Paper No. 503

Paper No.
CC – 503 – Project Management

For Academic Year 2019 – 20
Unit -1
Introduction
Project is defined as temporary but interrelated tasks undertaken to give a unique product or service or result.
Projects are different from other ongoing operations in an organization, because unlike operations, projects have
a definite beginning and an end - they have a limited duration. Projects are critical to the realization of
performing organization’s business strategy because projects are a means by which the strategy of the company
is implemented.
A project is a temporary endeavor, having a defined beginning and end (usually constrained by date, but can be
by funding or deliverables), undertaken to meet unique goals and objectives, usually to bring about beneficial
change or added value. The temporary nature of projects stands in contrast to business as usual (or operations),
which are repetitive, permanent or semi-permanent functional work to produce products or services.
1.1 Concept of Project

A project is an investment made on a package of interrelated time bound activities; consequently, a project
becomes a time-bound task. Every project has two phases basically; the first is preparation and construction,
and the second, its operation.
Any project that we may consider has an objective, or a set of objectives, to achieve. It has to be operated within
a given set of rules, regulations, constraints and restrictions. Implementation of projects needs resources or
inputs. Every project converts the given inputs into outputs through a process of implementation. The outputs in
the short run lead to outcomes, which, in the long run, should result in impact.
Definition of Project
A project can be defined as a complex of non-routine activities that must be completed with a set amount of
resources and within a set time limit. The following figure explains the basic tenets of project management.
Typical examples of projects include: construction of a house, performing a marriage, overhauling a machine,
maintenance of equipment, commissioning of a factory, conducting national elections, research and developing
a new technology, launching a new weapon system, conducting war, pre-crisis planning for preventing a riot,
recruitment of a project manager, etc. Each of the above cases involves investment of resources ona package of
inter-related, time-bound activities, thereby constituting aproject.
Projects also involve one or more elements that have not been doing the past, and are therefore unique. A
product or service may be unique even if the category to which it belongs is large. For example, although
several residential complexes have been built in the past, creation of anew house will be a project because each
facility can have elements such as a unique - location, customized or adapted design, regionally available
resources, and/or discrete owners.
1.2 Characteristics of a Project
1|Page By Binal Gadhive

Paper No. CC – 503 – Project Management
1.Projects are temporary in nature. Every project has a beginning and end. The word ‘temporary’ here may
refer to an hour, a day or a year. Operational work is an ongoing effort which is executed to sustain the
business. But projects are not ongoing efforts. A project is considered to end when the project’s objectives have
been achieved or the project is completed or discontinued.
Only projects are temporary in characteristic and not the project’s outcomes. It will not generally be applied to
the product, service or result created by the project. Projects also may often have intended and unintended
social, economic and environmental impacts that long last. Eg. Building Eiffel Tower was a project. The
structure was built between 1887 and 1889. Project Eiffel Tower ended on 1889.But still the outcome of the
project exists as a monument.
It requires the doing of something different, something that was not done previously. Even in what are often
called “routine” projects such as home construction, the variables such as terrain, access, zoning laws, labour
market, public services and local utilities make each project different. A project is a one-time, once-off activity,
never to be repeated exactly the same way again.
2.Project has definite Beginning and Completion: Project is said to be completed when the project’s
objectives have been achieved. When it is clear that the project objectives will not or cannot be met the need for
the project no longer exists and the project is terminated. Thus, projects are not ongoing efforts. Thus, every
project has definite beginning and end.
3. Project has definite Objective/Scope and Unique: All the projects have their own defined
scopes/objectives for which they are carried out. Every Project is undertaken to create a unique product, service,
or result. Eg. Hundreds of house buildings may have been built by a builder, but each individual building is
unique in itself like they have different owner, different design, different structure, different location, different
sub-contractors, and so on. Thus, each house building is to be considered as a Project and each Project produces
unique outcome.
4. Project has defined Time and Resources: As the projects have definite beginning and end, they are to be
carried out within the time and resources constraints. Each project will have defined time and resources for its
execution.
5. Project requires multiple Talents: As projects involve many interrelated tasks done by many specialists,
the involvement of people from several departments is very much essential. Thus, the use of multiple talents
from various departments (sometimes from different organizations and across multiple geographies) becomes
the key for successful project management. For example, take the construction of house building; the expertise
of very many professionals and skills of various people from various fields like architect, engineers, carpenters,
painters, plumber, electrician, interior decorator, etc, are being coordinated to complete the house project.
6. Projects cut across organizational lines. Projects always cut across the regular organizational lines and
structures within a firm. They do this because the project needs to draw from the skills and the talents of
multiple professions and departments within the firm and sometimes even from other organizations. The
complexity of advanced technology often leads to additional project difficulties, as they create task
interdependencies that may introduce new and unique problems.

7. Projects involve unfamiliarity. Because a project differs from what was previously done, it also involves
unfamiliarity. And oft time a project also encompasses new technology and, for the organization/firm
undertaking the project, these bring into play significant elements of uncertainty and risk.
8. The organization usually has something at stake when undertaking a project. The unique project
“activity” may call for special scrutiny or effort because failure would jeopardize the organization/firm or its
goals.
9. A project is the process of working to achieve a goal. During the process, projects pass through several
distinct phases, which form and are called the project life cycle. The tasks, people, organizations, and other
resources will change as the project moves from one phase to the next. The organizational structure and the
resource expenditures build with each succeeding phase; peak; and then decline as the project nears completion.
1.3 Project Life Cycle

The project life cycle serves to define the beginning and the end of a project. For example, when an
organization identifies an opportunity to which it would like to respond, it will often authorize a needs
assessment and/or a feasibility study to decide if it should undertake the project. The project life-cycle
definition will determine whether the feasibility study is treated as the first project phase or as a separate,
standalone project.
The project life-cycle definition will also determine which transitional actions at the beginning and the end of
the project are included and which are not. In this manner, the project life-cycle definition can be used to link
the project to the ongoing operations of the performing organization.
The phase sequence defined by most project life cycles generally involves some form of technology transfer or
handoff such as requirements to design, construction to operations, or design to manufacturing. Deliverables
from the preceding phase are usually approved before work starts on the next phase. However, a subsequent
phase is sometimes begun prior to approval of the previous phase deliverables when the risks involved are
deemed acceptable. This practice of overlapping phases is often called fast tracking.
Project life cycles generally define:
➢What technical work should be done in each phase (e.g., is the work of the analyst part of the definition phase
or part of the execution phase)
➢Who should be involved in each phase (e.g., resources that need to be involved with requirements and design)
Project life-cycle descriptions may be very general or very detailed. Highly detailed descriptions may have
numerous forms, charts, and checklists to provide structure and consistency. Such detailed approaches are often
called project management methodologies.
Most project life-cycle descriptions share a number of common characteristics:
➢Cost and staffing levels are low at the start, higher toward the end, and drop rapidly as the project draws to a
conclusion.

➢The probability of successfully completing the project is lowest,and hence risk and uncertainty are highest, at
the start of the project. The probability of successful completion generally gets progressively higher as the
project continues.
➢The ability of the stakeholders to influence the final characteristics of the project’s product and the final cost
of the project is highest at the start and gets progressively lower as the project continues. A major contributor to
this phenomenon is that the cost of changes and error correction generally increases as the project continues.
➢Project life cycle defines phases that connect beginning and end of the project. After each phase deliverables
are reviewed for the completeness in time, accuracy according to defined objectives and their final approval
(approval for acceptance) before moving to the next phase.
➢In the beginning, phases can be overlapped to save time and to have fast tracking on the life cycle. This
technique is used to compress the whole schedule (if required resources are available or manageable).
➢There is no way to define Project Life Cycle ideally. Because of this every project management team can
define its own way to work on the project. They can use best common practices and can learn new ways of
dealing projects by their experiences in detail or in general. Only three phases are always certain to be
performed; conceptualization, intermediate phase(s), and closure.
➢Cost and staffing level is defined for every single phase.
➢Project may have sub-project(s) and sub-projects may have their own project life cycle.
➢The typical project life cycle – initiating, implementing and closing has critical decision points where the
project may continue, be changed, or be abandoned. Care should be taken to distinguish the project life cycle
from the product life cycle. For example, a project undertaken to bring new banking software to market is but
one phase or stage of the product life cycle.
Stages of Project Life Cycle

The stages of project life cycle are detailed below:
a) Project Initiation
The first of a project is the initiation phase. During this phase a business problem or opportunity is identified
and a business case providing various solution options is defined. Next, a feasibility study is conducted to
investigate whether each option addresses the business problem and a final recommended solution is then put
forward. Once the recommended solution is approved, a project is initiated to deliver the approved solution.
Terms of reference are completed outlining the objectives, scope and structure of the new project, and a project
manager is appointed.
The project manager begins recruiting a project team and establishes a project office environment. Approval is
then sought to move into the detailed planning phase.”Within the initiation phase, the business problem or
opportunity is identified, a solution is defined, a project is formed and a project team is appointed to build and
deliver the solution to the customer.
Develop a business case undertake a Feasibility Study. Establish the terms of reference, appoint the project
team, set up a project Office.
Develop a business case: The trigger to initiating a project is identifying a business problem or opportunity to be
addressed. A business case is created to define the problem or opportunity in detail and identify a preferred
solution for implementation. The business case includes:

➢A detailed description of the problem or opportunity;
➢The Project Management Life Cycle
➢A list of the alternative solutions available;
➢An analysis of the business benefits, costs, risks and issues;
➢A description of the preferred solution;
➢A summarized plan for implementation.
“An identified project sponsor then approves the business case and the required funding is allocated to proceed
with a feasibility study. Undertake a feasibility study: At any stage during or after the creation of a business
case, a formal feasibility study may be commissioned. The purpose of a feasibility study is to assess the
likelihood of each alternative solution option achieving the benefits outlined in the business case.
The feasibility study will also investigate whether the forecast costs are reasonable, the solution is achievable,
the risks are acceptable and the identified issues are avoidable.
Establish the terms of reference: After the business case and feasibility study have been approved, a new project
is formed. At this point, terms of reference are created. The terms of reference define the vision, objectives,
scope and deliverables for the new project. They also describe the organization structure and activities,
resources and funding required for undertaking the project.
➢Documentation, such as a project methodology, standards, processes, forms and registers;
➢Tools, such as accounting, project planning and risk modeling software.
“Perform a phase review: At the end of the initiation phase, Performa phase review. This is basically a
checkpoint to ensure that the project has achieved its objectives as planned.”
b) Project Planning
Once the scope of the project has been defined in the terms of reference, the project enters the planning phase.
This involves creating a:
➢Project plan outlining the activities, tasks, dependencies and timeframes;
➢Resource plan listing the labor, equipment and materials required;
➢Financial plan identifying the labor, equipment and materials costs;
➢Quality plan providing quality targets, assurance and control measures;
➢Risk plan highlighting potential risks and actions to be taken tomitigate those risks;
➢Acceptance plan listing the criteria to be met to gain customer acceptance;

➢Communications plan describing the information needed to inform stakeholders;
➢Procurement plan identifying products to be sourced from external suppliers.
At this point the project will be planned in some detail and is ready to be executed. By now, the project costs
and benefits have been documented, the objectives and scope have been defined, the project team has been
appointed and a formal project office environment established.
It is now time to undertake detailed planning to ensure that the activities performed during the execution phase
of the project are properly sequenced, resourced, executed and controlled. The activities shown in the following
figure are undertaken.
 Create a project plan

 Create a Financial Plan
 Create a Quality Plan
 Create a Risk Plan
 Contact the suppliers
 Create an Acceptance Plan
 Create a Communication plan
 Create procurement plan
Project Planning Activities
 Create a project plan: The first step in the project planning phase is to document the project plan. A
‘work breakdown structure’ (WBS) is identified which includes a hierarchical set of phases, activities
and tasks to be undertaken to complete the project. After the WBS has been agreed,an assessment of the
level of effort required to undertake each activity and task is made. The activities and tasks are then
sequenced, resources are allocated and a detailed project schedule is formed. This project plan is the key
tool used by the project manager to assess the progress of the project throughout the project life cycle.
 Create a resource plan: Immediately after the project plan is formed, the level of resource required to
undertake each of the activities and tasks listed within the project plan will need to be allocated.
Although generic resource may have already been allocated in the project plan, a detailed resource plan
is required to identify the:
➢Type of resource required, such as labor, equipment and materials;
➢Quantity of each type of resource required;
➢Roles, responsibilities and skill sets of all human resource required;
➢Specifications of all equipment resource required;
➢Items and quantities of material resource required.

