project Implementation and Review (Unit 5) = UNIT 5 Project Implementation and Review pe OJECT, IMPLEMENTATION 5.1.1. Meaning of Project Implementation Implementation is a crucial stage in the life of a project. The objectives of project are achieved through implementation. Before implementation a project represents an idea and an expectation. Through implementation the idea achieves a physical form. Benefits start flowing from the project after implementation. However, implementation presents a challengin 1g situation for project management. The management is considered successful; to the extent implementation is effective. The term implementation phase may be a little misleading because it implies simply putting somet motion. The implementation phase is indeed that, but itis the project — the phase during which the actual work is Project is started, monitored, and controlled. 1g into much, much more. It is often called the main phase of performed. Consequently, this is the phase in which the Project implementation is the process of Putting the project plan into action. The project plan is the road map of how the project should progress; the implementation phase is where the plan is turned into reality. 5.1.2. Prerequisites for Successful Project Implementation The prerequisites for successful project implementation are as follows: 1) Set and Manage Realistic Expectations: A project should be requirements and objectives. This is a daunting task. Problems and such obstacles are normally expected. viewpoints about the budget, schedule and scope of the p set for a successful project implementation. Properly evaluated for determining its All the projects go through their share of However, the team should have realistic roject. Thus, realistic expectations should be 2) Develop Common Team Goals: The most important aspect of managing expectations is to coordinate the mutual understanding of the objectives to be achieved. This can be done by reaching proper agreement as to Project business results and goals. Once these are approved by the project team, it should be ensured that there is agreement regarding the deliverables. 3) Define a Realistic Budget and Schedule: During this stage, project team should set realistic expectations regarding the scope, schedule and budget of the project. After the setting of these criterions, they should be effectively communicated to the team members. The person in-charge should keep a check on the status of the project. Various risks and issues related to the project should also be determined. The outcomes should be re-affirmed throughout the length of the project. This can be done by carrying out timely status meetings, Preparing status reports, etc. 4) Maintain Management Commitment: The extent of business executives’ involvement in the Project is an important factor for ensuring project success. According to the Project Management Institute, Gartner Group and other such observers, the single biggest reason behind project failure is concerned with executive Sponsorship and commitment, Thus, maintaining the commitment of management towards successful Project implementation is essential 5) Participate in Executive Level Discourse: Management should properly track the progress of the project through various stages. It should be monitored whether the project commitments are being fulfilled duly or ot. Management is generally supportive for project implementation as long as it plays participatory role in decision making process and evaluates the progress of the project on regular basis.ao MBA Second Semester (Project Management) INTUK 5.1.3. Steps to Successful Project I m implementation is similar to any and procurement steps. implementation ; ‘other water treatment project in terms of phases; however, i Membrane sys is unique in terms of the degree of details have the following phases: Ht water quality goals and plant capacity are s¢l. Then, P of various technologies is A typical project implementation wi Phase 1: Feasibility Study: During this phase, the proj with assistance from membrane manufacturers and specialty consultants, a criti” Conducted to assess feasibility and costeffectiveness of membrane options. Many = anpie ties can complete this phase with their own staff. It is crucial to give # “yes” or “no” to membranes in this phase. Conceptual Design II types of waters and in Remember, membranes may not be the best option for every application, Detailed Design ice from a specialized t Phase 2: Conceptual Design: In this phase, concultant is a must. This is when layouts and conceptual design are done 19 Gvaluate membrane options. This is also the last practical and cost-effective Bidding Period phase where one can go back to the feasibility study if the membrane is not found to be the best alternative. aan, EE ‘Construction 1g is done in this phase to t ity investigation and sometimes pilotin; i ‘as well as setting design (—— Sonat Testing and Detailed water quality verify membrane applicability and type of systems to use, parameters for the next phase. Depending on the piloting requirements and periods, Conuntesiouing this phase could take as little as two or three months to more than a year; if seasonal, water quality changes are substantial. ¥ ‘Start-Up Phase If a pilot study is required, a detailed test protocol should be prepared to not t only evaluate various manufacturers but also as a basis for Operations and uation, It is highly recommended to prepare this Project Close-Out Maintenance (O&M) cost eval test protocol with guidance from the permit of the decision process. ‘The conclusion of phase 2 should determine what type of membrane to use and the membrane manufacturer. If manufacturers were invited to pilot test, one must ensure that they are being evaluated in a fair and open environment. Test protocol is the key evaluation tool. It is also recommended to get them involved early in the ing agencies and make them a part draft test protocol so there are no surprises. Phase 3: Detailed Design: Before starting Phase 3, all design parameters, plant capaci redundancy factors, stand-by provisions, temperature and water quality considerations must be established. They will then become the design basis for the specialty consultant. Phase 3 is essential when the Tocal engineers working withthe specialty consultants to perform detail designs and preparing the bidding documents while the local engineer is focusing on the site work, building, incoming power, etc. _ oe and , reliability ‘The specialty consultant is doing detail design and layout for th i i ida Se ee eset ie yout for the process equipment and setting the bidding Depending on the project schedule and local requirements, typi i 10 30%, 60% to 70% and 100% design, » typically three major submittals are prepared: 20% Its critical to establish the type of procurement and shortlist manuf ; ae ‘ during the 20% to 30% phase. Even with the same membrane technology, phe identify all key process needs power/chemical requirements are very different, the system layout, process needs and Phase 4: Bidding Period: This phase is the most complex phase in se in mi . reas aay different methods. and. ways, of bidding membrane wee plementation. There advantages/disadvantages. ystems, each with its ownjest implementation and Review (Unit 5) 163 Phase 5: Construction: The success and smoothness of phase 5 depends on phases 3 and 4, The single most important factor becomes how detailed the bid document is and who is responsible for what material and quipment, as well as testing and guarantees, Phases 6 and 7: Functional Testing and Commissioning, and Start-UP: Typically, each entity performs its ‘own function in phases 6 and 7, except the overall controls, for which one entity should be taking charge. Phase 8: Project Close-Out: This phase is preparing as — builts, final O&M manuals and each entity ‘completing its punch lists. The specialty consultant can be of great assistance to compile all O&M and shop drawings and provide a comprehensive operator training on the overall plant process, while each supplier provides training of individual components. OJECT ORGANIZATION) 5.2.1. Introduction Human resources associated with a project forms the basis of the project. Project organisation is a techni wherein set-up of the human resources at various hierarchical levels, the roles to be played and responsibilities tobe shouldered by each team member, etc. are clearly spelt out, There is a model which defines general set of roles and responsibilities, which are universally applied in respect of every project. In addition to the above, there are roles and responsibilities specific to a project, which are defined and finalised separately for that particular project. Project organisation covers all the personnel involved in a project, irrespective of the fact whether they are employed on a full time basis or on a part time basis. There are a number of project organisation models, from which the most suitable one for a project may be selected by the project manager. Forms of Project Organisation Line and Staff Organisation Structure Divisional Organisation Structure Functional Organisational Structure Project Organisational Structure Matrix Organisational Structure 5.2.2, Line and Staff Organization Structure This form of project organisation envisages two kinds of parallel authorities which are as follows: 1) Direet of Line Authority: ‘Most of the managers are empowered to decide and take action in respect of various issues just like those in line organisations (line organisations may be defined as the organisations with self-contained departments, in which authority runs from top to downward and accountability in the opposite direction, ie. from bottom upwards. Each departmental manager exercises complete control over his department's affairs). 