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BSBPMG510A Manage projects

Develop project plan

Reading

Overview....................................................................................2The 5 phases in a project...........................................................2The plan phase..........................................................................3Planning your project.................................................................3

Project goals............................................................................................4Project objectives.....................................................................................4

Tasks.........................................................................................5Defining tasks..........................................................................................5Task sequencing......................................................................................6Estimating task duration..........................................................................7Scheduling...............................................................................................7Tools for prioritising and scheduling tasks.............................................10

Risk management....................................................................13Risk identification...................................................................................13Risk quantification..................................................................................14Risk response........................................................................................14Risk monitoring and control...................................................................15

Cost management....................................................................16Resource planning.................................................................................16Estimating cost......................................................................................16Estimated costs and budget..................................................................18

Compile your project plan document........................................18

Acknowledgment:

Adapted from the UpFront! Toolbox (601) © Commonwealth Australia 2004.

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OverviewOnce a project has been established and defined during the initiate phase the task of the project manager, and others, is to formulate a project plan. It can not be understated how vital this phase of project management is to the final success or failure of the project. Typically, the better the planning the better the project result in terms of it being on time, on budget and fulfilling the projects objectives.

The 5 phases in a projectThere are five general phases in a project:

1. initiate phase

2. plan phase

3. organise phase

4. control phase

5. close phase.

This reading takes a close look at the plan phase.

Major activities that occur during each project phase

Initiate Plan Organise Control Close

Define the overall project goal

Develop a detailed task list

Obtain necessary resources

Lead and support the team

Complete final deliverables

Identify all stakeholders, their needs and expectations

Estimate all task times and all costs

Recruit necessary personnel

Establish control tools and methods

Write and issue final report, close the accounts, hand over project files

Identify the project objectives

Arrange the best sequence of all tasks

Organise and lead the project team

Monitor the project plan and make any necessary corrective actions

Release all resources

Identify initial work and resources and basic milestones

Develop a workable schedule and identify critical milestones

Assign all project tasks

Assess and implement change

Obtain stakeholder acceptance and signoff

Identify all constraints,

Write a detailed project plan and

Communicate with

Prepare and distribute

Evaluate the project

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Initiate Plan Organise Control Close

assumptions and risks

obtain approval from stakeholders

stakeholders and all necessary parties

status reports

The plan phaseIn the plan phase you will:

1. develop a detailed task list

2. estimate all task times and costs

3. arrange the best sequence of tasks

4. develop a workable schedule and identify critical milestones

5. write a detailed project plan and obtain approval from stakeholders.

You can use the scope document as a basis for the project plan but you will need to expand on it and create a detailed activity list of the project deliverables.

Planning your projectTo effectively plan and implement a project, you must remember that the project has:

an overall goal

several objectives

a number of separate tasks attached to each objective.

Your job will be to identify all of these objectives and tasks, and turn them into an effective project plan.

Now, consider the skills you will need to do this. As you develop your project plan you will find yourself using these skills:

Planning skills—to define the task list, estimate task times and task costs, define the task sequence and timing.

Communication skills—to help communicate and consult with staff, suppliers and contractors to determine how long each task should take, as well as job functions during the estimation process. These same skills will also help you to write the project plan and get approval from the stakeholders.

Skills in the use of project management tools—to assist in the development of the project plan.

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Risk management skills—to identify and classify all project risks including OHS issues.

Budgeting skills—to help estimate and cost the project.

Project goals

Every project has a major purpose or direction. Once a project has been identified, the major stakeholder or sponsor will make a clear statement of what they want to achieve. This is often called the goal of the project.

The sponsor’s goal will be defined by end products or services the sponsor wishes to acquire. The following are examples of particular project goals.

Design and complete staff training on new OH&S regulations.

Increase company sales by the end of the financial year.

Relocate the company to new premises by next year.

Project objectives

To successfully complete a project, several major steps need to take place. These steps usually represent the major parts of the project. These are the project objectives, sometimes called milestones.

