Project Management

December, 2011

Section – A

Q1) (a) Project

A project is a temporary endeavor with a defined

beginning and end, undertaken to meet unique goals and

objectives, typically to bring beneficial change or add

value. According to Project Management Institute, U.S.A

: "A Project is a one shot, time limited, goal

directed, major undertaking, requiring the commitment

of varied skills and resources." Or it is "a

combination of human and non – human resources pooled

together in a temporary organization to achieve a

specific purpose."

(b) Expected Value

The expected value can really be thought of as the mean

of a random variable. This means that if you ran a

probability experiment over and over, keeping track of

the results, the expected value is the average of all

the values obtained. The expected value is what you

should anticipate happening in the long run of many

trials of a game of chance.

How to Calculate the Expected Value

The variable is not continuous and each outcome comes

to us in a number that can be separated out from the

others. To find the expected value of a game that has

outcomes x1, x2, . . ., xn with probabilities p1, p2, .

. . , pn, calculate:

x1p1 + x2p2 + . . . + xnpn.

(c) Free Float

In the context of project management, the term Free

Float is used to describe amount of time that spans

from the completion of one previously scheduled

activity and extends to the point at which the next

scheduled activity is set to begin. Free float can be

calculated by determining the amount of the time

between the earliest start date of the initial activity

and the earliest start date of the succeeding activity,

and then subtracting from that total the amount of time

that it is expected the first activity will take to

complete. During this period of free float, the

completion time or date of the earlier of the

activities can be extended up until the scheduled early

start date or time of the next scheduled activity

without causing delays. If there is no succeeding

activity scheduled, the project end date would be used

to determine the back end of the free float window. FF

will always be less than or equal to TF and never more.

In all critical activities, FF is always zero.

(d) Latest Start Time

An activity can be started without delaying the entire

project. In other words, it is the latest possible time

at which an activity can start without delaying the

date of completion of the project.

LST = LFT – duration of that activity

(e) Relevance of Gantt chart

1. This technique's primary advantage is its good graphicaloverview that is easy to understand for nearly all

project participants and stakeholders.

2. The project's summary and terminal elements, which combine to form the project's internal structure, are shown

on the Gantt chart.

3. Gantt chart represents the tasks in most modern project scheduling packages.

4. It can also show summary elements and terminal dependencies.

(f) PERT

Program Evaluation and Review Technique is meant for

projecting task and project completion and organizing

complex sequences of tasks. PERT finds applications in

planning and control set of activities, functions and

relationships. By controlling the critical activities

the project can be completed within the scheduled time

limit. PERT gives a way to identifying critical

activities right at the planning stage so that

management is aware of risky areas and exercise proper

control over them, so as to complete the project within

the scheduled time.

(g) Project Planning

Project planning is a discipline for stating how to

complete a project within a certain timeframe, usually

with defined stages, and with designated resources. One

view of project planning divides the activity into:

Setting objectives (these should be measurable)

Identifying deliverables

Planning the schedule

Making supporting plans

(h) Crashing of activities

In CPM/ PERT network techniques, time is related to cost

and the object is to develop an optimum time cost

relationship. Crashing an activitymeans to reduce the

time required to complete an activity by assigning

additional resources to that activity but reducing the

duration time of the activities on the critical path may

change the critical path

normal time (NT): the expected time to complete an

activity

normal cost (NC): the cost to complete the activity in

its normal time

crash time (CT): the shortest possible time in which

the activity can be completed

crash cost (CC): the cost to complete the activity in

the shortest possible time (ie., the cost to complete

the activity in its crash time)

crash cost per time period = (CC - NC) / (NT - CT)

(i) Critical Path

A path along the network in which Earliest Finish Time

and Latest Finish time are equals known as Critical

path. It is the longest time path through the task

network. The series of tasks (or even a single task)

that dictates the calculated finish date of the project

i.e. it decides the sequence of activities which

decides the total duration of project. Critical path is

formed by critical activities and has zero float.

Activities off the critical path would not affect

completion time even if they were done more quickly.

The critical path is represented by double or thick

arrow line to distinguish it clearly.

