04 Project Planning
04 Project Planning
04 Project Planning
After working through this chapter you should be able to: explain the sense and purpose of scrupulous project planning. describe the complete project planning process and name the objectives of each stage. structure a project according to different organisational principles. structure the course of a project taking into interdependencies between the individual activities. account potential
calculate deadlines for individual events in a project summary using the critical path method, establish buffer periods, and determine the critical path for the project as a whole. roughly explain the structure of a critical path diagram and a bar chart (or Gantt diagram) based on an example. describe in your own words the criteria and tasks required for resource planning and cost budgeting in a project. justify the need for risk management in a project. identify and evaluate examples of project risks in different risk classes and plan appropriate measures to deal with these risks.
4 PROJECT PLANNING
4
4.1
PROJECT PLANNING
The project planning process
Planning, project planning process.
Key words:
When a project is being planned, the objectives must be stated unambiguously all stakeholders should know, and agree upon, where the project is going. Possible strategies to achieve these objectives should then be worked out (project planning process). The question, "How do we (best) get to where we want to be?" needs to be answered. A successful outcome of the project will only be achieved if participants act in a target-oriented virtual way and focus on processes and results right from the beginning of the planning phase. The structured planning of tasks and processes means that the complexity of a project can, to a large extent, be broken down into 'chunks'. The project as a whole is more likely to succeed if the various work processes are effectively co-ordinated. Scrupulous scheduling provides the participants with a clear idea of the relationship between the time required to complete a project and the time available an important consideration for a project with a time limit or specific deadline. The complete project planning process includes a number of iterative stages that feed back into each other (Diagram 23):
Risk analysis
detailed step-by-step planning
Cost budgeting Resource planning Project scheduling Project workflow Cost estimating Work breakdown
PROJECT MANAGEMENT
85
4 PROJECT PLANNING
With detailed step-by-step planning, we move from the abstract or general to the more concrete or specialised. The more carefully the stages of a project are planned in advance, the more confident the participants are that the outcomes can be achieved. The aim is to minimise the number of decisions about processes and content that might still have to be made while the project is running.
Reflective task:
This issue is repeatedly discussed in the workplace, in seminars, and in institutions of learning: To what extent is it advisable to limit the scope for decision-making about processes and content in order to increase participants confidence? Does it apply to all types of projects? Might it be counterproductive to restrict participants to a tight plan? To what extent is their freedom to act retained? How far should planning go? Jot down a few ideas and/or discuss these issues with your colleagues or fellow students. ................................................................................................................................... It is necessary to emphasise that, even with an iterative planning process, there is no guarantee that the envisaged course of the project will match the actual one. Outlines are always provisional, and plans can be reviewed at any time in all phases of the project. But this does not mean that there is no need for planning on the contrary, the possibility of augmenting a plan by correcting, adding or deleting items is also part of the idea of effective planning. Planning is an iterative process, which, since it continues right until the end of the project, contributes to a positive outcome because of appropriate decisions and actions on the part of participants.
PROJECT MANAGEMENT
86
4 PROJECT PLANNING
provides a basis for working through phases and tasks sequentially with clearly identified decision-making points, therefore avoiding the risk of failure.
Learning exercises:
4.1.1 Why is efficient project planning so important? Give reasons in your own words.
...................................................................................................................................
4.1.2
Name the steps in a complete project planning process. Why do we generally go through these steps more than once?
...................................................................................................................................
4.2
Key words:
PROJECT MANAGEMENT
87
4 PROJECT PLANNING
organises the allocation of work packages to employees or subcontractors in a targeted manner creates a solid basis for subsequent change management. In contrast to lists of activities in the private or professional field, the work breakdown structure (WBS) in a project is constructed hierarchically on several levels (tree structure with vertical and horizontal structuring rules). A very large project should first be divided into several self-contained sub-projects. Firstly, this makes things very clear, and secondly, the different sub-projects can be worked on and monitored independently in different organisations, sections, departments or teams. The sub-tasks form the next level. These can be divided up further into additional sub-tasks or into work packages. They form the lowest level of the hierarchy in a WBS (Diagram 24). They should always be structured in such a way that individual organisational units or employees can take responsibility for working through them and completing them successfully.
Project Project
sub-project sub-project SP 1
sub-plan
sub-task sub-task
ST2.1
sub-task sub-task
ST 2.3
sub-task sub-task
ST 2.2.1
sub-task sub-task
ST 2.2.2
Diagram 24: Breaking down a project into sub-projects, sub-tasks and work packages
Generally, individual work packages include several work stages, or activities. These are the smallest possible units in a project plan and represent the individual activities necessary to complete a work package (e.g. discussions, research, gradual development of concepts and documents etc.). These should be listed in a work package description. In the planning process, they are examined in more detail during project logistics and scheduling.
