Project Management_Theory

Project Life Cycle: Initiation Phase (Inception)

Planning Phase (Elaboration)
Implementation Phase (Execution / Construction)
Closing Phase (Transition)

‘S’ Curve:

 ‘S’ curve is graphical representation of “Cumulative project cost” ( y-axis) against ‘Time
schedule’ (x-axis)
 This plot takes shape of English alphabet ‘S’, so it is known as ‘S’ curve
 It is plotted over the phases of project life cycle.
 Shape is always travelling in upward direction, as cost is cumulative.
 Application in project management to asses / estimate: time, baseline, cost, time etc.
 Types: Cumulative Project Cost V/s Time, Cumulative Men Hours V/s Time

Responsibilities of Project Manager:

 Planning and Defining Scope

 Activity Planning and Sequencing
 Resource Planning
 Developing Schedules
 Time Estimating
 Cost Estimating
 Developing a Budget

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 Documentation
 Preparing Charts and Schedules
 Risk Analysis
 Managing Risks
 Monitoring and Reporting Progress
 Leading the team
 Business Partnering
 Coordinating with Vendors
 Controlling Quality

GANTT Charts:

Activity Jan-22 Feb-22 Mar-22 Apr-22 May-22

A
B
C
D
E

 Pioneer – Henry L Gantt

 Widely used to represent activities of a project over a period of time in a graphical way
 GANTT Charts allows you to see at a glance:
 What are the various activities of a project
 Beginning & End of each activity
 Duration of an activity
 Overlapping of activities and their duration of overlapping
 Start and finish point / dates of entire project

Contents of a Project Report (Detailed Project Report)

 General information about the project
 Project promoters & their previous experience
 Details of the projects which should comprise:
 Product Information
 Raw material details
 Plant capacity
 Manufacturing technology
 Management team and consultant
 Details of land, environmental clearances, buildings, plant etc
 Details of utilities like – water, power etc
 Details of infrastructure – like roads, connectivity etc

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 Effluent treatment arrangements

 Project implementation schedule
 Project financials & calculations of returns, profitability, estimated cash flows etc
 Means of financing
 Working capital requirement & its arrangement
 Commercial details relating to marketing, distribution etc
 Mode and terms of loan repayment
 Government approvals
 Details of securities that can be offered to the financial institutions

Techno-Economic Feasibility of a project:

 Feasibility analysis of technical and its economic aspects of a project

 Required material and utilities
 Manufacturing process & technology
 Product Mix
 Plant capacity
 Location & development of site
 Machines and equipment
 Structures and civil work
 Project charts and layouts

Cost Performance Index (CPI):

 CPI = (BCWP) / (ACWP)

 BCWP: Budgeted cost of work performed , ACWP: Actual cost of work performed
 The cost variance only tell us whether the project is consuming more or less resources
than the budgeted value
 The effect of these variances on the final project cost is not known
 At times, we are interested to know what effect would there be in the project cost due
to the variances
 CPI helps us in getting answers to this question
 Estimated project completion cost = (Budgeted project cost) / (CPI)
 Additional cost of completion, ACC = (Estimated project completion cost) – (Budgeted
Project cost)

Schedule Performance Index (SPI):

 SPI = (BCWP) / (BCWS)

 BCWP: Budgeted cost of work performed, BCWS: Budgeted cost of work scheduled
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 The schedule variance only tell us the project is behind or ahead of schedule when
compared with the required schedule in cost terms
 The effect of these variances on the final project duration is not known
 At times, we are interested to know what effect would there be in the project duration
due to the variances
 SPI helps us in getting answers to this question
 Estimated project duration = (Budgeted project duration) / (SPI)

Sources of conflict:

 Conflicts are a way of life in a project structure and can generally occur at any level
in the project organization
 The project manager has often been described as a ‘Conflict Manager’
 Most common types of conflicts involve:
 Manpower resources
 Equipment and facilities
 Capital expenditure
 Costs
 Technical opinions and trade-off priorities
 Administrative procedures
 Scheduling
 Responsibilities
 Personality clashes

Debt Service Coverage Ratio (DSCR)

