Project Management. ZEUS Student Seminar on 14 th November 2003 by Riko Wichmann. Riko Wichmann, MPY Zeus Student Seminar - PM,

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1 Project Management ZEUS Student Seminar on 14 th November 2003 by Riko Wichmann Riko Wichmann, MPY Zeus Student Seminar - PM,

2 Project Management - Training Program - Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Risk Management Project Communication Management Human Resource Management Project Integration Management Procurement Management Knowledge Management Marketing Management minimum 3 full days program!! Riko Wichmann, MPY Zeus Student Seminar - PM,

3 Modern Project Management Basic Concept according to PMI and some Methods and Definitions Riko Wichmann, MPY Zeus Student Seminar - PM,

4 Motivation for modern Project Management "More than 50 % of all big transformation projects fail." "Why Transformation Efforts Fail", Kotter, HBR 1995 "More than 80% of all IT projects are finished behind schedule, over budget, with missing functionality, or not completed at all. Gartner Group Rule of thumb: project budgets are exceeded by 40%, due-dates by 50%. Experience Many projects are named 'Phoenix' because they emerged from the ashes of a former project. Anecdote Riko Wichmann, MPY Zeus Student Seminar - PM,

5 Motivation: Software Engineering % cost overrun 60% too late 45% SW unuseable 29% SW was never delivered 19% fundamental redesign of SW to be useable 3% SW had to be modified 2% SW fullfilled specs 52.7% cost overrun (on average by 189% compared to budgeting) 31.1% of SW project were stopped before completion (financial damage 81 Mrd. US$) 9% on time and budget Reference: The General Accounting Office Report FGMSD-80-4 from: F.J.Buckley, R.Poston, IEEE Trans. on Software Engineering SE 10, 36 (1984) Riko Wichmann, MPY Zeus Student Seminar - PM,

6 Definition: Project according to DIN Project definition according to ISO 10006: A project is a unique process, consisting of activities in a certain order with a defined start and end date. A project is executed to reach a certain goal according to specified requirements including time, budget and resources. A project can be part of a higher ranking project structure (program). A project can be structured in phases, which are projects by themselves. The project organization is always a temporary organization limited by to the time frame of the project. The dependencies between the project activities can be very complex. That means: unambiguously defined roles and responsibilities necessity to plan, execute and control influence from (project) internal and external conditions and circumstances measurable success (or failure) Riko Wichmann, MPY Zeus Student Seminar - PM,

7 Project Management and Project Goals Project Management: Application of knowledge, skills, tools and techniques to project activities to meet the project requirements (scope, time, cost, risk, quality) Project Goals Management Goals Result oriented Goals Project Process Goals meet expectations function deadline successful project performance cost use resources quality transparency accumulate know how execution... Conditions capacity opposing interests available resources compentence/ escalation Politics! social needs know how Riko Wichmann, MPY Zeus Student Seminar - PM,

8 Cost and Change Relationship Outflow of Funds vs Fund Commitment at an early stage 80% of the project budget is committed! 80% Accumulated Value impact fund commitment (planned) spending profile initial phase intermediate phases final phase Cost of Changes vs scope of design scope of design decreases with increasing cost for changes during the progress of the project 15% costs for project changes or adjustments scope of design and risk Time Time Start End Riko Wichmann, MPY Zeus Student Seminar - PM,

9 PM Societies and Standards Project Management Institute PMBOK: Project Management Body of Knowledge International Project Management Association Competence Baseline (ICB) Deutsche Gesellschaft für Projektmanagment Projektfachmann Australian Institute of Project Management... National Competency Standards for Project Management Riko Wichmann, MPY Zeus Student Seminar - PM,

10 Project Management Institute composes the Project Management Body of Knowledge (PMBOK, Guide to the PMBOK) sum of knowledge within the profession of project management rests with the practitioners and academics that apply and advance it includes knowledge of proven traditional practices [...] as well as innovative and advanced [...] Best Practice Guide in Project Management Project Management Body of Knowledge, PMI Standard Committee, 2000 Riko Wichmann, MPY Zeus Student Seminar - PM,

11 PMBOK Reviewers DEC Westinghouse Eastman Kodak AT&T Primavera Systems Proctor & Gambler General Electric Consulting Firms U. of Quebec U. of Technology, Sydney Wright State University North Dakota State University Sandia National Labs Riko Wichmann, MPY Zeus Student Seminar - PM,

