Project Management for Business - Aura Limited - Case Study Example

Project Management for Business by [Lecturer’s and Number] Table of Contents Task 4 AC 1 Describe the background and principles of Project Management 4 AC1.2 Appraise the viability of projects, developing success / failure Criteria. 5 AC1.3 Explain the principles behind Project Management Systems and Procedures.. 6 AC1.4 Explain the Key Elements involved in terminating Projects and conducting post project appraisals. 7 Task 2 9 AC 2.1 Identify the most appropriate organizational structures, roles and responsibilities of participants within a project 9 AC2.2 Control and co-ordinate a project 10 AC2.3 Assess Project Leadership requirements and qualities 11 AC2.4 Plan and specify human resources requirements for a project 13 Task 3 15 AC3.1 Prepare project plans and establish the project organisation 15 AC3.2 Apply project scheduling, estimating and cost control techniques 16 AC3.3 Analyse the methods used to measure project performance 17 AC3.4 Explain Project Change Control procedures, evaluate completed Project 18 Work Cited 19 Abstract This paper explores the procedures, activities, resources, and people involved in project management. The first task of the paper outlines the principles of project management explaining their impact on the success of the project. It also explains factors that affect the viability and success of a project. An explanation of elements and activities involved in project termination is also explained in the first task. The second task identifies and explains the roles and responsibilities of a project team members and stakeholders. It also examines the processes involved in controlling and coordinating projects. Task two of the paper also covers human resource roles in project management. It also outlines the leadership characteristics required for a project manager. The third task of the paper uses project management tools and techniques including plans, estimation and cost control techniques, performance, and evaluation techniques. The whole paper is written with references to Aura Limited from which examples are drawn from. Task 1 AC1.1 Background and Principles of Project Management Project management is the process of coordinating, controlling, and monitoring people and resources to achieve specific goals. For the Aura project, the project manager mobilizes construction resources, coordinates people, controls, and monitors the operations of all stakeholders to achieve intended goals of the project. The three major elements of a project include objectives of the project, constraints of the project, and the project lifecycle. The objectives of a project are defined by major stakeholders of a company and communicated to all stakeholders of the company. For example, upon acquisition of a contract to construct a new building, the project manager for Aurora projects communicates the requirements of the project to the project team. The team analyses the project and comes up with objectives that are communicated to all stakeholders (Mehta, 2007). Constraints of a project are another element of a project. The constraints of project by Aura include funding of the project, time of project completion, resources requires to complete the project, and scope of the Aura project. The constraints of the project dictate the control measures required to complete the project within the planned budget, stipulated time, and the requirements of the customer. Another constraint of a project is the lifecycle of the project. The lifecycle of a project is the procedural requirements of a project that is meant to be achieved within planned timeframe. For example, procedural requirements for the Aura project include initiation of the Aura project, planning, execution of the project group processes, monitoring of the project, and the completion of the project (Patel, 2008). Another major principle of project management is the scope of the project. The process of defining the scope of a project changes the requirements of a customer into objectives. The process is coordinated by the project manager. The project manager should guide the project team and the organization’s stakeholders to have an achievable scope of the project. For example the Aura project team should analyse the requirements of the customer in order to create a realistic scope of the project. The scope of this project should not cover very large area such as buildings that cannot be completed within budget. The project’s scope should not cover a narrow scope that will not utilize all resources allocated for the project. The project manager should thus have good project estimation skills to guide the project team in the process of budgeting and planning of the project (Kerzner, 2001). Another principle of project management is the use of effective communication techniques. The project manager of the Aura project should communicate all the developments of the project to all stakeholders effectively. The Aura project manager should have good skills to determine the relevant information to relevant stakeholders. The mode of communication used by the project manager should be in line with the progress of the project, the deliverables a particular stage of the project, and the stakeholders of the project. Another principle of project management is the success factors and strategies of a project. The project manager must effectively define the success factor of the project. The factors will be used by the project team to assess the performance of the project. For example, the standards of buildings constructed by Aura should be defined by the project manager and communicated in time to all the stakeholders. This way, the stakeholders all stakeholders of the project will use the factors to evaluate their performance at every stage of