OTMA Group Assignment 1

Student no. 232219 1003088-6341 Do not print your name , surname or ID number in your assignment. Your assignment submission will be identified by your Student no

Master of Business Administration Operations and Technology Management Group Assignment 1(OTMA01-8/S1 06/2015) Assignment due date: 13 Apr 2015 - 13:00PM Exam date: 04 Jun 2015 Contact Learning

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Contents Acronyms ............................................................................................................................ v Table of Figures ..................................................................................................................vi Group Members .............................................................................................................. - 1 Project Stakeholders ...................................................................................................... - 2 Moore Housing Contractors ........................................................................................... - 3 Project Scope .............................................................................................................. - 3 Geographic Scope ................................................................................................... - 3 Project Plan Scope .................................................................................................. - 3 Architecture Scope .................................................................................................. - 3 Building Scope ......................................................................................................... - 4 Out of Scope ............................................................................................................ - 5 Time Management of the Project ................................................................................ - 5 Cost Management of the Project ................................................................................ - 6 Project Budget ......................................................................................................... - 6 Cost Tracking ........................................................................................................... - 7 Cost Reporting ......................................................................................................... - 8 Invoicing ................................................................................................................... - 8 Cost Change Control ............................................................................................... - 8 Project Quality Control................................................................................................ - 9 Quality Standards .................................................................................................. - 10 Overall Quality Measures .......................................................................................... - 11 CPM/PERT Network Diagram ....................................................................................... - 12 -

Key ............................................................................................................................. - 12 Calculations .................................................................................................................. - 13 Gant Chart ..................................................................................................................... - 15 Probability Calculation ................................................................................................. - 16 Critical Path A ............................................................................................................ - 16 Critical Path B ............................................................................................................ - 17 Cost Levelling ............................................................................................................... - 18 Important Aspects of Project Management ..................................................................... 24 Project Definition ........................................................................................................... 25 Project Initiation ............................................................................................................ 25 Project Planning ............................................................................................................ 25 Project Execution .......................................................................................................... 25 Project Monitoring and Control .................................................................................... 26 Project Closure .............................................................................................................. 26 Project Risk Management ............................................................................................. 27 Project Communication Management .......................................................................... 27 References ........................................................................................................................ 28

Acronyms PMI

Project Management Institute

SOW

Scope of Work

Table of Figures Figure 1 - Quality Improvement Process ..................................................................... - 10 Figure 2 - PERT Network Diagram ............................................................................... - 12 Figure 3 - Table of Calculations ................................................................................... - 14 Figure 4 – Earliest Start Gant Chart ............................................................................. - 15 Figure 5 - Earliest Start Histogram .............................................................................. - 19 Figure 6 - Gant Chart - Non-Critical Activities Moved ................................................ - 21 Figure 7 - Cost Levelled Histogram ............................................................................. - 22 -

Group Members Name

Student Number

Megandran Govender

232219

Sonwabile Bidla

179212

Project Stakeholders Stakeholders are individuals, groups, organizations, institutions and other claimants who have or claim ownership, rights, or interests in a project and its activities. Based on this, every project is influenced and must be managed from a perspective that goes beyond the basic relationship between customers and the company that is performing the project. Kerzner(2013:66) defines project stakeholders as any person/s or organisations that can favourably or unfavourably impacted by the project and as such project managers must constantly interact with these stakeholders as if not managed effectively then these stakeholders can have negative impact on the direction of the project. The project by Moore Housing Contractors for Country Side Realtors has the following stakeholders:

Moore Housing Contractors.



Countryside Realtors.



Mary Moore.



Sandy Moore.



Project Manager.



Employees of Moore Housing Contractors that will be involved in the construction of the houses e.g. brick layers, electricians, plumbers amongst others.



Potential buyers of the completed houses.



Sales and Marketing employees of Countryside Realtors.

Moore Housing Contractors Project Scope Effective scope management is one of the key factors determining project success. Failure to accurately interpret the client’s need or problem will produce misleading definition scope of the project. If this causes rework and additional effort, there may be project cost and time implications. Therefore project success will be self-limiting if the scope of work is not adequately defined. Schwalbe (2014:188) defines project scope as all of the effort (work) involved in creating the end products inclusive of the processes and services used to create them. A scope of work (S.O.W) is generally a document that is created during the preparation phase of the project and this outline the specific work that needs to be carried out, by whom this work needs to be carried out and the scope management plan. Schwalbe (2014:190) recommends that a scope management plan and a requirements management plan be developed as subsidiaries to the project plan. For the Moore Housing project we will establish the scope and define these in the sections to follow. Geographic Scope

The geographic scope is limited to the new development designated by Countryside Realtors. The new development will be the only area that Moore House contractors will be building houses on. Project Plan Scope

Moore Housing Contractors will develop a Project Plan during the Prepare phase of this Project that will reflect the estimated timeline to complete the Project. The Moore House project manager will be responsible for managing the projected timeline. Architecture Scope

Moore Housing Contractors will not be responsible for the architectural design of the houses as these are required to be provided by Countryside realtors. The architectural design plan along with any related plan approvals is strictly out of scope of this project. Building Scope

The scope of this project is limited to 6 (six) houses in the new development. The following building tasks and components will be provided by Moore House Contractors 

Excavation, pour footers.



Lay foundation.



Frame and roof.



Lay drain tiles.



Sewer (floor) drains.



Install insulation.



Pour basement floor.



Rough plumbing, pipes.



Install windows.



Rough electrical wiring.



Install furnace, air.



Conditioner.



Exterior brickwork.



Install plasterboard.



Mud, plaster.



Roof shingles, flashing.



Attach gutter.



Downspouts.



Grading.



Lay subflooring.



Lay driveway, walks.



Landscape garden.



Finish carpentry.



Cabinetry, Painting, Wooden Floors, Carpet.

Out of Scope

The following tasks are out of scope for this project:

Architectural design and approval of design.



Sale of the completed houses to potential buyers.



Marketing and advertising of the completed houses. Time Management of the Project

Kerzner (2013:198) postulates that without disciplined time management, a key driver for projects, then that project is doomed to fail. Kerzner (2013:198) further states that if a project manager is unable to control his own time on a project then he/she will most certainly be unable to control any of the project. Kerzner (2013:203) provides us with the following rules for effective time management:

Create a time log by doing a time analysis.



Plan solid block for critical tasks that need completion.



Classify and prioritise activities.



Define opportunity costs on activities thus giving you an idea of how much it will cost if these are not managed correctly.



Delegate.



Focus on opportunities and not problems.

In the Moore Housing project it is evident that time and thus time management is a critical issues for the customer i.e. Countryside Realtors. The project manager will therefore need to manage this project very closely with regards to time. It is important that effective time management is followed and all stakeholders honour time limits and schedules. The first consideration will be the requested start date. Countryside realtors are requesting that the project starts in late winter and or early spring. Consideration

needs to be given to weather conditions during this time that could hinder construction. The project manager will need to track the time closely against the project management plan and will need to ensure that he has the correct tools to do so. Software will be used to track the time on the project this will make the process much more streamlines and seamless. Penalty charges can be laid if the time is not managed and in the calculations below it would seem that there is a 7% probability of the project not being completed within the 70 week window which is low but still needs to be managed closely. Cost Management of the Project Kerzner (2013:300) states that cost control is not simply a function of monitoring costs and recording related data but rather analysing the cost data in order to be preemptive in taking corrective action before the costs are deemed to be out of control. Kerzner (2013:301) provides a guide for good cost management and offers the following considerations in achieving effective cost management within a project:

Cost estimating.



Cost accounting.



Project cash flow.



Company cash flow.



Direct labour costing.



Overhead rate costing.



Incentives, penalties and profit sharing.

For the Moore Housing project the cost management will be described in the sections to follow. Project Budget

The estimated cost for completing one house based on the base project costs is R95 254.21. Using this calculation the total cost of the project is estimated at R571 525.26. This amount excludes penalties and is based on completion of the project within the allotted 73.83 weeks. Cost Tracking

The cost of the following activities will be tracked by Moore Housing:

Excavation, pour footers.



