STUDENT: CRISTIAN MARCU - 14033485
PROJECT MANAGEMENT 641 - ASSIGNMENT No. 2
PROJECT CHARTER, SCOPE MANAGEMENT, PROJECT PLANNING
Lecturer’s Name: David Baccarini
1|Page
PART A
Sponsor: Myself
Project Name: New Car
Prepared By: Cristian Marcu Date: 18th of April 2008
PROJECT BACKGROUND
Overview
The “New Car” Project, involves the selection and purchase of a new vehicle for myself (the
client).
The project was initiated following a service of the client’s existing vehicle. The service
uncovered a large number of issues with the old vehicle, requiring extensive repairs with the
cost of repairs totalling in excess of AUD $1900. Given the market value of the old vehicle
and potential for additional expense in the short term, the client has decided not to proceed
with repairs to the vehicle. In addition, the old vehicle no longer meets family and
recreational requirements and the client requires a vehicle that meets current needs – a more
reliable car, improved safety and comfort.
The client has requested that a replacement vehicle be researched, selected and purchased.
This project charter formally acknowledges the existence of the “New Car” Project and
authorises the Project Manager (myself) to allocate resources, within the constraints of the
project, to complete the task. This document also describes the Project Objectives, the
Assumptions and Constraints associated with the project and a WBS (Work Breakdown
Structure) of the tasks required completing the project.
Project Scope Boundaries
The project scope includes the selection and purchase of a new vehicle for the client. It also
includes the sale or disposal of the client’s existing vehicle and the work and resources
required in order to make the old vehicle saleable. Income derived from the sale of the old
vehicle during the life of project shall not be included in the budget of the project.
STRATEGIC ALIGNMENT
This project is strongly aligned with the client’s strategic orientation. In particular, the
2|Page
“New Car” project will contribute to the long term goals of Happiness, Self-esteem and
Financial well-being. The next Section will detail how the project will contribute to these
goals.
BENEFITS INCLUDING KPIs
Project Purpose
Execution of this project has numerous benefits, all of which contribute to the
achievement of the long term goals outlined in next chapter –Deliverables. The sale of the
existing vehicle and replacement with a new and improved model will enable:
a. Decreased on-going vehicle costs.
b. Decreased occurrence of vehicle breakdown and the stress associated with it.
c. Increased safety for the driver and passengers.
d. Improved ease of transport (for the entire family), shopping etc.
e. Improved ability to transport of family.
f. Increased enjoyment of driving.
The project benefits will be achieved through the completion and use of the project
deliverables detailed bellow in the document
Key Performance Indicators – Benefits
Key Performance Indicators (KPIs) have been set as follows:
Project Benefit KPI
Decreased on-going vehicle costs Service costs decreased by 75% over 5 years
Decreased occurrence of vehicle Number of breakdowns decreased to one per 2
breakdown years over next 5 years
Increased safety The number of safety features in the new
vehicle double the number of safety feature in
the old vehicle at the time of purchase
Improved ease of transport Space available for storage and transport
doubled at the time of purchase
Improved ability to transport Frequency of transport given to family
increased by 250% over 5 years
Increased enjoyment of driving Score in the personal driving enjoyment above
threshold 9/10 in the next 5 years
3|Page
DELIVERABLES
Project Deliverables
The deliverables for this project are:
- Repair of the client’s existing vehicle and prepare for selling
- Sale of the client’s existing vehicle
- Selection of a replacement vehicle
- Purchase of a new vehicle
The deliverables must be completed according to the Project Assumptions and Constraints
detailed in the next chapter – Assumptions and Constraints.
Key Performance Indicators – Deliverables
Key Performance Indicators (KPIs) have been set for each of the Project Deliverables as
follows in the next table.
Project Benefit KPI
Repair of existing vehicle Repairs completed within budget of $1900,
within six weeks so that vehicle is fit for sale
Sale of existing vehicle Sale of vehicle within budget of $150, within
eight weeks, for a minimum price of $3000
Selection of replacement vehicle Selection of replacement vehicle within budget
of $250, within eight weeks, in accordance
with the client’s requirements as details in
project Assumptions and Constraints
Purchase of a new vehicle Purchase of replacement vehicle within budget
of
$20,000, within eight weeks, in accordance
with the client’s requirements as details in
project
Assumptions and Constraints.
