Chapter 2

Project planning

-Most of the time for the problems happened in the project

inappropriate planning is one of the cause.
- planning is most appropriate for project success.
-Its help as rout for PM from project start to finish
- before planning one should clearly identify why plan and what
content should be included in planning.
- plan should include the business case of organization’s expected
financial benefits and strategic reasons for project.
- the information need to be included in the planning are sufficient
information the PM needs at any time ; what remains to be done,
when to be done, with what resources, by whom, when the task
will be completed, and what deliverables the output should
include.
• PM needs also to know whether or not any changes in project plans
are contemplated and whether or not any problems are likely to arise in
the future.
• The multiple elements required in the project plan fall into one of the
following nine categories.
1. Overview. contains a brief description of the project and its
deliverables (the latter are the project scope), together with a list of
the major milestones or significant events in the project schedule and
any constraints on the project scope.
- It contains business case, Business Case includes the strategic reasons
for the project, its expected profitability and competitive effects as
well as the desired scope and any other technical results.
- The intent of the Business Case is to communicate to project team
members (and others) the reasons why the organization is undertaking
the project. If not specifically noted elsewhere, the overview can list
the project stakeholders, groups (or individuals) who have a legitimate
interest in the project or its deliverables.
2. Objectives. more detailed description of the project’ s scope, its deliverables and
outcomes.
- Project mission statement : communicate to project team members (and others)
what will be done to achieve the project’ s overall objectives.
- a representative group of team members and stakeholders are often included in
the process of developing the statement of objectives.
3. General approach. the technological and managerial approaches to the work are
described.
4. Contractual aspects. contains a complete description of all
agreements made with the client or any third party.
- This list would include all reporting requirements;
 the technical specifications of all deliverables
 agreements on delivery dates;
 incentives (if any) for performance, for exceeding contractual requirements, and
penalties (if any) for noncompliance
 Specific procedures for making changes in the deliverables, project review dates
and procedures; and similar agreements.
 agreements to comply with legal, environmental, and other constraints on the
project work and outputs.
5. Schedules. outline of all schedules and milestones.
- Each task in the project is listed in a project WBS.
6. Resource requirements. Estimates of project expenses, both capital and
operating, are included here.
- The costs associated with each task are shown, and overhead and fixed charges
are listed.
- Appropriate account numbers to be charged are listed with the relevant cost
items.
- In addition, cost monitoring and cost control procedures are described here.
7. Personnel. covers the details of the project work force. It notes any special
skill requirements, necessary training, and special legal arrangements such
as security clearances or nondisclosure agreements.
8. Risk management. Planners should list the major and minor disasters that
may strike projects similar to the one being undertaken(eg. late sub-
contractor deliveries, bad weather, unreasonable deadlines, equipment failure,
complex coordination problems, changes in project scope, and similar dire
happenings).
- A method for quantifying the potential seriousness of risks, Failure Mode and
Effects Analysis (FMEA), is helpful
9. Evaluation methods. Descriptions of all project evaluation procedures and
quality standards .
- Responsibility and control of all project activities
- procedures to ensure compliance with all corporate requirements for
monitoring, collecting, and storing data on project performance, together
with a description of the required project history.
 The major project stakeholders must sign off on the plan. The list of
signatories would include a person representing the project sponsor, the
client/user, the Project Manager, and the Program Manager if the project is
a part of an overall program.
THE PLANNING PROCESS
1. Develop and evaluate the concept of the project. Describe what it is you
wish to develop, including its basic performance characteristics, and
decide if getting such a deliverable is worthwhile. If so, continue.
2. Carefully identify and spell out the actual capabilities that the project’ s
deliverable must have to be successful. Design a system (product or
service) that will have the requisite capabilities.
3. Create such a system (product or service), which is to say, build a
prototype deliverable.
4. Test the prototype to see if it does, in fact, have the desired
capabilities. If necessary, cycle back to step 3 to modify the
