Project and Contract Management Guideline November 2015

Transcription

1 Prject and Cntract Management Guideline Nvember 2015 P a g e 1

2 Table f Cntents 1. INTRODUCTION THE NEED FOR A PROJECT/CONTRACT MANAGEMENT GUIDELINE PURPOSE OF THE GUIDELINE WHAT IS PROJECT MANAGEMENT? WHAT IS A SUCCESSFUL PROJECT? PRINCIPLES OF PROJECT MANAGEMENT PRIORITISING PROJECTS INTRODUCTION PRINCIPLES OF INFRASTRUCTURE PRIORITISATION PROJECT LIFE CYCLE INITIATION PHASE PLANNING PHASE IMPLEMENTATION (EXECUTION), MONITORING AND CONTROL PHASE CLOSING PHASE PROJECT MANAGEMENT KNOWLEDGE AREAS PROJECT INTEGRATION MANAGEMENT Get Buy-In Create a Plan f Attack Be Willing t Make Tradeffs Learn Frm Yur Mistakes (And Successes) PROJECT INTEGRATION MANAGEMENT PROCESSES Develp Prject charter prcess Defining the Prject Charter What Des the Prject Charter Include? Prject Overview Sectin Prject Apprach Sectin Prject Apprval Sectin Wh Is Respnsible fr the Prject Charter? Develp Preliminary Scpe Statement Develp Prject plan PROJECT SCOPE MANAGEMENT Develp a Scpe Statement PROJECT TIME MANAGEMENT PROJECT COST MANAGEMENT PROJECT QUALITY MANAGEMENT Develping a quality management plan PROJECT PROCUREMENT MANAGEMENT Prcurement Management Planning PROJECT HUMAN RESOURCE MANAGEMENT PROJECT COMMUNICATION MANAGEMENT Develp Prject Cmmunicatin Plan Methds f Cmmunicatin PROJECT RISK MANAGEMENT Prject Risk Management Prcess Objective setting Risk Analysis P a g e 2

3 Mnitring and Cntrl Develping a risk management plan PROJECT STAKEHOLDER MANAGEMENT ROLES OF THE CONSULTANT/PUBLIC BODIES ROLE OF THE CONSULTANT ROLE OF PUBLIC BODIES CONSTRUCTION PROJECT MANAGEMENT COMMISSIONING PHASE OF A PROJECT Pre-Prject Planning Effects f Prject Risks n Organisatin ENVIRONMENTAL AND LAND ISSUES Restrictins n transfer f rights in public assets t private sectr peratr Clear title in interest in land and land registratin Vesting f Rights f Access t and use f Third Party Land Acquisitin f Land fr Prject frm Third Parties Exprpriatin Planning permissin Envirnmental and scial issues and envirnmental assessment Internatinal Finance Institutins Requirements Limitatin f Envirnmental Liability MANAGEMENT OF DESIGN AND CONSTRUCTION PHASE Design and Cnstructin as an Integrated System Design Methdlgy Cnstructin Site Envirnment Cnstructin Planning PROJECT CLAIM MANAGEMENT Claim Management Claim Preventin Claim Mitigatin Claim Pursuance Claim Identificatin Claim Quantificatin Claim Reslutin CONTRACT MANAGEMENT AND ADMINISTRATION IMPORTANCE OF GOOD CONTRACT MANAGEMENT AND ADMINISTRATION OVERSIGHT OF CONTRACT MANAGEMENT AND ADMINISTRATION GOVERNANCE STRUCTURE CONTRACT MANAGEMENT MECHANISMS HUMAN RESOURCES AND COMPETENCY LEVELS ROLES IN CONTRACT MANAGEMENT Cntract wners Cntract manager Finance Legal Executive Authrity Risk Management / Internal Audit Audit Cmmittees CLASSIFICATION OF CONTRACTS CONTRACT LIFE CYCLE Planning P a g e 3

4 Creatin Cllabratin Executin Administratin Clseut/Pst-implementatin review DOCUMENT AND INFORMATION MANAGEMENT Recrd Keeping A Typical Set f Recrds Managing the Recrds Change management ENTERPRISE CONTRACT MANAGEMENT (ECM) Enhanced visibility Reducing csts and increasing revenue Cmpliance with regulatins and prcedures CONTRACT MANAGEMENT CHECKLIST Cntract Planning Cntract Creatin Cntract Cllabratin Cntract Executin Cntract Administratin Cntract Clseut r Prject pst-implementatin review REFERENCE LIST P a g e 4

5 1. Intrductin Public sectr rganisatins respnsible fr infrastructure develpment in mst nn-industrialised cuntries, which include infrastructure departments/ministries, parastatal rganisatins and ther public bdies qualify as prject-riented rganisatins (POO). At face value they purprt t be fully fledged prject-riented rganisatins and perfrming as cmpetent PM rganisatins, while in reality they are predminantly dependent n accidental prject managers. Many individuals find themselves undertaking prject management respnsibilities with little r n preparatin. Referred t as accidental prject managers, they have n training r experience and must ften manage prjects while invlved in day-t-day peratinal activities. Due t the surge in prjects in the public sectr, there is a grwing need fr gvernment departments t becme mre respnsive t change, and that they are increasingly recgnising that the prject is an adaptable frm f wrk rganisatin. The public sectr ften appints untrained staff t manage prjects whenever there is an unexpected need fr prject management. It is reflective f an rganisatin that is nt fully recgnising the critical nature f the prject management functin. There may be a relatively high level f buy-in and plitical supprt which indicates a willingness r enthusiasm fr prject management success but the lack f methdlgies and tls implies a lack f preparedness and a lack f sund prject management fundatin frm which t achieve successful prject utcmes. The public sectr senir management needs t re-evaluate the way it selects prject managers s that individuals with the apprpriate skills are chsen t undertake this imprtant rle. This includes senir management being mre practive in ffering develpmental pprtunities t bth existing and ptential prject managers. The lack f prject management tls, techniques and methdlgies shuld be f cncern t rganisatins and senir managers. Withut prper prject management tls, an rganisatin des nt have a strng fundatin frm which t build skilled prject managers, an rganisatinal culture f prject management, and ultimately, better utcmes. P a g e 5

6 2. The need fr a prject/cntract management guideline The findings frm The Review Reprt fr Prpsed Imprvement in the Prject and Cntract Management prcess fr the Prcurement Plicy Office in the Ministry f Finance and Ecnmic Develpment fr the Republic f Mauritius drafted in 2015 indicates a clear need fr a prject/cntract management guideline. There are big gaps which need t be filled regarding varius prject elements listed belw. Issues relating t nn-cmpliance with the rules f legislatin can be attributed t a general lack f knwledge with regard t managing prjects r prper cntract administratin. Guidance is required t ensure adherence t the laws, as well as aviding prject/cntract cst verruns and delays. The guidance wuld enable prject/cntract managers t better understand the requirements f prject management and enable them t manage prjects/cntract mre effectively and efficiently. This includes elements f cntract administratin best practice. P a g e 6

7 3. Purpse f the Guideline The purpse f this Prject and Cntract management guideline is t help prject managers t rganise, plan and cntrl prjects and cntracts. It is designed t help yu t maximise the ptential fr yur prjects t succeed by helping yu address each element f yur prject at the right time and t the right level f detail fr the size and cmplexity f yur prject. T help yu manage yur prjects and cntracts, the guideline, which can be applied t any type f prject/cntract in the rganisatin and its delivery partners, prvides: guidance n prject management, including an insight int the principles f prject management; prject priritisatin: an understanding f the different phases f a prject life cycle and prjects prcesses required t be managed; prject management knwledge areas t steer yu thrugh key prject management tasks; tgether with a high-level summary f Inputs, tls and techniques, and utputs fr the prject management knwledge areas; suggested rles f cnsultants and public bdies; cnsideratin f cnstructin management cmmissining and envirnmental and land issues; and guidance n claims prcedures n prjects. guidance n cntract management, including: Oversight, gvernance, mechanisms, rles and classificatin The cntract life-cycle Dcument and Infrmatin management Enterprise Cntract management; and A Cntract Management checklist. The fllwing are nt addressed in the guide, but are available frm a variety f ther surces: general prject management thery; detailed inputs, tls and techniques and utputs fr prject management knwledge areas; access t templates fr essential prject management dcuments/frms; and the sft skills necessary fr effective prject management. P a g e 7

8 4. What is Prject Management? Mre specifically, what is a prject? The Prject Management Institute defines a prject as a temprary endeavur undertaken t create a unique prduct, service r result. A prject is temprary in that it has a defined beginning and end in time, and therefre defined scpe and resurces. A prject is unique in that it is nt a rutine peratin, but a specific set f peratins designed t accmplish a singular gal. A prject team ften includes peple wh d nt usually wrk tgether smetimes frm different rganisatins and acrss multiple gegraphies. The develpment f sftware fr an imprved business prcess, the cnstructin f a building r bridge, the relief effrt after a natural disaster, - all are prjects. All must be expertly managed t deliver the n-time, n-budget results, learning and integratin that rganisatins need. Prject management, then, is the applicatin f knwledge, skills, tls, and techniques t prject activities t meet the prject requirements; and applicatin and integratin f the life cycle phases and prcesses which fall int fur grups: Initiatin; Planning; Implementatin (Executin), Mnitring and Cntrl; and Clsure. The prject manager is respnsible fr managing the prject bjectives and includes: identifying requirements; establishing clear and achievable bjectives; balancing cmpeting demands fr quality, scpe, time, cst; and adapting specificatins, plans and apprach fr changing risks, circumstances and expectatins frm stakehlders. Much f the knwledge required is unique t prject management; hwever, the prject manager/team als requires an understanding f the fllwing: applicatin area knwledge, standards and regulatins; the prject management envirnment; general management; and interpersnal skills. Prgrams are a cllectin f prjects that are managed in sme way t prduce a mre efficient utcme. The prgram manager des nt manage the specific prjects, but rather c-rdinates the utcme f the grup f prjects by changing their resurces, r changing their scpe. Prtflis are rganisatinal-wide cllectins f prjects r prgrams, where each prject/prgram is initiated in rder t achieve the best utcme fr the rganisatin as a whle. Prject prtfli management thery is an extensin f financial prtfli thery. Prtflis recgnise that n rganisatin has sufficient resurces t undertake all f the pssible prjects that it might want t d. P a g e 8

9 5. What is a successful prject? T be successful a prject must: deliver the utcmes and benefits required by the rganisatin, its delivery partners and ther stakehlder rganisatins; create and implement deliverables that meet agreed requirements; meet time targets; stay within financial budgets; invlve all the right peple; make best use f resurces in the rganisatin and elsewhere; take accunt f changes in the way the rganisatin perates; manage any risks that culd jepardise success; and take int accunt the needs f staff and ther stakehlders wh will be impacted by the changes brught abut by the prject. P a g e 9

10 6. Principles f Prject Management Principle 1: Visin and Missin In rder t be successfully executed, every prject r initiative shuld begin with the end in mind. This is effectively accmplished by articulating the Visin and Missin f the prject s it is crystalclear t everyne. Creating a visin and missin fr the prject helps clarify the expected utcme r desired state, and hw it will be accmplished. Principle 2: Strategic Objectives The next step is t establish tw t three gals r bjectives fr the prject. What is the reasn it is being implemented fr? Als, it's imprtant t specifically quantify the amunt f imprvement that is expected, instead f being vague. Principle 3: Standards f Engagement Simply put, this means establishing wh will be part f the prject team? What will be the frequency f meetings? What are the meeting grund rules? Wh is the prject wner? Wh is designated t take ntes, and distribute prject meeting minutes and actin steps? This ges alng with any ther meeting prtcl that needs t be clarified. Principle 4: Interventin and Executin Strategy This is the meat f the prject and includes using a gap analysis prcess t determine the mst suited interventin (slutin) t reslve the issue yu are wrking n. Once the best pssible interventin has been identified t reslve the issue, then we must map ut ur executin strategy fr implementing the interventin. This includes identifying wh will d what, when, hw, and why? Principle 5: Organisatinal Alignment T ensure the success and sustainability f the new initiative r prcess brught n by this prject, everyne it will directly impact must be nbard. T achieve rganisatinal alignment (r buy-in), nging cmmunicatin must be emplyed in-persn during team meetings, electrnically via and e-learning (if applicable), and thrugh training. Principle 6: Measurement and Accuntability And last, hw will we determine success? Accuntability means that cnsistently, tp perfrmers will be rewarded and recgnised; while thse needing imprvement will be cached with specific expectatins and cnsequences clearly utlined. P a g e 10

11 7. Priritising Prjects 7.1. Intrductin Additinal investment is needed t expand, update and mdernise infrastructure acrss develped and develping ecnmies t meet the grwing demands f cnsumers and businesses and meet the challenges f climate change. Estimates f the size f the infrastructure gap suggest that the financing required significantly utstrips available resurces. It is therefre critical t achieving the internatinal cmmunity s grwth, jb creatin and pverty alleviatin gals that gvernments allcate scarce resurces available fr infrastructure investment where they will have the greatest impact. With a plethra f cmpeting demands, priritising investment prjects is crucial. This means chsing thse investments with the greatest ecnmic ptential by achieving the right balance between new infrastructure and peratins and maintenance. Having a sund and transparent priritisatin prcess is essential fr gvernments, nt nly t maximise the ecnmic, envirnmental and scial benefits f infrastructure investments, but als t attract additinal financing, including frm the private sectr. Imprtantly, this prcess squarely allcates public resurces within the cntext f a gvernment s fiscal cnstraints. An infrastructure plan that has a rbust evidence base, has been discussed with a wide grup f stakehlders, and has sufficient crss-party plitical supprt, is mre likely t be preserved after a change f gvernment. A rbust lng-term infrastructure develpment plan gives cnfidence t financiers and cnstructin cmpanies that lk fr a secure and predictable pipeline f prjects. This reduces risks and therefre price premiums. While infrastructure plans shuld be specifically tailred t suit the needs f sectr and cuntry cnstraints, there are cmmn principles that can serve as the fundatin and prvide a guide t decisin makers. It is essential t have well-defined, transparent and clear criteria t priritise prjects s that their selectin is bjective and free f plitical influence. The principles set ut belw are intended t help guide gvernments in their effrts t priritise infrastructure activities t enhance the impact f the limited resurces spent n infrastructure investment, hwever may be equally applied t prjects f a nn-infrastructural nature. P a g e 11

12 7.2. Principles f Infrastructure Priritisatin Principle One: A cuntry s lng-term strategic visin shuld guide the preparatin f its infrastructure plan A cuntry s sectr strategies are bth aspiratinal dcuments and cmmunicatin tls that prvide the ratinale fr a cunty s prgram f investments, while each prject identified and develped by sectr and sub-natinal agency prvides the means by which the strategy can be achieved. Develping a prgram f infrastructure investment fr the next 10+ years that targets the ecnmic, envirnmental and scial gals f the cuntry requires, at a minimum, that each prject selected fr public supprt clearly and explicitly aligns with the lng-term strategic visin. Shwing the benefits f sectr investments fr achieving the strategic visin f the cuntry is imprtant t gain plitical as well as financial supprt fr its executin. Usually, alignment with cuntry visin becmes ne f the main criteria fr priritisatin. Principle Tw: Rbust and transparent selectin criteria shuld maximise ecnmic, scial and envirnmental impact Gvernments shuld adpt crss-cutting, clear and rbust selectin criteria and a management framewrk t imprve the bjectivity, credibility and ecnmic impact f investment decisins. Selecting infrastructure prjects requires a thrugh understanding f the extent t which sciety (as a whle and in its cnstituent parts) will benefit frm that investment. Assessment f the benefits shuld nt nly include likely ecnmic benefits and csts, but als scial and envirnmental nes. The latter are usually mre difficult t quantify and may require sme qualitative data based n perceptins. Hwever, all are fundamental building blcks. In particular, the ecnmic internal rate f return f a prject synthesises the ecnmic value f a prject and estimates that value thrugh a cst-benefit analysis (CBA). When the envirnmental and scial cst and benefits can be quantified, they are incrprated in the CBA. Ntably, an imprtant part f assessing benefits frm infrastructure is hw infrmatin is dealt with as part f the decisin making prcess. This is because public investment decisins acrss infrastructure sectrs require the synthesis f large quantities f infrmatin that cut acrss industries, services and ppulatin centres, bth sectrally and gegraphically. Principle Three: Investment plans shuld cnsider the entire life-cycle f the assets Optimising resurce allcatin fr infrastructure investment shuld take int accunt csts acrss the entire life-cycle f an asset including capital csts (CAPEX), rutine and peridic maintenance, depreciatin and cntingency csts. This type f csting usually requires adaptatin f the traditinal apprach t prject prcurement, which emphasises that the lwest bid (based n CAPEX alne) is selected. The life-cycle apprach requires that a lnger-term cst hrizn is used, which may result in a bid being selected that des nt ffer the lwest CAPEX, but prvides the greatest financial savings ver the life f the asset. P a g e 12

13 Gvernments shuld cnsider the whle lifecycle cst in the design, building and maintenance f assets as part f their due diligence. Fr example, Public-Private Partnership (PPP) arrangements t build and perate an asset shift lngterm peratin and maintenance respnsibilities t the cncessin cmpany creating a strnger incentive t ensure lng-term cnstructin quality because the firm will be respnsible fr peratins and maintenance csts many years dwn the rad. It als encurages mre preventative maintenance and reduces the risk f future fluctuatins in peratins csts. Principle Fur: Ptential netwrk and crss-sectral impacts shuld be accunted fr One f the defining features f infrastructure assets is that they d nt perate in islatin, but are part f an intricate system r netwrk. Fr example, the decisin t invest n rads will depend n the cnditins f the netwrk f ther mdes f transprtatin. Mrever, the decisin t invest in a rad may have an impact n the cst f expanding transmissin lines and/r irrigatin systems. Investments in a platfrm f urban services may prduce ecnmic returns greater than the sum f each individual investment as infrastructure investments may change land usage, prductivity levels, settlement patterns and prperty values. Investment decisins made in islatin may result in excess capacity, redundant assets and wasted resurces. Prject evaluatrs shuld incrprate crss-sectral, netwrk effects, and quantify externalities int the prject evaluatin. Accunting fr crss-sectral impacts and synergies requires an integrated planning prcess that incrprates the likely spill ver effects bth psitive and negative frm a particular infrastructure investment. This may require integrative spatial tls, land use mdelling and ther methdlgies that estimate spill ver effects f investments that are related spatially r alng a supply chain Principle Five: Analysis shuld be based n reliable data In rder t estimate the infrastructure investment needs f the cuntry and apply priritisatin criteria, it is imprtant t rely n sund and cmprehensive databases including financial and nn-financial infrmatin (e.g., usage rates, ppulatin density, infrastructure assets and the quality f the services, inventry f infrastructure unit cst). Data is cstly t cllect and update, hwever it is a crnerstne f asset management. The availability and quality f data will determine the accuracy f the priritisatin prcess and its utcmes. Many cuntries generate significant amunts f data but this is nt cllected with a systematic and standardised apprach making difficult its use fr future analysis (e.g., data is in paper frm, is nt categrised and is nt in a readily usable frmat). Understanding the existing surces f primary and secndary data, the data gaps, as well as develping adequate digital platfrms t stre, share and prcess infrmatin is the starting pint. Updating data and filling the gaps is cstly and time cnsuming and demands a significant allcatin f resurces. Hwever, the benefits f ding this can pay fr the initial utlay many times ver by allwing fr better selectin f prjects, and ultimately the cmmditisatin f certain infrastructure csts (e.g., cst per kilmetre f rad). Cuntries apprach data cllectin in different ways. P a g e 13

14 Principle Six: Supprt is needed frm a wide range f stakehlders and acrss plitical parties Priritisatin criteria, as well as the final infrastructure investment plan, require cnsultatin with a wide range f relevant stakehlders. Having supprt acrss plitical parties is a crucial part f this. A plan that is recgnised and supprted by a brad audience is mre likely t be preserved after a change f administratin and this may help lwer investment csts. This requires cnsultatin nt nly during the priritisatin prcess but als during the preparatin and implementatin f the prjects t get feedback t imprve the systems and t ensure and retain stakehlder participatin. Principle Seven: Financing arrangements shuld be ptimised under different budget cnstraints The public sectr is the largest prvider f infrastructure. Ntwithstanding, the private sectr will cntinue t play an increasingly crucial rle in mbilising financial resurces and expertise. An assessment f the ptimal structuring f financing fr each prject shuld be carried ut t define the relative use f public versus private sectr financing. The selectin f the apprpriate financing instruments depends n the size f the prject, the amunt and sustainability f its cash flw (e.g., tax payer and/r user fee based), its risk and cllateral structure, the creditwrthiness f the spnsrs, and the legal and regulatry framewrk that prvides prcurement guidance. Private sectr participatin als prvides a crucial surce f technical and financial innvatin, but may create a cntingent liability n the public-sectr balance sheet. Develping scially beneficial infrastructure assets that prvide fr an internal rate f return that is equal t, r greater than, the cst f capital allws private participants t deliver basic services. Such a scenari reduces the direct CAPEX and peratinal expenditure (OPEX) charges n the public purse and may allw fr a mre targeted allcatin f service csts t the specific users f the delivered service. Hwever, the public balance sheet des incur the bligatin, r liability, either directly thught capital grants r ther frms f public supprt, r indirectly thrugh supprt t debt bligatins, revenue r terminatin payments if a legitimate circumstance arises frm the cntractual arrangement f the scheme with the private participant. It is therefre imprtant that the public sectr develp an adequate capacity fr managing its debt, including cntingent liabilities befre engaging in ptentially cstly partnerships with financing partners. Principle Eight: Delivery ptins shuld be ptimised The private sectr, under certain circumstances, may be able t build, perate and/r maintain an infrastructure asset mre efficiently than the public sectr. Gvernments shuld assess the csts and benefits f delivering thrugh the public r private sectr r a cmbinatin f bth. One way f ding this invlves using a public sectr cmparatr t benchmark the cst f public versus private prvisin, establishing key parameters fr cmparisn such as assciated csts f investment, cst f capital and efficiency gains that may be derived in cnstructin, peratin and maintenance. Ultimately, when evaluating the ptimal use f gvernment resurces, the cmparisn between private and public sectr delivery f the asset thrughut its life shuld determine which f these appraches prduces greater savings. This due diligence needs t happen befre the decisin is made t bid ut arrangements such as PPPs. At the end, the decisin between public r private delivery P a g e 14

15 needs t be determined by the relative benefits t sciety and the plitical ecnmy f decisinmaking. Mrever, the decisin needs t be cnsistent with prudent gvernment fiscal plicy and debt management. Principle Nine: Institutinal and technical capacity shuld be develped t implement the plan Capacity t prepare, evaluate and bring prjects t market needs t be cnsidered and a strng methdlgical framewrk put in place when develping a cmprehensive apprach t infrastructure planning. While a cuntry may have the financial resurces t fund a pipeline f prjects, it may nt have the institutinal and technical capacity t prepare, develp and/r supervise them efficiently. The reality is that the uneven distributin f technical capability within and acrss sectrs can affect the allcatin f resurces, with the capacity t prepare r develp sme prjects cmprmised, such that sme sectrs receive insufficient funds frm central ministries. The priritisatin prcess shuld nt ignre these relative cnstraints as they are essential t the efficient use f resurces. A strng methdlgical framewrk t prepare, evaluate and bring prjects t market is als needed and shuld be included as part f a cuntry s frmal prject-appraisal methdlgy. An adequate methdlgy shuld becme the precnditin fr (i) (ii) (iii) ptimising prject selectin and planning; giving a clear mandate t institutins/prcesses t manage the prject cycle and its implementatin; and ensuring and enhancing public infrastructure prject s credibility and visibility t attract the private sectr. Principle Ten: Plans shuld be flexible and adaptable t incrprate feedback Mnitring and evaluating the develpment and implementatin f infrastructure prjects needs t be an integral part f the implementatin f infrastructure plans. This prcess shuld allw fr the creatin f feedback mechanisms that prvide the public sectr with credible and impartial infrmatin t gauge the perfrmance f particular agencies, t identify technical and ther gaps and, ver time, t link sectr transfers t the achievement f certain prject-level utcmes. Determining whether a prject has achieved the desired bjective in a cst-effective fashin allws decisin-makers t recalibrate expectatins fr the next generatin f infrastructure investments. Therefre, flexibility and adaptability ver time are crucial t a dynamic prcess f priritisatin. P a g e 15

16 8. Prject Life Cycle The prject manager and prject team have ne shared gal: t carry ut the wrk f the prject fr the purpse f meeting the prject s bjectives. Every prject has a beginning, a middle perid during which activities mve the prject tward cmpletin, and an ending (either successful r unsuccessful). A standard prject typically has the fllwing fur majr phases (each with its wn agenda f tasks and issues): initiatin, planning, implementatin, and clsure. Taken tgether, these phases represent the path a prject takes frm the beginning t its end and are generally referred t as the prject life cycle. In rder t manage effectively it helps t understand the typical life cycle f a prject and hw it applies t yur specific prject, yu need t decide hw the management activities f the lifecycle steps will be achieved, and precisely wh will be invlved. Yu must make sure yu understand yur rle in making these things happen in the right way and at the right time. Much f the prject management effrt acrss the life cycle will be driven by the wner/spnsr f the prject, and the Prject Manager. T achieve success they will almst certainly need t draw upn the skills and experience f many thers frm within the rganisatin, its partners and suppliers Initiatin phase During the first f these phases, the initiatin phase, the prject bjective r need is identified; an apprpriate respnse t the need is dcumented in a business case with recmmended slutin ptins; and a feasibility study is cnducted t investigate whether each ptin addresses the prject bjective and a final recmmended slutin is determined. Issues f feasibility ( can we d the prject? ) and justificatin ( shuld we d the prject? ) are addressed. Once the recmmended slutin is apprved, a prject is initiated t deliver the apprved slutin and; a prject manager is appinted; the majr deliverables and the participating wrk grups are identified, and the prject team begins t take shape; and apprval is then sught by the prject manager t mve nt the detailed planning phase. P a g e 16

17 8.2. Planning phase The next phase, the planning phase, is where the prject slutin is further develped in as much detail as pssible and the steps necessary t meet the prject s bjective are planned; the team identifies all f the wrk t be dne; the prject s tasks and resurce requirements are identified, alng with the strategy fr prducing them. This is als referred t as scpe management ; a prject plan is created utlining the activities, tasks, dependencies, and timeframes; and the prject manager crdinates the preparatin f a prject budget by prviding cst estimates fr the labr, equipment, and materials csts. The budget is used t mnitr and cntrl cst expenditures during prject implementatin. Once the prject team has identified the wrk, prepared the schedule, and estimated the csts, the three fundamental cmpnents f the planning prcess are cmplete. This is an excellent time t identify and try t deal with anything that might pse a threat t the successful cmpletin f the prject. This is called risk management. In risk management, high-threat ptential prblems are identified alng with the actin that is t be taken n each high-threat ptential prblem, either t reduce the prbability that the prblem will ccur r t reduce the impact n the prject if it des ccur. This is als a gd time t identify all prject stakehlders and, establish a cmmunicatin plan describing the infrmatin needed and the delivery methd t be used t keep the stakehlders infrmed. Finally, yu will want t dcument a quality plan, prviding quality targets, assurance, and cntrl measures, alng with an acceptance plan, listing the criteria t be met t gain custmer acceptance. At this pint, the prject wuld have been planned in detail and is ready t be executed. P a g e 17

