Prject Management review - Essay Example

? Project Management Review Project Management Review As Barkley and Saylor (2001, p. 82) the major and most dominant measures of a project are time, cost, and performance; and these measures may be constrained in a given project to obtain the maximum efficiency. To determine whether the project plan is realistic, the initial estimation of cost and time must be carried out. Besides, the time and cost needs are to be monitored throughout the project life-cycle. I. Categories of Estimation The estimation is one of the best planning tools at the disposal of the project manager. As the budgets and deadlines are very important in a project, it is important to specifically and accurately predict what the project is likely to encounter during the application of the project. The two major categories of estimation are ‘Macro or Top-down approach and Micro or Bottom-up approach’ (Sihombing). The Macro or Top-Down approach This approach is used to make a quick and rough estimation of project cost and time, when the time and expense of a detailed estimate are some issues. Often macro approach is carried out during the conception stage as there is no full design or Work Breakdown Structure available. The macro approaches may have high chances of inaccuracy and therefore, only well experienced personnel can do the estimation. With the help of a similar previous project, the estimation becomes easier. As Gray and Larson (2008, p. 134) point out, the expenses for the foremost subunits of the new project would be proportional to foremost subunits in the previous project. The Micro or Bottom-UP approach The Micro approach takes the project design and a ‘roll-up’ of Work Breakdown Structure elements into consideration (Project management). As it is a detailed approach, it requires multiple personnel and much time to complete the process. If the bottom-up estimate is done properly, it can yield accurate cost and time estimates. The costs for the higher level units are obtained by rolling-up the estimated time and cost connected with the lowest level Work Breakdown Structure packages. And this approach renders the most accurate estimation within the time devoted to developing the estimate. Factors affecting the estimation of Cost and Time There are several significant factors that affect the estimation of project cost and time. The most important factors are; Task Definition: The comprehensiveness of the definition of the project helps to determine whether all tasks have been taken into account. Project Structure: The structure compacted with a dedicated project team will always focuses on the effective completion of the project. Padding: there are chances of increasing the estimates in order to consider the unknown risks which in turn may cause an unwanted trade-off. Culture: It refers to the acceptable behavior of the organization which influences the estimation. Downtime: It is the lapse of time which affects the time estimate due to equipment repairs, holidays, vacations, etc. II An Ideal Approach According to Rosenau and Githens (2006, p. 133), planning, estimating, and resourcing are the most important elements of a successful project; and these elements may seem to be separate issues, but required to be conducted in parallel as they directly influence each other. Estimation of time and cost is needed per each type of resources for every part of the work to be done. An ideal approach from the part of the project manager would be to hold all the different elements and criteria together in a multi-dimensional model. The project manager should make sure that the estimation is done by a person who is most familiar with the task. And if possible, it is better to collect estimates from several people and find the variation of risk assessment. In order to avoid the ‘group think’, multiple estimates must be conducted independently. The project manager should use consistent units while estimating task time and the estimates should be based on normal conditions. The assessment of the work package should not include contingencies; instead, a separate risk evaluation may be conducted for calculating the influence of contingencies and abnormal conditions. III. Activity’s Slope An activity performed by a department is scheduled for 10 days at an anticipated cost of $400. Due to some reasons the project manager need to reduce this activity by 5 days, but have to face the crash cost of $800. Therefore the activity’s crash can be calculated using the following formulae. Activity’s slope = Crash Cost – Normal Cost Normal time – Crash time So the activity’s slope = $800 – $400 = $400 = $80 per day 10 – 5 5 Therefore the activity’s slope is $80 per day. IV. Major Types of Costs Cost estimation is an important step in the project management. It represents base line of the project cost at each stages of development of the project. Cost estimation at a given phase of the progress of project is the forecast given by the cost engineer. Proper cost engineering helps to find out various types of costs involved in a project and also helps in determining those costs which the project manger is able to control. The American Association of Cost Engineers defines cost engineering as, “that area of engineering practice where engineering judgment and experience are utilized in the application of scientific principles and techniques to the problem of cost estimation, cost control and profitability” (Au, 1989, p. 3 of 42). The important types of costs involved with project management are: 1. Direct Costs: These costs can be directly identified with a specific work package. Any cost that can be reasonably attributed to a specific project can be called a direct cost. To identify a particular cost between the direct cost and the indirect cost, it is applicable to put forward a question, “If not for this project, would the company incur this cost?” If the answer to this question is no, then the cost is direct and if it is yes, then the cost is indirect (Mahnke, 2011). 