Planning - MCST-CS

Transcript Planning - MCST-CS

Project Management: Process, Technology, and Practice

Ganesh Vaidyanathan

Chapter 5 Planning

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Learning objectives

     Manage the planning process of a project Understand the work breakdown structure of a project Understand different types of contracts in a project Understand procurement management Decide on make versus buy and rent versus lease

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Project Planning

 Planning helps project managers: • Clarify and focus a project's development and prospects. • Provide a benchmark against which actual performance can be measured and reviewed.

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Organizational Process Assets

 Organizational Process Assets • Any process-related assets that can be used towards a project’s success that include:  Existing policies, procedures, guidelines and templates;  Resources and knowledge of prior projects  Knowledge of technologies, outsourcing, information systems, management systems, and financial systems  Organizational controls  Prior project documents

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Documents during project planning

     Customer requirements: Requirements that satisfy the needs of the customers and the end users Specifications: Specify the requirement in a complete, precise, verifiable manner Functional requirements: Capture and specify the behavior of the product, system, or service that is being developed in a project Technical requirements: Detailed description of technology that is suitable for the actual design, development, and production processes of a project Project plans and planning documents: Formal, approved documents used to guide both project execution and project control

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Project plans and documents Knowledge Areas Integration Management Scope Management Project Management Plan

Project management plan Change management plan Configuration management plan Scope baseline (scope statement, WBS, and WBS dictionary) Scope management plan Requirements management plan

Performance reports Project organizational structure Statement of work Project charter Project closure reports Project change requests Project design documents Requirement document Requirements traceability matrix Stakeholder requirements Scope document 5-8

Project plans and documents Knowledge Areas Time Management Project Management Plan

Schedule baseline Schedule management plan

Cost Management

Cost management plan Cost performance baseline

Quality Management

Quality management plan Process improvement plan

Project Documents

Activity list and attributes Duration estimates Milestone list Project schedule Activity cost estimates Basis of estimates Project funding requirements Quality control measurements Quality control checklists Quality metrics

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Project plans and documents Knowledge Areas Project Management Plan Project Documents Human Resource Management Communications Management

Human resources plan Staffing Management Plan Communications management plan Responsibility assignment matrix or Responsibility, Accountability, Consultative, and Informative (RACI) matrix Resource breakdown structure Resource calendars Resource requirements Roles and responsibilities Team performance assessment Forecasts Stakeholder analysis Stakeholder management strategy Stakeholder register

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Project plans and documents Risk Management Procurement Management Risk management plan Risk register Risk Breakdown Structure

Procurement management plan Contracts Proposals Procurement documents Vendor lists Source selection criteria Teaming agreements

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WBS Work packages

• Small project activities possibly with very short durations with definable results. • In some complex projects, work packages may be at a lower level, • say Level 5 or Level 6. The smallest level in a project that can be monitored, managed, • and controlled by a project manager effectively. The time frame for a work package may be 40 hours or 4 weeks • depending upon the size and complexity of the project. A work package can be used in a project in a variety of ways including in cost estimation and scheduling.

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 

Creating WBS

A good scope document and requirements documentations with good input from all stakeholders; and Availability of organizational process assets including project policies, procedures, and historical information.

Consider:

• Cost and scheduling constraints • Project scope Lead time of equipment • Technology, Quality, and other performance criteria • Outsourced and contracted activities • Milestones and other objectives of the project • Reporting and other communication methods • Responsibilities and accountabilities of the project team

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      

Delivery-based WBS

List the committed deliverables Decompose the committed deliverables into groups of activities Decompose each of those groups of activities into activities Identify the supplementary deliverables Add the supplementary deliverables as activities to the WBS Evaluate all activities for optimum hierarchical planning Validate WBS

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Delivery-based WBS Level Level 1 Level 2 Level 3 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 WBS Element

1 1.1

1.1.1

1.1.1.1

1.1.1.2

1.1.1.3

1.1.1.4

1.1.1.5

1.1.1.6

1.1.1.7

1.1.1.8

1.1.1.9

1.1.1.10

1.1.1.11

Work Breakdown

   New Logistics with 3PL Selection of 3PL Request for Proposal (RFP)  RFP requirements and factors of selection  RFP to all transportation carriers  Contact all transportation carriers  Receive all transportation carriers response to RFP  Select RFP  Send 2nd RFP to down selects  Receive RFP response from down selects  Final Cut selection  Interviews  Selection of the transportation carrier  Transportation carrier Award

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

Creating WBS

Lifespan-based • Take into account the project process for a particular type of project.

• The major phases of either the traditional or iterative SDLC can be used as Level 2 with the title of the project as Level 1. • Follow the previously described delivery-based structure method.

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WBS Dictionary

• • • A useful resource for project management Describes the WBS element in detail Should be consulted before commencing any activity in order to ensure that proper standards, procedures, and quality control • measures are being followed Has to be changed whenever the WBS is changed.