18 8.3. Implementatin (executin), mnitring and cntrl phase During the third phase, the implementatin, mnitring and cntrl phase, the prject plan is put int mtin and the wrk f the prject is perfrmed. It is imprtant t maintain cntrl and cmmunicate as needed during implementatin; and prgress is cntinuusly mnitred and apprpriate adjustments are made and recrded as variances frm the riginal plan. In any prject, a prject manager spends mst f the time in this step. During prject implementatin, peple are carrying ut the tasks and, prgress infrmatin is being reprted thrugh regular team meetings. The prject manager uses this infrmatin t maintain cntrl ver the directin f the prject by cmparing the prgress reprts with the prject plan t measure the perfrmance f the prject activities and take crrective actin as needed. The first curse f actin shuld always be t bring the prject back n curse (i.e., t return it t the riginal plan). If that cannt happen, the team shuld recrd variatins frm the riginal plan and recrd and publish mdificatins t the plan; prject spnsrs and ther key stakehlders shuld be kept infrmed f the prject s status accrding t the agreed-n frequency and frmat f cmmunicatin. The plan shuld be updated and published n a regular basis. Status reprts shuld always emphasise, the anticipated end pint in terms f cst, schedule, and quality f deliverables; each prject deliverable prduced shuld be reviewed fr quality and measured against the acceptance criteria. Once all f the deliverables have been prduced and the custmer has accepted the final slutin, the prject is ready fr clsure. P a g e 18

19 8.4. Clsing phase During the final clsure, r cmpletin phase, the emphasis is n releasing the final deliverables t the custmer; handing ver prject dcumentatin t the business; terminating supplier cntracts; releasing prject resurces; and cmmunicating the clsure f the prject t all stakehlders. The last remaining step is t cnduct lessns-learned studies t examine what went well and what did nt. Thrugh this type f analysis, the wisdm f experience is transferred back t the prject rganisatin, which will help future prject teams. P a g e 19

20 9. Prject Management knwledge areas Prject management knwledge (based n PMBOK) draws n ten areas, and invlves varius prcesses: 1. Prject Integratin Management 1.1. Develp Prject Charter 1.2. Preliminary Prject Scpe Statement 1.3. Develp Prject Management Plan 1.4. Direct and Manage Prject Executin 1.5. Mnitr and Cntrl Prject Wrk 1.6. Integrated Change Cntrl 1.7. Clse Prject 4. Prject Cst Management 4.1. Cst Estimating 4.2. Cst Budgeting 4.3. Cst Cntrl 2. Prject Scpe Management 2.1. Scpe Planning 2.2. Scpe Definitin 2.3. Create WBS 2.4. Scpe Verificatin 2.5. Scpe Cntrl 5. Prject Quality Management 5.1. Quality Planning 5.2. Perfrm Quality Assurance 5.3. Perfrm Quality Cntrl 3. Prject Time Management 3.1. Activity Definitin 3.2. Activity Sequencing 3.3. Activity Resurce Estimating 3.4. Activity Duratin Estimating 3.5. Schedule Develpment 3.6. Schedule Cntrl 6. Prject Prcurement Management 6.1. Plan Purchases and Acquisitins 6.2. Plan Cntracting 6.3. Request Seller Respnses 6.4. Select Sellers 6.5. Cntract Administratin 6.6. Cntract Clsure 7. Prject Human Resurce Management 7.1. Human Resurce Planning 7.2. Acquire Prject Team 7.3. Develp Prject Team 7.4. Manage Prject Team 8. Prject Cmmunicatins Management 8.1. Cmmunicatins Planning 8.2. Infrmatin Distributin 8.3. Perfrmance Reprting 8.4. Manage Stakehlders 9. Prject Risk Management 9.1. Risk Management Planning 9.2. Risk Identificatin 9.3. Qualitative Risk Analysis 9.4. Quantitative Risk Analysis 9.5. Risk Respnse Planning 9.6. Risk Mnitring and Cntrl 10. Prject Stakehlder Management Stakehlder Identificatin Stakehlder Management Stakehlder Reprting P a g e 20

21 9.1. Prject integratin management Prject Integratin Management is the prcesses and activities needed t identify, define, cmbine, unify, and crdinate activities within the Prject Management Prcess Grups. It invlves making trade-ffs amng cmpeting bjectives and alternatives t meet r exceed stakehlder needs and expectatins. T help yu better c-rdinate and manage the varius elements f the prject, there are fur keys t integratin management: Get Buy-In Create a Plan f Attack Be Willing t Make Tradeffs Learn Frm Yur Mistakes (And Successes) Get Buy-In Fr integratin management t be effective, yu need t get buy-in frm key stakehlders and team members. Getting buy-in frm the get g will ensure that yur prject receives the supprt and funding needed fr it t be successful. T get buy-in, start by creating a prject charter and a preliminary scpe statement. The prject charter initiates the prject and includes: the necessary apprvals and sanctins; it gives the prject manager authrity t act and apply rganisatinal resurces t the prject; and defines the bjectives and participants in a prject, with the preliminary delineatin f rles and respnsibilities. Alng with the prject charter, yu will need t develp a preliminary scpe statement, which includes: a high-level definitin f the prject scpe and defines the reasns fr undertaking the initiative; the bjectives and cnstraints f the prject; directins cncerning the slutin; identifies the main stakehlders; defines the prject's prduct r service; methds fr apprval; and tactical strategies fr the change cntrl prcess. With the prject charter and preliminary scpe statement in hand, yu have the ammunitin, and mst imprtantly, the authrity t guarantee that resurces are crdinated and scheduled in the manner and time yu request. P a g e 21

22 Create a Plan f Attack Nw that yu have a prject charter and the bjectives f the prject have been clearly defined, it is time t create a plan f attack. This is dne in the frm f a prject plan. Start by identifying the activities needed t effectively execute, manage, and mnitr the prject. Prject management sftware can really help with this step and allws yu t plan and mnitr the prject frm anywhere at any time. The sftware helps yu create the prject timeline and tasks, allcate the required resurces, and get the day-t-day status updates needed t effectively manage the prject. As yu develp yur plan, verify that yur team is all n the same page. Make sure each team member can lgin t the prject management sftware and ensure that they all knw hw t update their task cmpletin status. Perfrming this simple step will make reprting and mnitring mre accurate and timely Be Willing t Make Tradeffs One f the biggest challenges yu will face in executing the prject is managing peple, their pinins, and the changes they request. Fr yu t be effective, yu must be willing t make tradeffs. Everybdy wn't get everything they want, but the prject shuld meet the bjectives and requirements established in the prject charter. Orchestrate hw the team implements the prject plan and make sure they cmplete the wrk required in the Prject Scpe Statement. Mnitr and cntrl the prject wrk by measuring and balancing the prgress f the prject. Take crrective r preventative actins as needed t assure that all bjectives are being met. Use the pre-established prcess fr change requests and ensure that all changes g thrugh the prper channels befre they becme a part f the plan. Evaluate all change requests and apprve thse changes that will help yu meet the prject bjectives. Only validated and apprved changes shuld be implemented Learn Frm Yur Mistakes (And Successes) Hpefully, befre yu ever started the prject, yu clearly defined what it means fr the prject t be cmplete. As yu finish up, verify that all f the prject activities are cmplete and that the final prduct r service meets the expectatins f the client and/r stakehlders. Obtain a written apprval f the prject cmpletin. Once the prject has been frmally clsed, it is nw time t learn frm yur mistakes and successes. Arrange a frmal review meeting and hld a brainstrming sessin where yu list all f the mistakes made during the prject. Nw make a list f all the things that went right. Hw can yu learn frm this experience? What are the takeaways frm prject and hw can yu prepare fr these challenges in yur next prject? This exercise will build team camaraderie and will help yu be mre effective in yur next prject. P a g e 22

23 9.2. Prject Integratin Management prcesses The knwledge area f Prject Integratin Management cnsists f the fllwing seven prcesses - Prject Integratin Prcesses Prcess Prject Phase Key Deliverables Develp Prject Charter Initiating Prject Charter Develp Preliminary Scpe Statement Initiating Preliminary Scpe Statement Develp Prject Management Plan Planning Prject Management Plan Direct and Manage Prject Wrk Executin Deliverables Mnitr and Cntrl Prject Wrk Perfrm Integrated Change Cntrl Mnitring and Cntrl Change Requests Mnitring and Cntrl Change Requests status updates Clse Prject r Phase Clsure Final prduct Develp Prject charter prcess The first f these prcesses is the develpment f the prject charter. The prject charter initiates the prject. This dcument authrises the prject t get underway. Prject charters state the prject bjectives and name the prject manager. A prject charter describes what yur prject is and hw yu will apprach it, and it lists the names f all stakehlders. It is a critical cmpnent f the prject management initiatin and planning phases, and yu will refer t it thrughut the life f the prject. The Inputs, Tls and Techniques and Output f the Develp Prject Charter prcess are given belw. Develp Prject Charter prcess Inputs Tls & Techniques Outputs Prject Statement f wrk Prject selectin methds Prject Charter Business case Cntract Prject management methdlgy Prject Management Infrmatin system Enterprise envirnmental factrs Expert judgment Organisatinal prcess assets P a g e 23

24 Defining the Prject Charter When yu start a prject, yu must define what needs t be accmplished; and decide hw the prject is ging t prceed. Each prject begins with an idea, a visin, r a business pprtunity - and that is the starting pint that must be assciated with yur rganisatin s business bjectives. The prject charter is that starting pint. The charter lays the fundatin f the prject. It includes a statement f yur business's needs. What is the histry that has led t the need? Hw was it recgnised, and why is it planned nw? Next, yu must stipulate the prject's purpse. Hw will yu reach yur gals? What deliverables can yu prmise? What are the risks? Yu must identify yur prject resurces and technlgies, and reflect n task dependencies. It is als imprtant t define yur indicatrs f success. Last, yu must tie this in t the rles and respnsibilities f yur prject team. Yu must define resurces - bth human and material - and specify whm r what will fill them. The charter frms a cntract with all stakehlders invlved in the prject. The prject charter is a single, cnslidated surce f infrmatin abut the prject in terms f initiatin and planning. The prject charter defines the bundaries f the prject, n matter what type f prject management methdlgy yu are using. It is much mre than an effective planning tl. It serves bth as anchr, hlding yu t yur bjectives, and as navigatr, guiding yu thrugh the milestnes that will mark yur prgress. The riginal prject charter will nt change thrughut yur prject's life cycle. Once it is apprved by the stakehlders, yu cannt mdify r change the riginal charter withut agreement by all parties invlved What Des the Prject Charter Include? What shuld be included in yur prject charter cntents? Alng with utlining a list f sectins that shuld be a part f almst every prject charter, this guide gives a brief descriptin f these sectins and explains the imprtance f each cmpnent. A prject charter is ne f many prject management frms used in the initiatin and planning stages f prject management and ne f the mst crucial dcuments. Prper cnstructin f a prject charter can help ensure the success f any prject and, likewise, taking shrtcuts in the preparatin f this all-imprtant dcument can subject yur prject t numerus pitfalls and unnecessary hld-ups. S, what shuld yu be sure t include in this frm? P a g e 24

25 Every prject charter shuld cnsist f at least three primary cmpnents: Prject Overview Sectin Prject Apprach Sectin Prject Apprval Sectin The fllwing guidelines will take a clser lk at the items that shuld be detailed in each f these sectins and give a brief explanatin f why that infrmatin is needed Prject Overview Sectin 1. Identificatin (Prject Frmal Name): Give the frmal name f the prject as well as any ther terms that might be used t identify the prject and the primary grups that will be invlved with it. With this cnsistent terminlgy, it will be easier fr all parties invlved such as the prject team, stakehlders, and end users t discuss and wrk n the prject. 2. Prject Backgrund and Histry: Give any backgrund infrmatin that will help explain hw the prject came t be. 3. Prject Purpse and/r Business Need: Explain why the prject is needed. If applicable, include details f why existing tls r prducts are inadequate. If yu have supprting dcuments fr any f these reasns, yu can list them here and include them as appendices t the charter. 4. Prject Scpe and Limitatins: Define the prject scpe, being careful t nte bundaries and limitatins. The prject scpe shuld be clearly detailed s that all parties invlved are very aware f exactly what the prject includes as well as what it des nt. 5. Prject Gals and Objectives: Using apprpriate business terminlgy, state all bjectives fr the prject. Be sure t include the prject's intended purpse in language that is bth cncise and explanatry. 6. Prject Spnsrship and Majr Stakehlders: Prvide a list f names identifying the majr parties invlved in the prject, such as prject spnsrs, stakehlders, and eventual prject wners. In additin, be sure t identify the rle f each individual listed s that there is n cnfusin cncerning respnsibilities later dwn the line. These names shuld als be included in the Prject Apprval sectin see the next page f this guide fr mre details n that sectin f the prject charter. 7. Pertinent Dcuments and References: List any related dcuments r ther resurces that culd be helpful in understanding varius aspects f the prject, such as the scpe and business need. If these dcuments are particularly crucial, they can als be included as appendices t the charter. 8. Overview f Prject Terminlgy: Prvide a basic, but cmplete, glssary that defines special terms related t the prject. If there are any key terms, phrases, r acrnyms that might prve t be cnfusing r new t anyne related t the prject, be sure t include them in this sectin. P a g e 25

26 Prject Apprach Sectin A prject charter shuld als include a Prject Apprach sectin, which gives a high-level verview f hw and when the prject will be cmpleted. Several standard cmpnents nrmally cmprise this sectin. In the fllwing sectin are eight key cmpnents determined t be the mst imprtant. 1. Prject Deliverables: List the majr deliverables f the prject and include when these gals shuld be achieved. Mst imprtantly, remember t include the key milestnes f the prject. 2. Respnsibilities and Rles: Include a summary f all parties that will be invlved in the prject and what their rles will be. Als, list the needed skills and expertise that each individual brings t the prject as well as each persn's respnsibilities. 3. Prject Resurces: In additin t the human cmpnent, what ther resurces will be needed fr satisfactry cmpletin f the prject? Prvide a list f cmputer equipment, raw materials, wrking space, and any ther resurces that might be taxed during the prject's life cycle. If certain resurces will nly be needed during specific phases f the prject, make nte f that as well. 4. Risk Management Overview: Give a summary f the risks that may be encuntered during the prject as well as hw these risks may be minimised. Risk mitigatin and actin steps can be listed. 5. Prject Prcess Summary: Explain which f yur rganisatin's prject management methdlgies will be emplyed fr this prject. If yu plan t deviate frm standard means and methdlgies, explain that as well. 6. Prject Life Cycle Overview: Give a basic breakdwn f the prject life cycle, and list the varius stages that yur prject will g thrugh. Make sure t include the bjectives f each stage; and why the stage is necessary. 7. Basic Prject Cntrl and Cmmunicatin Plan: The prject cntrl cmpnent explains the tls that will be used t assist the prject manager in tracking the prject's prgress. It als serves as a cmmunicatin device fr cmmunicating the prject's prgress t the prject team, prject spnsr, and prject stakehlders. 8. Prject Schedule: Prvide a basic schedule verview that lists, amng ther things, the key milestnes and stages f the prject. Varius exhibits, such as a Gantt chart (including the assciated Wrk Breakdwn Structure) shuld be included in this sectin. Here, it can be quite advantageus t use a prject management sftware tl t prduce a schedule that can be mnitred and adjusted as the prject prgresses. Depending n the size f the prject, such tls can be critical t its success. P a g e 26

27 Prject Apprval Sectin The Apprval sectin f a prject charter may be the simplest sectin t put tgether, but it is ne f the mst critical in terms f the prject's eventual success. This sectin shuld list all f the names and rles f the majr stakehlders alng with their signatures, indicating that each f these individuals is satisfied with the details included in the prject charter. In additin, if the prject will require resurces frm ther departments r grups, a representative frm each f these divisins shuld be listed in the Apprval sectin as well. The signatures f these individuals will signify that they accept their wn respnsibilities fr successful cmpletin f the prject and agree t prvide needed supprt Wh Is Respnsible fr the Prject Charter? With a well-designed prject charter yu will realise benefits such as imprved client partnerships and ther relatinships. Cmmunicatin with prject wners and external stakehlders will flurish, and yur spnsrs will buy in t yur prject mre eagerly. Yu can expect defined prject management prcesses t run mre fluidly. With universal recgnitin f the senir manager, yu will achieve ntime and n-budget delivery f gals. During prject executin, the prject team fcuses n cmpleting the tasks assigned. The Senir Management prtects the prject frm changes and lss f resurces. The Prject Manager integrates all the pieces int the prject as a whle. P a g e 27

28 Develp Preliminary Scpe Statement The secnd prcess f prject integratin management is the develpment f the preliminary scpe statement. The scpe statement defines what-is and what-is-nt a part f the prject. Well-defined scpe statements will list all and nly the wrk invlved with a specific prject. The purpse f the Preliminary Prject Scpe Statement is t identify the high-level prject bjectives. The bjectives must be clear, actinable and measurable. The Inputs, Tls and Techniques and Outputs f the Develp preliminary prject scpe prcess is given belw. Develp Preliminary Prject Scpe Statement prcess Inputs Tls & Techniques Outputs Prject charter Expert judgment Preliminary prject scpe statement Prject Statement f wrk Enterprise envirnmental factrs Organisatinal prcess assets Recmmended sectins fr the Preliminary Prject Scpe Statement include: 1. Prject Descriptin: Explain what the prject is, and hw it will be accmplished. Explain the ultimate intended utcme f the prject. This shuld serve as a brief intrductin. Prvide sme backgrund abut the histry f hw the prject gt t this pint. 2. Prject Purpse: State the purpse f the prject. Tie the purpse t the rganizatin s strategic gals and bjectives if pssible. Tell the reader why this prject is being started and what need it is fulfilling. Identify if there are any specific mandates, plicies r laws that are driving this change. 3. Prject Objectives: Prvide clear, actinable and measurable bjectives f the prject. The bjectives shuld be clear enugh s that the prject can be measured against the bjectives nce cmpleted. The ultimate success f a prject is whether the prject achieved its stated bjectives. Take time t clearly dcument the bjectives here. An example f an bjective is: The system/prduct/service will cut prcessing times by 50%, thus allwing the rganizatin t prcess twice as many tickets. 4. Prject Requirements: Identify the high-level requirements f the prduct r service that will be develped. Remember that this is nt a detailed list f system requirements r specificatins at this pint. The requirements might be at a level that is sufficient fr perfrming an alternatives analysis t identify vendrs and service prviders that can meet the requirements. P a g e 28

29 An example f a requirement is: The system will prvide users with the ability t create and maintain a lgin accunt and prfile nline. If yu have elicited enugh requirements where it makes sense t grup the requirements by categry, then feel free t display the requirements by categry. Generally, there are tw types f requirements: functinal and nn-functinal. Nn-functinal requirements are generally brken int grups like security, usability, quality, scalability, privacy, maintainability, etc. 5. Prject Assumptins: Assumptins are cnditins at the start f the prject that must be cnsidered. Fr example, when develping the new sftware system that is ging t take 3 years t fully cmplete, an assumptin culd be that the prject budget is apprved each year fr three years s that the prject scpe is nt impacted. 6. Prject Cnstraints: Cnstraints are situatins r events n the grund that must be cnsidered and accunted, fr which the prject has n cntrl ver. Fr example, a cnstraint can be a hard deadline r cmpletin date. Other cnstraints culd be resurces, tls r hardware - s that if the prject has n budget fr additinal servers, then the prject must find a way t develp the new system using the hardware already in place. This culd mean juggling servers t fit specific develpment envirnment needs while ensuring that the prductin envirnment stays up. 7. Prject Bundaries: If the prduct r system bundary is knwn, describe it here. Fr example, if a system requires access t multiple external systems (e.g., a system f systems), then it might make sense t break the scpe f wrk int multiple phases s that the scpe f the first phase f develpment wuld be t nly develp the cre functinality. A later phase wuld integrate the remaining functins. In this scenari, yu essentially culd have tw prjects. Therefre, clearly defining the prject bundaries helps set the scpe f wrk that is t be accmplished. An example f a system bundary cncept is: The nline stre will integrate with the shpping cart and credit card purchasing mdules fr the initial release. The secnd release will cntain scial media integratin mdules. 8. Prject Risks: State the knwn risks. These risks are generally at a high level since nt much is knwn abut the details f the prject yet. If a Benefit-Cst Analysis was perfrmed, then risks identified during the Benefit Cst Analysis shuld be placed here. Fr example, if the prject is ging t span 5 years and tuch multiple third-party systems, then integratin and technlgy change wuld be risks t cnsider here. 9. Prject Deliverables: Identify the prducts and services that the prject will deliver. The intent f this sectin is t list the prduct r system deliverables (e.g., an nline shpping site), and nt the prject management deliverables (e.g., Requirements Management Plan) An example f a prduct deliverable is: An nline stre with a shpping cart and credit card purchasing capability. P a g e 29

30 10. Prject Milestnes: Identify the prject milestnes. Milestne Date Milestne Name Milestne Descriptin [Jan 1] System Requirements Cmplete System requirements versin 1.0 is apprved and baselined s that the prject can begin design and develpment. [June 1] Develpment Cmplete Sftware develpment is cmplete and ready fr integratin testing [Dec 1] Deplyed t Prductin System passes integratin and end-user acceptance testing and is deplyed t prductin 11. Prject High Level Wrk Breakdwn Structure (WBS): If yu have decmpsed the highlevel wrk that needs t be dne, then prvide the high-level wrk breakdwn structure (WBS) here. A high level WBS is smetimes referred t as a Rugh Order f Magnitude WBS, r ROM WBS. 12. Rugh Order f Magnitude (ROM) Estimate: Prvide ROM estimate infrmatin here. If the wrk has been decmpsed and a ROM estimate calculated, then prvide the infrmatin here. P a g e 30

31 Develp Prject plan The third prcess is the develpment f the prject plan. The prject plan includes the prject charter, the definitin f the prject, prject bjectives, the prject budget, the prject schedule, the resurces required fr the prject, the apprach, management plans, and the initial risk assessment. The Inputs, Tls and Techniques, and Outputs f the Develp Prject Management Plan prcess are given in the table belw. Develp Prject Management Plan prcess Inputs Tls & Techniques Outputs Prject charter Expert judgment Prject Management Plan Outputs frm planning prcesses Enterprise envirnmental factrs Organisatinal prcess assets A Prject Management Plan is develped by Prject Manager with inputs frm the team, stakehlders and management. Prject Management Plan develpment is iterative. A Prject Management Plan is bught int, apprved, realistic and frmal. A Prject Management Plan includes - 1. Prject Charter 2. Budget 3. Schedule 4. Resurces 5. Scpe Statement 6. WBS 7. Respnsibility charts/assignments 8. Management Plans A Prject Management Plan cnslidates ther management plans. These are: 9. Scpe management plan 10. Requirement management plan 11. Schedule management plan 12. Cst management plan 13. Quality management plan 14. Prcess imprvement plan P a g e 31

32 15. Human resurce plan 16. Cmmunicatin management plan 17. Risk management plan 18. Prcurement management plan The Prject Management Plan als includes prject baselines. These are: 19. Schedule baseline 20. Cst perfrmance baseline, and 21. Scpe baseline. Prject baseline refers t the riginal versin f the prject management plan. Once the prject management plan is baselined, it may nly be changed by raising a change request. Baselines are smetimes called perfrmance measures, because the perfrmance f the entire prject is measured against them. They are the prject's three apprved starting pints and include the scpe, schedule, and cst baselines. These prvide the 'stakes in the grund.' That is, they are used t determine whether the prject is n track, during the executin f the prject. Baseline management plans include dcumentatin n hw variances t the baselines will be handled thrughut the prject. Each prject baseline will need t be reviewed and managed. A result f this prcess may include the need t d additinal planning, with the pssibility that the baseline(s) will change. Prject management plans dcument what the prject team will d when variances t the baselines ccur, including what prcess will be fllwed, wh will be ntified, hw the changes will be funded, etc. P a g e 32

33 One f the critical factrs fr prject success is having a well-develped prject plan. The fllwing is a 10-step apprach t creating the prject plan, nt nly shwing hw it prvides a radmap fr prject managers t fllw, but als explring why it is the prject manager's premier cmmunicatins and cntrl tl thrughut the prject. Step 1: Explain the prject plan t key stakehlders and discuss its key cmpnents. One f the mst misunderstd terms in prject management, the prject plan is a set f living dcuments that can be expected t change ver the life f the prject. Like a radmap, it prvides the directin fr the prject. Mrever, like the traveller, the prject manager needs t set the curse fr the prject, which in prject management terms means creating the prject plan. Just as a driver may encunter rad cnstructin r new rutes t the final destinatin, the prject manager may need t crrect the prject curse as well. A cmmn miscnceptin is that the plan equates t the prject timeline, which is nly ne f the many cmpnents f the plan. The prject plan is the majr wrk prduct frm the entire planning prcess, s it cntains all the planning dcuments fr the prject. Typically, many f the prject's key stakehlders, that are thse affected by bth the prject and the prject's result, d nt fully understand the nature f the prject plan. Since ne f the mst imprtant and difficult aspects f prject management is getting cmmitment and buying, the first step is t explain the planning prcess and the prject plan t all key stakehlders. It is essential fr them t understand the imprtance f this set f dcuments and t be familiar with its cntent, since they will be asked t review and apprve the dcuments that pertain t them. Step 2: Define rles and respnsibilities. Nt all key stakehlders will review all dcuments, s it is necessary t determine wh n the prject needs t apprve which parts f the plan. Sme f the key players are: Prject spnsr, wh wns and funds the entire prject. Spnsrs need t review and apprve all aspects f the plan. Designated business experts, wh will define their requirements fr the prduct. They need t help develp the scpe baseline and apprve the dcuments relating t scpe. They will be quite interested in the timeline as well. Prject manager, wh creates, executes, and cntrls the prject plan. Since prject managers build the plan, they d nt need t apprve it. Prject team, wh build the prduct. The team needs t participate in the develpment f many aspects f the plan, such as identifying risks, quality, and design issues, but the team des nt usually apprve it. End users, wh use the end prduct. They t, need t participate in the develpment f the plan, and review the plan, but rarely d they actually need t sign ff. Others, such as auditrs, quality and risk analysts, prcurement specialists, and s n may als participate n the prject. They may need t apprve the parts that pertain t them, such as the Quality r Prcurement plan. P a g e 33

