Planning

“If I had eight hours to chop down a tree, I'd

spend six hours sharpening my axe” Abraham
Lincoln
Project Plan
 Tool for coordination
Where you and control
want to be

 Simulates how the

project is carried out

 “Failing to plan is
Where planning to fail”
you are
Project Plan

PROJECT
SCOPE

PROJECT
CHARTER

PROJECT
PLAN
Project Scope
 A definition of the end result or mission of the in
specific, tangible, and measurable terms.

 Purpose of the Scope Statement

 To clearly define the deliverable(s) for the end user.

 To be used by the project owner and participants as a
planning tool and for measuring project success.
Project Charter
 Defines the project and gives formal authorization for the
project
 Can contain an expanded version of scope statement

 A written agreement that outlines the specifics of the project

 Usually between all of the groups providing people or other
resources to the project

 Agreeing to a charter implies members will not make changes

without consulting the others
Project Charter
 Project Title and Description
 Scope Statement
 Project Objectives
 Product Description/Deliverables
 Summary Project Milestones
 Project Manager Assigned
 Major Resources (some may be assigned later)
 Summary Project Budget
 Organizational/External Assumptions
 Organizational/External Constraints
 Major Risks
 Project Approval Requirements
 Project Plan
1. Project summary
2. Project requirements (S.O.W.)
3. Milestones
4. Work breakdown structure
5. Project management and responsibility charts
6. Network diagram of activities with dates
7. Budget for all activities
8. Team formation and resource allocation
9. Quality Plan
10.Communications Plan
11.Risk Management Plan
12.Change Management Plan
13.Customer organization contact points
14.Nature of project reviews
Planning- Work Breakdown
structure
Work Breakdown Structure (WBS)
Creating WBS
 This is a process for subdividing the major project
deliverables and project work into smaller, more
manageable components (called work packages).
 Breaks down project from the top-level to individual work
packages that are between 8-80 hours of work effort.
 It is the precursor to the more detailed project plan of
activities.
 Since it is a hierarchy, shows how individual deliverables
are related to each other.
 Each box at every level (except for the top level) is
numbered as a hierarchy (e.g. 1.1.3, 3.1.5.2, 4.2, etc.)
 Responsibility of Project Team since they are most
familiar with the work.
Work Breakdown Structure (WBS)
Activities
 The activity should have clear start and end
 Should take time to complete and should consume resources
 It should require the same resources throughout
 Meaningful to keep as separate activity (optimal breaking)
 Should have precedence relationship with other activities in
the project
Milestones (Events)
 Milestone marks the occurrence of an event
 Takes no time and resources
 Happens at various points in the project
 Used to generate control/decision/action points in projects
 Should usually be at beginning or end of an activity
 WBS Sample
Project Name

Project
Lifecycle
Phases

Deliverables (bottom level –

blue boxes)

Note: For the purpose of this example, only the installation phase is fleshed out. Also for this example,
deliverables are highlighted in blue boxes.
WBS Uses
NETWOR
ACTIVITY
K
LIST
DIAGRAM
PROJECT
STAFFING
CONTROL

QUALITY ESTIMATI
WBS
MGMT NG

RISK SCHEDULI
MGMT NG

BUDGETIN
G
WBS for the WEDDING Case
Study
 WBS for the WEDDING Case
Study
CAMPUS WEDDING

CHURCH CATERING / DRESS INVITATION

DINNER

Reserve the Choose Cake Travel from Guatemala Choose Invitation

church Jack’s Catering Choose Pattern Print / receive inv
Church notice Lead Time Receive lace Guest List prep
period Get Gifts for Sew Dress Address
Decorate the dinner Fit Dress invitation
church Rehearsal Dinner Clean and Press Posting invitation
 CAMPUS WEDDING – Activity
List
Jack’s Catering Lead Time
Reserve Church
Travel from Guatemala
Church Notice Wait
Choose Pattern
Decorate Church
Order and Receive Lace
Prepare Guest List
Sew Dress
Choose Invitations
Fit Dress
Order and Receive Invitations
Clean and Press Dresses
Address Invitations
Get Bridesmaids Gift
Take to Post Office
Rehearsal Dinner
Invitation Lead Time
Wedding
Choose Cake
Estimation
1. Resources, Time and Cost
Estimate Resources/Time/Cost
• Estimates are needed to schedule work.
• Estimates are needed to determine whether the
project is worth doing.
• Estimates are needed to determine how well the
project is progressing.
Estimate Resources/Time/Cost
 Estimates should be based on WBS
 Have people familiar with the tasks make the
estimate.
 Use several people to make estimates.
 Base estimates on normal
 Treat each task as independent, don’t aggregate.
 Estimates must be reviewed periodically throughout
the project to ensure accuracy
Estimation methods
 Micro (Bottom-up) Approaches
 Template / Analogous method
 Parametric Procedures
 Detailed / Engineering Estimates

