A Comprehensive Guide to Project Management Schedule and Cost Control
Methods and Models for Managing the Project Lifecycle
By
Randal Wilson
Instructor’s Manual
March 1, 2014
Pearson Education
Part 1 – Project Development
Chapter 1
Basic Project Structure
Introduction
Whenever specific concepts of project management are being taught, including scheduling, budgeting, and control of projects, students must first understand some of the basic fundamentals of project management to better understand how these concepts will be applied. In this chapter we will cover basic project structures such as projects, programs, and portfolios as well as how these structures are managed. We will also explore the basic concept of a project lifecycle.
The first section we explore is why organizations would use something like a project, program, or portfolio and how these project management structures benefit the organization. We start off by exploring two fundamental concepts of general business structure within most organizations: areas of the organization that are producing products or services that will yield financial revenue for the organization, and those departments and functions that are supporting the activities that are producing products or services. It’s important students understand the concepts of both producing and supporting activities as this can play an important role in a project for scheduling, budgeting, and controlling project activities.
The second section explores three primary project management structures (projects, programs, and portfolios) used in many organizations, why they are used, and some of the benefits of these structures of project management and how they can benefit an organization. This is an important section as the student will learn each of these structures will serve different functions, and there can be different approaches in how to schedule, cost, and budget, as well as control projects and project-related activities at each level.
The next area in this chapter focuses more on the managerial side of projects, programs, and portfolios. The two main components of this section deal with defining the management style and approach for each structure. This is another area of vital concern for teaching individuals about project management and the details of scheduling, costing, and controlling projects as some components will be similar across these structures and other components will be quite different. The second area of this section will explore the connection to the organizational needs of projects, programs, and portfolios. Students of project management need to understand that not all organizations use these project management structures, and some may not understand what they are and what benefits they would bring to the organization. In some cases this might give the student an opportunity to introduce a project management structure to help their organization, while in other cases this can help the student understand certain constraints to using project management within an organization based on upper management bias.
The last section of this chapter discusses the concept of the project lifecycle and the four primary sections within a project. It will be important for the student to understand each of these four components of the lifecycle as they will learn various responsibilities and activities for the project manager to oversee in developing and controlling the schedule and budget. It will also be important for the student to understand that each section of the project lifecycle may have a different managerial approach and involvement of management based on the project management structure (projects, programs, and portfolios).
As there are other textbooks that go into the basic project structures in much greater detail, I included this chapter simply as a foundation touch point to ensure students understand some of the basic concepts of project management structures and project lifecycle as they are important in understanding project schedule, cost, and control later in the book. Most of this book will focus on projects, but I will touch on programs and portfolios occasionally throughout the book for the sole purpose of clarifying a difference in approach or management style to scheduling, costing, and controlling.
Learning Objectives
Lecture Outline
Projects, Programs, and Portfolios
Producing versus Supporting
Project Management Structures
Projects, programs, portfolios
Project, Program, and Portfolio Management
Connection to Organizational Needs
Project management
Program management
Portfolio management
Project Lifecycle
Conceptual, planning, execution, closure
Topics for Classroom Discussion
Projects, Programs, and Portfolios
Project, Program and Portfolio Management
Project Lifecycle
End of Chapter Questions
“An example of a support center would be the accounting department or human resources department within the organization. These types of departments do not necessarily perform work that creates a profit for the company, but perform activities that support several areas within the organization. These duties will typically be seen as day-to-day functions carried out repetitively or on an ongoing basis. Organizations may have several support functions or areas such as warehousing, shipping and receiving, quality control, manufacturing, engineering, and administrative and executive staff.”
“Profit centers are those areas of the organization that produce an output such as a product or a service that will have an associated cost and will be sold at a higher value that creates a profit for the organization. Some organizations produce the same product or service over and over and there is little or no unique aspect to that product or service. Other organizations might produce a product or service that is more customized and unique and may only be produced in that form one time for a customer.”
This answer may vary depending on how the student interprets needs and their past experience with smaller versus larger organizations. The primary answer for this question is the separation of a unique deliverable constituting the use of a project versus the daily production of goods or services conducted by an organization. The secondary answer for this question would be the organization’s need for structuring of projects within programs, and projects and programs within a portfolio, for better clarity and organization. The sole purpose and use for projects, programs, and portfolios is to organize work activities to complete project, program, or a portfolio objective.
This should be a very basic and clear answer reflecting a hierarchy type structure within an organization that would have projects at the lowest level reporting within programs, and projects and programs reporting up to a portfolio. Although this answer would seem very straightforward and clear, variations of this answer might include whether portfolios have only programs or a combination of projects, programs, and individual work activities, which by definition is still correct for a portfolio. (This answer may reflect a student’s past experience at an organization.) Portfolios can also have a combination of related and non-related programs and projects. This answer should always reflect programs having a combination of related projects whereas portfolios can have either related or non-related projects, programs, and work activities.
This basic answer should reflect the four primary components outlined in the text: conceptual, planning, execution, and closure. It would be good to design this question to encourage the students to actually explain or discuss each of these areas in their answer. It might also be good for students to contrast the differences between each of these four components of the life cycle to test their conceptual understanding of each of these lifecycle components.
In general, the conceptual phase is the initial introduction of intent for a unique product or service required by a customer and the organization signing off the approval for the delivery of a product or service.
The planning phase is the actual planning of work activities, which includes identifying all activities and gathering information of schedule and cost requirements, as well as planning for control and risk.
The execution phase is where all the work actually takes place, and the management of the schedule and budget will require monitoring and controls to be implemented.
Closure is when all work activities have been completed and the customer has accepted final delivery of the product or service. This is also when all procurements and contracts have been completed and all financial obligations are closed.
Part 1—Project Development
Chapter 2
Initiating Process
Introduction
As the very definition of a project indicates, there is always a start and a finish of a project; the early stages of project selection and development are critical. This chapter will focus on the processes required in the opening stages of project development, sometimes referred to as the Initiating Process. Depending on the type of organization, there may be several types of processes that organizations use in the selection and development of projects, but this chapter will focus on four fundamental processes: project origination, stakeholders, project selection, and the project charter.