prototype and retest it. Continue until the deliverable meets the
preset requirements.
5. Integrate the deliverable into the system for which it was designed.
In other words, install the deliverable in its required setting.
6. Validate the deliverable—which answers the question, “Now that
we have installed the deliverable, does it still work properly?”
7. If the deliverable has been validated, let the client test it. Can the
client operate the system? If not, instruct the client.
8. If the client can operate (and accepts) the deliverable, make sure
that the client understands all standard operating and maintenance
requirements. Then shake the client’ s hand, present the client with
a written copy of maintenance and operating instructions, give the
client the bill, and leave.
Work break-down structure (WBS): The PM and individual team
members may differ on the technical approach to working on the task, the
type and quantity of resources needed, or the duration for each subtask.
- The process of building work breakdown structure is as follows:
1. All project activities will be identified and arranged in successively finer
detail, that is, by levels.
2. For each activity, the type and quantity of each required resource (including
personnel) are identified.
3. For each activity, predecessors and task duration are estimated.
4. All project milestones are identified and located on the project schedule
following their predecessor activities.
5. For each activity, the individual or group assigned to perform the work is
identified. Acceptance of the assignment is noted by “signing-off.”
6. If project milestones, task durations, and predecessors are combined, the
result is the project master schedule. Additional time allowances for
contingencies may be added, though we will later argue against this way of
dealing with uncertainty.
7. The master schedule allows the PM to compare actual and planned task
duration
Multi disciplinary teams: When used on sizable, complex projects that
necessitate inputs from several different departments or groups, the process
of managing the way these groups work together is called interface
coordination.
- Coordinating the work of these groups and the timing of their interaction is
called integration management. Integration management is also arduous
and complicated.
- MTs are almost certain to operate in an environment of conflict.
- Patrick Lencioni (2002) writes of the “Five Dysfunctions of a Team.” They
are “absence of trust,” “fear of conflict,” “lack of commitment,”
“avoidance of accountability,” and “inattention to results.”
- Its emphasized that team members be honest in their dealings with one
another, which is required for the development of intrateam trust.
- all members understand that they are mutually dependent on each other for
achievement of the team’s goals.
-
Risk management : Is the systematic process of identifying,
analyzing, and responding to project risk.
- Is the process of conducting risk management planning,
identification, analysis, response planning and control on project.
- A formal, comprehensive project proactive regarding risk plan
allows the project manager to the innumerable be proactive
regarding the innumerable things that can and do go wrong with
a things that can project. A systematic process adds discipline
and efficiency when creating the plan.
Defining Project Risks: Project risk management begins early in
the life cycle.
- The sources of project risk are almost limitless, emphasizing the
need for a well-thought-out, detailed plan. Typical examples
include the loss of a key team member, weather emergencies,
technical failures, and poor suppliers.
- Many project managers wait too long to assess risk factors
and delay the risk plan. What do you think the reason behind?
- The above managers assumption is wrong, During the initiation
phase of the project life cycle, an initial high-level assessment
ought to be conducted. The PM and team members should take a
strategic approach to “what can go wrong” and begin laying the
foundation for the detailed plan to follow.
The Six-Step Process: The Six-Step process is a common and
practical approach to establishing the project risk plan.
Step 1: Make a List: - Brainstorm. Making a list of potential risks
to the project should not be an analysis but a formal
brainstorming session, when all ideas are captured.
- It is important that the entire team get involved in identifying
threats and highlighting what can go wrong.
Steps 2 & 3: Determine the Probability of Risk Occurrence and
Negative Impact:
How probable is it that each risk will become a reality? This
question needs to be asked and answered. It is often sufficient to
use a High-Medium-Low (HML) scale and apply it to the list of
brainstormed risks.
- If the risk becomes a reality, how badly will it damage the
project? This is the next question that needs to be asked and
answered. All aspects of the project should be considered
when rating the negative impact of any risk. If the risk
becomes reality, how will it affect the budget, schedule,
resource utilization, scope of work, and so on?
risk PROBABLITY INPACT