As the project manager you will work with stakeholders to identify the key project objectives for the project goal.

Objectives are not actual work but are sub-goals that are used to focus work activities during the life of the project. Objectives have outputs that are clearly defined in terms of results, goods, or services produced during the project or at its completion.

These outputs are sometimes referred to as deliverables and may include reports, plans, products, or even organisational changes.

It is extremely important to be precise about the project objectives because they are the foundation from which the project plan is developed.

Project objectives can influence:

the selection of the project team

task definition

task schedule

resource allocation

budget.

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Objectives are also compared against outcomes at the end of the project and continuously during the life of the project, to make sure that expectations have been met and that the project is moving in the right direction.

TasksOnce you have defined project goals and objectives you can begin to focus on the actual work required to complete the project. This work is divided into tasks.

Tasks must be:

clearly defined

prioritised

sequenced, and

scheduled.

Defining tasks

Task definition involves identifying all of the specific tasks and task activities for the project. A task is an element of work that is contained in the work breakdown structure found in the scope document.

Each task has:

an expected duration

an estimated cost

resource requirements.

Task definition usually results in a very detailed work breakdown structure from which the project team has a complete understanding of the work that is required to achieve the project deliverables.

Tasks must first be determined. Some guidelines for determining tasks are as follows:

Identify tasks as precisely as possible. Each task should be short compared to the overall project duration. For example, if you plan to put up a frame house, you may want to break up the “put up the frame” process into three or more tasks, one for each part of the house (outer walls, inner walls, roof etc). This helps you make a more reliable estimate of the time and resources required to complete a task.

Tasks must be significant enough to include in the project plan. Insignificant or unscheduled tasks only clutter your project task list. For example, in the “pour the concrete” task mixing the concrete may be

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important, but it may not be significant enough to include as a separate step if it doesn’t affect how the task is scheduled.

The level of detail in your list of tasks should be appropriate for the amount of planning and control you want. For example, if you are hiring outside consultants to do a study, you are interested in when the consultant starts the study and when the study will be completed but you are not interested in the detailed tasks performed by the consultants. In your list of tasks, you would include one task for the study, showing the duration for the whole, rather than many tasks indicating each step of the study. However, if you are doing the study yourself, the separate steps would need to be included in your task list.

When you list your tasks, you must be aware of the scope of the tasks and the assumptions on which the tasks are based. This helps you identify changes and measure progress.

Be comprehensive. Remember to include reports, reviews and coordination activities in your list of tasks and remember to include tasks for anticipated rework or modifications after a task has been completed, such as revising a manual or reworking and retesting a new product.

Name a task using a verb and a noun, such as “pour the concrete”, “build the outer wall frame” and “tile the roof”. Make the names as explicit as possible and keep the style of the names consistent throughout. This consistency will help others understand each task in your schedule.

Task sequencing

At this point in the planning phase, our project is a list of tasks, what must be done in order to complete it, deliverables, and milestones to measure its progress.

Now it’s time to work out the sequence in which the tasks can be done to achieve these milestones and deliverables.

Obviously we could just put them in a logical order like a 'to do' list and then do them one after the other. This is fine for small, simple projects but for a complex project with many tasks this has the potential to be a long and inefficient path to completion.

Many activities in a project can be done simultaneously to increase efficiency, while other tasks will be done sequentially because they are dependent on earlier tasks.

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Estimating task duration

After the sequence of tasks is set, you must estimate the duration of the tasks. The duration includes both the work time that is needed to do the task plus the time over which this work is done. For example it may take 14 hours of work to perform a task, but this work may be done over four days because the assigned person may only do 3.5 hours work per day on the task. Holidays and weekends must also be considered when estimating task duration.

To complete the duration estimates you need to know:

the activities within the task

the sequence of the activities

the availability of resources

the skill levels of the personnel

any constraints and assumptions that have been made

any historical information from previous projects.