the project life cycle. AC1.2 Appraising the Viability of Projects and Developing Success/Fail Criteria The viability of any project is determined by the ability of project stakeholders to avail resources for the project, prepare and meet the project budget, use resources effectively, and cooperate in the project development and implementation. The success of a project is determined by the level of skills of the project team. For example, the success of the Aura project depends on the skills of the Aura project team including skills such as project management skills, engineering skills, financial and accounting skills, and architectural skills. The project manager should utilize the skills of the project team members effectively. Most importantly, coordinating the team members is essential for the success of the project (Eric Kirkland, 2014). The Net Present Value (NPV) is a project appraisal technique used to determine the viability of different projects. NPV uses capital costs to evaluate the feasibility of a project. It is calculated by subtracting the initial investment from the total discounted cash flows of a project. If the resultant value of NPV is a positive, it can be concluded that the project is viable. Otherwise, the project is considered non-viable. The appraisal technique can be used to evaluate the viability of the three projects A, B, and C. NPV= -Original investment + (sum of) [OCF/ (1+R(r)) t] + [TCF/ (1+R(r)) n] NPV for Project A = - 400,000 + (250,000 /1.05) + (5,000 /1.05^2) + (18,000 /1.05^3) Therefore, NPV for Project A= -141,821 NPV for Project B = - 400,000 + (150,000 /1.05) + (20,000 /1.05^2) + (26,000 /1.05^3) Therefore, NPV for Project B= -216,542 NPV for Project C = - 400,000 + (200,000 /1.05) + (10,000 /1.05^2) + (50,000 /1.05^3) Therefore, NPV for Project C= -157,262 From the results of the calculations of the NPV of projects A, B, and C, it is clear that none of the projects is viable. The three projects are not viable since they have negative values of NPV. Projects are considered non-viable if they cannot return the initial investments within the stipulated time. The reason for failure to return the original investments within the planned time include use of poor cost estimation techniques. For example, if Aura Company estimates the initial cost of starting a projects as 400,000 then end up using 500,000 as the initial cost of the project, the project faces risk of failure. To prevent the risks of project failure due to inflated costs the project team should use effective cost estimation techniques. The project team should also analyse discounted rates of return correctly. Changes in discounted rates of return could inflate operational costs thus leading project failure. Developing risk plans, monitoring risks, mitigating, and managing project risks can reduce chances of project failure (Ponnappa, 2014). AC1.3 Principles behind Project Management Systems and Procedures Project management systems are frameworks used to by project managers to manage projects effectively. Project management systems have the capabilities of monitoring and controlling project outcomes. The systems can be used to determine the feasibility of project which is the first critical success factor of every project. Effective planning techniques are an essential principle for project management systems. An important element of project management systems is the feasibility study of projects. It uses analytical procedures to assess the viability of a project. Feasibility study is vital in the evaluation of the viability of a project. A feasibility study explores all the factors that could result into the success or failure of the project. It explores resources available for the project and evaluates them against the resources required for the project as defined by the customer. Feasibility study evaluates the skills required for the successful completion of the project and evaluates them with the skills of the project team. The feasibility study also evaluates the scope of the project against the resources and time planned for the project. The feasibility study of a project is conducted prior to the initiation of the project so that adjustments can be made to resources, time, project team, and the scope of the project. It assists the project team and stakeholders to plan for the project so that it can meet requirements of the customer. For example, Aura Company can conduct a feasibility study to determine the construction materials, scope of the construction project, time, architectural design of the building, and technological requirements of the project (Patel, 2008). Another important element of project management systems is the ability to perform the analysis, monitoring, and controlling critical success factors of a project. The success or failure factors of projects include the ability to use resources economically so that the project can optimize the quality and complete the project within the planned budget and time. Another success or failure factor is the level of the skills of the project team. Leadership and project management skills of the project manager are critical to success of the project. The project can also succeed or fail due to the effectiveness of the estimation methods used to estimate the cost of the project. If the requirements of the project are not estimated properly, the project could experience insufficient resources or inflated costs leading to its failure. AC1.4 Key Elements Involved in Terminating Projects and Conducting Post Project Appraisals. A natural project termination occurs after the project has been implemented and tested successfully. Testing is done by both parties of the project i.e. project team and the customers. The project cannot be approved for closure before it has satisfied all the requirements agreed. The