By: Gerline Mae Ocampo Pableo

TOPIC: Project management

Part 1: Introduction

Every management professional encounters situations, at some point of time

or other, which needs good knowledge on project management and this is the

main reason behind including project management as a part of the studies in

most of the business schools around the world. The unique nature of projects,

the major decisions in project management, functions of a project manager, project

life cycle, work breakdown structure, network analysis and crashing, forms the core

content of this chapter. Projects play a vital role in sustaining business activity.

Network analysis and finding the critical path is inevitable for any project.

Finding the path variance and the probability of completion of the project in a given

time and so on are of primary importance to project managers. In addition to the

above, crashing the project to complete the same in lesser time using

additional resources is another technique which is worth learning in this

context. There are various terms and definitions related to project management

in addition to developing skills to generate work breakdown structure,

network diagram and its analysis for any project

Part 2: Summary of the topics/Topics Digest

In managing operations, we are often faced with activities that do not fit into the

usual day-to-day operations of the firm. These non-typical, unusual activities of the

firm are called projects. Therefore typical daily, weekly or monthly activities of a firm

involving scheduling, quality control, purchasing, etc. are not categorized as projects.

Due to their unique nature, projects require different management approaches and

techniques. A list of project examples are: installation of a new bar coding system,

installation of a new computerized production and inventory control system, design

By: Gerline Mae Ocampo Pableo

and development of a product prototype, feasibility study to decide whether to buy

new machinery, acquisition and installation of a new CNC (Computer Numerically

Controlled) machinery, conversion of the plant layout from process layout to group

technology layout, selection of a new plant site, construction of a new facility,

Planning, organizing and managing a professional conference or a trade show,

planning organizing and managing major sports events such as Olympics, sports

festivals, NCAA basketball tournament, etc. Project Management involves planning,

controlling and directing the unusual activities facing the firm. In managing projects,

temporary project teams are formed to schedule the work, to adhere to a given

budget, and to monitor the progress of the work through its various stages. For larger

projects, project teams are formed. These project teams may include workers from

the company involved in the project as well as other external companies (i.e.

consulting firm). Depending on the size and type of the project, an internal project

leader and possibly project team members may receive full or partial release from

their regular duties. The duty release is given because it would be very difficult for an

employee to manage the responsibilities of a time consuming project and also to

fulfill the responsibilities of normal day-to-day activities. Projects are not

necessarily single-time events. They can be repeated in similar settings. In

managing a project, the project team is usually responsible for managing and

controlling the following four factors: the length of project completion time, resources,

quality and cost. The project plan is generally prepared well before actual project

work begins. The first phase of the project needs to include a clear statement of

goals and objectives of the project. The next phase involves composing a detailed

definition of the project. Then, using the Work Breakdown Structure, the project is

decomposed into tasks or activities. Once all of the unique tasks making up the
By: Gerline Mae Ocampo Pableo

project are identified, specific time, cost and resource estimates are obtained for

each task. In planning and controlling the project, the project team’s major duty is to

ensure timely progression of the project through various stages without exceeding

the approved cost standards while achieving the desired level of quality. The project

team usually prepares progress reports during different stages of the project for

upper management and possibly for external sources playing a major role in the

project. The interim project progress report assists in ensuring that the project team’s

actions are consistent with the original goals and objectives of the project and the

project is continuing according to plan. If the project is delayed or major changes had

to be made, the interim progress report also allows the project manager to explain

the reasons for deviations from the original plan. In addition, the interim progress

report also gives upper management a chance to consider and possibly approve the

proposed changes. To effectively manage a project, a project manager must employ

a certain set of skills. For projects that involve fairly well-defined work, the project

manager must be able to, motivate his or her team, direct team members in specific

work areas of the project, solve specific project related problems, resolve issues and

problems between co-workers, communicate certain problems to upper

management, expedite work when necessary, coordinate work among the team

members and among the appropriate outside contractors and make the necessary

project trade-off decisions involving cost, time, quality and resources. However, if the

work is not well defined, there is usually more uncertainty involved. In projects

involving a higher degree of uncertainty, in addition to being able to perform the

functions listed above, the project leader must also demonstrate strong leadership

skills. The more ill-defined the work, the higher the need for leadership skills.

