PART- 1 Engineering Project Management

Biniam Zewdie G/Kidan *
•Haramaya Institute of University
P.O.Box:138; Dire Dawa, Ethiopia
•Mobile: +251910408218/+25191582832
•E-mail: nzg2001nzg@gmail.com/zewdienico@gmail.com

Be the user of information not the owner!!!!!

Project – a [temporary] sequence of unique, complex,
and connected activities having one goal or purpose
and that must be completed by specific time, within
budget, and according to specification.
Project management – the process of scoping,
planning, staffing, organizing, directing, and
controlling the development of an acceptable system at
a minimum cost within a specified time frame.
Process management – the activity of documenting,
managing, and continually improving the process of
systems development.

 Any project involves planning, scheduling and controlling a
number of interrelated activities with use of limited resources,
namely, men, machines, materials, money and time.
 A project is a temporary endeavour undertaken to
create a unique product or service.
It is
performed by people
constrained by limited resources
planned, executed and controlled
 It is required that managers must have a dynamic planning
and scheduling system to produce the best possible results and
also to react immediately to the changing conditions and make
necessary changes in the plan and schedule.

 A project has a definite beginning and definite end
 The duration of a project is finite
 The opportunity or market window is usually temporary,
most projects have a limited time frame in which to produce
the product or service
 The project team - as a team - seldom outlives the project.
 Most projects are performed by a team created for the sole
purpose of performing the project
 Projects involve doing something that has not been
done before in the same environment
 The project may require some innovation to be
completed
Temporary
Unique result

“A project is a temporary effort undertaken
to create a "unique" product or service”
Plan your work first…..then work your plan

Characteristic of a project
Projects differ in size, scope, cost and time, but all have the
following characteristics:
 solves a real and existing problem, has well-defined start and end points.
 A life cycle involving a series of phases in between the beginning and end
 A budget, Specific goals and conditions, Defined responsibilities
 A set of activities which are sequential, unique and non-repetitive
 Use of resources which may require coordinating
 Unique: All projects are unique in themselves, no two projects are exactly
similar.
 Defined roles and relationships for participants in the project
 Fixed set of objectives: A project has a set of objectives or a mission. Once
the objectives are achieved the project is treated as completed.
 Tenure: Project is never a continuous activity, it has to come to an end. Its life
span is fixed.
 Team work: : Project is a team work and it normally consists of diverse areas.
It needs a team to accomplish various activities.
Don’t let the things happen in their own way………..
Report right thing at right time to the right person!!!
DON’T JUST WRITE FOR FILES

Projects range
Projects range in size, scope, cost and time from mega
international projects costing millions of dollars over
many years - to small domestic projects with a low budget
taking just a few hours. It means that the project may
different in
Size
Scope
Cost and Time
Take an example of very large project which used for
different purpose, need high budget, takes long time to
complete and small project used for single purpose, need
low budget, and takes few hours to complete.

 The art of organising, leading, reporting and
completing a project through people
1.1. What is Project Management?
 Write down
three
attributes of
a good
Project
Manager
Exercise 1

Key Points in Project Set-up and Definition
Create Project Management Plan (PMP)
Be clear of scope and objectives
Establish clear statement of what is to be done (WBS)
Establish Risks to be Managed
Establish Costs and Durations
Establish Resources Required
“A Work Breakdown Structure (WBS) is a hierarchical
(from general to specific) tree structure of
deliverables and tasks that need to be performed to
complete a project.”

Work break down structure(WBS)
• Work: specific activity, function, duty, or assignment
accomplished by effort, effort or exercise of skill.
• Breakdown: to divide into parts, to separate into
simpler substances, to undergo decomposition
• Structure: something arranged in a definite pattern of
an organization
“A Work Breakdown Structure (WBS) is a hierarchical
(from general to specific) tree structure of
deliverables and tasks that need to be performed to
complete a project.”

 A diagram which breaks down the overall project
into smaller chunks
 This process is called “decomposition”

Project management generally consists of three phases.
Planning:
Planning involves setting the objectives of the project. Identifying various
activities to be performed and determining the requirement of resources such as
men, materials, machines, etc.
The cost and time for all the activities are estimated, and a network diagram is
developed showing sequential interrelationships (predecessor and successor)
between various activities during the planning stage.
Scheduling:
Based on the time estimates, the start and finish times for each activity
are worked out by applying forward and backward pass techniques, critical path
is identified, along with the slack and float for the non-critical paths.
Controlling:
Controlling refers to analyzing and evaluating the actual progress
against the plan. Reallocation of resources, crashing and review of projects with
periodical reports are carried out.