ASSUMPTIONS AND CONSTRAINTS
Assumptions
The assumptions associated with this project are:
- A vehicle meeting the client’s requirements does exist
- There are sufficient personnel available to complete the project within the
specified timeframe (there is not a human resource constraint)
4|Page
- The Project Manager will complete the project for free
- The replacement vehicle will be in better mechanical and cosmetic condition
that the existing vehicle
- Only new or demo model vehicles will be considered
- Funding from a bank or financial institution is not required for this project
- The income from the sale of old vehicle is not included in the budget of this
project
Constrains
1. Vehicle Specifications
The vehicle must meet the following criteria:
- New or display model
- Not older than 2007
- Air Conditioning
- Small fuel consumption (around 8l/100Km)
- Four doors
- Space for storage for pram and extra equipment associated with children
- Enough space for four adults when the baby’s car seat is fit in
- A minimum of 2 airbags for driver and passenger
The vehicle must be purchased from WA (Western Australia) to avoid additional costs
(interstate transport or associated costs with licensing and inspection if it is from overseas)
2. Vehicle Research and Selection
The most important criteria which should be taken in consideration during the research and
selection phase are listed bellow and they should be ranked accordingly in this order:
1. Safety (at least 4 stars EURONCAP or ANCAP rated)
2. Life expectancy in time (vehicle age against kilometres driven)
3. Comfort (internal for driver and passengers)
4. External condition (only for demo vehicles)
5. Past accidents (only for demo vehicles)
6. Storage space (storage for pram)
Budget
The total budget for this project is $25000. The budget is:
ITEM Budget
Repairs for existing vehicle $1900
Sale of existing vehicle $150
Selection of a new vehicle $250
Purchase of a new vehicle $20000
Project Management Free
5|Page
Insurance for the new vehicle $700
Stamp Duty $800
Vehicle transfer fees $200
Additional extras $1000
TOTAL $25000
Schedule
The total amount of time for this project is 8 weeks. This is only for selling the old
vehicle, choosing and buying a new one and does not include the delivery of vehicle.
The project will start on 3rd of March and finish on 27th of April.
WORK BREAKDOWN STRUCTURE
1.0 Vehicle Research
1.1 Research on safety and security using the Internet resources
1.2 Research on internal storage space
1.3 Research on fuel consumption
1.4 Develop vehicle ranking system
1.5 Conduct car review
1.6 Create list of possible cars (the shortlist)
2.0 Vehicle Selection
2.1 Rate vehicles using vehicle ranking system
2.2 Submit vehicle shortlist for client review and approval
2.3 Arrange for test drive using the shortlist
2.4 Choose the vehicle
3.0 Purchase of Vehicle
3.1 Organise transport from client’s place to the dealer (taxi or public transport)
3.2 Organise vehicle transfer paperwork
3.3 Organise comprehensive motor vehicle insurance
3.4 Organise payment for Stamp Duty
3.5 Arrange transfer of money to dealer
4.0 Preparation of old vehicle for sale
4.1 Create a list with problems for the old vehicle
4.2 Obtain a quote for repairing the old vehicle to make it sale-worthy
6|Page
4.3 Obtain a quote for time and cost
4.4 Arrange with the mechanical workshop a comprehensive mechanical inspection
4.5 Finalise work to be done with client
4.6 Arrange for car repairs to be completed
5.0 Sale of old vehicle
5.1 Advertising
5.1.1 Organise the advertising method (news papers or internet)
5.1.2 Obtain a quotation for both and choose the best for the client
5.1.3 Publish the old vehicle
5.1.4 Organise time for potential buyers to see the vehicle
5.2 Choose the best offer
5.3 Arrange vehicle transfer paperwork
5.4 Cancel existing insurance policy following sale
6.0 Project Management
6.1 Cost Management
6.1.1 Keep the costs within the initial budget
6.1.2 Readjust the budget if a better offer is on the market
6.2 Risk Management
6.2.1 Consider the fact that maybe the old vehicle couldn’t be repaired
6.2.2 Consider the fact that the old vehicle could be damaged before repairing –
due to use it for transportation before selling
6.3 Communication Management
6.3.1 Keep the communication channel open with the chosen dealers