 Macro (Top-down) Approaches

 Consensus methods
 Apportion method
Why do people overestimate
( Goldratt)
1. Parkinson’s Law

2. Self Protection

3. Dropped Baton

4. Management cutting time to “motivate”

workers
 CAMPUS WEDDING – Activity
List
no Activity Dur
no Activity Dur
11 Jack’s Catering Lead 10
1 Reserve Church 1
Time
2 Church Notice Wait 17
12 Travel from Guatemala 10
3 Decorate Church 3
13 Choose Pattern 3
4 Prepare Guest List 4
14 Order and Receive Lace 8
5 Choose Invitations 3
15 Sew Dress 11
6 Order and Receive 12
16 Fit Dress 2
Invitations
17 Clean and Press Dresses 2
7 Address Invitations 4
18 Get Bridesmaids Gift 1
8 Take to Post Office 1
19 Rehearsal Dinner 1
9 Invitation Lead Time 10
20 Wedding 1
10 Choose Cake 2
Scheduling
Scheduling
 Schedule is the conversion of a project action
plan into an operating timetable

 Basis for monitoring project

 Most scheduling is at the WBS level

 Most scheduling is based on network drawings

CAMPUS WEDDING
Network Diagram
 Critical Path Method

 Activity

 Activity-on-Node (AON)

 Event
Network Diagram

TASKS DURATION PRECEDENCE

A 3 days  
B 1 days A
C 2 days A
D 4 days B
E 5 days B
F 2 days D
G 3 days C
H 1 days E,F,G
Network Diagram

C(2) G(3)

B(1
A(3) D(4) F(2) H(1)
)

E(5)
Network Diagram

C(2) G(3)

B(1
A(3) D(4) F(2) H(1)
)

E(5)

path
Terminology
 Critical Path - the longest path through the activity
network that allows for the completion of all project-
related activities; The shortest completion time for
the project
 There can be more than one critical path
 Free Slack - The amount of time an activity can be
delayed without delaying connected successor activities

 Sensitivity of a Network
 The likelihood the original critical path(s) will change once the project
is initiated.
 The amount of slack across near critical activities
Project Schedule can answer
 Shows which tasks critical
 Shows which tasks can run in parallel
 Allow probabilistic estimates
 Shows interdependences
 Shows when resources are needed
 Shows cash requirements for a period
 Ensures proper communication
Network Diagram for
CAMPUS WEDDING
Crashing – Campus Wedding Case
 Can the wedding happen on April 22 ? If so, what
is the extra cost?
 Analyze the Impact of the following incidents
1. On April 1, the chairman of the Vestry Committee
at the church was left unimpressed by the added
donation and said he wouldn’t reduce the notice
period from 17 days to 10 days.
2. A call to Guatemala revealed that the potential
bridesmaid had several commitments and could not
possibly leave the country until April 10.
Crashing – Campus Wedding Case
3. Mother came down with the four-day flu just as
she started on the guest list.
4. The lace and dress materials were lost in transit.
Notice of the loss was delivered to the Jackson
early on April 10.
5. There was a small fire at the caterer’s shop on
April 8. It was estimated that the shop would be
closed two or three days for repairs.
Resource Management
Time Constrained Project
 A project that must be completed by an imposed date.
 Time is fixed, resources are flexible: additional resources are required to ensure project meets schedule.