PROJECT MANAGEMENT
88
4 PROJECT PLANNING
structural elements
4.2 WORK
sub-task sub-task
ST 3
sub-task sub-task
ST 1
WP WP
WP 1.1
WP WP
WP 1.2
WP WP
WP 1.3
WP WP
WP 2.1
sub-task sub-task
ST 2.2
WP WP
WP 2.3
WP WP
WP 3.1
WP WP
WP 3.2
WP WP
WP 3.3
horizontal structuring rules Activities : - researching information - working out an idea/concept (meeting) - agreement with customer (meeting) - drafting concept - agreement on concept draft (meeting) - completion of concept - Approval of concept
WP WP
WP 2.2.1
WP WP
WP 2.2.2
WP WP
WP 2.2.3
(subsequent) scheduling
Diagram 25: Work breakdown structure with sub-tasks and work packages
PROJECT MANAGEMENT
89
4 PROJECT PLANNING
Classification according to objects: This produces a work breakdown structure that is oriented towards results or products, i.e. oriented towards the subject of the project. It shows the structure for the project (parts, assembly, sub-systems) and all the additional physical components necessary for the project to be completed (draft documents, test data, preliminary investigations). An object-oriented breakdown structure is recommended if you need or wish to keep an eye on the costs of individual product parts.
Numerical coding (decades)
100
concepts concepts
200
media media
300
rough idea specific idea script rough idea specific idea script 110 130 120
Classification according to functions: A work breakdown structure classified according to functions is an activityoriented representation of the steps needed to complete the project. The objective is the functional differentiation of the overall task. For the description of work packages mainly verbs are being used. A function-oriented classification is recommended when the cost of individual work packages needs to be analysed during the project.
alphanumeric coding
conceive conceive
B
draw up describe draw up describe specifications prg. workflow specifications prg. workflow
develop develop
test test
A.1
A.2
A.3
C.1
C.2
C.3
B.1
B.2
B.3
PROJECT MANAGEMENT
90
4 PROJECT PLANNING
Mixed classification according to phases and functions: If the phases in a project are easily distinguishable, then it often makes sense to use this form of classification on the second level of the breakdown plan. Generally speaking, phase-oriented classification should be used if it is especially important to meet deadlines. A mixed classification allows for the activities in the function-oriented procedure to be added to subsequent levels.
Numerical coding
conception conception
2
elaborate elaborate concept concept formulate formulate script script
production production
implementation implementation
1-1
1-2
1-3
3-1
3-2
3-3
2-1
2-2
2-3
Diagram 28: Example of a work breakdown structure with a mixed classification (phases and functions)
PROJECT MANAGEMENT
91
4 PROJECT PLANNING
Bottom-up
sub-task sub-task
ST ?
Top-down
WP WP
WP ?.?
WP WP
WP ?.?
project
sub-task sub-task sub-task sub-task
ST ?
WP WP WP WP
WP ?.? WP ?.?
Sub-task Sub-task
ST ?
COST ESTIMATION
WP WP
ST?
project
WP WP
WP ?.?
WP ?.?
WP WP WP WP WP
WP ?.?
WP
WP WP WP
WP ?.?
WP WP
WP ?.?
WP WP
WP ?.?
sub-task sub-task
ST ?
WP ?.?
WP WP
WP ?.?
WP WP
WP ?.?
WP WP
WP ?.?
project project
sub-task sub-task
sub-task sub-task
sub-task sub-task
sub-task sub-task
sub-task sub-task
Please note that, irrespective of the method used, there is no single correct work breakdown structure! What counts is the structure set up by the project leader and his team being comprehensive and practical. Guidelines for setting up a work breakdown structure: Make sure that the sub-tasks and work packages are self-contained units with clear and simple boundaries or interfaces with other sub-tasks and work packages. Identify those tasks that are to be handled externally as independent subtasks or work packages. Don't go into too much detail that will reduce clarity and is not practical in terms of cost-effectiveness. Make sure that the size of the work package is reasonable in relation to the duration of the whole project: with very small work packages (of a very short duration) controlling costs at a later stage can be difficult or very expensive; when work packages are too large (of a very long duration), project management within project controlling might realise delays too late and wont be able to take effective counter-measures. Appoint one person only to be responsible for each work package irrespective of the number of persons working on it.
PROJECT MANAGEMENT
92
4 PROJECT PLANNING
For more complex work packages, draw up secondary work package descriptions with operationalised, detailed objectives. In this way, you can make sure that there will be a clearly understood and verifiable unit of production or deliverable result.
PROJECT MANAGEMENT
93
4 PROJECT PLANNING
project 1 (2002)
+
project 2 (2002)
+ + + +
COST ESTIMATION
+
project 3 (2003)
+
project 4 (2004)
Procedure based on comparisons (Diagram 30) Expenses of one or more completed projects are used as a basis for cost estimation in the current project. Secondary comparison criteria and weightings may be set taking different conditions into account. Procedure based on indices (Diagram 31) Sound indices and coefficients can be derived from a number of completed projects and then adapted. These figures can then be used for cost estimation in a new project.