2) Advisory Authority: The role o! downward. A small group of them Services in respect of certain matters. advisory authority is advisory and supportive in nature, The flow is have the authority to advise/make suggestions, support and give other "This kind of relationship is also known as staff relationship. A representation of line and staff organisation is furnished below in the form of a chart.sey MBA Second Semester (Project Management) INTUK Chet Executive Tavita Chet Executive Manufacturing) [Marketing Penomnet] [R&D Manager Manager Manager | | Manager Plant Plant Manager |_| Manager| a cr dt jasal Fensoes || Trig | |, Beotoses Sioa] [ Baer] [woes Manager | | Manager | ] Service Manager | Gndustrial | | (Consemer| | (Marketing| Product) | | Product) | | Research) Line Authority Sta Authority —— Figure 5.1: Line and Staff Organization ‘The line authority and staff authority are characterised by their contradictory features. The flow of the line authority is downward, whereas that of staff authority is upward. To elaborate it further, the General Manager of a company has full authority over the subordinates working under him like functional managers, whether they represent line departments or staff departments. Staff manager keeps him (the GM) informed about various problems faced by them in the areas under their respective command along with the recommendations for their redressal. The GM, in turn, issues necessary instructions to the concerned subordinates for _ taking recommendations/advice received from the concerned staff manager. appropriate actions as per the Differences between Line Manager and Staff Manager [___ Basis of Difference ‘Line Manager. ‘Staff Manager 1) Role ‘The role of a line manager is defined as|The role of a staff manager is restricted to moving ahead towards the achievement of|providing support (in the form of advices and suggestions) in carrying out its assigned) functions smooth! [Line authority is a concrete authority]Staff authority is advisory and supportive in lempowered by the organisational hierarchy nature. It Ea rmoelly ad through a logitimate process. facilitator. ine managers perform the core functions,/Staff managers are not involved in the| which takes the organisation ahead towards organisation's core functions. They simply its objectives. advise, support and help in performance of| _ the core funetions. [Line managers are primarily those, who|Staff managers work in those departments the actual work of the organisation. 2) Nature of Authority 3) ‘Type of Work Performed [ay ‘Type of Department handle revenue generating departments. In| where revenue i other words, revenue is generated through| cern them. 5 Example ‘The typical example of Tine authority is the| The typical examples of salt authority ar General Manager. Human Resource Development and Salary Departments, : d Staff Organisation ion is considered favourably as itis beneficial in view of the following: red to focus exclusively on the execution part of the work. They need not bother ‘Advantages of Line an‘ Line and staff organisati 1) Line authorities are required ‘about the thinking and planning process.pnt Inpementation and Review (Unit 5) 165 2) Line authorities are not free to perform thei execution job in an arbitrary manner i dependent upon the expert advice and suggestion received from the specialists or staff 4) The roles played by line managers and st *) from each other to ensure a po: stead they have to be authorities. and staff managers in an independent manner without any intervention ive synergy and the outcome of which is an overall efficiency. ‘cen the line managers and staff manager is i 4) Avery close coordination betw: siaff organisation, inbuilt in the system of line and 5), This type of organisation envisages the independence of decision-making at all levels of the officials. pisadvantages of Line and Staff Organisation Line and staff organisation suffers from the following shortcomings: 1) At times, Tack of proper understanding between the line authorities and staff authorities results in disagreement of opinion between them. The very foundation of this ty sat i SSeS ae osaiealt ry of this type of organisation is shaken and its As the role of staff authorities is advisory in nature and they are not directly held accountable for the successful execution of the project or failure thereof, at times they tend to give advice which may not be in the best interest of the project. 3) Dependence of line authorities upon the staff authorities is inherent under this kind of organisation. Such excessive dependence upon the staff authorities results in erosion of innovative thinking, creativity and initiative on the part of line authorities. 4) As the staff authorities are specialists, they command a better compensation in the form of high level of salary. For a small business entity, it may prove to be a drain on its limited resources. 5) Staff authorities carry a subtle air of superiority, as they are specialists and their role is advisory in nature, as against the role of line authorities, who carry out the execution part of the project. This creates an undercurrent of hostilities between the two. The overall impact on the organisation is a negative one. 5.2.3. Divisional Organization Structure Organization of this type, design their structure by focusing on the specialist nature of the work or project rather than on individual expertise. This form of structure is known as the divisional structure. The aim of the divisional form is to replicate specialist characteristics, but to focus on a final product through its specialist type, size, location, customer, etc. : Projects are easier to facilitate within a division, as all the components within the organization are geared to necting the division's goals. Divisional organizations are predominantly found in large companies. Moreover,~ the entire focus of activity is on the division, and decision-making is based on divisional requirements. Projects developing in the divisional environment require project managers to be aware of divisional and corporate Priorities and how they may impact on projects. xyz Engineering ail Water ‘ighwny || gninivaion || TT Engineering Engineering Enginering || “A [ 1 [ 1 = 1 Design Ff saimain&]| Design L [sina [desea Maintain Construction 4 Construction 4 Construction 4 Figure 52: Divisional Organization Structure166 MIVA Secon Semester (Project Management ITY, ‘Advantages of Divisional Organisation Structure 1) "Accountability makes it much easier to assign responsibility for actions and results competition, where loca 2) The divisional structure works well in markets where there is a great deal of managers can quickly shift the direction of their businesses. 3) Divisional structure to create a culture at the divisional level that most closely meets the needs of the locay market. 4). The divisional structure allows decision-making to be shifted downward i improve the company’s ability to respond to local market conditions. in the organization, which may 5) When a company has a large number of product offerings, or different markets that it services, and they are not similar, it makes more sense to adopt the divisional structure. Disadvantages of Divisional Organisation Stru 1) The company as a whole may not be able to integrated across the entire organization, age of economies of scale, unless purchases are y divisions, no one functional area wil be 2) When there are a number of functional areas spread among ms jon for each function, srefficient as would have been the case if there had instead been one central organiza 3) The various divisions may have no incentive 10 work together, and may even work at cross-PUrposes, as some managers undercut the actions of other divisions in order to gain localized advantages 4). All skills are compartmentalized by division, so it ean be difficult to transfer skills or best practices across and services between the divisions. the organization. It is also more difficult to cross-sell products own strategic direction, which may differ from the strategic direction of 5) Each division will tend to have the company as a whole. 5.2.4, Functional Organizational Structure Functional organisational structure is the traditional structure, which is in existence since the Inst 200 years. Many changes have taken place in the original structure from time to time, due to the demand of ‘changing times, mostly relating to market competition, information technology, customer behaviour, etc Chet Eewuive Personnel ‘Manafactaring Marketing Manager “Manager Manager Oa Coan] [Fe tiger i er] [Rng Tar Relations Salslog Raion | | ames Rene] [ee Ce oy Saray aio aby Figure 5.3: Functional Organi lon Structureproject Implementation and Review (Unit 5) 161 ‘Under the Functional Organisational Structure, the Organisation is divis in i ; n . the organisation is divided into various functiona eg eneesng mans, Gace, marketing. human resources, MIS Pret confined fos sng isn parent pose em ad move smoothly without any hindrance. However, if a eet aol a close coordination amongst those functi is ca oh . ns r tional department ‘Thisis a challenging task fora project manager, who is requited to assign, monitor and contol the oak speed gxertwo or more functional departments . crear advantages of the Functional Organization Structure inetional organisation structure is beneficial it is Fama mectans of onlin the cost and eay budgetary exes 2) Improved control mechanism through the following: ; i) Sharing of responsibility and knowledge. ii) Grouping specialists. 43) Having flexibility in respect of management of human resources. 4) Availabilty of sufficient human resources. 5) Lines of responsibility may be spelt out in an unambiguous and easy to understand manner. 6) Functional discipline, policies and systems and procedures are sustainable without any interruption 7), Within the specified parameters, it is possible to undertake extensive production activities. : Disadvantages of the Funetional Organization Structure Functional organisation structure is deficient in the following respects: 1) Absence of assigning the authority and responsibility of the entire project to a single person. 2) There is no project-oriented focus for the accomplishment of the assigned task. 3) Decision-making exercise is cumbersome and time consuming due to poor coordination system. 4) Decision-making process may not be fair, as it tends to favour the most powerful functional group. 5) It is not customer-centric, 6) Response to the customers’ demands is rather poor and slack. 7) Fixing of the accountability, if need be, is not easy due to absence of an appropriate projectoriented planning and authority. 