(j) Network Diagram

It is a pictorial representation of a project plan

showing the inter – relationship and interdependencies

between the various activities in a sequence; in which

they are to be performed to complete the project.

Figure shows the pictorial representation of a network

consisting of 5 events and A – F 5 activities. Event 1

is the start of the project and event 5 is the end of

the project. The logic of the network is that activity

B and C cannot start until event 2 is reached.

Section – B

Q2) What are the important phases of a project life cycle?

Discuss each phase

briefly with key issues involved.

A project is a temporary endeavor with a defined beginning

and end, undertaken to meet unique goals and objectives,

typically to bring beneficial change or add value. A project

1 2

3

4

5t1

t2

t3

t4

t5A

B

C

DE

F

is not uniformly distributed through out its life span, but

varies from phase to phase depending on the requirement of

that phase. All projects have mainly five phases which are

as follows:

1. Conception Phase

2. Definition Phase

3. Planning and Organizing Phase

4. Implementation Phase

5. Project Clean – up Phase

Conception Phase:

This is the phase during which project idea germinates.

The idea may certain come to developer's mind and he try to

overcome the problem. It may so happen that an idea will

suddenly come to his mind as he surveys the environment or

the solution comes through his well wishers who worked on

that problem. In this phase it is not supposed to be

considered as to how the project will be implemented. It is

just like considering which medical college your child would

be admitted to when the child is still in the womb. A well

conceived project will go way to successful implementation

and operation of a project. This is understandable since at

the conception stage all pertinent data are not available

and also the changing environment cannot be predicted

initially.

Definition Phase:

The definition phase of the project will develop the

idea generated during the conception phase and produce a

document describing the project in sufficient detail

covering all aspects necessary for the customer and /or

financial institution to make up their minds on the project

idea. The areas to be examined during this phase are:-

1. Raw materials

2. Plant size/ capacity

3. Location and site

4. Technology/ process selection

5. Project layout

6. Plant and Machinery

7. Electrical and instrumentation works

8. Civil engineering work

9. Utilities - fuel, power and water

10. Manpower and Organizational pattern

11. Financial analysis

12. Implementation schedule

This phase therefore clears some of the ambiguities and

uncertainties associated with the formation made during the

conception phase. This phase also establishes the risk

involved in going ahead with the project in clear terms. A

project can either be acceptable or get dropped at this

stage itself.

Planning and Organizing Phase

In theory this phase starts after definition phase, but

in practice it starts much earlier, almost after conception

phase. Some organization, however, prepare documents such as

Project Execution Plan to mark this phase. By large

organizations during this phase deal with the following and

in most cases take necessary action for realization of the

same.

1. Project infrastructure and enabling services.

2. System design and basic engineering package

3. Organization and man power

4. Schedules and budgets

5. Licensing and government clearances

6. Finance

7. System and procedures

8. Identification of project manager

9. Design basis, general conditions for purchase and

contracts

10. Site preparation and investigations

11. Construction resource and material

12. Work packaging

Thus, this phase is involved with preparation for the

project to take off smoothly. This phase is often taken as a

part of the implementation phase it dose not limit itself to

paper work and thinking but even activities, including field

work are undertaken during this phase.

Implementation Phase

This is a hectic phase. During this period something

starts growing in the field and people for the first time

can see the project. This phase involves:

1. Preparation of specification of equipment and machinery

2. Ordering of equipment

3. Lining up construction contracts

4. Issue of construction drawings

5. Civil construction and construction of equipment

foundations

6. Equipment and machinery erection

7. Plant electricals

8. Piping

9. Instrumentation

10. Checking

11. Testing

12. Trial run

13. Commission of the plant

80 – 85% of work done during this phase only. All techniques

of project management, therefore, are applied to this area

essentially. There is overlapping of various sub phases due

to the fast track attempt in this phase. Hence, because of

its peculiarities, this phase has a high need of

coordination and control.