Oftentimes students of project management study the specific processes within the project itself, but may not always understand how projects actually begin or where they originate from within an organization. It is important to cover how projects originate, as the students should understand the project manager may or may not always be a part of this process. The other part of project origination is the organizational need for projects. As projects are a unique endeavor to accomplish an objective, it will be highly dependent on the type of organization as to the use of projects. Projects can be used for simple internal improvement exercises, development of documentation, or things such as moving a facility or opening a new location. These would be considered internal projects or improvements. The other primary use of projects would be to manage the completion of an objective required by a customer; this is called an external project. The end result is the realization that a project will be required based on an organizational need.
The second part of this initiating process has to do with several areas regarding stakeholders that will be involved in the project. It will also be important that students understand who stakeholders are and what their roles might be with regards to project development, selection, participation, and authority. The text will go into several areas regarding stakeholders, such as identifying stakeholders, managing stakeholders, and managing stakeholder participation, specifically to project work responsibilities. Another important area students should understand with regards to stakeholders is how to manage stakeholder expectations and how this can play in not only the success of the project, but in the success of the project manager within the organization.
The third section will cover project selection and how the organization develops the process for selecting projects. Depending on the type and structure of an organization, project selection can be a very critical and vital process that can mean the success or failure of an organization. The text will go into several areas of project selection such as the constraints within the organization and within project management that can influence project selection. Other areas, such as organizational strategy and the selection of projects within programs and large portfolios, will also be covered. This chapter will also include selection models and methodologies to assist in the selection process. It is important students understand how the selection models work and the importance of using a selection model as a process for project selection so individuals within the organization are not selecting projects emotionally, politically, or based on a personal agenda.
The fourth component of the initiating process is the actual output of this process in the development of the project charter. The text will explain the purpose of the charter and how the charter is structured and used by the organization in the creation of projects. It is also important the students understand that not only is the charter an artifact or literal document that can be filled out with information, but that it should be used as a process. This can best be explained by labeling the initiation process as the charter process. I tell my students that this is a good way to view what a charter is used for, as some organizations do not have an actual document that is filled out, but simply go through the elements included in a charter and therefore complete what’s called a charter process. Other organizations that have a more structured project management culture or a project management office might have a literal document that is filled out and is used as an artifact in the initiating process.
The initiating process can vary greatly depending on the type of organization and how the organization is structured, so it is important the students understand that this initiating process, or as I call it, the charter process, should be carried out at the onset of every project regardless of what type of organization there is. The logistics and literal components of the charter or initiating process might vary depending on the type of organization, but irregardless, this initiating process should be carried out on every project.
Learning Objectives
Lecture Outline
Project Origination
Internal Projects and Improvements
External RFP’s and RFQ’s
Project Stakeholders
Project Stakeholder Management
Identify
Manage stakeholder
Manage stakeholder participation
Expectations
Project Selection
Organizational Constraints
In-house technology
Human resources
Management
Facilities and equipment
Financial resources
Functional, matrix, and projectized
Project Management Constraints
Project management maturity of the organization
Number of projects in cue
Project Selection in Organizational Strategy
Project comparison to other projects
Process or product improvements for the organization
Qualitative selection
Quantitative selection
Portfolios and Programs
Customer based
Product based
Organizational division
Independent Projects
Selection Models and Methodologies
Qualitative Screening and Scoring Models
Scoring model
Bubble diagram
Quantitative and Financial Models
Time value of money
Payback period
Net present value (NPV)
Return on investment (ROI)
Project Charter
Purpose of the charter
Structure of the charter
Process or artifact
Topics for Classroom Discussion
Project Origination
1. Internal Projects, RFP’s, and RFQ’s—Projects can be used for internal use and process improvement as these are typically seen as one-time unique activities. Projects can also be used to manage customer requests for specialized items. Have the class brainstorm other ideas for how projects can originate and can be used.
Project Stakeholders
Project Selection
Project Charter
End of Chapter Questions
Projects originate from two primary business areas: the internal need to add, change, or improve something or an external customer requirement. Projects will also be a one-time unique objective.
This answer may vary slightly in interpretation based on the student’s background and experience, but the general idea here is that stakeholders will have a “stake” in the project to some degree and stakeholders will manage that responsibility differently, so the project manager will need to understand the stakeholders’ needs and requirements of information relative to project details.
If students understand the concept of scope, they will probably answer this question in two or maybe three parts: the first is defining scope in project management as the boundaries or limits of what is required, the second is product scope defined as the specifics of the deliverable itself, and the third is the project scope which defines specifics of how the project will accomplish the objective. It is important students are clear about the difference between product and project scope!
This could be a rather complex and lengthy answer, but the result should be addressing at least three, if not all six, areas the text refers to in organizational constraints. As there may be other periphery problems in the selection process, the text calls out the primary influences seen in most organizations. The goal here is to see if the student understands the impact these influences can have on the selection process and the stress it can cause on the project manager.
This answer may vary depending on the experience each student might have in project selection, but the general reasoning is a qualitative methodology will be more subjective in nature and less accurate. It is used in situations where real definitive data might not be available and a higher level general classification might be all that can label an assessment.
The student should display an understanding of the charter as more of a process of starting a project. The Project Management Institute definition used in the text can be applied here:
The Project Management Institute defines a project charter as “a document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.”
Part 1—Project Development
Chapter 3
Planning Process
Introduction
The next phase in the development and management of a project is the planning phase. Once the project has been officially approved, most projects will either already have assigned a project manager or the project manager will be assigned. One of the first primary functions of the project manager is to create the project plan. This chapter goes into two types of plans that the project manager will create: the project management plan and the project plan, sometimes referred to as the project structure or project master schedule.
It’s important for students to understand the difference between a project management plan and the project plan. The text goes into all of the areas the project manager will need to manage such as scope, schedule, cost, and quality, as well as project development. The project plan will be developed after the collection of requirements and scope has been defined.