testing process involves evaluating the performance of deliverables against the initial requirements of the project. The final project status report is then prepared and handed over to all relevant stakeholders. The final report of the project status forms the basis for testing and evaluation. The procedure of termination includes the handing over of all the deliverables that were outlined as the requirements for the project. Another closure procedure is the appropriate disposure of materials that were used in the project. The passing of payments for resources and operational costs used for the project also happens before a project is closed. The final payment process involves issuance of invoices for work done. A project team appraisal feedback explains the performance of every team member in their responsibilities as well as in other general areas. Retrospective analysis provides information regarding the negative and positive aspects of the project for the purposes of learning. Organizations such as Aura Company use the retrospective analysis to improve their performances in future projects. Good retrospective analysis is conducted by an independent individual preferably an outsider to avoid biases (Williams, 2008). A project appraisal is conducted by the project manager to determine how much the project met customers’ requirements in terms of budget, scope, utilization of resources, and time management. The appraisal contains the cost of the project that is obtained from the comparison of the final cost of the project and the budgeted cost of the project. It also contains a comparison of the actual completion date of the project and the planned completion date of the project. Variances in the completion date are explained clearly with reference to the documented project status reports. The project appraisal also contains a documentation of the deliverables handed to the customer and the results of the tests done to evaluate the quality and or performance of the deliverables. The deliverables are also compared with the initial requirements of the customer. Variances in the condition or performance of the deliverables are explained with references to adjustments to the project that were communicated to all the stakeholders by the project manager. The appraisal contains the lessons learnt during the project and the value they have to all stakeholders of the project. The lessons are also used to improve the performance of the project team in the future (Randolph, 2014). Unnatural termination of projects occurs when the project fails to meet its critical success factors and is thus unable to progress. Reasons for unnatural termination of a project include failure to meet customer’s requirements and the customer cancels the project. The cancellation of the project is done by following agreements that are initially formulated by the project stakeholders. Another reason could be the unavailability of resources to continue the project to its completion. The project team have used poor estimation techniques that result into insufficient resources to complete the project. The customer might also lack enough resources to complete the project thus its termination. The termination of projects unnaturally involves communicating reasons for the immature closure of the project to all the project stakeholders. The communication is done as agreed upon by the stakeholders. The unnatural termination involves returning of resources to the rightful owners and handing in of relevant deliverables such as a termination report. Legal procedures are then conducted to end the project legally (Mehta, 2007). Task 2 AC2.1 Appropriate Organisational Structure, Roles and Responsibilities of Participants within a Project Effective communication is vital for all organizations since it enhances cooperation of stakeholders and coordination of organization operations. The methods of raising and handling complaints are an essential element of organizations. Good complaints procedures reduce conflicts within the organizations thus improving the performance of all organization stakeholders. Effective communication motivates stakeholders since they adopt the organization’s culture easily. Poor communication leads to ambiguous responsibilities by the stakeholders. Ambiguous responsibilities cause conflicts and poor performance of the stakeholders. Effective communication provides assistance and advice to the stakeholders since it makes them wary of the goals and objectives of the organization (Patel, 2008). Organization charts are also useful in the management of negative politics that arise due to lack of clear understanding of the organisations leadership. The charts provide a guideline for addressing protocols used to contact the management. For example, Aura Company can use organization chart to outline the responsibilities of the individuals in project management. Charts are also used to place project team members into teams. Aura can use the diversity of its staff skills to outline teams that are involved in specific projects. Different skills can be placed in one team to complement each other since projects are conducted by people with different skills (Patel, 2008). The responsibilities of Aura stakeholders are clear defined to avoid ambiguity of responsibilities. Aura Limited is headed by a General Manager who has the responsibility of representing the company externally. For instance, the General Manager represents the company in project acquisition negotiations. The General Manager has the responsibility of finding projects that offer best value to all organization stakeholders. The General Manager communicates and foresees the implementation the decisions made by the owners of the company. In the process General Manger creates a link between the staff and the owners. An ideal stakeholder