Leadership skills are less tangible than the skills mentioned and may include the
By: Gerline Mae Ocampo Pableo

following: ability to deal with change, deciding what type of changes are needed and

when to make the change or changes, working with the project team to make the

necessary change or changes, the ability to handle undesirable or unexpected

consequences of making the change, ability to manage people with varying

background and skills who may also be reporting to other managers in their

respective functional areas and ability to persuade and cooperate with others to fulfill

project goals since the project manager may not have the formal authority to

accomplish some of the goals of the project. Project champion is the person who is

from within the company specifically designated to support the project. The project

champion can be instrumental in facilitating the work of the project manager by

promoting the project to other managers who might be asked to share resources with

the project team. The project champion also promotes the benefits of the project to

employees who may be asked to work on portions of the project. Since the project

champion plays a very important role in facilitating the project, both the project

manager and the project team needs to keep him or her informed and involved about

the status of the project. Possible benefits of the project need to be communicated to

the project champion so that he or she is knowledgeable about the project to be able

to successfully promote it to others involved. The steps in risk management are:

identification of risks, assessment and evaluation of risks and risk reduction (includes

contingency plans, risk sharing, backup systems, risk transfer and early identification

and elimination of problems), choose good people, model appropriate behavior,

monitor team members’ behavior, and investigate any allegations of unethical

conduct. The advantages of using project management software include the

following: it imposes a methodology and a common project management technology,

it provides a logical planning structure, it can enhance communication among team

By: Gerline Mae Ocampo Pableo

members, it can automatically flag the occurrence of constraint violations, it

automatically formats reports, it can generate multiple levels of summary reports and

detailed reports, it enables what-if scenarios and what-if analysis, it can generate

various chart types, including basic Gantt charts. Work Breakdown Structure (WBS)

is a hierarchical listing of what must be done during the project. It breaks down the

entire project into manageable smaller portions called activities or tasks. WBS is

important because it establishes a logical framework for identifying the required

activities of the project. The primary advantages of PERT are: the PERT chart helps

managers to visualize the project, planners must identify major activities and define

sequential relationships, potential trouble spots become apparent, areas of weak or

nonexisting information (e.g., time estimates) tend to be more easily recognized with

a formal technique like PERT, reallocation of resources to shorten project time is

facilitated through computation of slack times.The primary limitations of PERT are:

important activities may be overlooked when developing the project network, errors

may occur in designating precedence relationships, time estimates may be incorrect,

large networks require the use of a computer which might not be available. Near-

critical paths can have distributions which overlap the distribution of critical path time,

which may result in a lower probability of timely completion than that based solely on

the time distribution of the critical path. Where overlap is not a factor, probabilistic

estimates based solely on the critical path are acceptable. Expected activity time is a

weighted average of optimistic, most-likely, and pessimistic time for each activity.

Variance of an activity measures the extent of activity variability. The standard

deviation of a path’s time is a measure of the extent of variability of path time. It is

computed by summing the variances of activities which comprise the path and then

taking the square root of that sum. The critical path generates more attention than
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other paths. Hence, those associated with activities which are on the critical path are

often in the spotlight. If they perform well, there is a good possibility for recognition

and reward. However, there can be an inordinate amount of pressure associated

with the critical path activities, and some would just as soon avoid that pressure.

Projects can offer a change of pace, a chance to do new work, meet new people and

new challenges. If the project is successful, certain rewards, recognition and perhaps

new opportunities may present themselves. Conversely, an unsuccessful project

may bring an unfavorable impression. In addition, after the project is terminated, it

may be difficult to return to one’s former slot in the organization. And, if one is

involved with the project on a part-time basis, conflicts may arise between the

regular work and project work. Authority may not be commensurate with

responsibility, time and funding pressures may be large, the environment is often

more dynamic than with more routine jobs, there may be a much wider range of skills

among subordinates, and conflicts may arise between project workers and those not

involved with the project (e.g., other projects, nonproject work). The project

organization permits a narrower focus on activities related to a project than a more

traditional form of organization would.

