MODULE 8 PROJECT MANAGEMENT

Learning Objectives:
At the end of the module, the students are expected to:
1. Describe the project life cycle.
2. Discuss the behavioral aspects of projects in terms of project personnel and the
project manager.
3. Name the six key decisions in project management.
4. Explain the nature and importance of a work breakdown structure in project
management.

INTRODUCTION

Managers typically oversee a variety of operations. Some of these involve

routine, repetitive activities, but others involve non routine activities. Under the latter
heading are projects : unique, one-time operations designed to accomplish a set of
objectives in a limited time frame. Other examples of projects include constructing a
shopping complex, merging two companies, putting on a play, and designing and
running a political campaign. Examples of projects within business organizations include
designing new products or services, designing advertising campaigns, designing
information systems, reengineering a process, designing databases, software
development, and designing Web pages.

Projects may involve considerable cost. Some have a long time horizon, and
some involve a large number of activities that must be carefully planned and
coordinated. Most are expected to be completed based on time, cost, and performance
targets. To accomplish this, goals must be established and priorities set. Tasks must be
identified and time estimates made. Resource requirements also must be projected and
budgets prepared. Once under way, progress must be monitored to assure that project
goals and objectives will be achieved. The project approach enables an organization to
focus attention and concentrate efforts on accomplishing a narrow set of performance
objectives within a limited time and budget framework. This can produce significant
benefits compared with other approaches that might be considered. Even so, projects
present managers with a host of problems that differ in many respects from those
encountered with more routine activities. The problems of planning and coordinating
project activities can be formidable for large projects, which typically have thousands of
activities that must be carefully planned and monitored if the project is to proceed
according to schedule and at a reasonable cost. Projects can have strategic importance
for organizations. For example, good project management can be instrumental in
successfully implementing an enterprise resource planning (ERP) system or converting
a traditional operation to a lean operation. And good project management is very
important when virtual teams are used.

Project management is the management of the work to develop and implement

an innovation or change in an existing operation. It encompasses planning the project
and controlling the project activities, subject to resource and budget constraints, to keep
the project on schedule. Examples of projects include constructing facilities and
buildings, such as houses, factories, a shopping mall, an athletic stadium, or an arena;
developing a military weapons system, new aircraft, or new ship; launching a satellite
system; constructing an oil pipeline, developing and implementing a new computer
system; planning a rock concert, football bowl game, or basketball tournament; and
introducing new products into the market.

PROJECT LIFE CYCLE

The size, length, and scope of projects vary widely according to the nature and
purpose of the project. Nevertheless, all projects have something in common: They go
through a life cycle, which typically consists of five phases.

1. Initiating. This begins the process by outlining the expected costs, benefits, and risks
associated with a project. It includes defining the major project goals and choosing a
project manager

2. Planning. This phase provides details on deliverables, the scope of the project, the
budget, the schedule and milestones, performance objectives, resources needed, a
quality plan, and a plan for handling risks. The accompanying documents generated in
the planning phase will be used in the executing and monitoring phases to guide
activities and monitor progress. Members of the project team are chosen.

3. Executing. In this phase the actual work of the project is carried out. The project is
managed as activities are completed, resources are consumed, and milestones are
reached. Management involves what the Project Management Institute ( www.pmi.org )
refers to as the nine management areas: project integration, scope, human resources,
communications, time, risk, quality, cost, and procurement.

4. Monitoring and Controlling. This phase occurs at the same time as project execution.
It involves comparing actual progress with planned progress and undertakes corrective
action if needed, and monitoring any corrective action to make sure it achieves the
desired effect

Key Decisions in Project Management

Much of the success of projects depends on key managerial decisions over a

sequence of steps:

1. Deciding Which Projects to Implement.

This involves determining the criteria that will be used to decide which projects to
pursue. Typical factors include budget, availability of appropriate knowledge and
skill personnel, and cost–benefit considerations. Of course, other factors may
override these criteria, factors such as availability of funds, safety issues,
government-mandated actions, and so on.
2. Selecting the Project Manager.
The project manager is the central person in the project. The following section on
project managers discusses this topic.
3. Selecting the Project Team.
The team can greatly influence the ultimate success or failure of a project.
Important considerations include not only a person’s knowledge and skill base, but
also how well the person works with others (particularly those who have already
been chosen for the project), enthusiasm for the project, other projects the person is
involved in, and how likely those other projects might be to interfere with work on
this project.
4. Planning and Designing the Project.
Project planning and design require decisions on project performance goals, a
timetable for project completion, the scope of the project, what work needs to be
done, how it will be done, if some portions will be outsourced, what resources will be
needed, a budget, and when and how long resources will be needed.
5. Managing and Controlling Project Resources.
This involves managing personnel, equipment, and the budget; establishing
appropriate metrics for evaluating the project; monitoring progress; and taking
corrective action when needed. Also necessary are designing an LO17.3 Name the
six key decisions in project management.
6. Deciding If and When a Project Should Be Terminated.
Sometimes it is better to terminate a project than to invest any more resources.
Important considerations here are the likelihood of success, termination costs, and
whether resources could be better used elsewhere.

The Project Manager

The project manager has many duties. In the planning stage, the project
manager must prepare a scope statement that spells out the deliverables and goals,
determine required skills and resources needed, develop a schedule and budget, and
develop plans for managing the scope, the schedule, the budget, and quality and risk.

The project manager bears the ultimate responsibility for the success or failure of
the project. He or she must be capable of working through others to accomplish the
objectives of the project. The project manager is responsible for effectively managing
each of the following:

1. The work, so that all of the necessary activities are accomplished in the
desired sequence, and performance goals are met.
2. The human resources, so that those working on the project have
direction and motivation.
3. Communications, so that everybody has the information needed to do
the work.
4. Quality, so that performance objectives are realized.
5. Time, so that the project is completed on schedule.
6. Costs, so that the project is completed within budget.
 7. Scope, so the project stays within the prescribed scope, and ―scope
creep‖ doesn’t occur without commensurate changes to the schedule (if
needed) and the budget.

Behavioral Issues

Project metrics related to cost, schedule, and quality are important indicators of
how well a project is doing. Behavioral metrics are also important, and should not be
overlooked. People make the project happen. However, behavioral issues can interfere
with the success of a project if they are not carefully managed. Decentralized decision
making, the stress of achieving project milestones on time and within budget, and
surprises can contribute to behavioral problems. Because project work is often based
on team efforts, workers are usually evaluated on the basis of the team’s overall
contribution relative to project metrics, and not on an individual basis. The team must be
able to function as a unit, so interpersonal skills are very important, as are coping skills.
And conflict resolution can be an important part of a project manager’s job. Some
problems can be avoided by the project manager by carefully selecting team members
when possible; leadership; motivation; maintaining an environment of integrity, trust,
and professionalism; and being supportive of team efforts

ELEMENTS OF A PROJECT PLAN

Project plans generally include the following basic elements.

 Objectives—a detailed statement of what the project is to accomplish and how it

will achieve the company's goals and meet the strategic plan; and an estimate of
when it needs to be completed, the cost and the return.
 Project scope—a discussion of how to approach the project, the technological
and resource feasibility, the major tasks involved, and a preliminary schedule;
includes a justification of the project and what constitutes project success.
 Contract requirements—a general structure of managerial, reporting, and
performance responsibilities, including a detailed list of staff, suppliers,
subcontractors, managerial requirements and agreements, reporting
requirements, and a projected organizational structure.
 Schedules—a list of all major events, tasks, and sub-schedules, from which a
master schedule is developed.
 Resources—the overall project budget for all resource requirements and
procedures for budgetary control.
 Personnel—identification and recruitment of personnel required for the project
team, including special skills and training.
 Control—procedures for monitoring and evaluating progress and performance,
including schedules and cost.
  Risk and problem analysis—anticipating and assessing uncertainties, problems
and potential difficulties that might increase the risk of project delays and/or
failure and threaten project success.

PROJECT RETURN
In order for a project to be selected to be undertaken it typically has to have
some kind of positive gain or benefit for the organization that is considering it. In a
business, one of the most popular measures of benefit is return on investment (ROI).
ROI is a performance measure that is often used to evaluate the expected outcome of a
project or to compare a number of different projects. To calculate ROI, the benefit
(return) of a project is divided by the cost of the project; the result is expressed as a
percentage or a ratio:

If a project does not have a positive ROI, or if there are other projects with a
higher ROI, then the project might not be undertaken. ROI is a very popular metric for
project planning because of its versatility and simplicity.
However, projects sometimes have benefits that cannot be measured in a
tangible way with something like an ROI, what's referred to as a ―soft‖ return. For
example, a project that has raising employee satisfaction as its goal can result in real
benefits—increased productivity, improved quality, and lower costs—that are difficult to
measure monetarily in the short run. A project by an Internet online retailer to install
backup power generators to keep orders coming in and customers happy during a
power outage is like insurance for something that may never happen, making an ROI
difficult to determine. A ―green‖ project may not have a tangible dollar ROI, but it can
protect a company against regulatory infractions and improve its public image. In
general, it may be more appropriate to measure a project's benefit not just in terms of
financial return, but also in terms of the positive impact it may have on a company's
employees and customers, that is, quality improvement.
Figure 1
The Project Management Process
PROJECT RISK
Every project has risks of varying size and degree. A risk is any uncertain factor,
event, or occurrence that might potentially interfere with the progress and successful
completion of a project. A risk is not a problem; it's the recognition that a problem might
occur. By recognizing, understanding, and identifying potential problems in advance,
and planning for them, the project team and manager can attempt to prevent them. It's
the job of the project team and manager to manage and minimize the risk in their
projects.

The approach to, managing project risk is proactive. The first step is to identify all
of the possible risks that can be anticipated in the project. This might include such
things as resource changes, wrong assumptions, a change in company objectives and
needs, technology changes, changes in the company's competitive environment, and
anything new in the project, like technology. After as many risks as possible are
identified, they should each be evaluated in terms of their impact and possible
eventuality (i.e., probability), and possibly quantified. Although any kind of risk
evaluation and measurement is obviously an estimate, the objective is to have a
process to compare the risks to one another in order to prioritize them in terms of which
ones will most threaten project success. The most important risks that are controllable
can be mitigated, and strategies should be developed to mitigate those that can't be
controlled.
Successfully managing project risk can have a very positive impact; it can keep
projects within budget and save money, maintain project schedules, and result in the
project success and quality results hoped for.

Project Scheduling
The project schedule evolves from the planning documents we discussed in the
previous section. It is typically the most critical element in the project management
process, especially during the implementation phase (i.e., the actual project work), and
it is the source of most conflict and problems.
Developing a schedule encompasses the following basic steps. First, define the
activities that must be performed to complete the project; second, sequence the
activities in the order in which they must be completed; next, estimate the time required
to complete each activity; and finally, develop the schedule based on this sequencing
and time estimates of the activities.
Because scheduling involves a quantifiable measure, time, several quantitative
techniques, including the Gantt chart and CPM/PERT networks, are available that can
be used to develop a project schedule.
THE GANTT CHART
A Gantt chart (also called a bar chart) was developed by Henry Gantt, a pioneer
in the field of industrial engineering, at the artillery ammunition shops of the Frankford
Arsenal in 1914. The Gantt chart has been a popular project scheduling tool since its
inception and is still widely used today.

A Gantt Chart

The Gantt chart provides a visual display of the project schedule, indicating when
activities are scheduled to start, when they will be finished, and where extra time is
available and activities can be delayed. The project manager can use the chart to
monitor the progress of the activities and see which ones are ahead of schedule and
which ones are behind schedule. The Gantt chart also indicates the precedence
relationships between activities; however, these relationships are not always easily
discernible. This problem is one of the disadvantages of the Gantt chart method, and it
sometimes limits the chart's use to smaller projects with relatively few activities.

Project Control
 Project control is the process of making sure the project progresses toward a
successful completion. It requires that the project be monitored and progress be
measured so that any deviations from the project plan, and particularly the project
schedule, are minimized. If the project is found to be deviating from the plan—that is, it
is not on schedule, cost overruns are occurring, activity results are not as expected, and
so on—then corrective action must be taken. In the rest of this section we will describe
several key elements of project control, including time management, quality control,
performance monitoring, and communication.

Key Elements of Project Control

1. Time Management
It is the process of making sure the project schedule does not slip and is
on time. This requires the monitoring of individual activity schedules and frequent
updates. If the schedule is being delayed to an extent that jeopardizes the project
success, then the project manager may have to shift resources to accelerate
critical activities.
2. Quality Management
Quality management and control are an integral part of the project
management process. The process requires that project work be monitored for
quality and that improvements be made as the project progresses, just as in a
normal production or manufacturing operation. Tasks and activities must be
monitored to make sure that work is done correctly and that activities are completed
correctly according to plan. If the work on an activity or task is flawed, subsequent
activities may be affected, requiring rework, delaying the project, and threatening
project success. Poor-quality work increases the risk of project failure, just as a
defective part can result in a defective final product if not corrected.
3. Performance Management
It is the process of monitoring a project and developing timed (i.e., daily,
weekly, monthly) status reports to make sure that goals are being met and the
plan is being followed. It compares planned target dates for events, milestones,
and work completion with dates actually achieved to determine whether the
project is on schedule or behind schedule. Key measures of performance include
deviation from the schedule, resource usage, and cost overruns. These reports
are developed by the project manager and by individuals and organizational units
with performance responsibility.
4. Communication
Communication needs for project and program management control in
today's global business environment tend to be substantial and complex. The
distribution of design documents, budget and cost documents, plans, status
reports, schedules, and schedule changes in a timely manner is often critical to
 project success. As a result, more and more companies are using the Internet to
communicate project information, and are using company intranet project
websites to provide a single location for team members to access project
information. Internet communication and software combined with faxing,
videoconferencing systems, phones, handheld computers, and jet travel are
enabling transnational companies to engage in global project management.

Activity 1

Select an everyday ―project‖ you are familiar such as a class project, preparing a meal,
washing a car, or doing a thesis. Develop a list of the activities and try to prepare a
simple GANTT chart illustrating the activities.

SAQ 1
Identify what is being described in each of the following statements.
__________________ 1. It is a unique, one-time operations designed to accomplish a
set of objectives in a limited time frame.
__________________ 2. It is the management of the work to develop and implement
an innovation or change in an existing operation.
__________________ 3. It is the process of making sure the project schedule does not
slip and is on time.
__________________ 4. It is the process of making sure the project progresses toward
a successful completion
_________________ 5 This begins the process by outlining the expected costs,
benefits, and risks associated with a project.
__________________ 6. It provides a visual display of the project schedule, indicating
when activities are scheduled to start, when they will be finished, and where extra time
is available and activities can be delayed.
__________________ 7. It is the process of monitoring a project and developing timed
(i.e., daily, weekly, monthly) status reports to make sure that goals are being met and
the plan is being followed.
__________________ 8. It is typically the most critical element in the project
management process, especially during the implementation phase (i.e., the actual
project work), and it is the source of most conflict and problems.
__________________ 9. It is a performance measure that is often used to evaluate the
expected outcome of a project or to compare a number of different projects.

__________________10. It is a detailed statement of what the project is to accomplish

and how it will achieve the company's goals and meet the strategic plan; and an
estimate of when it needs to be completed, the cost and the return.

ASAQ 1
Identify what is being described in each of the following statements.
1. Project
2. Project Management
3. Time Management
4. Project Control
5. Initiating
6. GANTT Chart
7. Performance Management
8. Project Scheduling
9. Return on Investment
10. Objectives
References
Operations Management by Roberta Russell and Bernard W Taylor, III
Productivity and Quality Management by Prof Angelita Ong Camilar Serrano
Operations Management, 12 Edition by William Stevenson

Adapted and prepared by:

MARICEL V MANIAOL