PART TWO

1) INTRODUCTION: PROJECT MANAGEMENT PROCESSES

Definition: A project is an endeavour in which human, financial, and material resources
are organized in a novel way to undertake a unique scope of work, of given specification,
within constraints of cost and time, so as to achieve beneficial change defined by
quantitative and qualitative objectives (Turner, 2009).

Fig 1: The definition of a project.

Objectives
Improved Goal
Performance

Benefit Operatio
Outcome n

Resource Project Outputs

A Temporary Organization. A project is a temporary organization. We have a vision of a

future state we wish to achieve, and we need resources to do work to deliver it. So we
create a new organization within which those resources can work. That organization will
have only a temporary existence, being disbanded when the new state is achieved. Hence,
the concept of the project as a temporary organization in which we assemble resources to
do the work to achieve our desired future state is key

How temporary is temporary? All organizations are permanent on some time scales and
temporary on others.

The parent organization views itself as permanent, and creates a project that it expects to
have shorter existence to achieve specific objectives. Carrol ((1995) suggests that the
success of an organization form depends on its ability to attract resources. Projects as an
organizational form are very effective at attracting resources because they are an effective
way of managing change. They can deliver change in a fast and flexible way, in ways that
cannot be achieved in the routine organization. They can also be used to prototype new
ways of working. Carroll also suggests that an organization’s longevity is an indication of
its efficiency. Projects are effective at delivering change, but an inefficient way of
working, so as soon as the change is delivered the project should be disbanded and
routine management adopted to manage the new asset delivered.

B. The Resources and the Work. We assemble the resources of the project to do work.
The resources can be people, materials, or money, or all three.

The work of the project has three features: it is unique, novel, and transient (Table 1).
The project has a transient existence and is disbanded when the work to deliver the new
asset is finished. We may never have built an asset like this before—the project is unique
—and so we need to adopt novel work processes. All of business—all of life—is about
trying to deliver objectives within constraints of time, cost, and quality.

Table 1: The Features of a Project

Goal Feature Pressure Plan
Change Transient Urgency Staged
Beneficial Novel Integration Goal oriented
Unitary Unique Uncertainty Flexible

.Projects can be categorized into runners, repeaters, strangers, and aliens. This
categorization recognizes that projects range from the familiar to the unknown:

Runners: These are very familiar. They almost count as batch processing. Example
maintenance projects would fall in this category. Routine processes can be used.
Repeaters: These are fairly familiar. There is knowledge in the organization about how
they should be managed, on which the project team can draw during the project start-up
process.

Strangers: The organization has undertaken similar projects in the past but there are
unfamiliar elements. For example the construction of the Channel tunnel fall in this type
of project: it wasn’t the first undersea tunnel ever built; it wasn’t the first time a high
speed railway line had been put in a tunnel; but it was the first time that such a tunnel had
been built between England and France. There were many familiar elements to draw on
but the overall project was completely novel.

Aliens: The organization has never done anything like this before. These projects are
high risk. You may try to identify familiar elements, and if you cannot, seriously consider
not doing the project. But many projects like this are mandatory, brought on by a change
in legislation.

Projects create several pressures that require the project plan to have certain features.
The transience creates urgency, a need to complete the work and obtain the benefit to
repay the money spent. The novelty requires us to create new ways of working, and
hence to integrate the working of people from across established organization structures.
The uniqueness creates uncertainty; you cannot predict the future, and therefore you
cannot be certain that the planned ways of working will deliver the objectives you want.
This uncertainty creates the first dilemma of project management: how much planning to
do?. When doing planning; you cannot predict the future, so you might as well ” knife-
and-fork” your way through the project. Well, there are two sayings about this approach:

“If you fail to plan, then plan to fail”; and

“We never seem to have time to plan our projects, but we always have time to do them
twice”
You must have a plan; you need a framework to coordinate people’s activities and the use
of materials and money. However, one thing you can guarantee about your plan is it is
wrong, that is not the way the project will turn out. You must have it as the framework
for coordination, but you must be ready and willing to change it as the project progresses.

