Introduction to Project Management Prof. B. Raja Shekhar B.Tech,

Introduction to Project Management Prof. B. Raja Shekhar B.Tech, M.B.A, Ph.D, M.Sc. (Psy.), FDP(IIMA), PGDPMIR, PGDCS, School of Management Studies University of Hyderabad Hyderabad-500 046 b [email protected]

What Is a Project? A project is “a temporary endeavor undertaken to accomplish a unique product or service” Attributes of projects unique purpose temporary require resources, often from various areas should have a primary sponsor and/or customer involve uncertainty

Characteristics of Projects Single unit Relatively low frequency Defined starting points and ending points Defined outcomes / goals Complex interrelated tasks, often transcending functional boundaries Require special management tools

What is a project? Project brief: states customer requirements or problem Roadmap / constraints Deliverable: objective solution that satisfies the customer (performance) budget (cost) schedule (time)

What is Project Management? Project management is “the application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements” (PMI)

History of Project Management Some people argue that building the Egyptian pyramids was a project, as was building the Great Wall of China Most people consider the Manhattan Project to be the first project to use “modern” project management

Project Management Statistics The U.S. spends 2.3 trillion on projects every year, an amount equal to one-quarter of the nation’s gross domestic product. The world as a whole spends nearly 10 trillion of its 40.7 trillion gross product on projects of all kinds. More than sixteen million people regard project management as their profession; on average, a project manager earns more than 82,000 per year.

Advantages of Using Formal Project Management Better control of financial, physical, and human resources Improved customer relations Shorter development times Lower costs Higher quality and increased reliability Higher profit margins Improved productivity Better internal coordination Higher worker morale

The Triple Constraint Every project is constrained in different ways by its Scope goals: What is the project trying to accomplish? Time goals: How long should it take to complete? Cost goals: What should it cost? It is the project manager’s duty to balance these three often competing goals

The Triple Constraint of Project Management

Reasons for performance Improvements "The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.“*

Project Stakeholders Stakeholders are the people involved in or affected by project activities Stakeholders include the project sponsor and project team support staff customers users suppliers opponents to the project

Project Management Knowledge Areas Knowledge areas describe the key competencies that project managers must develop 4 core knowledge areas lead to specific project objectives (scope, time, cost, and quality) 4 facilitating knowledge areas are the means through which the project objectives are achieved (human resources, communication, risk, and procurement management) 1 knowledge area (project integration management) affects and is affected by all of the other knowledge areas

Project Management Tools and Techniques Project management tools and techniques assist project managers and their teams in various aspects of project management Some specific ones include Project Charter, scope statement, and WBS (scope) Gantt charts, network diagrams, critical path analysis, critical chain scheduling (time) Cost estimates and earned value management (cost)

How Project Management Relates to Other Disciplines Much of the knowledge needed to manage projects is unique to the discipline of project management Project mangers must also have knowledge and experience in general management the application area of the project

The Project Management Profession The job of IT Project Manager is in the list of the top ten most in demand IT skills Professional societies like the Project Management Institute (PMI) have grown tremendously Project management research and certification programs continue to grow

Project Management Certification PMI provides certification as a Project Management Professional (PMP) A PMP has documented sufficient project experience, agreed to follow a code of ethics, and passed the PMP exam The number of people earning PMP certification is increasing quickly PMI and other organizations are offering new certification programs

Ethics in Project Management Ethics is an important part of all professions Project managers often face ethical dilemmas In order to earn PMP certification, applicants must agree to the PMP code of professional conduct

Project Management Applications Project management applies to work as well as personal projects Project management applies to many different disciplines (IT, construction, finance, sports, event planning, etc.) Project management skills can help in everyday life

Project Management Framework Project Management Project integration management Project scope management Project cost management Project quality management Project human resource management Project risk management Project procurement management Project communication management Project time management

Project life cycle Projects have beginnings, middle periods and endings. Where you are in the project life cycle determines what you should be doing and what alternatives are available Iron law of a life cycle: problems downstream are symptoms of neglect upstream.