Eight functions performed by every project manager:
• Scoping – setting the boundaries of the project
• Planning – identifying the tasks required to complete
the project
• Estimating – identifying the resources required to
complete the project
• Scheduling – developing the plan to complete the
project
• Organizing – making sure members understand their
roles and responsibilities
• Directing – coordinating the project
• Controlling – monitoring progress
• Closing – assessing success and failure

 A Good Project Manager
– Takes ownership of the whole project
– Is proactive not reactive
– Adequately plans the project
– Is Authoritative (NOT Authoritarian)
– Is Decisive
– Is a Good Communicator
– Manages by data and facts not uniformed optimism
– Leads by example
– Has sound Judgement
– Is a Motivator
– Is Diplomatic
– Can Delegate

 Interpersonal
– Figurehead
– Leader
– Liaison
 Informational Roles
– Monitor
– Disseminator
– Spokesperson
 Decisional Roles
– Entrepreneur
– Resource Allocator
– Disturbance Allocator
– Negotiator
Managerial Roles

 Effective project managers provide leadership by
example
 A leader focuses on long-term goals and big-picture
objectives while inspiring people to reach those
goals
 A manager deals with the day-to-day details of
meeting specific goals
 Project managers often take on the role of both
leader and manager
“Managers do things right, leaders do the right thing”
“Leaders determine the vision, managers achieve the
vision”
Leadership Skills

Matrix organization: It is a popular choice of
management professionals.
Matrix organization exists where there is multiple
managerial accountability and responsibility for a job
function.
There are usually two chains of command: horizontal
and vertical.
 The vertical line deals with the functional line
responsibility.
 while the horizontal line deals with the project line
of responsibility.
The project manager has total responsibility and
accountability for the project success.

Measures of Project Success
– The resulting information system is
acceptable to the customer.
– The system was delivered “on time” and
“within budget.”
– The system development process had a
minimal impact on ongoing business
operations.

Failure to establish upper-management commitment
to the project
 Lack of organization’s commitment to the system development
methodology
 Taking shortcuts through or around the system development
methodology
Poor expectations management
 Premature commitment to a fixed budget and schedule
Poor estimating techniques
Over optimism
The mythical man-month
Inadequate people management skills
Failure to adapt to business change
Insufficient resources
Failure to “manage to the plan”
Causes of Project Failure

• Poor expectations management (unlikely in a
final year project)
– Scope creep – the unexpected and gradual growth
of requirements during the project.
– Feature creep – the uncontrolled addition of
technical features to a system.
• Premature commitment to a fixed budget and
schedule
Causes of Project Failure
“Project risk is an uncertain event or
condition that, if it occurs, has a positive
or negative effect on a project objective”
Threat → Scope → Poor Quality Product
Threat → Schedule → Late Delivery
Threat → Cost → Overspend
Risk Impact

Scope creep – the unexpected and gradual growth
of requirements during an information systems
project.
Feature creep– the uncontrolled addition of
technical features to a system.
Poor Expectations Management

Project Management Process
Project planning + Project scheduling + Project control
•Project team
–made up of individuals from various areas and departments within a company
•Matrix organization
–a team structure with members from functional areas, depending on skills
required
•Project Manager
–most important member of project team
•Scope statement
–a document that provides an understanding, justification, and expected result of
a project
•Statement of work
–written description of objectives of a project
•Organizational Breakdown Structure
–a chart that shows which organizational units are responsible for work items
•Responsibility Assignment Matrix
–shows who is responsible for work in a project

What is Monitoring and Evaluation (M&E)?
• Monitoring is the collection and analysis of
information about a project or programme,
undertaken while the project/programme is
ongoing.
• Evaluation is the periodic, retrospective
assessment of an organization, project or
programme that might be conducted internally or
by external independent evaluators.

Item Monitoring Evaluation
Frequency routine, regularly scheduled episodic
Primary Objective tracking / oversight assessment
Purpose improve efficiency
mid-course corrections to
workplan
improve effectiveness, impact,
future programming
Focus Conformity/fidelity to program
guidelines, process indicators,
quarterly and annual goals,
workplans
effectiveness, impact, cost-
effectiveness, relevance
Data Sources routine surveillance systems,
field observation, progress
reports
same, plus surveys, special studies
Conducted by TB Focal Person and TBCO TBCO, BNTP supervisors, MOH,
external evaluators
Reporting to TBCO, District PHS, Matron,
BNTP, MOH, community
District PHS, Matron, BNTP, funders
(e.g., Global Fund), other policy-
makers

What is monitoring & evaluation?
• Monitoring is the routine collection and analysis of
information to track progress against set plans and
check compliance to established standards. It helps
identify trends and patterns, adapt strategies and
inform decisions for project/programme management
• Evaluations involve identifying and reflecting upon
the effects of what has been done, and judging their
worth. Their findings allow project/programme
managers, beneficiaries, partners, donors and other
project/programme stakeholders to learn from the
experience and improve future interventions.

Why is M & E important?
A well-functioning M&E system is a critical part of good
project/programme management and accountability. Timely
and reliable M&E provides information to:
• Support project/programme implementation with
accurate, evidence based reporting that informs
management and decision-making to guide and
improve project/programme performance.
• Contribute to organizational learning and
knowledge sharing by reflecting upon and sharing
experiences and lessons so that we can gain the
full benefit from what we do and how we do it.

Many of you will know the story of the crow and the pitcher. A crow was very thirsty one day and
he came across a pitcher with a little water in it. But he could not stick his head far enough into
the pitcher to reach the water. Being clever, he began dropping pebbles into the pitcher, which
eventually brought the water to the top of the pitcher.
Ask the following questions and solicit responses:
• In this story, what is the crow’s objective? (To eliminate his thirst.)
• What is the activity? (dropping pebbles)
• What are the inputs? (pebbles, crow, pitcher)
• What are the outputs? (number of pebbles dropped)
• What are the outcomes? (Short: water level rose; medium: crow able to drink; long: crow
satisfied.)

The Steps in Managing a Project
1.5. Project Planning

Planning is a general term that sets a clear road
map that should be followed to reach a destination.
1.5. Project Planning

Ch. 2: Project Scheduling
Planning, Scheduling, and
Control

Project Scheduling and Control Techniques
 Project planning is part of project management,
which relates to the use of schedules such as Gantt
charts to plan and subsequently report progress within
the project environment.
 project management is a systematic management or
balancing of scope, cost, time or schedule and quality.
 A Gantt chart is a horizontal bar chart developed as a
production control tool in 1917 by Henry L. Gantt, an
American engineer and social scientist
•131

132
WHY SCHEDUALE PROJECTS ?
1- To calculate the project completion.
2- To calculate the start or end of a specific activity.
3-To expose and adjust conflict between trades or
subcontractor.
4- To serve as an effective project control tool
5- To improve work efficiency.
6- To resolve delay claims , this is important in critical
path method ‘CPM’ discussed later..
7- To predict and calculate the cash flow .
8-To evaluate the effect of changing orders ‘CH’ .
ENGINEERING MANAGEMENT

Network scheduling
Project scheduling tools
I. Gantt chart
II.Critical Path Method (CPM)
III.Program Evaluation & Review Technique (PERT)
•133

Project Time Management
It is Concerned with developing a
realistic schedule and controlling
changes to the schedule.
134

1.Bar/gantt Charts
☂ it is a bar chart and named after its innovator Henry
Gantt.
☂This chart gives clear calendar schedule for the whole
project.
☂In Gantt chart, the start and completion time of activity
will be represented.
☂This chart also useful for resource leveling purpose
when there are limitations on the available resources
(man power, m/cs, materials…etc. designed the bar-
chart as a visual aid for planning and controlling his
projects. •135

Con’t…
Bar –chart is designed for a visual aid for planning and
controlling his projects.
This helps to travel the resources requirements
smoothly through the project execution.
•136
J F M A M J J
Time Period
Activity
Design
Build
Test
J F M A M J J
Time Period
Activity
Design
Build
Test

Bar chart cont.….
☂The beginning and the end of each bar represent the
time of start and the time of finish of that activity.
☂Once the project has started, the Gantt chart can
further be used as a tool for project control.
•137

Bar chart cont.….
☂ second line under the planned schedule is
drawn to indicate activity progress.
•138

Example on house construction
 =
•139

Example on bar or milestone chart
# Activity Predecessor Duration
(Month)
1 Design house and obtain
financing
------- 3
2 Lay foundation 1 2
3 Order and receive materials 1 1
4 Build house 3 3
5 Select paint 3 1
6 Select carpet 5 1
7 Finishing work 4 1
•140

| | | | |
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials
Build house
Select paint
Select carpet
Finish work
0 2 4 6 8 10
Month
Months
1 3 5 7 9
Example of Gantt/bar/milestone Chart
•141

Example 3.
Draw Gantt chart and find project comptetion time
Activity immediate predecessor Duration(month)
A ................ 5
B ................. 2
C A 3
D C 4
E C 2
F B 4
G D 7
H E,F 6

Solution=completion time =19months

Exercise
Draw Gantt chart and find project completion
time.
•144
Activity Predecessor Duration
(month)
A --- 2
B A,D 1
C D 6
D ----- 5
E B,C 4
F C 2

Network Diagram
For a project plan to be effective it must equally address the
parameters of activity time and network logic.
As project becomes larger and more complex, the Gantt chart
was found to be lacking as a planning and control tool, because
it could not indicate the logical relationships between activities.
A network is a flow diagram consisting of activities and
events, connected logically and sequentially. In the network
diagram, an activity is represented by arrows while events are
represented, usually, by circles.

Some of the advantages of network diagram or arrow
diagram are:
 It clearly shows the inter-relationship between
events.
The project is seen as integrated whole, thus making it
easier for control.
It can be used even for highly complicated
projects consisting of a large number of activities.
 It directly indicates the time required in between two
activities.

Network Scheduling
The most common network scheduling methods are:
☂ Critical Path Method (CPM) and
☂ Program Evaluation and Review Technique (PERT).
They were developed to overcome the shortcoming of
the gant chart method
•147

Project Network
 The arcs of the network represent the activities.
 The nodes of the network represent the start and the
end of the activities.
 A critical path for the network is a path consisting of
activities with zero slack. And it is always the longest
path in the project network.
•180

Cont.
 A node (an event), denoted by a circle, marks the start
and completion of an activity, which contain a
number that helps to identify its location. For example
activity A can be drawn as:
 This means activity A starts at node 1 and finishes at node 2
and it will takes three days
•181

Network Diagram
For a project plan to be effective it must equally address the
parameters of activity time and network logic.
Logical relation required
For bar chart’s shortcoming
For complex projects
•182

Terminologies
☂Activity
 task or set of tasks
 use resources and time
☂ Event
 state resulting from completion of one or more
activities
 consume no resources or time
 predecessor activities must be complete
☂Path
 Series of connected activities between two events
•183

A
k
 An arrow representing an activity “A” whose
estimated duration is “k” unit of time.
 An arrow
is commonly used to represent an activity with its head
indicating the direction of progress in the project.
•184

TYPES OF ACTIVITIES
☂Predecessor activity:
Activities that must be completed immediately prior to
the start of another activity
☂Successor activity:
Activities that cannot be started until one or more of
other activities are completed, but immediately succeed
them
Concurrent activities:
Activities that can be accomplished concurrently
•185

Cont..
An event can be further classified into the following categories:
Merge event: When more than one activity come and join
an event, such event is known as merge event.
Burst event: When more than one activity leave an event,
such event is known as a burst event.
Merge and burst event: An activity may be a merge and
burst event at the same time as with respect to some
activities it can be a merge event and with respect to some
other activities it may be a burst event.
•186

Activity relations
☂Lag and lead times
☂Finish to finish
☂Finish to start
☂Start to finish
☂Start to start
•188

 Critical Path
 set of activities on a path that if delayed will delay
completion of project
 Critical Time
 time required to complete all activities on the critical
path
•189

Building the Network
•190
 Define activities from WBS work packages
 Estimate duration and resources for each activity
 Define precedence relationships between activities
 Network Representation Schemes
 AON Network [Activity-on-Node]
 AOA Network [ Activity-on- Arrow]

AOA Network [ Activity-on- Arrow]
•191
 Historically most popular
 Nodes represent start and finish events for each activity
 Arrows can only come from/go to single node
 Only one arrow between two given nodes
Start of
activity
End of
activity
Event Event
Activity

2.6. Common Errors in Drawing Networks
 Three types of errors are most commonly observed
 Dangling: To disconnect an activity before the
completion of all activities in a network diagram is
known as dangling.
•192

 Looping (or Cycling): Looping errors is also known as
cycling errors in a network diagram.
 Drawing an endless loop in a network is known as an
error of looping as shown in the following figure.
•193

 Redundancy: Unnecessarily inserting the dummy activity in a
network diagram is known as the error of redundancy as shown
in the following diagram.
•194

Dummy Activities
•195
 A dummy activity is used to illustrate precedence
relationships in AOA networks.
 It serves only as a “connector,” however, it is not a “real”
activity and represents neither work nor time.
A dummy
Activity
Activity Predecess
or
A -
B -
C -
D A,B
E B,C
A
B
C
D
E

Rules to draw network
1. In a network diagram each event is represented by a
node and activity which is connected by an arrow.
2. Number of events should be in increasing order.
3. The activities emerging from the start should have no
predessors activity and the last event has no successor
activity.
4. A network diagram cannot have more than one
starting node and ending node.
5. There should not be a loop in a diagram as shown
below
2 4
3
1

cont....
6. An event cannot occur or an activity cannot start
unless all its preceding events or activities are
compeleted.

