Keanu

Lecture 8

Introduction to Project Management

Lecturer: Dr. Khalegh Barati

Term 3, 2020

CVEN3101

ENGINEERING OPERATIONS AND CONTROL

What is a Project?

A project is a temporary endeavour undertaken to create a unique product,

service, or result.

A project can create:

• A product that can be either a component of another item, an enhancement of

an item, or an end item in itself.

Example: construction of a house

• A service or a capability.

Example: controlling safety of labours during construction of a building

• An improvement in an existing product.

Example: renovation or upgrading of a building

• A result, such as an outcome or document.

Example: feasibility study to find if construction of a new building is required

• Or a combination of one or more products, services, or results.

2

Project Characteristics

• Every project has definite objectives.

• Every project is unique.

• Every project is a temporary activity.

• Every project involves unfamiliarity, risk, and uncertainty.

• Every project involves progressive elaboration.

• Every project requires sets of resources.

• Every project has specific start and end dates.

3

Project vs Operation

4

Project Operation

Temporary Ongoing

Unique Repetitive

Terminated when objective is attained Objective is to continue permanently

Performance intensive Efficiency intensive

Requiring project manager Requiring operation manager

Operation is an ongoing execution of activities and it follows organizational

procedures to produce the same result or conduct a repetitive service. An

operation is typically permanent in nature.

Both project and operation have a purpose, use constrained resources, and

require planning, execution, and control.

Table 1: Project and operation differences

Project Performance

Four major dimensions that define the project performance are scope, time,

cost, and quality. These parameters are interrelated and interactive.

Successful completion of a project would require accomplishment of specified

scope with desired quality within scheduled time and budget.

Project Performance = f(Scope, Cost, Time, Quality)

5

Project Life Cycle

Initiation

Planning

Execution

Monitoring and

Controlling

Closure

Project life cycle is the series of phases that a project passes through from its

initiation to its closure.

6

Initiation

During this phase, the project is conceptualised and its feasibility is determined.

Activities that should be performed in this phase include:

• Defining the project goal

• Conducting feasibility study

• Defining the project scope

• Identifying the project manager and the key stakeholders

• Identifying potential risks

• Determining estimated budget and time

7

Planning

This stage plans how the project’s objectives developed in the initiation phase

can be delivered. It includes planning the steps necessary to meet project

objectives by further identifying the specific activities and resources required to

complete the project.

The plans created during this phase will help to manage time, cost, quality,

scope, and risks of the project in the next phases.

Activities that should be performed in this phase include:

• Preparing detailed project cost and timeframe

• Developing communication strategy amongst stakeholders

• Preparing construction drawings

• Getting required approvals and certificates

• Developing quality control and assurance procedure

• Planning resources and procurement

8

Execution

This is the phase that is most commonly associated with project management.

The project is constructed and its deliverables are completed based on the

plans and drawings which have been prepared in planning phase.

During this phase, project managers are responsible for allocating and

supervising the project activities while keeping the entire project on time and on

budget.

Project managers also need to manage procurements and the supplies.

9

Monitoring and Controlling

Monitoring and controlling phase is sometimes combined with execution

because these two phases often occur at the same time.

During this phase, project management team closely measures the progress of

the project to ensure it’s proper development.

Documentations such as data collection and report preparation are required.

Monitoring and controlling phase is closely linked to project planning. While

planning determines what tasks are to be done, monitoring and controlling

establish how well these tasks have been done.

Monitoring and controlling phase will also detect any necessary corrective

action or change in the project to keep the project on track.

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Closure

The closure phase occurs once the project deliverables have been produced

and the client validates and approves them.

During this phase, the project management team will close contracts with all

stakeholders including suppliers, consultants, and subcontractors.

A project report must be also prepared and submitted to the project client

including the project summary, starting from initiation to closure.

This phase allows the project management team to evaluate the project and

archive its documents. Getting lessons from the previous mistakes and

successes, involved contractors build a stronger and more successful team for

the next projects.