5.2.5. Project Organizational Structure The concept of project organisational structure is the latest one (post-World War Il) amongst all the structures, The most striking feature of this structure is that it helps in bringing about the necessary coordination between various departments and implementing multifarious project activities. Incidence of negative nature, Tike interruptions, overlapping and clash of interest in normal functioning, etc. are eliminated to a great extent. Decision taken by the project management to adopt project organisational structure may be considered an important step in the right direction. | departments operate. The structure is created a number of functional the same may be Under a project organisational structure, nents that is achieved or the project is completed, with specific objectives in view and once separated according to the provisions in this regard. ‘General Manage Project A Projet I [ — I aly eesio) | fran] | [Pecine eet] | [rao] | [rocesine Contac act Engineering |qgminsraion| | SePeMlng Engincerig || pone ion| [Scheduling Engineering |} aa Manofocring Figure Sai Project Organisation168 MBA Second Semester (Project Management) JNTUK Advantages of Project Organizational Structure Project organisational structure is beneficial in view of the following favourable points: 1) The project manager exercises total authority in various matters relating to the project. 2) Any resource required in connection with the development of the project may be procured by the project manager, who has the freedom to do so. 3) Every member of the project team is required to report to the project manager directly. 4) There is sharing of project personnel between the project organisation and the project 5) Unity of command is encouraged under this type of structure. 6) There exists an efficient and formal channel for two-way communica project and its manager. 7) Under the project organ cutting across the borders of various projects. They 8) Itempowers an organisation to develop the traits of adaptability, of fast changing environmental factors. tion between the team members of a ation structure, specialised knowledge and skill are put to their optimum use, can be shifted from one project to another. which is very crucial in the present-day era Disadvantages of Project Organizational Structure Project organisational structure suffers from the following shortcoming: 1) Itlacks efficiency as far as the utilisation of various resources is concerned. 2) There are instances of duplication of facilities. 3) Personnel from the functional departments of the business entity are be deputed for the project work, which impacts the normal working of the concerned functional departments in a negative sense. 4) This type of structure leaves the people serving a company with a feeling of insecurity and uncertainty regarding their future careers. A lot of ad-hocism takes place during the short life span of a project, which creates an apprehension with regard to the post-project scenario. 5) Personnel are required to move from one project or department to another project or department. As such, they find it difficult to place their loyalty to a single department or project of a company. Their loyalty to the employer is likely to be eroded over a period of time. 6) Team members’ role in the business entity is rather vague under this type of structure. Such kind of ambiguity impacts their morale negatively. Only those team members who are used to working in an environment of ambiguity find themselves comfortable, 5.2.6. Matrix Organizational Structure The benefits of all the organisational structures (other than the matrix organisational structure), viz. line and staff organisation, divisional organisational structure, functional organisational structure and project organisational structure, find a place in matrix organisational structure. Logically, it should be the best form of organisational structure. It envisages shouldering of full responsibility by the project manager for the success of a project. In case of a failed project, he is the one who is held accountable. Matrix organisational structure is appropriate for the ‘project driven organisations’, such as companies engaged in the business of software development. ‘ ce0 Progam ve wir Managers Manufacturing ven i i I x Suit Suit Salt Suit T I T T T Pagina [Fees [Mont 1 AR Fre Naarer LY] Earecnng —][— Nanatcaring 7 Te E L Tassie Lf Bawa Hf Noto 7a Figure 5.5: Matrix Organizational Structures_— pt neem at iw (U3) ie mattis organisational structure may be developed if the following requirements are ensured: Ame eam members should make foal commitment by making arrangements for their full-time employment ina project. There should be such system present which could address the incidences of clash of ideas, if any, in a prompt manner. ‘There should be negotiations in respect of managers. ‘There should be operation of fun 0 ‘ious resources with functional managers and project 2 ynal departments 4 qe basic objective of a matrix organisational structure is to ensure total coordination and sharing of TRromsbilties between the functional management and project management, so as to obtain a synergistic atrix organisational structure gets impacted by the level of influence a project manager or a | manager have on it, which is also a deciding factor whether such structure becomes strong or result. M functional weak: There are certain pre- s, Which facilitates implementation of matrix organisational structure which is jpleed a complex one. Such pre-conditions are as follows: F) The major product produced by a manufacturer is a complex one. 2) The customer base of « company is broad and it serves a large number of cients spread over a large number of locations. 3) The design of a project is a complex one and innovative ideas are called for its timely completion. 4) The flow of data for processing is heavy. 5) The product designing, development and testing is not that simple and sophisticated expertise is required. 6) The resource-sharing between various projects is involved. 1) Approduct is forced to undergo fast changes in order to meet market conditions and resultant expectations Advantages of Matrix Organizational Structure Thore are a number of benefits accruing as a result of adopting matrix organisational structure, which are as follows: 1) All the available sources are monitored and controlled exclusively by the project manager. 2) A project may have exclusive sets of policies and procedures specific to that project. 3) Project manager is duly empowered to commit the company’s resourees. Tis leads to avoidance of clash in scheduling of one project with other. 4) tensures a prompt response to various project issues like requisite changes, clash of opinions, ete. 5) Availability of functional department's cooperation and support tothe project in an uninterrupted manner. 6) Future career of the team members is assured. 7). There is sharing of pivotal personnel by various projects, which results in overall reduction in cost. 8) tenvisages solving of complicated issues by devoting more time. Disadvantages of Matrix Organizational Structures ; Matrix organisational structure suffers from the following shortcomings: 1) There are possibilities of ‘power struggle’ under the “two boss system’. 2) A lot of time is needed for team meetings which is characterised by the team members becoming too self-centric that tional goal) may be built in the team. under the matrix organisational structure. 3) The phenomenon of “Groupitis’ ( they do not work for the orga 4) Necessity of additional team leaders to this kind of structure may lead to increase in cost.170 MBA Second Semester (Project Management) JNTUK. ROJECT PLANNIN §.3.1. Introduction Planning means predicting or forecasting the future activities and jobs in advance. In a business environment, planning is the primary function of considering the objectives of the enterprise and formulating policies accordingly with a view of achieving the goals and the objectives. ‘The basic reason behind planning is the development of a model, so as to aid she project manager to identify the critical tasks which require timely completion, Further, various strategies are formulated to ensure that the various activities and the resources are adequately managed, This will ensure the timely completion of the project and within the allocated budget. Planning involves estimating the project size, technicalities that may arise during the course of the project, budgeting the required resources for project completion, identifying and assessing the risk involved, preparation of a schedule, and negotiating the terms with the other parties. Thus, it can be said that, project planning refers to determining various tasks and activities to be performed on the project and scheduling them in a order by assigning respective time for each and every activity. 5.3.2. Meaning of Project Planning It refers to defining and describing the various activities and the end products of a project to achieve the overall objective. Under project planning, the task that holds the significance are defined by estimating the quantum of the resources and the time required. This enables the management to draw the budget and correct the deviations, if any. Under project planning, following need to be defined: 1). The goals of the project and the respective activities required to accomplish them. 2) Documentation of various estimates for the purpose of controlling and correcting. 3) Documentation of the agreements by the affected groups and individuals. 4) Presence of the alternatives and substitutes and constraints in the project. Project = Project Project Project Feattack |} rtming Je POR |} iptementon E>} Peoemanse \Geeems con i eS nits fe | Figure 5.6: Project Planning Koontzand O'Donnell defines as “Planning is to a large extent the jobs of m; . not otherwise occur", They go on to state ~ “Planning is thus an imeyeis, Pif8S happen that would : ; lectual proces, determination of courses of action, the basing of decisions on purpose, facts, and peer len ot the conscious ‘ estimates”,prajest Tmplementation and Review (Uni » m ‘Thus, it can be rightly said that project planning is both science and the art of utilising the past data, experience, archived information, institutional and organisational knowledge and background in order to forecast the resources and the expenditure required for the timely completion of the project. Under this, suitable guidelines are also issued on timely basis to maintain the quality level and dealing with the adverse situations. 53.3. Objectives of Project Planning Project planning has the following objectives: 1) The various complexities involved in the project are arranged in a series of activities to overcome them. 2) Renders an estimation of the time and the resources required in each of the activity involved in the project. 3) Making adequate provision for the risk and the uncertain events. 