There are those, on the other hand, who think they can eliminate all uncertainty by
planning in minute detail; by developing a highly detailed plan they can cover every
eventuality, they can predict the future. There are two problems with this approach. The
first is it costs time and effort to plan. There is an empirical rule that says if a certain
amount of effort, x, is required to produce a plan of a given accuracy, then to double the
accuracy requires four times as much effort, 4x, and to double it again requires four times
as much effort again, 16x.

Further planning gives decreasing returns, and you reach a point where you are putting
more effort into planning than is warranted by the value of the information you get out.
You have to stop planning and start managing the risk. The second problem is you cannot
eliminate the risk entirely, you cannot predict the future; if you make the plan too
complicated, too sophisticated, it becomes inflexible and less able to respond to changes
as they occur. Thus, we must have a plan, but we must accept that it will not be
completely accurate and so will need to be flexible to change. We will see later it must be
goal oriented to be flexible.

C. The Beneficial Change. The project is a temporary organization where resources are
assembled to do work. But we do not do the work for its own sake; we do it to deliver
some output, a new asset (or facility”). The asset may be a new building, manufacturing
plant, computer system, organization structure or a new design, and is called the output in
Fig. 1. It is something we want. However, we do not produce the asset for its own sake;
we make it so we can operate it to satisfy some purpose or produce some benefit. As we
operate the facility it will do something for us, which is called the outcome in Figure 1.
and the use of that outcome will provide benefit. The aim is to solve a problem or exploit
an opportunity to help us improve the performance of our business.
The performance improvement is the desired outcome of the project, the asset is simply
the desired output from the project that will enable us to achieve the outcome, the desired
performance improvement. The long-term use of the outcome may also help us achieve
higher order objectives, referred to as the impact in Fig. 1, and may help us achieve our
strategic goals.

D. The Functions of Project Management. The above definition of a project implies that
there are several functions of project management, five of which are illustrated in Fig. 1.
These five core functions can be explained as follows:
1. The project entails work, and that scope of work must be managed.
2. We assemble the resources into a temporary organization which must be managed.
3. In order to deliver the desired benefit, the asset must function in certain ways, and at
required levels of performance. Therefore, the performance, or quality, of the asset must
be managed. But to deliver a quality asset the work of the project must also meet certain
quality standards. Quality needs to be managed.

4. In order for the project to be of value to all stackholders, it must cost less than the
value of the benefit. Thus cost needs to be managed. This involves managing the
consumption of all resources, including people and material, not just money.

5. Time needs to be managed for several reasons. In order for the work of the project to
take place effectively and as efficiently as possible, the input of the various resources
needs to be coordinated. Also there will be a time value associated with the benefit from
the asset. The later it is delivered, the less its value, so the timing of the work needs to be
managed to deliver the asset within a time frame that will give the desired benefit. On
some projects, the Olympic Games for instance, the project must be completed to the
nearest minute. But on others the time value of the asset must be balanced against its
performance levels (quality) and the cost of delivering it.
Figure 2: Five functions of project management.
 Purpose
(beneficial change)

Scope

Organization

Time
Quality

Cost

Two additional functions, not illustrated in Fig. 2, are as follows:

6. As previously stated, the uniqueness, novelty, and transience of the work of the project
create risk. That risk needs to be managed.

