 can be crashed by any amount of time (not exceeding the maximum

allowable crash time) at a rate of $400 per week. For example, if the project manager

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decided to crash activity 1 by only 2 weeks (for an activity time of 10 weeks), the

crash cost would be $800 ($400 per weeks). The linear relationships between crash

cost and crash time and between normal cost and normal time are illustrated in the

figure below.

Now we will see how crashing is performed on the critical activities. Crashing starts

with a critical activity having the lowest crashing cost per week. In our case, it is going

to start with activity 1 with a crash cost of $400 per week with a maximum crash time

of 5 weeks which will reduce the activity time from 12 weeks to 7 weeks with a total

crash cost of $ 2,000 ($400*5). This will reduce the project duration to 31 weeks with

a total project cost of $77,000 (75,000+2000). This is now a new program and with

every crashing that we perform, we must revise the network and check if the current

path is still a critical path or another path becomes a critical path. Please note that

when two paths simultaneously become critical, activities on both must be reduced by

the same amount. In the current example, the crashing will not change the critical path

because activity 1 is included in all four paths in the network. The revised network with

revised project duration of 31 weeks is shown below.

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Revised Network with Activity 1 Crashed

2 4
8 12
7
1
4
7 6
3 5 4
4 4

Paths Activities Duration

Path 1: 1-2-4-7 7+8+ 12 + 4 = 31 weeks Critical path

Path 2: 1-2-5-6-7 7+8+ 4+ 4 + 4 = 27 weeks

Path 3: 1-3-4-7 7+4+12 +4 = 27 weeks

Path 4: 1-3-5-6-7 7+4+4 +4 + 4 = 23 weeks

This process must now be repeated. The critical path with the above crashing remains

the same, and the new minimum activity crash cost on the critical path is $500 for

activity 2. Activity 2 can be crashed for a total of 3 weeks, which reduces the project

duration to 28 weeks with extra crash cost of $1,500 and total project cost of $78, 500

(77,000+1,500).

Revised Network with Activity 2 Crashed

2 4
5 12
7
1
4
7 6
3 5 4
4 4

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Paths Activities Duration

Path 1: 1-2-4-7 7+5+ 12 + 4 = 28 weeks Critical path

Path 2: 1-2-5-6-7 7+5+ 4+ 4 + 4 = 24 weeks

Path 3: 1-3-4-7 7+4+12 +4 = 27 weeks

Path 4: 1-3-5-6-7 7+4+4 +4 + 4 = 23 weeks

Crashing activity 2 by 3 weeks does not result in any other path’s becoming critical, so

still crashing is to be performed on this path. The next candidate is activity 4 which

can be crashed by a maximum of 3 weeks compared to activity 7 which can be

crashed by 1 week both having equal crash cost per week of $7,000. This crash

process will reduce the project length to 25 weeks with crash cost of $21,000 and total

project cost of $99,500 (78,500+21,000). Check the critical path with the crashing

done.

Revised Network with Activity 4 Crashed

2 4
5 9
7
1
4
7 6
3 5 4
4 4

Paths Activities Duration

Path 1: 1-2-4-7 7+5+ 9 + 4 = 25 weeks Critical path

Path 2: 1-2-5-6-7 7+5+ 4+ 4 + 4 = 24 weeks

Path 3: 1-3-4-7 7+4+9 +4 = 24 weeks

Path 4: 1-3-5-6-7 7+4+4 +4 + 4 = 23 weeks

Still path 1 is the critical path with duration of 25 weeks. The only candidate in this

path is activity 7 with a crash period of 1 week and crash cost of $7,000.

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Revised Network with Activity 7 Crashed

2 4
5 9
7
1
3
7 6
3 5 4
4 4

Paths Activities Duration

Path 1: 1-2-4-7 7+5+ 9 + 3 = 24 weeks Critical path

Path 2: 1-2-5-6-7 7+5+ 4+ 4 + 3 = 23 weeks

Path 3: 1-3-4-7 7+4+9 +3 = 23 weeks

Path 4: 1-3-5-6-7 7+4+4 +4 + 3 = 22 weeks

The critical path with this crashing is still path 1 with duration of 24 weeks and project

cost of $106, 500 (99,500+7,000). The project can no more be crashed since all the

activities in the critical path have been crashed. The maximum that the project can be

crashed is by a total of 12 weeks. The duration can be brought from 36 to 24 weeks

with a total crash cost of $31,500. The above crash process offers five different

project programs to the project manager so that he or she can choose and implement

any one of them depending up on his/her financial capabilities. The different programs

are summarized in the following table.

Projects schedules/programs
Program Project duration Project cost
Normal program 36 weeks $75,000
Crash program 1 31 weeks $77,000
Crash program 2 28 weeks $78,500
Crash program 3 25 weeks $99,000
Crash program 4 24 weeks $106,500

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Review Exercises

1. What is a feasibility study? Why is a feasibility study undertaken?

2. Recall the schematic diagram of the feasibility study, identify and establish the

logical relationship among the components and briefly describe each of them.

3. What are the purposes of conducting the market and demand analysis, the

technical analysis, financial analysis and social-cost benefit analysis?

4. Why is market and demand analysis considered to be the critical step in the

process of project feasibility study?

5. What are the six basic steps involved in market and demand analysis.

6. Differentiate between quantitative and qualitative demand and supply forecasting

techniques.

7. What are the main components of a technical feasibility study?

8. What issues are covered in the technical analysis stage of the project feasibility

study?

9. Differentiate between selecting location and site for a project and factors

considered in the selection process.

10. What are the main sources of financing a project? Briefly describe them.

11. Do you see any difference between project financial analysis and economic

analysis? If yes, state the difference.