A schedule is assembled for each type of resource so that the project manager can review the resource allocation
at each stage in the project.
 Create a financial plan: A financial plan is created to identify the total quantity of money required to
undertake each phase in the project (in other words, the budget). The total cost of labor, equipment and
materials is calculated and an expense schedule is defined which enables the project manager to measure
the forecast spend versus the actual spend throughout the project. Detailed financial planning is an
extremely important activity within the project, as the customer will expect the final solution to have
been delivered within the allocated budget.
 Create a quality plan: Meeting the quality expectations of the customer can be a challenging task. To
ensure that the quality expectations are clearly defined and can reasonably be achieved, a quality plan is
documented. The quality plan:
➢Defines the term ‘quality’ for the project.
➢Lists clear and unambiguous quality targets for each deliverable. Each quality target provides a set of criteria
and standards to be achieved to meet the expectations of the customer.
➢Provides a plan of activities to assure the customer that the quality targets will be met (in other words, a
quality assurance plan).
➢Identifies the techniques used to control the actual quality level of each deliverable as it is built (in other
words, a quality control plan).
Not only is it important to review the quality of the deliverablesproduced by the project, it is also important to
review the quality of themanagement processes that produced them. A quality plan will summarize each of the
management processes undertaken during the project, including time, cost, quality, change, risk, issue,
procurement, acceptance and communications management.
 Create a risk plan: The next step is to document all foreseeableproject risks within a risk plan. This
plan also identifies the actions required to prevent each risk from occurring, as well as reduce the impact
of the risk should it eventuate. Developing a clear risk plan is an important activity within the planning
phase, as it is necessary to mitigate all critical project risks prior to entering the execution phase of the
project.
 Create an acceptance plan: To deliver the project successfully, you will need to gain full acceptance
from the customer that the deliverables produced by the project meet or exceed requirements. An
acceptance plan is created to help achieve this, by clarifying the completion criteria for each deliverable
and providing a schedule of acceptance reviews. These reviews provide the customer with the
opportunity to assess each deliverable andprovide formal acceptance that it meets the requirements as
originallystated.
 Create a communications plan: Prior to the execution phase, it is also necessary to identify how each
of the stakeholders will be kept informed of the progress of the project. The communications plan
identifies the types of information to be distributed to stakeholders, the methods of distributing the
information, the frequency of distribution, and responsibilities of each person in the project team for
distributing the information.
 Create a procurement plan: The last planning activity within the planning phase is to identify the
elements of the project to be acquired from external suppliers. The procurement plan provides a detailed
description of the products (that is, goods and services) to be acquired from suppliers, the justification
for acquiring each product externally as opposed to from within the business, and the schedule for
product delivery.
It also describes the process for the selection of a preferred supplier (the tender process), and the ordering and
delivery of the products (the procurement process).
 Contract the suppliers: Although external suppliers may be appointedat any stage of the project, it is
usual to appoint suppliers after the project plans have been documented but prior to the execution phase
of the project. Only at this point will the project manager have a clear idea of the role of suppliers and
the expectations for their delivery. A formal tenderprocess is undertaken to identify a short list of
capable suppliers and select a preferred supplier to initiate contractual discussions with. The tender
process involves creating a statement of work, a request for information and request for proposal
document to obtain sufficient information from each potential supplier and select the preferred supplier.
Once a preferred supplier has been chosen, a contract is agreed between the project team and the
supplier for the delivery of the requisite products.
Perform a phase review: At the end of the planning phase, a phase review is performed. This is a checkpoint to
ensure that the project has achieved its objectives as planned.
c) Project Execution
This phase involves implementing the plans created during the project planning phase. While each plan is being
executed, a series of management processes are undertaken to monitor and control the deliverables being output
by the project. This includes identifying change, risks and issues, reviewing deliverable quality and measuring
each deliverable produced against the acceptance criteria. Once all of the deliverables have been produced and
the customer has accepted the final solution, the project is ready for closure. The activities of this phase are
shown in the following figure.
Build Deliverables, Perform stage gate, Monitor & Control, Perform time mgt .,Perform procurement mgt.,
Perform issue mgt., Perform risk mgt., Perform change mgt., Perform quality mgt., Perform cost mgt., Perform
acceptance mgt., Perform communications management.
Project Execution activities:
The execution phase is typically the longest phase of the project in terms of duration. It is the phase within
which the deliverables are physically constructed and presented to the customer for acceptance.
To ensure that the customer’s requirements are met, the project manager monitors and controls the activities,
resources and expenditure required to build each deliverable. A number of management processes as shown are
undertaken to ensure that the project proceeds as planned.
1. Build the deliverables: This phase involves physically constructing each deliverable for acceptance by
the customer. The activities undertaken to construct each deliverable will vary depending on the type of
project being undertaken. The deliverable meets the requirements of the customer. Regardless of the
method used to construct each deliverable, careful monitoring and control processes should be employed
to ensure that the quality of the final deliverable meets the acceptance criteria set by the customer.
2. Monitor and control: While the project team is physically producing each deliverable, the project
manager implements a series of management processes to monitor and control the activities being
undertaken byte project team. An overview of each management process follows.
3. Time Management: Time management is the process of recording and controlling time spent by staff
on the project. As time is a scarce resource within projects, each team member should record time spent
undertaking project activities on a timesheet form. This will enable the project manager to control the
amount of time spent undertaking each activity within the project. A timesheet register is also
completed, providing a summary of the time spent on the project in total so that the project plan can
always be kept fully up to date.
4. Cost management: Cost management is the process by which costs/expenses incurred on the project are
formally identified, approved and paid. Expense forms are completed for each set of related project
expenses such as labor, equipment and materials costs. Expense forms area approved by the project
manager and recorded within an expense register for auditing purposes.
5. Quality management: Quality is defined as the extent to which the final deliverable conforms to the
customer requirements. Quality management is the process by which quality is assured and controlled
for the project, using quality assurance and quality control techniques. Quality reviews are undertaken
frequently and the results recorded on a quality review form.
6. Change management: Change management is the process by which changes to the project scope,
deliverables, timescales or resources are formally requested, evaluated and approved prior to
implementation. A core aspect of the project manager’s role is to manage change within the project. This
is achieved by understanding the business and system drivers requiring the change, identifying the costs
and benefits of adopting the change, and formulating a structured plan for implementing the change. To
formally request a change to the project, a change form is completed. The status of all active change
forms should he recorded within a change register.
7. Risk management: Risk management is the process by which risks to the project are formally
identified, quantified and managed. A project risk may be identified at any stage of the project by
completing a risk form and recording the relevant risk details within the risk register.
8. Issue management: Issue management is the method by which issues currently affecting the ability of
the project to produce the required deliverable are formally managed. After an issue form has been
completed and the details logged in the issue register, each issue is evaluated by the project manager and
a set of actions undertaken to resolve the issue identified.
9. Procurement management: Procurement management is the process of sourcing products from an
external supplier. Purchase orders are used to purchase products from suppliers, and a procurement
registries maintained to track each purchase request through to its completion.
10. Acceptance management: Acceptance management is the processor gaining customer acceptance for
deliverables produced by the project. Acceptance forms are used to enable project staff to request
10 | P a g e By Binal Gadhive
acceptance for a deliverable, once complete. Each acceptance form identifies the acceptance criteria,
review methods and results of the acceptance reviews undertaken.
11. Communications management: Communications management is the process by which formal
communications messages are identified, created, reviewed and communicated within a project. The
most common method of communicating the status of the project is via a project status report. Each
communications message released is captured in a communications register.
d) Project Closure
Project closure involves releasing the final deliverables to the customer, handing over project documentation to
the business, terminating supplier contracts, releasing project resources and communicating the closure of the
project to all stakeholders. The last remaining step is to undertake a post implementation review to quantify the
level of project success and identify any lessons learnt for future projects. Following the acceptance of all
project deliverables by the customer, the project will have met its objectives and be ready for closure. Project
closure is the last phase in the project life cycle, and must be conducted formally so that the business benefits
delivered by the project are fully realized by the customer.
The project closure activities:
Perform project closure: Project closure, or ‘close out’, essentially involves winding up the project. This
includes:
➢Determining whether all of the project completion criteria have been met;
➢Identifying any outstanding project activities, risks or issues;
➢Handing over all project deliverables and documentation to the customer;
➢Canceling supplier contracts and releasing project resources to the business;
➢Communicating the closure of the project to all stakeholders and interested parties.
A project closure report is documented and submitted to the customer and/or project sponsor for approval. The
project manager is responsible for undertaking each of the activities identified in the project closure report, and
the project is closed only when all the activities list the project closure report have been completed.
Review project completion: The final activity within a project is the review of its success by an independent
party. Success is determined by how well it performed against the defined objectives and conformed to the
management processes outlined in the planning phase. To determine how well it performed, the following types
of questions are answered:
➢Did it result in the benefits defined in the business case?
➢Did it achieve the objectives outlined in the terms of reference?
➢Did it operates within the scope of the terms of reference?
➢Did the deliverables meet the criteria defined in the quality plan?
➢Was it delivered within the schedule outlined in the project plan?
➢Was it delivered within the budget outlined in the financial plan?
To determine how well the project conformed, an assessment is made of the level of conformity to the
management processes outlined in the quality plan. These results, as well as a list of the key achievements and
lessons learnt, are documented within a post-implementation review and presented to the customer and/or
project sponsor for approval.
Unit-2 - Time Scheduling:
Time Scheduling:
Time scheduling is a collection of techniques used to develop and present schedules that show when work will
be performed. The choice of tools and techniques used to develop a time schedule depends upon the level of
detail available about the work that needs to be done.
Where the work is well defined, modeling techniques can be used to show the sequence of working and logical
dependencies between each package of work. The resulting model can be used to predict start and finish times,
and identify where there is flexibility in the schedule.
If requirements are clear but the means to achieve them is less so, or where the requirements are subject to
significant change as the work proceeds, then modeling techniques are less appropriate.
Most commonly used tool for project scheduling are:
 Bar chart (Gantt chart)

 LOB – Line of Balance
 CPM
 PERT
2.1 Gantt Chart
Introduction:
A Gantt chart is a type of bar chart that illustrates a project schedule. This chart lists the tasks to be performed
on the vertical axis, and time intervals on the horizontal axis. The width of the horizontal bars in the graph show
the duration of each activity. Gantt charts illustrate the start and finish dates of the terminal elements and
summary elements of a project. Terminal elements and summary elements constitute the work breakdown
structure of the project. Modern Gantt charts also show the dependency relationships between activities.
A Gantt chart is constructed with a horizontal axis representing the total time span of the project, broken down
into increments (for example, days, weeks, or months) and a vertical axis representing the tasks that make up
the project (for example, if the project is outfitting your computer with new software, the major tasks involved
might be: conduct research, choose software, install software). Horizontal bars of varying lengths represent the
sequences, timing, and time span for each task. Using the same example, you would put "conduct research" at
the top of the vertical axis and draw a bar on the graph that represents the amount of time you expect to spend
on the research, and then enter the other tasks below the first one and representative bars at the points in time
when you expect to undertake them.
Definition
A Gantt chart is a type of bar chart that illustrates a project schedule. This chart lists the tasks to be performed
on the vertical axis, and time intervals on the horizontal axis The width of the horizontal bars in the graph
shows the duration of each activity. Gantt charts illustrate the start and finish dates of the terminal elements and
summary elements of a project. Terminal elements and summary elements constitute the work breakdown
structure of the project. Modern Gantt charts also show the dependency (i.e., precedence network) relationships
between activities. Gantt charts can be used to show current schedule status using percent-complete shadings
and a vertical "TODAY" line as shown here.
Gantt charts are sometimes equated with bar charts.

Gantt charts are usually created initially using an early start time approach, where each task is scheduled to start
immediately when its prerequisites are complete. This method maximizes the float time available for all tasks.
The bar spans may overlap, as, for example, you may conduct research and choose software during the same
time span. As the project progresses, secondary bars, arrowheads, or darkened bars may be added to indicate
completed tasks, or the portions of tasks that have been completed. A vertical line is used to represent the report
date.
Gantt charts give a clear illustration of project status, but one problem with them is that they don't indicate task
dependencies - you cannot tell how one task falling behind schedule affects other tasks. The PERT chart,
another popular project management charting method, is designed to do this.
Automated Gantt charts store more information about tasks, such as the individuals assigned to specific tasks,
and notes about the procedures. They also offer the benefit of being easy to change, which is helpful. Charts
may be adjusted frequently to reflect the actual status of project tasks as, almost inevitably; they diverge from
the original plan.
Gantt charts are usually created initially using an early start time approach, where each task is scheduled to start
immediately when its prerequisites are complete. This method maximizes the float time available for all tasks.
On a Gantt chart you can easily see:
 The start date of the project,
 What the project tasks are,

 Who is working on each task,
 When tasks start and finish,
 How long each task will take
 How tasks group together, overlap and link with each other
 The finished date of the project.
A Gantt Chart is just what you need to make those big, overwhelming projects seem a little more manageable.
Imagine that you have a large project on your plate—something that’s going to take you months to complete.
For example, perhaps you and your team are spearheading the launch of an entirely new product for your company.
The end goal is straightforward: bring that new product to market. However, there are many tasks and milestones that
fall under that objective. You need to do initial research, create a prototype, gather customer feedback, prepare a
finalized version, craft a marketing strategy… the list goes on and on.
With so many different steps and mini-projects of sorts involved, you want an easy way to visually map out the entire
project to see when certain tasks are being worked on.
We have good news: This is the perfect use case for a Gantt Chart.
What Exactly is a Gantt Chart?
A Gantt Chart is a chart that displays activities, as well as the estimated time frame during which they’ll be completed.
Think of it as a visual schedule of sorts.
When creating a very straightforward Gantt Chart, you designate your measurement of time (this could be quarters,
days, weeks, months… really, whatever suits your project best) at the top of the chart. Along the left side of the chart,
you list your activities.
Then, you place bars to indicate the length of time each activity will span. These bars will vary in length to represent
different amounts of time.
Let’s look at an example for some clarity. Here’s a look at a very simple Gantt Chart
Gantt Charts can be used to oversee highly-complex projects with many different steps and stakeholders. In those
cases, the Gantt Charts become far more advanced, and end up looking more like this:
That might seem intimidating. But, rest assured, the more you work with Gantt Charts, the more comfortable you’ll
become. Start out with the basics, and you’ll be whipping together those far more complex charts in no time.
What are Gantt Charts Used For?
As mentioned previously, Gantt Charts are helpful for planning projects that involve a lot of different steps or tasks.
That can span a huge variety of projects—from a personal project like a home renovation to a work-related
undertaking like a marketing campaign.
Gantt Charts help you to plan out the order of necessary tasks, understand approximately how long a project will take,
figure out what resources you’ll need to handle those tasks, and spot any project dependencies you should be aware of
(for example, you can’t create the landing page for your new ebook until the copy is complete).
Having this bird’s-eye view of your anticipated project schedule will ensure that your project runs effectively and
efficiently—without a ton of bottlenecks or back and forth.
How to Create Your Own Gantt Chart:

7 Steps to Follow
1. Determine What Your Sub-Tasks Are
Before you can even so much as open an Excel sheet, you first need to understand what tasks you’re planning to plot
on your Gantt Chart.
For example, let’s return to our prior scenario of launching a new product for your company. What individual tasks
and milestones are involved in making that happen?
Have conversations with your team to come up with a list of the various steps you’ll take to launch that product. After
doing so, you might have a list that looks like:
 Market Research: To determine customer need and the demand for a product
 Planning: Figure out your strategy and what the product should look like
 Prototyping: Build a “first draft” of the product
 Customer Feedback: Share your product and ask customers for feedback and improvements
 Revisions: Make changes to the product based on customer feedback
 Final Product: Finalize the product
 Marketing: Create your marketing and launch strategy
There you go—you’ve identified seven different tasks that are involved in the launch of that new product. Now,
you’re ready to open a new Excel worksheet and get to work on your Gantt Chart!
2. Create an Excel Table for Your Project Schedule
Charts in Excel are fed by a data table, which means that you first need to plot out your schedule in a simple table—
rather than jumping right in with creating a chart.
Within your table, you will need four different columns to list the following: the task, the start date, the end date, and
the duration between your start date and end date.
NOTE: If you want a quick way to figure out the duration between your start date and end date, timeanddate.com
has this handy tool to do that calculation for you. Otherwise, you can simply use the simple Excel subtraction formula
(C2 – B2, for example) to subtract the start date from the end date and do the math right in Excel.
Using our product launch example, here’s what that data table ends up looking like:
3. Insert a Stacked Bar Chart

