The Relationship and Usefulness of Time, Cost and Quality behind the Success of Project - Coursework Example

? Business Project Management Introduction Project is defined as a temporary venture that is undertaken to create exclusive services and products. Here temporary signifies a venture that has a definite starting point and a definite ending point. On the other hand unique signifies that the product and services produced in this process has some distinctive features as compared to others. Projects are initiated by the organization in response to some requests that could not be executed in the normal operational limits of the organization (Woodward, 1997). Project management deals with application of talent, knowledge, procedure and equipments to the project activity to achieve the project goals. The team of project managers handles the various activities of the project that involves competing demands for cost, time, quality and risk, managing the expectation of the shareholders and identifying the requirement. Many of the processes within the project management are iterative in nature. The reason is that there is necessity and existence of progressive embellishment during the life cycle of the project because the more one gets to know about the project the more he is able to manage the project (Young, 2013). The project life cycle is defined as a sequence of steps that forms different phases of the project. The project life cycles comprises of four steps project commencement, project preparation, project implementation and lastly project closure. Project commencement is the first step in which various opportunities and problems related to the business are identified and various solution options are prepared through development of business cases. Feasibility study is conducted to analyse whether the solution provided will address the business problem and finally the solution is recommended. Once the solution is recommended it is approved and project is initiated. The next step is project planning. The project planning involves steps outlining the plan of the project, quality plan, financial plan, resource plan, risk plan, procurement plan, communication plan and acceptance plan. The third step is the project execution. In this phase the project gets executed according to the project plan and a series of management process are engaged in controlling and monitoring the output delivered by the project. The final step is project closure, which involves processes like delivering the final product to the customers, the project documentation is handed over to the business, the supplier’s agreement are terminated, project resources are realised and finally the closure of the project is communicated to the stakeholders (Westland, 2007; Schwalbe, 2010). The study aims to critically evaluate the relationship and usefulness of time, cost and quality behind the success of a project. Relationship between Time, Cost and Quality For deriving the relationship between the three factors one of the factors need to be held constant. In order to find the relation between time and cost, quality is held constant. A trade off relationship exists between the cost and the time required to complete the project. For some types of cost the relation is directly proportional while for some other cost a direct trade off is noticed. Due to these two categories of costs there is best possible project rapidity for nominal cost. By considering the relationship between the time and cost, the impact of change in scheduled time on the cost of the project can be better understood. There are two types of cost involved in a project, direct cost and indirect cost. Direct costs are those costs that are directly related to the activities of the project like equipments, material, salaries etc. If the pace at which the activity is running is increased then the cost increases, since in order to complete the project faster more resources will be allocated. Indirect cost is denoted as overhead cost; the cost that are not directly associated with the activities of the project like office space, taxes and administrative staff etc. During the project the indirect costs appears to remain stable. The indirect cost is seen to reduce as the duration of the project decreases. The project cost is the sum total of indirect and direct cost (Woodward, 1997). When a project is compressed, that is it needs to be completed sooner; the period necessary to finish the project is concluded from the critical path. The process for concluding the project time required is by determining the crash time and the completion time of each critical path. The crash time signifies the shortest time required to complete the project. The direct cost for crash time and normal time are calculated for each activity. The slope of each cost is calculated using the formula: Slope = (Crash cost – Normal cost) / (Normal time – Crash time) The activities that are having the least cost per unit of time decline should be abridged first. The direct, indirect and whole project cost can be determined for various project durations. The most favourable point is the period resulting due to the lowest project cost as shown in the graph below: (Source: Author’s Creation) Usefulness of the Techniques Critical Path Method Many projects are seen to fail the scheduled time of completion. Critical Path Analysis is also called as Critical Path Method (CPM) is the diagrammatically networking technique used to estimate the total duration required for the project. This tool helps to prevent overrunning of the project schedule. The critical path consists of a chain of activities that helps in determining the earliest possible time within which the project can be finished. It is the greatest path via the diagram that has minimum numbers of float or slack. Float or slack signifies the quantity of time by which a certain activity can be delayed but the succeeding activity will not be affected and the project will be completed on time. However it should be noted that critical path analysis has to be done all over the duration of the project so that the project managers can make a trade off. If the project manger finds that one of the tasks is running behind the schedule then he may need to decide on it. The technique to trade off the schedule is to determine the total slack and the free slack for each activity in the project. The free float or free slack is the time required for which an activity can be postponed without hampering the time of the next activity in sequence. On the other hand total float or total slack is the duration by which an action can be deferred from its timely start date without getting other planned projects that are about to finish get affected (Schwalbe, 2010). Net Present Value Net Present Value (NPV) is a calculation of value of cash over a certain period of time. The concept of NPV is applied during the project selection process, which helps in deciding whether a project must be selected or rejected. It is also applied later when there is a change in the scope that affects the benefit stream or the resources. Two important concepts brought by NPV are most significant for the project manager. The first concept of NPV says that money has time value. Project managers have to deal with this concept of time. Two time segments are there that