OPMA 407-Midterm study

Scope statement

- also called statements of work - used to clearly define the deliverables for the end user - used to focus the project on successful completion of its goals - Used by the project owner and participants as a planning tool and for measuring project success

Resource constrained example

- bathroom first - add a cabinet installer, not a plumber - Hiring more not increase costs but will speed up the project!

Impearl oil outsourced modules of the facility to be built in factories then transported to site. What are advantages of this approach?

- labour cost savings - No impact of weather - more suppliers to choose from - worker safety - concurrent/parallel crashing

Use time carefully or it will use you

- make realistic assessments of time-killers in daily schedule - Don't spend days in unproductive ways - Actively plan days and stick to a time budget

Direct costs

- reducing duration will increase costs (overtime, expedited materials, etc. - shorter time= more direct costs

Risk identification

- List possible risks through brainstorming, problem identification and risk profiling - Macro risk first, then specific risks - Check with PMO office for similar risks

What are some serious ethical problems with RFP's (requests for proposals)

- Low estimate to win, then plead special circumstances to increase costs - "Cost-Plus" basis - don't know how are costs allocated? - Sealed Bids - give favoured bidder a "last look" at supposedly sealed bids so they can submit a winning bid - "Cleaning staff espionage": Bidders pay cleaning staff to look at proposals of competitors prior to their submission

When should you use Macro budgeting?

- High uncertainty & Small internal project - i.e developing and implementing an untested technology

What are the benefits of risk management?

- Improves chances of project success (cost, schedule, quality, stakeholder satisfaction, etc.) Reduces surprises and negative consequences -A proactive rather than reactive approach (professional response) -Prepares the project manager to take advantage of appropriate risks (ex. low probability / severity)

Establishing a change management system

- Monitoring, tracking and reporting risks - Fostering an open organization environment - Repeating risk identification/ assessment exercises - Assigning and documenting responsibility for managing risk

Strategies to solve overloaded resources (people/machines) during project crashing

- Move start time of tasks with slack - increase capacity by: reallocating resources from non critical to critical activities, acquiring more resources, improving the efficiency of the resource - reduce scope - project due date extended ***These are listed in order of most desirable/ best solution to least desirable/ worst solution***

Enthusiasm and despair are both infectious

- PM projects the image and attitude that signals the current status of the project and likelihood of success - must be a motivator and encourager - honesty+ transparency

Two types of organizations?

- Project (core business is completing projects): consulting, construction, audit - non project: core business is something else

How are learning curves relevant for project estimations?

- Projects that create multiple units (a relatively small production run) and have a large labour component - If we are attempting to reduce risk in estimating project costs we may need to incorporate learning curve concept.

What are the project selection model criteria?

- Realism: includes objectives, expertise and limitations - Capability: ability to handle varying resource and time requirements - Flexibility: able to work with all projects - Easy to Use: quick to gather and analyze data - Inexpensive: cost/ benenfit of the model

Risk severity matrix

- Red= highly likely & Highly painful - Volume and quantity should also be considered

What is the nature of project selection models

- The inputs never fully describe the situation - The outputs never fully describe the expected results - Many factors affect the outcome of a project: Some are one-time factors, others are recurring - Not all factors are equally important: Critical factors on one project may be trivial on another

NPV Definition

- Value stream of all cash inflows and outflows in today's dollar value (includes TVM) - Discount/ Hurdle rate is the percentage used to reduce future cash flows - Discount rate of the organization=opportunity cost

What is the problem with estimating activity times?

- When activity times are set, these come to be considered as targets - The estimates become self-fulfilling prophecies -Parkinson's law - work expands to fill the allotted time Ex. Assignment Due Dates!

What is are the major characteristics of a project?