12 Process Group Model - structured approach to PM - Initiating formal go-ahead of the project or the next project phase Definition planning and defining of the project scope including initial resource estimate Program Mgmt. Initiating Definition Planning Planning development and maintanance of schedule and cost plans Controlling Executing Executing coordination of resources and funds to execute the project plan Controlling tracking of the project progress and initiating of necessary counter meansures Closing Closing formal acceptance of project results or results of the project phase Riko Wichmann, MPY Zeus Student Seminar - PM,

13 Process Group Model and Project Phases Concept/ Requirem ent Research/ Developm e nt Test Specification Production Installation Operation Process Group Model Initiating Definition Controlling Closing Planning Executing Riko Wichmann, MPY Zeus Student Seminar - PM,

14 Project Management Knowledge Areas and Project Management Body of Knowledge, PMI Standard Committee, Integration Management.1 Plan Development.2 Plan Execution.3 Integrated Change Control 7. Cost Management.1 Resource Planing.2 Cost Estimating.3 Cost Budgeting.4 Cost Control 10. Communication Management.1 Communication Planning.2 Information Distribution.3 Performance Reporting.4 Administrative Closure Project Management 5. Scope Management.1 Initiation.2 Scope Planning.3 Scope Verification.4 Scope Change Control 8. Quality Management.1 Quality Planning.2 Quality Assurance.3 Quality Control 11. Risk Management.1 Risk Management Plan..2 Risk Identification.3 Qualitative Risk Analysis.4 Quantitative Risk Analysis.5 Risk Response Planning.6 Risk Monitoring & Control 6. Time Management.1 Activity Definition.2 Activity Sequencing.3 Activity Duration Estimating.4 Schedule Development.5 Schedule Control 9. Human Resource Management.1 Organizational Planning.2 Staff Acquisition.3 Team Development 12. Pr. Procurement Management.1 Procurement Planning.2 Solicitation Planning.3 Solicitation.4 Source Selection.5 Contract Admin..6 Contract Closeout Help to plan new projects Guideline for running projects Dictionary for project related questions Introduction of PM for new project leaders Riko Wichmann, MPY Zeus Student Seminar - PM,

15 Planning according to PMI Program Mgmt. Initiating Definition Planning Planning Controlling Executing Closing Which are the necessary planning steps? Riko Wichmann, MPY Zeus Student Seminar - PM,

16 Planning according to PMI Project Management Body of Knowledge, PMI Standard Committee, 2000 Program Mgmt. 7. Cost Management.1 Resource Planing.2 Cost Estimating.3 Cost Budgeting.4 Cost Control 10. Communication Management.1 Communication Planning.2 Information Distribution.3 Performance Reporting.4 Administrative Closure Project Management Planning 4. Integration 5. Scope 6. Time Management Management Management.1 Plan Initiating Development Definition.1 Initiation Planning.1 Activity Definition.2 Plan Execution.2 Scope Planning.2 Activity Sequencing.3 Integrated Change Control.3 Scope Verification.4 Scope Change Control.3 Activity Duration Estimating.4 Schedule Development.5 Schedule Control 8. Quality 9. Human Resource Controlling Management ExecutingManagement.1 Quality Planning.1 Organizational.2 Quality Assurance.3 Quality Control Planning.2 Staff Acquisition.3 Team Development Closing 12. Pr. Procurement 11. Risk Management Management.1 Risk Management Plan..1 Procurement Planning.2 Risk Identification.2 Solicitation Planning.3 Qualitative Risk Analysis.3 Solicitation.4 Quantitative Risk Analysis.4 Source Selection.5 Risk Response Planning.5 Contract Admin..6 Risk Monitoring & Control.6 Contract Closeout Core Riko Wichmann, MPY Zeus Student Seminar - PM,

17 Planning according to PMI Core of Project Planning: dependent strongly on each other => common order of execution in most projects Scope Planning: (5.2) developing a written scope statement as the basis for future project decisions Scope Definition: (5.3) subdividing the major project deliverables into smaller, more manageable components Activity Definition: (6.1) identifying the specific activities that must be performed to produce the various project deliverables Activity Sequencing: (6.2) identifying and documenting inter-activity dependencies Activity Duration Estimating: (6.3) estimating the number of work periods needed to complete each activity Riko Wichmann, MPY Zeus Student Seminar - PM,

18 Core Planning II according to PMI Schedule Development: (6.4) analyzing activity sequences, activity duration and resource requirements to create the project schedule Risk Management Planning: (11.1) deciding how to approach and plan risk management in the project Resource Planning: (7.1) determining what resources (HR, equipment, material) and what quantities of each should be used to perform project activities Cost Estimating: (7.2) developing an approximation of the costs of resources required to complete the project activities Cost Budgeting: (7.3) allocating the overall cost estimate to individual work activities Project Plan Development: (4.1) combining the results of other planning processes into a consistent, coherent document Structuring of planning tasks according to topics!! What do I have to do? Did I miss anything? Riko Wichmann, MPY Zeus Student Seminar - PM,