44) Improvement in the communication and the coordination, 5) Prioritising the activities. 6) Implementing control measures and reducing the duration of the project. 7) Effective resource utilisation. 8) Ensuring availability of good quality data to assist in decision making process. 9) To ensure that the activities are in line with the overall objectives. 5.3.4. Importance of Project Planning Following are the importance of the project planning: 1) The activities and the tasks are adequately defined, 2). Working schedules are framed in a better way considering the availability of various resources. i 3) Identifying a suitable way of resource utilisation for achieving the overall objectives. 4). Preparation of practical budgets for work performance. 5) Monitoring the progress of the project and correct the deviations. 6) Forecasting the project cost and estimated completion date. 7) Exploring the various alternate strategies. 8) Recognising the requirement of contingent planning. 53.5. Functions of Project Planning | : Those projects which requires limited activities, resources constraints, inter-relationships, etc. does not demand high dynamic planning. It may however be done informally. But, as soon as a project reaches a designates limit in terms of size, resources, and complexity, formal planning process take over the informal planning process. Formal planning requires more involvement of resources and time than the normal activities. Absence of project planning may result in any undue losses. Project planning serves the following significant functions: : . }) Various activities of the project are organised and individuals are assigned their roles and the responsibilities. 2) It serves as the platform for the coordination and communication among the individuals forming part of the Project. 3) Individuals are induced for forward thinking. 4) People realises the importance of timely completion of schedule. 5) Control and correction is established.72 MBA Second Semester (Project Management) JNTUK 5.3.6. Project Master Plan Preparation of project master plan is the first and formal way of starting any kind of project. The project master plan helps the project manager and the team on the project. It keeps the account of the required Tesources and expenses incurred. It is also involved in measuring the progress of the project and also checking the defects. The good planning helps in reducing the different kinds of project failure like scheduling and excess expense. The planning of the project should be the effective one and should be done before the authorization of the plan, There are various cases in which the planning of the project is done even before the formulation of the project proposal. At the time of proposal preparation, the project team is developed and various decisions about the attainment of the resources is made. The team makes the summary of the project plan to be included in the Proposal and the same will also use for developing more detailed master plan. The basic difference between the proposal and the master plan is that the proposal is made for the customers while the master plan is made for the project team. Contents of Master Plans 4 The content of the master plans changes according to the size, difficulty and the features of the project. Basically, the plan has three basic sections: 1) Management Summary: It gives information about the project done by the upper level of management. There are information about the project, objectives, overall requirements, constraints, problem areas (and how they will be overcome) and the master schedule showing major events and milestones. 2) Management and Organization Section: This section has the information about the need of the organization and personnel involvement in the project. It comprises of: i) Project Management and Organization: It gives the information about the way of managing the Project and also recognizes the personnel and authority relationships ii) Manpower: It gives the detail about the number of human resource required according to the capacities and policies for finding and recruiting qualified person. 3) Technical Section: This section has the information about the basic project activities, ti comprises of: i) Statement of Work and Scope of Work: It has the detail about the various work performed in the project and outcome of the project. 1es and cost, It ii) Work Breakdown: It covers the information about the work packages. iii) Responsibility Assignments: It has the information about the personnel and the work assi them according to the work packages and other work in the project. ‘ening to iv) Project Schedules: The project schedules show the summarised project and the task se ; has various actions, achievements and the place where critical action or decision neues Meh comprises of Gantt charts, project networks and PERTICPM diagrams, iS required. It v) Budget and Financial Support: It help in calculating the capital and des veloy materials and facilities. It also estimates the time when these are required, et Needed for labour, vi) Testing: It gives the information about the things to be tested which comprise ; person required for doing it. prises Of process, time and the vii) Change Control Plan: The process required for analysis and the result of th any part of the project plan. © need of the changes forjest Implementation and Review (Unit $) re 13 viii) Quality Plan: It help in controtti ' ‘i , eed endless asseenbiies ing the quality and taking result for individual work tasks, components ix) Work Review Plan (may be included in work, the thing to be reviewed, the according to which it is done, Quality Plan): In this plan, there is regular check of the Person doing it, time at which it is to be done and the standards x) Documentation: The various documents require . a «d to be presented in this section, i i instruction covering the manner it should be orgat i 1 sfane. ith ie che nized and kept are provided. xi) Implementation: It emphasis on the discussion and the principles explaining the way the customer will change to ot will accept the outcome of the project. xii) Economie Justification: It shows various ways i jecti s n tion: | ys by which the objective of the project can be achiev and it show the relationship between costs and schedules 2 a ee oy winless xiii) Area of Uncertainty and Risk: It is plan made for any risk and uncertainty knows plan at the time of work failure. ” reat iaenaaieo 53. Tools and Techniques of Project Planning Following are various tools and techniques of project planning: 1) Multi-Level Scheduling: It means preparation of schedules at multiple level. Depending on the need, the schedules may be prepared at 3-4 different level, which may be: i) Master Project Schedule: It caters the requirement of top management. It highlights the peak or milestone that is to be achieved and indicated the different activities required to be done. It does not carry the details of the activities. ii) Functional Area Schedule: It caters the requirement of the functional departments. It carries the estimated and the projected details of the various activities contained in the master project. iii) Schedule of Work Package: It means the detailed schedule for the various work packages forming part of functional area. This is mainly designed for sub-contractors or the individuals designated for the execution process. 2) Multiple Project Scheduling: In case, where different projects are undertaken at the same time, the resources need to be adequately allocated among the different projects in hand, Various project requirements are reconciled, and are allocated in order of urgency ot preference. To ensure the optimality in the allocation process, various systems need to be inducted by the management Which must be dynamic enough to meet the requirement of the existing projects and also accommodate the new projects, This task can be highly cumbersome and multiple project scheduling requires experience project managers. is i : s, vari ‘hniques like inventory data, ‘material bill, 3) Material Requirement Planning (MRP): ‘Under this, various tect ju master sdsenon schedules are used for estimating the material requirement. It covers all the aspects for : ; san efficient and effective material the material to be manufactured and other items that req ‘management system. aterials are first allocated to the items under manufacturing, The ‘d and re-evaluated to known the delivery of the pending orders. A hich include those who require an immediate the orders that are planned w! le 0 ; wea t Per tes de require to be released in future. Lead time that exist inthe production and the civery i ve inewhat reduced and the various deliveries are intended to meet the deadlines. The procurement, production and delivery In planning process, the existing m: total requirements are then considere stages are streamlined and delays can be avoided. 4 5 ep Dino + scheduling time are classified as the CAT & RAT schedule. i) Different approaches for . ii) CAT refers to “Committed Activity Target Schedule’ while on the other hand RAT refers to ‘Reserved Activity Target Schedule’. |ms MDA Second Semester (Project Management) JNTUK 4) CAT schedule aids in progression of executing departments, whereas RAT schedules are the ones to achieve. The project management should try to maintain a reasonable distance between the two Schedules to ensure that the CAT does not absorbs the RAT schedule. iv) CAT schedule carries the details and develops in a squared network while the RAT schedule is established in S curve form. ¥) Only the significant milestones constitute the RAT schedule while all the significant activities and goals constitutes CAT schedule, W) Under the RAT schedule provision is made for the delays but the same remains hidden from the executing department. Some scope is maintained considering the uncertainties and the contingencies involved for executing the project. vii) In case there is a delay in achieving the milestone, then slippage is acceptable when reporting is made to general public and financial institutions. viii) Both the schedules needs a revision, when there is a change in the estimated cost to ensure the provisioning for the allowance. 