Part 3: Recommendations

Project management is very important for the organization to govern the project. A

team leader needs to understand project lifecycle, risk and risk management in order

to create the strategy for the project to be successful. Moreover, applying the proper

tool during the process duration estimation by considering the iron triangle can lead

to reach the goal of the project. However, team project need to keep in mind that

when the project seems to not achieve the goal, they need to know when to stop it

before they are going to spend beyond the budget. Risk occurs when the
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organization operates in the face of uncertainty, constrained by capability and cost.

The project manager or team project needs to find the dimension that causes the

risk. Risk management is usually defined as a set of principles and practices aimed

at identifying, analyzing and handling risk factors to improve the chances of

achieving a successful project outcome and/or avoid project failure. Risk and risk

management are also important because IT projects (including software projects)

can be vehicles of delivering IT-enabled organizational change, so achieving

business objectives can be critically dependent upon their success. Four common

risk response strategies are avoidance, transference, mitigation and acceptance.

Avoidance strategies aim to prevent a negative effect occurring or impacting a

project. This may involve, for example, changing the project design so that the

circumstance under which a particular risk event might occur cannot arise, or so that

the event will have little impact on the project if it does. For example, planned

functionality might be ‘de-scoped’ to remove a highly uncertain feature to a separate

phase or project in which more agile development methods might be applied to

determine the requirement.Transference strategy involves shifting the responsibility

for a risk to a third party. This action does not eliminate the threat to the project; it

just passes the responsibility for its management to someone else. Theoretically, this

implies a principal–agent relationship wherein the agent is better able to manage the

risk, resulting in a better overall outcome for the project. This can be a high risk

strategy because the threat to the project remains, which the principal must

ultimately bear, but direct control is surrendered to the agent. Common risk transfer

strategies include insurance, contracts, warranties, and outsourcing. In most cases,

a risk premium of some kind is paid to the agent for taking ownership of the risk. The

agent must then develop its own response strategy for the risk. Risk mitigation is one
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or more reinforcing actions designed to reduce a threat to a project by reducing its

likelihood and/or potential impact before the risk is realized. Ultimately, the aim is to

manage the project in such a manner that the risk event does not occur or, if it does,

the impact can be contained to a low level (that is, to ‘manage the threat to zero’).

For example, using independent testers and test scripts to verify and validate

software progressively throughout the development and integration stages of a

project may reduce the likelihood of defects being found post-delivery and minimize

project delays due to software quality problems. Risk acceptance can include a

range of passive and active response strategies. One is to passively accept that the

risk exists but choose to do nothing about it other than, perhaps, to monitor its

status. This may be an appropriate response when the threat is low and the source

of the risk is external to the project’s control. Alternatively, the threat may be real but

there is little that can be done about it until it materializes. In this case, contingencies

can be established to handle the condition when and if it occurs. The contingency

may be in the form of provision of extra funds or other reserves, or it may be a

detailed action plan (contingency plan) that can be quickly enacted when the

problem arises. Validation and maintenance of contingency plans is a critical part of

this strategy to ensure that contingency plans work as expected when required.

Part 4: Conclusions

Project management is the primary tool for executing the business plan, installing the

business processes, and achieving the strategic ambitions of the entrepreneur.

Project management helps to detail what tasks will be accomplished, who will be

involved in completing the tasks, and when tasks should start and finish. Typically,

projects progress in steps or incremental stages; however, other approaches for

rapid, interactive project management are also widely used. Several tools can be
By: Gerline Mae Ocampo Pableo

used to manage the project and communicate timing and status, including task

diaries, WBSs, and Gantt charts. Projects fail for many reasons. It is management’s

responsibility to determine whether the inherent risks in the project can be accepted

and the project can be launched, or whether the project will be delayed. Project

management is not a panacea, but rather a critical tool in the never-ending process

of growth and renewal of the business. It allows the managers to minimize and

mitigate inherent risks and increase the potential for success of the launch and the

ongoing operations.