- defined purpose/mission/goal (scope) - Multiple interrelated tasks - has a start and an end (finite) - broad group of stakeholders - limited resources (time, people, equipt, $) - change occurs - non-repetitive/unique (project vs. a project) - ongoing planning (progressive elaboration)

Biggest problem with NPV/IRR

- doesn't relay the intangible benefits - PM's will inflate financial values to meet financial criteria (using totally fake numbers to make a decision) - Solution= hybrid approach

Unweighted Factor model

- each factor weighs the same - not realistic b/s not everything is equally as important

Lowest uncertainty in project budgeting

- experienced cost estimator - standardized product and components

Above all plan, plan, plan

- get it right the first time - people are impatient about planning- they want to see action - rushing planning leads to wasted resources/ rework

One look forward is worth 2 looks back

- have troubleshooting mechanisms & contingency plans - be skeptical of the project; consider what possible risks exist

How much detail to include in a micro/ bottom up budget?

- level of detail varies with the complexity of the project - excessive detail is costly (unproductive paperwork) - insufficient detail is costly (wasted effort on essential activities and lack of focus on goals)

Weighted Factor model

- point scale used for performance on each factor - each factor is weighed relative to its performance - factors should ideally sum to 1 - pick the highest score

Lead from the front

- project management is a leader intensive undertaking -need to be a strong and effective leader to help a project succeed -leaders are the major source of information and communication for external stakeholders - flexibility is key - works as a facilitator vs. dictator - supports subordinates

Gates deal with three quality issues:

- quality of execution - business rationale - quality of action plan

Goldratt's critical chain

- takes into account scarce resources and that some activities may require the same resource --> implications for which tasks should be completed first - resource constrained examples

Competitive Necessity

-A project that is required in order to maintain the company's position in the marketplace (ex. RIM's Playbook)

What are some benefits of the stage-gate process?

-Builds the voice of the customer into projects -Puts discipline into a somewhat ad-hoc, chaotic process -The process is visible, simple, easy to understand and communicate -The requirements are clear: expectations of a project team and leader at each stage and gate are spelled out -faster decision making

What is the activity on arrow format?(AOA)

-Renamed from PERT -Arrows represent activities while nodes stand for events - Any given activity must have its source in only 1 node - Need for dummy activities (dashed line)

Difference between resource loading and resource levelling?

-Resource Loading: Describes the amount of resources an existing schedule requires. Gives an understanding of the demands a project will make of a firm's resources -Resource Leveling: Improves morale. Fewer personnel problems (hiring / firing)

What is a RACI chart

-Responsibility Matrices -(Responsible, Accountable, Consult, Inform) - summarizes the tasks to be accomplished and who is responsible for what on a project - clarifies the extent or type of authority that can be exercised by each participant - provides a means for all participants to view their responsibilities and agree on assignments

How does resource leveling work?

-When an activity has slack, we can move that activity to shift its resource usage-->No impact on other activities / cost -May also be possible to alter the sequence of activities to levelize resources-->Change order of tasks to even out workload - Small projects can be levelized by hand -Software can levelize resources for larger projects (Microsoft Project has this feature)

Stages

-each stage costs more than the preceding one- incremental commitments - as risk and uncertainties decrease, expenditures can rise and risk is managed

Models for project selection

-models simplify reality by only looking at the key variables involved in a decision - the more variables included in a model the more complex it becomes - simpler models usually work better

Six flags

-winds: restricted assembly to only 1-2 days per week - Crashed- 24 h construction with 250 workers on site - 10% over budget, construction took less than 10 months

PMBOK definition of a project is defined by what 3 characteristics?

1. finite 2. unique 3. progressive elaboration (not all is known at the start)

What is project creep?

The tendency for the project scope to expand over time due to changing requirements, specifications, and priorities.

What is the Failure Mode and Effect Analysis (FMEA)

A form of risk assessment rated on scales of 1-10 Calculate RPN

What is the deterministic model to select projects?

A model that does not include probabilities. Given the same inputs, the outputs will always be the same. Ex. Excel Solver Binary (0/1) programming for project selection

Stochastic model to select projects?

A model that includes the probabilities of events occurring. In other words, the same inputs might yield different outputs at different runs. Also known as a probabilistic model. Ex. Crystal Ball

What are some trends in project management?