for Aura should comprise of people with good mental skills and spread. This will help create a structure that represents the normal society to enable easier development of an organization culture. The stakeholders should also have varied personalities so that project teams can develop balanced nature that is essential project management. The teams should have at least one member who is capable of providing innovative ideas that can challenge and motivate the other members of the team. The team must be able to utilize available opportunities for the benefit of the organization and the team. Moreover, the teams should be able to adapt to changes in the organization so that changes in the organizations can be noted and implemented successfully if they are positive. The team should also have members who are vigilant enough to notice risks in projects or in the organization and raise them to the management (Heerkens, 2002). The characteristics of a good team for a relocation project include the ability to deal with people. The project manager should be at the forefront of convincing the parties affected by the relocation project on the importance of the relocation project. Another important aspect of the Aura relocation project is to handle property. Ability to handle property is a major requirement for this project since it will assist the company to avoid cases of damaged, lost or misplaced property. The engineers of the relocation project team should be able to measure the dimensions of the old premises and provide a framework for settling an organization into new premises. The architecture of the relocation team must plan and design the new location and premises correctly such that there will be no incidences of poor settlement. The relocation project team should also comprise of innovative members who can innovate new ideas of the new location and premises (Mehta, 2007). AC2.2 Control and Coordinate a Project If Aura’s project is behind schedule, there is need to hire new staff that will settle into the project team quickly. Therefore, the new staff should have ample experience in the field of project management. They should also be quick learners so that they can understand the progress, goals, and the requirements of the project in time. Diversity should also be considered when hiring the employees. For example, the new employs should be hired with consideration of the skills that will add value and diversity to the existing project team. However, the number of employees with particular skills can be affected by the scarcity of such skills in the Aura’s project team (Kerzner, 2001). The methods used to train new employees to understand and adapt the operations of the project team will affect the easiness of the settlement of the new employees. The new staff can be assigned to existing team members with similar skills. This will enable the new staff to learn from staff members with similar skills and responsibilities. The process of hiring new project team members will be implemented at extra costs. Realistically, the funds and resources to be used by the new employees had not been budgeted for. Therefore, the project manager has to mobilize extra resources and funds from those funding the project. The responsibilities of all team members will also change due to the introduction of new staff. The project manager should readjust the project plan to accommodate the new staff (Mehta, 2007). Orientation of new members of the Aura’s project team is vital for quick settlement and good performance of the staff as well as to the success of the project. The new stuff should be first guided into understanding the culture of the organization. The goals and objectives of the Aura’s project should be communicated to the new staff. The new staff should also get the information regarding the project’s progress and milestones. Previous communication documents of the project should be availed to the new staff to help them follow the status and progress of the project. The structure of the organization and project team should be given to the new employees to help them comprehend the roles and responsibilities of the existing project team members. Finally, the settlement and performance of the new employees should be tacked continuously to manage and improve their performance (Kerzner, 2001). AC2.3 Assessment of Project Leadership Requirements and Qualities The project manager should practice effective leadership by guiding the project in the right direction to achieve its goals. This includes setting project goals and seeing to it that the goals are achieved. It also involves coordinating project team members and other stakeholders to create the sense of cohesion in the project. The project manager should not only focus on customer satisfaction but also taking care of project team member needs to improve their productivity. This strategy and other leadership styles can lead to the success of the project team in many projects . The project manager should adapt and use transformative leadership. The project and the project team can be successful developing and communicating his or her vision thus instilling it into the minds of the project team members. The project manager should involve team members in many activities concerning Aura Company. For example, the project manager should welcome good ideas from its project team members and assisting them to communicate them to all stakeholders. The project manager should also give the project team members the opportunity to act in a ‘leadership capacity’ in their daily activities in order to nurture them into leadership. Another vital quality of leadership in project management is effective decision making. Decision making is anther critical factor in project management. As outlined by the decision-making theory the project manager