12. What does project planning horizon refer to? How is it determined?

13. What is meant by planning a project? What does this encompass? Who should be

involved in planning the work?

14. What is meant by the term project objectives? What might happen if project

objectives are not clearly stated?

15. What is resource estimating in project management?

16. Why is estimating time and cost critical to effective project management?

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17. What are the differences between bottom-up and top-down estimating

approaches?

18. How does the WBS differ from the project network?

19. How are WBS and project networks linked?

20. Why bother creating a WBS? Why not go straight to a project network and forget

the WBS?

21. What is slack and why it is important to the project manager?

22. What is a project crashing and common reasons for crashing a project?

23. What are the advantages and disadvantages of crashing a project scope to

accelerate a project?

24. How is crashing performed? Explain.

25. What does a cost–duration graph show? Explain.

26. Which activities are potential candidates for crashing?

27. Do you think that the critical path can change after crashing? Explain.

Drawing AON and AOA Networks

28. Draw a project network from the following information. What activity(ies) is a burst

activity? What activity(ies) is a merge activity?

ID Description Predecessor
A Survey site None
B Excavate site A
C Install power lines B
D Install drainage B
E Pour foundation C,D

29. Draw a project network from the following information. What activity(ies) is a burst

activity? What activity(ies) is a merge activity?

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 ID Description Predecessor
A Identify topic None
B Finalize research topic A
C Draft paper B
D Edit paper C
E Create graphics C
F References C
G G Proof paper D,E,F
H Submit paper G

30. From the following information, develop an AON project network. Complete the

forward and backward pass, compute activity slack, and identify the critical path.

How many days will the project take?

ID Description Predecessor Time

A Survey site None 2
B Excavate site A 4
C Install power lines B 3
D Install drainage B 5
E Pour foundation C,D 3
31. Bole sub-city requesting Addis Ababa city administration funding for a park-and-

ride project. One of the requirements in the request application is a network plan

for the design phase of the project. The chief engineer wants you to develop a

project network plan to meet this requirement. The engineer has gathered the

activity time estimates and their dependencies as shown below. Show your

project network with the activity early, late, and slack times. Identify the critical

path.

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 ID Description Predecessor Time
A Survey None 5
B Soil report A 20
C Traffic design A 30
D Lot layout A 5
E Approve design B,C,D 80
F Illumination E 15
G Drainage E 30
H Landscape E 25
I Signage E 15
J Bid proposal F,G,H,I 10

32. A project is represented by a network shown below and has the following data

Task: A B C D E F G H I
Optimistic time: 5 18 26 16 15 6 7 7 3
Pessimistic time: 10 22 40 20 25 12 12 9 5
Most Likely time: 8 20 33 18 20 9 10 8 4
Determine the following

a. Draw the network diagram

b. Expected task time and their variance

c. The earliest and latest expected times to reach each event

d. The critical path and the earliest total project time

33. Use the information below to draw a network. Reduce the schedule until you

reach the crash point of the network. For each move identify what activity(ies) was

crashed and the adjusted total cost.

ID Predecessor Normal Crash Normal Crash

time Time cost cost
A None 2 1 150 100
B A 3 1 100 80
C B 2 1 200 60
D B 5 1 200 40
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E A 5 2 200 40
F C 3 2 150 40
G D 5 1 200 20
H E,F,G 1 - 200 -

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 Chapter Five Project Execution, Monitoring and Controlling

5.1 Introduction

Chapter four addresses planning, techniques and tools for planning a project in order

to accomplish the project objective successfully. The project objective establishes

what is to be accomplished. Planning determines exactly what needs to be done, how

it will get done, who will do it, how long it will take, how much it will cost, and what the

risks are. Taking the time to develop a well-thought-out plan is critical to the

successful accomplishment of the project objective. Developing a detailed plan

includes, among others, defining the project scope and deliverables, defining the

specific activities needed to perform the project and assigning responsibility,

determining the sequence in which those activities must be accomplished, estimating

the resources that will be required and duration for each activity, identifying and

assessing risks and developing a risk response plan.

Once a baseline plan has been established, it must be executed. In the

implementation phase, work tasks are carried out to produce all the project

deliverables and to accomplish the project objective. It involves performing the work

according to the plan and controlling the work so that the project scope is

accomplished on schedule and within budget. While the project work is being

performed, it is necessary to monitor progress to ensure that everything is going

according to the plan. This involves measuring actual progress and comparing it to

planned progress. If, at any time, the project is not proceeding according to plan,

corrective action must be taken. The key to effective project control is measuring

actual progress and comparing it to the planned progress on a timely and regular

basis and taking any needed corrective action immediately. This chapter deals with

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execution of project that transforms the pre-investment phase to the investment phase

from project input to project output.

LEARNING OBJECTIVES

Upon successful completion of this chapter, the student will be able to:

 Understand the importance of project implementation

 Understand the role of project Implementation plan

 To appreciate the relationship between project planning and performance

evaluation (control)

 Discuss project implementation approaches and phases

 Recognize factors affecting project implementation

5.2 Project Implementation

Project implementation is the third phase of the project management life cycle that

follows the planning phase. After the project is carefully planned, we start the project

implementation phase. The implementation phase involves putting the project plan

into action. It is the process whereby project inputs (project plan) are converted to

project outputs (action). The whole point of a project is to produce deliverables of

some sort and the execution phase is where this happens. Essentially, work is done

according to the project plan and that work is monitored and evaluated to determine if

progress is made according to the plan. PMBOK (2013) understands project

execution as a process group that consists of those processes performed to complete

the work defined in the project management plan to satisfy the project specifications.