6.3.2 Keep the communication channels open with the bank for money transfer
6.4 Purchasing Management
6.4.1 Review all the known resources
6.4.2 Review the quotations for all the fees involved
WORK BREAKDOWN STRUCTURE DICTIONARY
ITEM Description
WBS Number 1.5
WBS Name Conduct car review
Description of Scope of Work This element includes collecting information on new
7|Page
and demo model vehicles that meet the client’s
specification
Deliverable format The format should be on an A4 format paper list which
will contain the following documents (attached or not):
- Car brochures
- Notes from interviews with car dealers,
colleagues and family members
- Notes from Internet research
- Articles from car magazines
Completion Criteria This phase is considered finished when a list of
maximum 8 vehicles has been generated. Completion
of this phase is required prior to phase 1.6
Stakeholders and Roles Client – sets the vehicle specifications
Wife – sets the budget (can negatively influence the
initial budget)
Car dealers – required to provide technical information
and purchasing methods as well
Friends and colleagues – provide information and
opinion
Activities and Tasks a. Surveys of all the vehicle models available on
the market (Ford, Holden, Honda, Toyota,
Mitsubishi, Mazda ,VW, Renault, Citroen,
Suzuki only)
b. Allocate research time on the Internet
c. Obtain phone numbers and addresses from car
dealers and make phone calls to arrange drive
tests, obtain information and vehicles
inspection
d. Find out what special offers are available on
new vehicles and demo versions as well
e. Find out the approximate prices for all
researched vehicles
f. Purchase the latest car magazines and read
reviews from Internet
g. Check on the Internet about safety and road
reviews
h. Consult with the family and friends and keep
up to date the most important stakeholder – the
wife
i. Arrange a meeting with the stakeholders for the
final step – creating the shortlist
Assumptions and Risks This activity must be taken in consideration at all
times during to the “New Car” project but for this
phase the following aspects are most important:
- General information required for the shortlist
could be false or not entirely true
- The main stakeholder could change the scope
8|Page
of the project (maybe she will want a bigger
car –SUV or AWD)
- A drastic increase in fuel price could change
the selection method (maybe a vehicle with a
fuel consumption under 5l/100Km); this will
decrease the number of available vehicles but
will increase the purchasing costs
- A longer time in fixing the old vehicle will lead
to parking problems if the new one is
purchased before selling the old one (unhappy
neighbours, parking infringements etc.)
Resources required Myself as human resources and Internet connection for
research phase
Budget required The budget for this activity is $250 which should be
reflected in car magazines acquisitions, phone calls
costs, flowers for the main stakeholders if we want to
change the balance in the client’s favour.
Schedule The allocated time for this activity is 3 weeks
SCOPE CHANGE
The hypothetical scope change discussed bellow is the change of the whole project. Instead of
buying a small family car, the stakeholder will force me to purchase an AWD. In this case the
following aspects will be changed:
a. The allocated budget for this project will be increased substantially. The new budget
should be around $35000 only for the vehicle. Also the additional costs will be
increased like Stamp Duty, Car Insurance etc. I estimate around $42000 the total
budget for the “New Car” Project
b. Due to the budget increasing should be taken in consideration a new stakeholder: The
Bank which will cover the difference between the old and new budget using a
Finance Program which will run for the next 3 to 5 years
c. Also including this new stakeholder which also will be a sponsor for this project the
following risks will erect:
i. The chance of not having the loan approved which will terminate the
Scope Change of the project and will force the client to go back to the
initial Scope
ii. The risk associated with additional costs for the whole family for the
next 3 to 5 years; that will increase the risk of not having any proper
holidays in the near future
d. Longer timeframes allocated for research due to the new vehicle type.