5) Network Analysis: It holds a significant position in the concept of project management. In a network, various activities and the events are graphically represents the planning and scheduling of the project and thus making the control easy. Programme Evaluation and Review Technique (PERT) and Critical Path Method (CPM) can be used by the project manager to ensure effective planning and thereby controlling the huge projects of construction, research and development and many others. Normally, the size of these projects is large and involves complex activities that requires various activities and tasks from numerous departments. Few examples are constructing a commercial or a residential complex; construction of a shopping mall, airport, shipping port and its repair center; developing a new vaccination; developing and implementing ERP software, launching of a satellite, installing a pipeline; construction of a manufacturing plant or unit etc. Under this, large volume of money and human resources are required in addition to various technical equipments. ‘These techniques are lifeline for the managers while handling the turnkey projects. This ensures that various timelines are duly met. 6) Allocation of Resources: One of the many problems encountered by project manager is that of resource allocation. Using the network analysis techniques, he may be able to identify critical activities. To ensure the timely completion of the project, the adequate resources should be available as and when required. The problem of limited resources is bound to be faced by the project manager initially or at a later stage. Various problems like delay in receiving building material, non- availability of the labour requirement or even surplus labour. As a project manager, the focus is on optimal utilisation of the resources for various activities so that the work is not put to hault. 7) Resource Levelling: Under this, the major problem is that of a fixed duration of the project. In other words, the project must be completed by a certain date. An attempt is made to fix the situations requiring abnormal demands and ensure thatthe same is evenly spread out. These problems are also termed as the time neiecd resource considerations issues. 8) Work Packages: Work packages means the complete project is broken down in small sets of activities or tasks, Such breaking down depends on the significance of various tasks and activities and the eeitcal esta necessitating forthe completion. It may happen that a level 2 breakdown is enough, though level 3; hroncs breakdown is required. Work contained in each of the boxes should be defined in a careful mansen Wer or the same isnot possible thatthe boxes may be divided funher. Following should be included in tegen i) Clear and Comprehensive Statement of Work (SAW): There should be clear definition nf he ask 0 the individuals should know their responsibilities clearly. 1e tasks li) Resource Requirement: 1t contains the need for various equipments, labour, wa skills, i facilities for the activity. materials and9% ns ia) Time: jx) Costs: It denotes the costs to be incurred tow i wands various resources, management and oth: «). Responsibility: The vari i feos cieek ) pom ae fs individuals, groups who are responsible to carry out a suitable task vi) Outcomes: The end-prosiucts, results, and deliverable ofthe activities and the tasks, si) Inputs: The conditions initiating the task. iit) Quality Assurance: The initial, processi jit I Processing and the end conditions required for a particular activity or jx) Risk: There is always an element of uncerta way tainty as related to cost, time an SOUrE uncertainties may cause or increase the volume of the risk element. eee x) Other: Any other information as may be required from time to time. If any activity and task contained in the box cannot be preci: y y 3 precisely defined. Then it may treaking down to get the precise definition of the underlying task. In majo eh eee ane that such break down can be made into smaller pieces to get the exact definit cases, it is however possible Table 4.2: Properties of Work Package Input Task ‘Outcome Predecessors Statement of work | Deliverables Preconditions Time Results Resources Cost Requirements/specifications | Responsibility Quality assurance Risk | Following are the tools defining the work packages: i) Product Breakdown Structure (PBS): What are the requirements of the project? To begin with the execution of the project. initially itis important to understand the deliverables required from the project and breaking them into smaller components. This breaking down of the main deliverables is called product breakdown structure. ii) Work Breakdown Structure (WBS): It is referred to as the procedure of breaking down the project into smaller components. The smaller components are defined in detail to get a clear job description as required by the personnel who are delegated the execution ‘of the task. The activities related with the producing the deliverables are further segregated into individual work activities and are documented after the break down is made. ‘The different models obtained should commensurate with each other and various work packages as identified must relate to specific deliverables. A ‘combination of PBS & WBS is then made and in such an event the combination is termed as ‘WBS. iii is y i tivity the task iii) Organisational Breakdown Structure (OBS): It may happen that a certain acti 'y oF ! , requires sone specific set of skills. So, wh conducting the project planning, itis essential to frame aaa ees atidvale who will be delegated the project work, documentos of the information and communicating the same to project team. ‘This delegation of work to the different individuals is known as the organisational breakdown structures. ji 5 ve i the activity falls short than the 14 that the manpower required to conduct th han th eae care early highlights thatthe skills are short and the deliverables may not be available in the specified time. So, availability of the resources are responsible in determining whether the project will meet the deadlines or not. ivi i 0d used for Bar-Chart: It i wn as Gantt chart or multiple activity chart and is the oldest method f formal ae nilesnis| 2 tion plan and carefully examines the sequence of activities being caried ut as per the terms of the plan. Bar charts are easy to draw and comprehend. Also not much technical skills are required in understanding the same. These charts are used for straightforward and complete understanding of the construction projects when the relation among different activities is simple." MBA Second Semester (Project Management) JNTUK A sraphical form of presentation holds an edge over the other forms of presentation and follow UP, Minder this, the activities are represented directly in the graph and the completion time shown Cha aire th = 2 the left side is the beginning time while the one on the right is the completion time. Thus, tie Oi Of bar signifies the duration of the activity. The quantum of human resources required is indica itself. Figure 5.7 represents a bar graph: Time in Weeks from Project ee [5 [20 Dalgang [ Pacha ofComponens fy | Fabien ey “Assembling ” 10) Line-of-Balance: It is used by the company for controlling aspect such as to collect, measure and present the time and cost data as set against the standards. The purpose is to get the exact status of the project in terms of timelines and the resources that are used. Like bar charts, itis also a graphical tool which aids the manager in visualising the activities and establishing a correct balance among them. It oversees and correct the activities as and when they deviate from the timelines. In 1941, it was first used by Goodyear tyres, for ‘monitoring the production process. Is basic aim and focus is towards balancing the various activities when they progress and enabling proper scheduling to plus the loopholes. Line of balance is carried out by: i) Making adjustment in production rate so that all the activities terminate collectively and time lags are substantially reduced fi) Causing delay in initialising the activity that completes at a faster rate than the preceding activity. 11) Linear Programming (Time-Change Chart): To carry out the linear jobs, it is the most suitable technique used. It is normally adopted by the contractors engaged in construction of roads, canals, drainage system, pipelines in the underdeveloped areas, It is also used while constructing tunnels in industry effluvium. Unlike LOB, it is also a two dimensional graph and the relationship between different activities is clearly established. 5.3.8. Process of Project Planning Following are steps followed in project planning: ses Lome Lara | lam Figures, rrocess of Project Planning. 1) Identification of the Project: It is basically related with collecting, compit > data for selecting the best possible opportunity for investment and considering hen analysing the financial opportunities. ‘sts associated with that i q an entrepreneur analysis the altern 2) Project Formulation: In this step, an ent sis the altemate co Various channels are assessed in terms of the output and the associated eer of investm different options available andthe product idea are converted into pros Keeping in view to achieve the maximum by nesting the minimum with et ' ents to be made. involves strategising the The project is formulated lated time, PF Beeot Minor eause Minor cause ‘Major cause Major couse Figure $.10; Principles of the Sotution-Effect Diagram, 4) Control Chart: A control chart is a graphical representation of the collected i i . ; may pertain to measured quality characteristics or judged quality charctedhiee of oe) The information aration in processing and warns if there is any departure from the specified tolerance nen eee itsproject Implementation nd Review (Unit S) tat 3) Flow Charts: A flow chart is a pictorial representation of the stages in a process. A series of sy b connected to each other in a logical series, portrays activities, decisions and databace. age determining how the process actually works, This allows complex procedures to be broken down ing manageable parts for examination, better understanding and, if necessary, redesigning, potenist sources of trouble and wastage ean be uncovered, thus making flow-charting a costsaver in many diverse fields i as processing orders, faulting procedures, corporate planning, product realization, operations methodology, etc, The main symbols used and their purpose are shown in figure 5.11. Symbols Purpose Ce (start or finish Activity <> Decision Database deseption Connector (o other pans of the chan ‘on anther Page) Figure $.11: Main Symbols for Flow-charting 6) Pareto Analysis: Pareto analysis is a technique for ordering causes or problems from the most to the least significant. In this way, the most significant aspects are identified and the efforts can be concentrated on those, thus getting the maximum benefit with the least effort. The analysis makes use of the Pareto diagram, which is a special case of the bar chart, and is used in conjunction with brainstorming, cause and effect analysis and cumulative line charts. The diagram displays, in decreasing order, the relative contribution of each cause (or problem) to the total. The relative contribution can be based on the number of occurrences, the quality damage or the cost associated with each cause (or problem). is Figure 5.12 provides an example of Pareto analysis with reference to the number of defects in the manufacturing process of Printed Circuit Boards (PCBs). The diagram indicates that the improvement effort should first focus on the elimination of blowholes and incomplete fillings, which account for 71% of the defects in the PCB soldering process (vital few). Obviously, the rest of the data defects (dewetted joints, coarse graining, and excess soldering) should not be ignored. ass og ye 250 aioe 220 3 s . / ze u, e | Zin 8. 