The second section of this chapter covers the collection of requirements, which is an extremely important area of project development. Students should understand the importance of collecting information for project activities and the impact that accuracy and completeness can have on the success of the project. The text will also cover resources the project manager can use to gather information and hints on how to select those that would be helpful in the information gathering process.
The third section of this chapter will explore defining the scope of the project. It is important here that the students understand the difference between project scope and product scope. This area will also cover who defines the scope and hints on how to develop a project scope statement.
The final section of this chapter deals with the creation of the project plan itself and the organization of information that was gathered for work activities. As most textbooks on project management address the organization of project activity information in work breakdown structures assuming it is already at the smallest levels (work packages), I have spent time in this chapter explaining the details of how to break down the deliverable, as some people are unclear as to how that process actually is carried out. I teach my students a tool called an Activity Decomposition Decision Tree which simply takes an output deliverable and asks if it can be broken down; if yes, how many pieces can it be broken into, and if no, that will be a final work package. This process continues until all pieces cannot be broken down any further. This has proven to be a useful tool where students can easily understand the process of breaking down the deliverable into its smallest components. Many have also taken it into the workplace as a literal tool to help them accomplish this task. It is vital students understand the importance in seeing all the smallest segments of work packages as this gives them the most detail to properly define resources, costs, durations, and deliverable requirements. Once activities have been broken into their smallest component they can then be taught how to organize them in a tool such as a work breakdown structure.
Learning Objectives
Lecture Outline
Develop Project Management Plan
Project Management Plan versus Project Plan
Project management plan
Project plan
Project Management Plan Structure
Scope management
Schedule management
Cost management
Quality management
Human resource management
Communications management
Risk management
Procurement management
Stakeholder management
How to Use a Project Management Plan
Collect Requirements
Definition of Requirements
Requirements internal and external to the organization
Stakeholder requirements
Deliverable requirements
Project requirements
Resources for Requirements
Project charter
Customer specifications
Statement of Work (SOW)
Stakeholder register
Stakeholder management plan
Subject Matter Expert (SME)
Historical data
Requirements Management Plan
Define Scope
Product or Project Scope
Product scope
Project scope
Who Defines Scope
Project Scope Statement
Scope Management
Work Breakdown Structure (WBS)
Activity Decomposition Decision Tree
Create the work breakdown structure
Topics for Classroom Discussion
Develop Project Management Plan
Collect Requirements
Define Scope
Work Breakdown Structure (WBS)
End of Chapter Questions
As this question is fairly broad, the answer should point to the understanding of what the project management plan is and how it is applied. The answer should show the plan is used to “manage” all of the processes used in the plan and how that management plan might be carried out.
This answer should be well defined as there is a very clear difference between product and project scope. The text goes into great detail on this topic, but the first area of understanding is in knowing what scope actually is. The second part is how it is applied to the product and to a project.
Expect a variety of answers depending on the student’s background and basic understanding of scope. This answer should include the responsibility of the project manager to understand and manage the “boundaries” of what the project activities are to accomplish, no less and no more.
This should be a very clear answer as the Activity Decomposition Decision Tree is a tool for breaking down a single deliverable into its smallest components. This is done for two primary reasons: to understand all the details and requirements with each activity and to be able to arrange the activities in sequence using a work breakdown structure.
Project managers need to understand all the details and requirements of each specific activity (work package) to estimate costs and schedule work and procurements, as well as assign appropriate resources to carry out the requirements of the activity.
Part 2—Project Schedule Analysis
Chapter 4
Activity Definition
Introduction
Now that the student understands the project manager will be creating a project plan, and the main deliverable will need to be broken down into its smallest components (work packages), it is time to look at what we do with all of the smallest components in order to understand how to develop our project plan. The first area is defining the activities.
After the deliverable has been successfully broken down into it smallest components, information will need to be gathered on each individual work activity to effectively accomplish the requirements of each activity. It is important the students understand the effect this information can have on not only the activity itself, but the overall project. It will be critical that those selected to gather information are chosen wisely and they are qualified to gather information correctly, completely, and accurately.
Once the project manager has gathered the information required for each activity, they can now begin the process of organizing that information. This can be done at an activity level as well as a project level. Inside of each activity there may be more than one single task that has to be completed. The arrangement of all work within a work activity is called the activity level organization. Project level organization is arranging the work activities and overall flow of project work that will accomplish the overall project objective.
The next area in this chapter will briefly look at the assignment of responsibilities of those involved in project activities. The text will cover both the assessment of responsibilities that will be required, as well as the assignment of responsibilities to individuals identified to participate on the project.
The final section of this chapter goes into an important administrative component of project management regarding the understanding of authority on a project. As with any organization, components of work are divided up and human resources are assigned responsibility to oversee the completion of tasks and processes within an organization. It is much the same on a project where there are several work activities that may have a responsible individual assigned to each activity or other stakeholders who hold responsibility of either direct areas of project participation or external or periphery areas of the project that will have influence on project activities. It is important the students understand how the authority is structured within an organization as well as defining areas of authority that would likely be included on a project.
Learning Objectives
Lecture Outline
Activity Analysis
Activity Information Gathering
Who is gathering information?
Where does the information come from?
How accurate and complete is the information?
Activity Organization
Activity level
Project level
Activity Definitions in the WBS
Responsibility Assignment
Responsibility Definitions
Responsibility Assignment Matrices (RAM)
Work Authorization
Authority by Organizational Structure
Functional organization
Projectized organization
Matrix organization
Authorization Definition
Scheduling
Work activity
Spending
Contract negotiation
Change control
Risk contingency
Topics for Classroom Discussion
Activity Analysis
Responsibility Assignment
Work Authorization
End of Chapter Questions
This answer should be fairly clear as the text points to the importance of information gathering resulting in accurate, correct, and complete data to build a project plan. The answer might also include the importance of who is gathering information, the source of information, and the accuracy and completeness of the information.