A M L

B M M

C L L

D H H
Step 4: Prevent or Mitigate the Risk: Some risks can be prevented; others
can only be mitigated. Earthquakes or the retirement of an important
stakeholder, for instance, cannot be prevented.
- Proactivity is the project manager’s best friend. Kill the risk before it has a
chance to grow and flourish, and you won’t have to deal with it again.
Step 5: Consider Contingencies: Contingencies represent the specific
actions that will be taken if the risk occurs. Here, you answer the
question “If the risk becomes reality, what will we do”?
Step 6: Establish the Trigger Point: trigger point is the point at which the
risk becomes enough of a reality that the project manager needs to
trigger the contingency.
- It is a judgment call meant to maximize the value of the predetermined
contingency by implementing it at the optimal time.
- Trigger too soon and you will probably spend time, effort, or money for
no good reason.
- Trigger too late and you may end up experiencing the full impact of the
occurrence
- The trigger should be a specific point in time or a defined range of time.
Establishing Reserves: The most comprehensive risk plan can
be compromised if you realize that you do not have the time or
means to take appropriate action.
- Establishing reserves enables you to leverage the plan to its
fullest potential.
- The best-laid plans are impotent without the time and/or
budget to allow for effective implementation. As a result, you
need to establish contingency and management reserves.
- Contingency reserves are designated amounts of time and/or
budget to account for risks to the project that have been
identified and actively accepted.
- They are created to cover known risks to the project.
- Management reserves are created to cover unknown risks to
the project.
Managing Multiproject Risks
- In the multiproject world, many projects overlap or experience direct
dependencies with other projects.
- Two perspectives are required here.
1. First, you must focus on the individual project and the associated
risks for each. Then, you must assess your entire portfolio and
determine the nature of the relationship of these projects. Your
portfolio is the sum of all projects under your purview.
2. A program typically involves multiple projects working toward the
completion of a single deliverable. In the portfolio environment, you
must identify where the projects coincide or overlap with regard to
any project work. You then determine what might go wrong in these
areas where the projects “touch.”
Coordination Points: the areas where the projects touch are called
coordination points.
Risk Matrix: A useful tool when managing many risks across projects
is the standard risk matrix as shown in the figure below.
PROBABLITY
IMP LOW MEDIUM HIGH
ACT
HIGH
MEDIUM
LOW
 Project Estimating

- Estimating is an essential part of project management, since it

becomes the baseline for subsequent cost control.
- If the estimate for a project is too low, a company may well lose
money in the execution of the work. If the estimate is too high,
the company may well lose the contract due to overpricing.
- there are two basic methods of estimating: top down and bottom
up.
- In most estimates which require any reasonable degree of
accuracy the method used must be bottom up. This principle is
used in bills of quantities which literally start at the bottom of the
construction process, the ground clearance and foundations and
work up through the building sequence to the final stages such as
painting and decorating.
- During estimation of the project cost the structure of the project
is required and level of accuracy is very important.
Importance of Estimating Time and Cost
- To support good decisions
- To schedule work to be done
- To determine how long the project should take
- To determine the project’s cost
- To determine whether the project is worth doing
- To develop cash flow needs
- To determine how well the project is progressing
- To develop time-phased budgets and establish the project
baseline
 Factors Influencing the Quality of Estimates
The factor affecting the cost estimation are listed as follows:
Planning horizon