19 Facilitating Planning according to PMI Facilitating : more dependent on the nature of the project, do not follow a specific order, they are NOT optional Quality Planning: (8.1) identifying which quality standards are relevant to the project and determining how to satisfy them Organizational Planning: (9.1) identifying, documenting and assigning project roles, responsibilities and reporting relationships Communication Planning: (10.1) determining the information and communication needs of the stakeholders Risk Identification: (11.2) determining which risks might affect the project and documenting their characteristics and others: 11.3, 11.4, 11.5, 12.1, 12.2 Riko Wichmann, MPY Zeus Student Seminar - PM,

20 Process Example: Resource Planning (7.1) Inputs: Tools & Techniques Outputs: 1. Work breakdown structure 2. Historical information 3. Scope statement 4. Resource pool description 5. Organizational policies 6. Activity duration estimates 1. Expert judgment 2. Alternatives identification 3. Project management software 1. Resource requirements Project Management Body of Knowledge, PMI Standard Committee, 2000 Which information is needed to perform the planning? Which methods and tool can I use to achieve this? What is the result? Riko Wichmann, MPY Zeus Student Seminar - PM,

21 Project Network Diagram Network Diagram: graphical or tabular representation of activities and their logical relationships (DIN 69900, part 1) Activity: element which describes a certain task (DIN 69900, part 1) Event: element, which describes a certain status (DIN 69900, part 1) PERT Diagram: Program Evaluation and Review Technique Critical Path Method Riko Wichmann, MPY Zeus Student Seminar - PM,

22 Activity Sequencing (6.2): Arrow Diagramming Method Finish-Start Relationship (normal) Setup network test connection connection A B Finish-Finish (end relationship) Start-Start (start relationship) Start-Finish (jump) last task finished delivery of reception of bids concrete A A A project leader pour concrete place order released for base B B B Riko Wichmann, MPY Zeus Student Seminar - PM,

23 Schedule Development (6.4) - towards Critical Path - Forward Pass start of project is determined establish the finishing date Backward Pass finishing date is given determine when project has to start Schedule Driven Planning given duration of activities defines duration of project activity duration defines the resource usage Resource Driven Planning depending on the availability of resources the activity duration varies available resources define project duration Riko Wichmann, MPY Zeus Student Seminar - PM,

24 Critical Path: Forward- & Backward Planning Forward Pass: calculation Early Start (ES) and Early Finish (EF) date ES = latest EF of all direct predecessors EF = ES + duration Backward Pass: calculation of Late Start (LS) and Late Finish (LF) date LF = earliest LS of all direct sucessors LS = LF - duration Buffer = LS ES critical path: Buffer = 0 Riko Wichmann, MPY Zeus Student Seminar - PM,

25 Network Plan Example Format Floppy 1) unpack box 1 work unit (WU) 2) format floppy 5 WU 3) prepare label 2 WU 4) attach label to disk 1 WU 5) put floppy back into box 1 WU Riko Wichmann, MPY Zeus Student Seminar - PM,

26 Example: Floppy Format Forward Pass ES = latest EF of all direct predecessors EF = ES + duration unpack format prepare label attach label pack Name ES duration LS Buffer EF LF E: Early S: Start F: Finish Date Riko Wichmann, MPY Zeus Student Seminar - PM,

27 Example: Floppy Format Backward Pass LF = earliest LS of all direct sucessors LS = LF - duration unpack format prepare label attach label pack Name ES duration LS Buffer EF LF E: Early S: Start F: Finish Date Riko Wichmann, MPY Zeus Student Seminar - PM,

28 Example: Floppy Format Buffer and Critical Path Buffer = LS ES Critical Path: Buffer =0 unpack format prepare label attach label pack forward pass 2. backward pass with LF = EF 3. buffer calculation LS-ES 4. path with buffer = 0 Name ES duration LS Buffer EF LF Riko Wichmann, MPY Zeus Student Seminar - PM,

29 Example: Floppy Format Buffer and Critical Path Buffer = LS ES Critical Path: Buffer =0 Delays of activities on the critical path delay the whole project!! unpack format prepare label attach label pack forward pass 2. backward pass with LF = EF 3. buffer calculation LS-ES 4. path with buffer = 0 Name ES duration LS Buffer EF LF Riko Wichmann, MPY Zeus Student Seminar - PM,