This answer should reflect the students understating of correctly defining what the requirement of each resource will need to be to make sure activities will be performed correctly. The next level of this answer should include two items: to effectively document what types of resources will be used and to correctly communicate to project staff and stakeholders what types of resources will be used.
This answer may be vague depending on how the student perceives the situation, but it is intended to get the student to think of the different ways it can be used in order to identify drawbacks. It may be that they cannot think of any drawbacks, but I occasionally use questions like this as an indirect teaching tool for critical thinking.
This answer should be full of thoughts pointing toward a project having a “clear” chain of command and the importance of establishing and communicating this early in the project. As there may be several management type staff involved at the beginning in the charter phase, once the project officially starts the “lead’ role depending on the organizational structure needs to be established quickly.
Part 2—Project Schedule Analysis
Chapter 5
Activity Sequencing
Introduction
Once the project manager has successfully and accurately defined each work activity, it is time to address the project level sequencing of activities that will accomplish the overall objective. This is another area where quality time should be spent helping the students understand the importance of correctly sequencing activities and what effect that has on the overall success of a project.
I start out the chapter by looking at the information that would be available to give us clues about how certain activities might be sequenced in relation to other activities. This can go into areas of just the relationship of one activity to another, but can also look at constraints such as time constraints or one activity having to be completed before another can begin, as well as any identified risks. It would be valuable to go over the network diagramming terms that the students will likely be using within an organization to articulate areas within a network diagram and project.
The next area of the chapter spends time on understanding if there are dependencies of one activity with relation to other activities that would suggest certain sequencing constraints or requirements. It is also important the students understand the gravity of these types of dependencies, as this can be detrimental to the flow of project activities if they are not understood and sequenced correctly.
The next section goes into the mechanics of developing the network diagram such as activity relationships, activity-on-node, activity labeling, and defining different types of network diagramming paths. It is also important the students understand, and it would be useful to have an exercise, how to create a simple network diagram where they can perform a forward and backward pass exercise, determine a critical path and calculate any float or slack that might exist on individual activities. I perform this function in the classroom as students having a first-hand exercise experience see very clearly the benefit of how sequencing operates within a network diagram and the development of multiple paths. Students can then analyze a path and, depending on predecessor or successor relationships, may have to rearrange activities slightly to accomplish other goals, such as reduction in path duration or mitigation of risk.
Learning Objectives
Lecture Outline
Information for Sequencing
Activity Information Required
Relationship to other activities
Constraints
Identify risks
Diagramming Methods
Network Diagramming Terms
Defining Dependencies
Predecessors and Successors
Mandatory
Discretionary
External
Precedence Diagramming Method (PDM)
Activity Relationships
Finish-to-Start (FS)
Start-to-Start (SS)
Finish-to-Finish (FF)
Start-to-Finish (SF)
Activity-on-Node (AON)
Activity Labeling
Activity Path Definition
Serial activities
Parallel activities
Burst activity
Merge activity
Determine Critical Path
Activity Analysis
Forward pass
Backward pass
Float/Slack Calculation
Topics for Classroom Discussion
Information for Sequencing
Defining Dependencies
Precedence Diagramming Method (PDM)
End of Chapter Questions
This answer should reflect references to the three elements listed in the text: relationship to other activities, constraints, and identified activity risks. There should also be some explanations as to why these are required.
This answer should be focused on the PDM and AON methods as explained in the text.
This is a two part answer. The first part explains what an activity dependency is. For example, one activity has to be completed before the next can begin, so the second activity is dependent on the prior. These can be a result of one of three reasons: they are mandatory, discretionary, or external. The second part is that these dependencies dictate how activities are both connected and sequenced in a network diagram.
This should be a fairly clear answer as the student needs to convey that the critical path represents the longest path through the network diagram. These are not necessarily the most important tasks, or the hardest activities to complete, it just represents the connection activities (path) that has the sum of durations resulting in the longest time.
Part 2—Project Schedule Analysis
Chapter 6
Resource Estimating
Introduction
This chapter focuses on resources required for the project. The first element of understanding resources is that resources can be in many forms—not only human resources, but other types of resources such as financial, capital equipment, materials, facilities, and information. It is useful for students to be able to identify various types of resources and define what the purpose of a resource would be on a project. The other important element of resources is the general classification of whether these resources are direct project resources or in direct project resources.
The next area of concern with regards to resources is the type of constraints that will be imposed by a resource for project activities or general use on the project. Some constraints are imposed by the organization while other constraints might be a function of the project itself or a project management control component. It’s important the students understand that with regards to resources, resource constraints might be the most important aspect with regards to the capability of a resource to complete an activity task, and this can be with human resources, as well as equipment or facilities and the availability of resources.
The next area will be contrasting the difference between project resource requirements and organizational resource requirements and how resources are classified and fall within these two categories. Students should also understand that resources internal to an organization are not always available and may not always provide the capability required for project activities.
The next section of the chapter is important to spend time on as it deals with resource estimating and various methods that can be used to assist in resource estimating. I start out this section at the higher level view looking at resources utilized not only on projects, but within programs and portfolios. One of the most difficult things project managers will have, as well as program and portfolio managers, is the management and allocation of resources within the organization for project activities and tasks. I cover some of the primary estimating methods and give an example of how simple resource leveling can assist project managers in ensuring resources are properly assigned to project activities and not overallocated. It is important the students understand that although resources can be available to perform tasks on a project, human resources have to be managed correctly and not overworked or underworked, as this can influence their performance. With nonhuman resources this can also influence conflicts in scheduling where resources are used across several projects, programs, and portfolios within an organization.