16 0 , t,t = 10% Blowholes Incomplete Dewetted Coarse Excess fillings joints —_graining soldering rareto Analysis for Printed Circult Board Products Figure 5.12:MBA Second Semester (Project Management) INT, 182 ram is one of the tools of quality. chnique used to analyze the ‘he analysis produced by the ysis, It shows whether or Scatter Diagram is called Regression A not there is correlation between two variable Correlation refers to the measure of the relationship between two sets of numbers or Les. Two sets of data are plotted on a graph, with the y-axis being used for the variable to be predicted and the x-axis being used for the variable to make the prediction ure 5.13: Seatter Diagram onships (although two variables might appear 0 be related, they might ke that evaluation). However, correlation does not s must mal n ‘onship. If it appears that values for one of the variables can able, then there is correla The graph will show possible re not be; those who know most about the variabl be predicted based on the value of the other vi EEL Studs eS Sh presence of human relations also drives a project towards its successful \d human relations work hand in hand. Absence of human relation will aid of finance, but issues relating to Apart from the financial resources implementation. Project management an lead the project nowhere. Majority issues may be resolved through the human are very delicate and cannot be resolved through the money power. For optimum balance in the human relations, issues like orientation, authority, responsibility, motivation, commitment should be tactfully handled by project manager. ‘Human Aspects of Project Management Project Authority Project Orientation ‘Commitment and Motivation Group Functioning 5.5.1. Project Authority It signifies the power to control or to command the activities of the others towards a direction while executing a project. As per the well-known management principle, the authority can be delegated by the superior to its subordinates. It’s the subordinates out of respect or seniority deputes to the superior with the Power to control them. If a is manager having certain authority, then it is mixture of power and the fact that the subordinates are willing to accept his decision. i Unilateral authority does not lie with the project mana ; . company, but for the internal matters, the authority is shared, The project size, maneor ene management's philosophy defines the amount of authority a manager possesses, There wen ince and between the risk and the authority. Ifthe risk associated with the project ie ren se pe aeeeet Feation authority is delegated to project manager, Project is high, proportionate level of When the organisation structure is project-oriented, the authori : , rity related , procedure is also held by the project manager. In such kind of organi eianaees fenetional policy and the placed at the helm of the affairs, and holds the ultimate authority and there ane er ne Prodeet manager is came. fe are no hurdles in exercising the-F ex tmemenation and Review (Uni) os pe personnel incharge of functions are deputed to work as per the instructions of project manager and sonable authority to conduct the work which is delegated, Apart from this, in case of other organisation cture the project manager lacks the ultimate authority and the ne is shared by different personnel. 55.26 Project Orientation iris immaterial whether the organisation structure selected for a project is a matrix, task force or a project oriented. Its successful implementation depends on the leaders and the different individuals carrying out different functions, Majority projects being highly technology driven arc handled by the engincers or technicians who have the experience of working in the highly technical environment. When the engineers and the technicians are assigned the managerial responsibility, then there are chances of uncertainty and risks and the main challenge is to resolve the unstructured problems which they have not dealt before. On the other hand, they also have to maintain cordial relations with different personnel and efficiently utilise the resources. So, as @ project manager, the major focus is to enhance the human bonding and increasing. managerial orientation of the personnel involved to achieve the underlying objectives of the project without wasting any of the resources. To infuse managerial orientation in other personnel, the project manager should himself be fully equipped with the managerial capabilities as well as the professional qualifications. 5.5.3. Commitment and Motivation For the success of a project, commitment and motivation are the prime requirements. So, a project manager always focuses on to motivate the personnel and make them committed towards the project. It may happen that the organisation has prepared a unique project report, has adopted the best available technology, has a best team of technical consultants, an experienced construction contractor, done adequate planning and coordination, has made financial arrangements and maintained adequate facilities for the timely disbursement of funds, has acquired the latest equipments for the success of the project. But, the essence lies in ‘acquiring and building a committed and motivated team who plug the gaps when required and collectively focus on achievement of the objectives within the prescribed time frame. So apart from possessing the technical competence, the project manager should be a good observer and influencer of personal relations to carry his team all the way through the completion of the project. At times, he must entertain the difference in individual requirements and tackle in a strategic manner. He must be self motivated first and supportive enough to understand different personnel. There are different things that drive the motivational level of different human beings and to initialise is the physiological requirements of the individuals. As soon as the basic requirements are satisfied, other Tequirements like emotion, safety, esteem, self actualisation arise in ascending order. A project manager should take care of all these requirements so as to keep the individuals motivated and inserting the sense of belongingness in them so that the individuals may accept more responsibility. At times, individuals are bound to react differently to satisfaction of varied requirements as they also might get influenced by their colleagues and seniors. Normally, the term motivation is related with the material benefits. Majority of individuals are materially driven, Often increase in their position does not affect them as much a material reward does. But at the same time, this material motivation has a shorter life. If the monetary rewards are less than the expected level, the same may back fire and result in de-motivating them, So, such individual requirement of monetary reward requires continuous monitoring. While commitment is a personal quality of the individiaal and cannot be externally infused. Commitment comes with motivation but often the non-material rewards 'Metease the level of commitment.mnester (Project Management) INTU, = MBA Seco project's office but also needs volved in the project. 5.5.4. Group Functioning A large and a complex project not only d representatives from different departments, groups, organi Involvement of different ates the x two types of groups: personnel formulates the following (wo (YP: ETI ea the 1) Formal Group: A group that is formed as per the organisation irncture and obliges the formal requirements. 2) Informal Group: It is voluntary formation by different together having a common ideology. These individu common thoughts, background, values, interests, ete. organisation structure. jemand personnel from th isations who are im 1s from different organisations that comes rds each other as a result of ipported by the indi Is are attracted towat 1 the group formed is not SU and types of groups may exist: et eid nao le jerarchy but at different rt cauals hold same level of position under the hi While setting a project. following thr 1) Horizontal Group: When the departments, functions of the companies. viduals in hierarchy of the same 2) Vertical Group: When different levels of positions are held by the ind department, functions of the companies. 3) Mixed Group: It is a composition of horizontal as well as vertical groups The individuals may come from ‘any position in the same hierarchy or a different one, jing Effective Groups Reeve be said that groups are the core to an organisation's success and it constitutes a Ie of individuals who takes the responsibility to carry the project without cutting time and energy in interpersonal spats and Gisputes, Some of the signs are: pride involved in handling the project, esprit de coms. supportive and Gispules ive behaviour, mutual understanding and respect, looking for alternatives in case of problem. etc, on the interpersonal conflicts that the project objectives apathy, mutual bickering, cynical On the other hand, if the individuals are keen to b are likely to take a back seat. Such groups are featured by resentment, attitudes, divided efforts and low morale. Following are few points that may be considered while formulating an ideal group: 1) Developing mutual trust. 