When estimating task times, there are five options that you can use to gather information to help you make the estimates as accurate as possible:

1. Ask the people who will actually do the work because they have the experience.

2. Get an expert's opinion in the task field.

3. Use an identical or similar task in a completed project as a guideline.

4. If you have time and the task is ready to be undertaken, perform a test task.

5. If all else fails, make your best educated estimate.

The results then are:

a detailed list of activity durations

a document describing the background of the estimates.

Scheduling

The schedule for the project will draw on all the information about the tasks that you have gathered and estimated. In the schedule show for each task the:

calendar dates

task duration

resource capacity.

The desired result is to have a realistic project schedule that will provide a baseline for monitoring and measuring the project performance.

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An accurate schedule is the most important tool for implementing a project and coordinating resources. If you are too short or too long with your time frame then the project will likely go over time or over budget. You must be realistic about the time required to complete a project.

A schedule lists tasks, in step-by-step order, and indicates what to do, who is to do it and the time that is allocated to complete it.

To schedule effectively you need to know:

fixed deadlines

details of each task

the order in which tasks will be done

how each task will be done

the number of staff and/or resources available to complete the task

estimates of the time needed to complete each task

when each task must be completed

how task completion will be measured

the number of tasks to be completed within a time frame

external and internal environmental factors that may influence performance.

Developing a project schedule

Once you have correctly sequenced all tasks, you should schedule all the activities required for each task. There are seven common steps to follow to create the schedule:

1. estimate the time required to complete each activity

2. determine if there is a critical path sequence for activities

3. determine the likely dates for each activity

4. review the schedule against resource availability

5. chart the final schedules and distribute it to the project team

6. make adjustments based on team feedback

7. approve the schedule and distribute.

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A simple task breakdown and schedule

Task No.

Task: Install bins and bag dispensers at the following parks

Work Team Resources Comments — Other site activities of team

Start Date End Date Status ***

1 Edenborough Park Lindfeld Parks Maintainence Team

3 x bin, pole and bag dispensers, 3 bags of gravel cement mix

During grass cutting & grounds cleaning

Mon 15th Tues 16th

2 Eastern Reserve Parks & Gardens Services P/L


Contractor Mon 15th Mon 15th

3 Ferndale Park Chatsville West Parks Maintainence Team


During walking track repair program

Tues 16th Wed 17th

4 Tintallen Oval Chatsville West Parks Maintainence Team

2 x bin, pole, and bag dispensers, 2 bags of gravel cement mix


Thur 18th Thur 18th

5 Chatsville Oval Willowbury Parks Maintenance Team

2 x bin, pole, and bag dispensers, 2 bags of gravel cement mix

During building upgrade work on amenities block

Fri 19th Fri 19th

6 Beau Park Chatsville Parks Maintainence Team



Mon 22nd Mon 22nd

7 Bales Park Willowbury Parks Maintenance Team



Wed 24th Wed 24th

8 Willowbury Park Parks & Gardens Services P/L


Contractor Thur 25th Thur 25th

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Schedule control

There are many reasons to amend or change a project schedule and many issues arise from doing so. This is why a realistic project schedule is important to successful project management. Strong leadership is important to make sure that project schedules are met.

There is constant pressure from stakeholders/sponsors to shorten schedules and from suppliers and contractors to lengthen schedules, so you will need to have strong negotiation skills to maintain control of the project timetable.

The importance of correctly negotiated and realistic milestones in the scope document will be the measuring tool for any rescheduling requests. Requests for changes in the schedule should go through a change management process, be assessed for relevance and impact, and then approved by a properly implemented change control group.

Tools for prioritising and scheduling tasks

Work Breakdown Structure (WBS)

Of the many methods available to define the activity and tasks that make up a project—the one that is most used and is easiest to understand—is the work breakdown structure, usually referred to as a WBS.

Using WBS, we represent the goal, objectives, tasks, sub-tasks and work activities using a hierarchical tree which shows all of the levels of breakdown. The top branch represents the goal of the project and the bottom branches represent the individual work activities to be performed.

