17884376 fundamentals of project management class notes

7/29/2019 17884376 Fundamentals of Project Management Class Notes

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Fundamentals of Project Management1 Overview of Project1.1 Concepts and Definition of Project 1.2 Characteristics of a Project 1.3 Project Environment 1.4 Types of Project 1.5 Projects Life Cycle and Project Phases1.6 Project Organizations

2 Project Management2.1 2.2 Concept and Definition of Management Concept of Project Management 2.3 The Project Manager, His Roles and Responsibilities

3

Project Management in Nepal3.1 3.2 3.3 3.4 Historical Overview Project Planning in Nepal Why do Projects Fail in Nepal? Improving Project Management in Nepal

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1. Overview of Project1.1 Concept and Definition of ProjectProjects are the specific schemes or action units designated for the investmentof given resources and skills with an aim of attaining some predetermined objectives. A project starts from the scratch. It has a specific objective. It has a well-defined life span divided into a life cycle. It involves a set of activitieswithin a schedule and budget. It integrates human and non human resources. According to Harold Kerzner: A project is any series of activities and tasks that: have a specific objective to be completed within certain specifications have defined start and end dates have funding limits, and consume resources. A project isone-time job that has defined starting and ending dates, a clearly specified objective, or scope of work to be performed, a pre-defined budget, and usually a temporary organization that is dismantled once the project is complete ( The project Managers desk Reference, James Lewis) A group of multiple interdependent activities that require people and resources is the Project. Projects generally originate from plans. They serve as the building blocks for development planning. APlan, Programme and Project are different concepts yet complementary to one another.

PLANA plan is an image, map or vision to represent the forms and/or features of desired situation(s). It is a process of setting future goals for country or organization and choosing the actions to achieve these goals. Plans may be Community Development Plan, District Development Plan or Regional Development Plan depending

upon the area it serves and its magnitude. Similarly, depending upon differentsectors (agriculture, education, Health and so on) there may be different sector-specific plans known as Sectoral Development Plan. And finally, we have the National Development Plan. In Plan document, we can find only the level or sector-specific Broad Decisions indicating what and how much is to be achieved with theinvestment of given resources. A plan itself is static. In other words, a plan representing only an imagination or vision will have no meaning unless it is putinto operation to achieve its set objective/s. A Plan is a set of Programmes.

PROGRAMMEA Programme is the extensive and consistent set of action units stating the needs of interrelated activities to achieve the plans objectives and goal. There could be several programmes within a plan or development plan.

PROJECTA project is a unique group of tasks designed to attain a specific objective within the constraints of time, cost and quality based on planning and control through the use of a variety of resources in a dynamic environment.

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Project Family Tree Development Plan

Agricultural Programme

Health Programme

Roads Programme

Other Programme

Wheat Project Potato Project Fertilizer Project Livestock Project Other Projects

Plan Programme Project Work Package Activity/ Task

Five-Year Plan Health Programme Hospital Construction Electrification Package Preparation of Drawing

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Project TerminologyGoal: Goal is what exactly needs to be accomplished after completion of the project. Project Scope: Documented set of standards and criteria that the customer defines as successful completion. Objective: A combination of tasks that concernspecific functional groups or structural areas. Tasks: A combination of activities that lead to the achievement of a definable result. Activity: A time consuming piece of work with a definite beginning and end. Duration: The elapsed time from the beginning to the end of an activity, task or objective.

1.2 Characteristics of ProjectDespite the different types and natures of projects we observe in different sectors and in different levels, all of those necessarily reflect a set of common characteristics. A project has the following characteristics: 1.Objective: Each and every project needs to be guided to achieve an objective or a set of objectives. It ceases to exist when the objective is achieved. 2.Life Span: A project hasbeginning and end. It cannot continue forever. 3.Constraints: A project has a schedule. It operates within the constraints of time, cost and quality. Every project requires certain investment of resources. 4.Unique: Every project is unique. No two projects are exactly similar. 5.System: All projects need to undergo asystem of inputs-process - Outputs. 6.Life Cycle: Every project will have its own phase-based cycle. 7.Teamwork: A project has many participants. It requires teamwork under the leadership of the Project Manager. 8.Organization Structure: Aproject is a temporary organization. A project usually has its own budget and management. 9. Planning and Control System: A project requires information, planni

ng and control system. The actual performance is compared with the planned targets. 10. Collection of Activities: A project is a collection of activities that are linked together to constitute a system.

Time

Environment Objectives CostModel of a Project

Quality

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1.3i

Project EnvironmentInternal Environment

Environment consists of forces that influence the projects ability to achieve itsobjective. Projects operate in a dynamic environment. Project environment can be classified into: Internal environment is located within the project. It is Controllable by the project. It provides strengths and weaknesses to the project. The forces in the internal environment consists of: o Project Objective o Constraints o Structure o Resources

ii

Task EnvironmentThe task environment of a project is made up of stakeholders. They are either involved in the project or their interests are affected by the project. The elements of task environment are: o Customer o Contractor o Consultants o Suppliers oGovernment o Financiers o Competitors o Labour Unions

iii.

External Environment

It is located outside the project. It cannot be controlled by the project. The project can indirectly influence it. It provides opportunities and threats to theproject. The forces in the external environment are: o Economic o Technologicalo Political-Legal o Socio-cultural (For detail Refer- Project Management in Nepal by Dr. Govinda Ram Agrawal page: 16-20)

1.4

Types of Project

Projects can be of many categories. Various ways of categorizing a project are as shown in the Table below.

Sponsorship

Nature

Orientation Speed

Funding Source

Technique Size

Customer Individual ProductNormal Indigenous Labor Mega Oriented Intensive Orgataff Crash Foreign Major ProcessCapital Contractor Special Disaster -J/V Mediu

l Intensive Government Complex Oriented Small -Multilateral INGO Donor (For detailfer- Project Management in Nepal by Dr. Govinda Ram Agrawal page: 21-34) 5


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1.5 Projects Life Cycle and Project PhasesA project is time bound. It has beginning and end. The life of a project is divided into several phases to provide better management control and appropriate links to the ongoing operation of the performing organization. Each phase defines the work outcomes or deliverables of the project. The phases are arranged in a sequence. Collectively, the project phases are known as Project Life Cycle. Project life cycle generally defines: o What technical work should be done in each phase? o Who should be involved in each phase? Cost and staffing levels are low atthe start, higher towards the end, and drop rapidly as the project draws to theConclusion. The probability of successfully completing the project is Lowest, and hence risk and uncertainty are highest at the start of the project. The probability of successful completion generally gets progressively higher as the project continues. The ability of the stakeholders to influence the final characteristics of the project product and the final cost of the project is highest at the start and gets progressively lower as the project continues.

Risk/Amount FormulationRisk Amount of stake

Planning

Implementation

Termination

Time

Project life cycle:The breakdown and terminology of project phases differ; depending upon whether we are discussing products or projects. The life cycle phases of a product are: oResearch & Development o Market Introduction o Growth o Maturity o Deterioration o Death Today, there is no general agreement about the life cycle phases of aproject. This is understandable because of the complex nature and diversity of projects.

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Project life cycle according to Cleland and King: o ConceptualPreliminary Evaluation of project idea Identification of needs Determination ofinitial technical, environmental and economic feasibility and practicability ofthe system. Preliminary identification of human and non-human resources

o Definition Firm identification of resources required Preparation of the detailed plans required to support the system Establishment of time, cost and performance parameters Standardization of efforts and completion of documents for operations Identification and management of the resources required facilitating the production process such as inventory, supplies, labor, funds etc. Project implementation Use ofthe system results by the intended customer Evaluation of the project and its integration into another organizations System phase down Reallocation of resources to other projects

o Production

o Operational

o Divestment

The Life cycle of a Construction Project:The various phases in the life cycle of a project are: Formulation Phase Planning Phase Implementation

I

Termination Phase

Formulation PhaseThe main tasks in the formulation phase are: Project Identification and ProjectFormulation

Project identification A situation survey is done. The project idea is born. The project is conceptualzed. The sources of project ideas are internal (Strategies, Plans, Programmes, R&D Dept., Quality Circle) or external (Customer needs, Donors, Experts, Politicians, Legal Provisions, Technological Development).