This process group involves coordinating people and resources, managing

stakeholder expectations, as well as integrating and performing the activities of the

project in accordance with the project management plan. It’s here that the project

manager will coordinate and direct project resources to meet the objectives of the

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project plan. As the project unfolds, it’s the project manager’s job to direct and

manage each activity, every step of the way.

Executing process is the longest phase of the project management lifecycle, where

most resources are applied. Both project execution and control utilize all the plans,

schedules, procedures and templates that were prepared and anticipated during prior

phases. The conclusion of the implementation phase is when the project produces the

deliverables. The word “deliverable” means anything the project delivers. The

deliverables for a project may include all of the products or services that the project

produces including all the project management documents that you put together. It is

important to note that accurate records need to be kept throughout this phase so that

they serve as input to the final phase, Project Closeout.

As stated above, the project manager’s main job is to direct the work to keep track of

how well the team performs. The implementation phase keeps the project plan on

track with careful monitoring and control processes to ensure the final deliverable

meets the acceptance criteria set by the stakeholder. Most often, changes are

identified by looking at performance and quality control data. Routine performance

and quality control measurements should be evaluated on a regular basis throughout

the implementation phase. Gathering reports on those measurements will help you

determine where the problem is and recommend changes to fix it. This implies that

the planning, executing, and the monitoring and controlling processes are in a cyclical

process and all are interdependent. More specifically, executing consists of the

processes used to complete the work defined in the project plan to accomplish the

project's requirements. Execution process involves coordinating people and

resources, as well as integrating and performing the activities of the project in

accordance with the project plan; and monitoring and controlling will continually

evaluate if performance is according to plan. Monitoring and controlling consists of

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monitoring project execution so that potential problems can be identified in a timely

manner and corrective action taken as necessary. Monitoring and controlling includes

measuring the ongoing project activities and the project variables (cost, effort, scope,

etc.) against the project plan and the project performance baseline. It then identifies

what needs to be done in order to get the project back on track.

The implementation phase uses the most project time and resources, and as a result,

costs are usually the high during this phase. Project managers also experience the

greatest conflicts over schedules in this phase. You may find as you are monitoring

your project that the actual time taking to do the scheduled work is longer than the

amount of time planned. When you absolutely have to meet the date and you are

running behind, you can sometimes find ways to do activities more quickly by adding

more resources to critical path tasks (crashing). Crashing the schedule means adding

resources to bring the project back into line with the schedule while at the same time

increasing cost. A project manager is confronted with such kind of issued in the

implementation process.

5.3. Project Implementation Phase and Project Implementation Plan (PIP)

Project implementation in general has two phases: Project activation, and project

operation. Project activation phase is a set of activities concerned with making

arrangements to have the project started. This involves coordination and allocation of

resources to make project plan operational. It is at this stage that project

implementation plan is drawn. The second phase is project operation which is

practical management of a project. Here, project inputs are transformed into outputs

to achieve immediate objectives. This stage involves actual implementation of the

outcomes of the planning or preparation stage. It is at this stage that investment in the

project is made.

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There are three approaches to project implementation. These are top-down approach,

bottom up approach, and collaborative participatory approach. In the top-down

approach, implementation is mainly done by agencies from outside the community

with limited involvement by the beneficiaries. Whereas in the bottom-up approach, the

beneficiaries take the responsibility to implement the project, in this approach, the role

of outside agencies may be to provide the financial resources and technical

assistance to facilitate the implementation process. The third approach is a mix of the

two called collaborative participatory approach. In this approach both top-down and

bottom-up approaches to project implementation are applied in the process.

Project implementation plan (PIP)

Project planning is an integral part of project management. Through effective

planning, project team and key stakeholders (such as partners and project

participants) – agree on what will be done, who will do it, when and how. A good plan

helps optimize the use of project resources and limits the time spent on resolving

problems during implementation. This is what is going to be done in PIP. If PIP is not

carried out during the project design process and embodied in the project documents,

it is carried out at the project activation stage. PIP is largely concerned with:

 What activities can produce expected project outputs?

 What is the sequence of these activities?

 What is the time frame for these activities?

 Who will be responsible for carrying out each activity?

The following methods, which are discussed in the previous chapters, may be used to

answer the above questions.

 Gantt chart

 Critical Path Method (CPM)

 Project Evaluation and Review Techniques (PERT)

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  Simple formats

Further to the above, it is important to clearly specify at least the following issues in

the project implementation plan.

1. The role of the implementing agency, if it exists, has to be included in the PIP. That

is, the specific responsibilities of the key staff during project implementation and

monitoring must be outlined for planning, monitoring and accountability purposes.

2. Beneficiary participation is key for the success of project implementation and due

consideration should be given to the involvement of the beneficiaries in planning

and implementation and what is expected of them. This has to be clearly spelt out.

3. Another issue that has to be addressed in the PIP is about the organizational

structure and staffing. Here the following are the things that have to be captured.

 Project structure for purposes of management

 Qualifications and skills for the staff

 Job descriptions and specifications for the staff

 Technical assistance if needed

4. Plan has to be sought about financial management which looks at funds

management, accounting period, financial reports and statements and how often

they will be made?

5. The reporting system has to be decided and established so that it can easily be

traced will be reporting to whom and how often. There is need to design standard

reporting formats to achieve clear understanding and consistency purposes.

6. Supervision of implementation of project schedule which looks at supervision or

monitoring to ensure timely implementation of project components is another issue

that has to be incorporated in the PIP. This involves a set of checks and balances

to ensure that the time schedule is being adhered to. To ensure that the time

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 schedule is being adhered to, the project activity time listing can be of great

importance.