7. There are a wide variety of stakeholders to a project, all with differing objectives. The
commitment of these stakeholders to the project needs managing

.The tools and techniques used to manage the five core functions, are summarized below
1. Scope is managed through product and work breakdown. The definition of a project,
Fig. 1, initiates the product breakdown: impact-outcome-output. But the project is fractal;
every bit of the project has the features of a project. So the hierarchy of objectives
continues down with the output, or deliverables, from work areas, work packages and
activities. This hierarchy is called the product breakdown structure (PBS).
2. Organization is managed through an organization breakdown, by which we break
down the skill sets of the people who will do the work. This is called the organisation
breakdown structure (OBS). At any level of breakdown, the products to be delivered and
the skill sets involved define a two-dimensional matrix, called a responsibility chart,
which indicates who will do what work to deliver the products. Conventionally products
are put in the rows and skills in the columns. The cells then represent the work of the
project.

The hierarchy of responsibility charts defines a hierarchy of work to be done, called the
work breakdown structure (WBS).
3. Quality is managed using techniques including quality control, quality assurance,
configuration management, procedures manuals, and audits.
4. The cost is managed through the three breakdown structure of cost types, labor,
materials, overhead, and finance. This is the cost breakdown structure (CBS). The three
breakdown structures combined produce what is called the cost control cube, and are part
of a methodology invented by the US military in the 1950s called the cost and schedule
control systems criteria (C/SCSC). This has now been incorporated into earned value
analysis (EVA).
5. Time is managed using networks and bar charts. Networks are a mathematical tool to
help calculate the time scale; bar charts are a communication tool to communicate the
schedule to the project team. Networks are part of a methodology variously called critical
path analysis (CPA), critical path method (CPM), or program evaluation and review
technique (PERT).

There are a number of project management processes to convert vision into reality. The
two most common management approach are- the project life-cycle and the classic six-
stages of project management models.

I. The project life-cycle: the stages we go through that take us from the initial germination
of an idea that there is some change we can make to improve performance to the point
where we have an operating asset providing benefit
Although all projects are different, any project can be considered to have a life-cycle
consisting of five phases (see Figure 1). The phases are usually referred to collectively as
the life-cycle of a project because they provide an overview of the life of the project from
its beginning to its end.

Concept Planning Closure

Feasibilit Execution

Figure 3: The Basic Project Management life-cycle

The above stage can be also written as: Germination => Incubation => growth=>
maturity => metamorphosis/death .

Each phase is marked by a completion which is often one of the deliverables of the
project. For example, Phase 1 – concept is completed by Benefits map and commitment
of resource for feasibility study. Phase 2 – feasibility study – is completed by the
production of the agreed project brief or project definition. Phase 3 – planning – is
completed as a project plan, although this remains flexible in many ways and is revised
during the progress of the project. Phase 4 – execution/implementation, leads to
achievement of the project Outputs and outcomes.. Phase 5 – closure – leads to formal
termination or handing over of the project to the sponsor and Data for evaluation, of
whether all the intended outcomes of the project have been met and learn lessons for
future project

In many organisations these phases are also used as evaluation points, so that as each
phase is completed a review is held to determine whether the project is succeeding in its
overall performance and whether key deliverables are being achieved. There are options
at these review stages to revise the plans and improve performance or even to
discontinue the project.
As each project is different, so each life-cycle varies also. Although Figure 1 is linear, the
phases of a project are often iterative in practice, with refining and modification taking
place throughout the life-cycle. Furthermore, projects usually change as they progress.
This is particularly so in service organisations such as health or educational services,
where projects are usually defined by needs and problems rather than by tangible outputs
such as factories or cars. Projects often take place in rapidly-changing contexts and the
impact of the changing environment on the life-cycle of a project has to be managed.
Flexibility is one of the keys to successful project management.

The idea of a life-cycle is also associated with ideas of birth, growing, maturity, ageing
and death. We talk about the ‘life’ of a project meaning this sequence of life stages. A
project is similar in the way that it develops and grows to maturity and completion. Once
the foundations have been established, the growth stages build on this and are shaped by
the earlier decisions. As growth moves towards maturity the project has a history of its
own that influences how we work with it and that also influences what is now possible –
many of the earlier decisions and actions have reduced flexibility. As the project moves
towards its conclusion there may be a sense of it having come to an end, perhaps a sense
of this being appropriate but also often some sorrow. If a team has enjoyed participation
in a project the closure may bring strong feelings of bereavement. However, if the project
has been successful it should have produced something worthwhile and sustainable.