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Project Formulation Defines the parameters of the identified project. Broad statement defining the bjective and outputs Preliminary statement of schedule and resources required. Preparation of Project Proposal based on prefeasibility study and preliminary design.

II

Planning Phase

The basic tasks in the planning phase of the project are: Feasibility study Appraisal Detailed design

Feasibility StudyDetermines the implement ability of the projects. The areas for which analysis is done areo Technical analysis Studies the feasibility of meeting technical specifications and examines the availability of alternative technical solutions. o Financial analysis Studies the financial sustainability of the project in terms ofcapital requirements and capacity for meeting of financial obligations. o Management analysis Studies the adequacy of management system to direct and control the project. o Marketing analysis- Studies project capacity, market demand and sales forecast. o Economic analysis Studies net contribution of the project to theeconomy and to the society. Benefit/Cost analysis is done for this purpose. o Environmental analysis- Studies the impact of the project on the environment. Fea

sibility study should be based on accurate information.

AppraisalIt is the Evaluation of the projects ability to succeed. Appraisal is based on the findings of the feasibility analysis. It addresses - Ability of the project toachieve its objectives - Comparability of the project with other projects (in terms of investment, cost/benefits, job creation, profit etc.) The competent authorities appraise the project against a list of criteria (policy, technical, economic, financial, social, etc.) before giving approval and formally approve the project selected through appraisal. Approval involves finalization of funding proposals and agreements and allocation of resources to the project.

Detailed design

It is concerned with - Preparation of blueprints of engineering design and specifications for construction, facilities, equipments etc. - Preparation of detailimplementation plans and work schedules. The design task establishes: Operatingplans and performance standards Allocates responsibilities Determines activitiesand resources Sets down work schedules 8


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III

Implementation Phase

The basic tasks in this phase are: - Implementation - Control

ImplementationImplementation is concerned with mobilization. It involves Setting up of projectorganization, Allocation of tasks and responsibilities, Getting together projectteam Preparation of tender documents. Other pre-construction activities like land acquisition and coordination with other infrastructure, Tendering, Construction and/or installation of equipment Project management, quality assurance, progress reporting and the participation of target groups and project affected groups.

ControlIt involves supervision and control of project performance to provide feedback.Monitoring of project performance is done. It is a means to improve implementation through the identification of problems and the possible corrective actions. Various techniques like CPM, PERT and other network analysis techniques are usedfor control purpose. The Control comprises the following activities: Setting ofstandards Measuring outputs Verifying the output with pre set standards Findingdeviations, if any. Correcting the process/output to the pre set standards if required.

IV

Termination Phase

The basic tasks in this phase are: Project Evaluation Project Handover

Project EvaluationEvaluation measures the effects and impacts of the project. It can be carried out during the project implementation to improve implementation or can also be carried out after project completion to improve future project planning and management.

Project Handover

Handover begins when the project work is finished. Resources are then reallocated to other projects.

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Other ways of breaking project phases in the Project Cycle

I.

Concept and Feasibility Study Engineering and Design Procurement Construction Start Up and Implementation Operation and Utilization

F/P P/P I/P I/P I/P T/P

II. National and Local Level needs

Benefit Monitoring And Evaluation Operation and Maintenance Project Implementation

Project Identification Project Preparation

Project CycleProject Appraisal

Funding

Loan/Grant Negotiation and A

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Donor Appraisal


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1.6

Project Organizations

Concept of Organization:An Organization is a network of structure and relationship. Commonly, the focusof the structure is the specialization of the human elements of the group.

Characteristics of Organization: Goal-Oriented Collection of People Consists of Structure (division of labor) sists of Technology Has Environment Has Feedback

Project OrganizationWhen projects are initiated, two issues immediately arise. First, a decision must be made about how to tie the project to the parent firm. Second, a decision must be made about how to organize the project itself. Project Organization consists of: Designing a Structure Pulling together Project Team Establishing Authority and Responsibility relationship Establishing Project Office There are three major organizational forms commonly used to house the projects.

Functional Organization Pure Project Organization Matrix Organization

1 Functional Organization Organization structure is broken into different functional units. The project tasks are performed through functional units. A project tends to be assigned to the functional unit that has most interest in ensuring its success or that can bemost helpful in implementing it. Functional elements of the parent organization-Administrative home for a project.

General Manager

Production department Marketing department

Finance Department

HR Department

Project A

Project B

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Advantages:o There is maximum Flexibility in the use of staffs. o Individual experts can beutilized by many projects o Specialists in the division can be grouped to shareknowledge and experience-Synergistic solutions to technical problems o Serves as a base of technological, procedural, administrative and overall policy continuity. Functional division contains the normal path of advancement for individualswhose Expertise is in the functional area.

Disadvantages:o o o o o o Lack of Client/Project focus. Focus on unique area of interest. Decision delay No individual is given full responsibility- lack of co-ordination Tendency to sub optimize the project Weak motivation for people Does not facilitatea holistic approach to the project (e.g. Jet air craft/ emergency room in a hospital can not be well designed unless designed as a totality.)

2 Pure Project Organizationo The project is separated from the rest of the parent system. o A self- contained unit with its own technical staff/ administration. o The project manager hashis own line organization with project authority and responsibility. o The project has its own resources and management.General Manager Project A Manager

Design

Construction

Administration

Production Department

Marketing Department

Other Departments

Advantages:o o o o o o o The PM has full line authority over the project Project work forcedirectly responsible to the PM Line of communication- shortened. Focus on proje

ct objective High motivation Unity of command Exists Flexible labor force

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Disadvantages:o o o o Duplications of efforts/Inefficient use of resources Lack of job security Stock piling of equipments / Technical expertise Projectiles (A disease-that creates animosities between parent organization. staff and project staff)

3. Matrix Organizationo A combination of pure project organization and functional Organization o It isa pure project organization overlaid on the functional divisions of the parentfirm. o Project team is assigned from the functional departments. o The PM has overall responsibility

General Manager

Production departmentProject A ManagerAdvantages:o o o o o o o

Marketing department

Finance Department

HR Department

The project is the point of emphasis/ special focus Availability of entire reservoir of technical talents in the FD Team identity Less anxiety about job Rapid response to client needs Consistency of policies/ practices/procedures of parentfirm Holistic approach/Balance of resources

Disadvantages:o Power and Authority is balanced. Doubt exists who is in charge o Division of authority and responsibility is complex o Movement of resources from project to project- may foster political infighting among the several PMs. o Projectile is still a serious disease. o Violates the management principle of unity of command.

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2

Project Management

2.1 Concepts and Definition of ManagementAll organizations carry out various activities to achieve their certain pre-determined goals. Management helps organizations to achieve goals. Management can bedefined as follows: Management achieves goals by getting the jobs done efficiently and effectively through and with people by using the means of planning, organizing, staffing, directing and controlling in a dynamic Environment. Managementis a know- how. Actually it is an art. It consists of skills, practical knowledge, creativity and result- orientation. Management is a science also because ithas an organized knowledge of principles and techniques. Management is a profession also.