Project conseption (PK / CI / DB) Definition phase Data collecting, investigation Is the author subject expert? Learning material avalable? oes learning materials fit with objectives/content? Is a consulter disposable? Rough concept Were structures indicated by contractor? Are structures simple or complicated? Are training materials simple or complicated? Are contens good differentiated? Conception phase Detailed concept Are training materials simple or complicated? Materials are available? Particular qualities required? The programme is too complex? Programme-CL (customer's spec.) General standards are defined? extensive framework necessary? not occupied not occupied Authoring phase Script, prototype Are training materials simple or complicated? Detailed ideas are defined enough? Particular qualities required? The programme is too complex? Level of interactions is high or low? Development of handling/desicion menu? not occupied not occupied Costs estimation 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 Costs 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 Costs 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 1,00 Unit Cost factor_Inv Factor Collecttion of materials Factor enrichtment of materials Factor reader production Factor meeting Cost factor_RI Factor Basic works Factor eleborating of rough concept Factor corrections Factor meeting Unit Cost factor_DI Factor Basic works Factor eborating of detailed concept Factor corrections Factor meeting Cost factor_Pr Factor Basic works Factor customer's spec. Factor Quality securing Factor meeting Unit Cost factor_Pr Factor Factor Factor Factor Level factor_DI Factor Factor Factor Factor Unit 1 1 1 1 1 1 1 1 Unit Basic works Conception VS Conception IS Conception TS final processing VS final processing IS final processing TS Concept videomin. Concept Lexiconterm. Quality securing meeting 1 1 1 1 1 1 1 1 10 1 1 Costs per Number of Unit 1 1 1 1 1 1 1 1 Costs per Number of Costs per unit Number of persons Costs 2,00 1,00 4,00 2,00 1,00 8,00 0,50 1,00 Costs 4,00 80,00 2,00 16,00 Calculation GP-Std/FhLZ GP-Std/FhLZ GP-Std/FhLZ GP-Std/FhLZ GP-Std/FhLZ GP-Std/FhLZ GP-Std/FhLZ GP-Std/FhLZ Calculation GP-h/Fmodule GP-h/FBS GP-h/FBS GP-h/FBS Range 4 32 8 64 0 - 32 0 - 32 4 16 4 32 0-16 0-16 Range 4 32 8 64 0-32 0-64 0-16 0-8 0-16 0-8 Range 0-15min 30-160min 45-270min 45-270min 30-160min 45-270min 45-270min 60-270min 5-30min 0-1h 0-1h Due rate 2 4 4 2 1 2 1 4 Due rate 2 4 4 8 4 1 4 1 Due rate 5 80 140 140 80 140 140 4 10 0,2 0,25
4,00 F-h 1,00 F-h/week F-h F-h/week Costs 0,10 1,00 1,25 1,25 0,75 1,00 0,75 1,50 0,17 0,17 0,17 Calculation GP-h/FBS GP-h/FBS GP-h/FBS GP-h/FBS GP-h/FBS GP-h/FBS GP-h/FBS GP-h/Fmin. GP-h/Fbegr. GP-h/FBS GP-h/FBS
Diagram 31: Extract from a collection of indices from 'Developing a learning programme'
Example: In a number of previous projects you established that writing one page of a draft plan with specific formatting guidelines requires a specific number of hours
PROJECT MANAGEMENT
94
4 PROJECT PLANNING
depending on the level of detail: 1,35 (low), 1,82 (medium), 2,46 (high). A 100-page plan with a medium amount of detail can therefore be written in 182 hours (= 22.75 person days).
developer
809 h 809 h
project leaders
245 h 245 h
326 h 326 h
238 h 238 h
authors
121 h 121 h
68 h 68 h
56 h 56 h
135 h 135 h
96 h 96 h
95 h 95 h
78 h 78 h
92 h 92 h
68 h 68 h
experts
Expenditure
controller
Expert experience
Diagram 32: Cost estimation by means of expert interviews
Expert interviews (Diagram 32) In single or multiple interviews or in an estimation test, different specialists give their cost estimates to carry out the tasks in a project. The quality of the estimates then depends on the experience of the interviewees. In the case of multiple interviews one can derive arithmetic or weighted average values from the results (e.g. from optimistic, realistic and pessimistic values). Algorithmic or parametric procedures Algorithmic or parametric estimation methods are used mostly in IT fields for establishing software development costs. These are based on the number of instructions in the source code (COCOMO-Model) or the concrete demands on the different function fields (Function-Point-Method). For all models, there is a formula-based connection between measurable result values and the expenditure required. For detailed information on these methods, please refer to the additional reading list (in German). Deciding on which procedure to use depends on your or your organisation's experience with previous projects; on the availability of comparative figures or indices from your organisation or from project partners; and on the specific project content.
PROJECT MANAGEMENT
95
4 PROJECT PLANNING
If you have a wealth of experience, you can directly establish costs in your project on the level of work packages. If you have less experience or if it is a completely new task, you will have to go down to the process level: i.e. you must refine the actual activity descriptions to provide reliable cost estimation, based on: the expected results of the activity (quality and specifications) the required and available competences of the participating employees (an experienced employee will require less time than an inexperienced employee) methods used and tools available (good tools speed up the work, and clear work methods limit uncertainties in completing tasks).
Learning exercises:
4.2.1 What are the advantages of a work breakdown structure? Why should you always start with structuring the project?
...................................................................................................................................
4.2.2
Look again at Diagrams 4 to 6. These show sub-tasks and work packages together with various key numbers (coding). What is the point of such coding in terms of work breakdown structures?
