Introduction to Project Management - ENGINEERING MANAGEMENT

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Introduction to Project Management Introduction: Project management is concerned with the overall planning and coordination of a pro...

Introduction to Project Management

Principle of project management
Introduction to Project Management

Introduction:

Project management is concerned with the overall planning and coordination of a project from conception to completion aimed at meeting the stated requirements and ensuring completion on time, within cost and to required quality standards. 

Project management is normally reserved for focused, non-repetitive, time-limited activities with some degree of risk and that is beyond the usual scope of operational activities for which the organization is responsible.

Steps in Project Management:

The various steps in a project management are:
  • Project Definition and Scope 
  • Technical Design 
  • Financing 
  • Contracting 
  • Implementation
  • Performance Monitoring

Project Definition and Scope:

What is a Project?

“A project is a one-shot, time-limited, goal-directed, major undertaking, requiring the commitment of varied skills and resources”.

A project is a temporary endeavor undertaken to create a unique product or service. A project is temporary in that there is a defined start (the decision to proceed) and a defined end (the achievement of the goals and objectives). Ongoing business or maintenance operations are not projects. 
Energy conservation projects and process improvement efforts that result in better business processes or more efficient operations can be defined as projects. Projects usually include constraints and risks regarding cost, schedule or performance outcome.

Four Basic Elements of Project Management:

A successful Project Manager must simultaneously manage the four basic elements of a project: resources, time, cost, and scope. Each element must be managed effectively. All these elements are interrelated and must be managed together if the project, and the project manager, is to be a success.
1-Managing Resources 
A successful Project Manager must effectively manage the resources assigned to the project. This includes the labor hours of the project team. It also includes managing labor subcontracts and vendors. Managing the people resources means having the right people, with the right skills and the proper tools, in the right quantity at the right time. 

However, managing project resources frequently involve more than people management. The project manager must also manage the equipment (cranes, trucks and other heavy equipment) used for the project and the material (pipe, insulation, computers, manuals) assigned to the project.
2-Managing Time and Schedule 
Time management is a critical skill for any successful project manager. The most common cause of bloated project budgets is lack of schedule management. Fortunately, there is a lot of software on the market today to help you manage your project schedule or timeline. 

Any project can be broken down into a number of tasks that have to be performed. To prepare the project schedule, the project manager has to figure out what the tasks are, how long they will take, what resources they require, and in what order they should be done.
3-Managing Costs
Often a Project Manager is evaluated on his or her ability to complete a project within budget. The costs include estimated cost, actual cost, and variability. Contingency cost takes into account influence of weather, suppliers and design allowances.

How the 80/20 Rule can help a project manager? 

The 80/20 Rule means that in anything a few (20 percent) are vital and many (80 percent) are trivial. Successful Project Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consumes 80 percent of your time and resources.

Project Management Life Cycle:

The process flow of Project management processes The various elements of project management lifecycle are:
  • Need identification 
  • Initiation 
  • Planning 
  • Executing 
  • Controlling
  • Closing out
1-Need Identification:
The first step in the project development cycle is to identify components of the project. Projects may be identified both internally and externally:
  • Internal identification takes place when the energy manager identifies a package of energy saving opportunities during the day-to-day energy management activities, or from facility audits. 
  • External identification of energy savings can occur through systematic energy audits undertaken by a reputable energy auditor or energy service company.
In screening projects, the following criteria should be used to rank-order project opportunities.
  • Cost-effectiveness of energy savings of complete package of measures (Internal rate of return, net present value, cash flow, average payback) 
  • Sustainability of the savings over the life of the equipment. 
  • Ease of quantifying, monitoring, and verifying electricity and fuel savings. 
  • Availability of technology, and ease of adaptability of the technology to Indian conditions. 
  • Other environmental and social cost benefits
The-process-flow-of-Project-management-processes
The-process-flow-of-Project-management-processes
2-Initiation:
Initiating is the basic processes that should be performed to get the project started. This starting point is critical because those who will deliver the project, those who will use the project, and those who will have a stake in the project need to reach an agreement on its initiation. 

Involving all stakeholders in the project phases generally improves the probability of satisfying customer requirements by shared ownership of the project by the stakeholders. 

The success of the project team depends upon starting with complete and accurate information, management support, and the authorization necessary to manage the project.
3-Planning:
The planning phase is considered the most important phase in project management. Project planning defines project activities that will be performed; the products that will be produced, and describes how these activities will be accomplished and managed.

Project planning defines each major task, estimates the time, resources and cost required, and provides a framework for management review and control. Planning involves identifying and documenting scope, tasks, schedules, cost, risk, quality, and staffing needs. 

The result of the project planning, the project plan, will be an approved, comprehensive document that allows a project team to begin and complete the work necessary to achieve the project goals and objectives. 

The project plan will address how the project team will manage the project elements. It will provide a high level of confidence in the organization’s ability to meet the scope, timing, cost, and quality requirements by addressing all aspects of the project.
4-Executing:
Once a project moves into the execution phase, the project team and all necessary resources to carry out the project should be in place and ready to perform project activities. 

The project plan is completed and baselined by this time as well. The project team and the project manager’s focus now shifts from planning the project efforts to participating, observing, and analyzing the work being done. 

The execution phase is when the work activities of the project plan are executed, resulting in the completion of the project deliverables and achievement of the project objective(s). 