It could be a hierarchical listing like a table of contents in the front of a book or a graphical diagram for displaying the WBS, like the WBS chart shown below. You will notice that it looks a little like an organisational chart for a company.

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An example of a WBS chart for installation of animal litter bins and bag dispensers in all council parks

Gantt charts

Gantt charts are the most common means for displaying project schedule information. Gantt charts use a list of tasks or activities required to complete the project. The timing for each task is represented as a series of horizontal lines or bars under a calendar scale.

Task name

Start date

Finish date Duration January

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Task 1 04/01/09 07/01/09 3d Task 2 06/01/09 10/01/09 5d Task 3 11/01/09 15/01/09 5d Task 4 07/01/09 20/01/09 6d Task 4 21/01/09 23/01/09 3d

Here is an example Gantt chart. Notice that task timings can overlap, be broken up or have gaps between tasks.

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Critical path methodCritical path analysis is a technique for calculating the duration of the project by analysing and calculating the duration of the longest path (the critical path) through the project.

Typically you are trying to determine the shortest path to complete a project. However, the critical path method looks at all tasks within the project and based on their sequence measures the path through this sequence that could potentially take the longest time. This helps estimate a realistic timeframe in which to complete the project.

In the example critical path chart below the shortest path is task A to C to G and would take only 7 days. However, a more realistic timeframe is represented via task A to C to E to G which could take up to 12 days.

Example critical path for a series of project tasks

PERT analysis

PERT analysis is a technique that is used when there is a high degree of uncertainty about the individual activity duration estimates. PERT calculates the critical path method but uses statistically weighted average duration estimates.

PERT uses probabilistic estimates, which are activity duration estimates based on three criteria:

optimistic duration

most likely duration

pessimistic duration.

The three estimates are then statistically averaged using a formula called the weighted average formula. Deriving this formula is outside the scope of this topic but an example is provided below.

The formula is: Where:

ED = Estimated event duration

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Task A

Task B

Task D

Task C

Task E

Task F

Task G

1 day

1 day

3 days6 days 2 days

6 days

5 days

4 days

6 days

BD = Best duration – shortest time needed to complete the activity

LD = Likely duration—the time most likely needed to complete the activity

WD = Worst duration—the longest time required to complete the activity.

Risk managementRisk management is a major issue in project management. Your project plan should include a risk management plan.

A risk is something that may happen and if it does, it will have a negative impact on the project. A risk must also have a probability of occurring that is something above 0% and less than 100%. If there is no chance of it happening, then it is not a risk. If it has a 100% chance of occurring it is a certainty rather than a risk and must be factored into the project planning.

The second thing to consider is what type of impact it will have on the project. If it will have a neutral or positive impact, it is not a risk. Suppose we said a risk was that we would find the project less complicated than we thought, and could finish early. Unless finishing early has a negative effect on the project, it is not a risk.

There are four stages to risk management planning:

1. risk identification

2. risk quantification

3. risk response

4. risk monitoring and control.

Risk identification

In this stage, we identify and name the risks. The best way to do this is to run a workshop with the project team. Use a combination of brainstorming specific project risks and reviewing standard risk lists. There are different sorts of risks for each project and you need to decide on a project-by-project basis what to do about each type of risk.

Business risks are ongoing risks that are best handled by the business. Consider Happy Pizza P/L. If the project to install a new accounting system cannot meet the end of financial year deadline, the business area may need to keep their existing accounting system for another year. Happy Pizza P/L

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can respond by developing a contingency plan to use the existing system for another year.

Generic risks are risks to all projects, for example the risk that suppliers might not meet project deadlines. Each organisation will develop standard responses to generic risks.

Risks should be defined in two parts:

the cause of the risk (such as suppliers not meeting deadlines, staff absences, contractors not available, etc)

the impact of the risk occurring (such as exceeding the budget, milestones not achieved, etc).