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Project Management

Project management is the application of processes, methods, skills,

knowledges, and experiences to achieve specific project objectives according

to the project performance criteria within agreed parameters. Project

management has final deliverables that are constrained to a limited times and

budget.

A key factor that distinguishes project management from just ‘management’ is

that project management has a final deliverable and a finite timespan, unlike

management which is an ongoing process.

Project managers need to have a wide range of skills and experiences to be

able to successfully manage the project under any condition or circumstance.

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Project Management Knowledge

Areas

Integration

Scope

Schedule

Cost

Quality

Procurement

Human Resource

Communications

Risk

Stakeholder

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Project Integration Management

Project integration management includes the processes and activities to

identify, define, combine, unify, and coordinate various processes and activities

within the project management team. As its name shows, project integration

management contains the tasks that hold the overall project together and

integrate it into a unified whole.

The project integration management includes the following six processes:

• Develop project charter

• Develop project management plan

• Direct and manage project work

• Monitor and control project work

• Perform integrated change control

• Close project

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Project Scope Management

Project scope management includes the processes required to ensure that the

project includes all the work required, and only the work required, to complete

the project successfully. Managing the project scope is primarily concerned with

defining and controlling what is and is not included in the project.

The project scope management includes the following six processes:

• Plan scope management

• Collect requirements

• Define scope

• Create WBS

• Validate scope

• Control scope

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Project Schedule Management

Project schedule (time) management includes the processes required to

manage the timely completion of a project. It specifically refers to developing a

schedule that can be met, then performing required actions to ensure that the

schedule happens during project construction.

The project scope management includes the following seven processes:

• Plan schedule management

• Define activities

• Sequence activities

• Estimate activity resources

• Estimate activity durations

• Develop schedule

• Control schedule

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Project Cost Management

Project cost management involves planning and controlling the budget of the

project.

This process includes activities such as planning, budgeting, estimating, financing,

funding, managing, and monitoring costs to make sure that the project is finished

within the scheduled budget.

This phase covers and tracks the project's total expenditure against the actual

budget to make sure that the project is moving on track and within the pre-

allocated budget.

The project cost management includes the following four processes:

• Plan cost management

• Estimate costs

• Determine budget

• Control costs

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Project Quality Management

Project quality management includes the processes and activities determining

quality policies, objectives, and responsibilities so that the project will satisfy the

needs for which it was undertaken.

Project quality management works to ensure that the project requirements,

including product requirements, are met and validated.

The project quality management includes the following three processes:

• Plan quality management

• Perform quality assurance

• Control quality

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Project Human Resources Management

Project human resource management includes the processes that plan, develop,

manage, and lead the project team.

The project team is comprised of the people with assigned roles and

responsibilities for completing the project.

A human resource management plan must be developed to identify and

document project roles, responsibilities, required skills, reporting relationships,

and create staff management strategy.

The project human resource management includes the following four processes:

• Plan human resource management

• Acquire project team

• Develop project team

• Manage project team

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Project Communications Management

Project communications management includes the processes that are required to

ensure timely and appropriate planning, collection, creation, distribution, storage,

retrieval, management, monitoring, and controlling of project information.

Most of the time of the project management team is spent for communicating with

project stakeholders including clients and subcontractors.

Effective communication creates a bridge between all stakeholders of the project

which has significant impact project success.

The project communications management includes the following three processes:

• Plan communications management

• Manage communications

• Control communications

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Project Risk Management

Project risk management includes the processes of conducting risk

management planning, identification, analysis, response planning, and

controlling risk for a project. The objective of project risk management is to

decrease the likelihood and impact of negative events in the project.

The project risk management includes the following six processes:

• Plan risk management

• Identify risks

• Perform qualitative risk analysis

• Perform quantitative risk analysis

• Plan risk responses

• Control risks

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Project Procurement Management

Project procurement management includes the processes necessary to

purchase or acquire products, services, or results needed from outside the

project team. Project procurement management involves deciding what must

be procured, issuing requests for bids or quotations, selecting vendors,

administering contracts, and closing them when the job is finished.

The procurement management includes the following four processes:

• Plan procurement management

• Conduct procurements

• Control procurements

• Close procurements

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Project Stakeholder Management

Project stakeholder management includes the processes required to identify the

people, groups, or organisations that could impact or be impacted by the project,

to analyse their expectations and their impact on the project, and to develop

appropriate management strategies for effectively engaging them in project

decisions and execution.

Stakeholder management also focuses on continuous communication with

stakeholders to understand their needs and expectations, address issues as they

occur, manage conflicting interests, and foster appropriate engagement of

stakeholder in project decisions and activities.

The stakeholder management includes the following four processes:

• Identify stakeholders

• Plan stakeholder management

• Manage stakeholder engagement

• Control stakeholder engagement

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Videos

https://www.youtube.com/watch?v=BOU1YP5NZVA

https://www.youtube.com/watch?v=hr68bgoP4z4

Introduction to Project Management

https://www.youtube.com/watch?v=rMVEUoANT64

https://www.youtube.com/watch?v=xq7Y-B6Xd28

Project Management Areas

https://www.youtube.com/watch?v=gaokJetFYGw

https://www.youtube.com/watch?v=EBnUasP5Qc0

What Is PMBOK?

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https://www.youtube.com/watch?v=10cX6ZZiShE

Project vs Operation

Project Management Techniques

WBS

Gantt Chart

CPM

PERT

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WBS

PMBOK defines work breakdown structure (WBS) as a hierarchical

decomposition of the total scope of work to accomplish the project objectives

and create the required deliverables.

WBS is actually a way to organise the project and decompose it into smaller

tasks. It provides a graphic breaking down of a project.

Breaking down of a project is continued until we reach work packages – a

small set of readily identifiable activities which can be assigned to a team or a

subcontractor.

There are two common types of process-oriented WBS and deliverable-

oriented WBS which can be developed for a project.

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Process-oriented WBS

A process-oriented WBS decomposes the project in terms of processes. It

actually defines what steps need to be taken to construct a project. WBS

elements in a process-oriented WBS are typically the construction activities that

are required to deliver a project. Example WBS elements in a process-oriented

WBS include design, procurement, excavation, and concreting.

Residential Project

1.

Design 2. Project

Management 3.

Demolition

4.

Excavation

5.

Concreting 6.

MEP

2.1. Contract

Management

1.2.

Architectural

Design

1.1.Structural

Design

2.2. Site

Management

3.1.

Asbestos

Collection

3.3. Site

Clearance

3.2.

Structure

Demolition

4.2. Detail

Excavation

4.1. Bulk

Excavation

5.2.

Formwork

5.1. Steel

Fixing 6.1.

Electrical

Process

6.3.

Plumbing

Process

6.2.

Mechanical

Process

1.3 MEP

Design 2.3. Project

Planning

5.3. Concrete

Pouring

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Deliverable-oriented WBS

A deliverable-oriented WBS (also known as product-oriented WBS) decomposes

the project into smaller and more manageable deliverables (products). Deliverables

are typically tangible components which need to be delivered to complete the

project. They are typically a physical component or an item that needs to be

produced, obtained, or supplied as a result of executing project activities.

Residential Project

1.

Plans 2.

Slab 3. Concrete

Structure

4.

Roof

5.

Façade 6. Interior

Finishes

2.1. On-

ground

Slab

1.2.

Architectural

Plan

1.1.

Structural

Plan

2.2. First

floor Slab

3.1.

Columns

3.3.

Beams

3.2. Walls 4.2.

Sheets

4.1.

Tiles

5.2.

Brick

Facades

5.1.

Cladding

6.1.

Doors

6.3.

Cabinets

6.2.

Windows

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WBS Applications

• Subdivision of project

• Identification of work packages

• Identification of project levels

• Sharing activities between involved subcontractors

• Assignment of responsibilities to individual managers

• Identification of interfaces at all levels

• Geographical distribution of budgets

• Documentation of the project information

• Budget allocation

• Schedule management

• Progress control

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Gantt Chart

Gantt Chart is a graphic display of

schedule-related information. In this

chart, activities are listed on the

vertical axis, dates are shown on

the horizontal axis, and activity

durations are shown as horizontal

bars placed according to start and

finish dates.

A Gantt chart must have a heading

with project title and location, date

of preparation, a brief description of

each activity, bars representing the

activities drawn to indicate duration,

and horizontal axis showing date.

Construction of a small house, Sydney, 1 June 2020

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Gantt Chart

A Gantt chart can provide the following

information.

▪ What the various activities are

▪ When each activity begins and ends

▪ How long each activity is scheduled

to last

▪ Where activities overlap with other

activities, and by how much

▪ The start and end date of the whole

project

▪ The precedencies

As a general rule, it is recommended to

cover no more than 100 activities in a

Gantt chart for easier scheduling and

management.

Time

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Gantt Chart

Gantt chart can also be used to develop S-curves (sigmoid curves).

S-curves are great graphical project management tools for planning,

monitoring, controlling, analysing, and forecasting project’s status, progress,

and performance.

S-curves can show the progress of work and the percentage of project

completion over time from the start of project.

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Example

A bridge is going to be constructed over one year including the six main

construction processes determined below. Developing a Gantt chart, draw the

project’s percentage completion S-curve.

Activities/

Month

Project

percent

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12

Demolition 5 2 3

Excavation 15 3 9 3

Foundation 25 8 12 5

Piling 30 10 16 4

Decks 18 8 8 2

Asphalt 7 5 2

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Example

Solution:

Activity/Month Project

percent

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12

Demolition 5 2 3

Excavation 15 3 9 3

Foundation 25 8 12 5

Piling 30 10 16 4

Decks 18 8 8 2

Asphalt 7 5 2

Completion % 2 3 3 9 11 12 15 16 12 8 7 2

Cumulative % 2 5 8 17 28 40 55 71 83 91 98 100

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10 11 12

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Gantt Chart

One of the main applications of Gantt charts is developing project cash flow and

calculating project profit/loss.

Project cash flow is the net cash flow associated with the project during its life

cycles.

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To find project cash flow, the

following four parameters must be

determined.

• Cash inflow

• Cash outflow

• Cumulative cash inflows

• Cumulative cash outflows

Example

A construction management company has won a tender to construct a small

house in 20 weeks. Client will release the following payments.

Develop project cash flow diagram and calculate the profit of construction

management company considering the information in the Gantt chart below.

Payment time W1 W5 W10 W15 W20

Payment amount ($k) 100 140 70 60 50

Activities/Time W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13 W14 W15 W16 W17 W18 W19 W20

Excavation 15 20 22 14

Concreting 20 26 24 20 14 50

Bricklaying 10 8 6 15

Carpentering 5 4 5 3 10

MEP 15 18 22

Joinery 10 14 18

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Example

Solution:

Activities/Time W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13 W14 W15 W16 W17 W18 W19 W2

0

Excavation 15 20 22 14

Concreting 20 26 24 20 14 50

Bricklaying 10 8 6 15

Carpentering 5 4 5 3 10

MEP 15 18 22

Joinery 10 20 12

Cash inflow 100 0 0 0 140 0 0 0 0 70 0 0 0 0 60 0 0 0 0 50

Cash outflow 15 20 22 14 20 26 24 20 14 60 8 11 19 5 3 25 18 32 20 12

Cumulative

cash inflow

100 100 100 100 240 240 240 240 240 310 310 310 310 310 370 370 370 370 370 420

Cumulative

cash outflow

15 35 57 71 91 117 141 161 175 235 243 254 273 278 281 306 324 356 376 388

Cash flow 85 65 43 29 149 123 99 79 65 75 67 56 37 32 89 64 46 14 -6 32

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Example

Profit = Final cumulative cash inflow – Final cumulative cash outflow = 420 – 388 = $22k

Negative cash flow is when the construction company pays money to suppliers

and subcontractors before client pays for the work that has been completed.

-50

0

50

100

150

200

250

300

350

400

450

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Cumulative cash inflow Cumulative cash outflow

Cash flow

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CPM

Critical Path Method (CPM) is an algorithm for sequencing activities and planning

and scheduling the project. The step-by-step CPM system helps to identify critical

and non-critical activities from projects’ start to completion.

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CPM Advantages

• It visualises project in a clear graphical form.

• It determines the total project duration.

• It helps to identify the critical activities that need more attention.

• It helps with the management of deadlines and milestones.

• It determines the floating time of activities.

• It makes precedencies clear and transparent.

• It identifies the activities that can be shortened to reduce the total project

duration.

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PERT

Program evaluation review technique (PERT) is similar to CPM in that they are

both used to visualise the timeline and the activities that must be done for a

project.

In PERT, three different time estimates are created for each activity which are the

shortest possible time, the most probable time, and the longest time. These times

could the determined based on the past experiences, historical data, or feedback

of experts.

where:

ET: Expected time of an activity

σ2: Variance of an activity OT: Optimistic time of an activity

MT: Most likely time of an activity

PT: Pessimistic time of an activity

ET = OT + 4MT + PT

6 σ2=

PT −OT

6

2 Z=

PSD −PED

SD SD= σ1

𝑛 σ2

PSD: Project scheduled duration

PED: Project expected duration

SD: Standard deviation of the project

duration

Z: Probability of meeting schedule (Table 2)

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Example Table 2: Converting Z value to probability

If Z value is negative, its probability will be: 1 – (positive value of Z)

For example, the probability of Z= -1.80 will be: 1 – (z=1.80) = 1 – 0.9641 = 0.0359

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Example

For constructing a small bridge, the following four successive activities must be

conducted. Considering the table below, determine the following:

• Expected duration and variance of every activity.

• Expected project duration.

• Probability of project completion on or before 100 days.

Activity Description Optimistic Time

(day)

Most likely Time

(day)

Pessimistic Time

(day)

A Excavation 15 18 23

B Piling 30 38 45

C Decking 25 32 40

D Asphalting 5 6 8

A B C D

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Example

Solution:

Using the following two formula, the expected time and variance of each activity

are first calculated.

Activity OT MT PT ET σ 2

A 15 18 23 18.33 1.778

B 30 38 45 37.83 6.250

C 25 32 40 32.17 6.250

D 5 6 8 5.33 0.250

SD= σ1 n σ2 = 1.778 + 6.250 + 6.250 + 0.250 = 3.812

PED = 18.33 + 37.83 + 32.17 + 5.33 = 93.66 days

ET = OT + 4MT + PT

6 σ2=

PT −OT

6

2

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Example

Z= PSD −PED

SD = 100 −93.66

3.812 = 1.66

Using Table 2, the probability of project completion on or before 100 days = 0.9515

So, the probability of finishing the project in 100 days or less is 95.15%.

93.66 100

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Videos

https://www.youtube.com/watch?v=akO2Lf1fHmM

Work Breakdown Structure

https://www.youtube.com/watch?v=fB0wsdmV3Sw

https://www.youtube.com/watch?v=00s5efQWrgU

Gantt Chart

https://www.youtube.com/watch?v=i160aaBX7mE

https://www.youtube.com/watch?v=h2OZGx3qnaU

PERT

46

https://www.youtube.com/watch?v=rxGcV0tuxRU

CPM

Summary

Project Definition

Project Characteristics

Project vs Operation

Project Performance

Project Life Cycle

• Initiation

• Planning

• Execution

• Monitoring and Controlling

• Closure

Project Management Techniques

• WBS

• Gantt Chart

• CPM

• PERT

47

Project Management Areas

• Integration Management

• Scope Management

• Schedule Management

• Cost Management

• Quality Management

• Human Resource Management

• Communications Management

• Risk Management

• Procurement Management

• Stakeholder Management