II. The classic six-stages of project management: Unlike the sequential flow of the
project life-cycle, the six-stage model assumes that some stages are carried out
simultaneously. In particular, the model (Figure 5.3) assumes that communications will
take place throughout the project. It also assumes that team building, leading and
motivation will take place once the project has been defined and continue until it ends.

In the Defining stage the project is discussed fully with all the stakeholders to identify
opportunities for performance improvement, and the key objectives are identified. The
costs and timescales are also established at this stage-often called feasibility study.. A
feasibility study can help to clarify which option or options would achieve the objectives in the
most acceptable way. The purpose of a feasibility study is to determine whether the required
outputs or outcomes can be achieved with the available resources. This stage is complete when
the project brief has been written and agreed for funding

TABLE 2: THE KEY ISSUES TO BE ADDRESSED IN FEASIBILITY STUDY

No Appraisal Techniques
1 Technical  Problem Analysis
 Demand Analysis
 Logical Framework Analysis
 Technical Feasibility Study
2 Environmental  Environmental Screening
 Preliminary Environmental Assessment
 Environmental Impact Assessment
3 Social  Stakeholders Analysis
 Gender Analysis
 Social Impact Analysis
4 Institutional  Organizational Capacity Assessment
 Work Breakdown Structure (WBS)
 Activity Description Sheet
5 Financial  Cash Flow
 Trading, Profit and Loss Account
 Balance Sheet
 Cost Benefit Analysis
 Cost Effectiveness Analysis
6 Economic  Cost Benefit Analysis
P Generation of ideas Analysis
Cost Effectiveness
R  Economic Analysis
I  Identification and removal of Transfer Payments
L  Initial screening
Inclusion of linkage effect and externalities
I  Use of shadow prices
M  Estimation of distributional effect
7 I Risk Analysis and Mgt Is the idea prima
Risk facie promising?
Identification
N  Sensitivity Analysis
A  Risk Analysis
 Risk Assessment matrix
R
 Risk Mgt plan
Y Plan for feasibility study Terminate

W
O
R Conduct problem Conduct technical
K and market & stakeholder
Analysis Analysis
A
N Figure 3: FEASIBILITY STUDY: A SCHEMATIC DIAGRAM
A Conduct Financial Analysis
L
Y E
S V Conduct Economic, Ecological
I A & Sensitivity Analysis
S L
U
A
T Is the project worthwhile?
Terminate
I
O
Prepare Funding Project Brief
N
 Yes No

Yes No

Structure of Project Brief: The project brief should be concise and clear. It is usual to
use headings and sub-headings and to list the main points. It provides a record in
summary of the agreements on which the project is based and so represents the
justification for expenditure of time and effort. A checklist of the headings is provided in
Box 1.
 Box 1: Checklist for Drafting a Project Brief
- Project title
- Name of sponsor and main contact for project approval
- Locations – addresses of sponsor, project location, contact addresses
- Name of person managing the project and possibly their organisation if different from that
of the project sponsor
- Date of agreement of project brief
- Date of project start and finish
- Background to the project and purpose with goals outlined Key objectives with quality
and success criteria
- Details of how achievement of these will bring benefits to the business or sponsoring
organisation
- Scope of the project and any specific boundaries
- Constraints
- Assumptions
- Timescale of the project
- Deliverables and target dates (milestones)
- Estimated costs
- Resourcing arrangements
- Reporting and monitoring arrangements
- Decision-making arrangements – level of authority and accountability held by manager of
project and arrangements for any necessary renegotiation
- Communications arrangements
- Signature of sponsor with date, title and authority