 Reducing Project Duration in Time Constrained Project

 Adding resources
 Outsourcing project work
 Scheduling overtime
Resource Constrained Project

 A project in which the level of resources available

cannot be exceeded.
Resources Allocation

TASKS DURATION PRECEDENCE

A 1 days  
B 2 days A
C 3 days A
D 5 days A
E 1 days B,C,D
Resources Allocation

B(2)

A(1
C(3) E(1)
)

D(5)
Resources Allocation

B(2)

A(1
C(3) E(1)
)

D(5)
Resources Allocation

TASKS DURATION PRECEDENCE RESOURCES

A 1 days   NASRIN
B 2 days A RAHIM
C 3 days A RAHIM

D 5 days A JAMAL

E 1 days B,C,D ASHRAF

Resources Allocation
Rahim

B(2)

Nasrin Rahim Ashraf

A(1
C(3) E(1)
)

D(5)

Jamal
Resources Allocation
Rahim

B(2)

Nasrin Rahim, Tariq, Zakir Ashraf

A(1
C(3) E(1)
)

D(5)

Rahim, Jamal
Resource Constrained Scheduling
 Scheduling of activities requires the use of heuristics (rules-
of-thumb) that focus on:
 Minimum slack
 Smallest (least) duration
 Most resources first
 Most successors
 Optimization Approach
 An approach, such as linear programming, that yields the

one best solution.

Resources Allocation

 Project network times are not a schedule until resources have

been assigned.
 Schedules need to be evaluated in terms of both time and
resources
 Resource allocation in project management is very similar to
capacity planning in production management
 We want a schedule that smoothes out the dips and peaks
of resource utilization but also has a high percentage of
resource utilization
Splitting/Multitasking

 Involves interrupting
work on an activity to
employ the resource
on another activity,
then returning the
resource to finish the
interrupted work.
Impacts of Resource-Constrained
Scheduling
 Increases criticality of events.
 Increases scheduling complexity.
 May make traditional critical path no longer
meaningful.
 Can break sequence of events.
 May cause parallel activities to become sequential
and critical activities with slack to become
noncritical.
 Project duration increases
 Reducing Project Duration in
Resources Constrained Projects
 Fast-tracking
 Critical-chain
 Reducing project scope
 Compromise quality

9–47

9–47
Fast tracking
 Doing activities in parallel that would normally be
done in sequence

 Starting to write code on a software project before the

design is complete

 Fast tracking may result in rework and usually

increases risk.
Goldratt’s Critical Chain
 Estimate time with 50% confidence level

 Work on a late start policy

 Countering Student Syndrome

 Add project buffers not task slacks

Reducing Project Duration
o Time and cost are interrelated. Thus many activities can be
speeded up by spending more money

o Choice of Activities to Crash is important

o Linearity Assumption may not hold

o Crunching a project often introduces unanticipated problems

o What if Cost, Not Time Is the Issue?

CPM Vs PERT
 Network Diagram ( PERT)
Name Optimisti Most Pessimi Precedence Dur (t) = Variance
c Likely stic (to+4tm+ (tp-to)/6
( to) ( tm ( tp) tp)/6
A 1 3 5 3 0.44
B 1 1 1 A 1 0.00
C 2 2 2 A 2 0.00
D 3 4 5 B 4 0.11
E 2 5 8 B 5 1.00
F 2 2 2 D 2 0.00
G 2 3 4 C 3 0.11
H 1 1 1 E,F,G 1 0.00
Network Diagram

C(2) G(3)

B(1
A(3) D(4) F(2) H(1)
)

E(5)
 PERT Analysis

Path Name Duration Variance Standard

deviation

A-B-D-F-H 11 0.556 0.745

A-B-E-H 10 1.444 1.20
A-C-G-H 9 0.556 0.745
Precedence Diagramming
Precedence Diagramming
 Finish-to-Start (FS)

 Start-to-Start (SS)

 Finish-to-Finish (FF)

 Start-to-Finish (SF)
Network Diagram
 Finish-to-Start (FS):
 An activity must finish before a successor can start. This is
the most common relationship.

Trench Lay pipe Refill

( 1 mile) ( 1 mile) ( 1 mile)
Start-to-Start (SS) with Lags
Critical paths Under different
Precedence relations
 Normal critical

 Reverse critical

 Bi Critical
Risk Management
Risk Management
 Risk: Any event that prevents or limits the
achievement of your objectives as defined at the outset of
the project.

