The Essentials of Project Management

Dennis Lock

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138635869
• eBook ISBN: 9781351789745
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

This title was first published in 2001. A primer distilled from the author's Project Management. It provides a straightforward account of the principles and techniques of project management, designed to meet the needs of the non-specialist. Using examples and illustrations, the author introduces key project management procedures.

1
Introduction

Projects and the means for managing them are hardly new, as the wonders of the ancient world testify. However, in recent years project management has become recognized as a branch of management in its own right, with its own professional associations and with a comprehensive and expanding range of procedures and techniques.

The purpose of project management is to plan, organize and control all activity so that the project is completed as successfully as possible in spite of all the difficulties and risks. This process starts before any resources are committed and must continue until all work is finished. The aim is for the final result to satisfy the objectives of both the project performer and the customer.

Most people think of a customer as an individual person or external organization that enters into a sales contract with the project performer. But many projects are conducted internally, within organizations for their own purposes. At the simplest extreme, an individual might wish to carry out a project single-handed for him- or herself. In all these cases there is still a notional customer for the project and appropriate methods must still be used to manage the project if that customer is to be satisfied.

Today’s project manager has ready access to a wider than ever range of cost-effective tools for planning and controlling a project. The most successful manager will be capable of choosing and using those techniques that best suit the particular project. But there is obviously far more to managing a project of any significant size than the application of a few sophisticated techniques and procedures. It involves a whole framework of logical and progressive planning and decisions, perceptiveness, the liberal application of common sense, proper organization, effective commercial and financial management, painstaking attention to documentation, and a clear grasp of proven and long-established principles of management and leadership.

Projects

The principal identifying characteristic of any project is its novelty. It is a step into the unknown, fraught with risk and uncertainty. No two projects are ever exactly alike, and even a repeated project will differ from its predecessor in one or more commercial, administrative or physical aspects.

Projects can be classified under four main headings:

1. Civil engineering, construction, petrochemical, mining and quarrying projects These generally involve work on a site which is exposed to the elements, remote from the contractor’s head office. Such projects incur special risks and problems of organization and communication. They often require massive capital investment and they deserve (but do not always get) rigorous management of progress, finance and quality. The amount of finance and other resources may be too great for one contractor, in which case the organization and communications are further complicated by the participation of several contractors, working together in some kind of joint venture.
2. Manufacturing projects, for new product development or to produce a piece of equipment or machinery, ship, aircraft, land vehicle or some other item of specially designed hardware. Manufacturing projects are often conducted in factories or other home-based environments, where it should be possible to exercise on-the-spot management and provide an optimum working environment.
3. Management projects, which prove the point that every company, whatever its size, can expect to need project management expertise at least once in its lifetime. These are the projects that arise when companies relocate, develop and introduce a new computer system, prepare for a trade exhibition, research and produce a feasibility report, set up a training programme, restructure the organization or plan a spectacular celebration.
4. Research projects Projects for pure research can consume vast sums of money, last for many years and either result in a dramatically profitable discovery or prove to have been a complete waste of time and money. Research projects carry very high risk: they aim to extend the boundaries of current knowledge. Their end objectives are usually difficult or impossible to define. However, some form of control must be attempted. Budgets have to be set in line with available funding. Expenditure can be controlled to some extent by conducting regular management reviews and reassessments, and by authorizing and releasing funds in periodic, controlled and carefully considered steps.

Project management processes

The left-hand column of Figure 1.1 lists project management processes that are directly related to planning and controlling most commercial and industrial projects. These are the processes with which this book is chiefly concerned. The seventh edition of my book Project Management was the source for practically all the material used in this book. That book is more comprehensive, contains more case studies and includes the additional topics listed in the right-hand column of Figure 1.1.

Figure 1.1 The essential processes of project management

Project objectives

The objectives of most projects can be grouped under three headings:

1 Quality

The end result of the project must be fit for the purpose for which it was intended. The specification must be satisfied. If a new copper refinery is designed and built for the purpose of processing 200 000 tonnes of cathode copper per annum, then it must be able to do so, and to produce copper at the rated purity. The plant must function reliably, efficiently and safely. In these enlightened times there will be trouble if operation of the plant causes environmental pollution.

Development projects for consumer goods must produce articles that satisfy the market requirements. The design engineering and manufacturing quality have to result in a reliable and safe product.

A management project for the relocation of a company should see a contented workforce at their desks in the new buddings on the appointed day, with all their goods and chattels delivered without loss or damage to the right places, and all company systems operational.

At one time quality was seen primarily as the responsibility of the quality control department, relying on inspection and testing to discover faults and then arranging for their rectification. Now, the concept of total quality management is uppermost, with responsibility for quality shared by everyone in the project organization from top to bottom.