should use different approaches to decision making in the project management. For instance, decisions should be made after consultations with project team and other project stakeholders. The project manager should create a good relationship with customers and project team members. Project manager should involve project team members in making decisions since their contributions through ideas are evaluated before implementation. A project manager should be a transformative leader. Transformative leadership in the project management aids in the creation of remarkable milestones that increase pride of the project team and Aura Company. The project team members feel appreciated by their employers and have the sense of achievement in them. It makes the project team members loyal to the company since they are involved in the transformation of the company to greater heights. As a transformative leader, project manager should ensure that every project team member is acquainted with qualities of leadership so that they can be leaders in every aspect of their project development and implementation. A transformative leader should also be able to identify technological advancements and introduce them to the project team. For example, the project manager should track and recommend new constructions technologies and equipment to the project team and other stakeholders. Effective communication is a major quality that a project manager should have. Effective communication reduces conflicts and disagreements hence enabling quick disagreements resolution. Project managers should communicate all the relevant information to their project team members, customers and other stakeholders using proper and effective channels. The project manager should create project team structure that enhances communication through different channels. The project manager may team-up project team members with similar or related skills into the same teams so that they can complement each another. Belbin team roles enable project team members to understand one another and recognize the importance of these roles to work together as a team. The project manager should thus implement the Belbin team roles in structure of the project team. Failure to follow these structures can lead to misunderstanding hence poor performance of the team. AC2.4 A Plan and a Specification of Human Resources and Requirements for a Project The process of outsourcing involves following the subcontracting procedures. The first stage of the outsourcing process is the definition of framework for outsourcing. The definition of framework for outsourcing defines the level of subcontracting. For example, Aura can decide to work on more than 80% of the work. Outsourcing over 80% of a company’s work is known as total outsourcing. Otherwise, if Aura is outsourcing less than 20% of LSBM relocation work, this is known as selective outsourcing. The second procure of the defining the framework for outsourcing is to select the model for outsourcing. The models include domestic outsourcing or insourcing model, captive model, and offshore outsourcing model. The model that can be used by LSBM is the domestic outsourcing model. Domestic out sourcing as used by LSBM involves hiring a third party organization (Aura) to perform a job (relocation project). The next stage is the process of selecting the location of potential subcontractors. For the case of offshore outsourcing, a company lists potential countries with companies that can offer the needed services. In the case of domestic outsourcing used by LSBM to hire Aura, LSBM finds a reputable company that specialises in providing outsourcing services (Aura). The credibility of potential companies is determined by value of business services offered by the company (Mehta, 2007). After the selection of a subcontractor, a company analyses and calculates the costs required for the outsourcing process. LSBM followed the procedures of this step to hire Aura by calculating the average wages of skilled Aura project team members. The wages are determined using pay scales defined by the roles and responsibilities of the workers such as engineers, architects, and project manager. Other costs include costs of infrastructure such as trucks, construction machinery and equipment, and power. Corporate taxes are also included so that the outsourcing agreements can abide by legal requirements. The next stage involves evaluation of skills of the Aura project team members. The skills are classified into professional categories and level experience. The skills can be classified into technical, management, business knowledge, communication, and innovative skills. LSBM evaluates the skills of Aura workers by analysing the profiles of the Aura project team. The profiles can be obtained on request from LSBM. The profiles and pay scales are used to calculate wages as described in the cost analysis and calculation stage. The next phase analyses the political and regulatory factors to determine risks that could affect the outsourcing process. LSBM evaluates the political and regulatory factors that could affect the terms and conditions of the outsourcing agreements. The final stage involves choosing the best company from the list of potential subcontractors. After selecting Aura, LSBM sends a request for quote (RFQ) document to Aura. Thereafter, terms of service are agreed upon. Task 3 AC3.1 Project Plans and Project Organisation Task 1/12/2014 8/12/2014 15/12/2014 22/12/2014 29/12/2014 5/01/2015 12/05/2015 Feasibility Study and Site analysis (FS) Development of Relocation plan (DR) Acquisition of Premises (AP) Furnishing and Fixtures (FF) Transportation of Materials (TM) Arrangement of Materials (AM) Relocation of Staff (RS) Settlement of Staff (SS) AC3.2 Project Scheduling, Estimating and Cost Control Techniques Project scheduling