2) Project and Scope definition

Project definition: The development of the project’s definition is vital to its success. A
comprehensive definition should be developed, stating its purpose, ownership,
technology, cost, schedule, duration, financing, sales and marketing, and resource
requirements. If this is not done, key issues essential to the viability of the project may be
omitted or given inadequate attention, resulting in poor performance. Through the project
definition, the vision for the project is created, the purpose of the project is defined, the
project plans are aligned with the business plans and the basis of cooperation agreed.
Project definition is achieved by following the steps discussed next.
Setting Objectives. Little can be done until clear, unambiguous objectives have been set
for the project. The project’s success can be compromised by objectives that are unclear
—do not mesh with organizational strategy—and are not clearly communicated and
agreed.
Defining the Scope. Scope definition, cost, time, and performance criteria are intimately
related. If they are unrealistic, expectations for the project will not be met, and it will be
said to fail. The strategic plan for attaining the project’s objectives must also be
developed in a comprehensive manner from the start. If the project objectives change, the
scope definition and investment criteria must be reconsidered.

Setting Functional Strategies. The setting of a project’s functional strategies must be

handled with great care, and requires the determination of the design, the technology to
be used, the method of its implementation, and eventual operation best suited to
achieving the objectives. The design standards selected will affect the difficulty of
construction and eventual operation of the plant. Technical risk in particular needs to be
assessed. Technical problems can have a huge impact on the likelihood of project
overrun.

Managing the Design Process. No design is ever complete; technology is always

improving. A key challenge is to achieve a balance between meeting the schedule and
making the design that fits better. Central to modern project management is the orderly
progression of the design and its technical basis through a sequence of review stages. At
each stage, the level of detail is refined, with strict control of technical interfaces and
changes (through

Configuration Management,. Changes can result in extensive rework, as people on other

parts of the project may have based their assumptions on the agreed design. You should
therefore aim to achieve a progressive design freeze as soon as possible. This is usually
feasible in traditional engineering projects, but an early design freeze may conflict with
meeting the customer’s requirements, especially in organizational development, high
technology, and information systems projects. In setting up projects, care should be taken
to appraise technical risk, prove new technologies, and validate the project design, before
freezing the design and moving into implementation..
Resources. It is no good defining what you want to achieve if you do not have the right
number of good, committed people, sufficient money, adequate infrastructure, and so on.
In fact, getting adequate resources, managing them well and ensuring that the context is
supportive are at the heart of successful strategic management, yet are rarely addressed
by the literature on strategy.

3) Project Organization. There are three organization issues which must be considered at
the earliest stages.
Management Structure. A project structure is expensive on resources. Many projects
begin and end with a functional line structure, but change to a matrix during
implementation. Implementing a matrix takes time, and effort must be put into
developing the appropriate organizational climate.

Client Involvement. The issue is the extent to which the client continues to be involved,
even after hiring contractors to undertake the work. They may feel they have a legal or
moral responsibility to ensure it is done to a certain standard, or may just want to ensure
it is for their own comfort. The dilemma is between not being involved at all, versus
constantly tinkering with the design, both frustrating the contractor and adding expense.
The balance will depend on the nature of the project. A solution is to schedule milestone
review points and limit owner involvement to those reviews.

Use of Contractors. No organization has the skills or resources to undertake all its project
work, and must therefore buy in goods and services. At an early stage of project
definition it is necessary to determine the contract and procurement strategy. Indeed,
financiers may not lend money without knowing who suppliers will be, so they can judge
their reliability.
In the second stage an initial plan is developed. Planning is an ongoing activity because
the plan is the basis for reviews and revision when necessary, depending on how the
project progresses during implementation. The third stage begins with the establishment
of the team of staff who will work on the project. The team members are usually involved
in developing the plan and are often able to contribute specialist knowledge and
expertise. The building of this team and its motivation and leadership also continue until
the project is finished. Once the initial planning has been completed the activities that
will lead to the project outcomes can begin. Implementation takes place during the
monitoring and control stage, shown as stage 4 in the model. During this stage, the tasks
and activities of the team will be monitored against the plan to assess the actual progress
of the project against the planned progress. Control is essential to ensure that the
objectives are met within the scheduled timescales and budgeted costs. Regular reviews
are usually held during this stage to enable the plan to be revised and for any difficulties
that emerge to be resolved.