Project Clean-up Phase

This is a transition phase in which the hardware built

with the active involvement of various agencies is

physically handed over for production to a different agency

who has not so involved earlier. For project personal this

phase is a clean up task. Drawing, documents, files,

operations and maintainace manuals are catalogued and handed

over to the customer. The customer has to be satisfied

through the guarantee test runs. Any change required at the

last minute is to be done for the sack of customer's

satisfaction. Projects accounts are closed, materials

reconciliation carried out, outstanding payments made, and

dues collected during this phase. The most important issue

during this phase is the planning of staff and workers

involved in execution of the project.

Q3) Explain the difference between Critical Path Method and

Program Evaluation

Review Technique along with their suitability of use.

The inherent limitation and inadequacies of the Gantt

Chart technique, encouraged the management to find out

more effective and efficient technique of planning,

scheduling and controlling of project activities. The

result is developing in the form of CPM and PERT. Today

they are universally used by most of the companies in

various countries.

PERT and CPM are the scheduling techniques which are

used to plan, schedule and control a project consisting

of number of inter – related activities. These

techniques provide a frame which defines the jobs to be

done integrates them in a logical sequence and provides

a system of control over the progress of the plan.

Difference between CPM and PERT

Sr

.

No

.

PERT CPM

1. PERT is used where the

emphasis is on shortening

project execution time

without too much concern

for cost implication

CPM is used where the

emphasis is on optimizing

resource allocation and

minimizing overall cost for

a given projection

execution time.

2. A probabilistic model with

uncertainty in activity

duration. Three time

estimates are used to make

allowances for

uncertainties.

A deterministic model with

well known activity time

based on past experience.

It uses single time

estimate.

3. An event oriented CPM is activity oriented.

technique.

4. The use of dummy

activities is required for

representing the proper

sequencing.

The use of dummy activities

is not necessary. The arrow

diagram thus becomes

slightly simpler.

5. Especially suitable in

defense projects, R and D

where the activity times

cannot be readily

predicted.

Suitable for problems in

industrial plant

maintenance, civil

construction projects etc.

Use of CPM and PERT

1. To plan, schedule and control the project

consisting of number of interleaved

activities.

2. To define and integrate the task in a

logical sequence.

3. These techniques show the precedence

relationship i.e., they show how the

activities are dependent.

4. With the help of these techniques the

management can know which operation should

be done after completing a particular

operation.

5. To focus management attention on the most

critical activities. It tells the

management at what moment and for which

activities the time schedules should be

strictly followed so that the future

project will not be affected and where it

may be, delayed and upto what extent

without affecting the last date of

completion of the scheduling timing.

6. To plan the best possible use of resources

to achieve a given goal within overall

time and cost limitations.

7. To know the progress of the work as

related to the scheduling time.

8. It provide the basis for determining

manpower, material and capital

requirements.

9. Network analysis helps in designing,

planning, coordinating, controlling and

decision making in order to accomplish the

project economically in the minimum

available time, with the limited

resources.

Q4) For the following data draw network diagram and then

crash the activities and

State the time – cost trade – off points that the

company should want to

consider, start with the plan that has longest

duration.

Q5) What are the main differences between the planning and

scheduling? Can we

say that scheduling is part of planning process?

The purpose of project planning is to identify all the

important events which are essential for completion as

well as for making up of the project. The dependence of

these events upon one another is shown explicitly in

the form of a network.

Whereas the scheduling computations give the earliest

and the latest allowable start and finish time for each

activity. As a by – product they identify the critical

path through the network and indicate the amount of

'slack' time associated with the non – critical paths.

Difference between Planning and Scheduling

Planning is the process of identifying all activities

necessary to complete the project while scheduling is

the process of determining the sequential order of

activities, assigning planned duration and determining

the start and finish dates of each activity.

Planning is a prerequisite to scheduling because there

is no way to determine the sequence until they are

defined. However they become synonymous because they

are performed interactive.

Planning involves making decisions with the objective

of influencing the future. Another way to consider

planning is as the “thinking” phase. Defining

activities, their logical sequence, and their

relationship to each other are all planning functions.

In planning you answer the following questions:

What will be performed?

This question is answered by determining the final

project product necessary for achieving project

success. This is done in the initiation phase before

the development of your WBS (Work Breakdown Structure).