2. Direct Overhead Cost: These are the costs which links the organizations’ resources with the specific work package. As Nicholas and Steyn (2008, p. 308) point out, these costs are incurred in supporting a particular project or work package, and it cannot be allocated to anything else other than the specific work package to which it applies. 3. General and Administrative Costs: These costs are not directly linked to a single work package. Instead, it is allocated proportionally to several packages and departments on a percentage basis. General and Administrative costs include expenses on things like accounting, advertising, senior management compensation, etc. Costs Controllable by the project manager The direct cost included in a project can be controlled by the project manager. It includes expenses on labor, materials, equipment, and other miscellaneous thing. The project manager can implement appropriate strategies to cut down the direct cost. V. The Decision The duration of the project determines the cost of the project. If a project takes more time to be accomplished, higher will be the overhead costs related to the project. The slope of the line between the normal and crash duration replicates the cost of crashing the activity to additional period. The cost of crashing the entire project will depend upon the crashing of activities that are on the critical path. So the criteria for crashing the project depend on determining which individual activity to be crashed at first. As stated in ‘Time-cost tradeoff’, the activity or activities that create the minimum total cost slope must be crashed at first. It must be done selecting the suitable activity which can cause impact on any other activity. And process further by selecting the activity with next least cost slope to be crashed next, and continue through the list of activities. VI. Acceleration of a project by reducing the project scope According to Wells (2003, p. 492), higher saving both in time and costs can be achieved by reducing the scope; and reducing the scope normally means that some of the tasks must be abolished or must take alternative means to accelerate the project. At the same time, cutting down the scope may decrease the value of the project to such extent that it may be no longer considered worth. In the same way, such projects fall short in meeting the vital success parameters. The most suitable option is to reconsider the necessities of the project to identify which are important and which are not. This re-evaluation should also consider all key stakeholders. More concentrated and intense revaluation of requirements will actually increase the value of the project by getting it accomplished more swiftly and at a lower cost. In total, a project is the composition of many diversified activities which in turn help to accomplish the project according to the predetermined plan. As Punmia and Khandelwal (1982, p. 91) reminds, there are chances of many uncertain events occurring while the project is on the go. So a project manager should be capable of foreseeing such problems and estimating the requirements for such occasions. He should also overlook the risk factors regarding the project. An effective estimation of project time and cost will help to solve these problems. And will help in completing the project on time. References Au, C. H. (1989). Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects and Builders.USA: Chris Hendrickson. Barkley, B. T & Saylor, J. H. (2001). Customer- Driven Project Management: Building Quality into Project Process. USA: McGraw- Hill. Gray, C. F & Larson, E. W. (2008). Project Management: The Managerial Process. New Delhi: Tata McGraw-Hill Companies. Mahnke, L. (2011). Overhead and G&A. Mahnke Consulting: Easing Government Contract compliance. Retrieved from http://www.mahnkeconsulting.com/resources/ind_rates.htm Nicholas, J. M & Steyn, H. (2008). Project Management for Business, Engineering, and Technology: Principles and Practice. USA: Butterworth- Heinemann. Punmia, B. C & Khandelwal, K. K. (1982). Project Planning and Control With PERT and CPM. New Delhi: Laxmi Publications (p) Ltd. Project management: Student blooming course. (n.d). Retrieved from http://www.youblisher.com/p/136834-Project-Management-NF/ Rosenau, M. D & Githens, G. D. (2006). Successful Project Management: A Step-by-Step Approach with Practical Examples. India: Wiley-India. Sihombing, H. (n.d). Project management: Estimating project times and costs, 1-6. Retrieved from http://sihombing15.files.wordpress.com/2009/07/chapter-5-estimating-project-times-and-costs.pdf Time-cost tradeoff. (2010). CPM Tutor: A Practice Guide to Construction Scheduling. Retrieved from http://www.cpmtutor.com/c08/timecosttradeoff.html Wells, J. (2003). Solutions for Energy Security & Facility Management Challenges: Proceedings of the 25th World Energy Engineering Congress. USA: The Fairmont Press. Read More