5. Communications
Notes & reports Presentations

1. Defining 2. Planning 4. Monitoring & 6. Review & exit

Meeting notes Work breakdown Control Project reviews
TOR Teams & authority Cost control
Effort Project
Figure 3: Classic six-stage & duration
ManagementSchedule control and Thomas, 1998, p.14)
Model (Elbeik
Schedule Progress meeting
Resource Replan
Budget
Risk analysis

3. Team building, leading & motivation

How to build a team
Leadership activities & qualities
What motivates others
Communications should take place continuously, both within the project team and
between the project team and stakeholders in the project, including anyone who
contributes to achieving the outcomes. Some communications will be through formal
reporting procedures but many will be informal. The final stage is the review and exit
from the project. The review is held to evaluate whether all the intended outcomes of the
project have been met. It is also important because it enables information to be gathered
about the processes used in carrying out the project from which lessons can be learned for
the future.

The exit from the project has to be managed to ensure that:

 any outstanding tasks are completed
 all activities that were associated with the project are discontinued
 all resources are accounted for, including any that remain at the end and have to
be transferred or sold to someone else

So far you have covered the first stage of project management – defining a project.
Among others, you have learned about the definitions of a project; triggering factors for
project idea; how project ideas are discussed fully with all the stakeholders and the key
objectives are identified. The first part also dealt with feasibility study such as market
analysis, raw materials and supplies, location, site and environment, engineering and
technology; organization and human resources, financial analysis. The initial costs and
timescales are also established at this stage. This stage is complete when the project brief
has been written and agreed. Thus, Part II of the course deals with second to sixth model
of project management.

CHAPTER 5: PROJECT PLANNING FUNDAMENTALS

5.1. INTRODUCTION
Once the project brief has been agreed by the project sponsors and approved by the main
stakeholders, thorough and systematic planning phase follows. The project plan can
become a working tool that
  helps to keep the project team focused on the project’s tasks and activities and
points them towards completion
 enables managers to keep track of resources, time and progress towards achieving
objectives.

All projects are different and the planning for each will be different. The difficulty with
planning a unique activity is that there is no prototype from which to predict all the
work that will need to be done, so the plan must evolve as work proceeds. It can be
helpful, however, to review any similar projects that have been completed within the
same organisation or in a similar setting to identify lessons that could be applied in a new
project..

The planning process aims to demonstrate how the project outcomes will be achieved
successfully within both the required timescale and the agreed budget. It is, therefore, a
creative process through which you draw out a manageable, measurable and
achievable way of dealing with all the phases of the project in order to achieve your
objectives. Many projects begin without essential information that only becomes
available later and then changes the assumptions that have influenced the project until
that point. It is important to think of planning as a continuous activity or a dynamic
process rather than something that can be completed once and used without change for
the duration of the project. Expect change and allow scope to change or modify the
plan.

Planning can be approached by asking a series of questions:

 what actions are needed?
 by when?
 who is going to do them?
 what resources are required?
 what other work is not going to be done?
 how shall we know if it is working?
The people who should be seeking answers to these questions are the members of the
project team or staff contributing to the project, so they should become engaged in the
process early on. Discussing the issues to produce a joint plan with the team usually
creates a sense of commitment that can be crucial to the project’s success.

This unit focuses on how projects are planned. More specifically, it deals with the va rious
components of a project plan, and introduces a number of tools and techniques to aid
planning.