...................................................................................................................................
4.2.3
Develop a work breakdown structure with function-, object-, and mixedorientation classification (function and phases) for the organisation of a two-day information event in your educational institution, with the topic 'distance education in current educational structures'. A symposium is planned with lectures by specialists in several parallel sessions and with exhibitions by organisations interested.
...................................................................................................................................
4.2.4
What are the goals of thorough cost estimation for individual project tasks, and what are the advantages of estimating costs as a team?
...................................................................................................................................
PROJECT MANAGEMENT
96
4 PROJECT PLANNING
...................................................................................................................................
Additional reading:
Mller-Ettrich R. (2003). Einsatzmittelmanagement, in GPM/RKW (Hrsg.): Projektmanagement-Fachmann, 7. Aufl., Eschborn, 577-582. Patzak, G. & Rattay, G. (2004). Projektmanagement Leitfaden zum Management von Projekten, Projektportfolios und projektorientierten Unternehmen, 4. Aufl., Wien, 147-165 (Projektstrukturierung) und 190-193 (Aufwandsschtzung). Schiersmann C. & Thiel H.-U. (2000). Projektmanagement als organisationales Lernen, Opladen, 175-183 (Projektstrukturierung).
4.3
Key words:
4.3.1 Logistics
At an early stage of planning, project logistics or scheduling makes it possible to consider variations and alternative solutions regarding deadlines, costs and resources. It also helps to localise critical interfaces between individual parts of a project and to discuss appropriate solution options with the participants. The sub-tasks, work packages and processes1 defined in the work breakdown structure must now be put into a logical sequence. This means that all logical and material dependencies between the individual tasks to be completed must be recorded and visualised. The analysis of interdependencies involves three central questions:
1
PROJECT MANAGEMENT
97
4 PROJECT PLANNING
Which conditions must be met for work on one sub-task, one work package or one process to begin? Which sub-tasks, work packages, and processes must directly follow other completed sub-tasks, work packages and processes? Which interface activities between different sub-tasks, work packages and processes might have to be taken into account? The result of this analysis is a network of logical links between sub-tasks, work packages and processes the project logistics (Diagram 33). A project team can work this out very well, based on the work breakdown structure (e.g. supported by software or with the aid of metaplan techniques).
Project
WP WP
ST WP
S E S
ST ST
E S
ST
ST
WP x
WP y
WP z
work package x
work package y
work package z
PROJECT MANAGEMENT
98
4 PROJECT PLANNING
DIN 69900 contains the following definition for the unambiguous identification of dependencies between two processes (logical relationships):
Designation according to DIN 69900 Normal sequence Common abbreviation ES (End-Start) Definition Example
The start of the next process depends on the close of the previous one. The close of the next process is dependent on the close of the previous one; however, the start of each process is not dependent on the other. The start of the next process is dependent on the start of the previous one; however the end points of each process are not dependent on each other. The end of the next process is dependent on the start of the previous process.
The concept can only be adopted if it has already been documented or defined. Course evaluation must be completed at the end of the course.
End sequence
EE (End-End)
Start sequence
SS (Start-Start)
Producing graphics for accompanying material can only start when the author has begun to write. The old learning platform can only be taken off the website when the new one is already up and running.
Step sequence
SE (Start-End)
The bar chart below, with arrows indicating the links between the different processes, makes the definition of the standard sequence more understandable:
Start End Start End
process A process B
process A
Z*
process B
process A process B
process A
An important factor in drawing up project logistics especially for later changes to the plan is the definition of the interval between two processes. This helps when determining time minimum or maximum intervals for any two processes.
PROJECT MANAGEMENT
99
4 PROJECT PLANNING
The time interval is also used in process completion with either partial or total overlap (Diagram 35).
End-Start with negative interval
ES 3 TI
process A process B
- 3 TI
process A process B
process A process B
+ 2 TI Time axis with time intervals (TI)
4.3.2 Scheduling
For smaller, often shorter or less complex projects, a monthly or annual layout usually meets all the requirements for project logistics and scheduling. This layout should include a chart on which all tasks and important deadlines are shown, thus providing an excellent overview of the work-flow in the project. The actual status of the project can then be easily determined at any time. A more powerful tool can be used for planning the schedules and logistics of larger and more complex projects: the critical path method. The critical path method enables the project logistics to be modelled on the basis of efficient algorithms, taking all interdependencies into account. In addition, all important project deadlines can be calculated in advance. Two methods are used to present the resulting logistics and scheduling plans: a critical path diagram and a bar chart. Diagram 36 shows an example from a curriculum planning project.
PROJECT MANAGEMENT
100
4 PROJECT PLANNING
Diagram 36: Comparison between a bar chart (above) and the critical path method (below), produced with MS Project
Since such plans can become very detailed and difficult to read, they are best produced with the assistance of an appropriate project-planning programme such as Microsoft Project, PQM or Graneda (an overview of current project management (PM) software is available on the internet see website in the Appendix). The critical path method is a graphic (sometimes also tabular) representation of the work-flow and dependencies of different activities in a project. There are different versions of this method, which are all constructed using small boxes or circles (nodes) and arrows (showing the logical relationships between processes). The most well known (and currently the method most often used in international projects) is the activity-on-node network (for those who are interested, other, less often used methods are covered in the additional reading section). In Diagram 37 (example of a network diagram), the individual processes are shown as small
PROJECT MANAGEMENT
101
4 PROJECT PLANNING
boxes (=nodes). Arrows with explanatory captions represent the logical relationships between the processes.