Achieving strategic goals (fit?) Improving project effectiveness Project Management Office (PMO) in organizations 63% of global organizations have a PMO (2010 PMI Annual Report) Virtual projects (global teams) Quasi-projects (scope unknown - get started)

AON vs. AOA (when to use)

Activity On Node (AON) diagrams: - Easier to draw - Used in most project software programs Activity On Arrow (AOA) diagrams: - Harder to draw ("dummy" activities) - "each activity must have its source in one and only one node" - These represent "technological relationships"

Project portfolio matrix

Bread and butter-evolutionary improvements White elephant-Once showed promise, no longer viable Oyster-Tech. breakthrough with high commercial payoff Pearl-revolutionary commercial advances using proven technology- ex. Apple Music

Name 8 of the 12 "Lessons for an accidental project manager"

Build and maintain a cohesive team Enthusiasm and despair are both infectious One look forward is worth two looks back Remember what you are trying to do Use time carefully or it will use you Above all, plan, plan, plan Recognize project team conflict as progress Understand who the stakeholders are and what they want

What resource limitation typically has the biggest influence on project approval for a non-project organization?

Capital

Risk control

Execution of the risk response strategy, monitoring of trigger events, initiating mitigation and contingency plans and watching for new risks.

Start to start (Lag)Precedence Diagramming example

Lag Example: "Setting electrical wires in place cannot begin until two days after framing has begun" -lag in two tasks occurring at the same time -Thus the predecessor is "4 SS + 2 days" - 4 is referencing the predecessor activity

What are the major characteristics of a project?

Multiple tasks that are interrelated Defined objective / goal (purpose) Has a start and an end (finite) Planned schedule Limited resources ($, people, time, space, etc.) Non repetitive / unique uncertainty Increased importance of risk management Expanded stakeholders management Ongoing planning (progressive elaboration)

NPV formula

NPV=-initial cash investment+ sum of (period cashflow T1/ (1+discount rate )^t - Higher cash flow is better (return>investment) - Higher discount rate, lower NPV (decreased value of future cash flows) - + NPV means we can take the project and make a profit

Can models make the decisions?

No! Models are tools, Managers are decision makers

Is the success of PERT/CPM due to high quality estimates?

No- The success of these methods is because you made an estimate and people worked to meet that deadline following based on parkinson's law.

Do most companies have formal project management training?

No. Ad-hoc training at best

Pros and cons of scoring models?

Pros: Allow multiple (tangible / intangible) criteria to be used (including profitability) Simple to understand and use Weighting allows for rating of importance Cons: Output is only a "relative" measure Does not provide the "value" a project offer Elements of models are assumed to be independent There may be an inter-relation in reality

Pros/Cons of Gantt charts

Pros: Easily understood Displays durations, precedence, and dates Shows planned and actual progress Provides a picture of the current state of a project Cons: -Gantt charts can be difficult to follow with complex projects (tough to follow multiple activity paths through the project) -Network diagrams are usually more helpful in the hands-on task of scheduling a project

Pros and cons of NPV/IRR

Pros: Relatively easy to use and understand Gives a "go/no-go" indication Can be modified to include risk (discount rate) Cons: Financial focus only Biased to the short-term longer term % rate & cash flow estimates are less predictable managers may inflate the benefits to meet criteria

Pros/Cons of Top Down(macro) Budgeting

Pros: - Encourage innovation / creativity (how can we do it for cheaper) - Cost control scope control (no scope creep) - Faster budgeting process Cons: - Too high - spend it anyway - Too low - demotivating (no "buy-in") - Fighting for resources/ cash allocation

What are some pros/cons of resource levelling?

Pros: - Peak resource demands are reduced - Resources over the life of the project are reduced - Fluctuation in resource demand is minimized Cons: - Loss of flexibility that occurs from reducing slack - Increases in the criticality of all activities

Pros/cons of using unweighted scoring for project selection? (unweighted factor model)

Pros: Easy to compute - total or average the scores Cons: Less important factors are weighted the same as important ones

What is the purpose of numeric scoring for project selection?

Purpose: to provide a project selection method that combines: Non-financial factors (ex. more than just "profit") Formal "objective" quantitative analysis

What is a schedule?

Schedule is the conversion of a project action plan into an operating timetable Not all activities on a project need to be scheduled to the same level of detail Most scheduling is WBS level, not the work package level Only the most critical work packages may be shown on schedule Most schedules are based on network drawings Work changes daily so a detailed plan is essential

How can a project manager be successful (technical dimension)

Scope, WBS, Schedules, Resource Allocation, budgets, status reports

Learning curves examples:

See slide 44-end of Planning and Budgeting slides

What are the 4 steps in defining the project?