A project success heavily depends on both external and internal factors. These are of

great important especially at implementation stage and should be accounted for in

developing the implementation plan. Some of the factors that affect project

implementation and lead to success of projects include:

 Political Commitment

 Simplicity of Design

 Careful preparation

 Good management

 Involvement of beneficiaries/community

There are also some factors and problems that lead to failure of projects if they are

not properly handled during the planning and implementation stages. This may

include:

 Financial Problems

 Management problems

 Technical problems

 Political problems

Project executing processes and outputs

Over the course of any project, the scope may change either as the result of

necessary design modifications, differing site conditions, material availability,

contractor-requested changes, value engineering and impacts from third parties, to

name a few. Recall that, in general, the majority of a project’s time and budget is

spent on project execution. Many of the deliverables and outputs created in the other

process groups are fairly similar from project to project, but no two projects are ever

executed in exactly the same manner. This is because projects involve uncertainty

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and that they are unique by their very nature. No one can ever predict with certainty

the challenges that project teams will face in trying to meet project goals. However,

the uncertainties can be minimized and project success can be ensured if project

management exercises the knowledge areas during implementation stage. Some of

the actions performed, in terms of knowledge areas, during this process may include:

 Project integration management,

 Project quality management,

 Project human resource management,

 Project communication management,

 Project stakeholder management,

 Project procurement management.

The first three are briefly discussed below and all as a package are discussed in the

monitoring and controlling process which follows this section.

Project Integration Management

During project execution, the project manager must direct and manage stakeholders

to complete the project. Project managers can follow several important practices to

help accomplish this challenging job:

Coordinate planning and execution: As mentioned earlier, the main purpose of project

planning is to guide execution. If the project manager and team did a good job

planning, the plans will be easier to execute. As things change, team members need

to update the plans to keep everyone working on the same page.

Develop and use soft skills: Several studies of project managers suggest that soft

skills (for example, strong leadership, effective team building, strong communication,

motivation, negotiation, conflict management, and problem solving) are crucial to the

success of project managers, especially during project execution. Project managers

must lead by example in demonstrating the importance of creating good project plans

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and then following them in project execution. Project managers often create plans for

things they need to do themselves, such as meeting with key stakeholders, reviewing

important information, and so on. If project managers follow through on their own

plans, their team members are more likely to do the same.

Provide a supportive organizational culture: Good project execution requires a

supportive organizational culture. For example, organizational procedures can help or

hinder project execution. If an organization has useful guidelines and templates for

project management that everyone in the organization follows, it will be easier for

project managers and their teams to plan and do their work. If the organization uses

the project plans as the basis for performing and monitoring progress during

execution, the culture will promote the relationship between good planning and

execution. Even if the organizational culture is not supportive, project managers can

create a supportive culture within their own project and work on improving the culture

in other parts of the organization.

Break the rules when needed: Even with a supportive organizational culture, project

managers might sometimes find it necessary to break the rules to produce project

results in a timely manner. When project managers break the rules, politics will play a

role in the results. For example, if a particular project requires use of nonstandard

software, the project manager must use his or her political skills to convince

concerned stakeholders of the need to break the rules.

Generally, the main outputs produced during execution as part of project integration

management are deliverables, work performance data, change requests, project

management plan and document updates.

Project Quality Management

To ensure quality on a project, it is imperative to develop a plan for it. The main quality

management process required during execution is performing quality assurance.

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Quality assurance includes all the activities related to satisfying the relevant quality

standards for a project. Many organizations understand the importance of quality

assurance and dedicate a department to this discipline. These organizations have

detailed processes to make sure that their products and services conform to various

quality requirements. To be successful in today’s global business environment,

successful companies develop their own best practices and evaluate other

organizations’ best practices to continuously improve the way they do business.

Top management and project managers can impact the quality of projects most

significantly by implementing quality assurance. Key outputs of quality assurance

include change requests, project management plan updates, and project documents

updates and organizational process assets. Organizational process assets include

plans, policies, procedures, guidelines, information systems, financial systems,

management systems, lessons learned, and historical information that can be used to

influence a project’s success.

Quality Assurance Techniques

It is important for organizations to use common techniques to identify areas in which

they would benefit from taking actions to improve quality. Several quality improvement

techniques include benchmarking, quality audits, and process analysis.

Benchmarking generates ideas for quality improvements by comparing specific

project practices or product characteristics to those of other projects or products within

or outside of the organization itself.

A quality audit is a structured review of specific quality management activities that

helps identify lessons learned, which could improve performance on current or future

projects. In-house auditors or third parties with expertise in specific areas can perform

quality audits, which can be either scheduled or random.

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Root cause analysis is often part of process analysis. Cause-and-effect diagrams—

also called fishbone diagrams (because their structure resembles a fishbone) or

Ishikawa diagrams (named after their creator) - can assist in ensuring and improving

quality by finding the root causes of quality problems.

Project Human Resource Management

Effective project human resource management is crucial to project execution. The

main processes project managers perform include acquiring, developing, and

managing the project team. Key outputs include project staff assignments, resource

calendars, team performance assessment, change requests, and updates to the

project management plan and organizational process assets. Resource calendars are

simply calendars for each resource showing work assignment dates.

5.4 Monitoring and Controlling Process Group

The monitoring and controlling process group consists of those processes required to

track, review, and orchestrate the progress and performance of the project; identify

any areas in which changes to the plan are required; and initiate the corresponding

changes. The key benefit of this process is that project performance is measured and

analyzed at regular intervals, appropriate events, or exception conditions to identify

variances from the project management plan. The monitoring and controlling process

also involves (PMBON, 2013):

 Controlling changes and recommending corrective or preventive action in

anticipation of possible problems,

 Monitoring the ongoing project activities against the project management plan

and the project performance measurement baseline, and

 Influencing the factors that could circumvent integrated change control or

configuration management so only approved changes are implemented.