While you’re still on that same worksheet within Excel, head to the “Insert” menu in the ribbon and navigate over to
where you see the different chart icons.
Click the bar chart button, and then select “Stacked Bar Chart.” Excel will then insert a blank chart box on your same
worksheet.
4. Add Start Dates to Your Chart

Don’t worry, that chart box won’t stay empty for long. We’re going to start by adding the start dates to your chart.
To do so, right-click on the blank chart box and click the option for “Select Data” that appears in the menu. After
doing so, you’ll be met with a window that looks like this:
Within that window, click on the plus sign that appears under the “Legend entries (Series)” field to add your first set
of data (in this case, the start dates of each of your tasks).
When you’ve hit the plus sign, a row called “Series 1” will appear in the box under the “Legend entries (Series)”
header. Click on “Series 1” to ensure that you’re editing that series in particular.
With “Series 1” selected within that box, click the tiny grid with the red arrow that appears to the right of the “Name”
field. That will open a box where you can select a data. Select your column header “Start Date” with your mouse and
press enter.
Now, click the tiny grid with the red arrow that appears to the right of the “Y values” field and then drag your cursor
to select all of your start dates in your data set—not including the column header. Press enter and then hit the blue
“OK” button.
5. Add Duration to Your Chart

Now, you’re going to repeat those same steps, only this time working with the “Duration” column of your data set.
Right click within your chart again and head to “Select Data.” Start by clicking the plus sign again within that window
to add another series. With “Series 2” selected, this time, you’ll click the column header for “Duration” to name the
series and select the values in your “Duration” column.
6. Add Tasks to Your Chart

At this point, your Gantt Chart looks a little something like this:
However, there’s still more data that needs to be added to this chart: the individual tasks within your project. To add
those, select the blue bars within your chart and then right click to choose the “Select Data” option again.
Within that window, you will see a field labeled “Horizontal (category) axis labels.”
Right click the small grid with the red arrow to select your data, and then select all of your tasks within your data set
—excluding the column header. Hit enter and then press the blue “OK” button.
7. Format Your Chart
You’ve now added all of your data to the chart. However, you probably notice that it still doesn’t look like a Gantt
Chart. You still have a little formatting left to do!
Your goal is to make all of the blue bars transparent so that only the orange bars are left to represent your tasks.
To do so, click on the blue bars to select all of them at once, and then select the “Format Data Series” option. Click the
paint can to adjust the fill and line colors of those blue bars—you should select “No Fill” and “No Line” in order to
make those bars totally transparent.
After doing so, you’ll see that your chart is starting to look more like a Gantt Chart:
Doing so is easy. Click on the tasks within your chart to select that data series, and then right click and select the
“Format Axis” option.
Within the menu that pops up, check the box for “Categories in reverse order” and then click back within your chart.
Your tasks will be re-ordered automatically, and your Gantt Chart is finished!
Create Your Own Gantt Charts

There you have it—seven steps to create your own simple Gantt Chart. It might seem a little intimidating the first
couple of times you do it, but you’ll quickly get used to how the whole chart comes together.
There are plenty more tweaks you can make to format your chart, as well as steps you can take to make an even more
advanced Gantt Charts.
But, getting started with these basics equips you with everything you need to get a bird’s-eye view of your project
tasks, timeline, and dependencies.
Who Uses a Gantt Chart?
Today, nearly everyone can use a Gantt chart to help them visualize their tasks. Because all the difficult work is
now done by computer algorithms, anyone can just create a simple task list, add start and end dates, and the
software does the work instantly of displaying your tasks over time.
Gantt charts are effective tools for these roles:
 Project Managers
 General Managers
 Team Leaders
 Operations Managers
 Scheduling managers
 Work Managers
 Marketing Managers
 CEOs & CTOs
 Anyone who wants an instant view of a project timeline.
It used to be that Gantt charts were the exclusive tool of formally trained project managers. These were people
planning long-range projects of all different types: construction, engineering, military, manufacturing,
infrastructure, IT and more. Creating long task lists and complex schedules with lots of moving parts, required
training in the art and science of task estimation, critical path analysis, base lining and so on.
While still considered the purview of project managers, today with the wide range of project management and
Gantt chart software offerings, anyone might be found to be using Gantt charts online.
Benefits of a Gantt Chart
While they might have become popular as a visual representation of timed tasks, Gantt charts offer ten specific
benefits for savvy project managers and their teams.
1. Clarity
One of the biggest benefits of a Gantt chart is the tool's ability to boil down multiple tasks and timelines into a
single document. Stakeholders throughout an organization can easily understand where teams are in a process
while grasping the ways in which independent elements come together toward project completion.
2. Communication
Teams can use Gantt charts to replace meetings and enhance other status updates. Simply clarifying chart
positions offers an easy, visual method to help team members understand task progress.
3. Motivation
Some teams or team members become more effective when faced with a form of external motivation. Gantt
charts offer teams the ability to focus work at the front of a task timeline, or at the tail end of a chart segment.
Both types of team members can find Gantt charts meaningful as they plug their own work habits into the
overall project schedule.
4. Coordination
For project managers and resource schedulers, the benefits of a Gantt chart include the ability to sequence
events and reduce the potential for overburdening team members. Some project managers even use
combinations of charts to break down projects into more manageable sets of tasks.
5. Creativity
Sometimes, a lack of time or resources forces project managers and teams to find creative solutions. Seeing how
individual tasks intertwine on Gantt charts often encourages new partnerships and collaborations that might not
have evolved under traditional task assignment systems.
6. Time Management
Most managers regard scheduling as one of the major benefits of Gantt charts in a creative environment.
Helping teams understand the overall impact of project delays can foster stronger collaboration while
encouraging better task organization.
7. Flexibility
Whether you use Excel to generate Gantt charts or you load tasks into a more precise chart generator, the ability
to issue new charts as your project evolves lets you react to unexpected changes in project scope or timeline.
While revising your project schedule too frequently can eliminate some of the other benefits of Gantt charts,
offering a realistic view of a project can help team members recover from setbacks or adjust to other changes.
8. Manageability
For project managers handling complex assignments, like software publishing or event planning, the benefits of
Gantt charts include externalizing assignments. By visualizing all of the pieces of a project puzzle, managers
can make more focused, effective decisions about resources and timetables.
9. Efficiency
Another one of the benefits of Gantt charts is the ability for teams members to leverage each other’s deadlines
for maximum efficiency. For instance, while one team member waits on the outcome of three other tasks before
starting a crucial piece of the assignment, he or she can perform other project tasks. Visualizing resource usage
during projects allows managers to make better use of people, places, and things.
10. Accountability
When project teams face major organizational change, documenting effort and outcomes becomes crucial to
career success. Using Gantt charts during critical projects allows both project managers and participants to track
team progress, highlighting both big wins and major failures. During professional review periods, team
members who frequently exceed expectations can leverage this documentation into larger raises or bonuses.
2.2 LINE OF BALANCE
The Line of Balance (LOB) Scheduling Technique was originated by the Goodyear Company in the early
1940's and was developed by the U.S. Navy in the early 1950's for the programming and control of both
repetitive and non‐repetitive projects. It was developed for industrial manufacturing and production control. The
basic concepts of LOB have been applied in the construction industry as planning and scheduling method.
Meaning:
A line of balance diagram comprises a series of inclined lines which represent the rate of working between
repetitive operations in a construction sequence. The Line‐of‐Balance also known as the Repetitive Scheduling
Method (RSM), Location Based Scheduling, Vertical Production Method or Vertical Scheduling Method.
It's the best planning method for a repetitive work such as Villas or Dwelling units, High-rise building,
highways, pipeline, tunnels, railway, however it may be adapted for non-repetitive projects as well.
Concept of Line of balance:
Line of Balance (LOB) is a method of showing the repetitive work that may exist in a project as a single line on
a graph. Unlike a Bar Chart, which shows the duration of a particular activity, a LOB Chart shows the rate at
which the work that makes up all of the activities has to be undertaken to stay on schedule, the relationship of
one trade or process to the subsequent trade or process is defined by the space between the lines.
A simple diagram in which line shows location and time at which a certain crew will be working on a given
operation is known as LOB. It is used on repetitive work such as constructing multiple dwelling units, when
used on linear work such as roads and railways the technique is more accurately called Time/Location Charts or
Chain age Charts which include “blocks‟ to mark out chain age’s such as bridges and culverts that require
substantial time to build and interrupt the general flow of work.
The LOB itself is a graphic device that enables a manager to see at a single glance which activities of an
operation are “in balance” – i.e., whether those which should have been completed at the time of the review
actually are completed and whether any activities scheduled for future completion are lagging behind schedule.
The LOB chart comprises only one feature of the whole philosophy which includes numerous danger signal
controls for all the various levels of management concerned.
To do LOB, the following is needed:
•A contract schedule, or objective chart;
•A production plan or lead-time chart for the production process itself;
•Control points cumulative inventories; and
A program status chart on which to plot LOB and the cumulative quantities of units that have passed through
the control points of the assembly/production process.
Purpose of LOB :
The purpose of the LOB method is to ensure that the many activities of a repetitive production process stay “in
balance” that is, they are producing at a pace which allows an even flow of the items produced through a
process and at a speed compatible with the goals set forth in a plan.
Line of Balance (LOB) is a management control process for collecting, measuring and presenting facts relating
to time (see Schedule Control), cost and accomplishment – all measured against a specific plan. It shows the
process, status, background, timing and phasing of the project activities.
LOB as a Measuring tools that help:
 Comparing actual progress with a formal objective plan.

 Examining only the deviations from established plans, and gauging their degree of severity with respect
to the remainder of the project.
 Receiving timely information concerning trouble areas and indicating areas where appropriate corrective
action is required.
 Forecasting future performance.
Advantages of Line of balance

 Clearly shows the amount of work taking place in a certain area at a specific time of the project.
 Has the ability to show and optimize the resources used for large number of repeated activities, executed
in several zones or locations.
 Easier cost and time optimization analysis because of all the information available for each activity in
the project.
 Ease of setup and its superior presentation and visualization.
 Easier to modify, update and change the schedule.
 Better managing of all the various sub-contractors in the project.
 Allows for simpler and clearer resource management and resource optimization functions.
 Visualization of productivity and location of crews.
 It allows project managers to see, in the middle of a project, whether they can meet the schedule if they
continue working as they have been.
Unit – 3
3.1 Concept of Project Network
The project network is the tool used for planning, scheduling,and monitoring project progress. The network is
developed from the information collected for the WBS and is a graphic flow chart of theproject job plan. The
network depicts the project activities that must becompleted, the logical sequences, the inter dependencies of
the activitiesto be completed, and in most cases the times for the activities to start andfinish along with the
longest path(s) through the network—the critical path. The network is the framework for the project information
systemthat will be used by the project managers to make decisions concerning project time, cost, and
performance.
The network is the framework that will be used by the projectmanagers to make decisions concerning project
time, cost and performance.Once the network is developed, it is very easy to modify or change whenunexpected
events occur as the project progresses. Developing the projectnetworks takes time for someone or some group
to develop; therefore,they cost money. Are networks really worth the struggle? The answer isdefinitely yes,
except in cases where the project is considered trivial orvery short in duration. The network is easily understood
by others becausethe network presents a graphic display of the flow and sequence of workthrough the project.
Once the network is developed, it is very easy tomodify or change when unexpected events occur as the project
progresses.For example, if materials for an activity are delayed, the impact can bequickly assessed and the
whole project revised in only a few minutes with the computer. These revisions can be communicated to all
projectparticipants quickly (for example, via e-mail or project Web site).
Objectives of Project Network
The project network provides invaluable information and insightsabove the following:
➢Basis for scheduling, labour and equipment. The project network provides invaluable information and
insights.
➢Enhances communication that brings together all managers and groups in meeting the time, cost, and
performance objectives of the project;
➢Provides an estimate of the time the project will take (duration);
➢gives the times when activities can start or finish and when they can be delayed;
➢Provides the starting point for budgeting the cash flow (when money needs to be received and spent on
various elements) of the project.
➢Identifies which activities are “critical” and, therefore, should not be delayed if the project is to be completed
as planned.
➢Highlights which activities to consider if the project needs to be compressed to meet a deadline.
3.2 Construction of Project Network