Learning Objectives
Lecture Outline
Type of Resources
Define Project Resources
Human resources
Financial resources
Capital equipment resources
Materials resources
Facilities resources
Information resources
Direct and Indirect Resources
Direct projects resources
Indirect projects resources
Contracted Resources
Resource Constraints
Organizational constraints
Projects constraints
Resource constraints
Capability
Availability
Resources Requirements
Project Resource Requirements
Organizational Resource Requirements
Resource-Estimating Methods
Portfolio resource-estimating
Program resource-estimating
Project resource-estimating
Delphi Method
Determinate Estimating
Alternatives Analysis
Published Data Estimating
Resource Leveling
Time-constrained projects
Resource-constrained projects
Resource Loading
Resource Requirements Plan
Topics for Classroom Discussion
Type of Resources
Resource Constraints
Resources Requirements
Resource-Estimating Methods
End of Chapter Questions
This question is designed to have the student rationalize what resources will be required for a project, and given their role, which might hold a higher importance based on the task assignment. Look for skill assessment and the use of internal versus external contracted resources. Some of this might be slightly subjective in assessment. The general idea is they have a process for evaluating resources.
As most organizations will try to use internal resources as much as possible, it will usually be a last resort to contract external resources. In most cases those providing contracted resources know there is a level of “need” and the price will reflect that. This answer can go into several areas such as issues with contracted human resource skill set assessment, lack of team interaction, “the expert” syndrome, and so on. In some cases there might be a lack of experts in the organization and an expert is welcome! Sometimes an outside view can bring a different perspective on things.
This is a fairly straightforward answer as the text covers this in detail. Make sure the student is covering the constraints list in the text as it might be easy to diverge and wander with this answer.
This answer can vary depending on the student and a combination of their understanding of the text and their experiences. The basic premise in this answer should reflect the student understanding there will be staffing challenges and there will be an evaluation of skill sets required. This can be done by the project manager or functional managers in support of offering resources to a project. The text goes into variations of how this can play out and different options given the results of skill set evaluations.
This is another question that is designed to have the student use critical thinking in not only what each method is, but the pros and cons of each, and given different types of projects, which they would choose to be most successful. Look for in-depth evaluations of methods and differentiation between them.
Part 2—Project Schedule Analysis
Chapter 7
Activity Duration Estimating
Introduction
It is important that information gathering has been completed in order to understand individual activity requirements that will help decide which resources will be used and allocated to the project activities. Having all the information for each activity forms the foundation required for properly estimating activity durations.
Although one would think estimating durations should be rather straightforward and simple, this can be a rather complex ordeal depending on what type of activities will be performed on a project. Duration estimating will also have processes and methods that can be used to assist the project manager in correctly and accurately estimating durations. This is an important task as this will formulate the overall project duration that will be of interest to not only the organization, but the customer, in the expected delivery of the completed project objective.
This section covers some of the classic estimating techniques such as analogous, parametric, and three-point estimating, as well as contingency estimating. I cover the use of each of these estimating methods and when and how they can be used, but I will focus on the three-point estimating, as this is usually referred to as the most accurate if the correct information is available. It would be useful in the classroom, or for homework, to have the students perform the three-point estimating method to see how the averaging works in comparison to one of the other estimating methods.
The next area that I like to cover is constraints that can affect development of a project plan. The first and foremost constraint for activity estimating will be the triple constraint, which will exist on any project. This is seen as more of a project management type constraint as the duration (schedule) will be somewhat connected or constrained by cost and quality. Organizational constraints can be top-down and customer requirements can impose requirements (constraints) for certain project activity durations. The successor or predecessor relationships can also pose requirements simply within a network diagram as a function of sequencing, and a scenario analysis can be run to look at variations in activity sequencing to mitigate or eliminate constraints on activity durations.
In the final section I have some basic conclusions that point to areas such as information gathering, the type of duration estimating method chosen, and basic network diagram analysis as being fundamental components of accurately estimating activity durations. Other areas that might be considered include the use of project milestones and how activity durations could affect projects within other programs or portfolios.
Learning Objectives
Lecture Outline
Duration Estimating Methods
Analogous Estimating
Parametric Estimating
Three-Point Estimating
Optimistic
Most likely
Pessimistic
Expected duration
Contingency Estimating (Reserve Analysis)
Activity contingency estimating
Project contingency estimating
Subject Matter Expert Analysis
Duration Estimating with Constraints
Triple Constraint
Top-Down/ Bottom-Up
Customer Requirements
Successor/Predecessor
Scenario Analysis
Scheduling Conclusions
Information gathering
Duration estimating methods
Network diagram analysis
Activity Level
Project Milestones
Project and Program
Topics for Classroom Discussion
Duration Estimating Methods
Duration Estimating with Constraints
Scheduling Conclusions
End of Chapter Questions
The text goes into enough of a definition for each estimating type that the students should understand differences between each. Some of this answer can reflect simple methodology type, but it would be nice to get real differential comparisons.
The primary answer is the use of optimistic, pessimistic, and most likely values give an averaging effect with the weighting on most likely. This is generally a good estimating tool for the closest and moderately accurate estimates. The only drawback is all three (opt, pess, and most likely) might not always be available.
This answer should include the explanation of what contingency estimating is and why it is used. The text goes into both activity level and project level contingency estimating so there should be plenty of information to draw a good conclusion for this answer.
The first part of this answer should show the contrast between top-down and bottom-up and the accuracy of information as a function of the source. The next part of this answer should reflect the influence of management in developing duration estimating (top-down) and the constraints that can impose.
Part 2—Project Schedule Analysis
Chapter 8
Schedule Development
Introduction
Now that the project manager has all the information needed for work activities, has completed an assessment of resources required, and has effectively established durations for all work activities, the project manager can then look to completing the overall project schedule (project plan).
Although the project manager might have a network diagram already in play and a work breakdown structure that shows the basic outline of activities broken down into their smallest components, these have simply been used as working documents to understand all of the details and information required for each work activity. As we have seen, the understanding of how work activities can be connected with relation to each other can have an effect on resource availability and duration estimating. The project manager should not attempt to complete an entire project plan in the course of this information gathering as things are likely to change during this dynamic phase of project development. Once all the information has been gathered and all activities are now understood, the project manager can look to finalizing and verifying an overall schedule of activities and the project plan. As with any phase of project development, the project manager should always look to the information gathering component, as this is where the critical information comes from. Resources for information can include the project charter and customer statement of work or specifications, the project scope statement, the initial work breakdown structure, and the collection of specific work activity information, as well as any organizational requirements or constraints.