Lay foundation.



Frame and roof.



Lay drain tiles.



Sewer (floor) drains.



Install insulation.



Pour basement floor.



Rough plumbing, pipes.



Install windows.



Rough electrical wiring.



Install furnace, air.



Conditioner.



Exterior brickwork.



Install plasterboard.



Mud, plaster.



Roof shingles, flashing.



Attach gutter.



Downspouts.



Grading.



Lay subflooring.



Lay driveway, walks.



Landscape garden.



Finish carpentry.



Cabinetry, Painting, Wooden Floors, Carpet.

The Moore Housing project manager will maintain a budget tracking spreadsheet. Cost Reporting

Moore Housing actual costs versus budgeted cost will be captured in the project’s Budget Spreadsheet maintained by the Moore Housing project manager and shared with Countryside Realtors every two weeks.

The Moore Housing project manager will inform Countryside Realtors immediately of any anticipated negative cost variances, prior to incurring those variances wherever possible.

Changes to the project which could affect the cost will be managed by the project change control procedures. Any significant cost variance will be reported to the Steering Committee at the regularly scheduled meeting, or immediately if deemed appropriate by the project management team.

Countryside Realtors is required to accept or provide feedback regarding the budget within 2 working days. An acceptance email is sufficient and this acknowledges that Countryside Realtors has approved the work completed in the previous period since the budget was last sent. Failure to provide acceptance or feedback of the budget within 2 working days is construed as automatic acceptance by Countryside Realtors. Invoicing

Invoices will be generated for payment by Moore Housing contractors on a monthly basis and payment terms are set out to be 30 days from the date of invoice. Cost Change Control

As long as the total actual cost to date falls within the currently approved budget to date, it will not be necessary to follow the project change control procedures; viz., minor fluctuations from week to week are typical adjustments during project execution and do not require change control.

Potential increases or decreases to the project cost (services or expenses) will be managed by the project change control procedures. Project Quality Control Kerzner (2013:387) admits that mature organisation cannot accurately defined quality within projects and the reasoning for this is that quality is defined by the customer or stakeholders during the project. Kerzner (2013:388) provides a definition of quality used by Kodak which states “quality is those products and services that are perceived to meet or exceed the needs and expectations of the customer at a cost that represents outstanding value”. Quality within a project is of utmost importance as without quality the project runs the risk of rework which equates to higher costs and penalties. Kerzner (2013:390) further provides a diagrammatic representation of the quality improvement process that can be applied within project management.

Figure 1 - Quality Improvement Process

Project quality control for the Moore Housing project will be discussed in the sections to follow. Quality Standards

By using a defined project methodology suited for construction projects Moore Housing will ensure that there will be quality checks and quality assurance checks at strategic points within the project life cycle. When a requirement arises for quality to be assured by external parties e.g. civil engineers and building inspectors then Moore Housing contractors will contract the services of the relevant people and obtain signed certificates and other related approvals.

Overall Quality Measures The following measures are employed to ensure that a high standard of quality is achieved: 

A project risk assessment is conducted at the beginning of the project and ongoing throughout the project.



Scope is clearly defined using a Scope Statement and signed off.



A management structure is established including project management and a steering committee with recurring meetings.



A common, integrated project schedule is established and maintained.



Project deliverables are accompanied documentation and stored for reference.



Moore Housing provides multiple skilled members to execute and manage the different activities in construction.



Clear communication lines are established and open communication policy is maintained.



All deliverables to be approved by both Moore Housing Contractors and Countryside Realtors.

by

proper

change

controlled

CPM/PERT Network Diagram

0

10.17 10.17 A 10.17 0 10.17

10.17 6.33 16.5 B 10.17 0 16.5

16.5 12.17 28.67 C 16.5 0 28.67

28.67 6.17 34.84 F 28.67 0 34.84

34.83 5.17 I 34.83 0

40

16.5

7 23.5 D 54.51 38.01 61.51

23.5 6.17 29.67 H 33.83 10.33 40

34.83 5.17 J 34.83 0

16.5

23.5 6.17 28.67 G 29.66 7.16 35.83

28.67 4.17 32.84 K 35.83 7.16 40

7 23.5 E 22.66 6.16 29.66

40

40 10.17 50.17 L 40 0 50.17

50.17 6.17 56.34 N 50.17 0 56.34

56.34 5.17 61.51 O 56.34 0 61.51

40

40

40

40

46.17 7.17 53.34 Q 46.17 0 53.34

53.34 6.17 59.51 S 59.51 6.17 65.68

6.17 46.17 M 0 46.17

53.34 7.17 60.51 T 53.34 0 60.51

53.34 6.17 59.51 U 54.34 1 60.51

Figure 2 - PERT Network Diagram

Key 

All blocks depicted in Red are those activities that are on the critical path. Earliest Estimated Earliest Start Completion Finish Activity Latest Start

Slack Time

Latest Finish

61.51 7.17 68.68 P 61.51 0 68.68

68.68 5.17 73.85 R 68.68 0 73.85

65.68 8.17 73.85 W 65.68 0 73.85 60.51 5.17 65.68 V 60.51 0 65.68

65.68 5.17 70.85 X 68.68 3 73.85

Calculations Calculations for the estimated completion time, slack times, earliest start, earliest finish, latest start and latest finish are depicted in the table below, Figure 3. The equations used to derive the results were as follows:

Estimated completion time used the following equation:-

Where:o a = optimistic time o m = most likely time o b = pessimistic time 

Calculation of the variance used the following equation:-



Slack times were calculated using the following equation:-

Slack = LF – EF Where:- LF is Latest Finish EF is Earliest Finish.

Estimated Comp

Daily Running

Earliest

Earliest

Latest

Latest

Cost (R1000)

Start

Finish

Start

Finish

1.00

0

10.17

10.20

10.17

0.00

Y

0.75

10.17

16.50

10.17

16.50

0.00

Y

0.69

0.55

16.50

28.67

16.50

28.67

0.00

Y

0.44

0.88

16.50

23.50

54.51

61.51

38.01

N

7.00

0.44

1.00

16.50

23.50

22.66

29.66

6.16

N

6.17

0.69

1.20

28.67

34.83

28.67

34.83

0.00

Y

Pour basement floor

5.17

0.69

0.83

23.50

28.67

29.66

35.83

7.16

N

Rough plumbing, pipes

6.17

0.69

0.50

23.50

29.67

33.83

40.00

10.33

N

Activity

Description

A

Excavation, pour footers

10.17

0.69

B

Lay foundation

6.33

0.44

C

Frame and roof

12.17

D

Lay drain tiles

7.00

E

Sewer (floor) drains

F

Install insulation

G H

Time

Variance

Slack

Critical Path

I

Install windows

5.17

0.69

0.21

34.83

40.00

34.83

40.00

0.00

Y

J

Rough electrical wiring

5.17

0.69

0.33

34.83

40.00

34.83

40.00

0.00

Y

K

Install furnace, air

4.17

0.69

0.22

28.67

32.83

35.83

40.00

7.17

N

L

Conditioner

10.17

0.69

0.40

40.00

50.17

40.00

50.17

0.00

Y

M

Exterior brickwork

6.17

0.69

0.50

40.00

46.17

40.00

46.17

0.00

Y

N

Install plasterboard

6.17

0.69

0.35

50.17

56.33

50.17

56.33

0.00

Y

O

Mud, plaster

5.17

0.69

0.63

56.33

61.50

56.34

61.50

0.00

Y

P

Roof shingles, flashing

7.17

0.69

1.40

61.50

68.67

61.51

68.67

0.00

Y

Q

Attach gutter

7.17

0.69

0.47

46.17

53.33

46.17

53.33

0.00

Y

R

Downspouts

5.17

0.69

0.20

68.67

73.83

68.68

73.83

0.00

Y

S

Grading

6.17

0.69

0.20

53.33

59.50

59.51

65.68

6.18

N

T

Lay subflooring

7.17

0.69

0.20

53.33

60.50

53.34

60.50

0.00

Y

U

Lay driveway, walks

6.17

0.69

0.13

53.33

59.50

54.34

60.50

1.00

N

V

Landscape garden

5.17

0.69

0.25

60.50

65.67

60.50

65.67

0.00

Y

8.17 5.17

0.69 0.69

0.32 0.17

65.67 65.67

73.83 70.83

65.67 68.67

73.83 73.83

0.00 3.00

Y N

W Finish carpentry X Cabinetry, Painting, Wooden Floors, Carpet Figure 3 - Table of Calculations

Gant Chart Activity A B C D E F G H I J K L M N O P Q R S T U V W X

Description Duration Excavation, pour footers 10.17 Lay foundation 6.33 Frame and roof 12.17 Lay drain tiles 7.00 Sewer (floor) drains 7.00 Install insulation 6.17 Pour basement floor 5.17 Rough plumbing, pipes 6.17 Install windows 5.17 Rough electrical wiring 5.17 Install furnace, air 4.17 Conditioner 10.17 Exterior brickwork 6.17 Install plasterboard 6.17 Mud, plaster 5.17 Roof shingles, flashing 7.17 Attach gutter 7.17 Downspouts 5.17 Grading 6.17 Lay subflooring 7.17 Lay driveway, walks 6.17 Landscape garden 5.17 Finish carpentry 8.17 Cabintery, Painting, Wooden Floors, Carpet 5.17 Duration

A = 10.17 B = 6.33 C = 12.17 D=7 E=7 F = 6.17 G = 5.17 H = 6.17 I = 5.17 K = 5.17 K = 4.17 L = 10.17 M = 6.17 N = 6.17 O = 5.17 P = 7.17 Q = 7.17 R = 5.17 S = 6.17 T = 7.17 U = 6.17 V = 5.17 W = 8.17 X = 5.17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75

Figure 4 – Earliest Start Gant Chart

Gant chart using the earliest start times for Moore Housing Contractors project with Countryside Realtors. The project completion time based on the earliest start times is 73.83 weeks. All activities in red are those that are on the critical path.

Probability Calculation Krajewski, Ritzman and Malhotra (2013:88) states that in order to determine the probability it is assumed that the duration time of one activity does not depend on any other activity. As a result of these Krajewski et al (2013:88) further states that the central limit theorem to determine the probability of completion within 70 weeks. These can be represented by the following formulas:TE = ∑ (Expected activity times on the critical path) = Mean of normal distribution. σ2P = ∑ (Variances of activities on the critical path) To analyse the probability of completing the project within a given timeframe the formulae is represented as follows:-

These formulas will be used to calculate the probability of completing the project in 70 weeks. Using the formulas stated above the first step is to calculate the critical path for the project. Using the network diagram provided in Figure 2 there seems to be two critical paths to the project. These will be discussed separately. Critical Path A The first critical path as the following activity flow: - A-B-C-F-I-L-N-O-P-R. Using this critical path the mean of normal distribution is 73.83 and the sum of the variance is 6.69. The z value for this critical path using the 70 week probability is therefore represented as:-

Using the standard normal tables the value we find for -1.48 is 0.9306. We then find that the probability is 0.93 that the length of the path A-B-C-F-I-L-N-OP-R will be no longer than 70 weeks. As this is the critical path we can then surmise that there is a 7% probability that the project will take longer than 70 weeks. Critical Path B The second critical path as the following activity flow: - A-B-C-F-J-M-Q-T-V-W. Using this critical path the mean of normal distribution is 73.83 and the sum of the variance is 6.69. The z value for this critical path using the 70 week probability is therefore represented as:-

Using the standard normal tables the value we find for -1.48 is 0.9306. We then find that the probability is 0.93 that the length of the path A-B-C-F-J-M-Q-TV-W will be no longer than 70 weeks. As this is the critical path we can then surmise that there is a 7% probability that the project will take longer than 70 weeks.

Cost Levelling To perform the cost levelling exercise a histogram based on the earliest start times needs first to be established. This is displayed below and represented as Figure 5.

Daily Running Costs (R1 000)

2.5 2.4 Activity C, D & E 2.3 Costs = 2.4 2.2 2.1 2 1.9 Activity = F,H & K 1.8 Activity = Costs = 1.9 C, G & H 1.7 Costs = 1.8 1.6 1.5 1.4 Activity = 1.3 N, Q, S, T &U 1.2 Costs = 1.4 1.1 Activity = O, S, T & U 1 Activity = A Costs = 1.1 Costs = 1 0.9 Activity = L & M Activity = Costs = 0.9 L&Q 0.8 Activity = B Costs = 0.9 Costs = 0.8 0.7 0.6 Act = 0.5 Activity = I &K O& 0.4 Costs = 0.5 V Act = Activity = Activity = 0.3 Costs P &V P, W & X R, W & X 0.2 = Costs = Costs = Costs = 0.1 0.9 1.7 1.9 0.7 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 Duration (Weeks)

Figure 5 - Earliest Start Histogram

Only activities that have a slack time i.e. not a critical activity can be moved in the cost levelling exercise. Activities that are not on the critical path are D, E, G, H, K, S, U, and X. These activities can be moved in order to level costs through the duration of the project. Referring to the earliest start histogram we can see that activities C, D and E when are producing very high costs during a phase of the project. Activity C is a critical activity and therefore cannot be moved. Activity D has a latest finish of 61.51 and activity E has a latest finish of 29.66. Re-scheduling activity E will not have an effect on the cost levelling as it only has a slack time of 6.16 weeks, however, activity D, with a slack time of 38.01 weeks can be re-scheduled to start after activity F. The next activities that can possibly be moved are G and H with a slack time of 7.16 and 10.33 weeks respectively. If these activities were moved then they will fall within the same time as activity D that has been moved which will create greater costs during this period of the project as both these activities have high costs associated with them. It is therefore recommended not to move these activities. Activity K, with a slack time of 7.17 weeks can be moved to its latest start time of 35.83 which will balance costs between the two phases of the project. Activity S with a slack of 6.18 weeks and activity U with a slack of a week has little consequence on the cost levelling if they were moved to the latest start date and as a result is not recommended to be moved. Activity X, with a slack time of 3 can be moved to its latest start time of 68.67 which will then have the activity completing with the project and will level costs in the last two phases of the project. Moving these activities as described above will produce a Gant chart similar to the one depicted below, represented in Figure 6.

Activity A B C D E F G H I J K L M N O P Q R S T U V W X

Description Duration Excavation, pour footers 10.17 Lay foundation 6.33 Frame and roof 12.17 Lay drain tiles 7.00 Sewer (floor) drains 7.00 Install insulation 6.17 Pour basement floor 5.17 Rough plumbing, pipes 6.17 Install windows 5.17 Rough electrical wiring 5.17 Install furnace, air 4.17 Conditioner 10.17 Exterior brickwork 6.17 Install plasterboard 6.17 Mud, plaster 5.17 Roof shingles, flashing 7.17 Attach gutter 7.17 Downspouts 5.17 Grading 6.17 Lay subflooring 7.17 Lay driveway, walks 6.17 Landscape garden 5.17 Finish carpentry 8.17 Cabintery, Painting, Wooden Floors, Carpet 5.17 Duration

A - 10.17 B - 6.33 C = 12.17 D=7 E=7 F = 6.17 G = 5.17 H = 6.17 I = 5.17 J = 5.17 K = 4.17 L = 10.17 M = 6.17 N = 6.17 O = 5.17 P = 7.17 Q = 7.17 R = 5.17 S = 6.17 T = 7.17 U = 6.17 V = 5.17 W = 8.17 X = 5.17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75

Figure 6 - Gant Chart - Non-Critical Activities Moved

Activities in red are critical activities. This Gant chart now produces a histogram as below which shows the costs levelled by moving the non-critical activities.

Daily Running Costs (R1 000)

2.5 2.4 2.3 2.2 2.1 2 1.9 1.8 Activity = Activity = C, G & H D, L & M 1.7 Activity = F & H Activity = Act = Activity = Costs = 1.8 Costs = 1.8 1.6 Costs = 1.7 D, I, J & K P&V P&W Costs = 1.7 Costs = Costs = 1.7 1.5 Activity = C & E 1.7 Costs = 1.5 1.4 Activity = 1.3 N, Q, S, T & U 1.2 Costs = 1.4 1.1 Activity = O, S , T & U 1 Activity = A Costs = 1.1 Act = Costs = 1 0.9 Activity = L & Q O& 0.8 Activity = B Costs = 0.9 V Costs = 0.8 0.7 Activity = Costs 0.6 R, W & X = 0.9 0.5 Costs = 0.7 0.4 0.3 0.2 0.1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 Duration (weeks)

Figure 7 - Cost Levelled Histogram

The histogram after the cost levelling exercise displays a more constant cost projection for the duration of the project.

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Important Aspects of Project Management The Project Management Institute (PMI) white paper on the value of project management states that major organisations across all industry verticals and across the globe have steadily been embracing project management as a method of curbing high expenditure and improving project results. The white paper states project management became more importance when the recession began as more and more executives learnt that adhering to project management methods and strategies reduced risks, cut costs and improved success rates. With little room for error and fewer resources to rely on, project management expertise and oversight is helping organizations streamline their delivery process, cut costs and sidestep risks, enabling them to ride out the recession and implement stronger project management practices for the future. To fully understand the important aspects of project management it is important that the project life cycle is understood. Gido and Clement (2014:196) identify the following six stages within project management: 

Project Definition - This refers to defining the objectives and the factors to be considered to make the project successful.

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Project Initiation - This refers to the resources as well as the planning before the project starts.

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Project Planning - Outlines the plan as to how the project should be executed. This is where project management triangle is essential. It looks at the time, cost and scope of the project.

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Project Execution - Undertaking work to deliver the outcome of the project.

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Project Monitoring & Control - Taking necessary measures, so that the operation of the project runs smoothly.

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Project Closure - Acceptance of the deliverables and discontinuing resources that were required to run the project.

Referring to each of the stages above the important aspects within each of these stages can be highlighted. Master of Business Administration Operations and Technology Management Group Assignment 1(OTMA01-8/S1 06/2015) Contact Learning Milpark Education

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Project Definition During this phase of the project the project scope, project deliverables, project timelines and costs need to be clearly defined. It is also important during this phase to clearly identify and document the stakeholders of the project. The most important aspect during this phase the project scope as this sets the stage for developing a project plan. It clearly states the project’s objectives and deliverables. Scope definition provides an administrative plan that is used to develop your operational plan, i.e. the plan for how you are going to run the project. Scope definition should be as brief as possible, but complete. Poorly defined scope leads to project failure. The development of the scope must involve the project manager, sponsors, performing organisations and beneficiaries. Project Initiation It is important that any project is not only resourced optimally, but accurately as well. During this phase of the project it is important that the correct resources are identified and assigned the project. Special attention needs to be made to match the skills set of the resources to the skills that may be required during the project life cycle. Another important factor during this phase of the project is the task of ensuring that all stakeholders are introduced and aware of whom the stakeholders within the project are. Project Planning Projects are executed through plans and therefore the project planning phase is arguably the most important phase of the project. Gido and Clement (2014:123) state that the first critical step in a project is the project scope and then the next critical step is the planning as the project scope dictates the project planning. Developing a project plan and a time management plan is vital for project control. Only once a base line plan has been agreed upon can the project be accurately measured and any deviations are reacted to in a pro-active manner so as to minimise project risk. Project Execution During the execution phase of the project quality is the most important aspect. Turner (2014:233) that scope, budget and time will, initially, is perceived by the customer as being achieved, therefore a customer then looks at other intangibles aspects during the project to determine quality. Turner Master of Business Administration Operations and Technology Management Group Assignment 1(OTMA01-8/S1 06/2015) Contact Learning Milpark Education

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(2014:233) states that some of these intangibles can be working relationship with the project team, ability of the project team to accommodate changes to the scope, open communication, ease of go live phase and the follow post go live. Completion of a project within the set time and budget is irrelevant if the final product is of poor quality. The project manager has to ensure that the final product meets the quality expectations of the stakeholders. This is done by good: ƒ 

Quality planning – identifying what quality standards are relevant to the project and determining how to meet them; ƒ

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Quality Assurance – evaluating overall project performance on a regular basis to provide confidence that the project will satisfy the relevant quality standards; ƒ

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Quality control – monitoring specific project results to determine if they comply with relevant quality standards and identifying ways to remove causes of poor performance. Project Monitoring and Control Project Monitoring and Control

Schwalbe (2013:187) states that controlling processes are prevalent throughout all of the project management stages. These processes ensure not only that project objectives are met, but also that corrective action can be taken should a problem arise. In this phase, performance reporting and risk monitoring and control are the key drivers in ensuring the project success. These overlaying processes work with enabling processes such as cost control, quality control, and schedule control to ensure the project stays on track. It is important to note that although project monitoring and control is seen here as a phase of the project life cycles it is really a function that is important throughout the project. Project monitoring and control is an important aspect throughout the entirety of the project and is essential to for reporting and risk management during a project. Project Closure The two main components of closing are contract closeout, in which any remaining open items are resolved and the contract is settled, and administrative closure, the gathering of information to formalize project completion, including compiling lessons learned for use in future projects ASAE (2014).

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During this phase of the project the important aspects are to ensure that the project deliverables have been achieved with all critical issues resolved and the customer is able to manage the process or the products by themselves. Apart from the aspects described under each of the project phases above there are two more important aspects that are overarching processes within project management. These will be discussed in the next two sections. Project Risk Management Risk identification consists of determining which risks are likely to affect the project and documenting the characteristics of each. Risk identification is not a one-time event and should be performed on a regular basis throughout the project. Risk identification should address both internal and external risks. Internal risks are things that the project team can control or influence and external risks are things beyond the control or influence of the project team. A risk management plan should document the procedures that will be used to manage risk throughout the project. Project Communication Management Project communication management is about how communication is carried out during the course of the project. Effective communication ensures that all stakeholders are regularly kept informed about progress, problems and issues that may arise during the course of the project. Project communication management is made up of the following processes: 

Planning communication is determining the information and communication needs of the stakeholders: who needs what information, when will they need it, and how will it be given to them;

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Communication distribution list makes needed information available to project stakeholders in an accessible and timely manner;

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Performance reporting refers to collecting and disseminating performance information. This includes status reporting, progress measurement and forecasting.

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References ASAE Centre. 2014. Five Essential Requirement for Project Management. The Centre for Association Leadership. [Online] Available: http://www.asaecenter.org/Resources/AMMagSidebarDetail.cfm?ItemNumber=9668 [Accessed 2015-04-

09]. Gido J and Clement J. 2014. Successful Project Management. Sixth Edition. Boston: Cengage Learning. Kerzner R.H. 2013. Project Management – A Systems Approach to Planning, Scheduling and Controlling. Eleventh Edition. United Kingdom: John Wiley and Sons. Krajewski J.L, Ritzman P.L and Malhotra K.M. 2013. Operations Management – Processes and Supply Chain. Tenth Editiion. Harlow: Pearson Education Limited. PMI. 2014. The Value of Project Management. Project Management Institute. [Online] Available: http://www.pmi.org/Business-Solutions/~/media/PDF/BusinessSolutions/Value%20of%20Project%20Management_FINAL.ashx [Accessed 2015-04-09].

Schwalbe K. 2013. Information Technology – Project Management. Seventh Edition. Boston: Cengage Learning. Turner R.J. 2014. Gower handbook of Project Management. First Edition. United Kingdom: Gower Publishing Ltd.

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