How will it be performed?

This question is answered by determining the processes,

procedures, and methodologies used to complete the

project.

Where will it be performed?

This answer varies for each type of project. For

example, if it’s a construction project, the “where”

will be the physical location of the building or road

etc. If the project is a software development project,

the answer could be the physical location of the

project team or the final location of the project

software.

Who will perform the work?

This question is answered by determining if the work

will be contracted or will use in-house resources.

Then, the question will be examined in even more

detail: if a contractor, what type of contractor, and

if company resource, what department and who in each

department?

In what sequence?

This question involves determining the order in which

activities will be performed to complete the project.

With five main questions answered, only one last

question remains: when. This question involves

scheduling.

Scheduling determines the timing of operations in the

project. The schedule will determine the specific start and

completion dates for the project and all project activities.

Another way to look at scheduling is to consider it the

“action” or “doing it” phase. In scheduling you answer the

question:

When will the work be performed?

Scheduling includes the project start and completion

dates, project deliverables and milestones dates, and

the start and completion dates for all activities

needed to successfully complete the project.

Project scheduling is a part of the planning process.

Project scheduling is important because it is an integral

part of the project planning process. A project can not run

without a project plan. Scheduling establishes the

timelines, delivery and availability of project resources,

whether they be personnel, inventory or capital. For this

reason, any project without a schedule is a project doomed

to issues down the road.

Q6) There exists a trade off between activity duration and

the associated cost.

Discuss the time/ cost trade off in project

management. When should one resort

to crashing?

Time – Cost Trade Off

If the schedule time to complete the project is

satisfactory, the project planning and scheduling may be

complete. However, if one is interested in determining the

cost of reducing the project completion time then time –

cost trade offs activity performance times must be

considered for those activities on the critical and near

critical paths.

It is assumed that the estimated completion time for a

project can be shortened by deploying additional resources

for the activities. These additional resources include

labour, equipment, capital or any other resources. For

examples if the staff in a project normally works an eight

hour shift, one can expedite the work on the project by

having the staff work an additional shift, but they will

have to be paid extra wages for overtime. So the project

duration can be shortened, but the indirect cost will be

increases. Similarly by mechanization and automation,

several activities can be speed up beyond their normal rates

of progress. But one has to add additional cost for getting

the work done. Hence it is assumed that the time in a

project is a variable, depending on the amount of effort or

resources applied to it.

For calculating time – cost relationship, initially assumed

that a given activity or a work package in a project is

performed at the normal work pace. The normal work pace is

assumed to be the most efficient and hence the least costly

pace of doing work in work package or activity. This is the

usual or customary way of executing the activity and its

direct cost and duration are designed as Cn and Tn

respectively.

Figure shows the time – cost relationship of an activity.

Cc

Cn

Tc Tn

NORMAL

CRASH COST – TIME SLOPE

(NEGATIVE)

= (Cc – Cn) / (Tc – Tn)

ACTIVI

TY D

IRECT

COST

When the maximum effort is applied to complete an activity

in the shortest possible time, the activity is said to be

have been crashed. This condition is represented by the

direct cost (Cc) and the duration (Tc) in figure. Crash

condition not only represents the shortest activity duration

(Tc), but also the greatest direct cost (Cc) for performing

the activity.

According to figure if you connect 'crash' and 'normal'

points by a straight line, then this line represents the

time – cost relationship for the activity. In other words

this line gives the nature of trade of between direct cost

and the duration of the activity. Any intermediate point of

operation between the normal and crash points is feasible

for every activity in the project that can be crashed. Every

such intermediate point for a given activity is uniquely

defined by its time – cost relationship. A very important

assumption is made during time – cost relationship is that

of linearity. That is the feasible intermediate operating

points between the normal and crash points in figure must

all lie only on the straight line connecting these two

points. It is equally important that each activity has its

own time – cost relationship.

Example: - Let activity, i and j denote an activity

originating at event I and terminating at event j, in the

project network. The time – cost relationship for this

activity can be calculated using the following parameters:

Tni,j = Normal time taken to perform an activity (i,j),

Cni,j = Normal (direct) cost for activity (i,j),

Tcij = Crash time for the activity (i,j),

Ccij = Crash (direct) cost for activity (i,j).