When looking at schedule structuring techniques we typically see an activity hierarchy, as this was somewhat defined in the initial stages of the project deliverable decomposition exercise. This usually results in smaller activities having to be completed first that will form the completion of larger activities, and ultimately the completion of the overall project objective and deliverable. This chapter covers the critical path method, precedence diagramming, and constraints which bring up more detail using network diagrams and show how the critical chain method can be utilized. Several components within the critical chain method can also influence how the overall structure of the project plan of activities will play out. It’s important students understand network diagramming methods, the theory of constraints, and the critical chain method, as these are fundamental structuring techniques that can be used on small projects, as well as very large and complex projects.
The next important component of developing a master schedule is the actual schedule analysis to evaluate areas such as resource loading and any leveling that might be required to address overallocation issues. At this point, the project manager should be going back to the original charter or statement of work and looking to see if there are customer requirements of any deliverables within the project, as well as if there is the output deliverable and an agreed-upon time frame for delivery of that deliverable. It’s also at this point the project manager might have to make schedule adjustments to ensure a project deliverable will be completed on time.
I conclude this chapter with an important area that is sometimes misunderstood or not discussed at all, and that is the proper documentation of scheduling and the storage of a schedule for a project. Once the project manager has completed the master plan schedule of a project, it is important the schedule is located within the organization so that it can be managed easily and communicated to other stakeholders and project staff. Students should know that project managers do not live in a vacuum and do all this behind the scenes, but all this hard work in developing the master plan schedule results in the correct management of project activities, the communication of activity requirements, the schedule of activities, and the assignment of resources. The success of a project in most cases is heavily dependent on the project manager’s organizational skills and communication skills.
Learning Objectives
Lecture Outline
Schedule Requirements
Information Gathering
Project charter
Project scope statement
Customer specifications
Work breakdown structure
Specific work activity information
Organizational requirements
External influences
Project Scope
Resource Requirements
Customer Requirements
Schedule Structuring Techniques
Schedule Structures
Activity disposition
Activity hierarchy
Network Diagramming (CPM, PDM)
Critical path method
Precedence diagramming method
Theory of Constraints (TOC)
Identify the system constraint
Exploit the system constraint
Subordinate everything else to the system constraint
Reevaluate for a new system constraint
Critical Chain Method
Parkinson’s Law
Self-protection
Dropped baton
Excessive multitasking
Resource bottlenecks
Student syndrome
Schedule Analysis
Resource Loading
Resource Leveling
Schedule Reduction
Schedule crashing
Fast tracking
Scenario Analysis
Schedule Variance Analysis
Schedule Documentation
Storage and Software Tools
Schedule Management
Schedule Communication
Topics for Classroom Discussion
Schedule Requirements
Schedule Structuring Techniques
Schedule Analysis
Schedule Documentation
End of Chapter Questions
It’s important this answer show the student understands what information is in the charter and that it represents the initial intent of the customer with regards to the deliverable and proposed delivery schedule.
This will be similar to the above concept in that developing the schedule is all about the customer needs and requirements. This answer might reflect special considerations to make sure customers get everything that has been agreed upon in the charter and possibly by contract.
This answer might be difficult for students to explain, but the general idea is loading has more to do with the availability of key resources and the blend and mix of resources at specific times. Leveling is balancing workload to reduce overallocation or overlapping with other projects needing the same resources.
This answer should be fairly straightforward. Durations can directly influence path overall length and may require some activities to be rearranged in the network based on constraints durations may present. As the critical path is a direct function of activity duration, it will also be directly affected based on the combination of activities. Therefore if activities are moved to other paths that result in changing the path duration, the critical path may also change.
Part 3—Project Cost Analysis
Chapter 9
Cost Estimating
Introduction
Once activity requirements have been identified, resources have been identified, and activity durations have been calculated, the final step in project development is estimating the cost of each work activity. When we consider the three areas—cost, schedule, and quality or the deliverable itself—there will also be requirements and constraints that will influence how estimating cost for activities will play out.
This chapter focuses on areas specific to estimating costs for project activities. Similar to previous process steps, the first step is collecting cost data and this begins with the identification of cost requirements for each activity. Earlier in the text a tool called the activity information checklist was introduced to help collect as much information as possible so that during each phase or process of developing the project plan that document can be reviewed for information. Students should understand that this will be similar to selecting information gathering staff for scheduling, as the project manager will be evaluating who will be collecting information and those individuals need to provide accurate and complete data.
We once again look at the next component that will influence cost estimating and that is the area of constraints. As with previous processes it is likely the project manager will run into organizational, project, and customer levels of constraint with regards to cost estimating. It is also important students understand the sequence that is presented here where direct activity information is gathered and analyzed first, then the very next step is to understand what constraining items will influence those numbers.
The next section of this chapter goes directly into estimating tools and techniques. Depending on the size and type of project and the organization, there may be several different areas that cost estimates can be derived from, or it may be very limited to only one or two areas where accurate cost information can be used with a high level of confidence. Estimating tools can be as simple as information from subject matter experts, to rough order of magnitude estimating and more quantitative estimating such as three-point cost estimating. Students should also understand that there may be an element of constraint where cost estimates might be a top-down estimating function within an organization and certain costing will have to be used. It’s important students understand they should exhaust all resources of cost estimate information gathering to be as accurate and complete as possible as these numbers will ultimately build the project budget.
Learning Objectives
Lecture Outline
Collecting Cost Data
Identify Cost Requirements
Cost Data Sources
Who will be collecting information?
What information should be collected?
What sources of information are reliable?
How much information should be collected?