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This continuous monitoring provides the project team insight into the health of the

project and identifies any areas requiring additional attention. The monitoring and

controlling process group not only monitors and controls the work being done within a

process group, but also monitors and controls the entire project effort. Having

equipped with the project management knowledge areas would greatly facilitate the

monitoring and controlling activities. Below are discussed some the knowledge areas

in relation to the monitoring and controlling process.

Project Integration Management

The main monitoring and controlling tasks performed as part of project integration

management include monitoring and controlling project work and performing

integrated change control. These are crucial tasks that must be done well to ensure

project success.

Project changes are inevitable, so it is important to develop and follow a process to

monitor and control them. Monitoring and controlling project work includes collecting,

measuring, and disseminating performance information. It also involves assessing

measurements and analyzing trends to determine what process improvements can be

made. The project team should continuously monitor project performance to assess

the overall health of the project and identify areas that require special attention.

The project management plan, performance reports, and organizational process

assets are all important inputs for monitoring and controlling project work. In addition

to expert judgment, earned value management can be used for monitoring and

controlling project.

Earned value management (EVM) is a project performance measurement technique

that integrates scope, time, and cost data. Given a baseline, project managers and

their teams can determine how well the project is meeting scope, time, and cost goals

by entering actual information and then comparing it to the baseline. A baseline is a

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starting point, a measurement, or an observation that is documented so that it can be

used for future comparison. In earned value management, a baseline includes the

following: Scope (WBS tasks), time (start and finish estimates for each task), cost

information (cost estimates for each task). Actual information includes whether or not

a WBS deliverable was completed or approximately how much of the work was

completed; when the work actually started and ended; and how much was the cost

incurred to do the completed work. If projects do not have a good baseline or actual

information, they cannot use earned value management. Earned value management

involves calculating three values for each activity based on the project’s WBS.

1. The planned value (PV) is that portion of the approved total cost estimate planned

to be spent on an activity during a given period.

2. The actual cost (AC) is the total direct and indirect costs incurred in accomplishing

work on an activity during a given period.

3. The earned value (EV) is an estimate of the value of the physical work actually

completed. It is based on the original planned costs for the activity and the rate at

which the team is completing work on the activity to date. The rate of performance

(RP) is the percentage of actual work completed divided by the percentage of work

planned to have been completed at any given time. For example, suppose an

activity is only half completed by the end of the week, when it should have been

totally completed. The rate of performance for that activity that week would be 50%.

In this example, the activity to develop a detailed course outline was totally

completed at the end of the week, so the RP was 100%.

The following is the general formula used in earned value management. Note that the

formulas for variances and indexes start with EV, the earned value. Variances are

calculated by subtracting the actual cost or planned value from EV, and indexes are

calculated by dividing EV by the actual cost or planned value. The indexes can be

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used to forecast what the project will cost when completed (the Estimate at

Completion or EAC) and when the project will finish, the Estimated Time to Complete.

The Formula

Earned Value: EV = PV to date × RP

Rate of Performance = RP = Percentage of actual work completed/percentage of work

planned to have been completed

Cost Variance: CV = EV – AC

Schedule Variance: SV = EV – PV

Cost Performance Index: CPI = EV/AC

Schedule Performance Index: SPI = EV/PV

Estimate at Completion: EAC = Budget at Completion (BAC)/CPI

Estimated Time to Complete: Original time estimate/SPI

Note that when negative results for cost and schedule variance occur, that indicates

problems in those areas. Negative results mean the project is costing more than

planned (over budget) or taking longer than planned (behind schedule). Likewise, CPI

and SPI less than one or less than 100% indicate problems. In general earned value

management can be applied at either a detailed or a summary level. In other words,

we can use a detailed WBS and its associated time and cost data (using level four,

five, or whatever is the most detailed), or you can apply earned value at a higher WBS

level, such as level two or three.

Generally, earned value calculations for all project activities (or summary level

activities) are required to estimate the earned value for the entire project. Some

activities may be over budget or behind schedule, whereas others may be under

budget and ahead of schedule. By adding all of the earned values for all project

activities, we can determine how the project as a whole is performing and forecast

both when it will be completed and how much it will cost at completion. The budget at

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completion (BAC), or the approved total budget for the project, can be divided by the

cost performance index to calculate the estimate at completion (EAC), which is a

forecast of how much the project will cost upon completion. Likewise, the approved

time estimate for the project can be divided by the schedule performance index to

calculate when the project will be completed. Earned value, therefore, provides an

excellent way to monitor project performance and provide forecasts based on

performance to date.

Project Scope Management

The main monitoring and controlling tasks performed as part of project scope

management are validating scope and controlling scope. Key outputs are

deliverables that are accepted by the customer and work performance information. It

is difficult to create a good project scope statement and WBS. It is often even more

difficult to validate the project scope and minimize scope changes. For all types of

projects, it is important to develop and follow a process for scope validation that meets

unique project needs. Careful procedures must be developed to ensure that

customers are getting what they want and that the project team has enough time and

money to produce the desired products and services. Even when the project scope is

fairly well defined, many projects suffer from scope creep. This is just like some

people who initially plan to have a simple wedding or build a basic new house, but

finally end up with many more extras than they initially planned. There are also time

when a new homeowner may have settled for an unfinished basement in order to

move in on time. In a similar analogy, there are some projects that suffer from scope

creep and fail to deliver the minimum scope due to time or cost issues. The above

mentioned scenarios are similar to those faced by a project manager who must

constantly cope with the triple constraint of balancing scope, time, and cost.