Introduction:
Every field has its jargon that allows colleagues to communicatecomfortably with each other about the
techniques they use. Project managers are no exception. Here are some terms used in building projectnetworks.
Terminology
Activity: For project managers, an activity is an element of theproject that requires time. It may or may not
require resources. Typicallyan activity consumes time—either while people work or while peoplewait.
Examples of the latter are time waiting for contracts to be signed,materials to arrive, drug approval by the
government, budget clearance,etc. Activities usually represent one or more tasks from a work
package.Descriptions of activities should use verb/noun format: for example,develop product specifications.
Merge activity: This is an activity that has more than one activityimmediately preceding it (more than one
dependency arrow flowing to it).
Parallel activities: These are activities that can take place at thesame time, if the manager wishes. However, the
manager may choose tohave parallel activities not occur simultaneously.
Path: A sequence of connected, dependent activities.
Critical path: When this term is used, it means the path(s) withthe longest duration through the network; if an
activity on the path isdelayed, the project is delayed the same amount of time.
Event: This term is used to represent a point in time when anactivity is started or completed. It does not
consume time.
Burst activity: This activity has more than one activity immediatelyfollowing it (more than one dependency
arrow flowing from it).
Basic Rules in Developing Project Networks
The following eight rules apply in general when developing aproject network:
1. Networks flow typically from left to right.
2. An activity cannot begin until all preceding connected activitieshave been completed.
3. Arrows on networks indicate precedence and flow. Arrows cancross over each other.
4. Each activity should have a unique identification number.
5. An activity identification number must be larger than that of anyactivities that precede it.
6. Looping is not allowed (in other words, recycling through a set of activities cannot take place.)
7. Conditional statements are not allowed (that is, this type ofstatement should not appear: If successful, do
something; if not, donothing).
8. Experience suggests that when there are multiple starts, a commonstart node can be used to indicate a clear
project beginning on thenetwork. Similarly, a single project end node can be used to indicatea clear ending.
Two Approaches:
The two approaches used to develop project networks are known as Activity-On-Node (AON) and Activity-On-
Arrow (AOA). Both methods use two building blocks—the arrow and the node. Their names derive from the
fact that the former uses anode to depict an activity, while the second uses an arrow to depict an activity.
Activity-on-Node (AON) Fundamentals
The wide availability of personal computers and graphics programs has served as an impetus for use of the
activity-on-node (AON) method (sometimes called the precedence diagram method). An activity is represented
by a node (box). The node can take many forms, but in recent years the node represented as a rectangle (box)
has dominated. The dependencies among activities are depicted by arrows between the rectangles (boxes) on the
AON network.
The arrows indicate how the activities are related and the sequencein which things must be accomplished. The
length and slope of thearrow are arbitrary and set for convenience of drawing the network. Theletters in the
boxes serve here to identify the activities while you learn thefundamentals of network construction and analysis.
In practice, activitieshave identification numbers and descriptions.
There are three basic relationships that must be established foractivities included in a project network.
The relationships can be foundby answering the following three questions for each activity:
1) Which activities must be completed immediately before thisactivity? These activities are called predecessor
activities.
2) Which activities must immediately follow this activity? Theseactivities are called successor activities.
3) Which activities can occur while this activity is taking place? Thisis known as a concurrent or parallel
relationship.
Sometimes a manager can use only questions 1 and 3 to establishrelationships. This information allows the
network analyst to constructa graphic flow chart of the sequence and logical interdependencies ofproject
activities.
Components of Network
PERT / CPM networks contain two major components:
➢Activities
➢Events
Activity: An activity represents an action and consumption of resources (time, money, energy) required to
complete a portion of a project. Activity is represented by an arrow.
Event: An event (or node) will always occur at the beginning andend of an activity. The event has no resources
and is represented by a circle. The ith event and jth event are the tail event and head event respectively.
Merge and Burst Events: One or more activities can start and endsimultaneously at an event.
Preceding and Succeeding Activities: Activities performed beforegiven events are known as preceding
activities, and activities performedafter given events are known as succeeding activities.
Dummy Activity: An imaginary activity which does not consumeany resource and time is called a dummy
activity. Dummy activities aresimply used to represent a connection between events in order to maintainlogic in
the network. It is represented by a dotted line in a network.
3.3 Critical Path Analysis method
The critical path for any network is the longest path through theentire network. Since all activities must be
completed to complete the entireproject, the length of the critical path is also the shortest time allowablefor
completion of the project. Thus, if the project is to be completed inthat shortest time, all activities on the critical
path must be started as soonas possible. These activities are called critical activities.
If the project has to be completed ahead of the schedule, then thetime required for at least one of the critical
activity must be reduced.
Further, any delay in completing the critical activities will increase theproject duration. The activity, which does
not lie on the critical path, iscalled non-critical activity. These non-critical activities may have someslack time.
The slack is the amount of time by which the start of an activitymay be delayed without affecting the overall
completion time of theproject. But a critical activity has no slack. To reduce the overall project time, it would
require more resources (at extra cost) to reduce the timetaken by the critical activities to complete.
Scheduling of Activities: Earliest Time (TE) and Latest Time (TL)
Before the critical path in a network is determined, it is necessary tofind the earliest and latest time of each
event to know the earliest expectedtime (TE) at which the activities originating from the event can be startedand
to know the latest allowable time (TL) at which activities terminatingat the event can be completed.
➢Procedure for Forward Pass Computations (to calculate EarliestTime - TE)
Step 1: Begin from the start event and move towards the end event.
Step 2: Put TE = 0 for the start event.
Step 3: Go to the next event (i.e., node 2) if there is an incoming activityfor event 2, add to calculate TE of
previous event (i.e., event 1) andactivity time.
Note: If there are more than one incoming activities, calculate TEfor all incoming activities and take the
maximum value. This value is theTE for event 2.
Step 4: Repeat the same procedure from step 3 till the end event.
➢Procedure for Backward Pass Computations (to calculate LatestTime TL)
Step 1: Begin from end event and move towards the start event. Assumethat the direction of arrows is reversed.
Step 2: Latest Time TL for the last event is the earliest time, TE of the lastevent.
Step 3: Go to the next event, if there is an incoming activity, subtractthe value of TL of previous event from the
activity duration time.They arrived value is TL for that event. If there are more than oneincoming activities,
take the minimum TE value.
Step 4: Repeat the same procedure from step 2 till the start event.
Other Tips for Drawing Networks
For more clarity, while drawing the network one should avoid the crossing of activity arrows. Also, it is better
to have as few dummies as possible.
Once the network has been developed, the corresponding time, cost and other resource requirement figures are
put in the different activities of the network, for the purpose of analysis of the network. This network analysis
provides a plan or guideline for the implementation of the project.
We will understand Network Construction through the example given below.
Example 1
Consider that you have been given a project as part of your BBA programme to arrive at a decision for selecting
the best company, in which you can invest. Your Project Guide has suggested that you perform the analysis in
the following four activities:
a. Select a company.
b. Obtain the company’s annual report and calculate the various ratios.
c. Collect technical stock price data and construct charts.
d. Individually review the data and make a team decision on whether or not to invest in the company.
Your group consists of four people. All the team members should be involved in the project. You will meet at
the end of the week to decide what company the group will consider.
Two people will be responsible for Activity B. They will obtain the annual report and do ratio analysis, and the
other two will do Activity C. They will collect the technical data and construct the charts. Your group expects
that it will take two weeks to get the annual report and perform the ratio analysis, and a week to collect the
stock price data and generate the charts. You agree that the two groups can work independently. Finally, you
agree to meet as a team to make the purchase decision. Before you meet, you want to allow one week for each
team member to review all the data.
Solution:
Following are the steps for executing a project:
1. Identify each activity to be done in the project, and estimate how long it will take to complete each
activity. This is obtained by studying the information given above. The four activities are – A,B,C and D. Time
given to complete A from the start date is one week, for B it is two weeks, for C it is one week and D also takes
one week. This is the expected duration of the activities and is written as A (1), B (2), C (1), D (1).
2. Determine the required sequence of activities, and construct a network reflecting the precedence
relationships. First, identify the immediate predecessors associated with each activity. The immediate
predecessors are the activities that need to be completed immediately before an activity. Activity A needs to be
completed before activities B and C can start, B and C need to be completed before D can start.
3. Table 5.1 reflects what we know so far:
4. Determine the critical path:
Consider each sequence of activities that runs from the beginning to the end of the project. In this project, there
are two paths: 1 –2 – 3 – 5 and 1 – 2 – 4 – 3 –5. The critical path is the path where the sum of the activity times
is the longest, 1 – 2 – 3 – 5 has a duration of four weeks and 1 – 3 – 4 – 3 –5 a duration of three weeks. The
critical path therefore, is 1 – 2 – 3 – 5. If any activity along the critical path is delayed, then the entire project
will be delayed. Note - The critical path of activities in a project is the sequence of activities that form the
longest chain in terms of their time to complete. If any one of the activities in the critical path is delayed, then
the entire project is delayed. CPM techniques are used to calculate when an activity must start and end and
whether the activity is part of the critical path.
Characteristics of a critical path
(a) Every network has a critical path. A network may have more than one critical path.
(b) Number of activities in a critical path may be less than the activities in the non-critical path.
(c) A critical path may have a dummy activity.
(d) A critical path determines the project duration time.
(e) Activities on critical path are called critical activities.
(f) If the project duration time needs to be shortened, then activities on the critical path need to be shortened.
5. Determine the early start/finish and late start/finish schedule:
To schedule the project, we need to find when each activity needs to start and Self-Instructional 96 Material
Project Analysis– PERT/CPM NOTES when it needs to finish. For some activities in a project, there may be
some leeway when an activity can start and finish. This is called the slack time in an activity. It is the
maximum delay possible in the occurrence of an event.
For each activity in the project, we can calculate four points in time; the early start, early finish, late start, and
late finish. The early start and early finish are the earliest times that the activity can start and be finished.
Similarly, the late start and late finish are the latest times that the activities can start and finish. Thedifference
between the late start time and early start time is called the slack time.
To calculate numbers, start from the beginning of the network and work to the end, calculating the early start
and early finish numbers. Start counting with the current period, designated as period 0. Activity A has an early
start of 0 and an early finish of 1(it takes 1 week). Activity B’s early start is A’s early finish or 1. Similarly, C’s
early start is 1. The early finish for B is 3 (third week, and the early finish for C is 2. Now consider activity D.
D cannot start until both B and C are done. Because B cannot be done until 3, D cannot start until that time. The
early start for D, therefore, is 3, and the early finish is 4.
To calculate the late finish and late start times, start from the end of the network and work toward the front.
Consider activity D. The earliest that it can be done is at times 4; and if we do not want to delay completion of
the project, the late finish needs to be set to 4. With a duration of 1, the latest that D can start is 3.
Now consider activity C. C must be done by time 3 so that D can start, so C’s late finish time is 3 and its late
start time is 2. Notice the difference between the early and late start and finish times: This activity has 1 week of
slack time. Activity B must be by time 3 so that D can start, so its late finish time is 3 and late start time is 1.
There is no slack in B.
Finally, activity A must be done so that B and C can start. Because B must start earlier than C, and A must get
done in time for B to start, the late finish time for A is 1. Finally, the late start time for A is 0. Notice there is no
slack in activities A, B and D.
These values are represented in Table 5.2.
Table 5.2 Calculating the Start and Finish Dates
Note: Early start date and early finish dates of an activity are based on the condition that every activity
would be started and finished as early as possible. Late start date and late finish dates of an activity are based
on the condition that every activity would be started and finished as late as possible, but the project will still get
completed in the scheduled time.
3.4 Slack and Free float
We learnt above that the Critical path is the longest path; all the activities falling on the critical path are
“critical” and have no slack. These critical activities, which are the bottleneck activities, need management’s
special attention since any delay occurring on any of these activities will delay the project as a whole. The other
paths of lesser time duration will have a certain amount of slack which could absorb any delays occurring in the
activities on these paths.
In smaller networks it is easy to find visually which is the longest path, and therefore, the ‘critical path’. But it
is more difficult with networks having a large number of activities. There is a systematic method by which one
can find out the critical path and as well the slacks available to different activities on non - critical paths.
Example 3:
Study the network diagram given below.
Activity Slacks or ‘Floats’
In order to find the critical path, we need to find the slacks of the different activities and identify those activities
which have no slack at all. These activities will be the critical activities and will comprise the critical path. The
slacks are called, in CPM language, ‘floats’. Let us try to calculate the floats for the activities.
(i) Total Float
Consider Activity 3-5. This activity can start at its earliest at the end of time period 12 and can be completed
latest at the end of the time period 23. If the preceding activities allow Activity 3-5 to start at its earliest, viz.
time 12, and if the activities down stream i.e 5-6 allow Activity 3-5 to end at the latest possible time, then
Activity 3-5 has a slack or free play or float of 23 – 12 – 9 =2. (Note that 9 is the duration of 3-5.) The
project duration will not be affected even if 3-5 were to use this entire float. The downstream Activity 5-6
can now start only at their latest allowable time which is 23 and, therefore, Activity 5-6 may not have the
liberty of starting at its earliest possible time and having a certain amount of slack for itself. The slack or
float for Activity 3-5 which we indicated above is called the ‘total float’.
(ii) Free Float
If we do not want the downstream activities to be affected by any permitted delays in the conduct of
Activity 3-5, we shall have to see that Activity 3-5 ends by time period 22 Self-Instructional 100 Material
Project Analysis– PERT/CPM NOTES which is the early time of event 5. In such a case, the float that is
available to this activity is that of the difference between the early times of the two events minus the
duration of the activity. This float is, therefore, 22 – 12 – 9 = 1. This kind of a float is called a ‘free float’.
In calculating the free floats, the activities start at the early times and end at the early times of their
respective nodes or events.
(iii) Independent Float
There is another kind of a float which is called the ‘independent float’. Here the activity is allowed to start at
the late time, so as to allow the upstream activities to finish at their latest; and the activities are supposed to
end at the early times of the end nodes, so as to allow the downstream activities a maximum amount of
slack. Such a calculation of the float for an activity, will be independent of any effects either on the
upstream side or on the downstream side and this is probably the reason for its name. The independent float
for activity 3-5 is 22 – 12 – 9 = 1. The activities which are on the critical path have their total and free floats
equal to zero.
(d) The Importance of Floats
Total Float, if used completely, would make the succeeding activities critical. For this reason, it is not
desirable to utilize this float completely, although the information that so much float is available there is
helpful.
Free Float can be utilized completely without disturbing the succeeding activities. Therefore, in case of
slippages in time, Free Float is first made use of before resorting to Total Float. Still, the use of Free Float
has an underlying assumption that the activity can start at its earliest which, in turns, means that the
preceding activities should have been finished by this time. Thus, the use of Free Float is somewhat
conditional, whereas Independent Float has no such strings attached either to the preceding or to the
succeeding activities. It can be freely used.
One may use the floats judiciously while managing a project. The person responsible for only one activity
can be given only the Independent Float or at the most the Free Float information. The information
regarding Total Float is liable not to be understood properly and may generate unnecessary complacency. At
other levels of management also only the Free Float may be used first, and the Total Float may be used only
exceptionally.
Free Float and Total Float are extremely useful in the allocation of resources, particularly when there are
constraints on their availability and usage. In the developing countries, shortages of commodities such as
cement, steel, or explosives at one time or another is common. Also capital shortage is not unusual. Under
such conditions it may not always be possible to complete the project in the planned time. Rescheduling the
start of various activities, making advantage of their floats, might relieve the pressure on the requirement of
the resources at different points of time.
3.5 PERT
PERT -Project Evaluation Review Technique
PERT, like CPM, is also a time – oriented planning and control device. PERT analysis yields both a mean or
central measure of completion time for a project and a measure of dispersion (standard deviation).
Using the mean and standard deviation of the completion time for a project, probabilities of finishing the project
in less time or more time than the mean time can be determined. The basic difference between PERT and CPM
is the incorporation of statistical probabilities into the network.
In the critical path method, the time estimates are assumed to be known with certainty. In certain projects like
research and development, new product introductions, it is difficult to estimate the time of various activities.
Hence, PERT is used in such projects with a probabilistic method using three time estimates for an activity,
rather than a single estimate, as shown in the following figure.
ESTIMATING TIME IN A PROJECT
For every activity in PERT, three different time estimates are obtained.
Optimistic time (t0 ) – It is the time taken to perform an activity if everything goes smoothly while performing
the activity. It is the shortest possible time estimate for an activity.
Pessimistic time (tp) – It is the time taken to perform an activity if everything goes wrong, while performing
the activity. It is the longest possible time estimate of an activity.
Most likely time (tm) – It is the time which is most likely to be taken, under the given circumstances. This is
often based on the gut feeling or hunch of the project manager.
The actual time taken by the activity could fall anywhere between t0 and t p ; and if the same activity was
performed a number of times, it will be completed at tm most number of times.
The values of the mean and standard deviation are calculated using the following formula
The probability of the completion of a project within a time duration can be computed with the help of the data
on individual activities. Generally, the probability of the completion of the critical path is taken as the
probability of completion of the project within any given time.
Example 4: Study the data given below for a plant construction project. Determine the critical path. What is
the probability that the project will be completed within 4 years? What is the probability that it will take more
than 55 months?
3.5.1 Advantages of PERT& CPM