Data Accuracy
Cost Classifications
Direct costs
Indirect costs
Cost Constraints
Organizational Level
Project Level
Customer Level
Estimating Tools and Techniques
Subject Matter Expert
Rough Order of Magnitude Estimating
Analogous Cost Estimating
Parametric Cost Estimating
Three-Point Cost Estimating
Optimistic
Most likely
Pessimistic
Expected cost
Top-Down and Bottom-Up Estimating
Contingency Cost Estimating
Topics for Classroom Discussion
End of Chapter Questions
This answer should be obvious to the student if they understand the concept of how important cost estimating is in the overall project budget process. Inaccurate data will establish the BAC incorrectly and will be used as an inaccurate baseline to track actual costs. The unfortunate reality is that the project might actually be doing fine cost wise, but will appear off as the baseline is not accurate, and the project manager will try to make corrections that are not needed.
Remember the scope of this question is in cost estimating only and not all project-related items. These differences are listed in the text so the students should be able to derive the answer. Organizational constraints stem more from management’s influence. There can be some accounting or procurements processes that might have an effect as well. The project constraints can be from a lack of qualified individuals to gather information or participate in project activities. In some cases a lack of time was a constraint in information gathering or estimating. Customer constraints can be many, but the typical ones are the changes early on that present challenges in cost estimating. Customers might also require certain processes that can influence estimating.
This answer should reflect two main points: SME’s can be helpful in the early conceptual planning phase with rough order estimates to do basic budgetary evaluations, and the PM might find SME’s have great insight on specific items that can help the PM better understand activity details and estimate more accurately.
The main point here is three-point estimating is justifiable when data gathering reveals more than one cost value for something or a range of values. The three-point is great for deriving a single conclusion from multiple inputs. If a range of values is available, this estimating tool gives more of an averaging effect and is good to use.
The text explains this well so the students should understand the basic concept as simply designing a reserve planned to manage overages or risk. This allows the project to have mild fluctuations in cost relative to the baseline, but not require added funding as it is built in.
Part 3—Project Cost Analysis
Chapter 10
Budget Development
Introduction
This chapter focuses primarily on the development of a budget. Once the project manager has completed gathering all of the cost estimates for project activities, it’s time to compile this information into an actual budget representing the cost of the entire project. This is done primarily to organize all of the cost and to effectively communicate activity costs and overall budget status, as well as to be a tool for the project manager to monitor costs associated with each activity on the project.
The first section of this chapter starts off with a simple understanding of what budgets can be used for and why they are created. Students should understand the purpose the budget serves within the organization, making all the work that goes into creating one justifiable. First and foremost this gives not only the project manager, but senior staff, an idea of what the overall cost of the project will be, commonly referred to as the budget at completion (BAC). Budgets can be used as a baseline to compare actual costs to original budgeted cost. Budgets can also be used to manage the triple constraint as well as regular reporting of project status.
The next section goes into the methods that can be used to develop a budget. It’s important for students to understand in this section that project managers do not always have the luxury of creating their own budget for a project, and some budgets are passed down from executive management or higher levels of management. This is called top-down budgeting. Students should also know that there are other forms of budgeting that can be used. These are covered in this section of the chapter depending on the size and type of projects, the type of organization, and what requirements the organization has in managing a project budget.
Students should also understand that there might be budgeting constraints imposed by the organization in how budgets are planned and how they are managed. In some cases the organization might have limitations on the type of funding and payment processes. Students should also know what budget contingency planning is and why it may be required within some organizations.
The final area of this chapter goes into the cost of quality and will look at other departments periphery to the project and the importance of their job to a project, as they can affect or influence the success of a project. Areas such as procurements, outsource contracting, and make or buy decisions can greatly influence how the budget is developed, and they can present challenges in developing and managing a budget.
Learning Objectives
Lecture Outline
Functions of a Budget
Budget at Completion (BAC)
Project Budget Baseline
Manage the Triple Constraint
Reporting Project Status
Budget Development Methods
Top-Down Budgeting
Cost Aggregation Method
Time-Phased Method
Analogous Budgeting
Historical derivative budget
Historical information for budget
Budget Constraints
Funding Limit Reconciliation
Budget Contingency Planning
Cost of Quality
Procurements
Outsource Contracting
Make-or-Buy Analysis
Topics for Classroom Discussion
End of Chapter Questions
This answer should be clear. A budget baseline is developed from the original cost estimates and is used to compare actual costs to ensure the project activities are staying on budget.
This should also be fairly straightforward. The three elements of the triple constraint—cost, schedule, and quality—are interlinked and any change in one will probably affect one or both of the others. The budget being used as a baseline is one way costs can be managed to help manage the triple constraint.
This answer should reflect the basic concept that costs are based on the smallest components of work activity and will be aggregate up to the highest level to form a master project budget. This is also referred to as bottom-up budgeting.
This type of budget planning incorporates extra “planned” funds at strategic points in the budget to allow for minor fluctuations in actual costs.
The text goes into detail on some of these such as acquiring expert human resources if they are not available internally, but this can also be a negative if the due diligence was not performed and incorrect resources were contracted. There are also legal issues that present problems to not only the project but the organization as well.
Part 4—Project Monitoring and Control
Chapter 11
Schedule and Cost Monitoring
Introduction
The fourth section of this book and this chapter will focus on schedule and cost monitoring. It’s assumed that the project plan, at this point, has been completed and a budget has been developed and approved, an active schedule has been developed and communicated, and the project is about to begin. Students should understand that although a tremendous amount of work has been accomplished and they are now ready to begin project activities, the work does not stop there as the bigger part of the project manager’s responsibility will be to ensure project activities are completed correctly, on schedule, and for the estimated cost that was budgeted. This can only be done if project activities are monitored and controlled.
This chapter focuses on the monitoring component of project activities, as the areas of control cannot be implemented or effectively accomplished without monitoring systems in place. This chapter discusses integrated monitoring and how monitoring is actually an information system within the project. Students should understand why monitoring is important, what to monitor, tools and techniques that can be used for monitoring, and what to do with the information that is gathered.
The next section moves into the monitoring and analysis tools. Students should understand what monitoring tools are available and that in most cases these tools are very simple to put in place. Information gathering techniques such as status meetings, subject matter expert information, and simple check charts can be invaluable sources of information for project activity status of performance.