Step 1: Defining the Project Scope Step 2: Establishing Project Priorities Step 3: Creating the Work Breakdown Structure Step 4: Coding the WBS for the Information System

What are the 4 steps in project planning?

Step 1: Defining the Project Scope Step 2: Establishing Project Priorities Step 3: Creating the Work Breakdown Structure Step 4: Coding the WBS for the Information System

Why do PMO's exist?

The Implementation Gap: The lack of understanding and consensus on strategy among managers who may independently implement their preferred strategy. Organization Politics: Project selection is based on the persuasiveness and power of people advocating the projects. Resource Conflicts: Interdependency relationships of shared resources results in the starting, stopping, and restarting projects. Repeating Effort & Mistakes: Previous project work re-created multiple times (ex. risk assessment) Lessons learned from previous projects not implemented

Name 2 project management magazines?

The Project Management Journal, PM Network.

Balancing Project Management- Name the 3 dimensions, plus the 2 added in class.

Time, Cost, Performance+Risk+Stakeholder Satisfaction

Top down budgeting?

Top managers estimate/decide on the overall budget for the project These trickle down through the organization where the estimates are broken down into greater detail at each lower level "design to cost" Allocated $ through WBS -EX: Nasa's Mars Pathfinder Rover -helps to limit scope creep

What are the 3 types of budgeting?

Top-down (macro) Bottom-up (micro) Negotiated

Ideal project portfolio

Want bread and butter, no white elephants, some oysters and pearls

What is the best way to balance subjective and non-subjectives values for a project?

Weighted Factor model

When should you use Micro budgeting?

When details are important EX: You are a subcontractor and you are submitting a fixed price bid proposal for a major construction project.

IRR

Where NPV=0

White elephant

Would never choose a project like this, but projects can at times become this genre of project Expensive to maintain without much value

Defining the project

a definition of the end result or mission of the project in specific, tangible, and measurable terms

Watch the Project Management at Six Flags, New Jersey video on Connect and answer the following questions: a) What was the primary cause of construction delays during the project? b) The project came in 10% over budget. In hindsight, do you think 'crashing' the project (by working 24 hours a day starting in February 2005) was a good idea? Why? c) Although actual construction time was approximately only 9 to 10 months, how many months did the entire project actually take? What does this reveal about upfront planning and material sourcing requirements? d) In the video, Six Flags Chief Corporate Engineer, Larry Chickola, states, "It doesn't feel like it, but a week at the beginning is the same as a week at the end". Given this advice, would you recommend 'crashing' a project only near the end of the project? Why or why not? What insights about project management and scheduling can be taken from this statement?

a) The primary cause of construction delay was the winds. Due to the nature of the structure, specifically its height, the project required cranes that could only operate when the winds were less than 15MPH. Strong winds cause the cranes to sway, making it unsafe to work. b) Yes, if not they would have lost opening week revenue. This project needed to be complete by May for the upcoming tourist season, this made schedule a top priority for this project. As completing the project on schedule was the main priority the 10% cost overruns are justifiable as they were able to open up this new attraction in time for the parks high season. c) This project was completed from start to finish in 15 months. In January 2004 the initial planning was started and May 2005 the roller coaster was officially opened. A lot of upfront planning was necessary. d) The statement made by Larry Chickola, "It doesn't feel like it, but a week at the beginning is the same as a week at the end" is important when considering how to schedule things and when to crash a project. Typically, crashing a project occurs at the end because delays have occurred that need to be responded to in order to get the project done on time. If you were to crash a project at the beginning it is redundant because you are paying more money for something that may or may not have delays. However, if the project needed to be done in a period in which there was little to no slack time on the critical path, then there would be a need to crash the project from beginning to end to stay on schedule. Crash whenever you can!