EXAMPLES 1.
Find critical path and project completion time.
•199

Example on AoN Diagram
=
•200
Activity Predecessor Duration[days]
a -- 5
b -- 4
c a 3
d a 4
e a 6
f b, c 4
g d 5
h d, e 6
i f 6
j g, h 4

Previous Example [Completed AON Network]
•201

2.7. Networking Scheduling techniques
2.Critical path method(CPM)
3.Program evaluation and review technique(PERT)
•202

The most common network scheduling methods are Critical
Path Method (CPM) and Program Evaluation and Review
Technique (PERT).
Two approaches may be used for the assessment of
duration for activity completion.

The first approach is the deterministic approach, in which
we may assume that we know enough about each job or
operation, so that a single estimate of their duration is
sufficiently accurate to give reasonable results.
The second approach is the probabilistic approach, in
which one may only be able to state limits with-in which it
is virtually certain that the activity duration will lie.
Between these limits we must guess what the probability
of executing the activity is.

CPM PERT
1 Deterministic Probabilistic
2 It has just one estimate of time has 3 estimate of times
3 Estimates of activity duration are
based on historical data
estimates are uncertain and based on
rages and probability
4 For project with activities of repetitive
nature
non repetitive activity projects
5 It allows an explicit estimate of cost It is a tool for controlling time
•205

1. Critical path method(CPM)
three main purposes:
a)To calculate the projects finish date
b)To identify to what extent activities in the schedule can
slip(without delaying the project)
c)To identify activities with highest risk (that can not slip
with out delaying the project)
•206

Thus the basic scheduling computation can be put
under the following two categories.
A. Forward Pass Computations: Before starting computations,
the occurrence time of initial network event is fixed. Then, the
forward pass computation yields the earliest start and earliest
finish time for each activity (i, j), and indirectly the earliest
expected occurrence time for each event.
Forward pass – determines Early Start & Finish
Early start of a given node is maximum of early finishes of
preceding nodes ( largest EF of the immediate predecessors).
Initialization : E1=0 [project start]
 Ej=max(Ei+tij) for all i before node j

B.Backward Pass Computations
Backward pass: determines Latest Start & Finish
Late finish of a given activity is minimum of late starts of
successors
 Initialization : Ln(latest occurrence of all ending
nodes1)=project duration, T, as determined in forward pass
 Li=Min(Lj+tij) for all successor nodes j of node I being
investigated

•209
i j
 The latest event time, (L) indicates the time by which all
activities entering into that event must be computed without
delaying the computation of the project. These can be computed
by reversing the method of calculation used for earliest event
times.
 Forward pass – determines Early Start & Finish
Early start of a given node is maximum of early finishes of preceding nodes
 Initialization : E1=0 [project start]
 Ej=max(Ei+tij) for all i before node j
Ej
Ei

 Backward pass: determines Latest Start & Finish
•210
 Late finish of a given activity is minimum of late starts of
successors
 Initialization : Ln(latest occurrence of all ending
nodes1)=project duration, T, as determined in forward pass
 Li=Min(Lj+tij) for all successor nodes j of node I
being investigated
j
i
Li Lj

Example on CPM AOA
Activity Predecessor Duration
(month)
A --- 2
B A,D 1
C D 6
D ----- 5
E B,C 4
F C 2
•211

Forward pass calculation
earliest start and earliest finish
For activity A;
ES=0
EF= ES + D , D is activity duration =2
EF=0+2 =2
•213

•214

•215

Latest start and latest finish
•217

Slack or float is the amount of time an activity may be delayed without delaying
a succeeding activity.
 .
•220

Earliest and Latest Schedule
•221
Activi
ty
Durati
on
[days]
Earlies
t Start
Earlies
t
Finish
Lates
t
Start
Lates
t
Finish
Total
Float
A 2 0 2 8 10 8
B 1 5 6 10 11 5
C 6 5 11 5 11 0
D 5 0 5 0 5 0
E 4 11 15 11 15 0
F 2 11 13 13 15 2

Kinds of float
Total float: The amount of time by which the completion of an
activity could be delayed beyond the earliest expected completion
time without affecting the overall project duration time.
TF=latest Finish –Eariest Start –Activity Duration
TF=LF-ES-D
Or
•222
)
start
Earliest
start
Latest
(
)
( 

ij
f
T

Cont..
 Free float: The time by which the completion of an activity can
be delayed beyond the earliest finish time without affecting the
earliest start of a subsequent (succeeding) activity.
•223
ij
i
j
ij
f D
E
E
F 

 )
(
)
(

Cont..
 Independent float: The amount of time by which the start of
an activity can be delayed without affecting the earliest start
time of any immediately following activities, assuming that the
preceding activity has finished at its latest finish time.
•224
ij
i
j
ij
F D
L
E
I 

 )
(
)
(

The critical path is the longest path
It is drawn along the critical activities
Start-D-C-E-Finish
PROJECT DURATION IS;
0+5+6+4+0 = 15 Months
Events, “start” And “Finish” Have Zero
Duration.
•226

3. PERT(program Evaluation and Review
Technique)
PERT is a network analysis technique used to estimate
project duration
•229

•230
 PERT uses probabilistic time estimates to
calculate the expected time(te)
1. pessimistic (tp)
2. optimistic (to)
3. most likely (tl)

• requires activity definition
• includes activity sequencing
• estimates activity duration
• elaborates schedule of
activities
Project time management

0
t
p
t
l
t
Optimistic time limit of completion time if every thing goes all-right.
limit of completion time if every thing goes all-wrong
(in case climatic conditions, explosions, accidents,
etc., come into effect to retard the activity).
the duration that would occur most often if
the activity was repeated many times under
the same conditions.
Pessimistic time
Most likely time
A three time probabilistic model was developed, this includes:
•232

The three times were imposed on a normal
distribution to calculate the activity’s
expected time te as,
6
t
4t
t
t
p
l
o
e
)
( 


•235

Steps in PERT Analysis
•236
For each activity k
☂ Obtain tm,tp,to
☂ Compute expected activity duration
(mean) te
☂Compute expected project duration
D=Te using standard CPM algorithm

■ Activity time estimates usually cannot be made with
certainty.
■ PERT used for probabilistic activity times.
■ In PERT, three time estimates are used: most likely time
(tm), the optimistic time (to), and the pessimistic time
(tp).
■ These provide an estimate of the mean and variance of a
beta distribution:

•237

Steps …..
☂ In case of multiple critical paths use the one with
the largest variance
☂ Calculate probability of completing the project
☂ Assuming project duration normally
distributed
•238

Example -1 [PERT]
•239
Task
Predecess
or
Time Estimates
te
Variance
to tl tp
A - 2 4 8 4.33 1
B - 4 6 10 6.33 1
C A 6 6 6 6.00 0
D A 2 8 14 8.00 4
E A 6 8 12 8.33 1
F B,C 9 3 15 6.00 1
G D,F 8 16 20 15.33 4
H D,F 4 4 4 4.00 0
I E.H 4 8 10 7.66 1

Forward and Backward Pass
AOA
•240
1
4
3
2
6
5
A
4.33
B
6.33
C
10.33
D 4.33
E
8.33
H 16.33
F 6 G 15.33
I 7.66
 Critical Path=A-C-F-G
 Project Duration (Mean)= 31.66

PART THREE
PROJECT CRASHING
1. DEFINITION OF PROJECT CRASHING
2. PROJECT CRASHING TERMINOLOGIES
3. PROJECT RISK AND TYPES OF PROJECT RISK
4. RISK MANAGEMENT

3.1. Project crashing
Project crashing is reducing of the estimated
project duration
The crash time estimate is the shortest time that
could be achieved if all effort were made to reduce
the activity time. The use of more workers, better
equipment, overtime, etc, would better generate
higher direct cost for individual activities.

The following are sequence of steps required to
crash an activity:
Step 1. Identify the activities that need to be crashed
This can happen at any time from the initial project
planning phase to project completion.
Step 2. Identify the critical path. To crash
noncritical activities is a waste of financial resource
because it will simply increase the float on that
activity without affecting the end date of the
project.

Conti…
Step 3. Prioritize the activities to be crashed. When there are
many activities which can be crashed, it is necessary to know
which activity will be crashed first? This can be done by
selecting the activity
with the least cost per day to crash. that is the easiest to
crash.
Select cost with least slope. which can be crashed soonest
to bring the project back on course.
Step 4. Crash activities one day at a time, then re- analyze the
network to see if any other activities have gone critical.
Continue this iterative process until there are no activities
with negative float. These crashing steps may vary with the
different types of projects.

3.2. Project crashing terminologies
A.Normal Time: This is the normal office hour, for
example eight hour a day, and six days a week.
B. Normal Cost: The cost of activity working on
normal time.
C. Direct Cost: Costs attributed directly to the project
labor and materials. These costs usually group when the
activity is crashed due to overtime, shift allowance, etc.
D. Indirect Cost: This is overhead cost which can not
be directly attributed to the project for example, office
rent, and management salaries. These costs are usually
linear with time, therefore, if the time reduces, the
indirect costs also reduce.

Conti…
Crash Time: The duration the activity can be reduce to, by
crashing the activity.
Crash Cost: The new cost of the activity after crashing.

i) Crashing direct cost:
The duration has been reduced but the costs have increased.
These additional costs are caused by overtime, shift work
and a reduction in productivity

ii) Crashing indirect cost
The duration has been reduced but the time and the costs
have also reduced. The benefit has come from reduced office
rental, equipment rental etc. Unfortunately project costs are
usually split 80% direct, and 20% indirect cost, so the
advantage of crashing indirect costs is usually overcome by
the far greater direct costs.

3.3. Project risk
However small the percentage may be, there is always
uncertainty in any venture.
Identification and management of risks is fundamental to
any project.
Before undertaking a project, all participants want to
identify the risks involved, as well as the steps that may
be taken to manage them.
There is direct relation between the project risk and
expectation of return.
If the risk of the project is in line with the average risk of
the company, then the expected rate of return would be
the weighted average cost of capital of the firm.

3.4. Types of project risks
i) General (or country) Risks: General or country risks refer
to the ones that affect the overall sectors of the country.
Factors such as a country’s economic growth, its political
environment, the tax code, the legal system and the
prevailing currency exchange rate system and the are
classified under this category.
The general risks may be divided into three major
divisions. The importance of these risks can vary
substantially from country to country and from project to
project.

3.4.1. Types of general risk
A. Political risks: These are related to the internal and
external political situation and the stability of the host
country.
These risks include the government’s attitude towards
allowing private sector profits from projects, changes in the
host country’s fiscal regime, including taxation, the risk of
expropriation and nationalization of the projects by the host
country, cancellation of the concession, and similar factors.

Conti…
B. Country commercial risks: These are risks related to the
convertibility of revenue from the project into foreign
currencies, foreign exchange and interest fluctuation and
inflation.
C. Country legal risks: The risks to sponsors and owners is
that legislation that is relevant to the project (for instance,
environmental legislation or property legislation) may change
after a project has been implemented.

ii. Special Project Risks:
In addition to the general risks discussed above, sponsors and
owners/lenders face specific project risks that may be
generally within the control of the sponsors.
The specific project risks may be broadly divided into the
following three categories in accordance with phases of a
project cycle.
1. Development risks: These are risks associated with the
bidding competition that occurs in the initial stage of the
process. The development risks also include losses caused
by delays in planning and approval, which can be
particularly acute in the case of transnational projects, where
project sponsors have to deal with the authorities of two or
more governments.

Conti…
2. Construction/completion risks: The primary risks here
are the following:
 The actual cost of construction may be higher than
projected (cost overruns).
 Completion takes longer than projected Completion
takes longer than projected (completion delays). The
construction of the project may not be completed at all.

Conti…
3. Operating risks: operating risks result from insufficiency
in performance, revenue income, material supply etc. and
from higher than expected operating costs. They may be
divided into five main categories:
a. Associated-infrastructure risks: These risks are
associated with facilities outside the project, such as
approach roads and transmission lines, for which
construction responsibility lies with third parties rather than
the project sponsors themselves.
b. Technical risks: These include design defects and latent
defects in project equipment.
c. Demand risks: Most projects that rely on market-based
revenues face demand risks related to volume and/or prices,
thereby lowering the rate of return of the project.

Conti…
d. Supply risks: Because they are also market risks,
supply risks have two components, volume and
prices.
e. Management risks: The quality of management in
every project is always a critical success factor.

Risk management
When designing the risk allocation and management structure
of a project three overriding considerations have to be made.
First, it is the cost of the project in its entirety that should
decide any particular risk allocation.
A particular risk should be borne by the party most suited to
deal with it, in terms of control or influence and costs

Conti…
All substantial project risks have to be identified, allocated
and managed; and the project risks have to be managed by a
combination of financial resources and firm contractual
commitments.
Thirdly, the risk structure has to be sufficiently sound to
withstand the ups and downs of a project implementation.

PART FOUR
PROJECT MANAGEMENT KNOWLEDGE AREAS
Project Management Process Mapping: Mapped with 9
Knowledge Areas
1. Project Scope Management
2. Project Time Management
3. Project Cost Management
4. Project Risk Management
5. Project Quality Management
272

Knowledge areas cont…..
6. Project Human Resource management
7. Project stakeholder management
8. Project communication management
9. Project procurement management
273

PM KNOWLEDGE AREAS
1. Project Scope
Management
☂Ensuring that the project includes all
the work required, only the work
required.
☂Dividing the work into major pieces,
☂then subdividing into smaller and
☂more manageable pieces.
 Primarily concerned with defining
and controlling what is or is not
included in the project.
274

Triple constraints of a project
275

Project scope management processes
Scope Management involves five Processes
1. Collecting requirement/initiation
2. Defining the scope
3. Developing wok breakdown structure
4. Verifying scope
5. Controlling change scope
276

2. Project Time Management
It is Concerned with developing a
realistic schedule and controlling
changes to the schedule.
277

Activities include:
1. Identifying activities(from WBS)
2. Estimating times and resources
3. Sequencing activities
(scheduling)
278

3. Project Cost Management
It includes the processes required to ensure that a
project team completes a project within an approved
budget.
279

The three project cost management processes:
1) Cost estimating
2) Cost budgeting
3) Cost control
281

1. Cost Budgeting
• It involves allocating the overall project cost estimate to
individual work items.
• To prepare budgetary estimates and
• To establish a cost baseline for measuring project
performance.
• These work items are based on the WBS (a required input
to the cost budgeting process) for the project.
282

2.Estimating Project Budgets
• In order to develop a budget, we must:
♣Forecast what resources the project will require
♣Determine the required quantity of each
♣Decide when they will be needed
♣Understand how much they will cost - including the
effects of potential price inflation
283
Chapter 7-2

3.Cost Control
 it involves controlling changes to the project budget.
It includes:
☂ Monitoring cost performance;
☂ Ensuring that only appropriate project changes are included
in a revised cost baseline; and
☂ Informing project stakeholders of authorized changes to the
project that will affect costs.
284

Types of Costs in project
1. Direct and indirect costs
2. Variable and fixed costs
285

Conti…
Direct costs
Are billed directly to the
project
♣ Direct material
♣ Direct labor
♣ Use of equipment
♣ No. of employees
♣ Use of facilities
Indirect costs
Belong to core supporting
business
♠Luxuries benefit
♠Taxes
♠Security
286

Conti…
Variable costs
Vary with production
Wages cost
Material cost
Fixed costs
Rent
Depreciation
Set up cost
287

Cont…
Is the degree to which the
project fulfills requirement.
Includes the processes
required to ensure that the
project will satisfy the
needs for which it was
undertaken.

5. Project HR Management
Is the processes of making the most
effective use of the people involved
within the project.
Has Four Process:
1. Human Resource Planning
 Identifying, documenting and assigning
project roles, responsibilities, and reporting
relationships.
 “Who does what?” and “Who decides what?”

2. Acquiring The Project Team
 Getting the needed personnel assigned to and
working on the project.
3. Developing The Project Team
 Building individual and group skills to enhance
project performance.
4. Managing The Project Team
 Tracking team member performance, motivating
team members, providing timely feedback,
resolving issues and conflicts, and coordinating
changes to help enhance project performance.

6. Project Communication Management
It is the process of ensuring the appropriate
generation, collection, storage, and
disseminations of project information.

7. Project Procurement Management
• Acquiring goods and services to attain project
scope from outside the performing
organization.

8.Project Stakeholders Management
A stakeholder is anybody who can affect or is
affected by the project.
• All the projects have stakeholders. If they did
not, the project would not exist.

Stakeholders Management Processes
Project Stakeholder Management involves four
processes:
1. Identifying stakeholders
2. Planning stakeholder engagement
3. Managing stakeholder engagement
4. Controlling stakeholder engagement.

= is anything not in the project plan that may occur
and cause your project to be late, cost more or compromise
its quality/performance.
Likelihood of an unfavorable event affecting the
achievement of set objectives to occur.
The main issue is related to future events.
Tomorrow won’t be like yesterday or today
298
RISK
9. Project Risk Management

Risk cont.…..
It is a fact of life that chance events will
occur and affect the outcome of our
project
 Risks are: uncertain events in the future (They
May Or May Not Happen)
Negative
Positive
299

Risk Management definition
“it is the systematic process of:
A. identifying,
B.analyzing and
C.responding to project risk.
• It includes maximizing the probability and consequences
of positive events and minimizing the probability and
consequences of adverse events to project objectives”
300

Common Responses
Strategic Responses
1. AVOID – eliminate uncertainty
♠ Considering alternative technical solutions
♠ Do something to remove it.
♠ Use another supplier for example
301

2. TRANSFER – transfer liability/ownership
☂Transfer risks to suppliers;
☂Non-insurance transfer (external sub-contracting)
☂New type of contract);
☂Insurance (transfer the economic consequences)
302

Common Responses
 Tactical responses
3. MITIGATE – reduction to acceptable
 modifications to procedures and standard
processes;
 schedule risky activities away from the critical path
to minimize impacts;
 allocate critical or scarce resources to minimize
negative impacts;
 hold design review meetings on critical aspects of
the project;.
 Contingency Planning 303

4. ACCEPT – control and manage residual risks
introduce monitoring plans dedicated to risky
activities;
consider recovery plans
304

Choices of the Correct Course of action
305

Conclusion
• Risk management is not a complex task.
• If you follow the four steps, you can put together a risk
management plan for a project in a short space of time.
• Without a plan for risk, the success of the project, and
your reputation as a Project Manager, will be at stake.
• Follow these steps and you will increase your chances of
success.
306

Thank you for your
patience!!!

PART- 1 Engineering Project Management

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PART- 1 Engineering Project Management