 Risks on a project impact the following:

 Cost
 Schedule
 Quality
PROJECT RISK ANALYSIS
 FINANCIAL RISK
 Funding risk
 Interest rate risk
 Revenue risk
 Cash flow risk
 COMPLETION RISK
 Construction risk
 Technical risk
 Cost / Time overrun risk
 Approvals / clearances
 Natural calamity
PROJECT RISK ANALYSIS
 OPERATING RISK
 Market risk
 Supplier risk
 Taxation risk
 Logistic risk
 POLITICAL RISK
 Taxation risk
 Foreign exchange risk
 Regulatory risk
The risk management model
 Exercise
 Imagine you are planning to go to airport tomorrow morning to
catch a plane to Chennai at 7:00 am. You are planning to drive
your car to the air port, park the car there and catch the plane. You
have made the following time schedule.
 Get up at 4:00 am

 Get ready by 5:00 am

 Drive to the air port and reach there by 5:45 am

 Park the car and report at the counter by 6.00 am

 Collect the ticket, finish the formalities and be ready to board by

6:30 am
Identify some of the possible risks of not being able to make the
trip
Risk Identification
 Car refuses to start
 Car breaks down on way
 Car runs out of petrol
 You become sick on the day of travel
 You get up late
 You forget your tickets
 Traffic jam on the way
 Car parks are full
 There is a riot on the way and the roads are closed
 Flight cancelled
Risk assessment

Prioritize risks based on

 the chance of occurrence
 and the impact if the risk occurs

Identify the top risks affecting the project

 Risk assessment

Risk Items Chance ( 1-10) Impact ( 1-10) Risk score

(a) (b) (a)*(b)
Car refuses to start 8 8 64
Car breaks down on way 4 8 32
Car runs out of petrol 2 8 16
You become sick on the day of travel 3 7 21
You get up late 8 8 64
You forget your tickets 6 3 18
Traffic jam on the way 6 9 54
There is a riot on the way 2 9 18
Flight cancelled 7 9 63
Risk assessment
 You get up late

 Traffic jam on the way

 Car refuses to start

 Flight cancelled
Risk planning

 Mitigate / reduce the risk

 Eliminate the risk

 Transfer the risk

 Accept the risk

 SENSITIVITY ANALYSIS
 Identify the basic underlying factors ( quantity sold, unit
price, interest rate etc)
 Establish the relationship between each of these factors
and desired outcome ( NPV, proj duration, Cost …)
 Identify the range of variation for each of these variables
 Study the variation in outcome variables corresponding to
these variation in input variables
 Limitation is that only one variable can be studied at a
time
SCENARIO ANALYSIS
 Each scenario is a combination of a set of values
for the input variables.
 Optimistic, realistic and pessimistic scenarios
can be projected
 Multiple variables can be analyzed at the same
time
SIMULATION TECHNIQUES
 Resembles automated what-if analysis.
 Values for uncertain cells are selected in an

unbiased manner.
 The computer generates hundreds (or

thousands) of scenarios.
 We analyze the results of these scenarios to

better understand the behavior of the

performance measure.
 This allows us to make decisions using solid

empirical evidence.
Monitoring and Control
1. Determining Project Progress
2. Measuring Performance
The Project Control Process

 Project Control Steps

1. Setting a baseline plan
2. Measuring progress and performance
3. Comparing plan against actual
4. Taking actions
Baselining
 The following have to be baselined:
 Scope
 Schedule
 Cost
 The baselines are the reference points for measuring
performance for the post-planning stages
 Changes to baselines can be made, but would require
going through the change control process and getting
the proper approval
Progress Reporting
 What data are collected?
 Current status of project
 Cost and/or schedule overruns and the reasons
 Remaining cost / time to compete project
 Out-of-control activities requiring intervention
Progress Reporting
 How to avoid unrealistic reporting
(How to get rid of the 90% syndrome)
 Multiple sources of information
 Reduce the size of the work package
 Define milestones
 Go for 50/50 or 0/100% or 20 / 80 reporting
 Look at the project from a problem solving mode
Progress Reporting
 What is the frequency of review
 Project duration
 Degree of uncertainty
 Importance of the project
 Variable review period
 Progress Analysis
 How to analyze the data collected