2). Reducing defensive behaviour and motivating them to take initiatives. 3) Increasing cant 4) Infusing the sense of support and cooperation. understanding. conversation. 5) Resolving disputes through mutu ‘So, to develop an ideal group, the sense of participation is necessa ev i . is necessary and management should take the responsibilty to build the same. Only by using this concept, the manager can develop trust, supportive Pekaviour, open communication, project attiude and cooperation among the group. Its achievement requires leadership qualities on the part of the manager. 5; ROJECT, RE 5.6.1. Introduction ‘One of the most effective tools for overall project management is the use of project reviews. The fa he purpose of project review isa critique ofthe projet at an early stage by interested part si i Eapecially useful in projects where a complex system is 10 be designed and seater Tee eras prncess provides a forum fr the project team to present the design and defend Trees a uae eran Persons, including experts and specialists and, of course, the customer, crea exienee maeemnentation and Review (Unit S) pews! 185 Types of Project Reviews ject manager has to conduct various reviews throughout the life of a project to ensure that it is vosressing towards achieving the planned objectives. The manner in which these reviews are conducted Medes the success of current and future projects. In general, a project manager conducts three types of eviews: ; {) Status Reviews: Status review is the most common and frequently conducted review in organisations taking up projects. A status review is usually conducted at two levels: i) Cursory review, ii), Comprehensive review. ‘Though deciding the frequency of project re monthly comprehen: s is largely a matter of judgment, a weekly cursory and a ve review are conducted for projects of one year duration, The frequency with which project reviews are conducted also depends on the frequency with which problems occur. Project reviews are conducted frequently whenever problems arise, Care should be taken to avoid conducting too many project reviews. The project manager should take care that team members give status reports that are substantiated by meaningful numerical figures on cost, performance, time and scope. ‘The project manager should also be aware of the possibility of misreporting. In many cases, team members report that they are on schedule even if they are not, in the hope that they will be back on schedule by the next reporting period. The project manager should design a reporting system that can detect deviations ‘ch are greater than the permissible variance limits. 2) Design Reviews: Generally, a project is subjected to a design review, usually at the major milestoné primary objective of conducting a design review is to check whether the design of the product or service deing produced is of the desired performance quality. Thus a design review is more a tool for reviewing the performance factor than the cost, time and scope of a project. ‘The performance of the product determines the project’s success or failure. The design of the product plays ‘a major role in the effective performance of the product. A design review should cover aspects like: i) Conditions of manufacturability, serviceability, tooling, economics of special machinery and processes to ensure better integration of design with manufacturing to ensure overall optimisation. ii) Safety of operators and maintenance personnel and precautions taken to minimize damages. iii) Scope statement along with technical spec products can be evaluated. cations based on which the performance of end 3) Process Reviews: The primary objective of conducting a process review is to determine whether the processes are going on as planned and whether any improvements are possible. A process review is conducted either once in three months or at major milestones in the project, whichever comes first. Process reviews can be conducted once a morkh if the project is of shorter duration. 5.6.3. Advantages of Project Review Once the project enters the implementation phase, the project manager should take up the responsibility of reviewing the status of the project in a timely and phased manner. Project reviews conducted at various stages of project implementation play a major role in the success of a project. The project manager conducts reviews to find out: 1) If the project can accomplish the business goals, 2) Whether the rules of the organisation are understood properly and implemented, 3) If itis worthwhile to take up the project at all before entering into major contracts, 4) Whether the project is managed effectively and the team memibers are sure of completing the project, by following the guidelines. Reviews give the project manager and the organisation a chance to solve problems before they get out of hand oF to improve the way in which the projects are being handled. To derive the maximum benefit out of the {eviews the project manager has to take follow-up action with an open mind.‘Semester (Project Management) INTU,, ite MBA See trative Aspects of Project Review 5.6.4. Performance Evaluation/Adm Performance Evaluation/Administrative Aspects of Project Review ‘Control of ln-Progreas Projects Post Completion Audits (PCA) ‘Abcasioorient Anaiytis ‘Administrative Aspects of Capital Budgeting Agency Problem TL] tvatuating the Capital Budgeting ST] System of an Organisat 5.6.4.1. — Control of In-Progress Projects A The control and controlling in the ongoing process which enables the project to flow on a pre-determined course. Even if the project is properly planned there are chances for the project activities to go wrong. It may result in cost overrun, out of schedule, poor quality of the product etc. Hence, it is necessary for performing the review of the in-progress project. There are two ways of this: 1) Establishment of Internal Control Procedure: Internal control is the process utilised, which consists of five interrelated components which are as follows: i) Control Environment: The control environment sets the tone of an organisation, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline, and structure. Control environment factors include the integrity, ethical values, and competence of the entity's people; management's philosophy and operating style; the way management assigns authority and responsibility, and organizes and develops its people; and the attention and direction provided by the Board of Directors. ii) Risk Assessment: Every entity faces a variety of risks from external and internal sources that must be assessed. A pre-condition to risk assessment is establishment of objectives, linked at different levels and internally consistent. Risk assessment is the identification and analysis of relevant risks to achievement of the objectives, forming a basis for determining how the risks should be managed. iii) Control Activiti Control activities are the policies and Procedures that help to ensure that management directives are carried-out. They help to ensure that necessary actions are taken to address risks to achievement of the entity's objectives. Control activities occur throughout the organisation, at all levels and in all functions. 7 iv) Information and Communication: Pertinent information must be identified, captured, and communicated in a form and time frame that enable people to carry-out theit repeiviin Information systems produce reports containing operational, financial, and. comeron’ d information that make it possible to run and control the business, . ene ela ¥) Monitoring: Internal control systems need to be monitored to assess the quali : rae y ‘ © qual " performance over time. This is accomplished through ongoing moniter rae the system's evaluations, or a combination of the two. 1B activities, separate 2) Use of Regular Progress Reports: Progress reports compare the actual wi al with the pla time with scheduled time, actual cost with budgeted cost, progress of work done oe fanned, peste acu this variance in time, cost and work done are determined. Such an analys reveal: poten annes. Proce apparent in trouble report Js potential problems not Managers should identify these problems and find solutions. One of th comparison of what the project has actually achieved with what the peony ements of the report is & comparison may be quite extensive and should include explanations of al sign yt (9 achieve. This from the plan. Significant deviations of actualPro ees EMIS) Because the report is not a fo 1 : mal evaluation, it ¢ why the Fmphs or faite” occurred. Ts » can reflect the best Judgment of the Project as ject management on ay cata oes dealing with similar technical man should be followed by a set of Tecommendations 5642, Post Completion Audits (PCA) Past-praject evaluation is also known as pos project after its completion. At the time of completion time. After the the actual time taken for project completion Thus, while project appraisal is an estim: tie for the “az ; 5; ‘pas In respect of pubic projets, pan ahs, MME ost reet evaluation isan assessment of he time, post-project evaluation al stu upto which the project's objecti Ying the variations in project cost and project completion So makes an assessment of the actual social cos benefit factors and the extent ial cost-benefit fact jctors and Fost completion audit aims to evaluate the efficiency and effectiveness of the capital budgeting decision that the Feeotcee has implemented. It compares between the planned and the actual outcome, costs and the use of Fe one ot Te aults and benefits. It contains all assumptions that were made during the decisi is one of the ongoing continuous processes thy Benefits of PCA. \ nal in nature and purpose is documenting the mistakes for future referen: 1) Provide a check on personal biases, D improves the quality of estimates, improves the productivity, as estimates become goals. Tdentifies factors due to which projects are not fulfilling their expected promises. 3) Provides information for subs. equent decision-making and can be used for corrective action is estimates Were ever poor, gives a sense Of project evolvement form the original objectives to final objectives. 