30 Format Floppy: Gantt Chart combine network diagram with real dates (including weekend, holidays) needs all relevant data (activities, dependencies, durations, resources) Riko Wichmann, MPY Zeus Student Seminar - PM,

31 Milestones - Definition - point in time, when something important was achieved or should have happened check of finished task / sub-project / phase; decision about next go-ahead, next steps; adjustment of project plan pure check points: duration 0, in general don't need resources or money points of influence of steering committee can be KO criterium for the project Riko Wichmann, MPY Zeus Student Seminar - PM,

32 Schedule Control (6.5) Milestone Trend Analysis (MTA) control mechanism based on milestones status of the project estimate the further development need for counter measures effectiveness of carried out counter measures plot the current estimate for reaching the milestone vs time (of given reporting date) Riko Wichmann, MPY Zeus Student Seminar - PM,

33 Schedule Control (6.5) Milestone Trend Analysis original milestone dates Report Date milestone will never be reached! Milestone Estimate milestone on time milestone delayed Riko Wichmann, MPY Zeus Student Seminar - PM,

34 Project Cost Controlling (7.4): Earned Value Analysis Method method of Performance Measurement at a given reporting date relative to a baseline incorporates scope, costs (or resources) and schedule developed for industry project of the DoD weighting the activities according to work units (time) cost of man power overall costs other risk factors see also: Riko Wichmann, MPY Zeus Student Seminar - PM,

35 Earned Value Analysis: Motivation Description: 50 week project duration; 10 milestones, total budget 1 Mio. but 1. milestone reached after 5 weeks planned spending (PV) : 100 k earned value (EV) : 75 k actual costs (AC) : 125 k Riko Wichmann, MPY Zeus Student Seminar - PM,

36 Earned Value Analysis: Definitions according to PMBOK: Old (1996) New (2000)Description BCWS PV Budgeted Cost of Work Scheduled Planned Value BCWP EV Budgeted Cost of Work Performed Earned Value ACWP AC Actual Cost of Work Performed CV CV CV=EV-AC, Cost Variance SV SV SV=EV-PV, Schedule Variance CPI SPI CPI SPI CPI=EV/AC, Cost Performance Indicator SPI=EV/PV, Schedule Performance Indicator Riko Wichmann, MPY Zeus Student Seminar - PM,

37 Earned Value Analysis: Motivation II Description: 50 week project duration; 10 milestones, total budget 1 Mio. but 1. milestone reached after 5 weeks planned spending (PV) : 100 k earned value (EV) : 75 k actual costs (AC) : 125 k CV = EV-AC = -50 k (!!) CPI = EV/AC = 0.60 SV = EV-PV = -25 k SPI = EV/PV = 0.75 Riko Wichmann, MPY Zeus Student Seminar - PM,

38 Earned Value Analysis accumulated value B A C A C C V E V C P I (% ) = E V / A C P V Project Start jetzt Time Project End AC BAC CPI CV Actual Cost (was ACWP) Budget at Completion Cost Performance Index Cost Variance (= AC-EV) EV Earned Value (was: BCWP) PV Planned Value (Cost-Baseline) % Compl. Percent Completed Riko Wichmann, MPY Zeus Student Seminar - PM,

39 Estimate at Completion (EAC) Accumulated Value 4. actual costs until now plus new estimate of further spendings deviations from plan point to fundamentally wrong planning so far B A C 1. actual costs until now plus corrected budget remaining deviations are assumed to be typical A C 2. actual costs so far plus remaining planned budget deviations are assumed to be atypical 3. actual costs until now plus corrected budget remaining (-) deviations so far can be compensated Project Start P V (B a s e lin e ) jetzt Project End Time Riko Wichmann, MPY Zeus Student Seminar - PM,

40 Estimate at Completion: - Types - 1) typical deviation: actual cost + corrected budget remaining => EAC = BAC/CPI 2) atypical deviation: actual cost + old remaining budget estimate => EAC = BAC + CV 3) compensation of cost so far => EAC = BAC 4) fundamentally wrong planning: => new BAC Riko Wichmann, MPY Zeus Student Seminar - PM,

41 Summary: Modern Project Management project: unique, start and end, limited resources, goal PM: structured (and formalized) description of common sense processes describe aspects of project work gives guide lines and rules create transparency among all project stake holders especially for the project leader increase the probability to finish a project in-time, on-budget and with defined functionality / scope key words: project phase, process group model, network diagram, critical path, milestone and trend analysis, EVA Riko Wichmann, MPY Zeus Student Seminar - PM,

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