Risk quantification

Risks need to be quantified in two dimensions. You need to assess the probability of the risk occurring as well as the likely impact on the project if the risk does occur. For simplicity, rate each on a 1 to 4 scale using a matrix similar to the one below—the larger the number, the larger the impact or probability.

Risk quantification matrix

Note that if probability is high and impact is low then this is a medium risk, whereas if the impact of a risk is high and probability is low it is high risk. A remote chance of a project-destroying risk warrants more attention than a high chance of a small problem.

Risk response

There are four things you can do about a risk:

1. Avoid the risk. Do something to remove it, for example, use another supplier if the current supplier cannot deliver on time.

2. Transfer the risk. Make someone else responsible. Perhaps a vendor can be made responsible for a particularly risky part of the

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project, or insurance can be obtained to provide cover in the event of the risk occurring.

3. Mitigate the risk. Take action to lessen the impact or chance of the risk occurring. If the risk relates to availability of resources, identify alternative suppliers and draw up agreements to allow suppliers to be changed if deadlines are not met.

4. Accept the risk. The risk might be so small that the effort to do anything about it is not worthwhile.

A risk response plan should include the strategy and action items to address each risk. The actions should include what needs to be done, who is going to do it, and when it should be completed. Below is a sample risk response plan.

Sample risk response plan for installation of animal litter bins and bag dispensers in council parks

Risk Title Risk Details Risk Priority

Mitigation Strategy

Failure to meet schedule

Failure to meet schedule due to bad weather, staff shortages. Constant bad weather over the short project time frame could delay the project.

Low Accept. If this does happen it will only push back the project a short time.

Cost overruns for installing bins

External costs include contractor for installing some of the bins, possible overtime, cement and damage to tools.

The cost of the bins has not been included as these have already been purchased.

Low Fixed price quote obtained from contractor for their two days of work.

Bins will be stolen

The bins may be stolen from park locations.

Low Cement bins in to minimise risk of being removed, pushed over or stolen.

Insure—Council must maintain insurance to cover the theft of council property in public reserves.

Risk monitoring and control

Risk management is not a complex task. If you follow the four steps (risk identification, risk quantification, risk response, risk monitoring and control) you can put together a risk management plan for a project in a short space of time. Without a plan, the success of the project, and your reputation as a

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project manager, are on the line. Follow these steps and you will increase your chances of success.

Cost management Cost management is and important area of project management especially in profit-focused corporate contexts. Companies are always conscious of budget overruns and cost restrictions in today’s competitive markets.

Project cost management includes all the processes required to make sure the project is completed within the approved budget.

As the project manager, it is crucial for you to make sure that the scope document is as accurate as possible, so that the approved budget is based on estimates that are as realistic as possible.

An accurate scope document also helps to make sure that the only work that is done on the project is work that is defined in the scope. Remember—it is your job as the project manager to constantly satisfy the needs of the stakeholders while keeping costs down and under control.

Project cost management processes include:

resource planning

estimating costs

estimated costs and budget.

Resource planning

To estimate, budget and control the costs of a project, you, as the project manager, must determine what resources are required and in what quantities, to complete all the project tasks. This includes people, equipment, facilities and materials.

When you have determined this, you will have a detailed list of resource requirements. To make sure that resource estimates are as accurate as possible, draw upon the skills of people with experience and expertise in similar projects.

Estimating cost

Costing a project is not an easy task. All projects are different and you may not have a previous example to assist you in costing the current project. You can refer to audit reports and budgets from previous projects, but these may only provide ideas, rather than real costs.

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One of the key inputs to the costing process is the detailed WBS that you developed at the start of the planning phase.

With very large projects this estimation process is usually undertaken in three stages.

1. Early rough estimate is usually done well before the start of a project or even before a project is initiated. This estimate is usually made with a -25% to + 75% accuracy.

2. Budgetary estimate is used to allocate funds into a company budget for forecasted expenditure in the upcoming 12–24 months. The accuracy of this estimate is usually tighter and about -10% to + 25%.