The decision variables for the linear programming problem

are the intermediate time – cost trade – off points, or the

Ti,j's where

Ti,j = (selected) duration time for activity (i,j)

To express the direct cost for each activity as a linear

function of the decision variable, Ti, compute the cost time

slope of the straight line joining the normal and the crash

point. This can be represented as:

ai,j = (Cci,j – Cni,j) / (Tni,j – Tci,j)

where ai,j = Cost - time slope of an activity (i,j) i.e. the

incremental direct cost of an activity (i,j) per unit

decrease in the activity duration time.

Q7) “The fate of any project is dependent substantially on

the human aspect.”

Comment on this statement.

A project is a set of various activities that are planned

and executed in order to create a unique product within the

specified deadline and budget. But without human efforts it

is not possible to achieve any project goal. Project

management helps to coordinate the members and the resources

available for a project for achieving the organizational

objective. Project management means developing a project

plan, which includes defining the project goals and

objectives of the project. It also associates the budget and

timelines for the completion of a project. It provides the

following benefits in an organization:

1. Saving Cost: If the process and procedures are planned

once, then they can be used in all the future projects

again. This way it can helps in saving cost and time to

complete the project.

2. Improving working conditions: If the projects a are

successful, the client will be more involved in the

projects. This helps in improving the working conditions of

project, which in turn encourages the morale and confidence

of the project team.

3. Improving financial management: Better estimations of the

actual cost helps in managing the budget of the

organization. This results in better financial

predictability and cost control.

4. Resolving problems: a lot of time is wasted on solving

project problems. If the project is properly managed and

planned, then the process of project management helps in

solving the project problems more quikly.

5. Determining risk: the process of project management helps

in identifying and managing risks in the near future.

6. Improving the product quality: it helps to understand the

customers need, once the team recognizes customer needs,

they can implement quality control and quality assurance

techniques to fulfill the customers demand.

Challenges in Project Management

Organizations face different challenges while managing the

project due to various reasons such as lack of management

skills and disputes among the team members. Here are some

challenges in project management which we are going to

discuss:

1. Unrealistic deadlines: This is the biggest challenge in

front of PM to complete the project with the scheduled

project time or to meet the project deadline. Through

proper planning of project activities and coordination

among team members we can overcome this challenge.

2. Communication deficits: This occurs due to lack of

communication between the team members and the

customers. One should maintain proper communication

flow between the project manage and team members and

customers.

3. Resource competition: There is a lot of competition in

resources required for projects due to availability of

the resources such as manpower and materials in the

organization. It is difficult to select a particular

project from various projects for utilizing these

resources.

4. Undefined vision and goals: Some times the goals of

project are not clearly defined. Therefore, to

communicate team members that what should be achieved

becomes a difficult task. This challenge can be

overcome by solving team members queries regarding

project. The documentation should be appropriate.

5. Failure to manage risks: Risk is mandatory for every

project. The plan of every project has a list of risks

but no further analysis is done which affect the

project badly. If the risks involved in the project

determined then the team members should take proactive

measures to avoid these risks.

6. Insufficient team skills: To overcome this challenge

there should e proper training given to team members.

They should be guided in such a way that the team will

be able to manage the resources and external advisors.

Project manager: Project manager is the individual who

manages the project effectively and efficiently. In every

organization, it is the duty of the project manager to

manage the projects. The basic roles and responsibilities of

a project manager are:

1. Defining and maintaining the integrity of a project.

2. Development of project execution plan.

3. Organization for execution of the plan.

4. Setting of targets and development of systems and

procedures for accomplishment of project objectives and

targets.

5. Negotiations for commitments.

6. Direction, coordination and control of activities.

7. Contract management.

8. Non – human resource management including fiscal

matters.

9. Projectising and problem – solving.

10. Man management

11. Satisfaction of customer, Government and the

public.

12. Achievement of project objectives, cash surplus

and higher productivity.