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Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th
Project Management I
ผศ.ดร. อริศรา เจียมสงวนวงศ์ จัดทาโดย ภาควิชาวิศวกรรมอุตสาหการ 1 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th
Outlines
1. Introduction to Project Management
2. Project Selection
3. Organizational Structure
4. Defining the Project
5. Estimating Project Times & Cost
6. Developing a Project Plan
7. Scheduling Resources and costs
8. Progress and Performance Measurement and Evaluation
9. Project Closure
2 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th
1. Introduction of Project Management
3 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th
What is Project?
All of mankind’s greatest accomplishments – from building the great pyramids to discovering cure for polio to putting a man on the moon
Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th What is Project? Project defined as A complex, nonroutine , one-time effort limited by time, budget, resources, and performance specifications designed to meet customer needs. 5 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Comparison of Routine Work & Projects 6 Routine, Repetitive Work Taking class notes Daily entering sales receipts into the accounting ledger Responding to a supply-chain request Practicing scales on the piano Routine manufacture of an Apple iPod Attaching tags on a manufactured product Projects Writing a term paper Setting up a sales kiosk for a professional accounting meeting Developing a supply-chain information system Writing a new piano piece Designing an iPod that is approximately 2 X 4 inches, interfaces with PC, and stores 10,000 songs Wire-tag projects for GE and Wal-Mart Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Major Characteristics of a Project
Has an established objective.
Has a defined life span with a beginning and an end.
Requires across-the-organizational participation.
Involves doing something never been done before.
Has specific time, cost, and performance requirements.
7 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Project Management
Provide a powerful set of tools
which improves ability to plan , implement , and manage
activities to accomplish specific organizational objectives
A result-oriented management style
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Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Classification of the Project 13 Compliance: need to meet regulatory conditions Emergency: emergency condition Operational: support current operations Strategic: support organization’s long-run mission Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Selection Criteria Financial Models
Payback Model
Net Present Value (NPV)
Non-financial Models
Projects of strategic importance to the firm.
14 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Selection Criteria: Financial Models
Payback Model
Measure the time it will take to recover the project investment
15 Payback ( yrs ) = Estimated Pr ojectCost AnnualSavings 0 1 2 $ - 50, $ +25,000 $ +25, $ - 50, Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Selection Criteria: Financial Models
Example: Calculate the payback periods of this project.
Project A has an initial investment of $700,000 and projected cash
inflows of $225,000 for 5 years.
Payback period = $700,000/$225,000 = 3.11 yrs.
Project B has an initial investment of $400,000 and projected cash
inflows of $110,000 for 5 years.
Payback period = $400,000/$110,000 = 3.64 yrs.
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Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Selection Criteria: Financial Models
Limitations of Payback:
Ignores the time value of money. Does not consider profitability. 17 10 Years ago Today Next 10 Years $ (^10) $ 10 $ 10 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Selection Criteria: Financial Models
The Net Present Value (NPV) model
Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows.
- Positive NPV : Project meets minimum desired rate of return and is eligible for further consideration.
- Negative NPV : Project is rejected. 18 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Example
Year C.F. Discount Rate = 10% Present value
0 - 10,000 1 - 10, 1 7,500 0.91 6,818. 2 8,000 0.83 6,611. 3 9,000 0.75 6,761. 4 9,700 0.68 6,625. 5 10,000 0.62 6,209. 19 NPV = 23,026. 1 ( 1 + 𝑘)𝑡 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Selection Criteria: Financial Models Excercise : Calculate the NPV of this project. Given discount rate of 15 % Project A has an initial investment of $700,000 and projected cash inflows of $225,000 for 5 years. NPV = Project B has an initial investment of $400,000 and projected cash inflows of $110,000 for 5 years. NPV = 20
Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Applying a Selection Model
Project Classification
Strategic, Operation, Must-do
Selection a Model
Financial, Non-Financial
Sources and Solicitation of Project Proposals
Ranking Proposals and Selection of Projects
Responsibility for prioritizing
26 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Project Screening Process 27 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th 3. Organization Structure 28 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Project Management Structure A good system….
Balance the needs of both parent organization and the
project
by defining their interface between the project and parent
organization in terms of
Authority Allocation of resources Integration of project outcome 29
Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Organization projects within 30 A. Functional/ a multi-division structure B. Product/Projectized structure C. Matrix structure (variety through combination) Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Organizational Influences 31 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th 4. Defining the Project 32 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Content
Defining the Project Scope
Creating the Work Breakdown Structure (WBS)
Integrating the WBS with the Organization
Coding the WBS for the Information System
Responsibility Matrices
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Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th WBS Helps the Project Manager Facilitates evaluation of cost, time, and technical performance of the organization on a project. Provides management with information appropriate to each organizational level. Helps in the development of the organization breakdown structure (OBS). which assigns project responsibilities to organizational units and individuals Helps manage plan, schedule, and budget. Defines communication channels and assists in coordinating the various project elements. 38 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Work Breakdown Structure 39 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Work Packages
A work package is the lowest level of the WBS. It is output-oriented
in that it:
- Defines work (what).
- Identifies time to complete a work package (how long).
- Identifies a time-phased budget to complete a work package (cost).
- Identifies resources needed to complete a work package (how much).
- Identifies a person responsible for units of work (who).
- Identifies monitoring points (milestones) for measuring success. 40 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Integrating the WBS with the organization Organizational Breakdown Structure (OBS)
Depicts how the firm is organized to discharge its
work responsibility for a project.
- Provides a framework to summarize
organization work unit performance.
- Identifies organization units responsible
for work packages.
- Ties organizational units to cost control accounts. 41
Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Integration of WBS and OBS 42 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th 5. Estimating Time and Costs 43 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Estimating Projects The process of forecasting or approximating the time and cost of completing project deliverables. Types of Estimates Top-down (macro) estimates: analogy, group consensus, or mathematical relationships by top management Bottom-up (micro) estimates : estimates of elements of the work breakdown structure by relevant staffs 44 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Estimating Time and Cost Are Important
To support good decisions.
To schedule work.
To determine how long the project should take and its cost.
To determine whether the project is worth doing.
To develop cash flow needs.
To determine how well the project is progressing.
To develop time-phased budgets and establish the project
baseline.
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Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Top-Down: Apportion Method of Allocating Project Costs Using the Work Breakdown Structure 50 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Top-Down: Function Point Count Method 51 Faculty of Engineering, Chulalongkorn University www.eng.chula.ac.th Top-Down: Function Point Count Method
Function point count total is 660
One-person month can work 5 function points
In total this job require number of workers = 660 / 5 or 132 persons
in a month
But if the project only got 10 workers who are able to do this job
Then; this job will take 13.2 months to finish
Given the monthly worker rate is $ 4000 , the labor cost will be 132
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