1 Behr
Information research
Eilts
Concept brainstorming
Behr
draft content concept
10
ES + 2
V
and design
agree on concept
1.1. 4.1.
3 3
5.1. 8.1.
9.1. 9.1.
0 0
9.1. 9.1.
10.1. 10.1.
0 0
19.1. 19.1.
22.1. 22.1.
0 0
22.1. 22.1.
Bering
media research
8
SS + 2
Bering
draft design concept
1.1. 1.1.
0 0
8.1. 8.1.
12.1. 16.1.
4 4
17.1. 21.1.
6
SS + 2
Ahrens
draft technical concept
12.1. 14.1.
2 2
19.1. 21.1.
The basic data for the process as well as all important deadline information is entered in the process boxes:
V Vb
ESD LSD
i V Vb D = = = = number of the process person responsible process indicator duration
TB FB
ESD LSD EFD LFD TB FB = = = = = =
EFD LFD
Earliest Start Date Latest Start Date Earliest Finish Date Latest Finish Date total buffer free buffer
The duration (D) of a process is generally derived from the cost estimation. It represents the time interval between the start and completion of a process. The unit of time may be months, weeks, days, hours, or even, in extreme cases, minutes. The deadlines of earliest start date (ESD), latest start date (LSD), earliest finish date (EFD) and latest finish date (LFD) are worked out using simple formulae in two sequential calculations: Forward calculation: Backward calculation: EFD (i) = ESD (i) + D (i) LSD (i) = LFD (i) D (i)
First, the earliest start and end dates for all processes in the network are calculated on the basis of the project start date (in the above example January,
PROJECT MANAGEMENT
102
4 PROJECT PLANNING
1st) (forward calculation). Then, the latest end and start dates of the processes are determined, based on the end date of the last process calculated (backward calculation). After carrying out the backward calculation, the interval leeway (buffer period) can be determined for each process, i.e. the maximum time interval permissible without endangering subsequent processes or the end of the project: Total buffer: the period within which a process can be moved or delayed, without affecting the end of the project. The calculation is done using the formula: TB = LSD (i) - ESD (i) = LFD (i) - EFD (i) Free buffer: the period within which a process can be moved or delayed, without affecting the next process. The calculation is done using the formula: FB = ESD (i+1) EFD (i)
i+1 designates the process to follow the process under consideration
N.B. Total buffers and free buffers need not correspond even if they do so in the example in Diagram 37.
Reflective task:
Recalculate the deadlines for the individual processes in Diagram 37 using the formulae given. (Tip: as you are working with calendar days, feel free to use your fingers when counting. Weekends and holidays are not taken into account for the sake of simplicity). ...................................................................................................................................
Processes with the same earliest and latest start and end dates do not have buffer periods. Such processes are critical processes. If you join all critical processes together, then you obtain the critical path of a project (see Diagram 37, processes and relationships highlighted). The project leader, if he wishes to meet deadlines and budgets, needs to pay special attention to this critical path when conducting a risk analysis and later during the project control process (Section 4.5). Due to the separation of structural and time analyses, the critical path method necessitates a logical procedure. The network diagram clearly indicates content and time dependencies. This facilitates an understanding of the logical sequence of processes and also helps to identify incompatibilities in the overall flow of activities. A significant disadvantage of a network diagram is that the duration
PROJECT MANAGEMENT
103
4 PROJECT PLANNING
and chronological position of individual processes are not immediately clear as there are no time lists. This shortcoming is addressed by a bar chart. The bar chart (also often called a Gantt diagram, after its inventor) consists of a tabular and a graphic component. In the table component (below left), individual processes in a project are listed one below the other. For each process, additional information is given in further columns, such as the duration of the process, the start and finish dates, resources used and so on. In the graphic component (below right), there is a bar for each process, the length of which corresponds to the duration of the process. In the bar chart, logical relationships are also indicated, using arrows. The scale may vary, thus quarters, months, weeks or days can be used as a basis. The scale will normally be chosen according to the size of the field to be described and/or printed.