9|Page
If the Scope Change is approved, bellow is the new revised WBS including the changes
highlighted in red:
1.0 Vehicle Research
1.1 Research on safety and security using the Internet resources
1.2 Research on internal storage space
1.3 Research on fuel consumption
1.4 Develop vehicle ranking system
1.5 Conduct car review
1.6 Create list of possible cars (the shortlist)
2.0 Vehicle Selection
2.1 Rate vehicles using vehicle ranking system
2.2 Submit vehicle shortlist for client review and approval
2.3 Arrange for test drive using the shortlist
2.4 Choose the vehicle
3.0 Loan Finance
3.1 Research the best bank considering the terms and interest associated with this type of
loan
3.2 Choose the best suitable loan term based on monthly repayments
3.3 Apply for the loan
3.3.1 Go to step number 10.0 if successful
3.3.2 Terminate the project if unsuccessful
4.0 Purchase of Vehicle
4.1 Organise transport from client’s place to the dealer (taxi or public transport)
4.2 Organise vehicle transfer paperwork
4.3 Organise comprehensive motor vehicle insurance
4.4 Organise payment for Stamp Duty
4.5 Arrange transfer of money to dealer
5.0 Preparation of old vehicle for sale
5.1 Create a list with problems for the old vehicle
5.2 Obtain a quote for repairing the old vehicle to make it sale-worthy
5.3 Obtain a quote for time and cost
5.4 Arrange with the mechanical workshop a comprehensive mechanical inspection
5.5 Finalise work to be done with client
10 | P a g e
5.6 Arrange for car repairs to be completed
6.0 Sale of old vehicle
6.1 Advertising
6.1.1 Organise the advertising method (news papers or internet)
6.1.2 Obtain a quotation for both and choose the best for the client
6.1.3 Publish the old vehicle
6.1.4 Organise time for potential buyers to see the vehicle
6.2 Choose the best offer
6.3 Arrange vehicle transfer paperwork
6.4 Cancel existing insurance policy following sale
7.0 Project Management
7.1 Cost Management
7.1.1 Keep the costs within the initial new budget
7.1.2 Readjust the budget if a better offer is on the market
7.1.3 Allocate a budget for learning new skills required for a AWD
7.2 Risk Management
7.2.1 Consider the fact that maybe the old vehicle couldn’t be repaired
7.2.2 Consider the fact that the old vehicle could be damaged before repairing –
due to use it for transportation before selling
7.3 Communication Management
7.3.1 Keep the communication channel open with the chosen dealers
7.3.2 Keep the communication channels open with the bank for money transfer
7.4 Purchasing Management
7.4.1 Review all the known resources
7.4.2 Review the quotations for all the fees involved
7.5 Resource Management
7.5.1 Make the arrangements for learning new skills required for a AWD
7.5.2 Allocate time for the learning lessons
As can be seen the Scope Change makes some changes within the initial WBS. A new phase
is required which is phase number 3 – Loan Finance. This will increase the overall timeframe
allocated for this project and will bring more spending within the next 5 years or 3 years for a
shorter term. Also the 1.2 step is not required anymore due to the big size of all AWD without
exception. The “1.3 Research on fuel consumption” phase will be slightly modified
considering the new values on fuel consumption associated with this type of vehicle. So the
best approach will be to choose the “best from the worst”. On phase 7 must be allocated a new
budget after the vehicle purchase for learning new skills required to drive an AWD and new
timeframes for learning those skills. Maybe a small project will be required in the future
called “AWD Driving Skills” with its own budget, time and scope.
11 | P a g e
PART B
CASE STUDY: Goal Definition and Performance Indicators in Soft Projects
1. What is “Strategic Alignment”?
Considering the “New Car” project the Strategic Alignment is quite vague regarding the related
aspects with this subject. For my project the Strategic Alignment will be the increased happiness
for me and my family, raising the self-esteem aspect for myself and also reducing the ongoing
costs for repairing will increase the financial well-being.