Project life cycle Purpose of project life cycle: tells us what needs to be done when upstream problems can only be solved upstream overcome iron law of a life cycle Project life cycle phases: concept definition / design execution / implementation close-out

Project life cycle: concept phase Clarify customer requirements Identify all stakeholders Finalize project objectives Define key performance indicators Generate and evaluate alternative solutions Determine best solution & evaluate risk Detailed plan for definition phase Provisional base line

Life cycle: definition phase Develop work breakdown structure (WBS) Which contractor(s)? Obtain cost and schedule estimates (estimating) Develop detailed plan for implementation phase & preliminary plan for rest of life Develop preliminary plan for rest of life Prepare provisional baseline: decisionmaking milestone meeting

Life cycle: Implementation phase Contract out or in - each task of implementation phase WBS Monitor and control project performance Launch corrective action whenever needed

Life cycle: close-out phase Test all deliverables Transfer to owner Close project accounts Reassign project team Conduct project post-mortem Alternative life cycle phase names: feasibility, preliminary design, detailed design, construction, commissioning

Decision-making milestones Milestone 1 Milestone 2 Milestone 3 Concept phase Baseline Definition phase Baseline Implementation phase Close-out phase Baseline Authenticate - accepts the recommendations of the previous project phase Authorise - Customer permits the next phase to start

Project life cycle Base lines Formal change control Performance measurement Project life cycle {activity phases, decision-making milestones, baselines} Differentiate between phase & process Project risk certainty of project outcome Project risk decreases and customer investment increases as the project progress

Terminology Milestone Specific major events to be completed at certain times in the project Work breakdown structure (WBS) Method by which a project is divided into tasks and subtasks Gantt chart Graphical technique that shows the amount of time required for each activity and the sequence in which activities are to be performed

Project life cycle Cost and staffing level Time Start Finish

Project Formulation Points to be considered: The type and level of industrial activity To match his financial resources with the required amount Prepare a nice project report

Broad Heads of Project Report General Information Project Description Market potential Capital Costs and Sources of Finance Assessment of Working Capital Other Financial Aspects Economic and Social Vairables

General Information Name and address of the entrepreneur Qualification, Experience and other capabilities of entrepreneur Reference of industry analysis Constitution and organization structure of enterprise Registration details with Directorate of Industries/ Registrar of Firms Utility of the products

Project Description Location Raw Material Skilled Labour Power Fuel Water Waste disposal Communication systems

Project Description (cont.) Transport Other common facilities List of Machinery Capacity of the Plant Technology Manufacturing Process Balancing of Plant Quality Control Research & Development

Market Potential Total Demand & Supply Estimation of Cost & Price Marketing Strategy After sales service Seasonality Transportation of Goods

Capital costs and Source of Finance Capital Costs Land and Building Plant & Machinery Other Miscellaneous Assets Preliminary expenses Contingency expenses Margin on Working Capital

Source of Finance Capital Subsidy/ Incentives Unsecured Loan Loan from friends and relatives Soft Loan Term Loan

Assessment of Working Capital Requirement Planning for working capital requirement Estimate of working capital requirement

Other Financial Aspects Projected Profit & Loss Account Projected Balance Sheet Projected Cash Flow Statement Break-Even Analysis Profitability Ratio Return on Investment Debt:Equity Ratio Debt Service Coverage Ratio

Economic and Social Variables Promoting Employment Import Substitution Promoting ancillaries Development of the area

Financial Appraisal Capital Cost of Project Source of Finance Financial Projections Ratio Analysis Break-Even Point Discounted Cash Flow

Technical Appraisal Manufacturing Process - Technology Technical Arrangements Size of the Plant Product Mix Selection of Plant & Machinery Procurement of Plant & Machinery Location of the Project Schedule of Project Implementation

Commercial Appraisal Marketing Demand Techniques of Forecasting Supply - Depth of Competition Pricing Policy Life cycle of the product Brand Name for the Product Packing & Transport Distribution Channels Sales Promotion Sources of Market information Publications Useful to study various aspects of marketing

Management Appraisal Qualities of an Entrepreneur Various Forms of Organisation Organisational Set-Up Management Problems

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