4) Leaming lessons for the future rather than simply fault-inding or fixing blames, 5) Precautionary care should be taken to avoid misplaced perceptions about the PCA. 5.6.4.3, Abandonment Analysis During @ post-completion appraisal it may be realised that the project is not likely to be so profitable as first thought and the possibility of abandoning it or terminating it early should be considered. Past cashflows are, of course, irrelevant to the decision ~ only future cashflows need to be considered, Abandoning the project is only necessary when the net discounted expected future cashflow of the project becomes negative. The complete abandonment of a project generally means that no one participant can proceed with itor that a competitive bid for the right to develop the project has been lost. On occasion, the decision to abandon a project is based on other factors, such as political actions, changes in tax treaties, and economic considerations in the home country of the participants, A project may be required to be abandoned even before its completion, Such a situation may arise under the following circumstances: 1) When the project has lost its strategic importance both in terms of long-term and short-term business strategies. ; 2) When the resources required for implementing the project have become scarce and their availability has become restricted. it i ir chedule continuously and also ject implementation always lags behind the schedu 0 Misra aed hen Robe aero improve te phse a project implementation do oo yd favourable results, 4) When completing the project has become infeasible due to the changed circumstances.“ ana Secon Semester (Projet Managemen) INTUK peu oni or Me sementing, and following-uP on capita sehangeably with capital expendi’ decision, 0 A istrative Aspects/Phases of Capital Bu Capital budgeting is the process of generating, evaluating, sele expenditure projects. The term Capital budgeting is used inte capital expenditure management and long-term investment des 5.6.4.4. Adi as mentioned below: © investment Screening and Various departments of the |! ‘Selection inet stages a The process of capital budgeting involves five di Stage 1: Investment Screening and Selection: organisation, viz., Production, Marketing, Research & Development, ete: identify projects, which need to be in conformity with the business policie: Evaluation and screening of such identified projects are undertaken based on the criteria with regard to their impact on the future ‘cash flow of the company (value of the company). usdget Proposal ‘Budgeting Approval and ‘Authorisation the after passing thro\ Stage 2: Capital Budget Proposal: Identified projects, in ugh the - process of evaluation and screening, are then subject to the exercise of “Capit pa ial Budgeting’. A list of suggested projects is submitted alongwith the estimate T capital outlay (amount of investment) and revenue generation under each sf the Fo Gompleion A engineering, accounting. E m i inal selection of the project (s) is arrived at. project. Data received from various departments, viz. marketing, finance function, etc., are taken into cor “Authorisation: After being put through the exercise of capital budgeting, a Projects thus selected are authorised for further information pect of selected projects. tions (after authorisation, some additional Authorisation and approval is done in a sequence in (a anil : aanaerh i cnnied ont before the approval), whereas, the projects are authorised and approved simultaneously in wee chee ersaniations, ‘The above authorisation and approval is undertaken in the case where huge expenditures are projected; smaller expenditures are left for the decision of management. ject, work on itis initiated. Monitoring of the work Stage 4: Project Tracking: Consequent to approval of a proj Q and expenditure incurred in connection thereof is monitored closely by periodical reporting to the management ‘This monitoring associated with a project is termed as ‘Project Tracking’. This is a link between the ‘Operating Management’ and ‘Decision Makers’ of the organisation. ‘Project Tracking’ is of paramount importance, as it can immediately identify any problem associated with the project (like incidence of cost overrun) and decision makers can take corrective/remedial measures to resolve the same. Stage 5: Post-Completion Audit: Some of the projects may be subjected to an audit (Post Completion Audit), after the approval of that project, i, after completion of few years, during which the project is reviewed so as to take a view whether or not they need to be continued. ration and a fi Stage 3: Budgeting Approval and final review is taken with regard to various projects. gathering and analysis, and approval for the expenditures in res some orgat However, such audits are performed on-a few selected projects only. Through Post Completion Audit, ‘management of the company is able to ascertain how well the cash flow realised corresponds with the projected cash flow. © 5.6.4.5. Agency Problem ‘Agency theory models a situation in which a principal (or owner) delegates decision-making authority to an agent (the managers) who receives a reward in return for performing some activit it of the . company form of organisation there is divorce of ownership and control. The real oct of the com a ie equity shareholders (principal) delegate their powers and have given the discretion to pursue objectives er the firm to the managers (subordinates). Managers have both the desire and discretion to pursue objectives other th i aoeees an aul . some profit constraint. Managers achieve their objectives directly by Saleen eerie akon eleet te Constraint on items that give rise {0 managerial satisfaction or utility, The shareholders ca above the profit wwealth by giving appropriate incentives to the managers and by proper monitoring of the masaaen anagers.Fr pro constituents of Agency Theory agency theory is based on the following issue: pValue Maxim The sharcholders seek to maximize their wealth, i.e., market value of share and to maximize their return for a given level of risk or to minimize their risk for a given level of return. tplementaion and Review (Unit 5) = However, the management is assumed to put its own interest above that of its principals who are kept away from the decision-making exercise and the routine affair of business, Many shareholders do not even know what is going on and what is going to happen in their business. If the management takes the advantage of their ignorance and lack of clear idea about business decisions and acts in their own best interest this may result o a substantial agency cost to the principal. 2) Management Risk: Management risk refers to the variability of return, caused by business decisions taken by the non-owner managers. Management errors in the process of decision-making are the main reasons which give rise to management risk elements of total investment risk. Efficient decision-making process expects right decision at right time, Hence, the decision and time both are equally important in the present day when the business world needs dynamism to the highest level. Non-owner executives are paid high salaries and perks. If they fail to give the company the desired business profit, it would seem to be very costly affair to the principal. 3) Monitoring: Monitoring refers to the control mechanism, designed by the principal, to monitor the actions of the agent. Virtually, every strategic decision of the management would need to be monitored. ‘The shareholders should always see in their own interest that monitoring is efficiently administered. The principals are not in a position to monitor the routine activities of the agents. Monitoring is done by bonding the agents, reviewing their perquisites, auditing the financial statements, and explicitly controlling management decisions. 4) Motivation through Incentives: Since the theory assumes that all individuals act in their own self-interest, monitoring of agent's performance is not the only way to make them work in the best interest of their principal. Appropriate incentive contracts can motivate them to act in the best interest of the principal Rewards based on performance measure aims to improve the performance of the agents, In absence of an incentive scheme the agents may not be motivated to work hard and to achieve organizational goal. Hence, such incentive contract is considered to be “goal congruent’. A right incentive contract protects the interest of both parties. The contract allows the agent in sharing the wealth when firm value is increased. Ex Evaluating the Capital Budgeting System of an Organisation The evaluation criteria should reflect the organisation's primary objectives for capital investments. By assessing a proposal’s relative benefit in terms of each of these objectives, management can judge the extent to which the proposal will help the organisation accomplish its overall purpose. Criteria selection, therefore, should be based on a careful consideration of the organisation's overall mission, essential strategies, and critical performance areas. Criteria typically fall into three categories: 1) Financial Impact Measures: For example, the net impact of incremental revenues and expenses 2) Strategic Impact Measures: For example, enhanced market share and operating efficiency. 3) Measures of Impact on Quality of Services: For example, improvements in patient outcomes. During strategic capital-budgeting process, following criteria are used: 1) Operating net present value (financial); 2) Market share (strategic); 3) Physician relations (strategic); 4) Operating efficiency (strategic 5) Network development (strategic).190 Bi 1) What do you mean by project implementation? 2) Explain project implementation and its process. 3) What are the Steps for successful project implementation? 4) Discuss the forms of projects organisation. 5) Describe line and staff organisation in bref. 6) What is project planning? Explain the process of project planning. 7) Discuss the tools and techniques of project planning. 8) Explain the objectives and importance of project planning. a Second Semester ject control. 9) What do you mean by project control? Explain the types and process of project com in project management. 1) Discuss the various quality control methods which are prevalent in project manager 10) Give detail to the human aspects of project management. 11) What is project review? Discuss the types of project reviews. 12) What are the advantages of project review? 13) Explain the various admi 14) Describe the administrative aspects of capital budgeting. 15) Write short notes on following: i) Abandonment Analysis ii) Post completion audit iii) Agency problem. istrative aspects in the context of project review. project Management) INT,