This phase brings together all of the project management disciplines, resulting in a product or service that will meet the project deliverable requirements and the customers need. During this phase, elements completed in the planning phase are implemented, time is expended, and money is spent. 

In short, it means coordinating and managing the project resources while executing the project plan, performing the planned project activities, and ensuring they are completed efficiently.
5-Controlling: 
Project Control function that involves comparing actual performance with planned performance and taking corrective action to get the desired outcome when there are significant differences. 

By monitoring and measuring progress regularly, identifying variances from plan, and taking corrective action if required, project control ensures that project objectives are met.
6-Closing out:
Project closeout is performed after all defined project objectives have been met and the customer has formally accepted the project’s deliverables and end product or, in some instances, when a project has been canceled or terminated early. 

Although project closeout is a routine process, it is an important one. By properly completing the project closeout, organizations can benefit from lessons learned and information compiled. The project closeout phase is comprised of contract closeout and administrative closure.

Technical Design:

For a project to be taken up for investment, its proponent must present a sound technical feasibility study that identifies the following components:
  • The proposed new technologies, process modifications, equipment replacements and other measures included in the project. 
  • Product/technology/material supply chain (e.g., locally available, imported, reliability of supply)
  • Commercial viability of the complete package of measures (internal rate of return, net present value, cash flow, average payback). 
  • Any special technical complexities (installation, maintenance, repair), associated skills required. 
  • Preliminary designs, including schematics, for all major equipment needed, along with design requirements, manufacturer’s name and contact details, and capital cost estimate. 
  • Organizational and management plan for implementation, including timetable, personnel requirements, staff training, project engineering, and other logistical issues.

Financing

When considering a new project, it should be remembered that other departments in the organization would be competing for capital for their projects. However, it is also important to realize that energy efficiency is a major consideration in all types of projects, whether they are:
  • Projects designed to improve energy efficiency 
  • Projects where energy efficiency is not the main objective, but still plays a vital role.
The funding for project is often outside the control of the project manager. However, it is important that you understand the principles behind the provision of scarce funds.
Project funds can be obtained from either internal or external sources.
Internal sources include:
  • Direct cash provision from company reserves 
  • From revenue budget (if payback is less than one year) 
  • New share capital
Funding can become an issue when energy efficiency projects have previously been given a lower priority than other projects. It is worth remembering that while the prioritization of projects may not be under our control, the quality of the project submission is.
External sources of funds include:
  • Bank loans 
  • Leasing arrangement 
  • Payment by savings. A deal arranged with equipment supplier 
  • Energy services contract 
  • Private finance initiative
The availability of external funds depends on the nature of your organization. The finance charges on the money you borrow will have a bearing on the validity of your project. 

Before applying for money, discuss all the options for funding the project with your finance managers. 

It is reiterated that energy savings often add substantially to the viability of other non-energy projects.

Contracting

Since a substantial portion of a project is typically executed through contracts, the proper management of contracts is critical to the successful implementation of the project. In this context, the following should be done.
  • The competence and capability of all the contractors must be ensured. One weak link can affect the timely performance of the contract. 
  • Proper discipline must be enforced among contractors and suppliers by insisting that they should develop realistic and detailed resource and time plans that are matching with the project plan. 
  • Penalties may be imposed for failure to meet contractual obligations. Likewise, incentives may be offered for good performance. 
  • Help should be extended to contractors and suppliers when they have genuine problems. 
  • Project authorities must retain independence to off-load contracts (partially or wholly) to other parties where delays are anticipated.
If the project is to implemented by an outside contractor, several types of contract may be used to undertake the installation and commissioning:
  • Traditional Contract: All project specifications are provided to a contractor who purchases and installs equipment at cost plus a markup or fixed price. 
  • Extended Technical Guarantee/Service: The contractor offers extended guarantees on the performance of selected equipment and/or service/maintenance agreements. 
  • Extended Financing Terms: The contractor provides the option of an extended lease or other financing vehicles in which the payment schedule can be based on the expected savings.
  • Guaranteed Saving Performance Contract: All or part of savings is guaranteed by the contractor, and all or part of the costs of equipment and/or services is paid down out of savings as they are achieved. 
  • Shared Savings Performance Contract: The contractor provides the financing and is paid an agreed fraction of actual savings as they are achieved. This payment is used to pay down the debt costs of equipment and/or services.
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Implementation

The main problems faced by project manager during implementation are poor monitoring of progress, not handling risks and poor cost management.
  • Poor monitoring of progress: Project managers sometimes tend to spend most of their time in planning activity and surprisingly very less time in following up whether the implementation is following the plan. A proactive report generated by project planner software can really help the project manager to know whether the tasks are progressing as per the plan.
  • Not handling risks: Risks have an uncanny habit of appearing at the least expected time. In spite of the best efforts of a project manager, they are bound to happen. Risks need immediate and focused attention. Delay in dealing with risks cause the problem to aggravate and has negative consequences for the project.
  • Poor cost management: A project manager's success is measured by the amount of cost optimization done for a project. Managers frequently do all the cost optimization during the planning stages but fail to follow through during the rest of the stages of the project. The cost graphs in the Project planner software can help a manager to get an update on project cost overflow. The cost variance (The difference between approved cost and the projected cost should be always in the minds of the project managers).
References:

  • Principles of Project Management, NPC publication 
  • Project Management, Tata McGraw Hill – S.Choudhury 
  • Projects: Planning, Analysis, Selection, Implementation and Review, Tata McGraw Hill – S.Choudhury

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