2. What are the benefits and suggest one suitable KPI for the benefits
The whole project was mainly based on the benefits which will erect from when the project will
be finished. The main benefit (which was the trigger to start such a project in the first place) was
the reduction of ongoing costs for the next 5 years. The large number of required services to fix
small and medium problems, the uncertainty of how much time will flow until one major
technical problem will occur made the old vehicle the perfect candidate for this project. As I
said early in the present document execution of this project have numerous benefits:
a. Decreased on-going vehicle costs.
b. Decreased occurrence of vehicle breakdown and the stress associated with it.
c. Increased safety for the driver and passengers.
d. Improved ease of transport (for the entire family), shopping etc.
e. Improved ability to transport of family.
f. Increased enjoyment of driving.
So the “Benefit” is the improvement which a project deliverable will bring when the project is
terminated. The benefit could be measured and quantified for a certain amount of time in the
future. In my case the acquisition of a new vehicle will decrease my ongoing costs with 75% in
the next 5 years (the period corresponds with the warranty period).
Of course the 75% mark could be a lucky guess around to a suggested amount based on previous
repairing costs, so the real mark could be 85% or even 95% cost reductions associated with
vehicle repairs. In the same time this amount could be smaller; maybe will be 65% or less if my
vehicle technical research wasn’t precise enough or the reviews about vehicle reliability in time
were not entirely accurate. That means that I will spend some money on small technical
problems which are not covered by the warranty.
3. Describe two project planning problems encountered in this project, and how each
may have been avoided or better managed
One of the planning problems was to synchronize the pickup day for the new car with arranging
payment for the vehicle. In the first place all the assumptions are made based on what the contact
persons will tell when you communicate with them but obviously everything can go wrong. And
this is what actually happened. With just a few hours before the meeting with the car dealer for
finalizing the purchasing papers he contacted me and called off the meeting because they
12 | P a g e
discovered a small technical issue during the technical inspection with my car (was an ex demo
vehicle). I didn’t know how bad the problem was so I had to call the bank and cancel the
payment and then cancel my day off from work and call a friend of mine who said that will
transport me to the car dealer as well and let him now that the delivery day has been postponed.
A better approach to avoid this kind of problems would have been to ask the car dealer to make
the technical inspection before all the arrangements would have been made and be sure that
everything is in good condition.
Another issue was the budget allocated for this project. The budget for purchasing the vehicle
was known and locked but I didn’t manage properly the budget allocated for all the other phases
of the project. For example initially the budget for Stamp Duty, Car Insurance wasn’t realistic
enough to cover the real expenses hopping that I will find one of those special offers where
everything will be included. Starting with this thought I missed the point when I choose the
vehicle and I’ve realised lately that I have to pay an extra $1200 to cover the Transfer Papers
Fees, Insurance and Stamp Duty. Of course a better research on the market regarding the fees
and taxes when it comes about buying new vehicles would have eliminated this problem. Maybe
if I would have allocated more money from beginning (like +10%) as unexpected or unplanned
expenses would have been much better in the end. I’m not sure if it’s a practice to allocate
budgets for unknown expenses but I suppose that could be a very good practice in order to avoid
unnecessarily budget rectifications.
4. Describe two examples of good project planning in the project
The first good project plan was the research phase. Due to the huge amount of information
available on the Internet together with the initial requirements for the vehicle, it was very easy to
build a short-list with all the desired vehicles after the research was completed.
Being driven by the defined constraints regarding the technical specifications early in the project
and put those specifications against the technical details grabbed from the official websites of the
builders (Ford, Toyota, Honda etc.) I’ve created an Excel spreadsheet with all the details
highlighting the desired specifications. Following those graphical highlights it is really easy to
come up with the desired list and choose the favourites vehicle.
The second one was the selling phase of the old vehicle. After just few hours of Internet
researching which websites are more appropriate to use for selling an old vehicle I come up with
two from where I choose only one. The process went smoothly and without any issues. The
payment was made online avoiding travelling, and 2 weeks latter I had to choose between two
offers. The whole process didn’t require any additional costs or time allocated to check in which
phase the selling process is. The only allocated time was for potential buyers to come and see the
vehicle but this was easy to cover within the project.
13 | P a g e