Free slack

the time an activity can be delayed without affecting that start time of any successor activity

Crashing definition

to speed up or expedite a project; expediting of tasks in order to reduce project completion time or overall project cost - resources must be available - changes the schedule for all activities - impact subcontractors schedule - often introduces unanticipated problems

Path

A series of connected activities

What is the activity on node format?(AON)

-Renamed Critical Path format -activities represented on the nodes, arrows show precedence

How can a project manager be successful (sociocultural dimension)

Leadership, Problem solving, teamwork, negotiation, politics, customer expectations

Project Priority Matrix Example

"Performance is a must, the faster the better, and the cost we will accept."

Finish to start (delay) example (precedence diagramming)

"The concrete foundation requires two days to cure before framing can commence" This is a "delay" in the normal Finish Start relationship Thus the predecessor is "1FS + 2 days" Why not just make the first task 2 days longer? Resource Availability - people / equipment are not "busy" during those 2 days, so it needs to be reflected in the schedule

What constitutes the core challenge of managing a project effectively?

"The temporary nature of projects, combined with the very real limitations on power and discretion most project managers face

Finish to finish (Lead): Precedence Diagramming example

"You can begin painting the lines on the portion of the asphalt parking lot that is completed & set, but you cannot paint the lines on the final section until it has set for at least 24 hours." This is a "lead" in the finish of one task to the finish of another task Thus the predecessor is "7 FF + 1 day"

Pro's and cons of using payback period?

(Cost/Annual CF)Cons: Does not consider time value of money (less meaningful over longer periods of time) Difficult to use when cash flows change over time Ignores cash flow after payback (big? small?) Pros: Easy to calculate Intuitive to understand a good "starting point"

How to calculate activity slope (project crashing)?

(crash cost-normal cost)/(crash time-normal time)

How many decisions were outsourced?

- 6/7- one decision did not save any days on the schedule - Was not cost effective/ didn't save time to outsource sidewalk removal - Laying of bricks was not cost effective to outsource either

Budgeting

- A plan for allocating scarce resources to the various endeavor of the organization - budget for an activity implies management support for that activity (higher budget/cost=higher managerial support) - budget is a control mechanism

Operating Necessity

- A project that is required to keep the company in operation. - Should take precedence if there is limited resources - Ex. Update to adhere to new government regulations Competitive Necessity

How are project tradeoffs managed?

- A shifting balance between scope, time and cost. - Quality is subjective to this balance. - Need to clearly state what trumps what in the project

Contingency plan

- An alternative plan that could be used if an unforeseen risk event actually occurs - A plan of action that will reduce or mitigate the negative consequences of a risk event

Risk response development

- Avoiding risk: changing the project plan to eliminate the risk or condition - Mitigating risk: reducing the probability or severity - Transferring risk: paying a premium to pass the risk to another party -Sharing risk: Allocating risk to different parties -Retaining/accept risk: use when risk is low impact/low severity

BP oil example

- Contingency plans were never tested, and are therefore not a good plan if they have never been proven to work - All oil companies had the same poorly developed contingency plan

What are some common reasons for differences between top down/bottom up budgets?

-Farther one moves up the organizational chart, the easier/faster/cheaper the job looks -The subordinate will build in a "Murphy's Law" allowance into a bottom up budget which may already have a contingency allowance

What are some of the risks of the Project Flip assignment?

-Financial Risks: Could lose money (uncertainty on costs and selling price) Opportunity cost of other "safe" investment options -Technical Risks: Proper tools combined with skills of Kim, Carl, Pat & Contractors -Organizational (Personal) Risks: Effect on their "regular" jobs Effect on their relationships (marriage, cousin Pat, friends, etc.) -Scheduling Risks: Accuracy of the duration estimates Unknowns: weather delays, mold, termites, etc.

How can you improve the process of cost estimation for projects?

-Have a professional cost estimator to do the job Project manager could work closely with cost estimator -Develop "rules of thumb" from past experience -Include "waste" that is required (ex. construction materials) -Obtain input from as many areas as possible Can compare values and identify more potential "surprises" -Focus on estimating direct costs Indirect costs are not a major concern (often beyond control of project manager) Two Approaches: -Add 5-10 percent for contingencies (most common) Use "most likely, optimistic, and pessimistic" estimates (apply PERT for budgeting!)