Most of this book is about achieving time and cost objectives. Achieving quality, performance and reliability objectives obviously requires technological competence, but this must be complemented by adequate quality procedures (for which ISO 9000 is accepted as the controlling series of standards and the starting point from which to install and operate a quality management system).

2 Budget

The project must be completed without exceeding the authorized expenditure.

For commercial or industrial projects, failure to complete work within budgeted costs must reduce the profits and any expected return on the capital invested, with risk of actual financial loss.

There are many projects, however, where there is no direct profit motive. Examples include internal management projects, pure scientific research, some charitable works and projects carried out solely by employees of local authorities using public funds. For these projects too, even in the absence of a profit motive, careful attention to cost budgets and financial management is vital.

3 Time to completion

Actual progress has to match or beat planned progress. All significant stages of the project must take place no later than their specified dates, to result in project completion on or before the planned finish date.

This timescale objective is extremely important. Late completion or delivery of a commercial project is, to say the least, hardly likely to please the project purchaser or sponsor. Consistently failing to keep delivery promises cannot enhance the contractor’s market reputation. Further, any project that continues to use the contracting company’s resources beyond its scheduled finish date is liable to have a knock-on effect and disrupt the company’s following projects.

The time/cost relationship

’Remember that TIME IS MONEY!’

(Benjamin Franklin, in Advice to a Young Tradesman, 1748)

I have always held that the most important aspect of cost control is the management of project time. If the planned timescale is exceeded, the original cost estimates and budgets are almost certain to be exceeded too.

Direct costs

’Variable’ or ‘direct’ project costs are time-related in several ways. Cost inflation is one factor. A project started and finished considerably later than the time originally planned might cost more because of intervening rises in the costs of payroll, materials and bought-out services.

Late working can sometimes be associated with inefficient working, perhaps through lost time or waiting time (often the result of bad organization and planning). If any project task takes longer to perform than its planned duration, there is a risk that the budgeted man-hours will also be exceeded. This is true not only for one task in a project but also collectively for the whole project.

Indirect (overhead) costs

The ‘fixed’ or ‘overhead’ costs of management (administration, accommodation, services and general facilities) are directly time-related: they are incurred day by day, every day, regardless of any work actually achieved, until the project is finished. If the project runs late, then these costs will have to be borne for a longer period than planned and must exceed their budget.

Costs of financing

Another important time-related cost is financing. Where the project performer has an overdraft at the bank or relies on other loan financing, interest has to be paid on the loan. Even if the performer finances the project from its own funds, there is still a notional cost of financing, equivalent to the interest or dividends that the same funds could have earned had they been invested elsewhere. If a project runs late, the financing period is extended, and the amount of interest or notional interest payable must increase correspondingly.

Much of the finance raised for a large industrial project is likely to be invested in work in progress. Work in progress includes not only visible signs of work carried out in a factory or at a construction site; it also includes all the unbilled costs of engineering and design. In many cases the contractor is only able to charge for work actually finished and delivered to the customer, or for amounts of work done and supported by certified invoices. Such invoices are validated by certificates from an independent professional third party (often a quantity surveyor or an engineer) which certify the amount of work done and claimed for. Certified invoices are often linked to planned events. If an event is late, or if a measurable progress stage has not been reached, an invoice cannot be issued.

Contract penalties

Some contracts contain a penalty clause which provides the customer with the sanction of a cost penalty against the contractor if the project should run late. A penalty clause might, for example, specify a sum of money to be deducted from the agreed project price for each week by which the contractor fails to meet the contracted project completion time.

Balancing time, cost and quality

Of course the aim of a good project manager must be to achieve success in all aspects of the project. But it is occasionally necessary to identify one of the three primary objectives (quality, cost or time) as being of special importance. This will affect the priority given to the allocation of scarce resources and the way in which management attention should be concentrated. It might also influence the choice of project organization structure (see Chapter 3).

A project for a charitable organization with very limited funds would, for example, have to be controlled very much with the costs in mind.

Some companies stake everything on their reputation for quality, even if this means overrunning time and costs. However, when quality is mentioned in this context it is actually the...

Table of contents

• Cover
• Halftitle Page
• Title Page
• Copyright Page
• List of figures
• Preface
• Acknowledgements
• 1 Introduction
• 2 Definition
• 3 Organization
• 4 Work breakdown and coding
• 5 Cost estimating
• 6 Planning
• 7 Scheduling
• 8 Implementation
• 9 Purchasing
• 10 Cost management
• 11 Changes
• 12 Managing progress
• Select bibliography
• Index