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In project scope management, scope validation has to be made so that conflicts and

false expectation are avoided. Scope validation involves formal acceptance of the

completed project deliverables by the project customer or designated stakeholders.

This acceptance is often achieved through customer inspection and then sign-off on

key deliverables. To receive formal acceptance of the project scope, the project team

must develop clear documentation of the project’s products and procedures, which the

appropriate stakeholders can then evaluate for completion and their satisfaction with

the results.

Another monitoring and controlling tasks performed as part of project scope

management is controlling scope. We cannot control the scope of a project unless we

have first clearly defined the scope and set a scope validation process in place. We

also need to develop a process for soliciting and monitoring changes to project scope.

Project Time Management

The main monitoring and controlling task performed as part of project time

management is controlling the schedule. One of the biggest challenges to project

managers is delivering projects on time and this is usually predominant source of

conflict than other issues. Perhaps part of the reason schedule problems are so

common is that time is easily and simply measured. Once a project schedule is

developed, one can easily calculate schedule performance by subtracting the original

time estimate from the time actually spent. Time monitoring through schedule is core

in project management as time is the least flexible variable and passes no matter

what happens on a project.

Project Cost Management

Cost control includes monitoring cost performance, ensuring that only appropriate

project changes are included in a revised cost baseline, and informing project

stakeholders of authorized changes to the project that will affect costs. The project

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management plan, project funding requirements, work performance data, and

organizational process assets are inputs to the cost-control process. Outputs of cost

control include work performance information, cost forecasts, change requests,

project management plan updates, project documents updates, and updates to

organizational process assets, such as lessons-learned documents. Among the

several tools and techniques that assist in project cost control is the earned value

management discussed earlier.

Project Quality Management

The main project quality management task for monitoring and controlling is performing

quality control. Key outputs include quality-control measurements, validated changes,

validated deliverables, work performance information, change requests, project

management plan updates, project documents updates, and organizational process

assets updates. Although one of the main goals of quality control is to ensure and

improve quality, the main outcomes of this process are acceptance decisions, rework,

and process adjustments.

Project Communications Management

Controlling communications involves monitoring and controlling communications

throughout the project life cycle to ensure that stakeholder information needs are met.

Key outputs include work performance information, such as performance reports,

change requests, project documents updates, and organizational process assets

updates. The following are some the issues that must be communicated in time.

Reporting Performance

Reporting performance keeps stakeholders informed about how resources are being

used to achieve project objectives. The project management plan, work performance

data and measurements, and organizational process assets are all important inputs to

performance reporting. Outputs of performance reporting are performance reports,

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organizational process assets updates, and change requests. Performance reports

are normally provided as status reports or progress reports. Status reports describe

where the project stands at a specific point in time with regard to the triple constraint:

scope, time, and cost goals. Progress reports describe what the project team has

accomplished during a certain period. In many projects, each team member prepares

a weekly or monthly progress report. Team leaders often create consolidated

progress reports based on the information received from team members.

Stakeholders often review project performance information at status review meetings.

Such meetings are a good way to highlight important information, keep everyone

abreast of important events and to learn from each other, empower people to be

accountable for their work, and have face-to-face discussions about key project

issues.

Project Stakeholder Management

We cannot control stakeholders, but we can control their level of engagement.

Controlling stakeholder engagement involves monitoring overall project stakeholder

relationships and adjusting strategies and plans for engaging stakeholders as needed.

If project managers perform this process well, they can maintain or increase the

efficiency of stakeholder engagement activities as the project evolves and the

environment changes. On some projects, stakeholder engagement is controlled by

making them key members of the project team.

Project Risk Management

Controlling risks involves executing the risk management processes to respond to risk

events. A risk event is a specific, uncertain event that may occur to the detriment or

enhancement of the project. Executing the risk management processes means

ensuring that risk awareness is an ongoing activity performed by the entire project

team throughout the project. Project risk management does not stop with the initial

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risk analysis. Identified risk events may not materialize, or their probabilities of

occurrence or impact may diminish or increase. Similarly, new risk events are

normally identified as the project progresses. Newly identified risk events need to go

through the same process of analysis and control as those identified during the initial

risk assessment. Carrying out individual risk management plans involves monitoring

risks based on defined milestones and making decisions regarding risks and their

response strategies. It is also important to have contingency plans to manage risks

that might occur. Risk reassessment, risk audits, variance and trend analysis,

technical performance measurement, and status meetings are all tools and

techniques for performing risk control.

Project Procurement Management

Controlling procurements ensures that the seller’s performance meets agreements or

contractual requirements. The contractual relationship is a legal relationship and it is

important that appropriate legal and contracting professionals be involved in writing

and administering contracts. In case of contract changes, it is very important to

document all changes to it and communicate those changes to all affected

stakeholders. Changes or updates are often made by having both parties—the buyer

and the seller-sign an addendum to the contract. Project team members must be

aware of the changes and the additional work at additional cost as a result of the

change and this is possible through the change control which is an important part of

the contract administration process.

Review Questions

1. Why does having good plans help project teams during project execution?

2. Define the implementation stage and project implementation plan (PIP). Why the

need for PIP?

3. Relate the work breakdown structure and with execution process.

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4. What is the purpose of setting project implementation schedule?

5. What are the varieties of techniques that can be devised to assist in planning and

managing implementation? Discuss techniques.

6. State and discuss some of the prerequisites for a successful monitoring and

evaluation system to exist.