The disadvantage of a bar chart is that clarity is lost in relation to the general flow of activities in a project if a large number of diverse processes are dependent on each other. Thanks to the timeline, however, it can be understood more quickly even by untrained employees. In addition, it offers the possibility of selecting and sorting tasks freely, which again increases clarity. It is therefore particularly suitable as a means of communicating and reporting on the chronological flow of the project within the project team but especially when dealing with the controlling committee and the client. The schedule you draw up using the critical path method will not necessarily be sufficient for your or your client's ideas concerning the completion deadline or important interim deadlines. Some deadlines, for example, cannot be realised (it makes no sense, for example, to hold a 2-day workshop on a Friday and the following Monday!). Furthermore, some deadlines do not fit in with prior agreements (for example, your client has prescribed a fixed time window, or interim objectives must be achieved by fixed dates (conference participation, the start of a course etc.)), and some deadlines simply do not match the original ideal (the project or parts of it take longer than desired). Always test your scheduling for compatibility and adapt it if necessary (by repeating planning steps). It is also
PROJECT MANAGEMENT
104
4 PROJECT PLANNING
very helpful to clearly highlight important deadlines (milestones) in the project schedule. It is very important to distinguish between internal and external milestones. In practice, there are different ways of defining milestones: Milestones may be concurrent processes with a definite duration (e.g. discussions, administrative meetings, presentations etc.) Milestones may be objectives that have been achieved and now have zero duration (e.g. 'Concept accepted', 'Congress closed', 'Course of study begun' etc.)
Learning exercises:
4.3.1 What questions should you ask yourself when planning the logistics for your project?
...................................................................................................................................
4.3.2
What do you understand by 'the logical relationships between processes' in your project plan? Which relationships are defined in DIN 69900? Give your own example for each of them.
...................................................................................................................................
4.3.3
Draw a network diagram for the list of processes given below and calculate all deadlines and buffer periods (start date: 06.10; weekends and holidays not taken into account). Then also draw the plan as a bar chart on a sheet of paper (select an appropriate scale).
Process name Process A Process B Process C Process D Process E Process F Process G Process H Process I Process J Responsibility MA 1 MA 2 MA 2 MA 2 MA 2 MA 1 MA 3 MA 2 MA 1 Duration 1 day 7 days 10 days 10 days 9 days 5 days 2 days 3 days 2 days 0 days Previous process 1 (ES) 2 (ES 2) 3 (SS +3) 4 (EF 1) 2 (SS +2) 1 (ES) 6 (ES +5); 7 (ES) 5 (ES +2); 8 (ES) 9 (ES)
No. 1 2 3 4 5 6 7 8 9 10
...................................................................................................................................
PROJECT MANAGEMENT
105
4 PROJECT PLANNING
Additional reading:
Patzak, G. & Rattay, G. (2004). Projektmanagement Leitfaden zum Management von Projekten, Projektportfolios und projektorientierten Unternehmen, 4. Aufl., Wien, 176-203. Rackelmann G. (2003). Ablauf- und Terminmanagement, in GPM/RKW (Hrsg.): Projektmanagement-Fachmann, 7. Aufl., Eschborn, 519-569.
4.4
Key words:
PROJECT MANAGEMENT
106
4 PROJECT PLANNING
To carry out the needs analysis, the project leader first requires detailed information on the type and quantity of the resources required (human resources, materials etc.). The following questions need to be asked: Which resources are (unequivocally) required for the work to be done from a financial point of view? How many units of these resources will be needed? When will these resources be needed? The necessary information is recorded for each work package separately. The selected resources are allocated to the processes or work packages. The results of this needs analysis provide different resource requirement profiles for individual resources in a project (Diagram 40) or for the entire human resource requirements in the organisation (when needs analysis is linked to other projects) (Diagram 41).
Diagram 40: Capacity requirements lower section) for a specific resource in a project
PROJECT MANAGEMENT
107
4 PROJECT PLANNING
Capacity
(work hours ) 12.000 10.000 8.000 6.000 4.000 2.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
capacity limit
Period
(months)
The availability of individual resources depends on permanent needs for routine activities, capacity utilisation in other projects, and on planned absences such as holidays, training, conference participation etc. People within an organisation are frequently unaware of the proportion of a resources overall work capacity which is in fact available for project work. Such a capacity analysis is therefore an essential foundation for resource planning. Each organisation would do well to draw up general capacity analyses for their resources from time to time (Diagram 42).
PROJECT MANAGEMENT
108
4 PROJECT PLANNING
Planning problems in terms of resource conflicts arise if the availability of resources does not correspond to capacity requirements this might either result in unused capacity (over-coverage) or overload (under-coverage) (cf. Diagram 40 exceeding the 100% limit; and Diagram 41 exceeding the capacity barrier). Long-lasting under- or over-coverage generally leads to a loss of motivation and consequent decrease in employees performance in the organisation, in addition to possible financial problems. At this stage of planning, the project leaders accept major responsibilities when harmonising the various project objectives (such as keeping to deadlines and budgets, high quality results and consistently utilising employees to capacity) according to relevant planning corrections. Demand increases disproportionately to the number of projects to be carried out at the same time. To arrive at a final and conclusive schedule of deadlines, an intensive series of discussions among project leaders, and between project leaders and their employees, should take place. This negotiation process can be targeted either at keeping to deadlines (dates are fixed, processes can only be moved within the buffer periods), or at keeping within capacity (fixed availability of resources, processes must be moved or stretched along the time axis).