Beginnings of the Gantt Chart

-Henry Laurence Gantt (1861-1919) -He developed Gantt charts in the second decade of the 20th century as a visual tool to show scheduled and actual progress of projects. -Gantt charts were first used on large construction projects like the Hoover Dam (competed under budget & before schedule)

Lessons from project flip:

-Holding cost vs. Outsource cost influences outsourcing decision -Project has many "indirect" (holding) costs: "overhead" like costs incurred each day during renovation (mortgage interest, property taxes, utilities, etc.) -"Owners" are the schedule constraint: outsourcing activities will speed up the project -Success is a combination of good project management and luck

What is the hybrid approach to negotiate budgets?

-Most projects use some combination of top-down and bottom-up budgeting: 1. Make rough top-down estimates 2. Develop the WBS 3. Make bottom-up estimates 4. Develop schedules and budgets 5. Reconcile differences between top-down and bottom-up estimates -Any differences are negotiated

How can you improve the ethics of the RFP process

-Open environment: A clarification provided to one must be provided to all -Use a submission website Potential suppliers upload their proposal Username & password required Avoids excuses of "courier problems", etc. -Strict deadline for submission Submissions not possible after deadline Submission page is "locked out" -Lock up all submissions & analysis when out of office

Network scheduling techniques?

-PERT (Program Evaluation and Review Techniques): uses probabilistic time methods -CPM (critical path method): deterministic time estimates and allows project crunching -Microsoft office blends these two techniques

What are some of the most common barriers to success with project management?

-Planning(unclear definition, poor decision making) -Directing (poor coordination, communication) -Scheduling (tight schedule, not meeting schedule) -organizing(lack of responsibility, weak project manager)

What are some strategies to manage the critical chain?

-Prioritize Critical Chain Activities: These are critical for on-time completion -Constantly Communicate Schedule to Scarce Resource: Ensure any proposed schedule changes are possible -Employ "Feeding Buffers": Ensure non-critical (feeder) chains have some buffer so if a delay occurs, they do not also become critical -Employ a "Project Buffer": Schedule the critical chain to be completed prior to the target date. This "protects" the critical chain

What are the two meanings of risk?

-Probability an event will occur -Danger or threat (severity)

Comparative Benefit

-Projects are subjectively rank ordered based on benefit - Q-Sort Technique: Project are divided into groups (ex. good, fair, poor) If any group has more than 8 projects, it is split into two (example: "fair-plus" and "fair-minus") Projects within each category are then ordered from best to worst

Options for examining non-critical path impact

1. Calculate probability for all paths (anything close?) 2. If paths are independent, multiply their probabilities 3. If paths are not independent, simulation must be conducted (ex. Crystal Ball)

What are the steps in project crashing?

1. Select the activity (activities) on the critical path(s) 2. Select the cheapest activity (activities) to expedite 3. Is it still possible to crash the activity (activities)? 4. Is there a net benefit? Repeat Step 2 until the net benefit is no longer positive (marginal costs of expediting exceed the savings in the project indirect costs).

Two scoring approaches to project selection

1. Unweighted model- binary or point scale 2. Weighted factor model

What is the slack calculation logic?

= Latest Start - Earliest Start OR = Latest Finish - Earliest Finish

Risk Management

A proactive attempt to recognize and manage internal events and external threats that affect the likelihood of a projects success

Sacred Cow

A project, often suggested by top management, that has taken on a life of its own. It continues, not due to any justification, but "just because."

Activity

A specific task or set of tasks that are required by the project Uses up resources and takes time to complete

Project charter

Can contain an expanded version of the scope statement A document authorizing the project manager to initiate the project

Project priority matrix

Constrain: a parameter that us a fixed requirement (a must) Enhance: optimizing a parameter over others (the better) Accept: reducing a parameter requirement ( we will accept)

What is the difference between a contingency and a mitigation plan?

Contingency Plan: If the event occurs, we will.... - After/reactive Mitigation Plan: How we can reduce the risk (probability/severity) - Before/Proactive

What is a hybrid approach for making decisions?

Costs - identified in detail Benefits - provided in subjective terms Managerial decision: "are you willing to pay this much $ for that set of benefits?"