Characteristics of management Management achieves goals Management gets the jobs done efficiently and effectiely Management works through and with people Management is a process comprisingplanning, organizing, staffing, directing and controlling Management operates inan environment

Principles of management

Principles are fundamental truths and are essence of management theory. Henry Fayol propounded 14 Principles of Management, which are universally applicable. These are: Division of Work: Principles of specialization. An employee should be assigned only one type of work to increase output. Authority and Responsibility Authority Legitimate power, right to influence others and make decisions Responsibility Obligations to carry out assigned jobs. It cannot be delegated. Accountability Answerability for satisfactory performance Those who exercise authority must assume responsibility. Unity of command: One employee should have only one boss.Unity of direction: One head and one plan for a group of activities having the same objective. Span of management (Scalar chain of command): All employees should be linked with each other in superior- subordinate relationship. Subordinationof individual interests to general interests Remuneration: Fair and equitable pay to employees. Discipline: Obedience and respect for agreement. Centralization

: Highly centralized power structure; decentralization with centralized control.Order: A place for every thing and every thing in its proper place. Equity: Sense of kindliness and justice throughout all levels of scalar chain. Stability and tenure of personnel: The tenure should be stable. Initiative: Encourages subordinates initiative. Esprit de Crops: Union is strength; cohesiveness and team spirit. 14


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Functions of ManagementManagement is what managers do. Management has certain functions. Various writers have classified management functions differently. Some of them are as listed below.

i.

Henry Fayol (POCCC) Planning Organizing Commanding Coordinating Controlling Planning Organizing Stafing Directing Coordinating Reporting Budgeting

ii.

Luther Gullick (POSDCORB)

iii.

Goal Setting Planning Assembling resources Organizing Implementing Controllor our purpose, the functions of management are:

Kast and Rosenzweig (GPAOIC)

i.

Planning: Predetermining future Selection of goals Discovering alternatives Choosing thest alternative Choosing future course of actions Estimating the cost and resources etc.

ii.

Organizing Defining activities and tasks Grouping the activities in departments structure Assigning activities to the position and people Establishment of responsibility and authority Manpower planning Preparation of an inventory of people

available Job analysis to determine job description Recruiting, selecting, placing developing, promoting, remunerating and retiring 15

iii.

Staffing


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iv.

Directing (Leading) Communicating, influencing and motivating people Concerned with interpersonal aspect of management. Establishing standards Measuring actual performance Findingand analyzing deviations

v.

Controlling

Corrective actions. Managerial Skills:

Managers need wide variety of skills. These skills can be categorized into: Technical Skills: Ability to perform a specialized task or function. Human Skills: Ability to go along and motivate people. Conceptual skills: Ability to think andanalyze and to relate the organization to environmental forces.

Conceptual

Conceptual

Conceptual

Human Human

Human

Technical Technical TechnicalTop Managers Middle Managers Lower Managers

Top Managers have the overall responsibility for the survival, growth and welfare of the organizations. They should have more conceptual skills. Middle managerssubordinate to top managers. They implement and control plans and strategies developed by top managers. They are responsible for the activities of lower levelmanagers. It will be better to have all three skills equally for them. Lower man

agers subordinate to middle managers. Operating personnel report to them. They should possess more technical skills than other two skills.

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2.2 Concept of Project ManagementProject management is a system approach for efficient and effective achievementof project objectives through assignment of total responsibility and accountability to a single project manager from inception to completion and coordination across functional lines with proper utilization of planning and control tools According to Harold Kerzner: Project management is the planning, organizing, directing and controlling of company resources to complete specific goals and objectives. Project Management is an alternative to the traditional management models. Itis planning, implementing and controlling of complex and unique projects to achieve results within constraints in a dynamic environment.

The main characteristics of Project Management Objectives-oriented Change-oriented Single responsibility center Multi-died Requires functional coordination along functional lines. Requires integratedPlanning and Control systems. Achieves results within the constraints of time, cost and quality.

Key Objectives of Project ManagementAny project must meet several objectives. Each objective is made up of many concerns, or constraints. Project management should have a document that has all ofthe details of each concern spelled out.

Objective Quality Requirements Deadlines

Document Specifications Project Schedule

Cost limits

Project Budget

High levels of Team Project Commitment Charter/Team Commitment

Concerns/Constraints Definition of end product Form, fit and function Must complete by ----- Must start by---------- Cant start before ---------- We can only spend-------- Bring it under --------------Your minimum profit margin is ----- We understand the purpose Each persons role is clear Mutual respect and trust Self- motivted

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2.3 The Project Manager, His Roles and ResponsibilitiesThe Project ManagerThe project manager serves as a single responsibility center to achieve projectobjective within the constraints of time cost and quality. His actions make or break the project. He occupies a focal position in project management. He assumes total responsibility and accountability for the project from inception to completion. A project manager must manage key project stakeholders-customers, contractors, consultants, suppliers, government, labor unions, competitors and financers.

Time Cost Quality

What to Manage?Time

Cost

Quality

Where the PM stands in project control?Client Organization

Project

Manager

Project Team

What a PM should know? What the priorities are? What authority he has? Opportunity and facilities tothe job. Feedback-to know how he is getting on. What extent of guidance and support from the superiors? Recognition for good program.

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Skills Requirements of Project Manager1.

Technical skills:Understanding of the technology involved Evaluation of technical concepts and solutions Communication in technical terms Assessment of technical risks, trends and innovations

2.

Managerial SkillsPlanning and control skills Organization skills Decision making skills Human Resource Management skills Leadership skills

3.

Human Relations skillsCommunication skills Motivation skills Negotiation and bargaining skills Conflict management skills

4. 5.

Conceptual Skills

They are ability to relate the project to environmental forces. The project manager should have vision, foresight, judgment and intuition.

Team Building skillsThey are ability to integrate people from many disciplines and departments intoan effective team.

Roles of Project Manager1.Diplomat: Maintain better relationship between project and environment Ensurepport Tackle new threats, if any Have high level of sensitivity Good negotiatingskill Responsible for all action of project personnel Make things happen by active intervention Make changes if necessary Coordinate the team Controlling and a

llocating resources Authority and influence Define ethics, norms and values of the team Motivating capacity Drive- be a leader Team spirit- team work 19

2.Chief Executive:

3. Leader


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Responsibilities of Project ManagerResponsibility is the obligation to perform duties and carry out tasks. It flowsfrom authority. It cannot be delegated. The specific responsibilities consistsof: i. Defining and maintaining project integrity ii. Selecting the project teamiii. Identifying and managing stakeholders iv. Planning the project implementation v. Project organization vi. Project implementation vii. Project control andprogress tracking viii. Financial management ix. Change and conflict management

Few Important Tips for Project Managers: Money makes things possible, people make things happen We are not looking fre-fighting managers, we need managers to prevent fire If you want every thing,you may get nothing If you dont know where you have to go, any road will lead youthere. Those who have no place and work in the project should not be in the project. Being a construction manager, dont be overly defensive, keep yourself cool,conceal your frustrations, when you slip off- say so.

The down side risk of Project Management Severe down side risks When a PM begins to fall in love more with his jobs thanwith his family, the result is usually lack of friends, a poor home life and possibly divorce During the birth of the missile and space programs, companies estimated that the divorce rate among PMs and Project Engineers was probably twice the national average. The followings are the characteristics of the workaholic Project Manager: o o o o o Every Friday he thinks that there are only two more working days until Monday At 5:00 PM he considers the working day only half over He

has no time to rest or relax He always takes home work from the office He takeswork with him on vacations.

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3.3.1

Project Management in Nepal

Historical Overview

Nepal is one of the least developed countries of the world. More than 38% of people live below the poverty line. The project concept in Nepal began in 1950/51 with a grant assistance of US $ 100,000 by USA. The planned development in Nepalbegan with the implementation of the First Five Year plan in 1956 (1956-1961). Since then, Nepal has implemented Nine Development Plans. The current Tenth plan(2002-2007) is mid-way in implementation. The financing of Nepals development plans has been heavily project based. Project management model appeared in Nepal during 1970. The project organization structure adopted was Development Committee. It was an autonomous pure project organization structure for the management of aspecific project. The matrix project organization structure was also used. The first Engineering project in Nepal was an iron bridge over the Bagmati River in 1850. The first hydroelectric project at Pharping was completed in 1911. The Raxual-Amlekhgang railway line was constructed in 1927. Manakamana Cable Car is themarvel of project management in Nepal. Kali Gandaki A, Kulekhani, Marsyngdi Hydro-Power projects and International Conference Hall are the Mega projects in Nepal.