Advantages of PERT
 PERT forces the management to plan carefully and study how the various parts fit into the whole
project.
 PERT enables the business managers to predict time and cost of the project in advance.
 PERT is a forward-looking control device for management. PERT calls attention on the timely
completion of the project and avoids delay.
 PERT enables the determination of the probabilities concerning the time by which activity and project
would be completed.
 PERT suggests areas for increasing efficiency and reducing cost.
 It provides up-to-date information of the project programme so that the necessary steps may be taken to
minimize the delays and interruptions.
 PERT assists in coordinating the different parts of the total projects.
 It provides a graphical display of project activities that helps the users understand the relationships
among the activities.
 It is the ideal technique for tactical level planning and operational level control of projects.
 It is effective in planning single project activities in any type of industry.
 It allows project managers to do 'what if' analysis on project activities.
Limitations of PERT:
 In PERT, it is assumed that all the activities involved in the project are known in advance. In projects
like research and development (R and D), it is not possible to list out all the activities in advance.
 The assumption that a project can be sub-divided into a set of predictable and independent, activities
may not hold true always.
 PERT emphasizes only on time and not the costs.
 PERT is based on time estimates and there may be error in estimating time.
 For active control of a project, PERT requires frequent updating and revising of calculations. It is an
expansive and time consuming exercise, which requires highly trained personnel.
 It cannot effectively handle situations in which two or more projects share available resources.
 It fails when there is a change in the precedence and sequential relationships of project activities.
 It requires a lot of information as input to generate an effective plan. This may prove too expensive.

Advantages of CPM
1. The CPM makes it easier for the project managers to build a team and create human network for
efficient handling of a multitasked project.
2. The CPM binds the entire team together and motivates the human resources in timely completion of the
tasks in a project.
3. The CPM takes into consideration the requirements well in advance to complete a project in the most
efficient way possible.
4. With help of the CMP the project managers can determine the duration and estimate exact time and cost
of the project. It helps to monitor human resources, and the direct and indirect costs associated with the
project.
5. The CPM assists the project managers in planning schedules, monitoring tasks, and helps control the
project expenses.
6. The CPM also makes it convenient for the project managers to calculate the time required to complete
the tasks of the project. That helps them to predict completion date of every phase, anticipate problems along
the way, if any, and react accordingly.
7. Charting in a CPM makes it easier to evaluate parallel activities, handle delays and judge the outcome of
a task.
8. It enables the managers to minimize the project length by monitoring the critical path.
9. The CPM chart clearly identifies critical path/s of the project, which assists the managers in decision
making to address the issue quickly. It also enables the project head to determine if the task is on schedule or
needs boost to accelerate the process.
10. The charting in a CPM also enables the managers to determine start time, end time, slack time and float
time associated with each activity of the project.
Disadvantages of CPM
1. In a big project, a CPM can become extremely complicated and difficult to fathom for the new recruits
to the project team.
2. If the project is far too bulky and lengthy, the CPM requires software to monitor the plan.
3. CPM can become ineffective and difficult to manage if it is not well-defined and stable.
4. It cannot effectively handle sudden changes in the implementation of the plan on ground. It is very
difficult to redraw the entire CPM chart if the plan of the project suddenly changes midway.
5. The CPM cannot form and control the schedules of the persons involved in the project.
6. The allocation of resources cannot be properly monitored.
7. The critical path of the CPM of a big project is not always clear. The project managers have to spend a
lot of time to calculate it carefully.
8. The CPM takes longer to identity and to monitor the critical path when the project is of big dimension.
9. Using CPM, identifying and determining a critical path is difficult when there are many other similar
duration paths in the project.
10. At times, to design a CPM is time consuming. It is also difficult to estimate the activity completion time
in a multidimensional project.
3.6Probability of completing project on time
Details as given in question of Pert
3.7 Crashing of Project Network
Crashing of a project means intentionally reducing the duration of a project by allocating more resources to it. A
project can be crashed by crashing its critical activities (because the duration of a project is dependent upon the
duration of its critical activities). The use of more workers, better equipment, overtime, etc would generate
higher direct costs for individual activities. However, shortening the overall time of the project would also
reduce certain fixed and overhead expenses of supervision, as well as indirect costs that vary with the length of
the project.
We know that by adding more resources, the duration of an activity can be reduced. If an activity gets
completed in ten days with five men working on it, the same activity can be finished in say, six days with ten
men (exact mathematical relationships don’t work here) working on it. The initial direct cost was 50 man days
(5 men x 10 days) and now it is 60 man days (10 men x 6 days). Therefore, the direct cost has increased by 10
men- days.
At the same time, because of the decrease in duration of the activity by four days, the indirect cost (cost of
supervision) decreases. Hence, we can conclude that the direct and indirect costs are inversely proportional to
each other, i.e. when one increases, the other decreases.
An activity can be crashed by adding more resources only up to a definite limit. Beyond this limit, the duration
of the activity does not decrease by adding more resources. This is due to decreasing efficiency of labour, and
also increasing confusion due to a large number of resources. In our example, if we increase the number of
workers to 15, the same activity can probably be done in four days; but by adding ten more men (so that 20 men
work on this activity), the activity time may not decrease further.
Crash time : It is the shortest time that could be achieved if all effort (at any reasonable cost) were made to
reduce the activity time. The limit beyond which the duration of the activity does not decrease by adding any
amount of resources is called the crash time. It is the shortest possible activity time.
Crash cost: The direct cost associated with each crash time is called the crash cost.
The normal time (10 days in our example) can be defined as the duration of an activity when the minimum
possible resources required for its performance are deployed.
Normal cost: The lowest expected activity costs are called the normal costs.
Project direct cost: It is the direct cost involved in all the activities of the project.
Project indirect cost: It is the costs associated with sustaining a project. They include the cost of supervision
during the implementation of the project, overheads, facilities, penalty costs and lost incentive payments. The
salaries paid to the project manager/supervisor etc. miscellaneous costs due to delays in the project, and rewards
to the project team members for its early completion are indirect costs. Project indirect cost is dependent upon
other length of duration of the project. A project having a longer duration will have a higher indirect cost (due
to supervision required for longer duration).
In any projects, there is a direct relationship between the time taken to complete an activity and the project cost.
On one hand, it costs money to expedite a project. Costs associated with expediting a project are called activity
direct costs, and are different from project direct costs. Some examples of activity direct costs are – hiring more
workers, buying or leasing additional equipment, drawing on additional support facilities etc.
If activity direct costs will rise, project indirect costs will fall. Therefore, in a real situation, we need to have a
time cost trade-off, this means the sum of activity direct costs and project indirect costs must be minimum.
During the process of crashing of a project, the critical path may get changed. At some stage of crashing, there
may even be two or more critical paths (having the same duration) simultaneously. In such situations, one
activity is chosen from each of the critical paths and these activities are crashed by unit time to reduce the
duration of the project by unit time.
Time-cost models search for the optimum reductions in time. We seek to shorten the length of a project to the
point where the savings in indirect project costs is offset by the increased direct expenses incurred in the
individual activities.
Example 5: A network has four activities with expected times as shown. The minimum feasible times and cost
per day to gain reductions in the activity times are also shown. If fixed project costs are Rs 90 per day, what is
the lowest cost time schedule?
Solution:
First we must determine the critical path and critical path time cost Path.
For ease of reference, let us call the paths A and B respectively. Path B that is, 1- 3-4 is the critical path with
duration 10 days and cost Rs 900/-
Next, we must select the activity that can reduce critical path time at the least cost. Select activity 1- 3 at Rs 35
per day, which is less than the Rs 90 per day fixed cost. Reduce activity 1–3 to 3 days. Revise the critical path
time cost.
Both paths are now critical, so we must select an activity on each path. Select activity 1–2 at Rs 40 per day and
3–4 at Rs 45 per day. Reduce activity 1–2 to 4 days and 3–4 to 5 days. Revise the critical path time and cost.
3.8 Concept of PERT cost
Project cost: in order to include the cost aspects in project scheduling we must first define the cost duration
relationships for various activities in the project. The total cost of any project comprises direct and indirect
costs.
Direct cost: this cost is directly depends upon the amount of resources in the execution of individual activities
manpower loading materials consumed etc. the direct cost increase if the activity duration is to be reduced.
Indirect cost: This cost is associated with overhead expenses such as managerial services, indirect supplies,
general administration etc. the indirect cost is computed on a paper day, per week, or per month basis. The
indirect cost decreases if the activity duration is to be reduces.
The network diagram can be used to identify the activities whose duration should be shortened so that the
completion time of the project can be shortened in the most economic manner. The process of reducing the
activity duration by putting on extra effort is called crashing the activity.
The crash time (tc ) represents the minimum activity duration time that is possible and any attempts to further
crash would only rise the activity cost without reducing the time. The activity cost corresponding to the crash
time is called crash cost (Cc ) which is the minimum direct cost required to achieve the crash performance time.
The normal cost ( Cn) is equal to the absolute minimum of the direct cost required to perform an activity. The
corresponding time duration taken by an activity is known as the normal time (tn)
Objectives of PERT-Cost Budgeting:
(A) Defining the project objectives;
(B) Setting the task of completing the project at estimated cost within the time estimates (weighted average time
estimates te per activity and TE for project schedule) and specified quality to group of functionaries within the
project team with ultimate responsibility of the Project Manager;
(C) In-built system to facilitate review of the actual performance at regular intervals, and/or at milestones—
representing budgeted ‘deliverables’ with a date; and
(D) Issue regular reports of the review including the further projection of the balance work still left to be performed.
PERT Cost
PERT cost is a management tool used to optimize the mix of time, resources, and cost for activities having a
definite beginning and end.
PERT cost is a managerial system for the planning and control of specific projects. It is a model thet enables the
managers to determine what must be done , how to schedule activities , what the best allocation of resources
will be, how much of the project will cost, and how to minimize the total costs. When planning is completed,
the plan becomes a standard against which to measure progress and deviation. Management by exception is
taken on those activities that exceed their allowed margin of error. This system is applicable to any project that
has specific beginning and ending point.
The PERT COST system, a complement to the basic PERT TIME system, has been developed to meet these
planning and control needs for various levels of management.
In PERT COST, both cost and schedule are planned and controlled on a common basis. This interrelation not
only permits more accurate measurement of progress but also enables managers to appraise more realistically
the consequences of alternative course of action.
Under PERT COST system, the program is specifically defined and then broken down in order to establish the
work breakdown structure including work packages. Work packages are identified with activities on a
conventional PERT network.
The PERT COST system requires periodic comparisons of the actual costs incurred versus estimated costs for
each work package and actual time versus scheduled time foe the activities concerned. This comparisons
significantly improves cost and schedule control by under-runs and schedule slippages. Concurrent estimates of
the cost and time needed to complete work not yet performed are also made available.
There are two basic objectives:
1. To provide a significantly more realistic cost estimate for the entire project.
2. To provide a realistic standard, against which project accomplishment can be compared.
These objectives are based on the interdependent relationship of time and cost. Simply stated, this means that
the longer an employee works, the more it is going to cost. This simple situation is complicated by the
variability of resources, their application to any given activity, and the accumulation of indirect costs, and
penalty costs.
Advantages of using PERT COST