In the next section, I look at information analysis tools and what to do with the information that is gathered. Relative to information gathering, tools such as S-curve analysis, milestone analysis, control charts, project baseline, and earned value analysis are used to simply conclude from information that a problem either does or does not exist. These tools are used because if a work activity is showing that it’s falling behind schedule, it is going over cost, or the quality of the work has fallen below a certain standard, they are designed to alert the project manager that action might be required.
Monitoring also includes troubleshooting tools such as root cause analysis and fault tree analysis to drive down into a problem to decipher the root cause. The results of these findings can also be used to initiate controls that will improve a process and return the performance to the expected standard.
The final section of this chapter discusses monitoring results of what the reality of this information can mean to a project and organization. Information can be used in a work performance report or can be used to generate a new risk assessment evaluation. In most cases, corrective action requirements will need to be implemented. If permanent change has been made, change validation analysis will need to be performed to ensure changes have accomplished the expected result. If change has accomplished its goal, there may be forecast adjustments required in either schedule or budgeting. It’s important students understand that monitoring a project is one of the primary responsibilities of the project manager, and these tools will help the project manager understand what has to be monitored, why, and what to do with the information that’s gathered.
Learning Objectives
Lecture Outline
Integrated Monitoring
Project Monitoring Information System
Why monitoring of work activities is important
What to monitor
What tools and techniques are used to create monitoring systems
How to use information gathered from monitoring work activities
Monitoring and Analysis Tools
Information Gathering Tools
Status meetings
Subject matter experts
Check charts
Information Analysis Tools
Project S-Curve analysis
Milestone analysis
Control charts
Create baseline
Tracking Gantt
Earned value analysis
Troubleshooting Tools
Root Cause Analysis
Fault Tree Analysis
Monitoring Results
Work Performance Reports
New Risk Assessment
Corrective Action Requirements
Forecasting Adjustment Requirements
Change Validation Analysis
Topics for Classroom Discussion
End of Chapter Questions
This is where the student can show if they really understand the concept of monitoring on a project. Integrated monitoring is developing a monitoring information system to gather data on project activity performance. This is why monitoring needs to happen, what will be monitored, what tools will be used, and how will the information be used.
There are two primary components to projects: the development of the project plan which includes the schedule, budget, and expected deliverable, and the actual performance of activities in comparison to the original project plan estimates. The project manager must ensure the actual project activities are conducted as planned, and this can only be done if a monitoring system is in place.
This answer will obviously vary, but the general idea will be the same as the student needs to “show” how they understand the tools.
The data is compared to a planned project baseline and is evaluated for variations. If variations are detected, then an evaluation of the magnitude of the variation would determine if corrective action is needed. This is how the project manager “manages” project activities, instead of just reporting on them.
If the project manager is to correct the problem, he needs to understand what to fix. This is why root cause analysis is part of monitoring as it is the final determination of if a problem really exists and what the real problem actually is.
Part 4—Project Monitoring and Control
Chapter 12
Schedule and Cost Control
Introduction
The previous chapter introduced the idea of monitoring as an integrated process within a project to gather information on real-time progress of work activities. This information is analyzed to determine if activities are on schedule, within budget, and accomplishing the expected requirement of each activity. If information during the monitoring process reveals that one aspect is not performing as expected, controls will need to be implemented to ensure activities stay within schedule, budget, and within the quality standard expected.
This chapter focuses primarily on tools and techniques to control schedule and costs of project activities. I open the first part of this chapter addressing change control as most projects will have changes that will be required either by the customer or by some process improvement. This is usually the first place where project activities will fail due to a lack of control. Changes can be made on a project if the change is well-documented, approved, designed and tested, implemented, monitored, and controlled. This is why change control should be seen as a process that can happen if needed on a project. Students should understand that change is inevitable on most projects, and they will need to have a sound change control process in place to manage changes as they occur.
I have split up the next section into three areas of control as the types of tools required for each component are focused on the three areas of the triple constraint schedule: control, cost control, and quality control. Students should also understand that all three of these areas should be monitored and controlled as one can have an effect on the other two if it is not controlled.
The final section discusses the results of control activities which can range from simply reporting the success of controls to how managing control has resulted in successful activity management. Control results can also require forecasting updates and both project plan and project management plan updates, as well as organizational process updates. Students should understand that in many cases project activities will utilize organizational processes. If the process is found to be out of control and a change will be required, this might result in a permanent change to that process that may be used on other projects as well. The final goal of chapters 11 and 12 is to have students understand the importance of not only developing a project plan, but the importance of monitoring and controlling projects to be successful in keeping projects on budget, on schedule, and producing the quality of output the customer will expect.
Learning Objectives
Lecture Outline
Change Control
Change Control as a Process
Propose
Implement
Communicate
Measure
Integrated Change Control
Control Tools and Techniques
Contingency Control
Schedule Control
Data for schedule control
Critical chain method
Resource leveling
Schedule crashing
Fast tracking
Cost Control
Data for cost control
Procurements
Contracts
Quality Control
Quality inspections
Regulatory inspections
Design reviews
Control Results
Reporting Control
Manage Change Control
Forecasting Updates
Project Management Plan Updates
Organizational Process Updates
Topics for Classroom Discussion
End of Chapter Questions
This is an important answer as the student needs to show they understand that just changing things doesn’t result in the outcome anticipated, but controlling a change helps ensure a change was conducted correctly, validated, and communicated. A process has any change go through certain steps to control how it is carried out.
This should be a straightforward answer, as the critical chain method incorporates buffers to control network path durations and can also be used in cost contingency planning.
This answer may vary depending on examples used, but the general idea is crashing uses variations in activity sequencing to shorten path durations.
This answer might also vary depending on the background and experience of the student, but contracts can have a control function depending on the type of contract. Fixed price contracts are great for control as it puts all the risk on the contractor.
Yes, this is a stop point where someone inspects progress for quality control. A building inspector halts construction at certain points to inspect to make sure things are being done correctly and by the local codes.
If changes are made that impact schedule, cost, or scope of the deliverable, then the project plan (forecast) has to reflect the change so the new expectation can be monitored for compliance.
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