34 Step 3: Hld a kick-ff meeting. The kick-ff meeting is an effective way t bring stakehlders tgether t discuss the prject. It is an effective way t initiate the planning prcess. It can be used t start building trust amng the team members and ensure that everyne's idea is taken int accunt. Kick-ff meetings als demnstrate cmmitment frm the spnsr fr the prject. Here are sme f the tpics that might be included in a kick-ff meeting: Business visin and strategy (frm spnsr) Prject visin (frm spnsr) Rles and respnsibilities Team building Team cmmitments Hw team makes decisins Grund rules Hw large the grup shuld be and whether sub-grups are necessary Step 4: Develp a Scpe Statement. The Scpe Statement is arguably the mst imprtant dcument in the prject plan. It is the fundatin fr the rest f the prject. It describes the prject and is used t get cmmn agreement amng the stakehlders abut the scpe. The Scpe Statement clearly describes what the utcme f the prject will be. It is the basis fr getting the buy-in and agreement frm the spnsr and ther stakehlders and decreases the chances f miscmmunicatin. This dcument will mst likely grw and change with the life f the prject. The Scpe Statement shuld include: Business need and business prblem Prject bjectives, stating what will ccur within the prject t slve the business prblem Benefits f cmpleting the prject, as well as the prject justificatin Prject scpe, stated as which deliverables will be included and excluded frm the prject. Key milestnes, the apprach, and ther cmpnents as dictated by the size and nature f the prject. It can be treated like a cntract between the prject manager and spnsr, ne that can nly be changed with spnsr apprval. The details required in the Scpe Statement are dealt with later under Sectin 9.5 Scpe Management. P a g e 34

35 Step 5: Develp scpe baseline. Once the deliverables are cnfirmed in the Scpe Statement, they need t be develped int a wrk breakdwn structure (WBS), which is a decmpsitin f all the deliverables in the prject. This deliverable WBS frms the scpe baseline and has these elements: Identifies all the deliverables prduced n the prject, and therefre, identifies all the wrk t be dne. Takes large deliverables and breaks them int a hierarchy f smaller deliverables. That is, each deliverable starts at a high level and is brken int subsequently lwer and lwer levels f detail. The lwest level is called a "wrk package" and can be numbered t crrespnd t activities and tasks. The WBS is ften thught f as a task breakdwn, but activities and tasks are a separate breakdwn, identified in the next step. Step 6: Develp the schedule and cst baselines. Here are the steps invlved in develping the schedule and cst baselines. 1. Identify activities and tasks needed t prduce each f the wrk packages, creating a WBS f tasks. 2. Identify resurces fr each task, if knwn. 3. Estimate hw lng it will take t cmplete each task. 4. Estimate cst f each task, using an average hurly rate fr each resurce. 5. Cnsider resurce cnstraints, r hw much time each resurce can realistically devted t this prject. 6. Determine which tasks are dependent n ther tasks, and develp critical path. 7. Develp schedule, which is a calendarisatin f all the tasks and estimates. It shws by chsen time perid (week, mnth, quarter, r year) which resurce is ding which tasks, hw much time they are expected t spend n each task, and when each task is scheduled t begin and end. 8. Develp the cst baseline, which is a time-phased budget, r cst by time perid. This prcess is nt a ne-time effrt. Thrughut the prject yu will mst likely be adding t repeating sme r all f these steps. Step 7: Create baseline management plans. Once the scpe, schedule, and cst baselines have been established, yu can create the steps the team will take t manage variances t these plans. All these management plans usually include a review and apprval prcess fr mdifying the baselines. Different apprval levels are usually needed fr different types f changes. In additin, nt all new requests will result in changes t the scpe, schedule, r budget, but a prcess is needed t study all new requests t determine their impact t the prject. P a g e 35

36 Step 8: Develp the staffing plan. The staffing plan is a chart that shws the time perids, usually mnth, quarter, year, that each resurce will cme nt and leave the prject. It is similar t ther prject management charts, like a Gantt chart, but des nt shw tasks, estimates, begin and end dates, r the critical path. It shws nly the time perid and resurce and the length f time that resurce is expected t remain n the prject. Step 9: Analyse prject quality and risks. Prject Quality: Prject quality cnsists f ensuring that the end prduct nt nly meets the custmer specificatins, but is ne that the spnsr and key business experts actually want t use. The emphasis n prject quality is n preventing errrs, rather than inspecting the prduct at the end f the prject and then eliminating errrs. Prject quality als recgnises that quality is a management respnsibility and needs t be perfrmed thrughut the prject. Creating the Quality Plan invlves setting the standards, acceptance criteria, and metrics that will be used thrughut the prject. The plan, then, becmes the fundatin fr all the quality reviews and inspectins perfrmed during the prject and are used thrughut prject executin. Prject Risks: A risk is an event that may r may nt happen, but culd have a significant effect n the utcme f a prject, if it were t ccur. Fr example, there may be a 50% chance f a significant change in funding in the next few mnths. Analysing risks includes making a determinatin f bth the prbability that a specific event may ccur and if it des, assessing its impact. The quantificatin f bth the prbability and impact will lead t determining which are the highest risks that need attentin. Risk management includes nt just assessing the risk, but develping risk management plans t understand and cmmunicate hw the team will respnd t the high-risk events. Step 10: Cmmunicate! One imprtant aspect f the prject plan is the Cmmunicatins Plan. This dcument states such things as: Wh n the prject wants which reprts, hw ften, in what frmat, and using what media? Hw issues will be escalated and when? Where prject infrmatin will be stred and wh can access it. Fr cmplex prjects, a frmal cmmunicatins matrix is a tl that can help determine sme f the abve criteria. It helps dcument the prject team's agreed-n methd fr cmmunicating varius aspects f the prject, such as rutine status, prblem reslutin r decisin-making, etc. Once the prject plan is cmplete, it is imprtant nt just t cmmunicate the imprtance f the prject plan t the spnsr, but als t cmmunicate its cntents nce it is created. This cmmunicatin shuld include such things as: Review and apprval f the prject plan. Prcess fr changing the cntents f the plan. Next steps - executing and cntrlling the prject plan and key stakehlder rles/respnsibilities in the upcming phases. P a g e 36

37 The furth prcess invlved is the directing and mnitring f prject executin. This is when the prject really gets underway. Items prduced during this phase include the final deliverable prduct. Direct and Manage Prject Wrk prcess includes perfrming the wrk defined in the PMP t achieve prject gals. The Input, Tls and Techniques and Outputs f this prcess are given belw. Direct and Manage Prject Wrk prcess Inputs Tls & Techniques Outputs Prject management plan Expert judgment Deliverables Apprved change requests Prject management infrmatin system Wrk perfrmance infrmatin Enterprise factrs Envirnmental Change requests Organisatinal prcess assets Prject management plan updates Prject dcument updates As easy as it seems t keep a well-planned prject n-track, it is nt! Prjects d nt fail in frmulatin; they fail in executin. The best results fllw thse prjects that are well-managed and kept n-track. Results are nt just substantial in terms f mnetary gain, but are als imprtant t custmer satisfactin and service delivery. There are several pwerful strategies t keeping a prject n track. Sme f the mst impactful are as fllws: 1. It starts at the tp: As with success verall, keeping yur prject n track starts at the tp. Leaders can make r break success. Thus, selecting the best prject manager is key t success. Of curse, it is beneficial als t have the best prject spnsrs and executive supprt; hwever, the 80/20 f success is putting the right leader in place. 2. Put time in upfrnt t understand the prject plan: Althugh it is a cmmn desire t jump int the prject and start perfrming tasks, it is significantly mre successful t take the time t develp a strng prject plan. Make sure t crdinate with all relevant parties and incrprate input. Ask questins and cnsider ptential issues. Be clear n yur plan, and results will fllw. 3. Fcus n the critical path: One f the secrets t success relates t fcusing exclusively n the critical path. It is easy t get deterred n all the prject plan tasks as they all seem imprtant; hwever, the mst successful prjects cnsider the 80/20 as the critical path. In essence, the fcus is n the tasks that are mst likely t hld up the prject frm prgressing at the ptimal pace and thse which are likely t impact whether results ccur. 4. Fllw up with task wners: Fllwing up with task wners can ensure success. I ve fund that a quick check in with task wners t remind them f upcming tasks, especially critical path P a g e 37

38 tasks, can be invaluable t making sure the wner is prepared t start n time and that they have the resurces available t successfully cmplete the task. Ask if there are any cncerns and wrk t address them prir t the start date. 5. Embrace prject supprters: Whether a prject spnsr r a peer t the prject team, prject supprters are integral t prject success. Identify prject supprters and keep them in the lp. Make sure t prvide infrmatin s that they understand hw they help t cntribute t the prject success. Make it easy fr them t supprt yur prject. 6. Celebrate successes: An imprtant part f any prject is t celebrate small wins alng the way. D nt wait fr the prject t be cmpleted t celebrate success. Success breeds success. Find peple ding right. Lk fr indicatrs that the prject is mving in the right directin. Recgnise the prgress and celebrate the cntributins f the team. 7. Simplify: Cmplex prject plans d nt deliver success. Cntrary t ppular pinin, mre ften than nt, success stems frm simplificatin. Simplify the tasks required t deliver yur end result. Avid cmplexity. It will becme easier fr the team t understand and execute. 8. Mnitr metrics: D nt wait until the end t evaluate prject success. Identify milestnes. Keep an eye ut fr critical path milestnes. Mnitr prgress twards these milestnes. Fr the critical milestnes, develp interim checkpints s that yu can mnitr prgress alng the way. That way, yu will have the pprtunity t adjust as needed. 9. Dn t take yur eye ff the prize - results: Althugh it is easy t get caught up in a maze f tasks and t-d s, dn t take yur eyes ff f yur desired end results. Keep them in mind and fcus n thse actins that will cntribute specifically twards delivering end results. 10. Cmmunicate, cmmunicate and cmmunicate: Just as in real estate where lcatin, lcatin and lcatin are the three mst imprtant attributes f a new huse, cmmunicate, cmmunicate and cmmunicate are the three mst imprtant attributes in keeping yur prject n track. If nt all team members, supprters, spnsrs and ther related parties are aligned, the prject is likely t veer ff track. Since pliticians cunt n prjects t deliver the vast majrity f imprvements t gvernment service delivery and perfrmance, keeping the prject n track is essential. Thse wh fllw these ten strategies will succeed significantly mre ften than thse wh d nt. P a g e 38

39 Fifth, prject wrk must be mnitred and cntrlled. One imprtant aspect f this prcess is change management. Requests fr prject change may be made during the prject lifecycle. If these requests are nt mnitred and cntrlled, then the quality f the prject may be cmprmised. A team must be frmed in rder t versee requests fr change and implementatin f change. Mnitr and Cntrl prject wrk prcess includes tracking and reviewing the prgress f the prject. The Input, Tls and Techniques and Outputs f this prcess are given belw. Mnitr and Cntrl prject wrk prcess Inputs Tls & Techniques Outputs Prject management plan Expert judgment Change requests Perfrmance reprts Enterprise envirnmental factrs Prject management plan updates Prject dcument updates Organisatinal prcess assets This prcess is clsely related t the sixth: the cntrl f integrated change. The change requests that get generated are evaluated as part f the Perfrm Integrated Change Cntrl prcess. The change requests n the prject deliverables and prject artefacts are managed in this prcess. The Input, Tls and Techniques and Outputs f this prcess are given belw. Perfrm Integrated Change Cntrl prcess Inputs Tls & Techniques Outputs Prject management plan Expert judgment Change request status updates Wrk perfrmance infrmatin Change cntrl meetings Prject management plan updates Change requests Prject dcument updates Enterprise envirnmental factrs Organisatinal prcess assets A Change Cntrl Bard needs t be frmed t review change requests. It is used t apprve r reject change requests. After the prject scpe has been baselined, each requested change must g thrugh a change cntrl review prcess. A Prject Manager needs t be practive in lking fr deviatins frm prject plan and then take timely crrective actin. After that, the Prject Manager needs t evaluate the effectiveness f crrective actin, and measure perfrmance f crrective actin, and then determine the need fr further crrective actin. P a g e 39

40 When a change request is received, the fllwing steps must be taken (in this rder) - 1. Evaluate (assess) the impact f change t the prject 2. Create alternatives including cutting ther tasks, crashing, fast-tracking etc. 3. Meet with management, spnsrs, stakehlders etc. 4. Meet with the client, if necessary Finally, the prject must be clsed when it has been cmpleted. Clsing the prject invlves reviewing the prcesses, successes and deficits that were encuntered during the prject lifecycle. During this phase, lessns learned dcument is prduced by the prject management team. The Clse Prject r Phase is the prcess f frmal cmpletin f all prject related activities. The Input, Tls and Techniques and Outputs f this prcess are given belw. Clse Prject r Phase Inputs Tls & Techniques Outputs Prject management plan Expert judgment Final prduct, service r result transitin Accepted deliverables Organisatinal prcess assets updates Organisatinal prcess assets At the end f each phase f a prject, a lessns learned dcument must be prepared. The lessns learned dcument defines what was dne right, wrng etc. It is required t be cmpleted in rder fr the prject t be cmpleted P a g e 40

41 9.5. Prject Scpe Management The knwledge area f Scpe Management includes the prcesses required t ensure that the prject includes all the wrk, and nly all the wrk required t cmplete the prject successfully. It is primarily cncerned with cntrlling what is and what is nt in the scpe. Elements which need t be included t imprve prjects planning are defined parameter r scpe, and hw this must be brken dwn and managed. The Inputs, Tls and Techniques, and Outputs f Scpe Management prcess are given belw. Scpe Management Prcesses Prcess Prject Grup Key Deliverables Plan Scpe Management Planning Cllect Requirements Planning Requirements dcument Define Scpe Planning prject scpe statement Create WBS Planning WBS, WBS dictinary Validate Scpe Cntrl Scpe Mnitring and Cntrlling Acceptance deliverables Mnitring and Cntrlling Change Requests Cllect Requirements prcess invlves dcumenting stakehlders needs t meet prject bjectives. The Inputs, Tls and Techniques, and Outputs f Cllect Requirements prcess are given belw. Cllect Requirements Prcess Inputs Tls & Techniques Outputs Prject charter Interviews Requirements dcumentatin Stakehlder register Fcus grups Facilitated wrkshps Requirements management plan Requirements traceability matrix Grup creativity techniques Questinnaires and surveys Observatins Prttypes P a g e 41

42 Grup decisin-making techniques The Define Scpe prcess invlves defining detailed descriptin f the prject and majr deliverables. The Input, Tls and Techniques and Output f the Define Scpe prcess are: Define Scpe Prcess Inputs Tls & Techniques Outputs Prject charter Expert judgment Prject scpe statement Requirements dcumentatin Prduct analysis Prject dcument updates Organisatinal prcess assets Alternative identificatin Facilitated wrkshps Develp a Scpe Statement An effective scpe statement is necessary t guide a prject t successful cmpletin. A scpe statement is ne f the mst critical pieces f a prject, and writing ne can be a difficult task fr a prject manager n matter what type f prject management methdlgy is being used. But, an effectively written scpe statement can help the rest f the prject flw alng with minimal prblems. It is written after the prject charter, and includes everything that the prject is intended t prduce. Nw that yu have the prject charter and the name, yu can start by filling in the prject name, prject charter, and a listing f the prject wner, spnsrs, and stakehlders n the scpe statement. 1. Justifying Yur Existence: A prject justificatin will need t be identified, as well as prject requirements, milestnes, and deliverables. Any nn-gals - items that fall utside f the scpe f the prject - need t be identified here. Prject justificatin is simply identifying the reasn fr the prject's existence. It is usually a statement r tw identifying why the prject is being created. It s imprtant t have the prject justificatin identified because this helps t give verall directin t the prject as well as emphasising the final gal. The prject justificatin shuld be clear and precise manner s that it identifies a quantifiable measure f success fr the end f the prject. 2. Be sure t include requirements and deliverables: The next sectin in the scpe statement shuld list the requirements f the prject. The requirements are bjectives that must be met during the prject, and ften they include significant milestnes r gals. The bjectives need t be quantifiable and identified clearly. Any milestnes r gals need t be als clearly identified, as well as any nn-gals. Nn-gals are items that are specifically nt ging t be addressed by the prject, which helps t eliminate the scpe creep. By clearly identifying these as nn-gals, the scpe cannt include them later n withut ging thrugh a change management prcess. Ultimately, many prject managers track their milestnes, gals, and/r deliverables using a Wrk Breakdwn Structure. P a g e 42

43 The deliverables fr a prject need t be clearly identified within a scpe statement. If necessary, deliverables need t be tied t specific milestnes in the prject schedule. The deliverables als need t be agreed upn by the majr stakehlders as well as the prject wner. Deliverables may include any training necessary fr persnnel at the culminatin f the prject. Or deliverables may be a final prduct t be prvided t the stakehlders. N matter what makes up a prject's deliverables, specific details regarding them are the glden rule. The mre clearly the deliverables are identified and specified, the less chance there will be fr scpe creep t ccur later n. 3. Include cst estimates fr the prject: This is an essential prcess f prject planning, s the cst estimates shuld be as accurate as pssible. If the cst estimates are t lw, the prject will g ver budget - smetimes significantly s. If the cst estimates are t high, resurces that are allcated t the prject - whether they are mney, equipment r peple - are unavailable fr ther prjects and culd negatively affect them. S the mre n track the cst estimates is the mre efficient and successful the prject will be. This can be a difficult task fr the prject manager t d, but effective cst management is a critical success factr fr prjects. 4. Finalisatin and Acceptance: The last significant sectin f a scpe statement is the frmal acceptance signatures. Once the prject manager has cmpiled all f the dcumentatin int a cncise and clear statement, all f the majr stakehlders as well as the prject wner need t sign ff n it. This is a very significant step and can be a very useful tl in mitigating scpe creep as well. A meeting shuld be held where everyne can be prvided a cpy f the scpe statement. At that time, any discrepancies can be cleared up r last minute changes can be made. Once everyne signs ff n the scpe statement, there shuld be agreement between all parties and the prject can begin. By having everyne sign the scpe statement, there is very little chance f surprises dwn the rad. And in the event that smething des pp up, there is dcumentatin f what was agreed upn initially s that changes can be made if necessary. If anything des change dwn the rad and the scpe des need t be increased fr sme reasn, signatures shuld be btained frm everyne nce mre. Exhaustively detailed specifics, clear and cncise language thrughut, and aviding ambiguity are the keys t making a scpe statement effective and useful. It is als very beneficial t have all f this infrmatin dcumented in ne place - even if the prcess f creating it is enrmus. The task f creating a scpe statement can encmpass a great deal f time fr any prject manager, but the rewards usually include mre successful prjects and minimised scpe creep thrughut. And this can be a highly desirable benefit, as scpe creep is ften a significant cause f prject failure. S dcument as much as pssible, as clearly as pssible, and make sure everyne invlved is aware f what is expected. Thrugh clear and cncise dcumentatin, a scpe statement's usefulness shines all the way t prject success. P a g e 43

44 Create WBS is the prcess f dividing the prject deliverables int smaller cmpnents. The Inputs, Tls and Techniques and Outputs f Create WBS prcess are: Create WBS Prcess Inputs Tls & Techniques Outputs Prject Scpe Statement Decmpsitin WBS Requirements dcumentatin Organisatinal prcess assets WBS dictinary Scpe baseline Prject dcument updates Nte: 8/80 rule fr WBS - N task shuld be less than 8 hurs r mre than 80 hurs. WBS is input t mst f the planning prcesses. Specifically WBS is input t the fllwing prcesses - Cst Estimating Cst Budgeting Scpe cntrl Activity Definitin Plan Purchases and Acquisitins The Validate Scpe is the prcess in which the prject custmer frmally accepts the prject deliverables. Scpe Validatin happens at the end f each phase. During the Validate Scpe prcess custmer gives feedback n wrk perfrmed. While Validate Scpe prcess fcuses n custmer acceptance, Perfrm Quality Cntrl prcess fcuses n crrectness f wrk. The table belw gives inputs, Tls & Techniques, and Outputs f the Validate Scpe prcess. Validate Scpe Prcess Inputs Tls & Techniques Outputs Prject management plan Inspectin Accepted Deliverables Requirements dcumentatin Requirements traceability matrix Change requests Prject dcument updates Validated deliverables P a g e 44

45 Cntrl Scpe prcess invlves mnitring the status f prject and managing scpe changes. The Inputs, Tls and Techniques and Outputs f Cntrl Scpe prcess are: Cntrl Scpe Prcess Inputs Tls & Techniques Outputs Prject management plan Variance analysis Wrk perfrmance measurements Requirements dcumentatin Requirements traceability matrix Organisatinal prcess assets Wrk perfrmance infrmatin Change requests Prject management plan updates Organisatinal prcess assets updates Prject dcument updates P a g e 45

46 9.6. Prject time management The knwledge area f time management typically refers t the skills, tls, and techniques used t manage time when accmplishing specific tasks, prjects and gals. T becme an effective time manager, yu shuld be able t clearly understand the activities f the prject and have the necessary skill set t plan, schedule, and cntrl a prject timeline. Alng with these skills, yu must als be able t utilise time management tls t help yu analyse, measure, and assess yur time management techniques. Managing time/schedule is abut definitin, sequencing, resurce and duratin estimating, schedule develpment, and schedule cntrl. The knwledge area f Prject Time Management cnsists f the fllwing prcesses - Time Management Prcesses Prcess Prject Phase Key Deliverables Plan Schedule Management Planning Define Activities Planning Activity List, Milestne list Sequence Activities Planning Prject Schedule netwrk diagrams Estimate Activity Resurces Planning Activity resurce requirements, Resurce breakdwn structure Estimate Activity Duratins Planning Activity duratin estimates Develp Schedule Planning Prject Schedule Cntrl Schedule Mnitring and Cntrlling Wrk Perfrmance measurements, Change Requests Prgram Evaluatin Review Technique (PERT) and Gantt charts are tw f the mst cmmnly used prject management tls used t schedule, manage and cntrl activities, resurces and timelines n a prject, and are described belw. Bth f these prject management tls can be prduced manually r with cmmercially available prject management sftware. PERT is a planning and cntrl tl used fr defining and cntrlling the tasks necessary t cmplete a prject. PERT charts and Critical Path Methd (CPM) charts are ften used interchangeably; the nly difference is hw task times are cmputed. Bth charts display the ttal prject with all scheduled tasks shwn in sequence. The displayed tasks shw which nes are in parallel, thse tasks that can be perfrmed at the same time. A graphic representatin called a "Prject Netwrk" r "CPM Diagram" is used t prtray graphically the interrelatinships f the elements f a prject and t shw the rder in which the activities must be perfrmed. P a g e 46

47 PERT planning invlves the fllwing steps: 1. Identify the specific activities and milestnes: The activities are the tasks f the prject. The milestnes are the events that mark the beginning and the end f ne r mre activities. 2. Determine the prper sequence f activities: This step may be cmbined with #1 abve since the activity sequence is evident fr sme tasks. Other tasks may require sme analysis t determine the exact rder in which they shuld be perfrmed. 3. Cnstruct a netwrk diagram: Using the activity sequence infrmatin, a netwrk diagram can be drawn shwing the sequence f the successive and parallel activities. Arrwed lines represent the activities and circles r "bubbles" represent milestnes. 4. Estimate the time required fr each activity: Weeks are a cmmnly used unit f time fr activity cmpletin, but any cnsistent unit f time can be used. A distinguishing feature f PERT is its ability t deal with uncertainty in activity cmpletin times. Fr each activity, the mdel usually includes three time estimates: Optimistic time - the shrtest time in which the activity can be cmpleted. Mst likely time - the cmpletin time having the highest prbability. Pessimistic time - the lngest time that an activity may take. Frm this, the expected time fr each activity can be calculated using the fllwing weighted average: 5. Expected Time = (Optimistic + 4 x Mst Likely + Pessimistic) / 6 This helps t bias time estimates away frm the unrealistically shrt timescales nrmally assumed. 6. Determine the critical path: The critical path is determined by adding the times fr the activities in each sequence and determining the lngest path in the prject. The critical path determines the ttal calendar time required fr the prject. The amunt f time that a nncritical path activity can be delayed withut delaying the prject is referred t as slack time. If the critical path is nt immediately bvius, it may be helpful t determine the fllwing fur times fr each activity: ES - Earliest Start time EF - Earliest Finish time LS - Latest Start time LF - Latest Finish time These times are calculated using the expected time fr the relevant activities. The earliest start and finish times f each activity are determined by wrking frward thrugh the netwrk and determining the earliest time at which an activity can start and finish cnsidering its predecessr activities. The latest start and finish times are the latest times that an activity can start and finish withut delaying the prject. LS and LF are fund by wrking backward thrugh the netwrk. The difference P a g e 47

48 in the latest and earliest finish f each activity is that activity's slack. The critical path then is the path thrugh the netwrk in which nne f the activities has slack. The variance in the prject cmpletin time can be calculated by summing the variances in the cmpletin times f the activities in the critical path. Given this variance, ne can calculate the prbability that the prject will be cmpleted by a certain date assuming a nrmal prbability distributin fr the critical path. The nrmal distributin assumptin hlds if the number f activities in the path is large enugh fr the central limit therem t be applied. 7. Update the PERT chart as the prject prgresses: As the prject unflds, the estimated times can be replaced with actual times. In cases where there are delays, additinal resurces may be needed t stay n schedule and the PERT chart may be mdified t reflect the new situatin. Benefits t using a PERT chart r the Critical Path Methd include: imprved planning and scheduling f activities; imprved frecasting f resurce requirements; identificatin f repetitive planning patterns which can be fllwed in ther prjects, thus simplifying the planning prcess; and the ability t see and thus reschedule activities t reflect inter-prject dependencies and resurce limitatins fllwing knw pririty rules. It als prvides the fllwing: expected prject cmpletin time, prbability f cmpletin befre a specified date, the critical path activities that impact cmpletin time, the activities that have slack time and that can lend resurces t critical path activities, and activity start and end dates. A Gantt chart is a simple and quick way t utline the entire prject. Use the Gantt chart t add tasks and their estimated timeframes. D nt wrry abut dates at this pint, but rather fcus n the time it will take t cmplete each individual task. Gantt charts are used t shw calendar time task assignments in days, weeks r mnths. The tl uses graphic representatins t shw start, elapsed, and cmpletin times f each task within a prject. Gantt charts are ideal fr tracking prgress. The number f days actually required t cmplete a task that reaches a milestne can be cmpared with the planned r estimated number. The actual wrkdays, frm actual start t actual finish, are pltted belw the scheduled days. This infrmatin helps target ptential timeline slippage r failure pints. T draw up a Gantt chart, fllw these steps: 1. List all activities in the plan: Fr each task, shw the earliest start date, estimated length f time it will take, and whether it is parallel r sequential. If tasks are sequential, shw which stages they depend n. 2. Head up graph paper with the days r weeks thrugh cmpletin. 3. Plt tasks nt graph paper: Shw each task starting n the earliest pssible date. Draw it as a bar, with the length f the bar being the length f the task. Abve the task bars, mark the time taken t cmplete them. 4. Schedule activities: Schedule them in such a way that sequential actins are carried ut in the required sequence. Ensure that dependent activities d nt start until the activities they P a g e 48

49 depend n have been cmpleted. Where pssible, schedule parallel tasks s that they d nt interfere with sequential actins n the critical path. While scheduling, ensure that yu make best use f the resurces yu have available, and d nt ver-cmmit resurces. Als, allw sme slack time in the schedule fr hldups, verruns, failures, etc. 5. Presenting the analysis: In the final versin f yur Gantt chart, cmbine yur draft analysis (3 abve) with yur scheduling and analysis f resurces (4 abve). This chart will shw when yu anticipate that jbs shuld start and finish. An example f a Gantt chart is prvided belw: Benefits f using a Gantt chart include: Gives an easy t understand visual display f the scheduled time f a task r activity. Makes it easy t develp "what if" scenaris. Enables better prject cntrl by prmting clearer cmmunicatin. Becmes a tl fr negtiatins. Shws the actual prgress against the planned schedule. Can reprt results at apprpriate levels. Allws cmparisn f multiple prjects t determine risk r resurce allcatin. Rewards the prject manager with mre visibility and cntrl ver the prject. P a g e 49

50 The Define Activities prcess has the fllwing Inputs, Tls and Techniques and Outputs - Define Activities Prcess Inputs Tls and Techniques Outputs Scpe baseline Decmpsitin Activity list Enterprise envirnmental factrs Rlling wave planning Activity attributes Organisatinal prcess assets Templates Milestne list Expert judgment This step requires yu t define the tasks, milestnes, and ther activities needed t cmplete the prject. Start with a basic definitin f each task and fill in the details as the prject gets fleshed ut. The Sequence Activities prcess has the fllwing Inputs, Tls and Techniques and Outputs Sequence Activities Prcess Inputs Tls and Techniques Outputs Prject scpe statement Precedence diagram methd (PDM) r AON Prject schedule netwrk diagrams Activity List Applying leads and lags Prject dcument updates Activity attributes Schedule Netwrk Templates Milestne list Dependency determinatin Organisatinal assets prcess Once the activities have been defined, yu can start putting the activities in rder. Withut wrrying abut dates, rder the activities in a way that makes the mst sense t yu. Create subtasks as needed and rganise the prject in a lgical manner. Once yu have the activities in rder, add dependencies t each task. Using dependencies, rather than dates, will help yu see the true timeline f the prject. Fr example, if yu are building a website, yu will need t design the website befre yu can start develping it. The design activity is a prerequisite t the develpment activity. If the design activity is cmpleted later than expected, the develpment activity will als be pushed ut t a later date. P a g e 50

51 The Estimate Activity Resurces prcess has the fllwing Inputs, Tls and Techniques and Outputs Estimate Activity Resurces Prcess Inputs Tls and Techniques Outputs Activity List Expert judgment Activity resurce requirements Activity attributes Alternative analysis Resurce breakdwn structure Resurce calendars Published estimating data Prject dcument updates Enterprise envirnmental factrs Bttm-up estimating Organisatinal prcess assets Prject Management sftware The Estimate Activity Duratins prcess has the fllwing Inputs, Tls and Techniques and Outputs Estimate Activity Duratins Prcess Inputs Tls and Techniques Outputs Activity list Expert judgment Activity duratin estimates Activity attributes Analgus estimating Prject dcument updates Activity resurce requirements Parametric estimating Resurce calendars Three-pint estimates Prject scpe statement Reserve analysis Enterprise envirnmental factrs Organisatinal prcess assets P a g e 51

52 This step is ne f the mre challenging steps because it requires yu t assess the supply and demand f each resurce/persn and hw it relates t yur specific prject. D yu have enugh resurces t cmplete the assignment as scheduled r d yu need additinal resurces? Assign specific peple r jb rles t each task and then revise the dependencies based n the resurce allcatin. If a Prgrammer is required fr 15 activities and 10 f them verlap, then yu can either hire an additinal Prgrammer r accept that the prject timeline will be pushed ut further based n the resurce dependencies. The Develp Schedule prcess has the fllwing Inputs, Tls and Techniques, and Outputs- Develp Schedule Prcess Inputs Tls and Techniques Outputs Organisatinal prcess assets Schedule netwrk analysis Prject Schedule Prject scpe statement Critical path methd Schedule baseline Activity List Schedule Cmpressin Schedule data Activity attributes What-if scenari analysis Prject dcument updates Prject Schedule Netwrk diagram Resurce levelling Activity Resurce requirements Critical chain methd Resurce Calendars Scheduling tl Activity duratin estimates Applying calendars Prject Management Plan - Risk Register Adjusting Leads and Lags Enterprise envirnmental factrs P a g e 52

53 The Cntrl Schedule prcess has the fllwing Inputs, Tls and Techniques and Outputs - Cntrl Schedule Prcess Inputs Tls and Techniques Outputs Prject management plan Perfrmance reviews Wrk perfrmance measurements Prject schedule Variance analysis Organisatinal prcess assets updates Wrk perfrmance infrmatin Prject management sftware Change requests Organisatinal prcess assets Resurce levelling Prject management plan updates What-if scenari analysis Prject dcument updates Adjusting leads and lags Schedule cmpressin Scheduling tl If yu used a Gantt chart t create the prject timeline, it shuld be easy t develp a prject schedule. Review the Gantt chart with the entire team and make sure yu have cmplete buy-in befre yu start the prject. Everybdy shuld understand their rle in the prject and shuld be able t cnfidently cmmit t the timeline. Cntrlling the schedule is a lt harder than planning the schedule and requires mre ne-n-ne management than yu might expect. The prject manager shuld be carefully mnitring the status f the prject and verify that the activities are being cmpleted n time and within scpe. P a g e 53

54 9.7. Prject cst management Prjects/Cntracts require resurces, and therefre, there is a need t manage the investment where the benefits derived exceeds the amunt spent. Managing csts is abut resurce planning, cst estimating, budgeting, and cntrl. The knwledge area f Prject Cst Management cnsists f the fllwing prcesses - Prject Cst Prcesses Prcess Prject Phase Key Deliverables Plan Cst Management Planning Estimate Csts Planning Activity Cst Estimates, Basis f estimates Determine Budget Planning Cst perfrmance baseline Cntrl Csts Mnitring and Cntrlling Wrk perfrmance measurements Regardless f scpe r schedule, prjects need funds t cmplete the wrk. Technically, even prjects that use nly labur have funds attached t them; smene, smewhere is paying fr that labur. What happens if yu d nt have the crrect amunt f funds t cmplete the prject scpe? Yur prject is dmed. Hw d we knw what a prject will cst? We really d nt, until the prject is cmplete. What we can d is create an estimate. An estimate is mre than pulling a randm number ut f the air, adding 20% fr gd measure. A real estimate evlves as prject details becme available. This is prgressive elabratin. Prject estimates start ut brad, and as the prject deliverables cme int fcus, we are able t mre accurately define ur estimates. Each estimate shuld prvide an acceptable range f variance, the cnditins f the estimates, and any assumptins made by the estimate prvider. Fr example, an estimate t build a new warehuse may state that the warehuse will cst RPS350,000, +/- 10%, is valid fr 30 days, and assumes that the warehuse will be built in the mnth f June. Ntice the range f variance, the assumptins, and the stated wrk? A gd estimate clearly defines what the prject will accmplish, the assumptins made, hw lng the estimate is valid, and hw much the prject will cst based n current infrmatin. A gd estimate presents t the stakehlder everything relevant t the prpsed wrk, withut hlding back any secrets. If there is a disagreement in price, assumptins, r range variance, it is better t discuss this issue nw rather than fur mnths int the prject executin. P a g e 54

55 Prject managers shuld rely n three majr estimate types: The Ballpark Estimate is als knwn as the Rugh Order f Magnitude (ROM). A ROM estimate is based n high-level bjectives, prvides a bird's-eye view f the prject deliverables, and has lts f range. Mst ROM estimates, depending n the industry, have a range f variance frm -25% all the way t +75%. ROM estimates, regardless f yur rle in the prject, are simply fr a high-level view f the prject's initial perceived csts. The Budget Estimate (r tp-dwn estimate) is a bit mre accurate. Frmulated early in the prject's planning stage, the budget estimate is mst ften based n analgus estimating, taking budget lessns learned frm a similar prject and applying them t the current prject. With the budget estimate, we start at the tp and wrk ur way dwn int the prject details. Like the ROM, this estimate shuld include cnditins, a range f variance, and any assumptins that went int yur calculatins. A budget estimate is quick, but nt very accurate. The range f variance n the budget estimate is frm -10 percent t +25 percent. The Definitive Estimate (r bttm-up estimate) is the mst accurate f the estimate types, but takes the mst time t create. The definitive estimate requires a Wrk Breakdwn Structure (WBS) as discussed earlier. A WBS is a deliverables-riented decmpsitin f the prject scpe. A definitive estimate takes lts f time t create, but it is the mst accurate estimate yu can prvide. Yu may knw this as a bttm-up estimate because yu start frm zer (the bttm) and accunt fr each item the prject will purchase, create, r deliver. The range f variance n a definitive estimate is relatively lw: -5% t +10%. This makes sense because it is much easier t predict hw much smething will cst when yu can see everything the prject will create. Hw many prjects have yu been invlved in where yu can see everything the prject will create frm the utset? Prbably nt t many, r nly prjects that yu have cmpleted repeatedly and therefre knw exactly what is expected. While definitive estimates are ideal fr accuracy, they are nt easy t create because s much effrt has t g int the prject befre the prject manager can create the definitive estimate. This requires educatin nt just fr yu as prject manager, but fr yur stakehlders, wh need t understand that the nly way a precise estimate can be created is t invest time in the prject itself, by creating the WBS. With any type f estimate, the prject manager must prvide the range f variance and an explanatin f hw the estimate was created. Pr planning is the majr cause f pr estimates. Rushed estimates, blated estimates, r estimates that are "lw-balled" just t get the prject mving are bund fr budget reviews, unpleasant cnversatins, and prject reassessments. Smetimes, thankfully, it is nt the prject manager's fault when the estimate must change: The cst f materials has changed, the anticipated time t cmplete the prject wrk was wrng, r the bases fr decisins were faulty. In these instances, the prject manager still has t cmmunicate the variances. Pr estimates can als be the fault f the custmer, stakehlders, r even the prject spnsr. When the stakehlder is respnsible, the increase in cst is usually tied t a change request. Cntrary t public pinin, change requests are nt gd things. Ideally, when the custmer and the prject spnsr sign ff n the scpe statement, n changes shuld ever be made t that scpe. Of curse, P a g e 55

56 errrs and missins, technlgical enhancements, and value-added changes all affect the scpe's resistance t change. If the custmer demands new deliverables in the prject scpe, hwever, a price increase is usually assciated with thse demands. The mnies needed t implement the change have t cme frm sme frm f financing. Even changes that replace current scpe cmpnents may have a price; time and mnies may already have been invested in these deliverables. The secnd prcess invlved with cst management strategies is cst budgeting. The prject manager relies upn the data she has gathered frm estimates t set up a realistic prject budget, which will be recrded as the prject cst baseline. The budget shuld take int accunt all stages f the prject life cycle. The third and final prcess is cst cntrl. All csts need t be mnitred against the prject baseline, accrding t wrk measurements, where there any variances between actuals csts and budgeted csts. The mnitring will als ensure that if the actual cst is deviating t far frm the estimated r budgeted cst, that the prject manager can effect change t get prject spending back n track. Finally, cst cntrl invlves infrming the relevant stakehlders f the cst discrepancies when the actual cst varies t much frm the budgeted cst. P a g e 56

57 9.8. Prject quality management Prjects invlve specific deliverables r wrk prducts which need t meet prject bjectives and perfrmance standards. There are three prcesses fr quality management. The first f these three prcesses is quality planning. Quality planning invlves ensuring that the prper prject management principles have been applied. These principles include resurce management, cst management, and prject planning. The knwledge area f Prject Quality Management cnsists f the fllwing prcesses - Quality Management Prcesses Prcess Prject Phase Key Deliverables Plan Quality Management Planning Quality Management Plan, Quality Metrics Perfrm Quality Assurance Executin Change Requests Perfrm Quality Cntrl Mnitring and Cntrlling Quality cntrl measurements Quality management has tw gals: Ensuring a quality end-prduct. Ensuring that all f the prcesses invlved during the prject lifecycle are carried ut efficiently. By managing quality, prject managers can ensure a successful prject and increased custmer satisfactin. Prject managers can als increase their bttm line with the bst in prductivity. The prcess f Plan Quality Management includes defining quality requirements f the prject and dcumenting hw the prject will ensure cmpliance. The Inputs, Tls and Techniques and Outputs f the Plan Quality Management prcess are given belw. Plan Quality Prcess Inputs Tls and Techniques Outputs Scpe baseline Cst-benefit analysis Quality plan management Stakehlder register Cst f quality Quality metrics Cst perfrmance baseline Cntrl charts Quality checklists Schedule baseline Benchmarking Prcess plan imprvement P a g e 57

58 Risk register Design f experiments Prject updates dcument Enterprise factrs envirnmental Statistical sampling Organisatinal prcess assets Flwcharting Prprietary quality management methdlgy Additinal quality planning tls An imprtant aspect f prject quality planning invlves planning fr the quality f the deliverables invlved. If the cmpany were wrking n a new sftware prgram, then a quality prgram wuld be ne that ran prperly. One resurce in quality planning is quality materials. By having reliable prgrams, templates, and standards, a prject manager can help ensure that the prject quality is high. The secnd prcess in quality management is perfrmance f quality assurance tests. These tests use a system f metrics t determine whether the quality plan is prceeding in an acceptable manner. Quality assurance tests bth prject quality and custmer satisfactin with prduct quality. Perfrm Quality Assurance invlves reviewing the quality requirements and auditing the results frm quality cntrl measurements. Perfrm Quality Assurance uses data created during Perfrm Quality Cntrl. Perfrm Quality Assurance Inputs Tls and Techniques Outputs Prject management plan Plan Quality and Perfrm Quality Cntrl tls and techniques Organisatinal updates prcess Quality metrics Quality audits Change requests Wrk infrmatin perfrmance Prcess analysis Prject management plan updates Quality measurements cntrl Prject dcument updates P a g e 58

59 Quality Assurance is dne during executin f the prject. It includes - Prcess f evaluating verall perfrmance n a regular basis Re-evaluating quality standards Quality audits - structured review f quality activities that identify lessns learned. These lessns learned are used fr prcess imprvement. The final prcess in quality management invlves quality cntrl. Quality cntrl is distinct frm quality assurance. Quality cntrl invlves peratinal techniques meant t ensure quality standards. Quality assurance n the ther hand has t d with activities that bst cnfidence surrunding quality. Perfrm Quality Cntrl fcuses n crrectness f wrk. It includes inspectins. The inputs, tls and techniques and utputs (ITTO) used fr Perfrm Quality Cntrl prcess are - Perfrm Quality Cntrl Inputs Tls and Techniques Outputs Prject management plan Cause and effect diagram Quality cntrl measurements Quality metrics Cntrl charts Validated changes Quality checklists Flwcharting Validated deliverables Wrk measurements perfrmance Histgram Organisatinal prcess assets updates Apprved change requests Paret chart Change requests Deliverables Run chart Prject management plan updates Organisatinal prcess assets Scatter diagram Prject dcument updates Statistical Sampling Inspectin Apprved change requests review Quality cntrl steps include prblem identificatin, prblem analysis and then prblem crrectin. Quality analysis invlves mre research - it requires data analysis, trend analysis, identificatin f prcesses, analysis f prcesses, and finally the imprvement f prcesses. Quality assurance ccurs P a g e 59

60 befre a prblem is identified, quality cntrl is reactinary and ccurs after a prblem has been identified Develping a quality management plan The Quality Management Plan defines the acceptable level f quality, which is typically defined by the custmer, and describes hw the prject will ensure this level f quality in its deliverables and wrk prcesses. Quality management activities ensure that: Prducts are built t meet agreed- upn standards and requirements Wrk prcesses are perfrmed efficiently and as dcumented Nn-cnfrmances fund are identified and apprpriate crrective actin is taken Quality Management plans apply t prject deliverables and prject wrk prcesses. Quality cntrl activities mnitr and verify that prject deliverables meet defined quality standards. Quality assurance activities mnitr and verify that the prcesses used t manage and create the deliverables are fllwed and are effective. Quality Plan Cmpnents The Quality Management Plan describes the fllwing quality management cmpnents: Quality bjectives Key prject deliverables and prcesses t be reviewed fr satisfactry quality level Quality standards Quality cntrl and assurance activities Quality rles and respnsibilities Quality tls Plan fr reprting quality cntrl and assurance prblems Ratinale/Purpse The purpse f develping a quality plan is t elicit the custmer s expectatins in terms f quality and prepare a practive quality management plan t meet thse expectatins. Wh is invlved? Prject Manager Prject Team Custmer Prject Spnsr Result Quality Management Plan segment f the Prject Plan P a g e 60

61 The tables belw describe actins yu perfrm t create a quality management plan. Set Overall Quality Objectives What t d Hw t d it Identify the verall quality bjectives fr the prject State the quality bjectives in terms f the prject bjectives and/r rganizatinal bjectives. Determine quality bjectives fr the prduct with the custmer. There may be verall rganizatinal quality bjectives r plicies that the prject can reference. Plan fr Quality Prject Deliverables Quality Cntrl What t d Hw t d it 1. Identify the key prject deliverables that will be subject t quality review The key deliverables are the results that need t be delivered fit-fr-purpse as identified in the prject charter. Example prject deliverables: Prject Charter The web applicatin System Design Building blueprint 2. Identify the standards that will be used t evaluate the quality f prject deliverables Identify the relevant deliverable quality standards, r measures used t determine a successful utcme fr a deliverable. Ideally yur rganisatin has identified quality standards t be applied. If nt, determine what yu will use fr yur prject. Example industry quality standards/ methds: TQM, Six Sigma, Quality Gates, SPC, Zer Defects, quality circles, cntinuus imprvement, ISO 9000 P a g e 61

62 Example quality standards fr a prject deliverable: Prject Charter frmat Web Interface Standards Dcumentatin Standards 3. Identify the cmpleteness and crrectness criteria Cmpleteness and crrectness criteria are defined frm the custmer s pint f view. Wrk with the custmer t define a cmplete and crrect deliverable. The deliverables are evaluated against these criteria befre they are frmally apprved. Example criteria fr Prject Charter: standard template was used fr the prject charter prject deliverables are clearly defined. Example criteria fr a prduct: 95% defect free All regulatry requirements are met All reprts and nline displays tie ut and balance. 4. Describe the Quality Cntrl activities the prject will use t ensure quality standards fr prject deliverables are met Quality Cntrl makes sure the results f what yu have dne are what yu expected. Quality cntrl is prduct riented. Quality cntrl activities are assciated with the creatin f prject deliverables. Quality cntrl prevents and reslves errrs in prject deliverables. Quality Cntrl verifies that deliverables are f acceptable quality, they meet the deliverable quality standards, and the cmpleteness and crrectness criteria established. Fr each deliverable, describe the quality cntrl activities yu will execute. Example quality cntrl activities: Quality cntrl check list Deliverable review Structured walkthrughs Statistical sampling P a g e 62

63 Testing prcess 5. Determine hw ften r when the quality cntrl activity will be perfrmed. Establish the timeframe r recurring frequency fr perfrming the quality cntrl activity. Examples: Deliverable Review at final delivery Structured Walkthrugh at each mdule cmpletin Plan fr Quality Prject Prcesses - Quality Assurance What t d Hw t d it 1. Identify the critical prject prcesses that will be subject t quality review Critical prject prcesses are the activities that must be undertaken crrectly and effectively t create the deliverables. Example prject prcesses: Change Management Prcess Cmmunicatin Prcess Testing Prcess Versin Release prcess 2. Identify the relevant prcess quality standards fr evaluating the quality f the prject prcesses Identify the relevant prcess quality standards, r measures used t determine a successful utcme fr a deliverable. Ideally yur rganisatin has identified quality standards t be applied. If nt, determine what yu will use fr yur prject. Example industry quality standards/ methds: TQM, Six Sigma, Quality Gates, SPC, Zer Defects, quality circles, cntinuus imprvement, ISO 9000 A written prcedure is als a standard that defines the steps t execute a prcess. Example standards fr a prject prcess: The Prject Management Framewrk Issue reslutin cmpleted in five business days P a g e 63

64 Change Cntrl Prcedure Versin Cntrl Prcedure 3. Identify stakehlder expectatins fr prject prcesses Wrk with the prject stakehlders t define what it means fr a prject prcess t meet their expectatins. The prject prcess is then evaluated against these expectatins. Example stakehlder expectatins: Prject status will be cmmunicated mnthly Business subject experts will participate in all requirements- gathering sessins 4. Describe the Quality Assurance activities t be used t ensure the quality standards fr prject prcesses are met. Quality Assurance makes sure yu are ding the right things, the right way. Quality Assurance is prcess riented. Quality assurance refers t the internal wrk prcesses used t manage and deliver the slutin. Quality assurance activities make sure prject prcesses used t manage and deliver the prject s prduct r service are effective and being applied. Quality assurance can be perfrmed by a manager, custmer r third-party reviewer r separate quality assurance grup. Example quality assurance activities: Quality Assurance Audit Quality Assurance Checklist Quality Assurance Checkpints Example quality audit questins: Fr prcess t create the Prject Charter: Has the right spnsr been identified and has the spnsr frmally apprved the charter? Did key stakehlders participate? Fr Prject Reprting prcess: Des each team member prduce regular prgress reprts? Fr Prduct Transitin prcess: Did the supprt team receive training n the new P a g e 64

65 prduct r service? 5. Determine hw ften r when the quality assurance activity will be perfrmed. Establish the timeframe r recurring frequency fr perfrming the quality assurance activity. Example: Quality Assurance Audit Mnthly Quality Assurance Check list at end f each stage Identify quality rles, tls and prblem-reprting prcedures What t d Hw t d it 1. Identify the quality cntrl and quality assurance rles and respnsibilities fr the prject and actual resurces assigned The quality rles and respnsibilities were identified in the prject charter, and actual resurces were assigned in the staffing plan. 2. Identify any qualityrelated tls used t supprt quality. Identify the tls yu will use and their purpses r uses. Example Versin cntrl tl 3. Define the quality cntrl and quality assurance prblem reprting plan Describe the plan t itemize, dcument and track t clsure items reprted thrugh the quality cntrl and quality assurance activities. All prblems must be tracked t clsure and feedback prvided t apprpriate stakehlders and the prject team cncerning the status f the prblem. P a g e 65

66 9.9. Prject prcurement management Prcurement Management is the knwledge area invlved in purchasing r acquiring prducts, services, r results frm utside the prject team, including develping and administering the cntract r purchase rder needed t btain them. There are fur prject management prcesses in the Prcurement Management Knwledge Area. The knwledge area f Prject Prcurement Management cnsists f the fllwing prcesses - Prcurement Management Prcesses Prcess Prject Phase Key Deliverables Plan Management Prcurement Planning Prcurement Management Plan Cnduct Prcurements Executin Selected Sellers, Prcurement cntract award Cntrl Prcurements Mnitring Cntrlling and Change requests Clse Prcurements Clsure Clsed prcurements The first prcess, Plan Prcurement Management, creates the Prcurement Management Plan which is the framewrk fr all f the ther prcesses. The Plan Prcurement prcess invlves build versus buy decisins. The Inputs, Tls and Techniques, and Outputs f Plan Prcurement prcess are listed in the table belw. Plan Prcurement Management prcess Inputs Tls and Techniques Outputs Scpe baseline Make-r-buy analysis Prcurement management plan Requirements dcumentatin Expert judgment Prcurement statements f wrk Teaming agreements Cntract types Make-r-buy decisins Risk register Prcurement dcuments Risk-related cntract decisins Surce selectin criteria P a g e 66

67 Activity resurce requirements Change requests Prject schedule Activity cst estimates Cst perfrmance baseline Enterprise envirnmental factrs Organisatinal prcess assets The secnd prcess, Cnduct Prcurements, is where the bidding prcess fr a cntract is cnducted. The respnses r bids f the sellers are evaluated accrding t criteria set up in the Prcurements Management Plan, and the seller is selected and the cntracted awarded. Cnduct Prcurement prcess Inputs Tls and Techniques Outputs Prject Management Plan Bidder cnferences Selected sellers Prcurement dcuments Prpsal evaluatin techniques Prcurement cntract award Surce Selectin criteria Independent estimates Resurce calendars Qualified seller list Expert judgment Change requests Seller prpsals Advertising Prject management plan updates Prject dcuments Internet search Prject dcument updates Make-r-buy decisins Prcurement negtiatins Teaming agreements Organisatinal prcess assets P a g e 67

68 During the curse f the prject, the Cntrl Prcurements prcess manages the relatinship, evaluates the perfrmance f the seller n the cntract, and any changes r crrectins that are required t be implemented by the seller are mnitred. The prcess f Cntrl Prcurement invlves managing prcurement relatinships and ensuring the seller perfrmance meets the prcurement requirements. Cntrl Prcurement prcess Inputs Tls and Techniques Outputs Prcurement dcuments Cntract change cntrl system Prcurement dcumentatin Prject management plan Prcurement perfrmance reviews Organisatinal assets updates Cntract Inspectin and audits Change requests Perfrmance reprts Perfrmance reprting Prject management plan updates Apprved change requests Payment systems Wrk perfrmance infrmatin Claims administratin Recrds management system The prcess f Clse Prcurement invlves cmpleting each prcurement. The prcess invlves verifying that all planned wrk as per the cntract has been cmpleted. The Clse Prcurements prcess is where the deliverable frm the seller is accepted and the prject prcurements are frmally clsed. Clse Prcurement prcess Inputs Tls and Techniques Outputs Prject management plan Prcurement audits Clsed prcurements Prcurement dcumentatin Negtiated settlements Organisatinal prcess updates Recrds management system P a g e 68

69 Prcurement Management Planning Prcurement Management Planning has elements that tuch upn practically all f the ther knwledge areas. The fllwing is a list f elements f the Prcurement Management Plan, arranged by related knwledge area in rder t put sme structure t this rather large list f elements. Related Knwledge Area Plan Element 1. Integratin Prject cnstraints and assumptins that culd affect planned prcurements 2. Scpe Directin t sellers n develping and maintaining wrk breakdwn structure (WBS) 3. Frmat fr prcurement statement f wrk (SOW) t be put in cntract 4. Time Crdinatin f prcurement with prject scheduling 5. Handling lng lead times t purchase certain items frm sellers and crdinating extra time needed with prject schedule 6. Linking make-r-buy decisin with Estimate Activity Resurces and Develp Schedule prcesses 7. Setting scheduled dates fr delivery and acceptance f cntract deliverables 8. Cst Whether independent estimates will be used as evaluatin criteria 9. Quality Perfrmance criteria fr acceptance f deliverables 10. Human Resurces Rles and respnsibilities fr prject management team crdinatin with the rganizatin s prcurement r purchasing department 11. Cmmunicatins Crdinatin f prcurement with perfrmance reprting 12.. Risk Risk management issues related t prcurement 13. Requirements fr perfrmance bnds r insurance cntracts t mitigate prject risk 14. Prcurements Types f cntracts t be used (fixed price, cstreimbursable, r time & material) 15. Identifying pre-qualified sellers 16. Prcurement metrics t be used in evaluating sellers and managing cntracts 17. Management f multiple suppliers 18. Stakehlder Include sellers as ne f stakehlder grups t be managed 19. EEFs Industry r prfessinal rganizatin infrmatin resurces regarding ptential sellers 20. OPAs Standardized prcurement dcuments In mst functinal rganisatins, very few peple can place rders fr equipment r services and thse few peple tend t have a number f checks and prcesses designed t ensure that they are ding the right thing. The prject's stakehlders are als likely t want t knw wh is making the decisin n prime items f equipment and hw that persn will be making thse decisins. P a g e 69

70 When cnducting prcurement a prject manager is expsed t a number f ptential sellers all f whm want the prject manager's business. Cnducting prcurements invlves releasing prcurement dcuments t the market, cllecting prpsals, analysing thse prpsals, evaluating them and selecting the preferred seller. Having selected a seller and negtiated a cntract, the prject manager needs t administer the cntract, i.e. track prgress, and ensure that what was requested is in fact delivered and that payments are made as apprpriate. Often this is left t ther parts f the rganisatin t manage; hwever, it is the prject and, thereby the prject manager, wh experiences any cntract mismanagement impacts. As such, the prject manager needs t be fully aware f cntract prgress. During the bidding prcess, prject managers will need t draw supprt and guidance frm a range f subject matter experts. A prject manager will generally need guidance with the fllwing: prcurement prcess cntract technical cntent Many prject prcurements are simple prduct purchases where the seller sets the cnditins and the buyer (the prject) agrees, purchases the item and pays the bill. Dcumentatin is likely t cnsist f a purchase rder, receipt f gds, invice and statement. Fundamentally, this is nt much mre cmplex than buying grceries. Hwever, a reasnable prtin f prject prcurement invlves buying cmplex gds and services that require the cnstructin f a purchase-specific cntract by a lawyer r prcurement expert. Simplistically, a cntract is a cmmercial agreement, f legal standing, between tw parties identifying what each will d fr r expects frm the ther. Bradly, there are three types f cntracts, with many variatins based upn this dichtmy. The difference lies in the level f cmmercial risk brne by each party and the type f wrk management undertaken by each f the parties. The basic cntract types are: fixed price (smetimes referred t as firm fixed price) - the buyer pays the seller a set amunt regardless f the seller's csts; the seller bears the risk f any cst verruns cst reimbursement - the buyer pays t the seller the seller's actual csts, plus a fee typically representing the seller's prfit; the buyer bears the risk f any cst verruns time and material (T&M) - strictly speaking a cst-reimbursement cntract. T&M cntracts are treated as a special case f cst plus usually used fr activities such as prfessinal services. While cst plus cntracts are cmmn fr labur hire, including prfessinals (dctrs, dentists, cntractr and cnsultants) - the gals f the seller and the gals f the buyer are nt aligned. The buyer wants t keep their csts (the price) dwn, but the seller wants t increase the verall price t increase their prfit. Therefre, cst plus cntracts invlves a need fr the buyer t cntrl the wrk being dne by the seller. This is relatively easy when ne r tw peple are invlved, but virtually impssible when tens r even hundreds are peple are invlved acrss multiple sites. The types f cst plus cntracts are: Cst plus fee (CPF) r cst plus percentage fee (CPPF) P a g e 70

71 Cst plus fixed fee (CPFF) Cst plus incentive fee (CPIF) Cst plus award fee (CPAF) Time and material cntracts (T&M cntracts) are similar t cst plus cntracts in that they reimburse fr cst and effrt, althugh T&M cntracts ften have a fixed cntract element within them. Further issues the prject manager needs t cnsider regarding prcurement planning are as fllws: Expert guidance The prject manager will need t seek expert guidance t determining the best methd t engage with the market t ensure that a wide range f sellers is aware f the prject's prcurement need. Independent estimates This is anther frm f expert judgment. When yu receive the respnses t yur RFT r RFP, hw d yu knw if the prices are reasnable? Hw d yu avid paying t much? One tl t help with this is the independent estimate. Advertising One f the key success factrs t prcurement is ensuring that the market knws that the prject is actually seeking sme frm f gds and/r services. Bidder's cnference The buyer prvides this briefing t the ptential sellers. The briefing generally gives an verview f the statements f wrk and hw bids will be evaluated and ffers bidders the pprtunity t ask questins. Prpsal evaluatin techniques Evaluatin f cmplex respnses will require evaluatin by a team f different subject matter experts. This ften results in a wide range f pinins between the subject matter experts as t which is the best prpsal. Prcurement negtiatin Negtiatin ccurs after the best submissin r prpsal has been selected. Negtiatin invlves the buyer and seller meeting t discuss and reslve any differences in understanding the statement f wrk. The bjective f the negtiatin is t end up with a cntract that bth rganisatins can execute s the wrk can be delivered t the prject. Selected sellers This invlves preparing an evaluatin reprt fr senir management apprval. This explains why a particular seller has been selected t prvide prducts t the prject. Recrds management Within prject prcurement, a recrds management system (a subset f the prject management infrmatin system PMIS) must be develped t keep track f: P a g e 71

72 the cntract baseline apprved cntract changes perfrmance reprts claims payments During the cntrl prcurement phase, the fllwing needs t be cnsidered: Perfrmance assurance Often sme frm f actin is taken, especially n larger prjects, t ensure that what the seller represents in their perfrmance reprts is what actually has happened. This is nt an expressin f distrust f the seller, but just prudent management t ensure the brader prject des nt receive unpleasant surprises. Tls that can be used fr perfrmance assurance are: prcurement perfrmance review frmal review f prgress against schedule, cst and scpe baselines invlving bth seller and buyer persnnel wh knw abut the prject checking that wrk has been dne crrectly inspectins/audits a mre frmal review that checks cmpliance f perfrmance against requirement specificatins. This is smetimes undertaken by a third party acting n behalf f the buyer. At the clsing prcurement stage, the fllwing must be cnsidered: Prcurement audit At the end f a cntract the seller will bviusly seek final payment t clse the cntract. This is ften initiated in the frm f a cmpletin certificate Negtiated settlement Unfrtunately, at times, n agreement can be reached abut hw t reslve any remaining prcurement issues. Optins then available t the prject manager are: Escalatin t the buyer's and seller's management teams t negtiate reslutin f the issue. Seek a reslutin thrugh a frmal mediatin r arbitratin prcess whereby the seller and buyer agree t whatever utcme the mediatr deems fair. As a last resrt, legal actin thrugh the curt system. Organisatinal prcess assets updates The rganisatinal prcess assets are t be updated t reflect the cmpletin f the prcurement, i.e. archiving cpies f the cntract, cntract changes, cmpletin certificate, cpies f all crrespndence, payment recrds, seller perfrmance assessment and any lessns learned. Clse prcurements P a g e 72

73 Clse prcurements is the frmal end f the cntract. This is where the prject accepts that it has received all the gds and services requested under the cntract, in a fit-fr-purpse cnditin and then pay the seller any remaining mnies wed. Outputs f the planning prcess include the fllwing: A Prject Prcurement Plan which identifies: what prducts r services need t be prcured hw the prject will decide which prducts r services d need t be prcured the prcess fr advising the market f the prcurement the prcess fr selectin f the candidate seller the prcess fr apprving the purchase decisin. Prcurement statement f wrk The Prcurement Statement f Wrk (r Prcurement SOW) is a critical cmpnent f the prcurement prcess. It can be cnsidered the seed f the prcurement, and it prvides suppliers with a clearly stated set f gals, requirements, and utcmes frm which they can prvide a quantifiable respnse. The prcurement statement f wrk may include the fllwing elements: Specificatins Quantity desired Quality level Perfrmance data Perid f perfrmance Wrk lcatin Prcurement dcuments There are different dcuments which are used t frmally request prcurements, amng which are the fllwing types: Request fr Infrmatin (RFI) Invitatin fr Bid (IFB) Request fr Prpsal (RFP) Request fr Qutatin (RFQ) Tender Ntice Invitatin fr Negtiatin Invitatin fr Seller s Initial Respnse Specific prcurement terminlgy used may vary by industry and lcatin f the prcurement. P a g e 73

74 Surce selectin criteria Selectin criteria may be as narrw as simply the purchase price and the cst f delivery if the prcurement item is ff-the-shelf, r readily available frm a number f acceptable sellers. Fr mre cmplex prducts, the fllwing may be used as surce selectin criteria: Understanding f need (des the seller s prpsal address the Prcurement SOW?) Overall r life-cycle cst (including purchase cst and perating cst) Technical capability (des the seller have the technical skills and knwledge required?) Risk (hw much risk is embedded in the SOW?); hw much risk will be assigned t the seller?; hw des the seller mitigate risk?) Management apprach (des the seller have management prcesses and prcedures t ensure a successful prject?) Technical apprach (des the seller s technical methdlgies meet the prcurement dcument requirements?) Warranty (what des the seller prpse t warrant in the final prduct, and fr what perid?) Financial capacity (des the seller have the necessary financial resurces?) Prductin capacity and interest (des the seller have the capacity and interest t meet ptential future requirements fr prductin?) Business type and size (des the seller s enterprise meet a specific categry f business set frth as a cnditin f the agreement award such as a small business?) Past perfrmance f sellers (what has been the past experience with selected sellers?) References (can the seller prvide references frm prir custmers?) Intellectual prperty rights (des the sellers assert IP rights in the wrk prcesses r services they will use r in the prducts they prduce fr the prject?) Prprietary rights (des the sellers assert prprietary rights in the wrk prcesses r services they will use r in the prducts they prduce fr the prject?) Change requests When the cntract is awarded, there may r may nt be a need t update a range f plans t reflect any variatin t cst, schedule r scpe that resulted frm the cntract's negtiatin. This shuld be fed thrugh the prject's change management system t ensure that all impacts are fully assessed and all parties are aware f these changes. P a g e 74

75 9.10. Prject human resurce management Prjects ften rely n mre than ne resurce. They are made up teams which need t be managed during the life cycle f the prject. Managing human resurces is abut human resurces planning, hiring, and develping and managing a prject team. This applies t internal prject as well as management f external cntractrs. The knwledge area f Prject Human Resurce Management cnsists f the fllwing prcesses - Human Resurce Management Prcesses Prcess Prject Phase Key Deliverables Plan Human Resurce Management Planning Human Resurce Plan Acquire Prject Team Executin Prject Staff assignments Develp Prject Team Executin Team perfrmance assessments Manage Prject Team Executin Change requests Plan Human Resurce Management prcess invlves identifying and dcumenting prject rles and respnsibilities. The table belw gives the inputs, tls and techniques, and Outputs fr the Plan Human Resurce Management prcess - Plan Human Resurce Management Prcess Inputs Tls and Techniques Outputs Enterprise envirnmental factrs Organisatin charts and psitin descriptins Human resurce plan Organisatinal prcess assets Organisatinal Thery Activity resurce requirements Netwrking The plan human resurce management prcess invlves identifying and dcumenting prject rles, respnsibilities, required skills and relatinships in rder t create a staffing management plan. As seen frm the definitin, the utput f this prcess is a prject human resurce management plan. The majr inputs f the plan human resurce management prcess are the prject management plan and the activity resurce requirements. The prject management plan shws the prject baselines (scpe, time and cst), change requirement plans, and hw they integrate t meet the prject bjectives. The activity resurce requirements (that have been defined in the prject time prject) shw the human resurce needs f the prject. Other inputs f the plan human resurce management prcess include the enterprise envirnmental factrs and rganizatin prcess assets. P a g e 75

76 The tls and techniques f the plan human resurce management prcess include: Organizatinal charts and psitin descriptin: These are used t dcument team member rles and respnsibilities. There are three kinds: Hierarchical Organizatinal Charts: These are charts that are used t shw psitins and relatinships in a tp-dwn, graphical manner. These charts are similar t the Wrk breakdwn structure created in the prject scpe management. An example is the Organizatinal Breakdwn Structure (OBS). The OBS shws the departmental breakdwn f an rganizatin and the prject activities that are assigned t each department. Anther example f this kind f chart is the Resurce Breakdwn Structure (RBS). This shws the resurce break dwn fr each prject activity in a manner similar t the WBS. The RBS can cntain ther resurces that are nt human resurces. Matrix Charts: Als called Respnsibility Assigned Matrix (RAM). This is used t shw the relatinship between assigned tasks and resurces. It is particularly useful fr tasks that have varius levels f detail assigned t different peple. An example f a RAM is a RACI matrix. RACI stands fr (Respnsible, Accuntable, Cnsult and Infrm). An example f a RACI chart is shwn belw: The utput f this prcess is the prject human resurce management plan. The plan cntains prject rles and respnsibilities, rganizatinal charts and the staffing management plan. Acquire prject team prcess invlves identifying and btaining the team necessary t execute the prject. The table belw gives the inputs, tls and techniques, and Outputs fr the Acquire prject team prcess - Acquire prject team prcess Inputs Tls and Techniques Outputs Prject management plan Pre-assignment Prject staff assignments Enterprise envirnmental factrs Negtiatin Resurce calendars Organisatinal prcess assets Acquisitin Prject management plan updates Virtual teams P a g e 76

77 The acquire prject team prcess invlves cnfirming the availability f human resurces required fr a prject and btaining the team necessary t perfrm the prject activities. As a prject manager, yur gal is t wrk with crss-functinal team leaders t acquire the human resurces. Smetimes the human resurces needed fr a prject need t be surced utside the rganisatin. In this case, the prject manager needs t wrk with the prcurement team in rder t surce the persnnel required. The majr input f the Acquire Prject Team prcess is the human resurce management plan which cntains the prject rles and respnsibilities, rganizatinal charts and the staffing management plan. The tls and techniques fr the Acquire Prject Team prcess include: 1. Pre-assignment: This is the selectin f prject team members in advance. This is usually a result f a cmpetitive prpsal, r if the prject requires the specific expertise f sme peple. Usually pre-assigned prject team members are defined in the prject charter. 2. Negtiatin: Usually, a prject manager needs t negtiate fr the prject team with: Functinal managers (e.g. departmental heads) Other prject management teams External surces (suppliers, vendrs, etc.) A prject manager s ability t negtiate is critical t the success f the prject team acquisitin because the best human resurces are usually scarce and functinal managers might need t chse amng different prject teams. 3. Acquisitin: This invlves surcing fr prject team members utside the rganizatin. Acquisitin can be dne by hiring cnsultants r sub-cntracting t anther rganizatin. 4. Virtual teams: These teams have little r n face-t-face interactin. As a prject manager, yu shuld pay attentin t cmmunicatin issues amng virtual team members. We will discuss prject cmmunicatin management in detail in anther article. 5. Multi-criteria decisin analysis: This invlves using multiple criteria in team selectin. Pssible team members are rated and scred n several criteria. Sme f the criteria can include availability, cmpetency, cst, experience, skills, etc. The majr utputs f the acquire prject team prcess are the prject staff assignments and the resurce calendars. A resurce calendar shws the time when a prject team member can carry ut an activity. Develp prject team prcess Inputs Tls and Techniques Outputs Prject staff assignment Interpersnal skills Team perfrmance assessments Prject management plan Training Enterprise envirnmental factrs updates Resurce calendars Team-building activities P a g e 77

78 Grund rules C-lcatin Recgnitin and rewards This is the prcess f imprving team member cmpetencies, interactin amng team members and the wrking envirnment in rder t imprve the perfrmance f the team members n the prject. The utputs f the tw prcesses discussed abve (prject human resurce management plan, staff assignments and resurce calendars) serve as inputs t the develp prject team prcess. The tls and techniques fr the develp prject team include: 1. Interpersnal skills: Als knwn as sft-skills, interpersnal skills include cmmunicatin skills, cnflict reslutin skills, negtiatin, influence, team building, etc. 2. Training: As a prject manager, yu might need t include a training budget fr a prject and future prjects. Trainings can be classrm based, nline, n-the-jb training, etc. It is als advisable t pair-up an inexperienced prject team member with smene mre experienced s that the mre experienced team member can prvide guidance and mentrship. 3. Team building activities: Teams usually g thrugh team develpment stages. The ppular mdel fr team develpment is the Tuckman (1965) mdel. The stages are: Frming: Team meets and learns abut individual respnsibilities. The team is usually independent at this stage. Strming: Team starts trying t wrk tgether. Many cnflicts arise in this phase. Nrming: Team begins t find a rhythm t wrk tgether. Team members begin t place team interests abve individual interests and learn t trust each ther. Perfrming: Team becmes interdependent and wrk effectively. Adjurning: Team cmpletes the wrk and mves n frm the prject. This is usually a part f the clse prject prcess (which wuld be discussed in mre detail when we explre prject integratin management). 4. Grund rules: This is useful t ensure that the team has an understanding f the expectatins required frm them. 5. Clcatin: This is als called tight matrix. It invlves bringing the prject team tgether in a specific lcatin (called a war rm ) in rder t increase enhance cmmunicatin and a sense f belnging. Other tls and techniques f the develp prject team prcess include rewards, recgnitin and persnnel assessment tls. The majr utput f the develp prject team is the team perfrmance assessments. P a g e 78

79 Manage prject team prcess is the prcess f tracking team member perfrmance and managing issues within the team. The table belw gives the inputs, tls and techniques, and Outputs fr the Manage prject team prcess - Manage prject team prcess Inputs Tls and Techniques Outputs Prject staff assignments Observatin and cnversatin Enterprise envirnmental factrs updates Prject management plan Prject appraisals perfrmance Organisatinal prcess assets updates Team perfrmance assets Cnflict management Change requests Perfrmance reprts Issue lg Prject management plan updates Organisatinal assets prcess Interpersnal skills The inputs t this prcess include the human resurce plan, staff assignments, team perfrmance assessments, issue lgs and wrk perfrmance reprts. The tls and techniques fr the manage prject team prcess include: 1. Observatin and cnversatin: This is the easiest way t keep abreast f what is ging n with the team members. 2. Prject perfrmance appraisals: This can be frmal r infrmal. They are used t clarify issues and prvide feedback t the team members. Perfrmance appraisals are als used as a reference pint fr future training needs and targets fr team members. 3. Cnflict reslutin: This is ne f the mst imprtant skills a prject manager shuld pssess. There are varius cnflict reslutin appraches. Sme f them include: Withdrawal r Avidance: This invlves pstpning the issue s that it can be reslved later r by smene else. Smthing r Accmmdatin: This invlves emphasizing areas f agreement mre than areas f disagreement in a cnflict situatin. This usually results in a temprary feeling f reslutin amng the parties invlved. Cmprmise r Recnciliatin: This invlves settling fr a slutin that brings a degree f satisfactin t all the parties invlved. Frcing r Directing: This is a win-lse situatin in which ne party s slutin is frced ver the ther party s viewpint. This is usually enfrced frm a psitin f pwer r in an emergency. P a g e 79

80 Cllabrate r Prblem Slving: This invlves integrating multiple viewpints in rder t reach a cmmn cnsensus. The kind f cnflict reslutin chsen by a prject manager depends n the unique attributes f the prject and the nature f the cnflict. Interpersnal skills: In managing the prject team, a prject manager must cultivate interpersnal skills such as leadership, influencing and effective decisin making. The majr utput f the manage prject team prcess are change requests (usually staffing changes). Other utputs include updates t the prject management plan and prject dcuments. In sme cases, there might be updates t the rganizatinal prcess and the enterprise envirnmental factrs. P a g e 80

81 9.11. Prject cmmunicatin management Prjects can include prject participants, managers wh versee the prject and external stakehlders wh have an interest in the success f the prject. Managing cmmunicatin is abut cmmunicatins planning, infrmatin distributin, perfrmance reprting, and stakehlder management. The knwledge area f Prject Cmmunicatins Management cnsists f the fllwing prcesses - Cmmunicatins Management Prcesses Prcess Prcess Grup Key Deliverables Plan Cmmunicatins Management Planning Cmmunicatin Management Plan Manage Cmmunicatins Executing Organisatin assets updates prcess Cntrl Cmmunicatin Mnitring and Cntrlling Perfrmance Reprts The Inputs, Tls and Techniques, and Output f Plan Cmmunicatins prcess is given belw. Plan Cmmunicatins Prcess Inputs Tls & Techniques Outputs Stakehlder register Cmmunicatin analysis requirements Cmmunicatins plan management Stakehlder strategy management Cmmunicatin technlgy Prject dcument updates Enterprise factrs envirnmental Cmmunicatin mdels Organisatinal prcess assets Cmmunicatin methds Thrughut the prject duratin, infrmatin is shared with stakehlders as planned. This sharing f infrmatin is part f the Manage Cmmunicatins prcess. The Inputs, Tls and Techniques, and Output f Manage Cmmunicatins prcess is given belw. Manage Cmmunicatins Inputs Tls & Techniques Outputs P a g e 81

82 Prject management plan Cmmunicatin methds Organisatinal prcess assets updates Perfrmance reprts Infrmatin distributin tls Organisatinal prcess assets The Cntrl Cmmunicatins prcess invlves sharing the prject status reprts and measurements with apprpriate stakehlders. Cntrl Cmmunicatins Prcess Inputs Tls & Techniques Outputs Prject Management Plan Variance analysis Perfrmance reprts Wrk perfrmance infrmatin Frecasting methds Organisatinal prcess assets updates Wrk perfrmance measurements Cmmunicatin methds Change requests Budget frecasts Reprting systems Organisatinal prcess assets Plan Cmmunicatins Management defines hw and when the varius stakehlders receive infrmatin, and cmmunicate with each ther. Plan Cmmunicatins prcess invlves determining what kind f infrmatin shuld be shared with which prject stakehlder. This is dcumented in the Cmmunicatin management plan. Als dcumented is hw and when the cmmunicatin needs t be shared with stakehlders. Cmmunicatin is ne key element which has t be applied effectively thrughut a prject s life cycle frm the beginning till the end. Hence, why is it that Prject Managers are nt cmmunicating effective? The challenges a Prject Manager has may include the fllwing: Stakehlders A mdest prject will tend t have a number f peple wh need t knw its prgress and abut any issues which crps up during executin. Mdern prjects nwadays ften have an added cmplicatin f stakehlders scattered all ver the glbe. Withut a slid cmmunicatin plan and strategy, it will be impssible t keep everyne up t date and infrmed. In additin t that, different stakehlders may have different expectatins and hence the methd f cmmunicatin may vary frm ne t anther and hence a standard cmmunicatin plan may nt be effective. P a g e 82

83 Team members A prject team is generally quite a diverse grup f peple. Prject teams are usually thrust tgether t deliver a custmized and unique benefit t an rganisatin. In sme prjects, team members are put tgether and have never wrked tgether befre. The diversity within a prject team which can be cultural, gegraphical, rganisatinal, functinal, age related, level f educatin and s n is indeed the biggest challenge fr a prject manager. Ever changing situatin All prjects are by nature fluid and ever changing. Hence a prject manager has t cnsider the changes and challenges all the way until the end f the prject and ensure that the team and stakehlders are fully up t date with issues and prgress s that there will be n nasty surprises fr them t discver later n. Hence, t ensure that effective cmmunicatin is applied thrughut the whle prject and t vercme the challenges, a Prject Manager shuld incrprate a cmmunicatin plan at the planning stage f the prject. Efficient cmmunicatin means prviding nly the infrmatin that is needed Hence, the prject manager has t tailr the cmmunicatin plan accrdingly fr each prject. The plan shuld be maintained and updated thrughut the prject life cycle if there are any changes. A cmmunicatin plan facilitates effective and efficient cmmunicatins with the varius audiences having a majr stake in the prject. It describes hw prject cmmunicatins will ccur. A gd cmmunicatin plan generally includes the fllwing elements: Cmmunicatin bjectives Target audiences Key cntent fr the cmmunicatins Cmmunicatin methd and frequency Ratinale/Purpse Gd tw-way cmmunicatins amng all stakehlders is key fr the success f the prject. Gd cmmunicatin frestalls surprises, prevents duplicatin f effrt, and can help t reveal missins and misallcatin f resurces early enugh t permit crrectins. Wh is Invlved? Prject Manager Prject Spnsr Prject Stakehlders Result This infrmatin is included in a separate sectin f yur prject plan ften referred t as the Cmmunicatin Plan. P a g e 83

84 Develp Prject Cmmunicatin Plan The table belw lists the steps fr develping a prject cmmunicatin plan: Fcus n the fllwing Questins t ask 1. Cmmunicatin bjectives What are yu hping t achieve with yur prject cmmunicatins? Lk at the bjectives established fr the prject. 2. Target audiences (internal and external) and the makeup f each audience 3. Purpse f the cmmunicatin fr each audience Whm d yu want t cmmunicate with? Refer t the rles established fr the prject. Cnsider a brad range f stakehlders. Why are yu cmmunicating with them? Think abut what yur audience wuld like t knw frm their perspective - What s in it fr me? 4. Key cmmunicatin messages and the cntent f the message What d yu want t say? The cntent shuld address the reasn the audience will be interested in the prject. 5. Infrmatin surces Where will yu find the infrmatin yu need t cllect fr yur cmmunicatins? Sme infrmatin may be frm fficial surces, and ther infrmatin will be created as part f the prject and stred in the prject repsitry. 6. Frequency f the cmmunicatin Hw ften d yu want the cmmunicatin t be delivered? Weekly, bi-weekly, mnthly, at the end f a stage, etc. 7. Frmat and delivery mechanism fr the cmmunicatin Hw des the target audience prefer t receive this infrmatin? Reprt, phne, website, meeting, frmal presentatin, etc. 8. The messenger Wh is the respnsible cmmunicatr? Wh prepares and distributes r presents the cmmunicatin? Usually the prject manager and prject spnsr are the main cmmunicatrs, but the size f the prject may require the assignment f a rle f prject cmmunicatr. P a g e 84

85 9. Cmmunicatin milestnes measurements success and f Hw will yu knw if yur plan is wrking? Establish sme simple perfrmance indicatrs and evaluatin measures t determine if the cmmunicatin plan is effective. Example use f a Meeting Evaluatin frm after a meeting. There are numerus ther tls that a prject manager can use t better tailr a cmmunicatin apprach. Fr example, fr stakehlder analysis, a Pwer/Interest grid culd be used where stakehlders are gruped based n their level f authrity ( pwer ) and their level f cncern ( interest ) regarding the prject s utcme. Once the analysis is btained, a prject manager can nw assess hw key stakehlders are likely t react r respnd in varius situatins, in rder t plan hw t influence them t enhance their supprt and mitigate ptential negative impacts. Pwer/Interest Grid Anther tl prject managers can use t imprve cmmunicatin in regards t prblems n the prject is by creating a fish bne diagram r Ishikawa Diagram. Each bne is labelled with a prblem and then it is brken dwn further by lking at the causes fr each prblem. This tl is simple but effective at getting t the real issue quickly. P a g e 85

86 Fish Bne Diagram / Ishikawa Diagram Using a RACI chart, as mentined under Prject Human resurce management in chapter 9.10, can be very helpful t in prmting healthy cmmunicatin in a team. RACI stands fr Respnsible, Accuntable, Cnsulted and Infrmed. The chart ensures that at least ne persn is in charge f each categry, as well as helps thers t see their rle in assisting the respnsible persn in getting the jb dne. This als helps prevent cmmunicatin that des nt need t take place and nly interrupts the flw. In cnclusin, effective cmmunicatin is indeed imprtant fr a successful prject and in rder t achieve effective cmmunicatin in a prject, cmmunicatin planning is essential and using tls and putting prcesses in place t ensure daily effective cmmunicatin during prject executin will vercme the challenges and cntribute t a mre successful prject. P a g e 86

87 Methds f Cmmunicatin Given the gegraphical and rganisatinal diversity within typical prject teams tday, successful prject managers shuld als cnsider hw the team culd best cmmunicate, and t put in place tls t facilitate efficient and frequent cmmunicatin. Unlike 20 years ag, there is a wealth f technlgy-based tls available t facilitate efficient cmmunicatin, wherever individuals may be. A cmmunicatin strategy shuld be cnceived at the prject planning stages, s key is its influence n the success f the prject. Yu culd cnsider cmmunicatin methds which are either active r passive. Active cmmunicatin methds being thse used t cmmunicate in the here and nw, fr example the use f: Face t Face meetings Vide cnference, meeting - ne n ne, r grup Telephne cnference, r vice nly web cnference Webinars, becming increasingly ppular fr the delivery f presentatin based activities Telephne Stand Up presentatins in persn PASSIVE cmmunicatin methds wuld be thse which recipients can adpt in their wn time, fr example: Pd cast Web cast Intranet bulletin bards Blgs Website Prject Newsletter - paper based Table tp presentatin P a g e 87

88 9.12. Prject risk management Prjects encunter a variety f risks. Prjects may als encunter unexpected events, such as prject team members resigning, budgeted resurces suddenly changing and newer technlgies being intrduced. These risks need t be prperly identified and managed. Managing risk is abut risk planning and identificatin, risk analysis (qualitative and quantitative), risk respnse (actin) planning, and risk mnitring and cntrl. The knwledge area f Prject Risk Management cnsists f the fllwing prcesses: Risk Management Prcesses Prcess Prject Phase Key Deliverables Plan Risk Management Planning Risk Management Plan Identify Risks Planning Risk register Perfrm Qualitative Risk Analysis Planning Risk register updates Perfrm Quantitative Risk Analysis Planning Risk register updates Plan Risk Respnses Planning Risk related cntract decisins Mnitr and Cntrl Risks Mnitring and Cntrlling Risk register updates The practical applicatin f Prject Risk Management is a key element in the success f any prject. The Prject Risk Management prcess shuld frm part f the prject management rutine at all stages f the Prject Life-Cycle. All t ften thugh the applicatin f Risk Management can fall by the wayside smewhat during the implementatin phase f a prject nce the Prject Team gets int the fast pace f the implementatin phase, dealing with all the day t day issues that need t be reslved. Failing t fllw a structured Prject Risk Management prcess fr yur prjects in a self-disciplined manner will quickly lead t prject failure. The practical applicatin f Prject Risk Management is straightfrward: Applying a practical risk management prcess t yur prjects with the self-discipline and cmmitment t fllw the prcess rigrusly, yu will underpin yur chances f a successful utcme. P a g e 88

89 Prject Risk Management Prcess A simple way f lking at a Prject Risk Management prcess is t split it int 3 key activities: 1. Objective Setting: Set the bjectives fr the Prject Risk Management prcess t be used and align them with the verall bjectives fr undertaking the prject - the criteria fr success. Risk Registers are practical ways fr lgging identified risks s they may be managed effectively thrugh the prject risk management prcess. 2. Risk Analysis: Identify freseeable risks and seek t understand the type f risk - is it cmmercial, health & safety related, peratinal etc.? Fr all risks identified, understand the likelihd and impact as well as any cause and effect relatinships between risks. 3. Mnitring: Thrughut the whle Prject Life-Cycle, the level f risk facing the prject shuld be measured in sme way, as well as a measuring the effectiveness in respnding t identified risks Objective setting Prject Risk Management bjective setting prcesses shuld als cnsider and deal with the fllwing: Risk r Opprtunity? A practical Prject Risk Management prcess, if applied prperly, can als facilitate the identificatin f pprtunities t imprve the desired utcmes f yur prjects. Opprtunities t bring previusly unidentified benefits t the prject, ften mean sme deviatin frm the prject definitin and implementatin plan and can ften be verlked r dismissed due t the discipline f cntrlling the prject as signed ff. By fllwing a practical Prject Risk Management prcess during the assessment f pprtunities, risks assciated with pursuing pprtunities can be successfully managed during the curse f seeking the benefits n ffer - in a lt f cases pursuing pprtunities can inherently mitigate previusly identified prject risks. Risk vs. Definitin Different types f risk are present during different stages f the prject life cycle, the largest prject risks mainly present themselves during the early stages f a prject, when the prject definitin has nt been develped sufficiently, r risk details have nt been wrked thrugh thrughly enugh. It therefre fllws that as a prject prceeds t cmpletin its risk prfile reduces the nearer t cmpletin it gets. With sme prjects, a level f residual risk may exist after the prject has been cmpleted, which will require cntinual mnitring and management. Freseen and Unfreseen Risk Tw areas f prject risk management that yu are likely t cme acrss, with bvius descriptins, are Freseen and Unfreseen risk. Freseen risks are thse risks that yur prject team is able t anticipate and therefre have a gd chance f managing apprpriately. Freseen risks are the principal fcus f the prject risk management prcess, as it is difficult t manage smething yu are nt aware f (unfreseen). Hwever, t ignre unfreseen risks ttally is nt wise. Unfreseen risks are thse that creep up n yu and hit yu ttally unawares, and can cnsequently cause prject failure very easily. Althugh the P a g e 89

90 specifics f unfreseen risks are unknwn, it is likely that sme prvisin can be made t accmmdate the generic type f risk that culd present itself in an unfreseen way. A cmmn pragmatic way arund this issue is fr the spnsring rganisatin t put aside sme level f central cntingency fund t be made available shuld an unfreseen risk present itself. This fund wuld typically be held utside f the prject budget, but within the spnsring rganisatin s financial budget. Having established the bjectives f yur Prject Risk Management prcess taking int accunt the impact and magnitude f the cnsequences f prject failure Risk Analysis The next step is t undertake a Risk Analysis f yur prject. Qualitative & Quantitative Risk Analysis If yu d nthing else, the bare minimum yu shuld be cnsidering is the prductin f a list f risks facing yur prject and t rank that list in sme way t allw yu t fcus n managing the mst significant risks, but at the same time nt lsing sight f the less significant risks. This list in essence is the start f yur Risk Register and shuld be the main vehicle fr traveling alng the Prject Risk Management prcess, althugh the generic risk management prcess is in fact an iterative review. During the early stages f the Prject Life cycle, qualitative risk analysis is mre ften used than quantitative. During cncept and feasibility stages f a prject, the level f definitin is nt sufficiently defined t allw effective quantitative risk analysis. Quantitative risk analysis techniques cme int their wn as the prject definitin gets better develped, and very ften, quantitative risk analysis becmes an integral part f the definitin develpment prcess, defining actins and implementatin methdlgies which mitigate r remve risks previusly identified Mnitring and Cntrl Cncept and Feasibility stages may see the creatin f the Risk Register with risks identified and qualitatively ranked in rder f imprtance fr mre in-depth cnsideratin at the next stage f the prject. During the Pre-planning stage f the prject, the risk register will be reviewed at least nce again having taken sme actin against the mst significant risks identified frm the earlier definitin stages. As the definitin prceeds, sme risks may have been eliminated, yet new risks may have presented themselves. Sme risks may still have nly been assessed qualitatively and sme f the mre significant risks may have undergne a rigrus quantitative analysis. The pririties fr management actin will have mst likely als changed. During the Prject Implementatin and Handver stages f a prject it s mre usual t review risks via the Risk Register n an nging basis as part f the prject cntrl activities and reprting requirements fr the prject - cmmnly n a mnthly basis as a minimum. Gd practice suggests that the utcme f prject risk management activities shuld be fed back int ther prjects as cntinuus learning. P a g e 90

91 After all, if a methd f eliminating r mitigating a risk has prven successful, by capturing and sharing the successful risk management actins with thers, similar risks assciated with ther prjects can be managed mre effectively, reducing the verall prject risk expsure f the spnsring rganisatin. In this sense, the Risk Management prcess becmes a feedback lp f learning and verall risk reductin. 1. A prject risk is a ptential surce f deviatin frm the prject plan. Prject risks can have a negative r psitive impact n the prject. Prject risks that are negative are called threats. Prject risks that are psitive are called pprtunities. 2. Respnses t threat include -- Reducing the prbability f risk Develping cntingency plans Passively accepting cnsequences. Transferring risk Insurance is an example f transferring risk. 3. Nn-critical risks shuld be dcumented. They shuld be revisited and reviewed regularly. 4. Risks are identified in all phases. P a g e 91

92 Descriptin Develping a risk management plan During the Planning Stage, the prject team identifies all significant prject risks knwn during the planning stage and determines the likelihd, impact, and respnse strategy assciated with each risk. Additinally, the team identifies prcesses and rles t cntrl risks during the Execute and Cntrl Stage f the prject. Results are dcumented in the Risk Management Plan and Risk Register. Ratinale/Purpse Factrs that cause a risk t be realized may ccur thrughut the prject life cycle. A Risk Management Plan helps assure satisfactry prject results by specifying a prcess t fllw during the Execute and Cntrl Stage fr detecting the ccurrence f these factrs and fr respnding t the resulting realized risks. Wh is invlved? Prject Manager Prject Team Prject Spnsr Custmer Prject Stakehlders Result Risk Management Plan cmpnent f the Prject Plan The table belw describe actins yu perfrm t create a risk management plan. What t d Hw t d it 1. Hld risk management planning kick-ff meeting Engage key stakehlders and risk management decisin makers as identified in the Initiate Stage fr every step in the Risk Management Plan develpment. Prepare an agenda t review the risk management strategy and key cmpnents t be decided fr the Risk Management Plan. Hld the risk management planning kick-ff meeting, dcument utcmes, and determine additinal steps and assignments t cmplete the Risk Management Plan. 2. Expand general areas f risk fr the prject int a detailed list f risks Begin with the areas f risk identified in the Initiate Stage. Expand the list t identify all specific risks knwn within each area. Make the list as cmprehensive as pssible at this stage. The list will be cntinually updated thrughut the Execute and Cntrl Stage f the prject as mre is knwn abut additinal risks r risks that are n lnger pertinent. P a g e 92

93 3. Set guidelines fr risk analysis apprach With reference t the rganisatin s general dispsitin tward risk likelihd and impact categries, set guidelines that define what type and level f analysis is needed. Optins fr type f analysis include: A qualitative analysis f a risk, which determines the factrs that wuld cause the deviatin, the likelihd f its ccurrence, and the impact were it t ccur. A quantitative analysis f a risk, in which its likelihd is expressed as a prbability and the impact f the deviatin, is expressed as a mnetary value. The ptin chsen fr level f analysis depends n hw cmprehensive an assessment is needed fr the particular prject. Examples include: Careful research r reliance n industry expertise regarding risks fr prjects f this nature. General sense f the key stakehlders regarding the risks fr this prject. 4. Define risk likelihd categries Risk likelihd categries can either be general qualitative measures, such as a scale frm extremely unlikely t extremely likely, r specific quantitative ranges f prbabilities. 5. Define risk impact categries Risk impact categries can be expressed either as general qualitative measures, such as an indicatin f what areas f the prject deliverables r rganizatin wuld be impacted, r as specific quantitative measures, such as mnetary impacts. 6. Establish risk likelihd and impact values fr each risk Assess and assign risk likelihd and impact values t each risk based n the categries defined. Dcument risk likelihd, impact, and type f analysis required (i.e., qualitative r quantitative) fr each risk in a risk register. 7. Define the respnse fr each risk Fr each risk, judge the likelihd and impact and determine an apprpriate respnse strategy. List the respnse strategy and a specific respnse actin in the risk register. Respnse strategies fall int fur categries: Avidance. The avidance strategy eliminates the pssible deviatin by changing the prject deliverables against which P a g e 93

94 the deviatin is defined. Mitigatin. The mitigatin strategy sets ut t alter the likelihd r the impact f the risk. Transference. The transference strategy transfers the impact f the deviatin t a third party. Acceptance. The acceptance strategy merely acknwledges the risk, but des nt specify any immediate actin t take in respnse t the risk, althugh a cntingency plan shuld be defined. Examples f specific respnse actins fr each strategy include: Avidance: Fr a negative risk, ne culd decide nt t undertake the deliverable. Fr a psitive risk r pprtunity, ne culd explit the pprtunity by incrprating it int the prject as a planned deliverable. Mitigatin: Fr negative risks, take steps t reduce the prbability that risk factrs will cause a deviatin frm the prject plan r t reduce the amunt f deviatin. Fr a psitive risk, such as a cst savings pprtunity, take steps t increase the likelihd r amunt f the cst savings. Transference: Purchasing insurance is a classic risk transference strategy. On the psitive side, a plan t share pssible cst savings with a vendr as an incentive is an example f transference. Acceptance: Merely nte that the risk is accepted. P a g e 94

95 9.13. Prject stakehlder management Stakehlders can, literally, make r break a prject, by their supprt fr a prject r by their interference in a prject. The cst f making a change based n a request by a stakehlder ges up thrughut the prject, s it is imprtant t prevent changes by engaging the stakehlders as early as pssible. That is why Identify Stakehlders is the nly ther prcess t be in the Initiating Prcess Grup ther than Create Prject Charter, meaning that is undertaken even befre the frmal planning prcess starts. Prject Management is placing increasing emphasis n Stakehlder Management; it has elevated it frm being just a part f Cmmunicatins Management t its wn knwledge area utright. This is because cmmunicating with a stakehlder is nt enugh; yu have t influence the stakehlder. Influence because yu will nt be in a psitin with sme stakehlders t be a psitin f authrity t cerce them, and have t rely n ther frms f sft pwer r influence t be able t get them t d what yu want them t d. Prject stakehlder management is cmprised f the prcesses required t identify the peple, grups, and rganisatins that can impact r be impacted by the prject. It invlves analysing stakehlder expectatins in develping management strategies fr effectively engaging stakehlders and prject decisins and executin. Stakehlder management als fcuses n cntinuus cmmunicatins with stakehlders, managing cnflict, and prmting apprpriate stakehlder engagement in prject decisins and activities. The high level Prject Stakehlder Management utput elements, by Prcess Grup, are: Initiating Planning Executing Mnitring and Cntrlling Stakehlder register Stakehlder Management plan Stakehlder CR's register Wrk Perfrmance Inf CR's Prject stakehlder management fcuses n the prcesses required t identify the peple, grups, r rganisatins that can either impact r be impacted by the prject. Sme f these prcesses include the fllwing: Analysing stakehlder expectatins and their impact n the prject. Develping apprpriate management strategies fr engaging stakehlders. Implementing cntinuus cmmunicatins with stakehlders t understand needs and expectatins. Fstering stakehlder engagement in the prject fr decisins and activities. Fcusing n stakehlder satisfactin as a key prject bjective. Identify Stakehlders is the prcess f identifying all individuals r rganisatins that can be psitively r negatively impacted by the prject, and dcumenting their influence, impact, interest, and invlvement n prject success. This is a key area in the prject management prcess, as many prjects fail due t a lack f cmplete stakehlder identificatin. Mst prjects will have a large number f stakehlders, and it is a prject manager's jb t identify stakehlders and understand the impact f the prject n their specific business areas. In this respect, the prject manager's jb amunts t a relatinship management functin. P a g e 95

96 As part f the Manage Stakehlder Expectatins prcess, the prject manager wrks with the stakehlders, understands and addresses their needs and expectatins. The Inputs, Tls and Techniques, and Output f Manage Stakehlder Expectatins prcess is given belw. Manage Stakehlder Expectatins Prcess Inputs Tls & Techniques Outputs Stakehlder register Cmmunicatin methds Organisatinal prcess assets updates Stakehlder management strategy Interpersnal skills Change requests Prject management plan Management skills Prject management plan updates Issue lg Prject dcument updates Change lg Organisatinal prcess assets During Stakehlder Analysis the fllwing activities are cnducted: Identify all ptential stakehlders and relevant infrmatin abut them, such as their rles, departments, interests, knwledge levels, expectatins, and influence levels. Key stakehlders are thse in decisin making r management rles. Als identify ther stakehlders during interviews with stakehlders. Identify the ptential prject impact r supprt the stakehlder culd prvide, classifying them t help define an apprach strategy. Priritize them. Assess hw key stakehlders are ging t react r respnd t varius prject situatins and issues, t plan hw t influence them t enhance their supprt and mitigate their negative impact. The Stakehlder Register cntains all the details related t identified stakehlders, including: Identificatin, such as name, psitin, rle, cntact infrmatin Assessment, such as majr requirements, main expectatins, ptential influence n the prject and in what phase Classificatin, such as internal r external, attitude tward prject (supprt, neutral, resister) The Stakehlder management strategy is the apprach t be used t increase supprt and minimize resistance, including: Wh can significantly impact the prject Desired level f participatin in the prject Stakehlder grups, and their management, as grups The central rle f stakehlders in the successful delivery f prjects is becming increasingly recgnised. Hwever, whilst critical t success, these rles are neither passive nr predetermined. The P a g e 96

97 rganisatin has significant pprtunities t influence stakehlder s perceptins and expectatins fr the benefit f bth the stakehlders and the prject; but nly when there are effective relatinships in place with each key stakehlder. Identifying, mapping and priritising a prject s stakehlder cmmunity are nly the beginning. Prjects and ther initiatives can nly be cnsidered successful when their key stakehlders acknwledge they are a success. This requires the delivery team t effectively engage with each f its key stakehlders t understand and manage their expectatins and then deliver the utcme t meet r exceed these managed expectatins. Expectatins are never fixed ; effective cmmunicatin can help change perceptins and expectatins t make them realistic and achievable. Cnversely, ineffective cmmunicatins can create the perceptin f failure in the mind f a stakehlder even when the deliverable is n time, n budget and delivering the specified scpe. Engaging effectively and ethically with key stakehlders t help create a successful prject utcme requires significant levels f skill and maturity. A Stakehlder Relatinship Management Maturity (SRMM) mdel defines five levels f maturity and suggests a rute mst rganisatins can fllw t prgress frm Level 1 t Level 5. The 5 levels f SRMM are: Ad hc: sme use f prcesses Prcedural: fcus n prcesses and tls Relatinal: fcus n the Stakehlders and mutual benefits Integrated: methdlgy is repeatable and integrated acrss all prgrams and prjects Predictive: used fr health checks and predictive risk assessment and management. The fllwing table serves as an implementatin guide fr SRMM: SRMM Stage Features Methdlgy Steps Reprting / Tls Cmments 1. Ad hc: sme use f prcesses One area recgnises the need fr imprved Stakehlder Management (SHM) Generally fcuses n simplified selected steps. Smetimes just Steps 4 and 5 Self-develped tls - Wrd templates - Spreadsheet lists Requires cntinuus and significant management push t maintain impetus 2. Prcedural: fcus n prcesses and tls SHM intrduced as part f implementatin f cnsistent prcesses Smetimes all five steps but truncated and simplified Standardised tls - Wrd templates - Spreadsheet with macrs - Simple database Require cntinuus and significant management push t maintain impetus 3. Relatinal: fcus n the stakehlders and mutual benefits Recgnitin f usefulness fr cmpetitr analysis, r supprt fr mergers/acquisitin All five steps implemented. Mve twards valuing insights / infrmatin in decisin making Fully functinal tls - Spreadsheet with macrs - Sphisticated databases Useful fr specific applicatins r events; rarely with an intentin f cntinuus applicatin P a g e 97

98 4. Integrated: methdlgy is repeatable and integrated Business as usual applicatin using the full methdlgy fr Steps 1 5 with Step 4: engage and Step 5: being vital fr evidence f success Graphic reprts, visualisatin, engagement prfiles, etc., used in The methdlgy and tl are used as a demnstratin f repeatable applicatin all prjects and management reprts within that part f the selected and KPIs rganisatin peratinal wrk 5. Predictive: used fr health checks, predictive risk assessment and management: Implementatin f the full methdlgy and supprting tls tl Steps 1-5. Lessns Learned & cmparative data. Integrated data acrss prgrams, etc. Trend reprting, pr-active risk identificatin (unusual prfiles) Cmparisn between prjects and different Organisatin wide and cmplete fcus n cntinuus imprvement as cmpetitive advantage categries f wrk P a g e 98

99 10. Rles f the cnsultant/public bdies Whether prjects are direct managed by the public bdy, r a cnsultant is used, it is essential that clear rles and respnsibilities are defined. In certain instances, these functins, rles and respnsibilities may differ based n agreed the nature and cmplexity f prjects, scpe definitin and prject management expertise available Rle f the cnsultant The Rle f the Prject Management Cnsultant can be a cmplex ne. The rle has many different aspects and means different things in different rganisatins. Sme f the Prject Management Cnsultant Respnsibilities and Duties are as fllws: Manage prjects and related specific activities within given cnstraints f time, budget and quality. Ensure scpe, schedule and csts are reasnable and achievable. Allcate wrk amng team members and prvide guidance regularly. Cnduct peridic and pst-prject reviews t ensure prject is n track. Crdinate functinal perspectives frm within and utside prject teams. Ensure all prject dcumentatin is updated and cnveyed t relevant stakehlders n time. Integrate self int client envirnment t effectively lead prject team building psitive prfessinal relatinships with clients and assciates. Define bjectives, requirements and assumptins necessary t structure management prject. Plan, schedule and cntrl activities t fulfill identified bjectives applying technical, theretical and managerial skills t satisfy prject requirements. Enfrce and develp integrated develpment plan representing apprpriate level f detail. Develp task interdependency and prject tactics with verall prject strategy. Establish and maintain high perfrming team and serve as prject advcate within rganisatin. Cnsult and lead effrts f individual, team, client and ther resurces assciated with prject activity. Ensure alignment n prject gals and deliverables. Lead risk management within prject management team. Ensure risks have apprpriate mitigatin and cntingency plans. Sme benefits f hiring a Prject Management Cnsultant include: Return n investment: Cnsultants add value by using their skills and expertise t help deliver an utcme, slutin, service r mitigate risk that prvides a meaningful return n investment t a client. Speed: Since cnsultants are already experienced and trained they can be deplyed rapidly smetimes within days as ppsed t weeks r mnths. Their experience means they can engage prmptly with the situatin, and can quickly becme effective in the client rganisatin P a g e 99

100 Expertise: Prject Management Cnsultants typically cme int an rganisatin at a relatively senir level and are expected t prvide expertise and leadership Objectivity: Since they cme frm utside the client rganisatin they are unencumbered by cmpany plitics r culture, and can prvide a fresh perspective. Accuntability: Prject Management Cnsultants are nt simply advisrs. They are als practitiners and will take respnsibility fr and manage a prject r prgramme. Effectiveness: Ideally, in rder t be effective, a PM cnsultants will need t wrk well with senir management in the client cmpany and als be granted sme authrity and credibility t effect significant change r transitin within a cmpany. Cmmitment: PM cnsultants shuld maintain high prfessinal standards. They rely n their reputatin and knw that future wrk relies upn referrals and a successful track recrd Rle f public bdies The rles f public bdies are t take wnership f the prject being cnducted. The public bdy shuld ensure it has the prper structures, such as a prject/prgramme/prtfli management ffice ensuring the efficiency f the delivery mechanisms f the public prtfli f prjects, thrugh the prvisin f prject management and crdinatin services t ensure n time and n budget prject delivery. The functins f Prject/Prtfli Management Office include: develping and implementing prject management systems and prcesses t enhance the department s rganisatinal perfrmance; assisting line functin management t identify prject leaders and team members t frmulate prject teams; develping and implementing standards, prcesses, and methdlgies that imprve individual prject perfrmance capabilities f the rganisatin; facilitating the public bdy s ability t manage its entire cllectin f prjects as ne r mre inter-related prtflis, and serving as a single surce f infrmatin n prject activity acrss the enterprise; facilitating gvernance f, best practices fr and adherence t, prject cntrl and quality standards; tracking prject executin, issues and risks t ensure n-time and n-budget prject delivery; prviding mnthly and quarterly prject reprts t management; and institutinalising prject management discipline in the rganisatin by prjectising business plans and staging infrmatin and knwledge management sessins. P a g e 100

101 11. Cnstructin Prject Management The fllwing items are specifically cnsidered with regard t cnstructin prject management: Cmmissining Phase f a prject The prgramming f capital prjects is shaped by the strategic plan f an rganisatin, which is influenced by market demands and resurces cnstraints. The prgramming prcess assciated with planning and feasibility studies sets the pririties and timing fr initiating varius prjects t meet the verall bjectives f the rganisatins. Hwever, nce this decisin is made t initiate a prject, market pressure may dictate early and timely cmpletin f the facility Pre-Prject Planning Even befre design and cnstructin prcesses begin, there is a stage f "pre-prject planning" that can be critical fr prject success. In this prcess, the prject scpe is established. Since cnstructin and design prfessinals are ften nt invlved in this prject scpe stage, the terminlgy f describing this as a "pre-prject" prcess has arisen. Frm the wner's perspective, defining the prject scpe is just anther phase in the prcess f acquiring a cnstructed facility. The danger f pr prject definitin cmes frm escalating csts (as new items are added) r, in the extreme, prject failure. A gd definitin f scpe allws all the parties in the prject t understand what is needed and t wrk twards meeting thse needs. Sme items in the scpe definitin checklist include: business strategy fr building use, justificatin, plan, ecnmic analysis, facility requirements, expansin/alteratin cnsideratin, site selectin issues and prject bjectives; wner philsphy with regard t reliability, maintenance, peratin and design; prject requirements fr value engineering, design, existing facility, scpe f wrk review, schedule and budget; site infrmatin including applicable regulatry reprting and permits requirements; building prgramming including rm by rm definitins fr use, finishes, interir requirements, heating, ventilating and air cnditining; design parameters including all cmpnents and a cnstructability analysis; and equipment including inventry, lcatins and utility requirements. In rder t gain time, sme wners are willing t freg thrugh planning and feasibility study s as t prceed n a prject with inadequate definitin f the prject scpe. Invariably, subsequent changes in prject scpe will increase cnstructin csts. This may be attributed in large part t the uncertainties inherent in cnstructin prjects. Hwever, sme prjects are clearly unsuccessful and abandned befre cmpletin, and their demise must be attributed at least in part t inadequate planning and pr feasibility studies. The spnsr hlds the key t influence the cnstructin csts f a prject because any decisin made at the beginning stage f a prject life cycle has far greater influence than thse made at later stages. Therefre, a spnsr shuld btain the expertise f prfessinals t prvide adequate planning and feasibility studies. Many spnsrs d nt maintain an in-huse engineering and cnstructin P a g e 101

102 management capability, and they shuld cnsider the establishment f an nging relatinship with utside cnsultants in rder t respnd quickly t requests. Finally, the initiatin and executin f capital prjects places demands n the resurces f the spnsr and the prfessinals and cntractrs t be engaged by the spnsr. Fr very large prjects, it may bid up the price f engineering services as well as the csts f materials and equipment and the cntract prices f all types. Cnsequently, such factrs shuld be taken int cnsideratin in determining the timing f a prject Effects f Prject Risks n Organisatin The uncertainty in undertaking a cnstructin prject cmes frm many surces and ften invlves many participants in the prject. Since each participant tries t minimise its wn risk, the cnflicts amng varius participants can be detrimental t the prject. Only the spnsr has the pwer t mderate such cnflicts as it alne hlds the key t risk assignment thrugh prper cntractual relatins with ther participants. Failure t recgnise this respnsibility by the spnsr ften leads t undesirable results. In recent years, the cncept f "risk sharing/risk assignment" cntracts has gained acceptance by gvernment. Since this type f cntract acknwledges the respnsibilities f the spnsr, the cntract prices are expected t be lwer than thse in which all risks are assigned t cntractrs. In appraching the prblem f uncertainty, it is imprtant t recgnise that incentives must be prvided if any f the participants is expected t take a greater risk. The willingness f a participant t accept risks ften reflects the prfessinal cmpetence f that participant as well as its prpensity t risk. Hwever, sciety's perceptin f the ptential liabilities f the participant can affect the attitude f risk-taking fr all participants. When a claim is made against ne f the participants, it is difficult fr the public t knw whether a fraud has been cmmitted, r simply that an accident has ccurred. Risks in cnstructin prjects may be classified in a number f ways. One frm f classificatin is as fllws: Sciecnmic factrs Envirnmental prtectin Public safety regulatin Ecnmic instability Exchange rate fluctuatin Organisatinal relatinships Cntractual relatins Attitudes f participants Cmmunicatin Technlgical prblems Design assumptins Site cnditins Cnstructin prcedures Cnstructin ccupatinal safety The envirnmental prtectin mvement has cntributed t the uncertainty fr cnstructin because f the inability t knw what will be required and hw lng it will take t btain apprval frm the regulatry agencies. The requirements f cntinued re-evaluatin f prblems and the lack f P a g e 102

103 definitive criteria which are practical have als resulted in added csts. Public safety regulatins have similar effects, which have been mst nticeable in the energy field invlving nuclear pwer plants and cal mining. The situatin has created cnstantly shifting guidelines fr engineers, cnstructrs and wners as prjects mve thrugh the stages f planning t cnstructin. These mving targets add a significant new dimensin f uncertainty which can make it virtually impssible t schedule and cmplete wrk at budgeted cst. Ecnmic cnditins f the past decade have further reinfrced the climate f uncertainty with high inflatin and interest rates. Uncertainty stemming frm regulatry agencies, envirnmental issues and financial aspects f cnstructin shuld be at least mitigated r ideally eliminated. Owners are keenly interested in achieving sme frm f breakthrugh that will lwer the csts f prjects and mitigate r eliminate lengthy delays. Such breakthrughs are seldm planned. Generally, they happen when the right cnditins exist, such as when innvatin is permitted r when a basis fr incentive r reward exists. Hwever, there is a lng way t g befre a true partnership f all parties invlved can be frged. During perids f ecnmic expansin, majr capital expenditures are made by industries and bid up the cst f cnstructin. In rder t cntrl csts, sme wners attempt t use fixed price cntracts s that the risks f unfreseen cntingencies related t an verheated ecnmy are passed n t cntractrs. Hwever, cntractrs will raise their prices t cmpensate fr the additinal risks. The risks related t rganisatinal relatinships may appear t be unnecessary but are quite real. Strained relatinships may develp between varius rganisatins invlved in the design/cnstruct prcess. When prblems ccur, discussins ften center n respnsibilities rather than prject needs at a time when the fcus shuld be n slving the prblems. Cperatin and cmmunicatin between the parties are discuraged fr fear f the effects f impending litigatin. This barrier t cmmunicatin results frm the ill-cnceived ntin that uncertainties resulting frm technlgical prblems can be eliminated by apprpriate cntract terms. The risks related t technlgical prblems are familiar t the design/cnstruct prfessins which have sme degree f cntrl ver this categry. Hwever, because f rapid advances in new technlgies which present new prblems t designers and cnstructrs, technlgical risk has becme greater in many instances. Certain design assumptins which have served the prfessins well in the past may becme bslete in dealing with new types f facilities which may have greater cmplexity r scale r bth. Site cnditins, particularly subsurface cnditins which always present sme degree f uncertainty, can create an even greater degree f uncertainty fr facilities with heretfre unknwn characteristics during peratin. Because cnstructin prcedures may nt have been fully anticipated, the design may have t be mdified after cnstructin has begun. If each f the prblems cited abve can cause uncertainty, the cmbinatin f such prblems is ften regarded by all parties as being ut f cntrl and inherently risky. Thus, the issue f liability has taken n majr prprtins and has influenced the practices f engineers and cnstructrs, wh in turn have influenced the actins f the spnsr. Many spnsrs have begun t understand the prblems f risks and are seeking t address sme f these prblems. Fr example, sme spnsrs are turning t thse rganisatins that ffer cmplete capabilities in planning, design, and cnstructin, and tend t avid breaking the prject int majr cmpnents t be undertaken individually by specialty participants. Prper crdinatin thrughut the prject duratin and gd rganisatinal cmmunicatin can avid delays and csts resulting frm P a g e 103

104 fragmentatin f services, even thugh the cmpnents frm varius services are eventually integrated. Attitudes f cperatin can be readily applied t the private sectr, but nly in special circumstances can they be applied t the public sectr. The ability t deal with cmplex issues is ften precluded in the cmpetitive bidding which is usually required in the public sectr. The situatin becmes mre difficult with the prliferatin f regulatry requirements and resulting delays in design and cnstructin while awaiting apprvals frm gvernment fficials wh d nt participate in the risks f the prject. Althugh spnsrs and cntractrs may have different perceptins n prject management fr cnstructin, they have a cmmn interest in creating an envirnment leading t successful prjects in which perfrmance quality, cmpletin time and final csts are within prescribed limits and tlerances Envirnmental and Land Issues Establishment f rights and title ver and use f land is key t infrastructure prjects. The gvernment needs t ensure it has title in assets and btain title t assets that it r the public is paying fr ver time. Cnsideratin f the ptential impact n the envirnment and sciety f an infrastructure prject is key t planning and implementatin f a prject. Factrs which need t be cnsidered regarding land and envirnmental issues are: Restrictins n transfer f rights ver public assets t private sectr Clear title in land and land registratin Vesting f rights in use f land Acquisitin f land fr prject frm third parties Exprpriatin Planning permissin Envirnmental and scial issues and envirnmental assessment Restrictins n transfer f rights in public assets t private sectr peratr Prjects may require the transfer f rights in public assets t the private sectr peratr. The awarding authrity may wish t transfer rights ver, r wnership f, prject assets t the prject assets t the prject cmpany r peratr and there may be a requirement fr the prject cmpany t transfer wnership f assets t the awarding authrity after cnstructin r at the end f the prject. The awarding authrity will want t find a mechanism that gives the peratr sufficient rights t enable it t fulfil its bligatins while allwing the awarding authrity t maintain a sufficient interest in the public assets and rights f reversin. The law f the cuntry may include restrictins n transfer f rights ver public assets, such as: t what extent can the peratr receive rights ver land and/ r assets frm the gvernment? Are there any limitatins impsed by law n the transfer f rights ver land and public assets? are there restrictins n whether interests in land can be transferred t a freign entity? P a g e 104

105 can the peratr transfer, sub-licence, r dispse f rights in thse assets r land? can assets be remved, replaced r dembilised? t what extent can lenders btain security ver the assets and land? is the peratr prtected by law in the event that gvernment exprpriates the assets r land? what liabilities run with the assets transferred (e.g., envirnmental liabilities, ccupier's liability, etc.) Clear title in interest in land and land registratin In mst prjects, particularly where the service prvider is investing in existing r new infrastructure, the service prvider will want assurance that it has rights in the land where the infrastructure is t be built r whether this is wnership f the land r sme right less than wnership (such as lease r license ver the land). Where third party finance is being prvided, the lender may have as its sle surce f security a charge ver the assets and will want certainty that there is a clear frm and effective methd f establishing a security interest ver the land r land rights. A hst gvernment will be cautius abut granting any interest in the land greater than is necessary t enable the prject t prceed. It will be imprtant t cnsider if there is a clear methd f registering and enfrcing rights f prperty in the cuntry. The service prvider and lender will be cncerned that there are n cmpeting third party claims t the land t be used fr the prject Vesting f Rights f Access t and use f Third Party Land The service prvider may be respnsible fr installing and/ r maintaining assets n third party land, such as laying pipes r lines acrss third party r public land. Fr this, it will need rights f land use such as rights f access and pwer t dig trenches, etc. These rights are usually granted by law t the utility r authrity - the parties will need t check that the awarding authrity has such rights and that the awarding authrity has the right t delegate r vest these rights in the service prvider. If it cannt delegate the pwers, then it will need t cntinue t perfrm these activities during the cntract perid and the cntract will have t allcate respnsibilities and liabilities fr this between the parties. It will als be imprtant t determine the prcess fr diverting r clsing public rads and highways t enable the prject t prceed. In the case f cnstructin f a rad, railway r bridge, this is likely t be fr an extended perid Acquisitin f Land fr Prject frm Third Parties Gvernments shuld ask the fllwing key questins: Is it ging t be necessary t acquire land fr the prject t prceed? Fr example, in highway, railway and dam prjects a cnsiderable amunt f land will need t be acquired fr the prject t prceed. P a g e 105

106 Has the gvernment already acquired the land? If nt, des the gvernment have pwer t cmpulsrily purchase land? Is this smething that the gvernment has a right t d? D landwners have right t legal redress against such cmpulsry acquisitin? D they have a right f resettlement? D landwners have a right t petitin t stp the resettlement frm prceeding? Is the gvernment required t cmpensate citizens? If s, are there set levels r frmulae fr assessing cmpensatin? Can the gvernment acquire land n behalf f a third party? Exprpriatin Exprpriatin is the act f a gvernment remving the prperty rights f a private entity r persn. Exprpriatin can be direct, as in natinalisatin r cndemnatin by the gvernment f a radway, r indirect, such as eliminating an peratr's right t cllect tlls and thereby nullifying the bject f the peratr's investment. Are there prvisins in the law f the hst cuntry setting ut the levels f cmpensatin available in the event f exprpriatin? Is the cmpensatin likely t be adequate t cver the sunken investment csts f the peratr and the csts f debt service? Des the law limit r prevent the awarding authrity frm prviding cmpensatin in the cntract different frm that under the law? Planning permissin Prjects invariably give rise t planning issues, whether invlving the creatin r extensin f facilities. The gvernment, as well as ther interested stakehlders such as lcal authrities and citizens will be cncerned t ensure that there is the least pssible disruptin caused by the prject and that existing amenities and services will nt be affected. If a cunty des nt have any established planning laws, it may wish t intrduce them, whether fr the specific prject r mre bradly, t cver anything frm unsightly buildings, access t facilities, harmny with the neighburing cuntryside, etc. If the cuntry has a prtracted planning prcess, hwever, then this can delay the cmmencement f ften much needed infrastructure prjects fr years and s a balance shuld be struck between ensuring that prjects cause minimal disruptin and ensuring the planning prcess des nt cause undue delays t prjects. A service prvider will be keen t leave the duty f btaining planning permissin with the awarding authrity as it is likely have greater influence ver the planning authrity and be mre familiar with the planning prcesses. At the very least, the service prvider will require a cntractual bligatin n the awarding authrity t prvide supprt in btaining such permissin and shuld seek t include in the delay triggers resulting in an extensin f time t cmplete cnstructin wrks delays in btaining planning permissin. P a g e 106

107 Envirnmental and scial issues and envirnmental assessment Ptential damage t the envirnment and impact n sciety are key issues when planning an infrastructure prject it is imprtant fr the gvernment t determine whether the detrimental impact n the envirnment r n sciety frm a prject utweighs its ptential benefits and, where a prject is necessary, hw the envirnmental and/ r scial impact can be kept t a minimum. These standards shuld be included in the parameters f the prject agreement but there may als be certain standards that are required t be met by law. The gvernment will als need t cnsider hw t mnitr the peratr t ensure cmpliance with these standards and the cnsequences f the prject cmpany r peratr failing t meet these standards at the utset and during the prject term fr example, a gvernment will be keen t ensure that the service prvider is discuraged frm plluting r even allwing pllutin and indeed plluters may face criminal liability fr their ffence in the particular cuntry Internatinal Finance Institutins Requirements Many internatinal finance institutins, including the Wrld Bank, and ther lending institutins, will require adherence t envirnmental and scial principles and envirnmental impact assessments t be carried ut befre a prject can prceed Limitatin f Envirnmental Liability The develper r peratr will seek t limit the circumstances where it is penalised fr breaching envirnmental standards where such breach is nt within its cntrl fr example, a wastewater treatment plant peratr will wish t avid prsecutin r even liability fr pllutin caused by a pllutant in the influent which the treatment plant cannt treat - r will at least want t have the pwer t pursue the plluter t stp the pllutin and/r btain cmpensatin. The develper r peratr will therefre need t determine whether it is pssible t transfer civil r criminal liability fr pllutin t a third party r avid prsecutin if it can shw that it was nt the cause f the pllutin - sme legal systems allw fr this but many d nt. The develper r peratr will als seek t limit its liability fr envirnmental damage - whereas the gvernment will want t ensure that the develper r peratr is incentivised t cmply with envirnmental standards and has ample insurance cver fr any envirnmental damage. P a g e 107

108 11.3. Management f Design and Cnstructin Phase Design and Cnstructin as an Integrated System In the planning f facilities, it is imprtant t recgnise the clse relatinship between design and cnstructin. These prcesses can best be viewed as an integrated system. Bradly speaking, design is a prcess f creating the descriptin f a new facility, usually represented by detailed plans and specificatins; cnstructin planning is a prcess f identifying activities and resurces required t make the design a physical reality. Hence, cnstructin is the implementatin f a design envisined by architects and engineers. In bth design and cnstructin, numerus peratinal tasks must be perfrmed with a variety f precedence and ther relatinships amng the different tasks. Several characteristics are unique t the planning f cnstructed facilities and shuld be kept in mind even at the very early stage f the prject life cycle. These include the fllwing: Nearly every facility is custm designed and cnstructed, and ften requires a lng time t cmplete. Bth the design and cnstructin f a facility must satisfy the cnditins peculiar t a specific site. Because each prject is site specific, its executin is influenced by natural, scial and ther lcatinal cnditins such as weather, labur supply, lcal building cdes, etc. Since the service life f a facility is lng, the anticipatin f future requirements is inherently difficult. Because f technlgical cmplexity and market demands, changes f design plans during cnstructin are nt uncmmn. In an integrated system, the planning fr bth design and cnstructin can prceed almst simultaneusly, examining varius alternatives which are desirable frm bth viewpints and thus eliminating the necessity f extensive revisins under the guise f value engineering. Furthermre, the review f designs with regard t their cnstructability can be carried ut as the prject prgresses frm planning t design. Fr example, if the sequence f assembly f a structure and the critical ladings n the partially assembled structure during cnstructin are carefully cnsidered as a part f the verall structural design, the impacts f the design n cnstructin wrk and n assembly details can be anticipated. Hwever, if the design prfessinals are expected t assume such respnsibilities, they must be rewarded fr sharing the risks as well as fr undertaking these additinal tasks. Similarly, when cnstructin cntractrs are expected t take ver the respnsibilities f engineers, such as devising a very elabrate scheme t erect an uncnventinal structure, they t must be rewarded accrdingly. As lng as the wner des nt assume the respnsibility fr reslving this riskreward dilemma, the cncept f a truly integrated system fr design and cnstructin cannt be realised. The fllwing table shws the recmmended respnsibility fr varius tasks related t a cnstructin prject: Recmmended Respnsibility Task Respnsible Party P a g e 108

109 Owner Design Prfessinal Cnstructin Cntractr 1. Prvide adequate time and funding fr drawing Prime preparatin and review 2. Arrange fr structural design Prime 3. Prvide structural design Prime 4. Establish verall respnsibility fr cnnectin design 5. Accmplish cnnectin design (by design prfessinal) 6. Alternatively, prvide lading requirement and ther infrmatin necessary fr drawing preparatin Prime Prime Prime 7. Alternatively, accmplish sme r all f cnnectin design Prime 8. Specify drawing requirements and prcedures Review Prime 9. Apprve prper scheduling Prime Assisting Assisting 10. Prvide drawing and submit the drawing n schedule Prime 11. Make timely reviews and apprvals Prime 12. Prvide erectin prcedures, cnstructin bracing, shring, means, methds and techniques f cnstructin, and cnstructin safety Prime Design Methdlgy While the cnceptual design prcess may be frmal r infrmal, it can be characterised by a series f actins: frmulatin, analysis, search, decisin, specificatin, and mdificatin. At the early stage in the develpment f a new prject, these actins are highly interactive. Many iteratins f redesign are expected t refine the functinal requirements, design cncepts and financial cnstraints, even thugh the analytic tls applied t the slutin f the prblem at this stage may be very crude Cnstructin Site Envirnment While the general infrmatin abut the cnstructin site is usually available at the planning stage f a prject, it is imprtant fr the design prfessinals and cnstructin manager as well as the cntractr t visit the site. Each grup will be benefited by first-hand knwledge acquired in the field. P a g e 109

110 Fr design prfessinals, an examinatin f the tpgraphy may fcus their attentin t the layut f a facility n the site fr maximum use f space in cmpliance with varius regulatry restrictins. In the case f industrial plants, the prductin r prcessing design and peratin ften dictate the site layut. A pr layut can cause cnstructin prblems such as inadequate space fr staging, limited access fr materials and persnnel, and restrictins n the use f certain cnstructin methds. Thus, design and cnstructin inputs are imprtant in the layut f a facility. The cnstructin manager and the cntractr must visit the site t gain sme insight in preparing r evaluating the bid package fr the prject. They can verify access rads and water, electrical and ther service utilities in the immediate vicinity, with the view f finding suitable lcatins fr erecting temprary facilities and the field ffice. They can als bserve any interference f existing facilities with cnstructin and develp a plan fr site security during cnstructin. In examining site cnditins, particular attentin must be paid t envirnmental factrs such as drainage, grundwater and the pssibility f flds. Of particular cncern is the pssible presence f hazardus waste materials frm previus uses. Cleaning up r cntrlling hazardus wastes can be extremely expensive Cnstructin Planning The develpment f a cnstructin plan is very much analgus t the develpment f a gd facility design. The planner must weigh the csts and reliability f different ptins while at the same time insuring technical feasibility. Cnstructin planning is mre difficult in sme ways since the building prcess is dynamic as the site and the physical facility change ver time as cnstructin prceeds. On the ther hand, cnstructin peratins tend t be standard frm ne prject t anther, whereas structural r fundatin details might differ cnsiderably frm ne facility t anther. Frming a gd cnstructin plan is an exceptinally challenging prblem. There are numerus pssible plans available fr any given prject. While past experience is a gd guide t cnstructin planning, each prject is likely t have special prblems r pprtunities that may require cnsiderable ingenuity and creativity t vercme r explit. Unfrtunately, it is quite difficult t prvide direct guidance cncerning general prcedures r strategies t frm gd plans in all circumstances. The planning prcess fr cnstructin prjects cnsists f three stages that take place between the mment in which a planner starts the plan fr the cnstructin f a facility t the mment in which the evaluatin f the final utput f the cnstructin prcess is finished. The stages are as fllws: Estimatin Mnitring and cntrl Evaluatin The estimate stage invlves the develpment f a cst and duratin estimate fr the cnstructin f a facility as part f the prpsal f a cntractr fr the prject. It is the stage in which assumptins f resurce cmmitment t the necessary activities t build the facility are made. A careful and thrugh analysis f different cnditins impsed by the cnstructin prject design and by site characteristics are taken int cnsideratin t determine the best estimate. The cntractr has t lk fr the timecst cmbinatin that will allw the cntractr t be successful in his cmmitment. When changes are dne, they shuld imprve the estimate, taking int accunt nt nly present effects, but als future P a g e 110

111 utcmes f succeeding activities. It is very seldm the case in which the utput f the cnstructin prcess exactly eches the estimate ffered. In the mnitring and cntrl stage f the cnstructin prcess, the cnstructr has t keep cnstant track f bth activities' duratins and nging csts. It is misleading t think that if the cnstructin f the facility is n schedule r ahead f schedule, the cst will als be n the estimate r belw the estimate, especially if several changes are made. Cnstant evaluatin is necessary until the cnstructin f the facility is cmplete. When wrk is finished in the cnstructin prcess, and infrmatin abut it is prvided, the third stage f the planning prcess can begin. The evaluatin stage is the ne in which results f the cnstructin prcess are matched against the estimate. Only when the utcme f the cnstructin prcess is knwn is it able t evaluate the validity f the estimate. It is in this last stage f the planning prcess that it can be determined if the assumptins were crrect. If they were nt r if new cnstraints emerge, he/she shuld intrduce crrespnding adjustments in future planning. P a g e 111

112 11.4. Prject Claim Management Claim Management is an inevitable prcess in Cnstructin Prject Management, t reach successfully the desired results. The requirement in first place is t avid claim thrugh managing the breeding grunds with all earnest, alignment f dcuments, and eventually entertaining an entitlement in an efficient and business-like manner. Cnsiderate apprach fr early settlement n issues between parties is always cheaper and leads t win/win results. The cnstructin prject, mstly a large undertaking, demands ne t prevent stained relatinship f parties, stalemates, delays, disputes, r lss f resurces that cause r carry the ptential frce fr litigius and arbitral actin f the parties, fr reslutin in cntract. Claim is a management issue and the prcess needs efficient and effective management during the entire life cycle f a prject. The cnstructin prject generally has fur well-recgnised phases: 1. Pre-tender - initial cncept, design f cntractdcumentatin, - pre-tender meetings and up t invitatin f tenders 2. Cntract Frmulatin - preparatin and submissin f tenders, tender - assessments, pre-cntract negtiatins and cntract frmulatin 3. Cnstructin - during cnstructin up t substantial cmpletin 4. Pst cmpletin - settlement f utstanding issues after substantial cmpletin & finalisatin f accunts Mstly claims relate t the encuntered cnditins r events, which ccur during the cnstructin phase. Hwever, the seeds f claim and nutrients essential fr develpment are cntained in the cntract dcumentatin and the infrmatin supplied r nt supplied in pre-cntract phase. The greatest pprtunity t prevent claims ends nce tender-dcuments are finalised and the cntract is awarded. There are tw significant elements in the cntrl f the prject wner and his prfessinal-team. The first is the effrts expended in pre-cntract preparatin as regards the reliability and cmpleteness f infrmatin, design and dcumentatin aligned t purpse. The secnd is the develpment f scheme fr risk distributin, plan fr management, selectin f Frm f Cntract, and prcedure fr dealing with emergent issues. Sme frm f cnflict is inevitable; the prepnderance f pinin is that Cnstructin cnflicts are endemic in the industry fr invlvement f stakehlders, having varied requirements and P a g e 112

113 expectatins assciated with prject, fr particular need. Further the tendency f cntracts t generate dispute, because f externality f interpretatin; a cntract cannt specify their wn indexical by prviding hw they will be read r used by parties and interpreted differently in cnjunctin with dcuments prepared by varius parties. The prblems fall int a series f brad categries. They can be gruped int tw headings thse, which have their rigin in the planning f the prject, and thse, which are caused by prblems during the cnstructin f wrks Claim Management The Management Prcesses that requires preventin r mitigatin f cnstructin claims and the expeditius handling when they d ccur, fr earliest settlement can be viewed frm tw perspectives: the party making the claim and the ne defending against it. A claim is, A demand fr smething due r believed t be due, usually the result f an actin r directin. In cnstructin, smething is usually additinal cmpensatin fr wrk claimed t be extra t the cntract r an extensin f time fr cmpletin r bth. What distinguishes a claim frm a change is the element f disagreement between the parties as t what is due r whether r nt anything is due. If agreement is reached, then the claim disappears and becmes a change. If nt, the claim may prceed t negtiatin, mediatin, arbitratin, and finally, t litigatin befre it is ultimately reslved. Often claims are thught f in terms f the cntractr making claims against the wner r ther prime party and by subcntractrs against the cntractr. Hwever, claims can als riginate frm the wner/prime party wh believes that sme requirement f the cntract is nt being perfrmed by the cntractr. P a g e 113

114 Therefre the lgical prcesses fr claim management at different phases f prject are: 1. Claim Preventin 2. Claim Mitigatin 3. Pursuing Claims a) Claim Identificatin b) Claim Quantificatin 4. Claim Reslutin Claim Preventin The preventin prcess starts with frmulatin f cntract dcuments and develpment f integrated prject plan with sufficient knwledge f the purpse. Clearly, the best way t prevent claims is t have n claims t prevent. Thus, the emphasis is n hw t avid r prevent claims frm arising. Alignment f purpse, and develpment f all dcuments related with Cntracts fr a prject are all prepared in same line. The ingredients are management scheme, identified risk distributin t nes in best psitin t cntrl and defined respnsibilities. After the award f cntract, the pprtunity t prevent claims ends. The necessary inputs required t the Claim Preventin prcess are: Scpe Assessment: An assessment f wrk that needs t encmpass all requirements and satisfy the purpse. Required Distributin f Infrmatin: Plan fr distributin f necessary infrmatin t prject players wh prepare respnses t risk. Management Scheme f Prject: The required management scheme that defines the respnsibilities f majr players and stakehlders. Requirement f risk sharing scheme: The scheme f the risk sharing amng the majr players and stakehlders. Time frame fr prject cmpletin: An assessment f lgical time frame fr cmpletin. Dependency: Prject players understanding f alignment t the defined purpse and dependency f respnsibilities fr risk sharing. Tls and Techniques that help claim preventin: Methdlgy fr Ecnmic Exchange: Methdlgy with win/win utcmes that best serves the scheme f management and risk sharing f prject players. Identificatin & Assessments f Prject Scpe: Everything that is necessary t add value r is required t serve the purpse f prject needs t be incrprated in Prject Scpe. Infrmatin Sharing: Distribute infrmatin in accrdance with the respnsibility and risk carried by prject player. Template: Tested methdlgy and lessns learned n similar prject. P a g e 114

115 Expert Judgment: Independent views f experts f the field t ascertain that the apprach adapted will lead t win/win results. Alignment f Dcuments: All dcuments are aligned with the purpse fr a Cntract. Dispute Reslutin: A reliable mechanism fr fast reslutin f dispute Partnering Apprach: Respect fr prject player's independence and cmmercial interest. Mnitring & Cntrl: The system and team develped fr prject mnitring and cntrl Educatin & Training: Prject life cycle cntinuus educatin and training is necessary t develp an atmsphere f trust, respect fr purpse and directin setting thrugh the cmplexities. Desired utcmes frm the Claim Preventin prcess are: Prject scpe: Scpe f wrk (explicit and implicit) t satisfy the purpse f the prject. Cntract frm: Well defined risk sharing and respnsibility plicy, the Cntract Frm may be: Cst-plus-fee Management Lump sum Quted Rate fr Bill f Quantities Design and cnstruct BOT Cntract Dcuments: All dcuments carefully aligned with the purpse. Dispute Reslutin Methdlgy: An independent dispute reslutin bard is defined. Trust Building & Training Plan: Actin plan is develped t train & educate the team f prject players n Claim/Cntract Management during prgressin fr trust building. P a g e 115

116 Claim Mitigatin Cnstructin activities are generally carried ut in cmplex, highly sensitive and changing envirnments. Perfect cnditins and cntrl n everything are next t impssible. Best apprach is t mitigate the pssibilities f arising claim all thrugh prgressin f the cntract. Thus, the emphasis is n hw t mitigate claims frm arising. The perfect, well-scped, defined respnsibilities and risk allcated cntract will entail lesser disputes. The prject players can d their best with timely and fast cmmunicatin tward reslutin f disputes. There are several general principles f practice described in this sectin fr mitigating claims that, when fllwed, can wrk tward the eliminatin f the basis fr, r at least minimise, the ccurring f claims. The required Inputs t the Claim Mitigatin prcess are: The prject plan: The fundamental parts f the plan are the mst imprtant. A clear and carefully described scpe f wrk, a reasnable schedule and an apprpriate methdlgy f prject executin tailred t the type f prject and the degree f risk invlved all g a lng way t the gal f mitigating claims. Cntract terms: Cntract terms that prvide lgical sharing f risk fr pssible changes and unknwn site cnditins, frce majeure type delays, peridic reprting, fair ntice prvisins and apprval times als prvide a basis fr minimising claims. Risk management plan: Claims are mitigated by the use f a risk management plan that allcates the risk between the parties n the basis f which ne has the mst cntrl ver the risk invlved. A cntemprary wner's practice f ften trying t have the cntractr be respnsible fr mre and mre risk, sme f which the cntractr has little r n cntrl ver, is an invitatin t claims. Handling f Disputes: Mishandling f disputes mstly leads t strained relatinship f parties, delays in wrk and eventually t a claim. Decisin Making Prcess: Cumbersme decisin-making prcess r indecisin leads t delays in wrk, dispute, and claim. Tls and Techniques that help Claim Mitigatin are: Clarity f Language: The cntract scpe and specificatins are written in clear and unambiguus language. Wrk Schedule: The wrk schedule requirements are clearly stated and develped realistically fr accmplishment and schedule update requirements are fair. Request fr infrmatin (RFI) prcedure: Cntracts requiring designer r wner apprval f drawings, materials f cnstructin need a specific time bund clause fr the answer required. Effective Cmmunicatin: Efficient and effective cmmunicatin is the key fr bnding t reach cmmn gals. Prequalificatin Prcess: Prequalificatin f cntractrs helps t find the seasned and qualified cntractrs wh are cnscius fr reputatin in market. They avid claim situatins fr sake f a claim activity. P a g e 116

117 Dispute Review Bard (DRB): Larger prjects need a DRB, which acts as a kind f arbitratin panel ver any dispute arise during the prgress. The ptential claims are turned int changes r are dismissed fr gd reasn. Jint Recgnitin f Changes: Bth parties need t be realistic and carry a win/win apprach. The best way f reducing claim ptential is fr the ther party t recgnise when a change has ccurred. The tendency t fail t d this and argue incessantly ver every ptential change is a majr factr in perpetuating claims. Dcumentatin: Gd dcumentatin leads quickly t recgnising a change and help reduce the prlnged argument between the parties. It als prvides a gd defence against claims. Outcmes achieved frm Claim Mitigatin are: Changes: Ptential claims fr cmpensatin r requests fr extensins f time, r bth, that are agreed are turned int changes and the claim/dispute disappear. Enhanced Business Relatins: Parties have imprved relatins t g extra mile tgether. Prject Gals: Successfully achieved the prject gals Claim Pursuance Natural eventualities may arise when Claim Pursuance becmes necessary. In a cntract, n party is prepared t take extra financial r ther burden fr the default, missin and cmmissin f ther party r t bring additinal benefits n cst. The prcess prvides an apprach t successfully pursue a claim in a cntract. On cnstructin prjects, a number f such natural eventualities g t waste fr imprper apprach that brings suffering t the party. The prcess has tw majr areas: Claim Identificatin Claim Quantificatin Claim Identificatin The identificatin f a claim starts with sufficient knwledge f the scpe and respnsibilities stated in cntract terms, when sme activity appears t be a change in scpe r terms requiring a cntract adjustment. Prper identificatin invlves nt nly an interpretatin f what the cntract requires, but als a dcumented descriptin f the activity viewed as extra t that required by the cntract. The necessary inputs t Claim Identificatin are: Cntract scpe: The baseline scpe f wrk as apprved in the cntract. Cntract terms: The respnsibility fr wrk t perfrm, especial terms relating t changes, changed cnditins, schedule preparatin, submittal and ntices given. Extra wrk descriptin: Descriptin f wrk believed t be extra t the cntract, where and when it tk place. Statement f why it is nt cvered in the cntract scpe and reference t the sectin f the cntract that supprts the cntentin. Descriptin f extra time requested: Recrd f the extra wrk and delays. Time extensin claims resulted due t events such as unusual weather, strikes r ther frce majeure items P a g e 117

118 utside the cntractr's cntrl may be valid while they may nt be cmpensable. The cntract and lcal law decisins ften state which are cmpensable. Hld-ups and Delays: Recrd f hld-ups and delays caused by events beynd cntrl f a party but respnsible fr management under the cntract. Tls and Techniques fr Claim Identificatin: Cntract terms: The prvisins relating t changes and ntice are time barred. In many cases, claims are invalid when nt made timely. Expert Judgment: It is wrthwhile t reach a cnsensus amng mre than ne persn that the activity under questin des merit claim status. In sme cases f mre imprtant r larger claims legal advice further supprt t the validity f the claim. Dcumentatin: Mst imprtant factr is the need fr gd supprtive dcumentatin. This may take the frm f phtgraphs and vides f the wrk in questin, relevant cntract sectins, drawings, relevant statements f persns invlved in r related t the claimed wrk. In additin, the time fr wrk that was perfrmed is nted. It is helpful t pen a new cst accunt t cver the claimed wrk in rder t clearly separate it frm ther cntract wrk. The utcmes achieved frm the Claim Identificatin prcess are: Statement f claim: The infrmatin is gathered t prepare a cmplete statement f the claim and why it is cnsidered extra t the cntract. Dcumentatin: Presentatin with supprtive dcumentatin fr justificatin is made Claim Quantificatin Once an activity has been reviewed and a decisin made that it is wrthy f pursuing as a claim the next step is t quantify it in terms (usually) f additinal cmpensatin r a time extensin t the cntract cmpletin r ther milestne date. Thse wh have had experience with this side f claim management knw that it is nt unusual fr the claimant t inflate the amunt f the claim t the extent pssible and thus it later becmes a frm f bargaining prcess between the parties as a reasnable truth is sught. Nevertheless, there are prper and lgical ways f determining the cst f the extra activity r damages in terms f bth mney and time. The prcess uses a cause and effect apprach t determine the full effect f the claimed activity-what was the full effect n the cnstructin wrk caused by the claimed activity? Smetimes the claimed activity has an indirect effect n ther aspects f the cnstructin prject making ther wrk mre cstly, changing sequences, delaying ther activities. T the extent that these indirect effects can be justified and quantified they are prperly part f the ttal cst f the claim. The necessary Inputs t Claim Quantificatin are: Statement f claim: The utcme f Claim Identificatin abve. Other Wrk Affected by claimed activity: In the event that there is additinal effect n the balance f the cntract wrk caused by the claimed activity. These effects are treated in the same manner and data cllected as fr the claimed activity itself. Lss f Prfit: Detail estimatin r an Agreed basis fr wrking ut prfits. P a g e 118

119 The Tls and techniques required fr claim quantificatin: Quantity measurement: Develp actual quantities f the claimed item/wrk. When disagreement arises, the first place t lk fr agreement is the BOQ invlved. Cst estimatin: Develp csting f the resurces invlved in the claimed wrk. The cst recrds prvide the basis f the estimate r prepare estimate using current applicable rates. Overhead cst and prfit are prper as the claim is treated at this stage as a change. In case claimed wrk has an effect n ther wrk f prject that causes additinal cst, it is estimated fr cause and effect relatinship. Cntract law precedents: It is helpful t cite previus cases that act t supprt the claim in thse mre cmplex situatins where the cntract des nt prvide a slutin. Such cases may give guidance as t what may r may nt be included in the claim r hw the claim may be evaluated. Schedule analysis: Cmpare the as planned schedule with the as built schedule t supprt the time extensin requested nt nly fr the claimed activity, but als fr the effect (if any) n the balance f the prject. Schedule analysis with the aid f tday's sphisticated cmputer prgrams can help, but als can make this analysis very cmplicated. The ultimate deciding factr is the effect n the critical path; it can becme difficult t separate these because f all f the ther factrs that can and d affect cnstructin schedules. Outcmes achieved frm Claim Quantificatin are: Direct and indirect csts: Statement f the cst r damages resulting frm the claimed activity is develped with full supprt f the factrs used in the calculatin. Als, the cst, when justified, f the effects f the claimed activity n ther aspects f the prject calculated in the same manner as the direct csts. Time extensin: The result frm the schedule analysis Dcumentatin: Backup f quantity calculatins, time cards shwing the extent f labur invlved and machine usage, wage rates, equipment rates and invices fr material that are included in the claim are the kinds f dcuments needed fr supprt f the quantificatin. P a g e 119

120 Claim Reslutin Even with all effrt t prevent claims, they may still arise fr a justifiable disagreement as t whether the claim in questin is a change t the cntract r nt r whether the claimed amunt f cmpensatin r time requested is crrect. When this situatin arises there begins a step-by-step prcess t reslve these questins. It is aximatic that the lnger this prcess takes the mre expensive and disruptive it is t bth parties. Therefre, the gal is t settle these issues as sn and at the lwest pint in the rganisatin as practicable. The prcess begins with negtiatin, perhaps at mre than ne level, befre mving n t mediatin, arbitratin and litigatin depending n the remedies affrded by the cntract. Because f the prliferatin f claims in cnstructin and the expense f litigatin, alternate methds f reslutin have been increasingly used. Called ADR fr Alternate Dispute Reslutin, they include mediatin, arbitratin and mini-trails. Necessary Inputs t Claim Reslutin are: Statement f claim: Established thrugh identificatin Claim quantificatin: Established thrugh quantificatin Cntract: The agreed terms f cntract that prvides the ultimate baseline and means fr reslutin Crrespndence: Recrd f crrespndence n the matter is initiated at a relevant pint in time. Tls and Techniques fr Claim Reslutin: Negtiatin: The fremst and best step fr reslutin. Smetimes the negtiatin needs t be elevated t a higher level, but it still is a negtiatin between parties trying t find an equable slutin. Alternate Disputes Reslutin (ADR): These include mediatin, arbitratin and mini-trials. Litigatin: The eventual result when all attempts have failed. Cnstructin lawsuits are cmmnly cmplex fr a jury t understand and ften take a lnger time t present. This is the last resrt and mre expensive in terms f cst and utcmes that may upset the rganisatins invlved. Parties in litigatin really need t ensure that this is the nly way fr reslutin. Cst Estimated fr reslutin: When the initial attempts at negtiatin fail it is prudent fr each party t estimate the cst f carrying the dispute further. Mediatrs are cstly (but can be cst effective) and sme arbitratin cases can apprach the expense f litigatin due t the amunt f discvery invlved. An estimate f these csts can help in deciding just hw beneficial it is t pursue a claim. Outputs frm Claim Reslutin Claim reslved: One way r the ther. Cntract clsed: In cases where the cntract cannt be clsed because f a pending dispute, reslutin f that dispute enables the cntract t be clsed. P a g e 120

121 Claim management prcesses cme int play n a cnstructin undertaking much earlier than the frmulatin f cntracts and need clser attentin. On-ging prcesses may be carried ut alng with Cntract Management t ensure the desired utcmes envisaged in the purpse f the endeavur. Billins f funds are wasted in mismanagement f the cnstructin claims that lead t fatal-damages t parties r undertaking r bth. The key is a win/win apprach fr success tgether. 12. Cntract management and administratin The gal f public prcurement is t award timely and cst-effective cntracts t qualified cntractrs, suppliers and service prviders fr the prvisin f gds, wrks and services t supprt natinal and lcal gvernment, and public services peratins, in accrdance with principles and prcedures established in the public prcurement rules. The gal f cntract management and administratin is t mnitr delivery under the cntract t ensure that it achieves its riginal bjectives and includes tracking and auditing f cntract terms such as: pricing and discunts; timeliness f payments and r receipts; perfrmance in delivering agreed service level r specificatin f gds and services; and amendments. P a g e 121

122 12.1. Imprtance f gd cntract management and administratin Gd practice cntract management and administratin has the capacity t increase revenue pprtunities, decrease csts and enhance service delivery. Imprtantly, as cmpetencies f managers and the resurces at their dispsal increase, it is essential that they strengthen their effrts t make cmpliance central t strategic bjectives. Cntracts frm the basis n which mst prjects are cmpleted. A cntract is a legally binding agreement between ne r mre parties. All transactins are the result f a cntract whether explicit r implied and in mst cases cntracts are written legal dcuments. Cntracts usually cnsist f terms and cnditins presented in legally binding language and terminlgy. In the past cntracts may have been viewed as simple agreements t prtect the parties frm wrst case scenaris. Mre and mre cntracts are seen as vehicles fr achieving value fr mney and fstering gd relatinships with partner and stakehlder rganisatins. Cntracts are ften managed manually and by multiple managers withut an enterprise wide apprach. A multitude f rules and cmplex decisin making can lead t inflexibility, pr planning, extended lead times and belw par service delivery. It is imprtant t cnsider all transactins and recrd all types f cntracts in use including thse that may nt have any frmal written dcumentatin. Once identified and classified the apprpriate level f management interventin can be applied. In the private sectr, executives are beginning t realise the ptential savings and pprtunities which can be achieved thrugh examining cntract management and implementing an enterprise wide apprach. Dcumentatin f recent imprvements in this area in the private sectr suggests that there are benefits t be gained by the public sectr as well. Gd cntract management: ptimises delivery f large capital prjects; specifies management techniques and prcesses fr all types f cntracts; encurages achievement f value fr mney and cntinuus imprvement; identifies savings and additinal revenue pprtunities; enhances risk management; prvides clear and cmplete recrds fr audit; and encurages cmmunicatin between all parties t cntracts. Failure t implement adequate cntract management culd result in: paying fr gds and services which d nt meet the standards set ut in the cntract; significantly higher csts; P a g e 122

123 revenue cllectin delays; custmer and supplier dissatisfactin; vercharges by suppliers r underpayments by buyers; errneus payments; service delivery issues; missed savings pprtunities; failed cmpliance with regulatry prvisins; increased risk; cmplicatins assciated with audits; accidental renewal f gds r services; n verificatin f timeliness and accuracy f payments, receipts r deliverables; n mnitring f use f discunts r rebates; n mnitring f cntract management prcesses and mechanisms; n mnitring f supplier perfrmance acrss cntracts; and n enfrcement fr nn-perfrmance r vilatin f regulatins r ther terms and cnditins. P a g e 123

124 12.2. Oversight f cntract management and administratin Given the abve imprtance and having regard t internatinal gd practice in cntract management and administratin, t facilitate apprpriate versight f cntract management the executive authrity/respnsible fficial must take all reasnable steps t ensure that: cntracts are prperly enfrced; cntracts are classified accrding t the level f management interventin required; cntracts are mnitred apprpriately accrding t their classificatin; a single persn and r cmmittee structure is respnsible fr driving institutin wide cntract management perfrmance; rles fr cntract wners, cntract managers and ther advisrs are clearly defined; apprpriate delegatins are in place t allw rle players t carry ut their respnsibilities; clear prcedures fr handver frm cntract award t cntract management are in place; cntract management plans are implemented where apprpriate, and fcused n utputs and perfrmance; cntract management prcesses and prcedures are aligned with rganisatin wide gvernance and risk management prcesses, and perfrmance is reprted thrugh established gvernance channels; nging cntract management training is prvided during inductin and regular refresher training; there is an annual review and adjustment f cntract management plicies, prcedures and guidance with a view t cntinuus imprvement in cntract management; there is regular assessment and evaluatin f the effectiveness and efficiency f cntract management activities including an assessment f the csts f the cntract management functin; and plicies and prcedures are in place in terms f: identificatin and classificatin f cntracts; recgnitin; measurement and disclsure f cntracts; planning and budgeting fr cntracts; versight f cntract management; resurcing cntract management activities; dcument and infrmatin management regarding cntracts; relatinship management in terms f parties t cntracts; P a g e 124

125 perfrmance management f cntracts and parties t cntracts; payment, cllectin, incentives and penalties; and risk management relating t cntracts Gvernance structure Gvernance arrangements will set ut where accuntability sits in the gvernment institutin. A gvernance prcess chart fr cntract management shuld be cnstructed with assciated prcedural dcumentatin describing at least: cmpsitin, rles and respnsibility f each unit r functin and relatin t the institutin s verall gvernance structure; where different types f decisins are made and the wrkflw sequence f decisins; relevant delegatins required t enable decisins discussed abve; and reprting mechanisms Cntract management mechanisms T ensure apprpriate cntract management takes place it is imprtant t cnsider: peple; prcesses; and systems. The type and level f resurces required fr cntract management will vary fr different types f cntracts. Different levels f skills and cmpetencies will be required fr different types f cntracts. Sme will require establishment f a cntract management team while thers will be managed by a single persn. Prcesses will be driven largely by cmpetencies and systems in place. Sme cntracts will be tracked using specialised sftware systems while thers will be managed with hard cpy registers. P a g e 125

126 12.5. Human resurces and cmpetency levels Cntract managers, wners, and ther team members must have apprpriate skills and qualificatins t carry ut the cntract management activities required fr the classificatin f cntracts they are dealing with. Skills and qualificatins must be accurately detailed in jb descriptins, which shuld be reviewed regularly and ideally in cnjunctin with annual staff appraisals. Accurate jb descriptins cntribute twards ensuring duties are carried ut prperly by apprpriately skilled staff. Salaries must be apprpriate fr the duties being carried ut and cmpetency f staff must be suited t the duties. Inapprpriate salaries can lead t lack f mtivatin, staff turnver and staff withut the requisite cmpetencies perfrming duties utside f their abilities. Apprpriate training and supprt must be prvided t cntract wners t assist in their dealings with the cntact management team and ther stakehlders. This shuld include training as part f new staff inductin as well as annual refresher training. The training plan shuld als allw fr fllw up sessins with staff that appear t nt be fllwing prcedures. Intrductin f new systems and prcedures may als feature n the annual training plan. If prject/cntract managers are nt invlved during the tendering / cntract award prcess, there must be a handver frm staff invlved with the tendering and award. Staff managing the bid and award prcess shuld have an understanding f the cntract management requirements and the implicatins that awarding the cntract will have n managing the cntract/prject ver its life. P a g e 126

127 12.6. Rles in cntract management There are varius rles which need t be cnsidered fr effective cntract management t take place. The fllwing items need t be cnsidered: Cntract wners Cntract manager Finance Legal Executive Authrity Risk Management/Internal Audit Audit cmmittees Cntract management systems Cntract wners The cntract wner is the persn wh is requesting the gds and services and is ften a line manager. Cntract wner s need a gd understanding f the cntract and may call n specialist advice depending n the level f cmplexity f the cntract. Ultimately the cntract wner shuld be making judgments abut whether deliverables have been achieved. Cntract wners will be invlved in at least the fllwing: specificatin develpment including deliverables fr timing, quantity and quality; agreement f measurement mechanisms fr the cntract deliverables; and regular cmmunicatin with cntractr and assessment f perfrmance Cntract manager A cntract manager s rle is t ensure that: the legal cntract crrectly stipulates requirements in line with the cntract wners request and the institutin s strategic bjectives; the gds and services are delivered accrding t standards set ut in the cntract; and cntract dcumentatin and infrmatin is managed thrughut the Cntract Life Cycle. As such, a range f abilities is required. In particular, the fllwing skills shuld be cnsidered: cmmunicatin and negtiatin at all levels. Ability t ensure excellent cmmunicatin and where necessary t prevent and repair situatins f pr cmmunicatin; financial skills sufficient t be able t understand financial implicatins f cntracts; change management skills t successfully manage changing relatinships and cntract mdificatins; analytical skills t ensure sufficient analysis and reprting f cntract prgress and judgement regarding escalatin f issues; P a g e 127

128 risk management; perfrmance management; and legal issues arund cntracts. The cntract manager may smetimes be the same as the cntract wner. Fr example, fr emplyee cntracts, the Human Resurces Manager will be the cntract manager. In the case f majr cnstructin prjects, a prject manager will generally be appinted t perfrm the functins f cntract manager Finance Finance will prvide advice n budgeting and assist with preparatin f in-year and annual reprts and in particular with amunts cmmitted and accrued. The rle f finance als includes payments and cllectins and usually the systems and prcesses fr authrisatin. Finance may als be cntract wner and r cntract manager fr certain types f cntracts such as financing instruments. Financial supprt may include but is nt limited t advice n the fllwing: develpment and review f the financial mdel; calculatin f payments including penalties, incentives and terminatins; efficient prcessing f payments accrding t the cntract; and indexatin and price variatins Legal The legal divisin may perfrm the rle f cntract manager fr many cntracts due t their rle in understanding and negtiating cmplex terms and cnditins. In ther cases, legal s rle may be t prvide expert advice t the cntract wner and manager. In-huse r utside specialist legal advisry services may be required, frm time t time, t establish and manage cntracts. Legal is nrmally called upn t develp general cnditins f cntract fr the majrity f circumstances and special cnditins where required. They may als be called upn in the fllwing circumstances: dispute reslutin; implementatin f variatins; implementatin f cntract changes (cntractr wnership, nminated sub-cntractrs etc.); cntractr distress; refinancing; certificatin f deliverables; breach f cntract, penalties and terminatin; and enfrcement f indemnities, guarantees and cntractual claims. P a g e 128

129 Executive Authrity Overall accuntability fr all cntractual agreements entered int by the institutin resides with the executive authrity. Hence, they are required t have a general understanding f the cntract classificatins and assciated expsure cntained in the Cntracts Inventry. They must ensure that a cmprehensive delegatins system is in place and that staff with delegated authrity have the necessary skills and qualificatins t carry ut their tasks and prvide apprpriate and timely advice Risk Management / Internal Audit Risk management shuld prvide input int: risk management plan templates fr each classificatin f cntract; the risk management cmpnent f training plans; and the internal audit plan. Internal audit shuld review existing cntracts and cntract management systems and prcesses as part f the audit plan Audit Cmmittees The Audit Cmmittee is an independent cmmittee respnsible fr versight f the Institutin s cntrl, gvernance and risk management. Their rle will include an independent assessment f the adequacy f cntract management systems and prcesses in terms f cntrl and risk management. P a g e 129

130 12.7. Classificatin f cntracts T facilitate gd cntract management it is useful t classify cntracts r grups f cntracts accrding t the level f management interventin required. Such a classificatin system shuld take int accunt: cntract type r nature; strategic imprtance f the gds and services being purchased r sld; cntract value; cntract duratin; and cntract cmplexity. Plicies and prcedures shuld then be established and implemented t deal with the management cntrl requirements fr each classificatin and cntract type. Each cntract and / r each grup f cntracts shuld be listed by classificatin in a Cntracts Inventry. Each cntract wner shuld maintain an inventry listing f the cntracts they are respnsible fr. It is recmmended that each institutin select the lwest level f management that may be designated as cntract wners. A simple Cntracts Inventry system which prvides fr recrding classificatins will capture the infrmatin reflected in the bullet pints belw. Fr each cntract, recrd the ID number, descriptin, type, Rand value and duratin in mnths. Give the cntract a rating f High, Medium r Lw fr the perceived level f cmplexity and strategic imprtance. Using the available infrmatin, prvide an verall classificatin f High, Medium r Lw management interventin required. Cntract ID Cntract descriptin Cntract type Cntract value Cntract duratin Perceived cmplexity (H/M/L) Perceived strategic imprtance (H/M/L) Overall level f management interventin required (H/M/L) Fr the cntracts requiring High and Medium levels f management interventin, assign a level f effrt rating fr each f the fllwing: versight; resurces required (including peple and systems); P a g e 130

131 dcument and infrmatin management; relatinship management; perfrmance management; payment, cllectin, incentives and penalties; and risk management. A 5 pint level f effrt rating is recmmended as fllws. 1= n effrt 2= limited effrt 3= mderate effrt 4= cnsiderable effrt 5= very high effrt P a g e 131

132 12.8. Cntract Life Cycle The cntract life cycle f a cntract includes the stages shwn in the diagram belw: Planning The planning stage refers t planning and budgeting activities. During this time, strategic bjectives are cnverted int apprved budgets and peratinal plans. Budgets and peratinal plans will have sufficient detail t identify the need fr cntracts t carry ut the apprved peratins. Institutins must incrprate prcesses int their planning and budgeting t identify the need fr cntract creatin and thus plan fr when cntract creatin shuld take place t ensure delivery can ccur as apprved in the budget. EXAMPLE: An entity manages many f its cntracts and will nt create a cntract unless the activities encmpassed in the cntract are cntained in an apprved business plan Creatin During creatin, the cntract authr will decide n the mst apprpriate wrding t give effect t the intended utputs and utcmes. This step invlves preparing the first draft f the cntract dcumentatin Cllabratin Cllabratin is the drafting and negtiating prcess which includes internal and external reviews t ensure that the cntract will give legal effect t the requirements f all parties t the cntract. Internal review may include, but is nt limited t, review by the fllwing stakehlders: legal; P a g e 132