PROJECT MANAGEMENT
109
4 PROJECT PLANNING
project planning phase, step one and two have to be achieved while also taking the last step into account.When estimating costs, the project leader has a basic dilemma: he is expected, at a very early stage, to anticipate the cost of his project, when, in most cases, he as yet knows little or nothing about the content of the project and the processes required to carry it out. The range of his initial estimates (tolerance) will therefore be rather wide. With each step forward within the project, the tolerance range for the estimation of future costs is being reduced. Towards the end of the project, however, possibilities to manipulate project costs will also decrease (Diagram 43). This again emphasises the importance of structuring a project properly and highlights the usefulness of the following planning steps (cost estimation, planning logistics, deadlines and resources).
costs 15-20%
Accuracy of planning
Evidence of actual costs 10% 5%
ni n
at io n
pt io
tio n
pl an
tio n
im pl em en ta
nc e
re al is a
in iti
Diagram 43: Cost trend: managing costs and estimated cost tolerances during a project
Three essential questions need to be asked for detailed cost budgeting: Cost types: What costs will be incurred? There might be personnel and material costs, investment or procurement costs, capital or financing costs, general costs, costs for third-party services, costs for taxes and duties and internal accounting costs. Cost accounts: Where are costs incurred? Cost accounts are created by dividing costs across different sectors (e.g. faculties, schools, departments etc.) within an organisation.
co
Cl o
se
-u p
Time
PROJECT MANAGEMENT
110
4 PROJECT PLANNING
Cost units: What are costs incurred for? "Project cost units represent a project outcome or partial outcome, to which project costs are attributed according to the principle that the party responsible is liable." (DIN 69903). Examples of cost units include: proposed content of a study course; requirement specifications for a new information system. A major part of budget planning takes place by means of differentiated resource planning. Personnel and materials costs can be reliably determined by simply multiplying the cost by the relevant quantity unit (e.g. the costs per hour for employees or the cost of fixed quantities of materials). Other cost types can then be added. The overall project costs can be shown in an overview (e.g. using project planning or table calculation software) as well as in a cost histogram over the duration of the project (Diagram 44).
costs 10.000 9.000 8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000 250 1000 1.500 1. 2. 3. 3.000 4. 2.500 5. 6. 7. 8. Time (periods) 8.250
Total costs
Diagram 44: Cost histogram with cost baselines and cost curve
Depending on the particular preconditions and agreements for a project, one of two different approaches to cost budgeting can be taken: Design-to-Cost: the budget is fixed and the result of the project is to be produced within that limitation. It should be considered to what extent and on which quality level the required project outcome can be achieved. Priority is given to critical or significant partial results. Cost-to-Design: the scale and quality of the result of the project is specified. The minimum costs are then drawn up for an economically viable implementation of the project.
PROJECT MANAGEMENT
111
4 PROJECT PLANNING
Learning exercises:
4.4.1 Optimal resource planning can be based on keeping either to deadlines or to capacity. Using your own examples explain the difference between these approaches and identify the potential consequences for the project plan as a whole when using one of the two options.
................................................................................................................................... 4.4.2 Why is the ability to influence costs very high at the beginning of a project but gradually decreases as the project progresses?
................................................................................................................................... 4.4.3 Why does it make sense to establish the different cost units as early as possible in a project and to monitor cost trends for these units as the project progresses?
...................................................................................................................................
................................................................................................................................... 4.4.5 Look more closely at the two approaches to cost budgeting 'Cost-to-Design' and 'Design-to-Cost'. Do you know of any examples in your work environment in which one or the other has been or will have to be implemented? What are or were the basic problems for the project planner in relation to deadlines, resource and budget planning? What possible solutions do you see in the examples?
...................................................................................................................................
Additional reading:
Blume J. (2003). Kostenmanagement, in GPM/RKW (Hrsg.): Projektmanagement-Fachmann, 7. Aufl., Eschborn, 607-633.
PROJECT MANAGEMENT
112
4 PROJECT PLANNING
Mller-Ettrich R. (2003). Einsatzmittelmanagement, in GPM/RKW (Hrsg.): Projektmanagement-Fachmann, 7. Aufl., Eschborn, 573-579 und 584-593. Patzak, G. & Rattay, G. (2004). Projektmanagement Leitfaden zum Management von Projekten, Projektportfolios und projektorientierten Unternehmen, 4. Aufl., Wien, 205-214 (Einsatzmittelplanung) und 215-231 (Kostenplanung).
4.5
Risk analysis
Risk, risk identification, risk probability, risk analysis, risk reduction, risk management, warning indicator, occurrence indicator, scope, planning measures.
Key words:
A risk is therefore a problem that is yet to arise a purely abstract concept of something that may or may not happen, and may or may not influence the project. The onset of a projected risk almost always leads to a waste of precious time and valuable project budgets. A project leader should not just wait and see if risks occur, but take action to prevent them. The objective and purpose of risk planning and subsequent risk management is therefore to take possible preventative measures before such circumstances arise. The thesis by TOM DE MARCO entitled "Manage projects by managing their risks" (1998, S.72) (see also Section 1.2.4), underlines the importance of preventive risk management. Detailed and deliberate project planning is already an important step towards risk prevention in your project. This assesses the feasibility of a project in relation to
PROJECT MANAGEMENT
113
4 PROJECT PLANNING
the hard factors of project work (time, expenditure and resources). By conducting a risk analysis, other potential internal and external influencing factors, which could become risks as the project proceeds, are considered.