1) More Effective Planning:
It provides a comprehensive planning discipline, which requires the manager to do careful, detailed planning.
By aiming at the end objective, all activities and decisions are co-ordinate toward the most effective, efficient
and economical way of completing the total project under the given constraints.
2) Show Relationships:
All activities are related to achieving to each other is identified. This relationship determines whether a group of
activities must be carried out in series or may be carried out in parallel. One way of shortening the overall
project time is to maximize the concurrency of operations.
The co ordination of all activities is through their time relationship, individually and to each other, and to the
project as a whole. There are two basic times associated with each activity: normal and crash. Sometimes it is
better for the project as a whole to crash one or two activities in order to allow other larger, more sensitive ones
to be carried out at their normal place.
Resources for each activity are constrained by the time and costlimitations for the project. Within these outside
constrains resources will be related to achieve the time, cost and performance goals of the activity at the
minimum cost.
3) Pinpoints Problem areas:
As the above relationship is worked out many problems will be recognized and solved before they become
crisis. During execution, an imbalance in the interrelationships will quickly pinpoint problem areas because
time resources, or cost schedules will not be met.
4) Improves Communication.
The manager learns of the critical areas by doing his homework on the PERT COST model. This gives him the
specific facts and figures he needs to properly explain the situation to subordinates in order to work out the
needed solution. He is also better prepared to justify requests to higher authority for additional resources.
5) Better Resource allocation:
Manpower, materials, equipments , money and time can all be related to each other on this model. The optimum
mix will be that which achieves the time and performance objectives at the least total cost.
The plan can be organized to best use scarce RESOURCES. The plan may even have to be built around the use
of a scarce resources.
Resources requirements may be leveled so that overhead costs of inactive resources will be minimized. Slack
activities will be juggled to utilize resources when critical activities do not require them in order to get
maximum use from the minimum resource level.
6) Provides simulation model:
The use of the PERT COST model is in fact a simulation of what management expexcts to happen. Changes and
alternative courses of action may be worked out on the model to determine their overall effect on the project,
The effects of uncontrollable forces can be analyzed and contingency plans prepared.
7) Management by exception:
PERT Cost identifies the critical path of operations, and sets parameters on other activities which limits their
slippage to a specified amount. Management needs to watch the critical path closely, but the other activities
get attention only when they exceed their margins of slack.
8) More effective control:
Management effort is concentrated on the sensitive areas which effect project goals. The detailed planning and
discussion, the reduction of the plan to writing, and the defining of individual responsibilities, gets everyone
on the right track to start with. The completed PERT Cost model then becomes the standard against which to
compare individual performance in the methods and rate of project accomplishment.
9) Focuses on cost:
This model gives management an effective tool for focusing on the cost of projects. The common denominator
of all decisions is cost, and the ultimate output of the model is the project cost.
During the planning and execution phases, projected and actual costs can be compared with the value of the
end item or the imposed budget constraints. This will allow management to take timely corrective action or
seek additional resources prior to crisis.
The PERT Cost model can also be used to develop a proposed project to determine its feasibility, cost and time
factor.
Unit-4
Introduction
The basic building blocks of the traditional form of organisation are a functional division of management and a
well defined hierarchical structure. Typically, a firm is organised into various departments, such as production,
purchasing, marketing, finance,personel, engineering and research and development. Someof these departments
have a line function and other a staff function. Line managers have the principal responsibility for achieving the
goals of the firm’s and are vested with decision making authority. Staff managers primarily serve in an advisory
capacity, of course within the staff departments they enjoy administrative powers.
The traditional form of organisation is quite appropriate for established operations which are characterized
by a continuous flow of repetitive work, with each department attending to its specific functions in such a
setting, relatively stable inter departmental and inter personal relationship emerge. However, the traditional
form of organisation is not suitable for project management why? There are several reasons: (1) a project is a
non- routine, non-repetitive undertaking often plagued with many uncertainties;(2) a project requires
coordination of the efforts of persons drawn from different functional areas and contributions of external
agencies. Due to these reasons, project management calls for a different form of organisation, sharper tools of
the planning and control, and improved means of coping with human problems.
4.1 Forms of project organisation
The traditional from of organisation is not suitable for project work for the following reasons:
(1) It has no means of integrating different departments at levels below the top management,
(2) It does not facilitate effective communication, coordination, and control when several functional
departments, with different professional background and orientations are involved, of development, design,
procurement, construction, and commissioning work.
Hence there is a need for entrusting an individual with the responsibility for integrating the activities and
functions of various departments and external organisations involved in the project work. Such an individual
may be called the project manager or project coordinator. Depending on the authority that is given to the person
responsible for the project, the project organisation may take one of the following three forms:
Line and staff function.
Divisional organisation.
Matrix organisation.
1) Line and staff function.
In this form of project organisation, a person is appointed with the primary responsibility of coordinating the
work of the people in the functional departments. Such a person, referred to commonly as the project
coordinator, acts essentially in a staff position to facilitate the coordination of line management in functional
department. The project coordinator does not have authority and direct responsibility of line management. He
serves as a focal point for receiving project related information and seeks to promote the cause of the project by
rendering advice, sharing information and providing assistance. He may gently coax line executives to strive
for the fulfillment of project goals. Deprived of formal organisational authority, he may find it difficult to exert
leadership and feel unsure of his role. His influence would depend on his professional competence, closeness to
top management, and persuasive abilities. Clearly, this is a weak from of organisation which may be employed
mostly for small projects- it is certainly not suitable for large projects.
2) Divisional organisation
Under this from of project organisation, a separate division is set up to implement the project. Headed by the
project manager, this division has its complement of personnel over whom the project manager has full line
authority. In effect, this form of organisation implies the creation of a separate goal-oriented oriented division of
the company, with its own functional departments. While the project manager still has the problem of
coordinating the inputs of other organisations involved in the project, he has total formal control over the
division he heads
A very strong form of project organisation, the divisional project organisation facilitates the process of planning
and control, brings about better integration of efforts and strengthen the commitment of project related
personnel to the objectives of the project. It considerably improves the prospect of fulfilling the time and budget
targets.
This form of organisation, however, may entail an inefficient use of the resources of the firm. It may result in an
unnecessary duplication of specialists in the company, because of the necessity to allocate them n total to each
project. Further, it may be difficult to achieve a higher degree of specialisation of expertise because the
divisional project organisation may have to manage with, one manager, rather than two specialist.
3) Matrix organisation
The line and function form of organisation is conducive to an efficient use of resources but is not suitable for an
effective realisation of project objectives. The divisional form of organisation, on the other hand, is suitable for
an effective realisation of project objectives but is not conducive to an efficient use of resources. The matrix
form of organisation, the third form of project organisation, seek to achieve the twin objectives of efficient use
of resources and effective realisation of project objectives at the cost of greater organisational complexity.
In a matrix organisation, the personnel working on the project have a responsibility to their functional superior
as well to the project manager. This means that the authority is shared between the project manager and the
functional managers. The authority and influence of the project manager cut across the traditional vertical line
of command. The project manager integrates the contribution of personnel in various functional departments
towards the realisation of project objectives. While the personnel maintain their departmental affiliation and are
responsible to their functional superiors, they are responsible to the project manager as well.
The matrix form of organisation is incongruent with the traditional organisation theory: there is dual
subordination; responsibility and authority are not commensurate; the hierarchical principle is ignored. This
clearly implies that the matrix form of organisation involves greater organisational complexity and creates an
inherently conflictive situation. Yet it seems to be a better vehicle for the simulation pursuit of the twin
objectives; efficient utilisation of resources and effective attainment of project objectives.
4.2 Project planning and control

Projects involving few activities, resources, constrains, and inter relationships can be visualised easily by the
human mind and planned informally. However, when a project crosses a certain threshold level of size and
complexity, informal planning has to be substituted by formal planning. The need for formal planning is needed
much greater for project work than for normal operations. Without effective planning there may be chaos.
Functions of planning
Planning, a vital aspect of management, serves several important functions:
1. It provides a basis for organising the work on the project and allocating responsibilities to individuals.
2. It is a means of communication and coordination between all those involved in the project.
3. It includes people to look ahead.
4. It instills a sense of urgency and time consciousness.
5. It establishes the basis for monitoring and control.
Areas of planning:
1. Planning the project work: the activities relating to the project must be spelt out in detail, they should be
properly scheduled and sequenced.
2. Planning the manpower and organisation: the manpower required for the project must be estimated and
the responsibility for carrying out the project work must be allocated.
3. Planning the money: the expenditure of money in a time phased manner must be budgeted.
4. Planning the information system: the information required for monitoring project must be defined.
Work breakdown structure:
The work breakdown structure, as it’s name suggests, represent a systematic and logical breakdown of the
project into its component parts. It is constructed by dividing the project into its major parts, with each of these
being further divided into sub parts. This is continued till a breakdown is done in terms of manageable units of
work for which responsibility can be defined. Thus the work breakdown structure helps in:
1. Effective planning by dividing the work into manageable elements which can be planned, budgeted and
controlled.
2. Assignment of responsibility for work elements to project personnel and outside agencies.
3. Development of control and information system.
Work breakdown structure and project organisation:
The project organisation represents formally how the project personnel and outside agencies are going to
work. The work breakdown structure defines what work is to be done in a detailed manner. To assign
responsibility for the tasks to be done, the work breakdown structure has to be integrated with the project
organisation structure. This calls for blending the vertical breakdown of the work with the project organisation
structure. This results in delineation of project tasks which are the specific responsibilities of organisational
units. The technical name given to such a project task is cost account. A cost account represents a unit of work ;
1. Which is defined in fairly concrete terms
2. For which a single person is responsible
3. For which a budget of expenditure and manpower requirement can be prepared meaningfully.
Tools of planning:
The oldest formal planningtool is the bar chart, also referred to as the Gantt chart or the multiple activity chart.
In the last four decades, network techniques have received considerable attention. This section briefly describes
the nature of these tools of planning.
Bar chart : This is a pictorial device in which the activities are represented by horizontal bars on the time axis.
The left hand end of the bar shows the beginning time, the right hand end the ending time. The duration of the
activity is indicated by the length of the bar. The manpower required for the activity is shown by a number on
the bar.
The advantages of bar chart are:
1. It is simple to understand
2. It can be used to show progress
3. It can be used for manpower planning.
The disadvantages of bar chart are:
1. It cannot show interrelationship among activities on large, complex projects
2. There may be a physical limit to the size of the bar chart, which may limit the size of the project that can
be planned with this technique
3. It cannot easily cope with frequent changes or updating.
Network technique:
These are more sophisticated than the traditional bar chart. In these techniques, the activities, events, and their
inter relationships are represented by a network diagram also called an arrow diagram.
The advantages of network techniques are:

1. They can effectively handle inter relationship among project activities
2. They identify the activities which are critical to the completion of the project on time and indicate the
float for other activities
3. They can handle very large and complex projects
4. They can be easily computerized and updated.
The disadvantages of network techniques are:
1. Being more complicated than the traditional bar chart they are not easily understood by the project
personnel
2. They do not define an operational schedule which tells who does what and when.
Project control
No sooner is the project launched, control becomes the dominant concern of the project manager. Indeed, once
the launch phase is over, planning and control become closely interwined in an managerial process.
Project control involves a regular comparison of performance against targets, a search for the causes of
deviation, and a commitment to check adverse variances. It serves two major functions:
1. It ensures regular monitoring of performance
2. It motivates project personnel to strive for achieving project objectives.
Reasons for ineffective control:
Effective control is critical for the realisation of project objectives. Yet, control of projects in practice tends to
be ineffective. There are 3 reasons for poor control of projects.
Characteristics of the project: Most of the projects are large, complex undertaking involving many organisations
and people. This renders the task of control difficult because:
1. Keeping track of physical performance and expenditure on hundreds or thousands of activities which are
often non-profit routine is a stupendous task.
2. Coordination and communication problems multiply when several organisations are involved in the
project.
People problem: To control a non-routine project, a manager requires an ability to monitor a wide range of
disparate factors, a sensitivity to symptoms indicative of potential problems, and a faculty for comprehending
the combined effect of multiple forces. Naturally, most of the operational managers, used to the steady rhythm
of normal operation and routine work lack of experience, training, competence and inclination to control
projects.
Poor control and information system: One of the factors which inhibits effective control is the poor quality of
control and information system.
Some of theWeaknesses observed in the control and information system are:
• Delay in reporting performance: Often there is a delay in the reporting of performance. This prevents
effective monitoring of the project and initiation of timely action to Check adverse developments.
• Inappropriate level of detail: Generally cost information for control is collected in terms of cost codes
found in the company’s cost accounting system, irrespective of the level of detail employed for project planning
and budgeting. Consider an extreme example wherein cost and value of work done are reported for the project
as a whole. What is the value of such information for identifying where slippages are occurring and who is
responsible for them.
• Unreliable information: One of the major problems in project control is unreliable and inaccurate data
and information. Often project managers receive reports which suggest that' everything is okay' or things are '
reasonably within control' when the reality is different. Further, for months after the project is completed, costs
dribble in to change a favourable variance into an unfavorable one or to aggravate an unfavorable variance.
Performance analysis : Modern approach to control
Effective control over a project requires systematic performance analysis. This calls for answering the following
questions:
• Is the project as a whole on schedule,ahead of schedule,or behind schedule? If there is a variation, where
did it occur,why did it occur, who is responsible for it, and what would be it’s implication?
• Has the cost of the project as a whole been as per budget estimates,less than the budget estimates,or
more than the budget estimates? If there is a variation, where did it occur, why did it occur,who is responsible
for it, and what would be it’s implications?
• What is the trend of performance? What would be the likely final cost and completion date for the
project and it’s individual parts?
For small and simple projects,the project managers would do performance analysis for the project as a whole,or
for its major component. As the project becomes larger and more complex, performance analysis needs to be
done for individual segments of the projects which are referred to as cost accounts.
Method of analysis: For analysing the performance at cost account and higher levels of the work breakdown
structure, we employ a method of analysis which takes into account the value of work that has been done. In the
traditional method of analysis, the project manager measured the actual progress against the predetermined
schedule and the actual cost against the budget estimate. This did not enable him to know systematically
whether the expenditure incurred was commensurate with progress. He perhaps relied on subjective estimates.
Performance analysis seeks to remove this subjectivity by employing an analytical framework based on the
following terms:
• BCWS ( Budgeted cost for work scheduled): It represents the total of three components:
1) budgets for all work packages, scheduled to be completed
2) budgets for the portion of in-game process work, scheduled to be accomplished
3) budgets for the overheads for the period.
BCWP ( Budgeted cost for work performed) : This is equal to the sum of three components: 1) budgets for work
packages actually completed
2) budgets applicable to the completed in process work
3) overhead budgets.
ACWP ( actual cost of work performed): This represents the actual cost incurred for accomplishing the work
performed during a particular time period.
BCTW (Budgeted cost for total work) : This is simply the total budgeted cost for the entire project work.
ACC ( Additional cost for completion): This represents the estimate for the additional cost required for
completing the project.
4.3 Human Aspects Of Project Management
A satisfactory human relations system is essential for the successful execution of a project. Without such a
system, the other systems of project management, however sound they may be by themselves,are not likely to
work well. While technical problems can be solved with additional investment of resources, people's problems
may not be amenable to a satisfactory solution in the short span of the project life.
To achieve satisfactory Human relation in the project setting, the project manager must successfully handle
problems and challenges relating to:
• Authority
• Orientation
• Motivation
• Group functioning
Authority
Except in the divisional organisation, the project manager whose activities cut across functional lines of
command, lacks the desired formal authority over project related personnel. The project manager has to
coordinate the efforts of various functional groupsand outside agencies. While he often has formal control
emanating from contacts and agreements,as far as outside agencies involved in the project work are concerned,
in this own organisation he has to contend with split authority and dual subordination.
Since the project manager works largely with professionals and supervisory personnel, the basis of the authority
would be different from that found in simple superior subordinate relationship. For exercising leadership and
influence over professional people, he has to explain the logic and rational for the project activities; show
receptivity to the suggestions made by others; avoid unilateral imposition of decisions; eschew dogmatic
posture; and search for areas of agreement which can be the basis of acceptable solutions.
His effective authority would stem from his ability to develop rapport with the project personnel, his skill in
resolving conflicts among various people working on the project, his personnel reputation and stature, his skills
in communication and persuasion, and his ability to act as a buffer between the technical, engineering, financial
and commercial people involved in the project.
Orientation
Most of the managers working for a project are usually engineers
Typically an engineer:
• Works physical laws, characterised by mathematical precision,as his tools
• Adopt a structured, mechanical approach to his problems
• Seeks an enduring solution to his problem
• Attaches a high value on technical perfection.
When an engineer assumes managerial responsibilities, he faces a very different world in which he is
supposed to:
• Perform the tasks of planning, organising, directing, and controlling the resources of the firm in a world
of uncertainty.
• Adopt a more creative approach to solve non-programmed and unstructured problems.
• Attach greater importance to efficient utilisation of resources and resolution of human relation problems.
This the project manager has to strengthen the managerial orientation of project personnel so that the project
goals and objectives can be efficiently achieved within the constraints of time and budget. Clearly for achieving
this task he must himself be an accomplished engineer manager.
Motivation
The project manager functions within the boundaries of a sociopath technical system. Most of the factors of this
system- organisational structure, technical requirements, competencies of project personnel- and more or less
given for him. The principal behavioral factor which he can influence is the motivation of the project personnel.
In this context he should bear in mind the following:
• Human being are motivated by a variety of needs such as physiological needs, social needs, recognition
needs, and self actualization needs. Individual differ greatly in the importance they attach to various need
satisfactions. Further, their attitudes tend to change with time and circumstances, and are significantly
influenced by their peers and superiors.
• The traditional approach to management was based on the assumption that human beings regard work as
unpleasant, shirk responsibility and ordinarily employ inefficient and wastefull methods. Such a conception of
human behaviour suggests that a great deal of pressure has to be applied. Behavioral research, however, has
shown that while some pressure is beneficial, an excess of it is undesirable. Beyond a certain point, pressure is
dysfunctional.
• Motivation tends to be strong when the goal set is challenging, yet attainable. If the goal is too
demanding, it results in frustration and conflict.
• Expectation or reward, rather than fear of punishment, has a greater bearing on individual behaviour.
Further, the effectiveness of reward or punishment depends on how quickly it is administered.
• In a project setting where hygiene factors ( like pay, physical working conditions etc.) are reasonably
taken care of, the principal motivators would be a sense of accomplishment and professional growth. In this
setting, the project manager should rely more on participative methods of management.
In order to succeed in motivating project personnel, the project manager must be a perceptive observer of
human beings, must have the ability to appreciate the variable needs of human beings, must have skill in several
styles of management suitable to different situations, and must besensitive to the reactions of people so that he
can act supportively rather than threateningly.
Understandably, the project manager has a difficult task. In this endeavour, he can, however, count on one
blessing: the stimulating and satisfying nature of project work. In established organisations many professional
and supervisory personnel find it difficult to see how their efforts re-found to the realisation of organisational
goals. Separated from top management by several layers of organisational hierarchy, they are unable to relate
their work to the missions of the firm. In addition, the jobs in established organisations are somewhat dull and
routine. All this creates a sense of alienation and frustration which dampens motivation. Fortunately, in a
project setting, where the superordinate goals are clearly defined and visible to all involved, where there is
usually a great emphasis on participative style of management, where the layers in the organisational hierarchy
are few, and where the jobs are more challenging, project personnel tend to have greater commitment. Being
able to relate their work easily to the goals of the project, their motivation is usually high.
Group functioning
In a large complex project, many persons drawn from different functions, departments, and organisations are
involved. This leads to formation of groups formal and informal. According to Rensis Likert, organisations may
be considered as system of interlocking groups. Thus, in a typical project organisation, many interlocking
groups. Thus, in a typical project organization, many interlocking and interdependent groups are formed.
The groups formed in a project setting may be of three types; vertical groups, horizontal groups and mixed
groups.
Vertical group: it consists of people drawn from different levels in the same department, or function or
company.
Horizontal group: it consists of people drawn from different functions, departments, and companies, but
occupying similar hierarchical positions.
Mixed group: it consists of people drawn from different levels from various functions, departments and
companies.
A vertical group tends to form most naturally because of departmental/ functional/ or organisational affinities.
However, the existence of such groups may lead to a pronounced “ we/ they” attitude and accentuate conflicts.
A horizontal group is a useful instrument in linking the overall project organisation. The members of the
horizontal group, occupying key positions in their respective fields, serve as channels of communication. By
their influence they, can strengthen the commitment to the project. The mixed group tends to promote greater
cohesion of the total project organization. It is very conducive in creating a project attitude and developing an
overriding commitment for the project. Hence the project manager should strive to establish such a group
because of temporary nature of later, they retain strong links with their parent company or department.
Building effective groups:
An effective group consists of members who are satisfied and committed and who strive for the attainment of
project objectives, without dissipating their energies in inter personal and inter group conflict. The manifest
signs of an effective group are:
• Espirt de crops,
• Pride in the project
• Supportive behaviour,
• Coordinated endeavour,
• Mutual respect,
• Resilience during trying period.
An effective group, on the other hand, consists of disgruntled members who are more involved in inter personal
and inter group rivalries and less concerned about project goals. Such a group is characterized by apathy,
animosity, mutual bickering, disjoint efforts, cynical attitudes and low morale.
How can effective groups can be established? Studies in group dynamics suggest several stages, which are
partially overlapping, in the formation of an effective group:
1. Development of mutual trust

2. Diminution of defensive behaviour
3. Openness in communication
4. Cooperation and supportive behaviour
5. Resolution of differences by mutual negotiation.
For building an effective group, the firm must pursue a genuinely participative style of management. With this
managerial philosophy, the project manager can facilitate the development of mutual trust and acceptance, open
communication, cooperation, and project attitude. In this task, he needs leadership capabilities, sensitivity to
human nature, perceptiveness , concern for welfare of others, maturity, and impartial approach. Clearly this is
difficult and challenging task.
Unit-5
5.1 Performance review on the basis of planned project cost and time.
Implementing a pmValue Measurement System to measure project management performance and value will
help organizations achieve one or more of the following goals:
• to identify the business impact of implementing project management improvement initiatives
• to compare costs to benefits of project management improvement initiatives
• to determine if a project management improvement initiative is accomplishing its objectives
• to assist in marketing future project management improvement initiatives.
Note that these goals are based on determining the value of implementing project management improvement
initiatives in the organization. That value is determined by showing improvement in some measure or measures
over time. Choosing those measures is key to the success of the pmValue Measurement System.
PM Solutions Center for Business Practices has compiled an extensive list of possible measures for
consideration. These measures are a starting point for a pmValue Scorecard development process, not a simple
menu to craft a pmValue Scorecard from. So use the list as a starting point to think about measures that are most
important to your organization’s goals. We recommend that you select 3-7 measures for your measurement
system (it’s too difficult and costly to collect too many measures).
Also note that you will be selecting measures of project management value rather than measures of project
performance.
The key difference in performance measures versus value measures is the reason for doing the measuring. In
measuring performance, you are trying to gather information to help you make management decisions to affect
change that, hopefully, will improve that performance. For example, project performance measures are
undertaken to provide information to managers in order to exert control over the project.
Those measures must be appropriate to the organizational level that can immediately effect change based on
information it learns in order to control the performance of the project at hand (measuring the earned value of
the project will provide information on the performance of the project to allow managers to make critical
decisions to bring the project to closure successfully). These measures must be collected fairly often, perhaps
even weekly, depending on the duration of the project.
In measuring value, you are trying to demonstrate that decisions you made to implement change (project
management improvement initiatives) has indeed added value to the organization. So you are measuring value
rather than performance (which may or may not be the same). Sometimes (usually) improved performance can
be translated into value.
For example, improving schedule performance for all your projects over a period of a year can be translated into
improvement in average project cycle time, which can be translated into improvement in time to market, which
can add significant value to your organization. Value measures, therefore, provide information on the
performance of the organization rather than the performance of a project. They must be collected over a longer
period of time (no more than quarterly) and over your portfolio of projects.
TOP 10 PROJECT MANAGEMENT BENCHMARKING MEASURES
There is no single set of measures that universally applies to all companies. The appropriate set of measures
depends on the organization’s strategy, technology, and the particular industry and environment in which they
compete. That said, below are my choices for the top 10 measures an organization should benchmark to lead to
project management success. The measures should be indexed—that is, averaged over a large number of similar
types of projects over a period of time (for example, per year).
 Return on Investment
t (Net Benefits/Costs) x 100 The most appropriate formula for evaluating project investment (and project
management investment) is Net Benefits divided by Cost. By multiplying this result by 100, this calculation
determines the percentage return for every dollar you’ve invested.
The key to this metric is in placing a dollar value on each unit of data that can be collected and used to measure
Net Benefits. Sources of benefits can come from a variety of measures, including contribution to profit, savings
of costs, increase in quantity of output converted to a dollar value, quality improvements translated into any of
the first three measures. Costs might include the costs to design and develop and/or maintain the project or
project management improvement initiative, cost of resources, cost of travel and expenses, cost to train,
overhead costs, etc.
 Productivity
Productivity is output produced per unit of input. Productivity measures tell you whether you’re getting your
money’s worth from your people and other inputs to the organization. Typically the resources have to do with
people, but not always. A straightforward way to normalize productivity measurement across organizations is to
use revenue per employee as the key metric. Dividing revenue per employee by the average fully burdened
salary per employee yields a ratio.
This ratio is the average-per-employee “Productivity Ratio” for the organization as a whole. Other productivity
metrics might be number of projects completed per employee, number of lines of code produced per employee.
The key to selecting the right productivity measures is to ask whether the output being measured (the top half of
the productivity ratio) is of value to your organization’s customers.
 Cost of Quality
Cost of Quality/Actual Cost Cost of quality is the amount of money a business loses because its product or
service was not done right in the first place. It includes total labor, materials, and overhead costs attributed to
imperfections in the processes that deliver products or services that don’t meet specifications or expectations.
These costs would include inspection, rework, duplicate work, scrapping rejects, replacements and refunds,
complaints, loss of customers, and damage to reputation.
 Cost Performance
Earned Value/Actual Cost The Cost Performance Index is a measure of cost efficiency. It’s determined by
dividing the value of the work actually performed (the earned value) by the actual costs that it took to
accomplish the earned value. The ability to accurately forecast cost performance allows organizations to
confidently allocate capital, reducing financial risk, possibly reducing the cost of capital. CPI Standard
Deviation is an even better metric, one that shows the accuracy of budget estimating.
 Schedule Performance
Earned Value/Planned Value
The Schedule Performance Index is the ratio of total original authorized duration versus total final project
duration. The ability to accurately forecast schedule helps meet time-to-market windows. SPI Standard
Deviation is an even better metric that shows the accuracy of schedule estimating.
 Customer Satisfaction
Scale of 1-100 Customer satisfaction means that customer expectations are met. This requires a combination of
conformance to requirements (the project must produce what it said it would produce) and fitness for use (the
product or service produced must satisfy real needs). The Customer Satisfaction Index is an index comprising
hard measures of customer buying/use behavior and soft measures of customer opinions or feelings. Index is
weighted based on how important each value is in determining customer overall customer satisfaction and
buying/use behavior. Includes measures such as repeat and lost customers (30%), revenue from existing
customers (15%), market share (15%), customer satisfaction survey results (20%), complaints/returns (10%),
and project-specific surveys (10%).
 Cycle Time
There are two types of cycle time—project cycle and process cycle. The project life cycle defines the beginning
and the end of a project. Cycle time is the time it takes to complete the project life-cycle. Cycletime measures
are based on standard performance. That is, cycle times for similar types of projects can be benchmarked to
determine a Standard Project Life-Cycle Time. Measuring cycle times can also mean measuring the length of
time to complete any of the processes that comprise the project life-cycle. The shorter the cycle times, the faster
the investment is returned to the organization. The shorter the combined cycle time of all projects, the more
projects the organization can complete.
 Requirements Performance
Meeting requirements is one of the key success factors for project management. To measure this factor you
need to develop measures of fit, which means the solution completely satisfies the requirement. A requirements
performance index can measure the degree to which project results meet requirements. Types of requirements
that might be measured include functional requirements (something the product must do or an action it must
take), non-functional requirements (a quality the product must have, such as usability, performance, etc.). Fit
criteria are usually derived some time after the requirement description is first written. You derive the fit
criterion by closely examining the requirement and determining what quantification best expresses the user’s
intention for the requirement.
 Employee Satisfaction
An employee satisfaction index will give you one number to look at to determine employee morale levels. The
ESI comprises a mix of soft and hard measures that are each assigned a weight based on their importance as a
predictor of employee satisfaction levels. The ESI should include the following (percentage represents weight):
climate survey results (rating pay, growth opportunities, job stress levels, overall climate, extent to which
executives practice organizational values, benefits, workload, supervisor competence, openness of
communication, physical environment/ergonomics, trust) (35%), focus groups (to gather indepth information on
the survey items) (10%), rate of complaints/grievances (10%), stress index (20%), voluntary turnover rate
(15%), absenteeism rate (5%), and rate of transfer requests (5%).
 Alignment to Strategic Business Goals
Most project management metrics benchmark the efficiency of project management—doing projects right. You
also need a metric to determine whether or not you’re working on the right projects. Measuring the alignment of
projects to strategic business goals is such a metric. It’s determined through a survey of an appropriate mix of
project management professionals, business unit managers, and executives. Use a Likert scale from 1-10 to rate
the statement: Projects are aligned with the business’s strategic objectives.
5.2 REASONS OF PROJECT TIME AND COST OVERRUN
Delay and cost overrun are inherent part of most projects despite the much acquired knowledge in project
management. Although some may argue that this is negligible It is important to note that physical and economic
scale of projects today is such that it is driven under the platform of profit to the parent organization, and of
national interest (for government projects) by the degree of success defined within the Iron triangle of cost,
time, and scope. It is therefore much appreciated to look at some reasons of delays and cost overrun in project
and their mitigation process, so as to increase the perception of project success.
1: Unplanned Costs

