CHAPTER 1

PROJECT PLANNING AND CONTROL

1.1 INTRODUCTION
Workers typically follow a morning routine that begins with waking up, and
ends with arriving at work. While everyone’s routine will vary in number of
tasks, and tasks themselves, the majority of routine include two things: a clean
shower and getting dressed. It is obvious getting dressed for work before
showering is not efficient and can cause you to be late for work, but what is
not so apparent is our routine is actually a project. The complete project begins
with waking up and is completed when we arrive at work. Tasks like a morning
jog, eating breakfast, taking a shower, and getting dressed are activities which
must be completed in order to complete the project. This is project planning in
its simplest form. Whether we do it mentally or use pen and paper, we plan for
every project in an effort to save time, money, and avoid headaches.

On the corporate level giving incorrect estimates, failing to meet deadlines,

and oversight can lead to loss of revenue and marginal profit. Project planning
is a vital tool, without it constructing a 20-story skyscraper would be nearly
impossible.

There are two main techniques pertaining to project planning in use today: the
Critical Path Method (CPM) and the Project Evaluation and Review Technique
(PERT).1

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Project management is an activity to ensure smooth implementation of any
project as per its specification. The following sections detail out the key
concept of project management.

1.2 PROJECT LIFE CYCLE2

The Project Life Cycle refers to a logical sequence of activities to accomplish
the project’s goals or objectives. Regardless of scope or complexity, any project
goes through a series of stages during its life. There is first an Initiation or Birth
phase, in which the outputs and critical success factors are defined, followed
by a Planning phase, characterized by breaking down the project into smaller
parts/tasks, an Execution phase, in which the project plan is executed, and
lastly a Closure or Exit phase, that marks the completion of the project.

1.2.1 The Project Initiation Phase

The project initiation phase is the first Project Phase and is usually represented
by the conceptualization of the project. The purpose of this phase is to specify
what the project should accomplish.
The basic processes of the Project Initiation Phase are: Creation of a Product
/Project Description Document. This is an informal, high-level statement
describing the characteristics of the product / project / process to be created.

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1.2.2 The project planning phase

The Project Planning Phase follows the Project Initiation Phase and is the most
important phase in project management. The effort spent in planning can save
countless hours of confusion and rework in the subsequent phases.
1.2.2.1 Purpose of the Project Planning Phase

• Establish Business Requirements.

• Establish Cost, Schedule, List of Deliverables and Delivery Dates.
• Establish Resource Plan.
• Get Management Approval and proceed to next phases.

1.2.2.2 The basic processes of the Project Planning Phase are:

Scope Planning: This specifies the in-scope requirements for the project.
Preparing the Work Breakdown Structure: This specifies the breakdown of
the project into tasks and sub-tasks.
Organizational Breakdown Structure: This specifies who all in the
organization need to be involved and referred for Project Completion.
Resource Planning: This specifies who will do what work at which time of
the project.
Project Schedule Development: This specifies the entire schedule of the
activities detailing their sequence of execution.
Budget Planning: This specifies the budgeted cost to be incurred in the
completion of the Project.

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1.2.3 Execution and Controlling

The most important issue in this phase is to ensure project activities are
properly executed and controlled. During the execution phase, the planned
solution is implemented to solve the problem specified in the project's
requirements. In product and system development, a design resulting in a
specific set of product requirements is created. This convergence is measured
by prototypes, testing, and reviews. As the execution phase progresses, groups
across the organization become more deeply involved in planning for the final
testing, production, and support. The most common tools or methodologies
used in the execution phase are an update of Risk Analysis and Score Cards, in
addition to Business Plan and Milestones Reviews.

1.2.4 Closure

In this last stage, the project manager must ensure that the project is brought
to its proper completion. The closure phase is characterized by a written formal
project review report containing the following components: a formal
acceptance of the final product by the client, Weighted Critical Measurements
(matching the initial requirements specified by the client with the final
delivered product), rewarding the team, a list of lessons learned, releasing
project resources, and a formal project closure notification to higher
management. No special tool or methodology is needed during the closure
phase.

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1.3.0 NETWORK ANALYSIS

1.3.1 Network Techniques

There are two main techniques pertaining to project planning in use today: the
Critical Path Method (CPM) and the Project Evaluation and Review Technique
(PERT)

1.3.1.1 Critical Path Method (CPM)

CPM type is based on the Critical Path Method. This type looks for the schedule
with minimum cost in a definite period of time in the case where the cost is
associated with each activity. Time is a resource. The resource allocation
problem is to allocate time among project tasks.

1.3.1.2 Program Evaluation Review Techniques (PERT)

PERT type, which is based on the Program Evaluation Review Techniques, looks
for the schedule, which minimizes the objective function such as project time
(total elapsed time). That is, it determines the start and completion times of
each activity.

PERT is used in Research type of projects whereas CPM is used in all of non-
research type projects.

