Project Management

LU3) Project life cycle

projects are generally subdivided into phases to provide better management.

4 Phases

Phase 1: Concept and initiation Phase

Establishing a need or opportunityLook at feasibilitywhen a proposal is accepted, move onto next phase

Phase 2: Design and Development Phase

use guidelines of the feasibility study to design the project.Outline Build methodDevelop plans for implimentation

Phase 3: Implementation or Construction Phase

Implement the plan as set out in the baseline plan.

Phase 4: Commissioning and Handover Phase

Confirms the project has been implemented.Built to the design specifications.Concludes the project.

Front End Design and Development

Explanation: in the 1960's & 1970's project management focused on implementation phase because it used the largest amount of effort and expenses.

1980's they realised that they should focus on the earlier stages of the cycle. The Design and Development Phase.

This phase is where the greatest potential to add value is.

The stakeholders potential to add value through the design reduces as the project progresses.

The cost of making changes or the design needing to be changed due to errors becomes more expensive as the project progresses through the phases.

Financial encouragement is to spend much more time and effort in teh initial phases to get the design right before implementation.

Project manager must be appointed early to ensure project is most effective.

project costs can be reduced, improved flexibility can be promoted and improved performance is highest in the early phases.

Product lifecycle phases

7 Phases

1) Pre-Project Phase

new ideas, innovation,creativitymarket research identifies market changesresponding to a new competitor productexpanding facilities to meet increased demand.

2) Project Lifecycle Phase

1)concept and initiation phase2)Design and Development phase3)Construction or Implementation phase4)Commissioning and Handover phase

3) Operation Phase

This is the entire purpose of the project.outside of the project managers sphere of influence.Project manager only interacts with the operations manager with regards to:1) Handover2) Maintenance3) Upgrade and expansion4)Disposal

4) Maintenance Phase

This phase is to keep the facility functioning.minimum impact of maintenace on production must be considered in the design phase of the project.

5) Up-grade, Expansion Phase

facility requires an upgrade or expansion to keep it running efficiently and effectively.factors which effect this phase as:* new technology*competition*market requirements*rules and regulations it should be managed as a mini project.There needs to be tight timelines to cause minimal disruptions.

6) Decommission and Disposal

Final phase of product lifecycle.disposing of facilities should have been considered in the design phase to have minimal impact on the environment.

Contract Types

5 Types

BOT

Built , Operate and Transfer

BOOT

Build, Own, Operate and Transfer

ROT

Refurbish, Operate and Transfer

PPP

Private, Public Partnerships

PFI

Private Finance Initiative

What management skill is most used by the project manager?

answer: COMMUNICATION

What is a Project deliverable?

answer: The end result of a project planning session

The early stages of the project can best be described as:

answer: Low costs and low demand for resources.

LU5) Project selection (basic summary)

What are the 2 classes selection models come in?

numeric

non numeric

what is the simplest method of project screening and selection?

making a checklist

what does a scoring criteria assign to the criteria used to evaluate a project?

weights

what principal are all financial models predicted on?

Time value of money principal

What is the internal rate of return?

a method of evaluating the expected outlays and income associated with new project investment opportunity.

What are the advantages and disadvantages of IRR?

Advantages:

has the ability to compare alternative projects from the perspective of expected return on investment.

Disadvantages:

conflicting solutions if cashflows are not normal.

only uses one rate throughout the project

What is the Time value of money principal?

it suggests that money earned today is worth more than money expected in the future.

money is expected to be worth less in the future due to 2 things:

1) the impact of inflation

2) the inability to invest the money

LU4) Feasibility Study

How does a feasibility study begin?

* ideas, needs and problems become projects* Project feasibility study assesses the viability of the project.*Formalise the project with the PROJECT CHARTER. This outlines the purpose of the project and what it is meant to achieve.

How do we formalise a feasibility study?

we add requirements, boundaries and expected outcomes!1)who is responsible?2)project brief to be analysed3)who should be involved?4)Level of detail5)Budget for the feasibility study6)Report back date.once the feasibility study is done the senior management decides whether or not to go ahead with the project.

Who is involved in the feasibility study?

*senior management appoints a project manager for the feasibiliy study.*Project manager selects the feasibility study team.*Operators have an input in the design of the project.*There needs to be enough time to release members from their normal duties as well as do the feasibility study.

1) Identifying a project stakeholder

many types of stakeholders that should be identified when going into a project. Stakeholders are important to the project!

originator

the person who suggested the project

owner

the person who's strategic plan created the need for the project

sponsor

the person/company who authorises the expenditure on the project.

users

the people who will operate the facility when the project is completed.

customers

receive and pay for the benefit of the facility.

project team

the team members who plan, organise, implement and control the work of sub-contractors to deliver the facility within the constraints of time, cost and quality.

senior management

functional managers

who will be supplying the workforce for the project

colleagues

sub-contractors

the external companies or people offering specialist expertise to supplement the company's workforce.

suppliers and vendors

external companies or people who supply materials and equipment.

legal

rules and regulations both national and international that must be complied with.

External stakeholders

regulatory authorities

trade unions

special interest groups

government agencies

media outlets

Stakeholder Analysis includes:

stakeholder characteristics

ability to affect the project policies through power and leadership

level of interest of the stakeholder in the specific project

2) Identification of the Clients needs

the starting point of a project is usually to address a problem, need or business opportunity.

A design philosophy should be made stating all decisions that are made regarding the clients needs. Certain objectives can not be achieved with other objectives and therefore a tradeoff needs to take place. All of these decisions should be clearly stated. This part of the process defines the scope of the project.

Project viability check

1) impact location has on project

2) how the environment will impact the product

3) how the product will impact the environment

4) optimum size of the end product

5) is the style that of current fashion?

6) define the target market

7) assess the market supply and demand curve

8) assess competition from other players in the market

Project requirements can be gathered through BRAINSTORMING, FOCUS GROUPS AND FACILITATED WORKSHOPS.

3) Evaluate Constraints

3 Types

Internal Project constraints

relates directly to the scope of the project and asks basic questions about the product.

can the product be made?

does the company have the technology?

wait or start the project?

can the employees be trained to the level of ability or should contractors be employed?

special design requests

special equiptment or machines required?

special transport requirements

can the project be completed within budget?

can the company accept time penalties?

Internal Corporate Constraints

the company itself can impose further constraints on the project through their corporate strategy. These usually relate to long term issues.

Financial objectives:

marketing

Estimating

partner

industrial relations

training

exports

External Constraints

imposed by parties outside the company and the project's sphere of influence.

laws and regulations

component lead times

unavailable resources

logistic constraints

currency fluctuations

environmental issues

climatic conditions

political unrest

licenses, permits, etc

4) Value Management

Points to be considered when carrying out VALUE ANALYSIS

1) IDENTIFY UNNECESSARY EXPENDITURE

2) GENERATE ALTERNATIVE IDEAS

3) PROMOTE INNOVATION

4) SIMPLIFY METHODS AND PROCEDURES

5) SAVE TIME, MONEY AND ENERGY

6) OPTIMIZE RESOURCES

5) Cost-Benefit Analysis

Performed to establish the financial feasibility of a project.

Based on 3 Economic principles:

Pareto Improvement Criteria

"The project should make some people better off without making anyone worse off."

example: very difficult to achieve in reality

Hicks-Kaldor test

"The aggregate gains should exceed aggregate losses."

Example: a Dam project may have many benefits to the community but it might cause silting up of the river.

Willingness-to-pay test

"simply to determine how much your clients are prepared to pay for your product."

example: airlines manage to charge a range of air fares for the same seat.