Other non-
project factor

Project duration
Quality of
estimates
Organization
structure
people

Padding estimates

Project structure and

organization
Planning horizon: - This refers to the accuracy of time and cost
estimates. They should improve as the project moves from the
conceptual phase to the point where individual work packages
are defined.
Project duration: - Long-duration projects increase the
uncertainty in estimates. The price of technology may
decrease over time, however labor, equipment, and operations
are likely to increase over this same period; but at what rate?
How can these be accurately estimated?
People: -The “people” factor can introduce challenges in the
estimating process. A close match of skills to the task will
influence productivity and learning time and, conversely, the
opposite is also true. Staff turnover and whether people have
worked on projects together in the past also influences
accurate estimating.
Project Structure and Organization: -Project structure refers to
matrix, functional, and projectized. The “speed” advantage of
a focused dedicated team comes at a higher cost than a matrix
team; however the matrix team will not deliver as quickly due
to competing demands and divided focus.
Padding Estimates: -When asked to estimate, most are inclined
to “pad” estimates in order to increase the probability of being
on budget and reducing the risk of being late. Padding,
however, defeats the chance of truly arriving at realistic
estimates, which is greatly needed in order to be competitive.
Organization Culture: - Some organizations tolerate padding,
others encourage it, still others oppose it. It takes time to
properly prepare estimates. It is the bedrock of effective
project management.
Other (Non-project) Factors: - Equipment downtime, holidays,
vacations, staff reduction, strikes, and legal limits influence
project estimates.
• There are four main estimating methods in use, varying from
the very approximate to the very accurate. These are:
1 Subjective (degree of accuracy +/− 20% to 40%)
2 Parametric (degree of accuracy +/− 10% to 20%)
3 Comparative (degree of accuracy +/− 10%)
4 Analytical (degree of accuracy +/− 5%).
1 SUBJECTIVE
- At the proposal stage, a contractor may well be able to give
only a ‘ball park figure’ to give a client or sponsor an
approximate ‘feel’ of the possible costs. The estimating
method used in this case would either be subjective or
approximate parametric.
- In either case the degree of accuracy would largely depend
on the experience of the estimator.
2 PARAMETRIC
- The parametric method would be used at the budget preparation stage, but relies on
good historical data-based past jobs or experience.
- By using well-known empirical formulae or ratios in which costs can be related to
specific characteristics of known sections or areas of the project, it is possible to
produce a good estimate on which firm decisions can be based.
- Clearly such estimates need to be qualified to enable external factors to be
separately assessed.
3 COMPARATIVE (BY ANALOGY)
- This method is based on the costs of a simplified schedule of major components
which were used on previous similar jobs.
- It may even be possible to use the costs of a similar sized complete project of
which one has had direct (and preferably recent) experience.
- Due allowance must clearly be made for the inevitable minor differences, inflation
and other possible cost escalations.
4 ANALYTICAL
- This type of estimate may also be required where a contractor has to submit
a fixed price tender, since once the contract is signed there can be no price adjustment
except by inflation factors or client authorized variations.
It’s the most accurate method
- It needs the project to be broken down in to sections, subsections and
individual components.
- Each component must then be given a cost value (and preferably also a
cost code) including both the material and labour content.
PROJECT SCHEDULING
Scheduling is the determination of the timing of the activities
comprising the project to enable managers to execute the project in a
timely manner. The project scheduling is ued for:
- Knowing the activities timing and the project completion time.
- Having resources available on site in the correct time.
- Making correction actions if schedule shows that the plan will result
in late completion.
- Assessing the value of penalties on project late completion. -
Determining the project cash flow.
- Evaluating the effect of change orders on the project completion
time.
- Determining the value Of project delay and the responsible parties.
 Project network diagram

- A project schedule network diagram is an output type of the

process ‘sequencing activities
- A project schedule network diagram visualizes the sequential and
logical relationship between tasks in a project setting. This
visualization relies on the clear expression of the chronology of
tasks and events.
- Project schedule network diagrams show the order in which
activities should be scheduled to address logical relationships
between these activities.
Benefits of the project management network diagram
• A network diagram allows a project manager to track each
element of a project and quickly share its status with others. Its
other benefits include:
• Visual representation of progress for stakeholders
• Establishing project workflows
• Tracking dependencies and potential bottlenecks
- Example of a Project Schedule Network Diagram
typically comprises of nodes that represent activities
and arrows that show the sequence and dependencies
(shown in figure 1).
- This way of presentation is also referred to as
‘activities on nodes’ (AON) diagramming. It is
probably the most common type of project schedule
network diagram.
- An alternative form of presentation is the ‘activities
on arrows’ (AOA) method where, as the name
indicates, activities are shown as arrows while nodes
represent the logical relationships (shown in figure 2).
 Figu
re 1.

Figure
2.
The Critical Path Method
- The most widely used scheduling technique is the critical path
method (CPM) for scheduling.
- This method calculates the minimum completion time for a
project along with the possible start and finish times for the
project activities.
- The critical path itself represents the set or sequence of activities
which will take the longest time to complete.
- The duration of the critical path is the sum of the activities'
durations along the path.
- Thus, the critical path can be defined as the longest possible path
through the "network" of project activities.
- The duration of the critical path represents the minimum time
required to complete a project.
- Any delays along the critical path would imply that additional
time would be required to complete the project.
- The CPM is a systematic scheduling method for a project network and
involves four main steps:
• A forward path to determine activities early start times;
• A backward path to determine activities late finish times;
• Float calculations; and
• Identifying critical activities.
Activity-On-Arrow Networks Calculations
- The objective of arrow network analysis is to compute for each event
in the network its early and late timings.
- These times are defined as: Early event time (ET) is the earliest time
at which an event can occur. Late event time (LT) is the latest time at
which an event can occur if the project is to be completed on schedule
Forward Path: -The forward path determines the early-start times of
activities. The forward path proceeds from the most left node in the
network and moves to the right, putting the calculations inside the
shaded boxes to the left.
Figure : Forward path calculations in AOA networks
Backward Path : -The backward path determines the late-finish
(LF) times of activities by proceeding backward from the end
node to the starting node of the AOA network.
- We put the LF values in the right side boxes adjacent to the
nodes, as shown in Figure below. For the example at hand, we
do the following:

Figure : Backward path calculations in AOA networks

Float Calculations: -Once forward path and backward path
calculations are complete, it is possible to analyze the activity
times.
- One important aspect is Total-Float (TF) calculations, which
determine the flexibility of an activity to be delayed.
Identifying the Critical Activities : -
- Activities with zero total floats mean that they have to be
constructed right at their schedule times, without delays.
- These activities are considered to be critical.
- They deserve the special attention of the project manager
because any delay in critical activities causes a delay in the
project duration.
Assignment :I
1. Discuss about the Precedence Diagram Method (PDM) used
for calculating critical path time and give example for the
process. (discuss how to determine all the four steps which is;
Forward Path , Backward Path, floating time and identify
critical activities)
 PERT technique

- In project management, the Project Evaluation Review

Technique, or PERT, is used to identify the time it takes to
finish a particular task or activity.
- It is a system that helps in proper scheduling and coordination
of all tasks throughout a project. It also helps in keeping track
of the progress, or lack thereof, of the overall project .
- Knowing the time it should take to execute a project is crucial,
as it helps project managers decide on other factors such as the
budget and task delegation.
- No matter how big or small a project is, estimates can be too
optimistic or pessimistic, but using a PERT chart will help
determine realistic estimates.
Creating a PERT Chart
- A flowchart is used to depict the Project Evaluation Review
Technique. Nodes represent the events, indicating the start or end of
activities or tasks. The directorial lines indicate the tasks that need to
be completed, and the arrows show the sequence of the activities.
- There are four definitions of time used to estimate project time
requirements:
• Optimistic time – The least amount of time it can take to complete a
task
• Pessimistic time – The maximum amount of time it should take to
complete a task
• Most likely time – Assuming there are no problems, the best, or most
reasonable, estimate of how long it should take to complete a task.
• Expected time – Assuming there are problems, the best estimate of
how much time will be required to complete a task.
Here are several terms used in a PERT chart:
• Float/Slack – Refers to the amount of time a task can be
delayed without resulting in an overall delay in completion of
other tasks or the project
• Critical Path – Indicates the longest possible continuous path
from the start to the end of a task or event
• Critical Path Activity – Refers to an activity without any slack
• Lead Time – Refers to the amount of time needed to finish a
task without affecting subsequent tasks
• Lag Time – The earliest time by which a successor event/task
can follow a prior event/task
• Fast Tracking – Refers to handling tasks or activities in
parallel
• Crashing Critical Path – Shortening the amount of time to do a
critical task
To implement a PERT chart:
• Identify the different tasks needed to complete a project. Make sure to add these
in the right order and indicate the duration of each task.
• Create a network diagram. Use arrows to represent the activities and use nodes as
milestones.
• Determine the critical path and possible slack.
Advantages of PERT
• Here are several benefits of using PERT in project management:
• It helps maximize the use of resources.
• It makes project planning more manageable.
• It’s useful even if there is little or no previous schedule data.
• It enables project managers to better estimate or determine a more definite
completion date.
Disadvantages of PERT
• Like any other method, PERT comes with its share of limitations:
• In complex projects, many find PERT hard to interpret, so they may also use a
Gantt Chart, another popular method for project management.
• It can be tedious to update, modify, and maintain the PERT diagram.
• It entails a subjective time analysis of activities and, for those who are less
experienced or are biased, this may affect the project’s schedule.
ASSIGNMENT II
1. Write about Gantt chart and discuss how Gantt chart is
created
- Also give an examples for Gantt chart
2. What is project crashing (deffine, explain how its created and
give examples)
3. Write the difference between Gantt chart, PERT technique, and
Project crashing.