is the process of creating a plan managing time used to perform particular tasks of the project. It enables the project team to manage time by following the plans outline using Gantt Charts and Network Diagrams. It also enhances faster completion of the project is completed within the specified time. Project schedule is essential in marking the milestones of the project. Scheduling aids the project manager to assess time management practices exercised by the project team. A network diagram and its critical path of the relocation Program are illustrated below. The critical path is indicated by the maroon arrows. Therefore the critical path can be calculated as 4+ 10+9+8+5+16= 52 days. Cost control involves making modifications to budgets to balance the total costs of the project. Budgets are very essential in the planning of project expenses. Thy can be adjusted to control costs. Controlling costs is a challenging process because of uncertainties associated with market prices of materials used by the project. For example, the cost of building materials may change before the completion of the project. The changes in prices of these materials affect the budget of projects. Some costs may be incurred before the completion of the project. For instance, wear and tear is unpredictable and can inflate the project budget. Project control measures are used to identify variances of costs from the budget instead of creating measures to enhance saving (Mehta, 2007). AC3.3.The Methods Used to Measure Project Performance Benchmarking is one of the methods used to measure the performance of a project by using external entities as reference to evaluate the performance of a project. For example, Aura Limited can track the performance of projects done by its competitors and use the details to assess the performance of its projects. The competitors used for the benchmarking process have been successful in the industry. Aura Limited can use many companies that have been prosperous in construction industry and use their operations to evaluate its performance. It can also use some aspects of one company and other aspects from different companies to evaluate specific areas of its project performance. The results of the benchmarking process can be used by Aura Limited to improve areas that have been noted to reduce the performance of the company. Balanced score card method is another method of assessing the performance of a project. The method used specific aspects to check the performance of its projects. The aspects include financial and customer performances. The financial performance of a project is gaged by using the budge of the project to determine whether it was completed within the planned budget or not. Justification for the areas that led to changes in the project budget assists in the identification of areas that caused poor performance that can be corrected in future. The score card method also evaluates the procedures of internal business processes to identify weaknesses in performance of stakeholders. It also uses learning and growth to assess continuous improvement of the project team. The process involves comparing current projects with past projects to determine the direction of the project team. Past projects that were corrected are used to evaluate learning and growth of the project team (Patel, 2008). AC3.4 Explanation of Project Change Control Procedures and Evaluate of the Completed Project The most important procedure to control changes in a project is by communicating the changes to all stakeholders. The stakeholders can plan on ways to control or adapt to the changes once they are communicated by project manager. Some changes may adversely affect the project team. For this reason, the project manager should device contingency measures before the project team is severely affected by the changes. For example, withdrawal of key member of the project team can cause havoc in duties. The project manager should find immediate replacement and guide the project team members to adapt to the changes in the team. Most projects experience changes in requirements. Changes in requirements should prompt the project manager to go back to the analysis and planning phases of the project to accommodate the changes (Kerzner, 2001). Project valuation gathers information about the activities, procedures, resources involved in the project to determine its worth. Project evaluation shows accountability to the people funding the project. It is used to identify the weaknesses and strengths identified in the course of the project. The evaluation results are then used to make recommendations to the project stakeholders. It also assists the stakeholders to understand the project team. The process of evaluation can be conducted using different methods including interviewing the project stakeholders. Other evaluation methods include observing participants or by taking direct measurements (Kerzner, 2001). References Dinsmore, P. and Cabanis-Brewin, J. (2011). The AMA handbook of project management. New York: American Management Association. Eric Kirkland, C. (2014). Project Management: A Problem-Based Approach. Project Management Journal, 45(1), pp.e3-e3. Heerkens, G. (2002). Project management. New York: McGraw-Hill. Kerzner, H. (2001). Project management. New York: John Wiley. Lock, D. (2004). Project management in construction. Aldershot: Gower. Mehta, R. (2007). Project management. Jaipur: Aavishkar Publishers. Patel, V. (2008). Project management. Jaipur, India: Oxford Book Co. Ponnappa, G. (2014). Project Stakeholder Management. Project Management Journal, 45(2), pp.e3-e3. Randolph, S. (2014). Maximizing Project Value: A Project Managers Guide. Project Management Journal, 45(2), pp.e2-e2. Williams, M. (2008). The principles of project management. Collingwood, Vic.: SitePoint. Read More