So many things can happen between the time a contract is signed and when it is finally executed. And they can
all influence the cost of materials, equipment and labor and overhead, such as administrative, finance and legal
costs. Unplanned costs – whether they are unexpected or overlooked – can bedevil any project.
Guard against this cost overrun by building reserves and regularly checking material and supplier contracts
against buying patterns, which influence supply and demand, and therefore, costs. Successful project managers
not only produce project budget and spending outlooks; they also check them constantly, says 4 Cast Plus, a
project management company. This goes for “any project-based industry, regardless of whether you are in
construction, IT or professional services,” the company states.
2: Communication Breakdown
This can happen among any two people involved in a project, but the miscommunication that could end up
costing you money is most likely to take place between the project manager and another employee in a key role.
You can’t possibly be in the same room for every meeting or listen in on every phone call, but you can be in the
pipeline in other ways, so that you can guard against one of the primary causes of cost escalation in project
management.
Guard against this cost overrun by keeping your project leader's clear, organized and detailed project plan
nearby at all times -- and insist that others involved in the project do the same. They should have “their parts”
memorized and they should meet at least once a week to review the project’s status. And the project leader
should be proactive, communicating any changes to the plan immediately and issuing a “heads-up” to potential
problems on the horizon. Miscommunication is far less likely to occur when everybody is on “high alert.”
3: Changes in Project Scope
It’s a rare project that gets smaller over time; a project almost always grows, and with that growth, the costs.
Many people defend “scope creep,” saying that it should be expected, as a project begins to take shape. Don’t
fight it; embrace it, they say. In theory, you may agree, but what about that burgeoning bottom line?
Guard against this cost overrun the only way possible: By setting strict rules about how much change you will
accept and by what date – and then standing by your decision.
4:Underestimating Project Difficulty or Complexity
It’s more likely to happen with big, expensive projects – the type with hidden “surprises” that haven’t been
unearthed yet, like building projects that involve excavation work. But underestimation can impugn smaller
projects, too.
Guard against this cost overrun by ensuring that you hire bona fide experts to undertake the initial review of
your project. Of course, even experts make mistakes, but those who have experience are more likely to rely on
their experience, as they consider “what if?” scenarios. As the boss, it's always beneficial to visit projects
similar to yours – and take copious notes of what went right and what could have gone better, if those project
leaders knew then what they know now. Finally, consider breaking down projects into smaller, more
manageable phases. Psychologically, it can be easier for project participants to approach and execute; in
practice, it can force any gaps to the surface sooner rather than later.
5: Unrealistic Cost Estimates

Like sailing in a boat with a leaky bottom, setting sail on a project that has been underbid virtually seals it for a
budget overrun (unless cuts are made in other places).
Guard against this cost overrun by putting your project in the hands of an experienced hand right from the start
and comparing the bid to the cost of similar projects. Then ask your project leader to sit down and provide a
comprehensive breakdown of each component of the project and its associated costs. Such a disclosure can help
expose even accidental oversights.
6: Inadequate Financing
You can see the triumvirate forming before your eyes: a project whose complexity has been underestimated can
lead to unrealistic cost estimates and then problems when it comes to financing. And if financing dries up in the
middle of a project, it can come to a grinding halt, all of which proves that project management is part art, part
science.
Guard against this cost overrun having a frank conversation with your lenders about what they can do if you run
into financing trouble. Having a back-up plan in place – even if you don't need it – probably won't be cheap, but
it could spare you the much bigger expense of a stalled project.
7: Project Delays
During the course of any project, it's fair to expect at least a few delays. All the moving parts, and people,
practically guarantee that something or someone will not perform as planned. But as you surely know, there's a
big difference between an isolated incident and a repetitive problem that can trigger some of the most
frustrating causes of cost-escalation in project management.
8: Lack of Leadership Experience
It can be painful to “point fingers,” but sometimes it can't be helped. Small-business owners want, and are
entitled to, accountability. So when a project runs off the rails because of a lack of leadership on the part of the
project leader, it can be painfully obvious who is responsible. A lack of project management experience can
reveal itself in myriad ways: lack of planning, poor communication, insubordination and missed or unenforced
deadlines, among them.
Guard against this cost overrun by hiring an experienced team leader, who excels at communicating (with you)
and who provides regular project updates.
. 9: Lack of Coordination
Slightly different from a lack of leadership, a lack of coordination could certainly be a symptom of it. But even
experienced project leaders can falter if, as the saying goes, “the right hand doesn't know what the left hand is
doing.” Lack of coordination most often results in tasks slipping through the cracks or duplicity of tasks, both of
which jeopardize deadlines and virtually guarantee cost overruns and project delays.
Guard against this cost overrun by ensuring that you have a system in place that can tell you the status of your
project at any given time, as well as the next task on the list. The risk here, of course, is that you could find
yourself in the position of having to step in and referee. You might be OK with this as a temporary move, and
besides: as a small-business owner, you probably have a take-charge personality anyway. But it should help to
remember that your project leader is being paid to lead and that he should reassert control over the project on
your behalf.
10: Lack of a Contingency Plan
It may sound obvious now, but like many small-business owners, you may resist drafting a contingency plan -
“plan B" - when you're busy trying to get "plan A" launched and off the ground. On the other hand, your mind
may already be programmed to think in terms of backup plans, just in case things go awry. This quality will
serve you well with a project that demands not only a few tweaks and revisions, but also an overhaul.
Guard against this cost overrun by taking the time to draft a “plan B,” right from the start. A contingency plan
could serve you, as well as your can-do attitude can, by putting your project back on the rails, by reducing cost
overruns – and by keeping that charge of electrical current a positive, sustaining force at your small business.
5.2.1 Remedial measures to Avoid Time and Cost Overruns :
Delivery management is the intricate process of assuring timely delivery of quality software products and
services within the agreed budget, while at the same time, ensuring a fair share of profit for the company.
One needs to be strategic with proactive thinking, not just to correct issues that arise during the project phase,
but to take nececarry actions to prevent their occurrence too. Because as the old saying goes, prevention is
always better than cure! Here are five ways to reduce time and cost overruns in projects, and some pointers to
help you deliver a successful project.
1. Use Customized Agile Project Management

This would be the best approach, as Agile is one of the most flexible project management models in use. Let me
give you a brief overview for those who are not familiar with the concept. Agile project management accepts
that change is one of the major risks which needs to be dealt with in projects. Change means a change in
requirement, change in timeline, change in budget, or any such factor which decides the project’s success. The
Agile approach deals with this risk in multiple ways.
Plan for Short Term Deliverables

Plans are prepared for providing work output usually a week or two at a time. This time frame is called a sprint.
Deliverables of each sprint is internally tested and submitted to the client, who reviews it and provides feedback
to the development team. This results in progressive constructive feedback about the work being undertaken,
thereby eliminating surprises at the last moment, once all the work is finished and submitted for client review.
Maintain a Small Autonomous Team

An Agile project team’s maximum size will be around ten, including developers, BAs, QAs and project
manager. All team members will have the authority to make decisions which are beneficial for the project, and
such decisions will be communicated across the team. Knowledge is not centric to any particular division within
the team; it is rather spread across all team members.
Effectively Manage Communication
As hinted in the previous point, all details regarding the project are communicated with all the stakeholders.
Development builds and demos are planned at the end of each sprint for clients, and they provide open and
honest feedback which is taken into consideration for the next sprint. Daily stand up team meetings are a good
way of keeping everyone (including the client) updated about the project status. Sprint backlogs are maintained
and updated daily to keep track of progress against each task committed for delivery in a sprint.
Plan for Dummy Sprints to Handle Overruns

While planning your sprints, plan for dummy sprints in between, with no work planned except for handling
bugs identified in previous sprints and adjusting minor changes in overruns. You can plan for a dummy sprint
after every third or fourth development sprint.
2. Do Proper R&D and Ensure Consultant Availability

Doing proper research on the planned area of work – both general and technical - is essential for understanding
and sizing up the requirements. Even after the project starts, make sure you have architects in the consultant role
so that your team does not get stuck on issues due to unavailability of expert advice.
3. Ensure Continuous Integration Using Good Configuration Management Approach

Continuous integration is achieved using GitHub or Bitbucket. The code is managed from three branches –
Development, Acceptance and Production. Development is the branch where actual coding work is performed.
Developers check out code, make modifications, and check them back in only in the Development branch. Once
development is complete and unit testing is performed, the code is deployed in Acceptance branch, where it is
subject to thorough testing by the QA team.
Any feedback received is worked upon in the development branch, verified, and re-deployed in Acceptance
branch. Once it is confirmed that all functionalities are working as desired, the acceptance copy is moved to
Production. No work whatsoever is performed on the Production branch – ever. This lets us quickly revert to
stable code, in case of unforeseen adversities.
4. Perform Proper Product Testing
Integration testing and product testing should be performed on the produced code to ensure its compliance with
stated requirements. The Requirement Traceability Matrix (RTM) will help you in this process. Business
Analysts list down each requirement in the RTM document. Integration test cases and product test cases are
prepared by QA team members, and are linked with each requirement in the RTM. Testing is performed in the
Acceptance code branch and only QA certified code is released to the customer.
5. Have Solid Risk Management Procedures

This is at the heart of project management process, and demands considerable amount of ‘thinking out of the
box’ and creativity to perfect it. However, a delivery manager’s strength lies in managing unforeseen risks from
a perfect plan on a daily basis. Contingency and mitigation plans are prepared to handle such scenarios. The
decision about which one of these needs to be prepared is based on two parameters – impact of risk and
probability of its occurrence.
Contingency plans are prepared to deal with risks that have high impact, but low probability of occurrence,
while mitigation plans are prepared for risks with high impact and high probability of occurrence. Essentially,
you need to prepare risk management plans for items with high impact. Both these plans identify risks, list
associated stakeholders, and detail steps to be taken in case of occurrence of each risk. We hope the information
shared in this article helps your team use the Agile project management approach to reduced time and cost
overruns in your next delivery project.
Correct identification of the causes of delays can help the project team to eliminate the same, as per the adage, a
problem well formulated is half solved. The most important reason for delay in cost and time overrun: planning,
organising and monitoring; hence, the need to plan the resources adequately and estimate the need scientifically.
Right choice of project manager, project oriented organization, project team and delegation of authority
commensurate with responsibility will go a long way to reduce the overruns. Proper project management
information system and effective coordination with all concerned will ensure timely project completion. The
other reasons that help completing the project without delay are listed hereunder. These are:
➢Detailed planning and implementation schedule.
➢Sound monitoring
➢Resource-planning based on time schedules and anticipated progress.
➢Ensuring safety measures while preparing contracts.
➢Reward and incentive schemes for the project staff
➢Selection of appropriate, feasible technology
➢Listing engineering parameters and designs
➢Mobilizing community participation in planning and implementation
➢Decentralized decision-making for fast implementation
➢Continuity of the project manager, at least till the start of the plant
➢Adequate training of the workers, supervisors involved
➢Anticipating omissions, mistakes and preparing the organization to face crisis
➢Minimizing managerial lapses
➢Identifying transport bottlenecks by proper liaison
➢Communication, and following-up with vendors and subcontractors to know the latest status and location of
project material
➢Regular follow-up with local, national and international financial agencies
➢Innovative attitude and skills of the project team
➢adequate project information system
➢Maintaining ecological balance and avoiding environmental
pollution
➢Clarity of scope on project objectives
➢Lucid description of team and sub-team tasks
➢Lucid financial cost estimates
➢Milestone charts and project audit reports, and
➢Minutes of the co-ordination committees’ meetings with contractors and government agencies.

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CC – 503 – Project Management

1.1 Concept of Project

1.2 Characteristics of a Project

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1.3 Project Life Cycle

Project life cycles generally define:

Most project life-cycle descriptions share a number of common characteristics:

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➢Cost and staffing level is defined for every single phase.

Stages of Project Life Cycle

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The stages of project life cycle are detailed below:

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➢A detailed description of the problem or opportunity;

➢The Project Management Life Cycle

➢A list of the alternative solutions available;

➢An analysis of the business benefits, costs, risks and issues;

➢A description of the preferred solution;

➢A summarized plan for implementation.

➢Documentation, such as a project methodology, standards, processes, forms and registers;

➢Tools, such as accounting, project planning and risk modeling software.

➢Project plan outlining the activities, tasks, dependencies and timeframes;

➢Resource plan listing the labor, equipment and materials required;

➢Financial plan identifying the labor, equipment and materials costs;

➢Quality plan providing quality targets, assurance and control measures;

➢Acceptance plan listing the criteria to be met to gain customer acceptance;

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➢Communications plan describing the information needed to inform stakeholders;

➢Procurement plan identifying products to be sourced from external suppliers.

 Create a project plan

Project Planning Activities

➢Type of resource required, such as labor, equipment and materials;

➢Quantity of each type of resource required;

➢Roles, responsibilities and skill sets of all human resource required;

➢Specifications of all equipment resource required;

➢Items and quantities of material resource required.

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➢Defines the term ‘quality’ for the project.

Project Execution activities:

The project closure activities:

➢Identifying any outstanding project activities, risks or issues;

➢Handing over all project deliverables and documentation to the customer;

➢Canceling supplier contracts and releasing project resources to the business;

➢Did it result in the benefits defined in the business case?

➢Did it achieve the objectives outlined in the terms of reference?

➢Did it operates within the scope of the terms of reference?

➢Was it delivered within the schedule outlined in the project plan?

➢Was it delivered within the budget outlined in the financial plan?

Unit-2 - Time Scheduling:

Most commonly used tool for project scheduling are:

 Bar chart (Gantt chart)

2.1 Gantt Chart

Gantt charts are sometimes equated with bar charts.

On a Gantt chart you can easily see:

 The start date of the project,

 What the project tasks are,

How to Create Your Own Gantt Chart: