Project Management

Lecture April 14, 2011

Overview
Project planning
Repetition
Various PM Planning Issues

Model of Project Control Project control Project planning content / deliveries start and end date team members budget
adaptation discrepancies Real values Real values

Target values

Monitoring

Control
Activities

Project execution
disturbance

scope change capacity problems inter personal problems

From the Structure to Scheduling of a Project

Work breakdown structure

Work package

Schedule (e.g. network)

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B Create list of requirements D Conduct Feasibility study A Project organization C Project schedule

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E Phase plan Projektmmgt creation F Project report study

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G Design system concept

H Determine functions

I Phase plan concept

J Determine development process

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Project report Concept

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Work Flow
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Determine Critical Path 1. step: forward calculation

earliest starting date estimated duration earliest finishing date

4 Activity 5

Activity 1
2 0 0 0 Project start 0 0 0 0 5 5 2 3

Activity 3 3 2 5

9 9 0 9 project end 9 0 9

Activity 2 0 0 5

Activity 4 6 1 7

Activity 6 7 1 9

latest start

Total float

latest finishing date

2. step: backward calculation

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People in Projects Expert committee Steering committee

Project leader
Special functions

Project team

Overview of the Project and Organization Structures

Board of Management Department A Department B Department C

Pure project organization

Projekt A

Projekt B

PM A

PM B

Board of Management

Influence project organization

PM

Staff

Department A Department B Department C

Matrix project organization

Project 1

Executive board Department A Department B Department C

Project related directives

Project 2

Function related directives

Overview
Project planning
Repetition
Various PM Planning Issues

Cost Planning

Examples for Cost Planning

Modification project of the ice-skating hall Bodensee-Arena with restaurant and hotel (2000)
- budgeted costs : 8,9 Mio. CHF - real costs : 11,9 Mio. CHF - overrun: 1,33 Mio. CHF

Acquisition and introduction of a new administration system for human resources (1998)
- budgeted costs : 2,4 Mio. CHF - real costs : 3,1 Mio. CHF - overrun: 0,7 Mio. CHF

Roof of Munich Olympia Stadium

- budgeted costs: 20 Mio. Mark - real costs: 171 Mio. Mark - Factor: 8,6 (other project parts: average 1,9)

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Cost Calculation Terms

Cost calculation

The anticipatory consumption in terms of amount and value, respectively the effective consumption as well as the spatiotemporal claim of production factors for the purpose of goods and services.

Cost-type accounting

Systematical recording of all the costs, which occur with the creation and application of goods and services (e.g. HR costs, material costs, logistic cost, capital costs, but also direct and indirect costs)

Cost-centre accounting

Computed allocation of included costs of each cost-type to a costcentre during a period of time (e.g. distribution, engineering,...)

Cost-unit accounting

Cost-unit: marketable goods and services (e.g. product or service) Cost-unit accounting: calculation
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Principles of Cost Estimation in Projects

Top-down (global) estimation methods
For a fast and easy, approximate estimation of projects cost. Uses parameters, key data (e.g. per volume)

Bottom-up (analytical, AP-based) estimation methods

Basis for detailed project cost planning Basis for cost based project controlling

Allocation

Type of cost

Work package costs

Project costs (PC)

PC over time

Work packages

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Identification of Work Packages in a WBS

Project WBS

System A
Sub system AA

System B

System C
sub system CB

System D

Work Package AA1

Work Package CB1

Work Package CB2

Work Package D1

Work packages

Work Package AA2 Work Package AA3

Work Package D2
Source: Litke, H.-D.: Projektmanagement. Hanser 1995

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Costs
Human resources
- Developer, constructing engineer, product leader,etc. - in CHF/h - cost/unit: e.g. 130.- / h

Material
- Steel plate, zinced, screws M4, P4 Chips, etc. - in m2, pieces, etc. - cost/unit: e.g. 20.-/m2 or 500.-/piece

Acquired services
- Consultant services - All-inclusive

Etc.

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Allocation
Work package AA3
Personnel Factory worker Material Steel plate: Screws M8: Rest C-parts, etc. total

60h 30m2 300 pieces

130.-/h 20.-/m2 1.-/piece

= = = = =

7800.- CHF 600.- CHF 300.- CHF 400.- CHF 9100.- CHF

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Project Calculation
WP-costs (CHF) see previous slide WP1 + WPi + Wpn = sum of all direct costs Overhead (%)
- Infrastructure - Management - Office equipment, EDV (utilities) = sum of all overhead costs (e.g. 10%)

Profit and risk margin (%)

- e.g. 50%

Offer price (CHF)

- e.g. 15000.- CHF

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Different Cost Estimation Methods

Estimation of an expert (1 person)
One employee (mostly project manager) estimates costs based on his experience, called an educated guess. This kind of estimation is only based on one persons knowledge and his luck. It might therefore end in a catastrophic mislead.

Estimation of experts (more than one persons)

classical Delphi method no discussion between experts broadband Delphi method with discussion between experts
Source: Litke, H.-D.: Projektmanagement. Hanser 1995

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Quality Issues in Project Management

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Dependencies in Project Planning

Project task
Structuring the task Structuring the process Capacities Schedule Information Resources

Quality

Team
profit Cost Benefit
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Source: Litke, H.-D.: Projektmanagement. Hanser 1995

Quality as Central Key Figure in the Project

Quality

Project
Costs Time

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Definition of Quality

DIN 55350, part11, S.2:

Quality it the entirety of attributes and characteristic values of a unit concerning its eligibility to achieve defined and required demands.
en.wikipedia.org/wiki/Quality (accessed 02.05.07)

Quality refers to the inherent or distinctive characteristics or properties of a person, object, process or other thing. Such characteristics or properties may set a person or thing apart from other persons or things, or may denote some degree of achievement or excellence. When used in relation to people, the term may also signify a personal character or trait.

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Quality Management
Due to the uniqueness of each project and therefore new/different quality requirements have to be defined Observation of the requirements is the responsibility of each team member... ... but first and foremost the responsibility of the project manager Quality management is an important task in project management

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Quality Management
Strategic management concept
which aligns the organization with all-embracing and consistent quality.

Collaborative quality awareness

Realization of an optimal product quality through an appropriate quality of the overall process

Unconditional orientation
Product and process quality Service quality Innovation quality Environmental quality social quality ...

to the expectation of all stakeholders: costumers, employees, owners, suppliers and society, etc. and in all ranks:

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Contents of Quality Management

Quality management

Quality planning

Quality control

Quality test

Performance planning

Performance control

Performance correction

Inspection

Test

Set up quality characteristics

To set up arrangements to reach the quality characteristics

To set up conduction and affectivity of the quality characteristics

To bring Verification of Check of about documents code or amendments prototype of product quality

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Personnel Planning

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Dependencies in Project Planning

Project task
Structuring the task Structuring the process Capacities Schedule Information Resources

Quality

Team
profit Cost Benefit
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Source: Litke, H.-D.: Projektmanagement. Hanser 1995

Acquiring Sufficient Resources

Resources initially budgeted for projects are frequently inadequate
- Sometimes resource trade-offs are required - Subcontracting is an option - Project and functional managers perceive availability of resources to be strictly limited - Competition for resources CAN turn into win-lose propositions between project and functional managers

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Source: Meredith/Mantel Project Management 2005

Acquiring Inspiring Personnel

A major problem for the PM is that most people required for a project must be borrowed
- At times, functional managers may become jealous if they perceive a project as more glamorous than their own functional area - Typically, the functional manager retains control of personnel evaluation, salary, and promotion for those people lent out to projects - Because the functional manager controls pay and promotion, the PM cannot promise much beyond the challenge of the work itself - Violation of Unity of Command principle
Source: Meredith/Mantel Project Management 2005

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Personnel Planning

The planning of personnel contains all reflections which are related to the concrete assignment of employees to the project team.

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Contents of the Personnel Planning I

Determination of the staff requirement
Required functions Required capacity Qualification profile

Recruitment of employees

recruitments of qualified internal employees (Battle for Talents) Possibly selection of employees Possibly external recruitment of employees

Agreement of the assignment to a project

part-time / full-time assignment Organizational form (pure project organization, influence project organization, matrix project organization) Subordination Activity after project end
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Contents of the Personnel Planning II

Assignment of the employees
To be carried out in oral and written form List of activities should contain:
The The The The task to be solved available capacities planned costs closing date to be obtained

Optimal condition of employment and infrastructure

Work station PC, development and test tools Methodological instruments Further education (related to project task) Career planning Supervision / Coaching of employees

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The Project Manager

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Significance of a PM Success and Failure correspond strongly with the type and personality of the PM Selection of the right PM is essential Management support for PM

Requirements
Methodological Competence Social Competence Strong Leadership abilities Motivator Trainer Psychologist Conflict Manager

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PM Career Model

Source: http://www.project-management-knowhow.com/project_management_career_model.html

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PM Career at Siemens

Quelle: PM@Siemens PM-Guide

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PM Career at Siemens

Quelle: PM@Siemens PM-Guide

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The project team

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Attracting the Best Team

Characteristics of effective team members:
High quality technical skills Political sensitivity Strong problem orientation Strong goal orientation High self-esteem
Source: Meredith/Mantel Project Management 2005

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High performance teams

A team is a small group of people with complementary skills, who work actively together to achieve a common purpose for which they hold themselves collectively accountable. Teams are one of the major forces behind revolutionary changes in contemporary organizations. High performance teams:
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Have strong core values Turn a general sense of purpose into specific performance objectives Have the right mix of skills Possess creativity

Source: Schermerhorn, Hunt, and Osborn: Organizational behavior 2003

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Optimal team size I

Efficiency and Effectiveness Information exchange Cumulated Know-how

Coordination

Number of team members

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Optimal team size II

Probability of mistakes

Team size 1 2 3 5
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Conflict: General Terms Forming a high performance team I

Conflicts arise if there are different ideas/person(s) how to achieve project objectives Virtually impossible that interaction take place without conflict Definition: the process which begins when one party perceives that the other has frustrated, some concerns of his (Thamhain and Wilemon, 1975) Conflicts arise over:
goals feelings beliefs behaviour (indiv. or group pursues different goals; Raiffa, 1982) (emotion; most conflicts have their roots in uncertainty) (personality) (education)

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Conflict intensity over the project life Forming a high performance team II cycle

Schedule and technical conflicts are most frequent and serious in the build up and main program stage, and schedule conflict in particular during the phase-out stage.
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