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WBS Dictionary

Project title: 3PL logistics project WBS Element: 1.1.1.9 - Interviews Associated Activities: 1.1.1.8 - Final Cut selection and 1.1.1.10 - Selection of the transportation carrier Milestones: 1.1.1.11 - Transportation carrier Award Responsible person: Ms. Brenda Jackson Start Date: 3/12/12 End Date: 3/20/12

WBS Element Description:

At least three (3) 3PL partners will be selected as potential partners in WBS element 1.1.1.8. Out of      the three potential partners, one will be selected to be the 3PL business partner. The following categories will be used to assess the potential capabilities of the 3PL partners during the presentation and interviews:  Cost  Services including remote depots, security, scalability, availability, delivery metrics; reverse logistics, etc Technology Performance including on-time delivery, inventory carrying rate, delivery quality Quality including ISO certification, storing inventory, packaging, etc Logistics software and intelligence General information and references

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Task Responsibility Matrix Rob Mark Doug Molly Peter Jim Maria Identify target customers Identify challenges &

R R S

opportunities Perform competitive analysis Perform SWOT analysis Identify product features

S S R R S R

Identify advertising medium Create advertisement Post on company website Monitor advertisement

responses R: Responsible team member; S: Supporting team member

R S S R R S

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RACI Task Identify target customers Identify challenges & opportunities Perform competitive analysis Perform SWOT analysis Identify product features Identify advertising medium Create advertisement Post on company website Monitor advertisement responses Rob

A A A A A,R A

Mark Doug Molly Sam Rich

R R C A R A A R R R R R R R C C C C

Kim

I I I I I

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Contracts

      Fixed-price contracts Fixed-price incentive fee contracts Cost-plus fixed fee contracts Cost-plus percentage fee contracts Cost-plus incentive fee contracts Guaranteed maximum-shared savings contract

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Contract terminology

    Target cost: Level of cost that a contractor has negotiated with a client. The contract is based on this cost. Both profits and the ceiling price are calculated from this cost. Target Profit: The target profit is the negotiated profit in a contract assuming the target cost is met. Target Fee: This target fee is the negotiated fee in a contract assuming the target cost is met.

Target Price: This is target cost plus target profit and/or target fee found in a negotiated contract.

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Contract terminology

  Ceiling Price: This is the maximum price the client expects to pay a contractor regardless of cost overruns in a project. Once the ceiling price is reached, the contractor is responsible for all remaining costs. Sharing ratio: This is the negotiated ratio for sharing cost overruns. For example 80/20 sharing ratio is the share of the client (80%) to the contractor (20%).

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Fixed price incentive fee contracts

Point of Total Assumption (PTA): For example, if in a contract, target cost is $1,000,000; target profit is $100,000 for the contractor; then the target price is $1,100,000; If ceiling price is $1,150,000; and the sharing ratio is 50/50.

Point of total assumption = = $ 1,100,000 When costs are on target, the contractor earns $100,000. As costs rise, the client and the contractor splits the costs until the combination of cost and fee reaches $1,150,000. After that point, the point of total assumption, the contractor is responsible for all costs.

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Category Weight Sub weight Score (1 5)* as follows:

Scorecard

The weighted score is calculated For example for the category Expertise in Table 10-3: Weighted score for Technical Expertise = (5 out of a maximum of 5 points) = 1.0 * sub weight of 10 = 10 Weighted score for Process Expertise = (2 out of a maximum of 5 points) = 0.4 * sub weight of 5 = 2 Weighted score for Process Expertise = (3 out of a maximum of 5 points) = 0.6 * sub weight of 5 = 3 Expertise Technical expertise Process expertise R&D expertise Finance Debt Financial Ratios Management capability Project Management Process Management General Management Quality commitment Quality Awards Certifications Sigma TQM Cost structure Cost comparisons Cost control efforts Delivery Promised date reputation Lead-time requirements Responsiveness Recognition Community Support Well known Trusted

20 10 10 20 20 10 10

100

10 5 5 5 5 2 3 5 5 3 2 5 5 5 5 5 3 2 10 10 5 2 3 5 3 5 3 2 1 5 2 5 4 4 5 3 3 3 3 5 Weighted Score 1.2

1.8

75.6

5-28 8 8 5 1.8

1.2

10 2 3 5 3 5 1.8

0.8

1 5 2 5

1 2 3 4 5 6 7 8 9

Make or Buy

A No of parts per year Purchase costs Fixed costs Labor costs Overhead costs Raw materials cost Total Costs

Cost per unit

Make

150,000 $ 120,000.00 $ 250,000.00 $ 100,000.00 $ 950,000.00 $ 1,420,000.00

$ 9.47

Buy

$ 1,725,000.00 $ 1,725,000.00

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Buy or Lease

A Term of loan B Amount of loan Interest Rate per year Interest Factor C Annuity payment per year Assume depreciation on a straight-line basis Tax savings D E 4 $ 1,500,000 7.5% 1.33547 =(1+D3)^D1 $ 447,851.26