Reflective task:
In your opinion, which internal and external influencing factors could become risks for (potential) projects in your work environment/organisation? What risks do your fellow students see in their projects? Exchange information and opinions and classify the influencing factors identified. ................................................................................................................................... There have been a number of attempts to determine a conclusive classification of project risks. One possible classification was proposed by VERSTEEGEN (2003, p.3 cited by SCHELLE, OTTMANN and PFEIFFER (2005), p.151 et seq.). He identifies, for example, commercial, technical, deadline, resource and political risks. LOMNITZ (2000, p.117) talks about resistance in projects and describes personal and organisationcultural components. SCHIERSMANN and THIEL (2000, p.185 et seq.) give examples of positive and negative internal and external influencing factors, such as project team members, other departments or teams, the overall institution and the environment outside the organisation. The 'location' of potential risks serves as a basis for deriving the following classification: Context-related risks: Risks that are directly dependent on the project content, project work and project outcomes. Examples: quality of (partial) outcomes; functioning of operating materials (installations, equipment and software); availability of illustrative material; quality and range of available documentation; ambiguous setting of tasks; (too much) complexity; changing priorities. Personality-related risks: Risks that are linked to the personalities and methodological, social and personal competences of project workers. Examples: personal strategies and/or interests; motivation; attitudes; fears; implicit and explicit knowledge; social competence of individual workers; workers being jealous of or disliking each other; team conflict. Organisation-related risks: Risks that are grounded in the organisation, its (hierarchical) structure, its (existent or non-existent) culture and its management principles. Examples: organisation-cultural actualities; management support for the project; commitment on the part of inspection or controlling committees; hierarchical levels and structures; decision-making culture (e.g. delays,
PROJECT MANAGEMENT
114
4 PROJECT PLANNING
obstructions etc.); buy-in (behaviour indicating acceptance or rejection) for the type of project execution or the project outcomes in other fields, departments or teams; departmental egoism. Organisation-external risks: Risks that can be found in the environment outside the organisation. Examples: legal guidelines and regulations; formal and informal networks and collaborations; public opinion; civil initiatives; concern on the part of external stakeholders; competition; political change. Interface-related risks: Risks that might arise at the different interfaces inside and outside the immediate project environment. Examples: exchange of expectations (explicit and implicit, with project workers, clients, stakeholders); communication and information deficits (e.g. distributing and dealing with information, comprehensibility of information, prompt availability of required information or materials); team disputes; change of contacts; contractual issues.
PROJECT MANAGEMENT
115
4 PROJECT PLANNING
Planning for the onset of a potential risk The project leaders list of priorities enables him to plan appropriate measures for dealing with the risks identified. There are several possibilities:
The first possibility is to attempt to evade the risk completely. This strategy of risk avoidance promises the maximum security but may also eliminate some opportunities. A second possibility, risk reduction, includes all formal activities during the execution of the project that are aimed at limiting the probability and/or damage level of a risk (preventive behaviour). The third possibility, that of risk shifting, transfers the risks for example by defined contractual agreements to other participants in the project (client, subcontractor, other departments or schools etc.)
The project leader bears any remaining risks that are not being addressed with one of these three strategies consciously or unconsciously. He is fully responsible for any consequences that might follow the onset of a risk. The two remaining activities described by de Marco, describe how to further deal with project risks within risk management. Risk response planning This includes all activities that help to reduce the probability of a risk or to limit its expected damage. In addition, activities are included that should take place before the onset of a risk to facilitate measures to be taken in the event of damage, and to ensure that these are carried out effectively (risk-coping strategy). Continual monitoring of onset indicators The project manager should continually keep track of the recorded risks as part of the monitoring and controlling activities during the execution of the project. A mechanism by means of which risks can be immediately identified using warning or onset indicators must be established. It is desirable to foster a culture among all project workers that does not hinder the flow of 'bad news' but ensures that first signs of any negative development in a project are conveyed to the highest levels in the hierarchy. Risk management has become one of the most important activities in project management. Make it your job to sensitise all participants to the necessity of well thought-out risk management. Make an effort to establish a project culture that supports risk management. A culture of fear within a project team or organisation is counterproductive. An exaggerated 'we'll manage' mentality, however, might mean that project risks are not revealed in time because project workers are uncomfortable conveying the message 'we can't manage'. For risk analysis and planning to be effective, there needs to be agreement on rules to deal with risk
PROJECT MANAGEMENT
116
4 PROJECT PLANNING
management, unless such rules have already been defined within the organisation as a whole and are also being realised.
Learning exercises:
4.5.1 Describe the difference between a risk and a problem.
...................................................................................................................................
4.5.2
For the following sample project, devise a risk for each of the risk classes identified in the text. Provide a risk evaluation and plan measures for dealing with the risks identified.
The project: Organise a two-day information event on the subject 'Blended learning in modern educational structures'. A conference is planned with several parallel sessions of presentations by expert as well as an exhibition by interested organisations. Your organisation is planning this event together with two other organisations from the same work environment. Your project team consists of four colleagues (project leader, project assistant, research assistant, student assistant).
...................................................................................................................................
PROJECT MANAGEMENT
117