7. Experience in implementing projects has varied widely. Some projects have been

highly successful; and others have experienced shortcomings. Discuss the factors

that contribute to:

i. the success of project implementation

ii. the failure of project implantation

8. What is involved in monitoring and controlling projects? What outputs of monitoring

and controlling are common to all knowledge areas?

9. Explain how earned value management helps you monitor project performance and

forecast future cost and schedule information. What do you need to do to use

earned value management?

10. What are the three main objectives of integrated change control?

11. What is the difference between scope validation and scope control? Why are both

important to project success?

12. What are some of the tools and techniques for performing time, cost, and quality

control? What are the basic tools of quality?

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 Chapter Six Project Closure

6.1 Introduction

The Project Closure is the fifth and last phase in the project life cycle. In this phase,

we will formally close the project and then report its overall level of success to the

stakeholder or owner. This involves handing over the deliverables to your customer,

passing the documentation to the business, cancelling supplier contracts, releasing

staff and equipment, and informing stakeholders of the closure of the project. The

closing process consists of those processes performed to conclude all activities

across all project management process to formally complete the project or contractual

obligations. This process group, when completed, verifies that the defined processes

are completed within all of the process groups to close the project or a project phase,

as appropriate, and formally establishes that the project or project phase is complete.

Once a project is closed out, after a little while, it is essential to have a post

implementation review to determine the project’s success and identify the lessons

learned.

This process group also formally establishes the premature closure of the project.

Prematurely closed projects may include, for example: aborted projects, cancelled

projects, and projects having a critical situation. In specific cases, when some

contracts cannot be formally closed (e.g. claims termination clauses, etc.) or some

activities are to be transferred to other organizational units, specific hand-over

procedures may be arranged and finalized. In general, at project closure, the

following may occur: obtain acceptance by the customer or sponsor to formally close

the project or phase, conduct post-project or phase-end review, document lessons

learned, apply appropriate updates to organizational process assets, archive all

relevant project documents in the project management information system (PMIS) to

be used as historical data, close out all procurement activities ensuring termination of

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all relevant agreements, and perform team members’ assessments and release

project resources.

LEARNING OBJECTIVES

Upon successful completion of this chapter, the student will be able to:

 Understand the importance of project closing

 Describe common ways to close or terminate projects

 List several processes and outputs of project closing

 Discuss the process of closing a project as part of project integration

management

 Explain the importance of a project closeout meeting and knowledge

transfer, and lessons-learned report

6.2 Methods of project closure

Closing activities for projects involves gaining stakeholder and customer acceptance

of the final products and services, and bringing the phase or project to an orderly end.

It includes verifying that all of the deliverables are complete, and often includes a final

presentation and report. For both projects that are completed and those that are

canceled before completion, it is important to formally close the project and reflect on

what can be learned to improve future projects. As philosopher George Santayana

said, “Those who cannot remember the past are condemned to repeat it.”

With this in mind, underneath are four common ways to close or terminate a project

(Schwalbe, 2013).

1. Integration: A project is completed, and products and services created are

integrated into operations. This is the most common approach. Project staff and

other resources are released and distributed into the organization.

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2. Addition: A project creates a new product or service that results in a new unit in the

organization, such as a department, division, or company. Project staff and other

resources move into the new unit.

3. Extinction: A project may end because it was successful and achieved its goals,

and there is no need for further work. Another form of extinction is when a project is

stopped because it was unsuccessful or superseded. A special case of termination

by extinction is called termination by murder, when there is a sudden end to a

project.

4. Starvation: A project can also be terminated by decreasing its budget or suddenly

ending funding. This approach is also known as withdrawal of life support. The

reason for starving a project is generally to shadow the failure of

nonaccomplishment of the goals. Management sometimes uses this approach to

avoid embarrassment.

6.3 Types of Project Closure

The different types of closure are identified and discussed below (Larson and Gray,

2017).

Normal Project Closeout: This is the most common circumstance for project closure

that occurs when projects are completed. For many development projects, the end

involves handing off the final design to production and the creation of a new product

or service line. For other internal IT projects, such as system upgrades or creation of

new inventory control systems, the end occurs when the output is incorporated or

integrated into ongoing operations as mention in the above section.

Premature: For a few projects, the project may be completed early with some parts

of the project eliminated. For example, in a new product development project, a

marketing manager may insist on production models before testing:

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Perpetual: Some projects never seem to end. The major characteristic of this kind of

project is constant “add-ons,” suggesting a poorly conceived project scope. At some

point the review group should recommend methods for bringing final closure to this

type of project or the initiation of another project.

Failed Project: Failed projects are usually easy to identify and easy for a review

group to close down. However, every effort should be made to communicate the

technical (or other) reasons for termination of the project; in any event project

participants should not be left with an embarrassing stigma of working on a project

that failed.

6.4 Implementing the close down

Implementing the closure process includes several wrap-up activities. Many

organizations develop lengthy lists for closing projects as they gain experience. These

are very helpful and ensure nothing is overlooked. Procedures for closure are part of

organizational process assets that should have procedures to guide closure.

Implementing closedown includes the following major activities:

1. Getting delivery acceptance from the customer.

2. Shutting down resources and releasing to new uses.

3. Reassigning project team members.

4. Closing accounts and seeing all bills are paid.

5. Delivering the project to the customer.

6. Creating a final report.

Getting delivery acceptance by the customer is a major and critical closure activity.

Delivery of some projects to the customer is straightforward. Others are more complex

and difficult. Ideally there should be no surprises. This requires a well-defined scope

and active customer involvement. User involvement is critical to the acceptance. The

conditions for completing and transferring the project should be set before the project

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begins. Again, note the delivery conditions need to be carefully set up before the

project begins; if not, wrap-up activities can develop a life of their own. Releasing the

project team typically occurs gradually during the closure phase. For some people,

termination of their responsible activities ends before the project is delivered to the

customer or user. Reassignment for these participants needs to take place well before

the final finish date. Since many work invoices are not submitted until after the project

is officially over, closing out contracts is often messy and filled with untied ends.

Further, when contractors are used, there is a need to verify that all the contracted

work has been done. Keeping contract records, such as progress reports, invoices,

change records, and payment records, is important should a compliance or lawsuit

occur. There are many more wrap-up activities; it is important to complete all of them.

Experience has proved time and again that not doing all the little cleanup tasks well

will create problems later. A final wrap-up activity is some form of celebration. For

successful projects, an upbeat, festive celebration brings closure to the enjoyable

experiences everyone has had and the need to say good-bye. Celebration is an

opportunity to recognize the effort project stakeholders contributed. Even if the project

did not reach its objectives, recognize the effort involved and goals that were

achieved. If the project was a success, invite everyone who in some way contributed

to project success. Thank the team and each one individually. The spirit of the

celebration should be one in which the stakeholders are thanked for a job well done

and leave with a good feeling of accomplishment.

Project Procurement Management

The final process in project procurement management is closing procurements, which

involves completion of each procurement. The project team should determine if all

work required in each contract was completed correctly and satisfactorily and resolve

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any open items. The team should also update records to reflect final results and

archive information for future use.

Tools to assist in closing procurements include:

Procurement audits: Procurement audits are often performed to identify lessons

learned in the entire procurement process. Organizations should strive to improve all

their business processes, including procurement management.

A records management system: A records management system provides the ability

to easily organize, find, and archive documents, such as those related to

procurement. Outputs from closing procurements include closed procurements (such

as closed contracts) and updates to organizational process assets. Just as with

closing the project or phase, updating organizational process assets includes

documentation, historical information, and lessons learned. To close contracts, the

buying organization often provides the seller with formal written notice that the

contract has been completed. Buyers might also consider the final payment to the

seller as the contract closeout. The contract itself should include requirements for

formal acceptance and closure.

6.5 Retrospective - Lessons Learned

Throughout each project phase, lessons are learned and opportunities for

improvement are discovered. During closing, the project team should update

appropriate process assets, especially lessons learned as this will serve as a

tremendous asset for future projects. As part of a continuous improvement process,

documenting lessons learned helps the project team discover the root causes of

problems that occurred and avoid those problems in later project stages or future

projects. Data for this report was gathered by using Project Lessons Learned Record

sheets and is summarized in the table. The objective of this report is gathering all

relevant information for better planning of later project stages and future projects,

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improving implementation of new projects, and preventing or minimizing risks for

future projects. Lessons learned questions include:

 What worked well—or didn’t work well—either for this project or for the project

team?

 What needs to be done over or differently?

 What surprises did the team have to deal with?

 What project circumstances were not anticipated?

 Were the project goals attained? If not, what changes need to be made to meet

goals in the future?

Project Closeout Meeting and Knowledge Transfer

It is good practice to hold a closeout meeting as a project nears completion or

termination. At this meeting, like the kickoff meeting, we should invite key project

stakeholders. Some people call this closeout meeting a post-mortem since it is

normally held after the project has died or been put to rest. The project champion

should start off the meeting, and the project manager and his/her team should review

information like the following:

 The scope, time, and cost goals and outcomes

 The success criteria and results in achieving them

 Main changes that occurred during the project and how they were addressed

 The main lessons learned on the project

The project team should also ask for comments and questions from stakeholders. It’s

important to get other perspectives on how things went. If there are still any issues

that need to be addressed, the project manager should follow through on them to

successfully close them out. It is also important to take time to transfer knowledge

learned while working on the project. In particular, people who will take over products

or results produced as part of the project would need to spend time with project team

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members so they understand what is involved in detail. Of course, these people could

read the final report, transition plan, and lessons learned, but most people also want

face-to-face interaction to really benefit from knowledge transfer. Many organizations

are working hard to improve the knowledge transfer process, since employee

knowledge or human capital is one of their key assets. It is crucial, therefore to make

project knowledge transfer a priority, especially if the benefits of a project are not

achieved immediately.

6.6 Final Note on Closing Projects

Although project teams do not typically spend much time on closing projects, it is

important to do it well. Below are a few words of advice on quickly and successfully

closing projects, whether they were successful or not. It is important to plan for project

closing. There should be tasks in the WBS and resources allocated to perform project

closing. For example, someone should be assigned the task of reviewing lessons

learned and creating one final lessons-learned report. Resources should be assigned

to prepare the final project report, presentation, and some type of closing celebration.

It will be much easier to close a project if the project team captures lessons learned

and other important information required for closing as soon as possible. For example,

the project team should have some type of log where everyone can document lessons

learned as they occur. A simple blog would work well for this purpose, or team

members could document lessons learned as part of progress reports.

Review Questions

1. What do you understand by project closure and what activities are expected to be

accomplished in the close out?

2. What is involved in closing projects? Why should all projects be formally closed?

3. Discuss the methods of project closure

4. Identify and describe the types of project closure.

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5. What are the main closing outputs created as part of integration management?

Why is it important to create a final project report, presentation, and lessons-

learned report?

6. What are the main topics included in a lessons-learned report?

7. What is a post-mortem?

8. What are the main closing outputs created as part of procurement management?

9. What advice about project closing is most useful to you? What other advice would

you add?

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