 Ability to service debt from project cash inflows is an important criteria for deciding the
project viability
 The ratio which indicates this viability is known DSCR
 DSCR is the primary measure to determine if the project will be able to sustain its debt
based on cash flow
 DSCR greater than 1 indicates that a project / an organization generates sufficient cash
flows to pay its debt obligations
 DSCR less than 1 indicates that there is not enough cash flow to cover loan repayments
 DSCR = (NPAT + Depreciation + Interest) / (Principal repayment + Interest)

Smoothing Constant

 A smoothing constant is a variable used in time series analysis based on exponential

smoothing
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 This constant determines how the historical time series values are weighted
 The higher the smoothing constant, the greater weight assigned to the values from the latest
period and as a consequence, the greater possibility for quick reaction to systematic
changes in the time series
 The smoothing constant must have a value between 0 and 1
 When using forecast methods where the base forecast is calculated using exponential
smoothing method, a new smoothing constant is automatically calculated for each period
 Entities like sales, demand etc. can be forecasted using smoothing constant in exponential
smoothing method by following formula –

F t+1 = α At + (1 - α) Ft

Where, α is smoothing constant

At is actual observed values
Ft is forecasted values

Difference between ‘Moving Average’ & ‘Weighted Moving Average’ method

 Moving average or weighted average are the methods use in forecasting using past trend
 Simple moving average method gives equal weighs to past performance values
 Whereas weighted moving average method gives more weight to immediate past
performance, then reduces the weightage for subsequent past observations
 For example: 3 years moving average method gives equal weightage i.e. 0.33 or 33.33%
to all past 3 observations. Whereas, weighted moving average gives, say 0.5 or 50% weight
to t-1 period, 0.3 or 30% to t-2 and 0.2 or 20% weightage to t-2 period
 This gives more realistic forecast based on past performance
 So forecasting using weighted moving average is more realistic as compared to simple
moving average method

Responsibilities of Project Manager

Planning and Defining Scope

Activity Planning and Sequencing
Resource Planning
Developing Schedules
Time Estimating
Cost Estimating
Developing a Budget
Documentation
Preparing Charts and Schedules
Risk Analysis
Managing Risks
Monitoring and Reporting Progress
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Leading the team

Business Partnering
Coordinating with Vendors
Controlling Quality

How uncertainties are handled in PERT?

Uncertainty can be incorporated in PERT network by assuming that the activity time has a beta
distribution. This enables us to calculate the expected activity time and its standard deviation.
For this purpose, we have the following three different estimates for the completion time of an
activity:

Pessimistic time (tp)

Optimistic time (to)
Mean or Most likely time (tm)
These 3 times can be equated to „Equivalent Time‟ (Teq)
Standard deviation can be calculated for each activity

WBS (Work Break-down Structure)

The WBS is a method for getting a complex, multi-step project done.

It's a way to divide and conquer large projects so you can get things done faster and
more efficiently.
Work breakdown structure (or WBS) is a hierarchical tree structure that outlines your
project and breaks it down into smaller, more manageable portions.
WBS cab be created and further be divided into individual tasks and into subtasks.
The goal of a WBS is to make a large project more manageable.
Breaking it down into smaller chunks means work can be done simultaneously by
different team members, leading to better team productivity and easier project management
overall

.Project Crashing

Project Crashing is a schedule compression technique used to reduce or shorten the

project schedule.
There are various measures to accomplish this goal.
Adding additional resources to the critical path activities: This option has various
constraints such as the securing of the budget to add the resources, and the availability of
the resources.
After applying the crashing, the critical path might have changed and result in creating
a different critical path.
Procedure of Crashing:
Mark critical path and critical activities

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Find out cost slope and assigned ranks based on cost slope
Start reducing duration of critical activities having lowest rank
Direct cost will increase and indirect cost will decrease
Simultaneously mark if any other path is becoming critical while crashing
Find out minimum possible total cost of the project
Time associated with this minimum total cost will be minimum possible duration of the
project

Essential requirements of Project Management Software

Real time reporting

Portfolio-wide visibility
Collaboration tools
Documents management tools
Mobile connectivity
Flexibility

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