Project phases, budgeting approach (diagram)

Create a detailed budget in the phase once you have reached it Macro estimate=top down Detailed estimate=bottom up

Define critical path

Critical Path - The path through the project where, if any activity is delayed, the project is delayed There is always a critical path There can be more than one critical path

What are the 3 steps in the stage gate process?

Deliverables-Inputs to be reviewed Criteria-What the project is judged against in order to make it a go Output-Results of the gate review

What is the Project Management Office?

Department within organization Often report directly to CEO Key Responsibilities: - Assess alignment of project with organization's goals - Project administration procedures (best practices) Selecting, planning, budgeting, scheduling, risk management, stakeholder engagement, etc. - Offer consulting services to their project managers - project auditing

What are some of the risk mitigation options for Kim and Carl in Project Flip?

Detailed home inspection before purchasing: Ensure house is structurally sound before buying Subcontract work: Transfer risk to others (@ fixed price) Reduce "holding" duration: Subcontract, Work hard, Accept a lower offer price Purchase "Constructor's Insurance"

The Risk Event Graph:

Do not want to be near the "almost complete" part of the graph --> the further into a project lifecycle you get the more expensive it becomes to fix things

What are some factors to consider when assigning project work?

Don't always pick the same people for the toughest assignments (spread the pain). Choose people with an eye to fostering their development through participation on the project. Pick people with compatible work habits and personalities but who complement each other. Team-up veterans with new hires to share experience and socialize newcomers into the organization. Select people who may need to learn to work together on later stages of the project or other projects

What are the four categories for Precedence Diagraming

Finish to start (Delay) Start to start (Lag) Finish to finish (Lead) Start to finish (rarely used)

What factors have led to the increased use of Project Management?

Government regulations (ex. Environmental, transparency) Global economy / global supply chain New product development, etc. More competitive business environment (pressure to get projects right) Advances in technology (can we use it?) Communication technology (sharing ideas) More bigger projects, more complex Past failures and successes of projects Corporate downsizing (less middle managers)

What are the risks of not having a contingency plan?

Having no plan may slow response Poor decisions may be made under pressure

WBS:

Hierarchal outline that identifies the products and work elements involved in a project. Defines the relationship of the final deliverable to its sub deliverables, and in turn their relationships to work packages.

Based on simple project life cycle, where is the most effort exerted?

Implementing the project

What does a work package do?

It is the lowest level of the WBS Defines work (what) Identifies time to complete a work package (how long) Identifies a time-phased budget to complete a work package (cost) Identifies resources needed to complete a work package (how much) Identifies a single person responsible for units of work (who) Identifies monitoring points (milestones) for measuring success

What is the learning curve?

Learning curve (also known as improvement curve, experience curve, or industrial progress curve) is described by the following relationship: "Each time the output doubles, the unit labour hours are reduced at a constant rate."

A WBS coding system defines what?

Levels and elements of the WBS Organization elements Work packages Budget and cost information Allows reports to be consolidated at any level of the organizational structure

What are the benefits of a PMO

Links strategies Builds discipline into the project selection process Balances risk across all projects Allocates more resources to projects strategic alignment Improves communication and agreement on project goals Prioritizes project proposals across a common set of criteria rather than politics or emotion Justifies killing projects that do not support organization strategy **reduces number of failed projects, cost savings

What does it mean to manage a project by phase or gate?

Manage business risk by breaking resource commitments into increments or stages i.e. breaking objectives into shorter sub objectives. - ideal for new product development - allows for lots of feedback between disciplines - allows focus to be on specific short-term outputs

How did project management begin?

Modern project management began with the "Manhattan Project" (1942-1946) Code name for the U.S. secret plan to develop atomic weapons for use in warfare

Which nonnumeric model should take precedence in times of limited resources?

Operating Necessity

What is the project management designation?

PMP (Project Management Professional)

Pros/Cons for bottom up(micro) budgeting?

PROS: - "buy-in" from project team is high - More realistic / accurate - Catch more surprises CONS: - Slower budgeting process - Overstating requirements "padding the budget" - Management tend to cut the budget (padding out)

What are the numeric profit models for project selection?