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1.4 BAR CHART –GANTT SCHEDULE3

Taking its name from early project management innovator Henry L. Gantt, the
basic Gantt chart or now one know it as Bar Chart is an easy way to document
schedules. It is a horizontal-bar schedule showing activity start, duration, and
completion. It shows the connection between events and the calendar, and
provides a graphical analogy of the activity duration.
The Gantt schedule can illustrate the relationship between work activities
having duration, events without duration that indicate a significant completion,
and milestones that represent major achievements or decision points. Various
comments can be used to communicate the progress of the project effort
compared to the baseline plan, as well to depict in a graphical way areas where
there are modified expectations from the baseline plan.
Once a Gantt schedule has been established for a project, progress should be
periodically plotted against the baseline schedule. If different functional areas
are involved in a project, each area may need its own detailed schedules to
support the project master schedule. In such cases it is important that working
schedules be linked to a common master schedule in a way that they can be
easily updated. Each activity or event on the schedule should have a
responsible individual assigned, so there is clear ownership and so schedule
status can be updated without a lot of argument. Here one should know
meaning for two words “activity” and “event”.

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“Activity”- An activity is a part of the project denoted by an arrow on the
network. The tail of the arrow indicates the start of the activity whereas the
head indicates the end of the activity.
“Event” – Event is the stage or point where all previous jobs merging in it, are
completed and jobs bursting out, are still to be completed.

e.g.

Here 1 and 2 denotes the event form where the activities A, B, C, D can merge
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of burst out Scheduling process needs duration of the activity.

1.5 Planning and Forecasting

1.5.1 Planning Definition and concept

The establishment of objectives, and the formulation, evaluation and selection

of the policies, strategies, tactics and action required to achieve them. Planning
comprises long term/strategic planning and short term/operational planning.
The latter is usually for a period of up to one year.’

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Planning is a universal management activity, inherent in every business
proposition. A plan exists when an objective is framed and a sequence of
events identified to reach that objective. Planning is an analytical activity, and
is:

‘…breaking down a goal or set of intentions into steps, formalizing those steps
so that they can be implemented almost automatically and articulating the
anticipated consequences or results of each step.’ Henry Mintzberg, 1994

Plans are usually prepared in a cascade, that is, in the context of plans at other
levels in the hierarchy. Strategic plans usually take a long term view, five or
more years into the future. Tactical plans (also known as functional plans) look
two to four years ahead. Operational plans, which include budgets, have an
annual scope.

Specific types of plan in the business context include: contingency planning,

scenario planning, and the business plan.

1.5.1.1 Contingency planning

‘A plan, formulated in advance, to be implemented upon the occurrence of
certain specific future events.’

The contingency planning process includes identifying possible problems as far

as is practicable. It considers what actions could prevent or ameliorate the
impact of those problems. Contingency planning involves monitoring if the
trigger points for those problems occur.

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1.5.1.2 Scenario planning
This is similar to contingency planning in that it also scopes out a limited
number of possible futures in the context of high uncertainty. However,
scenario planning is used to generate a population of possible futures to help
long term plans remain flexible, rather than to prepare for the worst.

1.5.1.3 Business plan

A business plan outlines the company’s expected course of action for the
medium term. This should be in the context of the industry, market, products,
policies, capacity and resources. It should not be a one-off exercise, but a
document which is regularly used and revised. Its purpose is to help the
business:

‘…meet the expected and unexpected opportunities and obstacles the future
holds… a guide to navigate successfully through its unique competitive
environment.’

1.5.2 Forecasting

Forecasting is an attempt to estimate the future. It is based on available past

data, the extrapolation of trends and the application of judgment. There are
three basic forecasting methods.

Time series analysis and projection

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The analysis of past data is used to identify patterns, such as trends,
seasonality or cycles. A trend is an upward or downward pattern which is not
caused by seasonality. Projection is about extending this trend into the future
using those observations.

Where non-numerical information is used to improve the accuracy or

relevance of forecasts. Mintzberg refers to such information as soft
information. These techniques include the Delphi method where predictions
and analysis from experts are collected, moderated and summarized.5

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 CHAPTER 2

FINANCIAL AFFAIRS

2.1 Introduction to the Business Plan

You want to start a business – or expand your existing business. You have a
great idea, super attitude and the entrepreneurial spirit. So you head down to
your local bank or financial institution; you sit down in front of the credit
manager and start to explain this brilliant idea when she interrupts you: “That
sounds great, but where is your business plan?”

This scenario is played out every day in Nigeria – people with ideas who want
to plunge into business without having done a business plan.

A business plan outlines the company’s expected course of action for the
medium term. This should be in the context of the industry, market, products,
policies, capacity and resources. It should not be a one-off exercise, but a
document which is regularly used and revised. Its purpose is to help the
business:

Why do a Business Plan?

You will set goals and then, once you are in business, you can measure those
goals against the actual performance. Goals should be specific, measurable,
achievable, realistic and time limited – SMART

2.2 Budget

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Budgeting: Like planning, budgeting looks into the future beyond the
immediate timeframe. Planning is an attempt to shape the organization’s
future, while budgeting aims to predict what resources the organization can
use and might expend. Budgets are an essential, more detailed element of
planning. They are not effective when divorced from the planning context

Budget Forecasts may:

 Help manage financial market expectations by enabling

management to better communicate with analysts. For
example, this might regard profit and loss forecasts
 Reduce costs by enabling more efficient production scheduling and
minimization of stock holding (production and logistics forecasts)
 Reduce the cost of borrowing by enabling the organization to predict
when it needs finance (cash flow forecasts)
 Helps focus marketing effort to those areas where it will have most
impact (forecasts of market potential).6

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 REFERENCE

Louise Ross; 2008; Planning and Forecasting Topic Gateway; pp 3-5

Rogelio Acuña; 2010; analysis of project planning using cpm and pert; pp 7

Usor; 2007; project management; pp 3-8

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