 Compare the Actual with Planned to arrive at

conclusions
Earned Value Analysis Example

The Project

You have a project to paint the inside of a apartment

that has six equal sized rooms. Your estimate is that
each room will take 1 day to paint and each room will
cost Rs 5000 to complete. It was decided to paint the
rooms sequentially
 Progress Analysis
 Traditional Variance Analysis
Difference between the actual and baseline time /cost

Complete Cost (Rs) Schedule ( days)

d Activity
Plan Actual Variance Plan Actual Variance

Room 1 5000 5000 0 1 1 0

Room 2 5000 6000 -1000 1 2 -1
Room 3 5000 4500 +500 1 1.5 -0.5
Room 4 5000 6500 -1500 1 0.5 +0.5
Earned Value Method
 An integrated project management system based on the
earned value concept that uses a time-phased budget
baseline to compare actual and planned schedule and
costs

 Can be used to forecast future performance and project

completion dates and costs
Earned Value Analysis Example

Status as of the end of Day 4:

Room Completion Status Cost

1 Completed Rs 5000

2 Completed Rs 4500

3 Completed Rs 6000

4 50% complete Rs 3500

TOTAL 3.5 rooms completed Rs 19000

Earned Value Terms
Acronym Term Definition
PV Planned At a point in time, the current estimated
(BCWS) Value value of the amount of work that was
planned to be done
EV Earned At a point in time, the current estimated
(BCWP) Value value of the amount of work that was
actually done
AC Actual At a point in time, the actual cost of the
(ACWP) Cost work completed
Methods of Earned Value Analysis
Term Formula Comments
Cost Variance EV - AC Negative is over budget; Positive is
(CV) under budget
Schedule EV - PV Negative is behind schedule; Positive
Variance (SV) is ahead of schedule
Cost Performance EV/AC < 1 over cost, >1 means under cost
Index (CPI)

Schedule EV/PV < 1 means behind schedule, > 1

Performance means ahead of schedule
Index (SPI)
Earned Value Analysis end of Day 4
Value Calculation Answer Comments
PV 4 Rooms x Rs 5000 Rs 20000
EV 3.5 Rooms x Rs 5000 Rs 17500
AC Rs 5000+4500 Rs 19000
+6000+3500
CV (EV – AC) Rs 17500–19000 Rs -1500 Over Budget by Rs 1500

SV (EV – PV) 17500-20000 Rs -2500 Behind Schedule

CPI (EV/AC) 17500/19000 0.92

SPI (EV/PV) 17500/20000 0.875

Forecasting Final Project Cost
Term Formula Comments
Estimate cost At BAC / CPI Expected total cost on completion
Completion (EAC)
Estimate cost To EAC - AC At a point in time, a forecast of
Complete (ETC) how much cost needs to be
incurred to complete the project

Variance at BAC - EAC As of today, what is the variance

Completion (VAC) between the forecasted budget and
the planned budget
To Complete (BAC – EV)/ the amount of value each
Performance Index (BAC – AC ) remaining dollar in the budget
(TCPI) must earn to stay within
budget
Earned Value Analysis end of Day 4
Value Calculation Answer Comments
PV 4 Rooms x Rs 5000 Rs 20000
EV 3.5 Rooms x Rs 5000 Rs 17500
AC Rs 5000+4500 +6000+3500 Rs 19000
BAC 6 Rooms x Rs 5000 Rs 30000

EAC 30000/.92 Rs 32609 At this level of efficiency, the

project may be complete at Rs
32609
ETC Rs 32609 – Rs 19000 Rs 13609 The budget for the remaining
work
VAC RS 30000 – RS 32609 Rs 2609 Rs 2609 over budget at
completion
TCPI 12500/11000 1.13 Required efficiency to remain
within budget
Earned Value Chart
Progress Monitoring
 How to draw conclusions which are robust and not
too sensitive to the numbers

 Extrapolation to the future may not work

 Most projects have few activities in the beginning ,
maximum in the middle and few at the end ( S Curve)
 Get back to the basic network to decide on the cost /
time for the remaining work
Progress Monitoring
 Changing the project plan / project schedule

 Should be done only under exceptional circumstances

which are not under our control
 If baseline is changes after every review, the whole
process loose its validity
 Communicating with all those involved also is a
problem
 Rewarding inefficiency