needs to be considered: firstly the schedule of implementation of the project. The development and the management of the implementation of the project are in the hand of the project manager. Secondly as soon as the project implementation is completed the operational life of the project begins. During the course of the project the lifecycle is defined and developed by the project management team. In order to evaluate the investment and the cash flows associated with the salvage and operations of the project efficiently, the cash values must be adjusted to a common time frame by discounting the value of the future funds. The degree of discount is out of the purview of the manager. Discounting is accomplished through applying weighting factor to each upcoming period, compounding the factor at each period by taking into account the accumulation time. Projects are called successful only when they add value to the business. The value is positive only when the net of all cash flows is positive. If this is not the case then more value flows out than coming in. Thus NPV is very significant to the project managers (Goodpasture, 2001). Total Quality Management Total quality management is an approach adopted by the management that looks for achieving and retaining the long-term success of the organization by satisfying the needs and requirement of the customer, encouraging the participation and feedback of the employees, respecting the societal beliefs and values and complying with the government regulations and statutes. Quality management helps in improving the performance and productivity of the organization. Total Quality Management is not only concerned with the product quality but is also concerned about quality of the management of the company, the after sales service and quality of human life. Quality management is a continuous process that starts with the requirement of the customer and ends with the customer’s satisfaction. The organization that uses the principles of TQM forms corporate strategy with quality and customer embedded in them. Globalization and economic liberalization has made it mandatory for the managers to follow TQM in order to gain competitive advantage (Jha, and Joshi, n.d.; Ribiere and Khorramshahgol, 2004). Advantages and Disadvantages of the Techniques Critical Path The length of the critical path of the project shows the project’s lengths and helps in determining the schedule of the project. If the project manger aims to finish the project in lesser time then he may consider the shortest path. Through close monitoring of the critical path the performance of the project can also be improved. Since it helps in focusing on the activity that getting delayed may affect the performance of the project. This also helps in monitoring the activities that are tending to be critical, so that the project manager can take preventive measures from the start. A project can have more than two critical paths at the same time. This implies that every path in the project can be critical as it takes same amount of time for completion. In such a case a high risk situation arises since a delay in any of the activities can cause delay in finishing the project (Portny, 2013). Moreover it involves uncertainty of time and use is limited (Singla, 2010). Net Present Value NPV reveals the true profit generating capability of an investment since it considers the time value of money. This method is easy to calculate and helps the firm to achieve its objective, which is maximization of the wealth of the shareholder. The major disadvantage of the NPV is the cost of capital keeps on changing which affects the value of investment. The future cash flow of the investment is essential while calculating the NPV. So any error in the calculation of the cash flow may lead to wrong NPV thus making the task of forecasting difficult (Kapil, 2011). Total Quality Management The Total Quality Management looks towards the overall improvement of the quality standard of the organization. It leads to the creation of competitive position for the organization by enhancing productivity, profitability and market image of the organization. Reduces the cost by eliminating the wastes and defects and leads to better cost management. It improves the satisfaction of the customers by focusing on them that in turn increases the loyalty and retention. It also improves the morale of the employees. The major disadvantage of the TQM is that it is expensive since it requires the participation of the employees who needed to be trained and understand the main objective of the company. Moreover resistance from the employees are also common that makes managing the TQM difficult (Sashkin and Kiser, 2003; Barkley, 2008). Conclusion Project management is the discipline that deals with arranging, planning, motivating and managing the resources that may lead to achievement of a specific goal. The project has a typical starting and terminating point within which certain goal is achieved that brings value addition and beneficial changes in the organization. This study focused on how effective the three main parameters of project management that is time, cost and quality are used. Various methods like NPV, Critical Path Method and Total Quality Management are used as methods to control these three parameters. Personal Reflection This study has made the concept of project management more clear. Now I am able to recognise that the Critical Path Method helps the project manager to schedule the time required for the project. The NPV method helps the manager to determine the returns that the project is going to generate. On the other hand TQM helps in maintaining the quality standard of the project. All these three techniques help to reach the objective of the project. REFERENCES Barkley, B.J., 2008. Project Management in New. Noida: Tata McGraw-Hill Education. Goodpasture, J.C., 2001. Managing Projects for Value. Vienna: Management Concepts. Jha, V.S. and Joshi, H., n.d. Relevance of Total Quality Management (TQM) or Business Excellence Strategy Implementation for Enterprise Resource Planning (ERP) – A Conceptual Study [pdf] Available at < http://mitiq.mit.edu/iciq/pdf/relevance%20of%20total%20quality%20management%20(tqm)%20or%20business%20excellence%20strategy%20implementation%20for%20enterprise%20resource%20planning%20(erp)%20a%20conceptual%20study.pdf> [Accessed on 7 June 2013]. Kapil, S., 2011. Financial Management. Mumbai: Pearson Education India. Portny, S.E., 2013. Project Management for Dummies. New Jersey: John Wiley & Sons. Ribiere, V.M. and Khorramshahgol, R., 2004. Integrating Total Quality Management and Knowledge Management. Journal of Management Systems, 16(1), pp. 39-54. Sashkin, M. and Kiser, K.J., 2003. Putting Total Quality Management to Work: What TQM Means, how to Use It, & how to Sustain it Over the Long Run. California: Berrett-Koehler Publishers. Schwalbe, K., 2010. Information Technology Project Management. Connecticut: Cengage Learning. Singla, A., 2010. Business Practice. New Delhi: FK Publications. Westland, J., 2007. The Project Management Life Cycle [pdf] Available at [Accessed 6 June 2013]. Woodward, J.F., 1997. Construction Project Management: Getting It Right the First Time. London: Thomas Telford. Young, T.L., 2013. Successful Project Management. London: Kogan Page Publishers. Read More