Payback period Discounted cash flow (NPV) Internal rate of return (IRR)

What resource limitation typically has the biggest influence on project approval for a project organization?

People and Equipment availability

What are some of the elements that need to be in a formal project proposal?

Planned schedule with target completion date Purpose/mission/scope Fit with organizational strategy Resource requirements: budget, equipment, materials, staff, etc. Planned responsibilities Overview of approach: technical and managerial Planned benefits: performance measures to be used Risk management Stakeholders and plans for interacting with them Planned project priorities

What is a program?

Program: A higher level group of projects targeted at a common goal

Example of project vs. program

Program: completion of all courses required for a business major Project: completion of a required course in project management

What is the major Project Management organization?

Project Management Institute (PMI) -rapid growth since the 2000's

Bottom-up budgeting?

Project is broken down into work packages Low level managers price out each work package Overhead and profits are added to develop the budget

Who is the project manager?

Project manager is the key individual on a project Project manager is like a mini-CEO While project manager always has responsibility, may not have necessary authority; usually made up of cross-functional teams, so the PM is not responsible for performance reviews or bonuses Often have minimal PM training "the accidental profession"

Product Line Extension

Projects to expand a product line are evaluated on how well the new product meshes with the existing product line rather than on overall benefits ex. Tim Horton's Latte

What does each letter in the acronym RACI mean?

Responsible ("doers"): Those who do the work to achieve the task. Accountable ("owner"): Those who are ultimately accountable for the correct and thorough completion of the deliverable or task Consulted (two-way communication): Those whose opinions are sought; and with whom there is two-way communication. Informed (one-way communication): Those who are kept up-to-date on progress, one-way communication.

What are some of the risk management subprocesses?

Risk Management Planning Risk Identification Qualitative Risk Analysis Quantitative Risk Analysis Risk Response Planning Risk Monitoring & Control Create and maintain a risk management data bank (valuable for future projects within the organization)

Difference between risk assessment form and FMEA

Risk assessment form rates on a scale of 1-5, rather than 1-10

What are the non-numeric types of project selection?

Sacred Cow Operating Necessity Competitive Necessity Product Line Extension Comparative Benefit

Risk Assessment

Scenario analysis Risk Assessment Matrix Probability analysis--> Decision tree's, NPV, PERT Failure Mode and Effects Analysis (FMEA)

Risk Priority Number (RPN)

Severity*Liklihood*Detection S*L*D High RPN--> consider ways to reduce the severity

Network scheduling advantages?

Shows interdependences Shows when resources are needed Determines expected completion date Identifies critical & non-critical activities

What are the four different types of risks?

Technical (backup plans if technology fails) Schedule (absolute project finish date) Costs (time/cost dependency; costs increase when problems take longer to solve, input costs could increase) Funding (changes in supply)

Solution to each type of risk

Technical--> assessing whether technical uncertainty can be resolved Schedule--> crashing Costs-->Do not adjust schedule to solve cash flow problems (payroll timing) Funding

What is a "network" in scheduling terminology?

The combination of all activities and events that define a project Drawn left-to-right Connections represent predecessors

Payback period definition and formula

The length of time until the original investment has been recouped by the project Payback period=Project cost/ Annual cash flow Shorter payback period is better

What is the risk of focusing on only the critical path?

There could be another non-critical path that has minimal slack and a higher cumulative duration variance-- which could become the critical path!

Why use AOA diagrams?

They clearly identify events (milestones) In AON diagrams, events must be added as "zero duration"/dummy activities to represent milestones

Risk

Uncertain or chance events that planning cannot overcome or control

Risk management process:

Understand the risk events (what can go wrong), prioritize them based on probability and severity, minimize the impact using mitigation plans, and have a plan for if things do go wrong (contingency plan)

Contingency funds

funds to cover project risks--identified and unknown aka. budget reserves or management reserves

Class room vs. real world crashing

in the class we assume the project has unlimited resources such as skilled labour

What is the proportion of critical activities in real world projects?

less than 10%

PMO benefits

reduced number of projects failed by 31% Delivered 30% of projects under budget Saved on average $567,000

Indirect costs

reducing duration will deduce costs (rented facilities, overheads, management salaries) - longer time= more indirect costs