3. Definitive estimates are made after the project has started and usually provide the accurate estimate for project costs. These estimates are usually based on the performance of the project to date. The accuracy of this estimate is usually approximately -5% to + 10%.

There are typically four major cost areas that are involved in any task. They are:

1. labour costs

2. equipment/materials costs

3. other direct costs (travel, telephone, contracted services etc)

4. indirect costs (for example company overheads, depreciation etc).

You can take either a top down or a bottom up approach to costing.

The top down method

The top down method of costing can be difficult—it relies on senior management estimating a budget for a project from their experience and then allocating funds to the project team for execution. This only works if the senior management have allocated carefully and they have significant project experience and precedents of similar projects on which to base costs. Estimation done this way puts a limit on the project, which can severely limit the tasks that can be included in the project.

The bottom up method

The approach to costing preferred by most project managers is to estimate from the bottom up—to cost each task and subtask then work out the total cost from that. If the task is repeated many times throughout the project then you can use this as a standard unit of work cost.This is also the most accurate method as it involves input from the staff and providers of materials and services. This method reduces the risk of tasks or subtasks being left out of the total costing for the project.

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Contingency allowances

When all task costs have been totalled and you have a final cost for the project, don’t forget to add in a contingency allowance. In project management terms this is ‘padding’ to allow for errors in estimating or unexpected cost occurrences.

Estimated costs and budget

Once you have added up all the costs for all the tasks and activities and you have a final cost estimate for the project, you usually present it to the project sponsor and stakeholders who are providing the funds. After assessment and negotiation, the project sponsor will either accept the costing for the project and approve funds or the project scope or methodology may have to be re-evaluated to reduce costs. When the funds are allocated this becomes the project budget, which you will use to control and track the project expenditure against.

A sample budget is shown below.

Sample budget for installation of animal litter bins and bag dispensers in council parks

Proposed budget or financial constraints for the project

Overtime wages/contractor payments $ 7,000

Bins & posts $ 15,000

Materials (cement, etc) $ 2,000

Annual bag replacement program $ 6,000

Annual additional charge by Waste Management Co $ 18,000

Total cost $ 48,000

Compile your project plan documentIt’s now time to consolidate all the work you’ve done into your project plan document. It is a document that you and others can refer to for all the vital information about stakeholders, schedules, team members, tasks, quality management, cost management, and risk management.

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Sections in a project plan document

For medium to large projects, the project plan is definitely the key document in the project. If you have a project like this you should consolidate all of your planning documents created so far into one project plan document.

For smaller projects with established work teams, you may be able to use just the scope document, along with budget, work schedules and the risk management plan as your total project planning tools.

Remember that the project plan is a positive document that represents the move from planning to execution. It is simultaneously a tool for guiding management decisions, control and reporting. It is a master plan to pull together all the various pieces of information that you have developed in the planning phase. It tells you:

where you are

where you are going, and

how you are going to get there.

Project plans can vary from a very simple single page document with some objectives, a task list, resources and budget, to a complex report accompanied by books of estimates, task lists, Gantt charts, critical path analyses etc.

Here is a suggested format for a large project with a detailed project plan. The plan has several sections:

executive summary, or overview, including the project goal

project objectives and deliverables

project milestones

project assumptions

project risks

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project work breakdown structure

resource details

- human resources - equipment - materials and supplies - budget details - project organisation - operating procedures - assessment and review criteria - contacts - project approvals.

There is no fixed rule for the level of detail that should go into the project plan. The aim is to balance the time taken to plan the project with the importance and time taken to implement the plan.

If a new telephone system is to be installed in an office of five staff then a two week planning phase is unnecessarily detailed.

If your project is to build a new office building that will cost $25 million, take 16 months to complete and involve over 100 people, then three months of planning will be a small cost to pay for successful completion of the project.

Remember, the most important general management skills you will use are planning and communication. You have to meet with many people to help determine the information that you need to correctly estimate work durations, costs and resources.

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