=D2*(D3*D4)/(D4-1) 10% F

Buy equipment

5 1 2 3 4 Year G 6 21 22 23 24 25 26 27 28 29 30 Year 1 2 1 2 Lease amount Tax Savings $ 447,851.26

$ 44,785.13

$ 447,851.26

$ 44,785.13

3 4 $ $ 447,851.26

447,851.26

$ $ 44,785.13

44,785.13

Present Value of salvage = $100,000 *0.749= $ 3 =(1) - (2) Lease cost Calculate PV with D3 Present Value after taxes $ $ 403,066.14

$ 403,066.14

403,066.14

$ 403,066.14

factor 0.93023

0.86533

0.80496

0.74880

Total present value of payments 74,880.05

Present Value of cost of loan = $1,350,000-$74,880 = $ 1,275,119.95

4 Advantage of buying = Present value to lease - Present value of cost of loan =

Lease equipment

=(3) * (4) Present Value $ $ $ $ $ 5 374,945.24

348,786.27

324,452.35

301,816.14

1,350,000.00

$ 74,880.00

(1,350,000-1,275,120) H 7 7 I 8 9 J K 10 3 4 =D6 Yearly 1 2 payment $ 447,851.26

$ 447,851.26

$ $ 447,851.26

447,851.26

=Remaining Balance * D3 Interest at 7.5% $ 112,500.00

$ $ $ 87,348.66

60,310.96

31,245.44

=(1) - (2) Payment on Principal $ 335,351.26

$ 360,502.61

$ 387,540.30

$ 416,605.83

=Remaining Balance - (3) Remaining Balance $ 1,164,648.74

$ 804,146.13

$ 416,605.83

$ =D2/4 Depreciation $ 375,000 $ 375,000 $ 375,000 $ 375,000 =(2) + (5) Tax deductible expense $ 487,500.00

$ 462,348.66

$ 435,310.96

$ 406,245.44

=D7 * (6) Tax savings $ 48,750.00

$ 46,234.87

$ 43,531.10

$ 40,624.54

=(1) - (7) Calculate PV with D3 =(8) * (9) Cost of owning $ 399,101.26

Present Value factor 0.930

0.865

Present Value $ 371,256.99

$ 347,531.77

$ 401,616.40

$ 404,320.17

$ 407,226.72

0.805

0.749

Total present value of payments $ $ $ 325,461.79

304,931.58

1,349,182.13

8 9 10

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    

Summary

Project planning helps project managers to clarify and focus on the development of a project and provides a benchmark against which actual performance can be measured and reviewed. Planning helps project teams channel their efforts toward achieving project objectives. Planning is to develop measures that will be used to determine how expectations are to be met. Planning is to establish policies, procedures, guidelines, and the necessary processes to adhere to them. Project planning must be flexible to handle unanticipated activities with the scope of a project.

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Summary

  A planning process involves the scope document that is used to create project tasks and milestones known as the Work Breakdown Structure (WBS). To create a WBS, a number of project factors have to be considered including the scope document and project assets.

The WBS is a documented project plan that is developed from a project scope. This project plan defines all work activities and identifies each activity with the team member who is responsible for performing the activity.

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Summary

  The WBS is a hierarchical process map of a project with multiple levels. Level 1 is the highest level of the project, which usually is the name of the project. Level 2 is the next level, which consists of main groupings of the project. Level 3 shows supporting sub-deliverables while Level 4 describes the work packages that define the various lowest level activities of the project. When a project is too small in size and scope, project managers use responsibility matrices instead of a WBS. A contract is a formal agreement between two parties, a contractor and a client, wherein the contractor promises to perform a service and the client is obligated to pay for the service.

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Summary

    Contracts come in six types: fixed-price, fixed-price incentive fee, cost-plus fixed fee, cost-plus percentage fee, cost-plus incentive fee, and guaranteed maximum-shared savings.

Contracts are used to procure either services from a contractor or products and services from a supplier. Procurement is to acquire goods and services from a vendor. A procurement management plan that includes a make-lease or-buy decision, procurement documentation, selection criteria, and change requests is the output of procurement planning.

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Summary

 The procurement cycle consists of five stages: identification, evaluation, selection, transaction, and improvement. A request for quote (RFQ), request for proposal (RFP), or request for information (RFI) from the contractor or supplier is often sought by a client.

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Class Discussions

      Clients and Contractors should always go for a GMS contract.

WBS need not be elaborate and accurate.

Detailed planning is a waste of time.

One should always resort to outsourcing.

IT management should decide on outsourcing.

Outsourcing brings new technology in client companies.

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