3.2

Project Planning in Nepal

Most central level development projects in Nepal are planned by the donors. Mostlocal level projects, however, are planned within the country by various agencies of the ministries or local authorities. National Planning Commission, NPC isresponsible for preparation of five-year development plan. Projects are the primary means of translating development plans into action. Central level projects should have approval of NPC. Enactment of Local Self Governance Act, 1999 (LSGA)and Local Self Governance Rules, 2000 (LSGR) has made local bodies responsible for local level planning. According to the new decentralization concept, local bodies (e.g. DDCs, VDCs and Municipalities) are totally responsible for planning and implementing local level projects. These bodies, constituted of the directly

elected local representatives, prepare Periodic Plans for the development of their jurisdiction by comprehensively taking into consideration of the situation, need and potential of their jurisdiction and the aspiration of the local people.Planning is Participatory and Bottom-Up. On the basis of this Periodic Plan, they prepare Annual Plans for development investment. There are sets of governmentguidelines for helping the local authorities undertake such planning exercises.In addition to the Annual Plans and Periodic plan, the districts are also encouraged to prepare a vision plan of the concerned district in a participatory manner. This vision plan, generally termed as the Strategic Development Plan basically defines 20-year development goals in different sectors for the district and isessentially a Perspective Development Plan. In that sense, the Annual Plan is extracted from Periodic Plan, which in turn, is extracted from Strategic Development Plan.

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3.3 Why do Projects Fail in Nepal?Project implementation in Nepal has remained poor. Most development projects have failed to achieve the desired results. Time and cost overruns are common. There are various reasons behind the failure of the projects. Some of them are as listed below: Unclear Policy and Objectives Weak Institutional Capabilities Lack of Users Participation. Defective Project Design Delays in Project approval Consutants related Problems Procurement Delays Delays in Contract Award Lack of Co-ordination Delays in Budget Release Lack of Counterpart Funds Poor Monitoring andEvaluation Corruption

3.4

Improving Project Management in Nepal

Problems of project implementation are profound in Nepal. Poor implementation has been the key reason for project failure. Thus for successfully managing construction projects in Nepal, project implementation needs urgent improvement. The actions needed for this purpose are: Formulate proper policies and guidelines Ensure good project design Improve financial management Strengthen institutional capabilities Establish PMIS system Prepare implementation plan Streamline procedures Strengthen Co-ordination, Monitoring and evaluation Control corruption and politicization.

Thank You.

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PROJECT PLANNING TOOLS11.1

Work Break Down Structure (WBS)Concept:

To develop a project schedule, the successful Project Manager must break the project down into small work components. The concept is fairly intuitive. Most people understand that any job is easier to handle when broken into smaller pieces.A Work Break Down Structure is a tree showing the hierarchy of the required work to be performed to complete a project. It organizes, defines and displays the work to be accomplished. In planning a project, the project manager must structurethe work into small elements that are: Manageable, in that specific authority and responsibility can be assigned. Independent, or with minimum interfacing withand dependence on other ongoing elements. Integratable so that the total packagecan be seen. Measurable in terms of progress. The WBS is the single most important element because it provides a common framework from which: The total programcan be described as a summation of subdivided elements. Planning can be performed. Costs and budgets can be established. Time, cost and performance can be tracked. Objectives can be linked to company resources in a logical manner. Schedules and status-reporting procedures can be established. Network construction and control planning can be initiated. The responsibility assignments for each element can be established. The work breakdown structure acts as a vehicle for breakin

g the work down into smaller elements, thus providing a greater probability thatevery major and minor activity will be accounted for.

1. 2 Hierarchy of Work:A job must be broken down into objectives, then into tasks, and finally into activities. Using this hierarchy of work simplifies the process of breaking down the project into its smallest components, called activities, and ensures that anyof the components is not missed out. Objective: An objective is a combination oftasks that concern specific functional groups, major contractors, major subassemblies or some other logical division of the total project like major parts, skills or major resources etc.


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Tasks: A task represents one of several major deliverables towards an objective.It is a combination of activities that lead to the achievement of a definable result. Activities: An activity is a time consuming piece of work with a definitebeginning and end. Activities are the basic building blocks of a project, the individual actions that will be performed one at a time. To develop Work Break Down Structure: Develop the project goal. Define the objectives- the preliminary plan. Have teams refine the objectives. Have teams break down the objectives intotasks. Have doers break down the tasks into activities. Chart-1 shows a typicalexample of WBS with break down of the project into objectives, tasks and activities. There is a variety of WBSs. Alternatively a WBS can be developed as composed of three components: Work Items Levels & Work Packages Work Item: A work itemis a manageable element at each level. Level: The level refers to the management scope, which divides a project into clearly defined elements. For example, level 0 is for end product of a project. Level 1 is for manageable elements of theproject manager. Level 2 is for manageable elements of superintendent. Level 3 is for manageable elements of project engineer. Level 4 is for manageable elements of fore men. Work Packages: The units of WBS at the lowest developed level. The work package is to be performed by a single organization unit (crew), sub-contractors etc. and is the base for project element, short interval planning, and collection of expenditures. Chart-2 shows a typical example of WBS with break down of the project into work items, levels and work packages.


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2

Precedence Relationships:

It is the relationship between activities based on where they occur in relationto each other. In other words, it is the sequencing of activities. There are four main logical categories that will influence the sequencing of activities. Technical Requirements o Write before editing o Test before repairing o Frame beforepouring concrete Safety and efficiency considerations o Check preflight checklist o Disconnect power before making repairs Policy or preference decisions o A developer may insist that landscaping of the entrance must precede the opening ofsales office. Though there is no technical reasons or may even be less efficient to do so. o Vendor certification prior to contract o Preference to minority contractors Availability of limited resources o One may not be able to commit major expenditures until revenue is realized or credit is obtained o One may not beable to hire outside experts in some fields, and have to do with in house teams.

3. Planning ToolsThe Planning phase of any venture involves a listing of tasks or jobs that mustbe performed to bring about the ventures completion. Gross requirement for material, equipment and manpower are also determined in this phase, and estimate of costs and duration for the various jobs are made.

PLANNING

ESTIMATING

SCHEDULING

CONSTRUCTION

COST

RESOURCES Material Equipment Manpower

TASKS Activity start & finish dates Project start & finish dates

COST Cost Profile

RESOURCES Resource Aggregation Resource Levelling Limited Resource Allocation

SITE LAYOUT Materials Equipment Manpower

TECHNOLOGY Methods Organization

DIRECT Materials Equipments Manpower

INDIRECT Overheads Profits

Sequence of operations


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Scheduling on the other hand, is laying out of the actual jobs of the project inthe time order in which they have to be performed. Manpower and material requirements needed at each stage of construction are calculated, along with the expected completion time of each of the jobs. Control generally regarded as the underlying managerial function, begins with reviewing the difference between the schedule and actual performance once the project has begun. The analysis and correction of this difference forms the basic aspect of control. There are a number of planning, scheduling and controlling tools in use. Basically these tools are of two types- the bar chart and flow chart. The use of any particular type depends upon the situation and complexity. A separate description on each of these toolsis given in following paragraphs.

3.1 Bar Chart (Gantt Chart)A graphical representation of project activities shown in a time scaled bar linewith no links shown between activities. A bar chart is a scheduling technique in which activity duration is drawn to scale on a time base. A bar chart is alsocalled a Gantt chart since it was developed by Henry Gantt. It is one of the most popular and widely used techniques for planning and scheduling activities because the graphical representation of a bar chart makes it easy to read and understand.

How to draw Bar Chart? Listing of work activities Estimation of work duration Identifying start and copletion date in calendar format Drawing each activity as a horizontal bar in chr

onological order according to its start date. Easy to understand The status of the project can be assessed in a short time Easy to develop and implement No training is required Appropriate for small projects Starting point for planning

Advantages:

Shortcomings:

The length of the bar indicates rough time estimate. Difficulties in seeing immediately and exactly overall project duration if changes occur in any particularactivity. Not detail but gross planning


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It does not show specifically which activities to control and expedite and how much. It does not depict the dependencies of activities upon each other. Updatingmeans to redraw the entire chart again and again.

Types of Bar Charts:Bar charts differ in the way they show planned progress on the horizontal scale,in the way they report progress and in numerous details of diagrammatic style.Three of the more common types of bar charts are discussed in some detail below.Type I: Linear Time-scaled for Planning; Linear Progress-scaled for ReportingJan Feb March April May

Type I: Plan Bar Reporting dateJan Feb March April May

Type I: Reporting Bar Assumes that progress on an activity is a direct linear function of elapsed time. Therefore, in planning, no attempt is made to show the physical percentage completion at any point on the bar representing an activity. In order to report progress, a parallel bar is sometimes placed immediately below the plan bar and is initially open also. Then as the job progresses, it is shaded in direct proportion to physical work (not necessarily elapsed time) completed on the activity. In above example, 5 months were originally scheduled for theactivity and that 60% of time has elapsed by the reporting period.. However, the shaded bar reports that only 50% of the physical work in the activity has beencompleted. It may seem that the activity is lagging behind by 10% or by 15 days

. But it may not be true. It depends upon the volume of work and resources scheduled during different months. If resources scheduled are higher towards first half, it may be lagging behind the target and if the resources scheduled are higher towards later half, it may be on or ahead of scheduled target.


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Type II: Time-scaled for Planning; Time-scaled for ReportingJan0 10

Feb

March30 50

April

May80 100

Type II: Plan Bar Reporting dateJan0 10

Feb30

March50

April80

May100

550 8 28 55

Type II: ReportingJan0 10

Feb30

March50

April80

May

Jun100

0

8

28

55

75


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90

96

Type II differs from Type I in the sense that planned cumulative progress percentages (in terms of physical work, man hours expended etc.) are written at the end of each basic time interval (generally at the top). This progress need not beuniformly linear. In above example, 50% of the work is planned to be performed in last 2 months (40% time interval). As the activity gets underway, work completed is reported by a parallel shaded bar below the planned one. It is shaded to show the actual time worked on the activity up to the current date or to completion, whichever is earlier. Figures giving the actual percentage cumulative progress are written on the opposite side of the bar.


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Type III: Time-scaled for Planning; Variable Progress-scaled for Reporting In this type of bar chart, work completed is reported by shading in alternating areasin the lower and upper portions of the bar, one for each basic time interval worked.. The segments are shaded in proportion to the physical work actually performed during the basic time interval compared with the scale for the basic time interval in the range being shaded. It is important to recognize that the scale of progress generally changes during each basic time interval considered unless progress is indeed a direct linear function of time.Jan0 10

Feb30

Mar50

April80

May100

June

July

0

8

28

55

75

90

96

100

The End


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CPM/PERT NetworksCPM/PERT Networks are flow charts and are sometimes called network diagrams. Critical Path Method (CPM) is a graphical network- based scheduling technique thatevolved in late 60s. US Government agencies insisted on their use by contractorson major government projects. Basic concepts of CPM such as activities, events and predecessors have become a regular part of the language of Project Managers.CPM enables planners and managers to thoroughly analyze the timing and sequential logic of all operations required to complete a project. In the 1950s, the US Navy developed the project management tool known as PERT (Project Evaluation andReview Technique). In the same decade (in 1956) CPM (Critical Path Method) was developed jointly by Engineers at DUPont and Remington Rand. Since the mechanicsof the two approaches are so similar, they are now commonly referred to as CPM/PERT. The most obvious difference between the two is that PERT recognizes uncertainty in activity duration by the use of optimistic, pessimistic and most likelydurations, whereas CPM makes only one time estimate for an activity- the most likely duration. In PERT, three duration estimates for each activity is developed.These are: The most Optimistic duration: duration of an activity if all went right, without any problem. The most pessimistic duration: duration of an activityif everything went wrong. The most likely duration: duration of an activity based on experience of what usually happens- something went wrong and some thing right. A probability is attached to each estimate, and the final duration is derived from a stochastic formula: Final Duration= D0P0 + Dp Pp + Dc Pc Where, D0 is

the most optimistic duration P0 is the probability of D0 Dp is the most pessimistic duration Pp is the probability of Dp Dc is the most likely duration Pc is the probability of Dc CPM is most often used in commercial projects. It differs from PERT only in the duration estimating technique. As CPM requires only one duration estimate; it sure do save a lot of time and effort. In practice, however, both PERT and CPM are used synonymously.1


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PERT is used more in research and development projects and CPM is used more in projects such as construction, where there has been some experience in handling similar endeavors. Project characteristics that are essential for analysis by CPMare: The project consists of a well-defined collection of jobs, or activities which when completed mark the end of the project. The jobs are ordered, that is they must be performed in technological sequence. PERT/CPM charts can be drawn inone of two ways: Activity on Node (AON Diagram): Each activity is represented by a node/box. Example: Activity A precedes activities B and C. E cannot start until both B and C are finished. B precedes D. D and E must finish before F can start. G must wait for F to finish. BA

D F G

C

E

Activity on Arrow (AOA Diagram): Each activity is represented by an arrow Example: In the above example, the AOA diagram will be as shown below. A B D F G

C

E

Sometimes dummy activity (which requires neither time nor resources) is introduced. It is required to properly show the logic of an arrow network to provide unique labeling. The nature of the relationships conveyed by the dummy activities is not readily clear. For example, the dotted arrow on the far left representingfinish to start between A and C could also mean start to start between B and C,which is not true in this case. For these and other reasons, the AON technique is generally used and for our purpose also we will describe PERT/CPM networks inAON only in this chapter.

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The Critical PathSo far the only logic element in CPM networks has been discussed. The second main element is time. In general, these schedule calculations involve the followingsteps: i. Estimating Durations Once all activities in a project have been defined and organized into a logical CPM network, their durations must be estimated.An activitys duration is the expected amount of time that will be required to complete the activity from start to finish. ii. Forward Pass:

The calculation procedure called the forward pass establishes the earliest startand finish times for each activity in the network. The following nomenclature and relationship is used in the discussion of the forward pass: Early Start (ES):The early start of a job in a project is the earliest possible time that the job can begin. Early Finish (EF): The early finish of a job is its early start time plus the time needed to complete the job. The Forward Pass yields an ES and EF for each activity, and the earliest finish date, T for the project. S= Start timeof project (usually =0) ES (a)= S for all beginning jobs, or ES (a)= Max {EF (all predecessors of a)} EF (a)= ES (a) + t (a) T= Max {EF (all jobs)}= Earliest finish time for project The set of rules that defines the procedure for the forward pass calculations is called an algorithm. iii. Backward Pass:

The calculation procedure called the backward pass establishes the latest allowable start and finish times for each activity that will still permit the overall

project to be completed without delaying beyond the scheduled completion date. The following nomenclature and relationship is used in the discussion of the backward pass: Late Start (LS): It is the latest time the job can begin without pushing the finish date of the project further into the future. Late Finish (EF): The late finish of a job is its late start time plus its duration. The Backward Pass yields LS and LF for each activity, and the finish times for all jobs.3


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LF (a)= T for all ending jobs, or LF (a)= Min {LS (all successors of a)} LS (a)=LF (a)-t (a) iv. Total Float/Slack

The total float or total slack for an activity is the maximum amount of time that the activity can be delayed without extending the complete time of the overallproject. However, such a delay might postpone the early start of one or more ofits following activities. Total slack of a job activity is the difference between its late start and early start times (or equivalently, as the difference between its late finish and early finish times). TS= LS- ES or LF-EF v. Free Float/Slack

Free float is the maximum amount of time an activity can be delayed without delaying the early start of any of its followers. For calculation purpose, the freeslack of a job is the difference between its early finish time and the earliestof the early start times of all its immediate successors. Free slack, of course,can never exceed total slack; moreover, all jobs that have total slack do not necessarily have free slack. In general, a job has free slack if it has more total slack than one of its immediate successors. FS (a)= Min {ES (immediate successors of a)} EF (a) vi. Critical Path

A critical path is a continuous chain of activities from the beginning to the end of a network with the minimum float value. In the case where the target projec

t completion time is set equal to the early project completion time, a criticalpath will have Zero Float. In other words the longest path through the network is called the critical path.

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Example: Draw AON diagram indicating ES, EF, LS, LF and earliest finish time ofthe project having the activities, durations and precedence relationship as shown in the table below. Activity Duration Predecessors A 6 B 3 A C 4 A D 9 A E 12F 8 G 3 B, D H 6 C, D I 4 C J 4 E K 3 E L 1 E M 6 G, H N 7 H O 4 N, I, J P 2 K,L

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Construction of Arrow NetworksExample

ActivityA B C D E F G H K L M

Duration3 2 1 4 4 3 5 3 3 1 2

PredecessorsA A C B, E B, E B, F D, G, H G, H

FollowersD, E G, H, K F L G, H K L, M L, M -

Equivalent Precedence Network

D A E G

L

Start End B H M

C

F

K

1


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AON Diagram

D A E Start BStart S=0

L G H

M

EndFinish Time T= 14

C

F

K

2


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AOA Diagram 2 7 9

1

3

5

8

10

4

6

3


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Forward PassD (x) = Estimated duration for activity x ES (x)= Earliest start (expected) timefor activity x EF (x)= Earliest finish (expected) time for activity x S= Project start time ES (Initial Activities) =S ES (x) = Maximum (EF (all predecessors of x)) EF (x) = ES (x)+ D (x)

Backward PassD (x)= Estimated duration for activity x LS (x) = Latest allowable start time for activity x LF (x) = Latest allowable finish time for activity x T = Target project completion time LF (End Activities) =T LF (x)= Minimum (LS (all followers of x)) LS (x) = LF (x)- D (x)

Total FloatThe Total Float for an activity is the maximum amount of time that the activitycan be delayed without extending the completion time of the overall project. However, such a delay might postpone the early start of one or more of its following activities.

Total Float for Activity x, TF (x) = LS (x)- ES (x) = LF (x)- EF (x)

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Free FloatFree Float is the maximum amount of time an activity can be delayed without delaying the early start of any of its followers.

Free Float for Activity x, FF (x) = Minimum (ES (all immediate followers of x))-EF (x)All activities on the critical path have zero float- Total or Free. Free float for any activity is always less than or equal to the total float.

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THE S-CURVES-Curve is one of the popular planning tools. S-Curve graphically plots some measure of cumulative progress on the vertical axis against time on the horizontalaxis. Progress can be measured in terms of money expended, quantity surveys of work in place, man-hours expended, or any other measure which makes sense. Any ofthese can be expressed either in terms of actual units (Rupees, Cubic meter, etc.) or as a percentage of the estimated total quantity to be measured.

Why does it look Like S?On most projects, expenditures of resources per unit time tend to start slowly,build up to a peak, and then taper off near the end. This causes the slope of the cumulative curve to start low, increase during the middle, and then flatten near the top. After signing a construction contract, the contractor has to preparehimself for the work. Also minor works are started which takes time to gain momentum. After the period of slow start, when the contractor mobilizes him fully,the rate of progress accelerates remarkably and for quite sufficient duration, the rate of progress is constant. Finally, a falling off of this rate of progressis marked when the project is towards completion. Contractor reduces his manpower substantially and activities are limited to finishing, testing and commissioning. By this, for any project, if we draw on a graph, we find a figure having S-shape.

S- Curve

Cumulative Cost

Time

Traditionally, the curve was being used to plan the budget and cash flow only. It was drawn for cumulative schedule of cost on vertical scale and time durationon horizontal scale. But now, we have started using it not only to plan overallcost of the project, but also to plan man-hours, physical percentage completion,individual items of work and so on. In that case

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MR Gelal FPM, Class Note VI the vertical scale represents man- hours, physical percentage of work completed etc. and horizontal scale always represents the time.

Example:An airport construction project has to move 10,000 cubic meter of earth within 10 days. The daily excavation quantities are as shown in figure 1 below. Summingall the daily excavation quantities through any particular day gives the cumulative quantity by that day. For example, by the end of day 5, the cumulative quantity is the sum of excavation on days 1, 2, 3, 4 and 5. That is = 200 + 600 + 1000 + 1400 + 1800 = 5000 The shape of S- Curve can be seen by connecting the points at the end of each days cumulative production as shown in figure 2.

Figure 1

Figure 2

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LINE OF BALANCELine of Balance is a graphic technique used for project planning and control todepict timequantity relationships. They apply best to linear and repetitive operations such as tunnels, pipelines, highways and building projects. The verticalaxis typically plots cumulative progress or percentage completed for different systems of a project, such as the structural, electrical, mechanical and other trade sub contractors on a high-rise building. The horizontal axis plots time. Anexample may be, clearing, excavation, stringing, welding, pipe laying, and backfill operations on a pipeline. As long as the slopes are either equal or decreasing as one moves to the right, the project should proceed satisfactorily. However, if early scheduling shows one operation proceeding too rapidly, with a high slope compared with those preceding it, the time and location of the first conflicts become rapidly apparent. To illustrate this, figure 3 shows the eighth operation starting to conflict with the seventh, when each is about 70% complete. 100%

Time

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Linked Bar ChartLinked bar chart is a modified version of Gantt bar chart. It was developed to overcome some of the inherent limitations of bar chart. It shows the links between an activity and the preceding or succeeding activities. The linked bar chart has advantage of exhibiting the effect of delay on succeeding activities and alsoit can provide some information of the extra time available (if there is) withan activity for its completion. The extra time available for an activity for itscompletion is called float. Similarly, the activities, which do not have extratime for completion, are called critical activities. It is to be noted that linking bars are very complicated, difficult and sometimes impossible to show graphically. An example of linked bar chart is presented below. Example:

ActivityA B C D E F G H

Duration4 3 2 2 7 3 8 8

PredecessorsA A B B C D E, F

Followers

B D F G H H -

Corresponding AON and CPM Network

D B E StartA

G

End C F H

Corresponding Linked bar Chart is as given in figure 1 below.

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Milestone ChartA Milestone Chart is an improved version of a bar chart in which some of the limitations of bar chart are eliminated. As Henry Gantt invented it, it is called Gantt Milestone Chart. Combined activity bar charts can be converted to milestonebar charts by placing small triangles at strategic locations in the bars to indicate completion of certain milestones within each activity or group of activities as shown in figure below. A milestone implies some specific stage or point where major activity either begins or ends, or cost data become critical. Figure (a) shows a bar chart of a project, which involves four tasks or activities or jobs viz. Task I, Task J, task K and Task L and figure (b) shows the correspondingMilestone Chart. It may be seen that in a milestone chart the long time activities or jobs or tasks are identified in terms of specific events or milestones which are plotted against the time scaled indicating their accomplishments by specified times. Each bar in a milestone chart again represents an activity or job or task and all the bars taken together represent the entire project. A milestonechart shows relationship between the milestones within the same activity or jobor task. It may be seen from fig. (b) that Milestone 2 can not be started untilmilestone 1 has been accomplished. Thus as compared to bar chart better controlcan be achieved with the help of a milestone chart, but it still possesses thesame deficiency that it does not depict the interdependencies between the various tasks or the relationship between the milestones of different tasks.

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Earned Value AnalysisAny deviation in schedule, performance or cost from the plan or from the set standard to the actual accomplishment is called variance. In the past the conventional method of control analysis was variance analysis. This measures the difference between two factors by subtracting one from the other to give a positive or negative variance. It can be used to show differences between actual progresses and planned, and the resources used against estimate or budget. For example, thefollowings are common variances in the control of projects: Scheduled start vs.Actual start Scheduled finish vs. actual finish Scheduled time for an activity vs. actual time Scheduled date of milestone vs. the actual date when the milestone was reached Budgeted cost vs. Actual cost Measured value vs. Actual cost Budgeted man-hours vs. Actual man-hours Budgeted unit cost vs. Actual unit cost Although still used extensively today, variance analysis must be supplemented by other methods, as it is an inadequate, often misleading, and sometimes meaningless,guide to progress and performance. For example, consider a simple case where outof total project cost of NRs. 25,00,000, the budgeted expenditures to date on aproject is NRS. 850,000 and actual expenditure is NRs. 900,000, giving a variance of NRs. 50,000. All this tells us is that expenditure is ahead of budget. Itdoes not give us any of the following information: Whether we are on, above or below the expected cost performance. What will be the likely final cost of the project Whether we are on, behind or ahead of schedule What will be the likely completion time of the project Thus variance analysis, when used on its own is an i

neffective way of analyzing and reporting project progress and performance.

Performance analysis based on Earned ValueThe modern methodology used in analyzing project progress and performance uses Performance Measurement based on Earned Value concepts, which integrates cost and schedule on a structured and personalized basis. There are actually three elementsof data required to analyze performance, from which more information can be extracted than from than two-element variance analysis. These elements are: BudgetedCost of Work schedule (BCWS) = NRs. 850,000 Actual Cost of Work Performed (ACWP) = NRs. 900,000 Budgeted Value of the Work Actually Completed, i.e. Earned Value (EV) =NRS.750, 000 In addition the completion time of the project is 50 weeks(say).

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Cost variance CVCost Variance CV, is the difference of Budgeted Value of Work performed (EarnedValue) and Actual Cost of Work Performed. It can be expressed as:

CV= EV-ACWPNegative value of CV indicates Cost Overrun. In the above example, CV is, = NRs.750, 000- NRs. 900, 000 = NRs. (-) 150, 000 The project is NRs. 150, 000 over budget!

Cost PerformanceCost Performance can be obtained by dividing Earned Value EV by Actual cost of Work Performed ACWP. It can be expressed as:

Cost Performance = EV/ACWPIn the above Example, Cost Performance = NRs. 750,000/NRs. 900,000 = 0.8333 Theproject is obtaining 83.33 Paisa of Earned Value for every Rupee expended, thatis cost performance is 83.33% of that planned. Final Cost Forecasting= NRs. 25,00,000/ 0.83333 = NRs. 30,00,000 The project will be NRs. 500,000 over budget, ifthere is no change in performance.

Schedule Variance SVSchedule Variance SV (In cost terms), is the difference of Budgeted Value of Wor

k performed (Earned Value) and Budgeted Cost of Work Schedule (BCWS). It can beexpressed as:

SV= EV-BCWSNegative Value of SV indicates time overrun. In the above example, SV is, SV (Incost terms)= NRs. 750,000- NRs. 850, 000 SV (In cost terms)= NRs. (-) 100, 000The Project is equivalent of NRs. 100,000 behind schedule.

Schedule PerformanceSchedule Performance can be obtained by dividing Earned Value EV by Budgeted Cost of Work Schedule BCWS. It can be expressed as:

Schedule Performance= EV/BCWS

In the above Example, Schedule Performance = NRs. 750,000/NRs. 850,000 = 0. 8823Schedule Performance is only 88.23 % of that planned. Final Completion Time Forecasting= 50 weeks/ 0.8823 = 56.67 Weeks The project will be 6.67 weeks late, ifthere is no change in performance.

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Resource Allocation and LevelingResourceAny consumable, except time, required to accomplish an activity, such as labor,materials, equipment, machinery, tools and shop space are the resources for theproject. Resource requirements are estimated at the activity level based on project/activity documentation and achieved productivity or production rated under the stated environmental and managerial conditions. More than one resource neededis to be estimated. These resources may be constant over an activitys duration or may be variable in intensity. Having estimated the resources needed for the activities considered, and based on the CPM diagram already developed, the projectteam will develop a schedule with no resource constraints. Project resources all have certain characteristics that differentiate them in specific categories for further analysis. 1. Stock ability 2. Required/ Availability resource intensity Constant Intensity (Uniform Requirement) Non uniform Intensity (Non uniform requirement) 3. Resource Complexity.

Resource AggregationResource aggregation is a method of calculating needed resources at the projector multi project level for each time unit to enable implementation of the plan.During this process, no limitation on available resources is considered. Most CPM oriented software on the market is capable of performing aggregation or findingdaily (time unit) project requirements for all resources estimated as needed to

implement the plan.

Resource Aggregation ProcessThe step-by-step procedure for obtaining resources histograms for a given project with or without computer usage are as listed below. 1. A project CPM network using the arrow or precedence technique is developed. 2. The required resources/activity are limited; sometimes more than one resources / activity is specified.3. The CPM network is computed considering Early and Late start schedule. 4. A bar chart in ascending order of early or late activity start is developed. 5. Foreach specified resource for each project time unit, the total daily-required resource is calculated. 6. For each resource, based on requirements per project time unit, histograms are developed. (for both ES and LS schedule). 7. For each resource analyzed, cumulative curves for early start and late start schedules are

developed on the same plot.

Resource AllocationResource allocation is the distribution of available resources to different activities on different dates and in different quantities is. It is usual in planning a project; a planner has to consider not only the activity precedence relationships but also the availability of the resources. While allocating resources, the planner tries to distribute (allocate) the resources from non-critical activities to critical activities so that important activities (having no floats) can be continued without affecting the project completion date. 1


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Resource Allocation ProcessMany of the constraints hedging in a plan will have origins in the limitation oftotal resources or in the proportion of total resources that can be committed to a project. Resource allocation procedures or programs allocate available resources to project activities in an attempt to obtain the shortest project schedule(completion date) consistent with fixed resource limits. For project managers,one of the most challenging tasks is allocating resources that are available only in a fixed amount for a given period. The first step of the process is to identify project required resources with limited availability and the periods of availability. Available resources with constant intensity for long period of time or project duration (e.g., a tower crane for lifting materials for a multistory building). Available resources for shorter or cyclic periods o Stock able resources (if not used today, can be used in future) o Non-stock able resources (if notused when allocated, incur extra costs in future) To reach the best use of resources, the utilization factor of the allocated resources is desired. The additional cost directly associated with utilization of allocated resources fall in oneof the following categories: Cost of hiring or requiring additional resources Cost of idle labor or equipment Cost of delay to other activities not having enough resources to schedule the work. The quality of allocation decision can be measured through a resource utilization factor. A utilization factor of 1 for the project is considered best. A simple procedure is presented for understanding theallocation procedures that lead to a more realistic schedule. The resource avai

lability limits are known for the entire project duration. Starting with the first day of the project, consider all activities that can be scheduled and selectthe one with the highest priority. The most common priority criterion is the earliest start and minimum total float. If an activity meets the allocation criterion and there are available resources in the pool, schedule and assume that the activity will not be interrupted until completion. A more complex procedure considers the possibility of interrupting an activity after its start and rescheduling the remaining position at a later date.

Resource LevelingResource Leveling is the method of scheduling activities within their availablefloat so as to minimize fluctuations in day- to- day resource requirements. By resource leveling, we try to optimize the use of resources required to complete a

project. Resource leveling helps in obtaining uniformity (so far as possible) in resource requirement throughout the life of a project. The benefit of resourceleveling is to ease resource management so that cost involved in managing resources can be minimized.

Resource Leveling Process:i. ii. iii. iv. Identification of what type of resources on what dates and on what quantity. Preparation of Resource Histogram of the resources required for each activity in a time series. Shifting of activities having floats for resource allocation/leveling. Sometimes, resource allocation/leveling may require extension of total project duration also. 2


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Limited Resource SchedulingThe completion of a construction project at maximum efficiency of time and costrequires the judicious scheduling and allocation of available resources. Men power, equipment and materials are important project resources that require close attention. The supply and availability of resources is seldom be taken for granted due to seasonal shortage, labor disputes, equipment breakdowns, competing demands, delayed deliveries and many other uncertainties. Nevertheless, if time schedules and cost budgets are to be met, the work must be supplied with the necessary men, equipment and materials when and as they are needed on the job site. Theproject manager has to identify and schedule the future job needs so that the most efficient employment is made of the resources available. He must establish what resources will be needed, when they must be on site and the quantities required. He should have detailed compilation of resource requirements. If it appearsthat there will be adequate numbers of resources available to satisfy these projected requirements, the work presumably goes according to established scheduleand no adjustment of the job completion date is required. If the resources requirement discloses that demand will exceed the supply, remedial measures to combatinadequate resource supply is to be made. If there are conflicts among projectactivities for the same resource items, rescheduling the non- critical activities will often solve the problem. Most project managers are faced with The problemof relatively fixed manpower availabilities, a certain number of machines or other pieces of equipments, and considering money as a resource- a limited budget.

Jobs that occur on parallel paths through the network may compete for the sameresources, and even though precedence constraints would not prevent their beingscheduled simultaneously, a limited supply of resources might force them to be scheduled sequentially.

Example:Consider the small project plotted as a schedule graph with a horizontal time scale. The horizontal length of each activity arrow represents its duration and the number above the arrow represents its manpower resource requirement. Assume that there are only 10 men available on any day. In modified schedule, the completion time has increased from 6 to 7 days. The resource limit has resulted in a delayed completion date. (See graph in next page)

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The complexity of Project Scheduling with Limited ResourcesProblems of resource scheduling vary in kind and in severity, depending upon thenature of the project and its organizational setting. In some cases there may be just one key resource- perhaps a large crane- that is bottleneck in schedulinga project. Activities must be scheduled so that no two of them requiring the same facility occur at the same time. Or perhaps there is relatively small numberof resources, whose limited availability must be jointly considered in scheduling. At other extreme are projects requiring many resources, most of which are available in fixed, limited amounts. The problem of scheduling activities so that none of the resource availabilities are exceeded and none of the precedence relations are violated is a exceedingly difficult task for project of even modest size. This is especially true if one tries, simultaneously, to minimize project duration or meet some other reasonable scheduling criteria. Resource leveling program attempts to reduce peak resource requirements and smoothen out period-to-period assignments, within a constraint on project duration.

Resource Leveling of Project Schedules In most project situations resources can be acquired or released in practicallyany desired amounts if one is willing to pay expenses involved in changing resource levels, such as the costs of hiring, training, unemployment insurance, and so on. It is usually prudent, however, to maintain relatively stable employment levels and to utilize resources at a more constant rate. The activity slack is a

measure of flexibility in the assignment of activity start times. The schedulermay use activity slack as a means of smoothing peak resource requirements. One has to start by calculating an early start schedule for the project and then plotting a resource loading chart for the schedule. (See Example 2 in next page)

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Resource Requirement/ Availability and Economics of Project Completion Date1. The projects required resources can be satisfied at normal prices.The recommendation is to adopt the early start schedule and target the project early completion date.

2. If the project requirements cannot be satisfied at the normal price level.Maintain the project completion date, reschedule the activities, and target theproject contractual due date (Project late finish date)

3. If the early schedule resource requirements can be satisfied using the resource Premium -price level (if economical).The planner may choose this solution, targeting early completion. 4. If projectresource requirements can not be satisfied at the premium- price level

by implementing an activity early start schedule but it will be possible to complete the project by contractual due date.There is no alternative.

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MR Gelal FPM, Class Notes 10

Project Monitoring and Control1.ConceptMonitoring and evaluation (M & E ) are of critical importance for achieving theobjective of the project and are among the most challenging tasks faced by the Project Managers. They are tools for effective project management. Monitoring andEvaluation are related but distinct activities.

Monitoring:Monitoring refers to timely gathering of information to review project implementation. It is usually an ongoing activity throughout the life of the project. Itis management review of project implementation to ensure that project inputs, schedules, outputs and other actions are proceeding according to the plan. It is done during the project implementation phase. Some definitions: Meredith and Mentel Monitoring is collecting, recording and reporting information concerning anyand all aspects of project performance that the project manager or others in theOrganization wish to know. David I. Cleland Monitoring means to keep track of and to check systematically all project activities. Monitoring is a feedback mechanism.

Evaluation:Evaluation is an objective and systematic process for determining relevance, efficiency, effectiveness and impact of project in the light of its objective. Eval

uation can be ongoing, terminal or ex-post. Evaluation is used to improve project implementation or to improve future project planning and decision-making.

2 Project Monitoring and Evaluation in NepalThe UNDP/World Bank developed the existing project monitoring and evaluation system in Nepal in 1993. It is common to all sectors. It consists: A system of weighting. Indicators for financial and physical performance. The monthly and trimester performance reports related to financial and physical performance of projects from Line Ministries serve as the heart of monitoring system. Projects are divided into: o Priority Projects o Other Projects The Central Monitoring and Evaluation Division of NPC monitors priority Projects. Monthly and Trimester reports,supplemented by ad-hoc field observations of projects by NPC staff, serve as the source of information for monitoring. Problems of project implementation are i

dentified. Sector- wide problems are discussed in National Action Development Committee (NDAC) chaired by the Prime Minister on a trimester basis. The non- priority projects are reviewed by the respective line ministries in the Ministry Action Development Committee (MDAC) 1


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3. Logical Framework for M&EA logical framework is generally used for monitoring and evaluation. It evaluates cause and effect relationships and assumptions and risks of the project. The logical framework evaluates three sequential relationships:

Inputs to OutputsOutputs resulting from inputs. For example, construction of Cold Storage facility for Apple Promotion Project.

Outputs to EffectsEffects resulting from project outputs. For example, ability of storing apple for a long time with out damage is an effect of cold storage facility.

Effects to ImpactsImpacts resulting from project effects. For example, higher income to farmers due to higher price of apple in the market during off-season is the impact of apple storage. The assumptions and risks are evaluated as to their validity. They cannot be controlled by the project. Performance Benchmarks serve as the standardsfor monitoring and evaluation purposes. A logical framework matrix for each project is prepared for planning, monitoring and evaluation purposes as shown in the box below. Narrative Summary Objectively Verifiable Indicators Per Capita Income Objective (Increased by 2010 will be economic growth NRs. 25000 through econo

mic (PCI now is NRs. reform) 11000) Means of Verification Assumptions and Risks

Nepal Human If assistance from Development donors continues Report published afterIf the present 2010 situation of Sample Surveying insurgency improves. Reports ofCBS If the present Agriculture/Irrigation/Subsidies Policies of HMG/N and the norms and programs continues If assistance from donors continues

Effect/Purpose (Increased Production and productivity through modernization andprofessionalism in agriculture and livestock) Outputs (Area irrigated by X Irrigation Project) Activities

Rice Production Reports of DADO by 2010 shall be Records of DIC 50,000 MT (PresentProduction 36,000MT)

3000 Hectors

Project completion If assistance from report of DOI continues

donors

Inputs

2


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Key Concepts in Logical Framework o Objective: Desired outcome of the project oPurpose: Effect or impact of the project. o Outputs: Deliverables of the projecto Activities: Tasks that must be undertaken to accomplish outputs. o Objectively Verifiable Indicators (OVIs): Targets in terms of quantity, quality andtime (QQT) to measure actual performance. o Means of Verification (MOV): Sourcesof information that provide the basis for monitoring and evaluation of the project. o Assumptions and Risks: External factors beyond the control of the project.

4. Concept of Control:Control, generally regarded as the underlying managerial function begins with reviewing the difference between the schedule and actual performance once the project has begun. The analysis and correction of this difference forms the basic aspect of control. It ensures that the right things are done in the right manner and at the right time. Control is measuring, evaluating and correcting actual performance to achieve planned targets. Some definitions:

Koontz and WeihrichControlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.

Ivancevich, D

17884376 fundamentals of project management class notes

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