LEARNING OUTCOMES
By the end of this unit you will be able to:
 develop plans with relevant people to achieve the project’s goals
 break work down into tasks and determine handover procedures
 identify links and dependencies, and schedule to achieve deliverables
 allocate roles with clear lines of responsibility and accountability
 allocate tasks that are realistic and equitable and accommodate other work loads
 ensure that staff can make an effective contribution to the project

5.2. Work breakdown structure (WBS) and mapping

5.2.1. Where do I start?
Many people find it difficult to draw up a detailed plan and prefer to get started on the
activities that are needed to complete the project. The planning stage of a project usually
takes place before the activities start, but not always. In any case, planning always
continues during the implementation of a project because there is always a need to
change some aspects and to revise plans.

Although there are many approaches to planning a project, there are seven elements (see
Figure 3 under the second project management model) that are normally included in a
project plan:
 a work breakdown structure to show separate tasks and activities
  the team structure and responsibilities of key people
 an estimate of effort and duration for each task
 a schedule to show the sequence and timing of activities
 details of resources to be allocated to each task
 details of the budget to be allocated to each cost identified
 contingency plans to deal with risks identified.

The ways in which planning can be approached usually fall in one of the following:
 bottom-up – identify all the small tasks that need to be done
and then group them into larger, more manageable blocks of work
 top-down – start by mapping out the major blocks of work that
will need to be carried out and then break them down into their constituent
tasks
 work backwards from the completion date if that is a given
point in time, for example, 1 January, and then fill in the intermediate stages
that will enable you to get there.

Each of these approaches has advantages and disadvantages. You will need to choose the
one that best fits your circumstances. Ideally, you should then use one of the other
approaches to check that nothing has been missed out. It is important to record your
thinking and to keep any diagrams or charts produced as these will help to provide detail
in the initial plan.

Anderson et al. (1990) suggest an approach to project planning with three levels of
documentation. The first two form the contract between the project manager and the
sponsor, while the third sets out the contract between the project manager and the
project team. The levels are:
 a project responsibility chart setting out principles and policies for cooperation
and the responsibilities for key stages
 a key-stage plan that shows the intermediate stages en route to meeting the
project’s objectives
  an activity schedule that shows planned activities, charts involvement,
schedules work and reports progress.

The activity schedule needs to be linked into each of the key stages and defining the end-
point of each key stage is crucial in monitoring and controlling the schedule.

EXAMPLE 5.2.1
LESSONS FROM A PROJECT MANAGER’SVIEW
Some people think that all that is required in planning a project is to make a list of tasks,
classify them under headings, call the project team together and ask them to do
particular jobs, and then work towards the deadline. Based on my experience this will
not work. Depending on the complexity of the project, high risks and cross-functional
activities, this could very quickly lead to fire fighting rather than managing the
project. Project planning is about addressing the fundamental questions: what needs to
happen and when? It is the process by which the activities in a project are defined, their
logical sequence determined and the effort required in terms of time, cost and quality is
estimated. A project plan has two main purposes:
 it underpins the ‘business case’ (business approval to proceed with the
implementation of the project, including a full investment appraisal)
 it provides a route map defining and communicating how the project will
move from start to finish.

For the project manager, the project plan is the most important tool for monitoring and
control. Most project planning tools and techniques have been around for a long time
and have proved themselves to be useful, enabling the project manager to deliver his
projects to time, cost and quality. In discussions I have had with many project managers
from across the industry I found that where project planning is not given the priority it
deserves, project managers failed to deliver their projects in a timely manner.

When I first started to project manage renovation projects, my planning was based on
what I thought was the best way to plan the work. Some of my projects were late
because I underestimated the resource requirements. Some were over budget because I
did not carry out an impact analysis when the scope of the project changed and
sometimes my project deliverables did not comply with the specification because I did
not define and monitor the deliverables adequately. Any project manager who does not
produce a plan will soon run into unplanned activities, which incur unexpected costs.

There is also the opportunity to filter out projects with negative returns at this point
thus eliminating unproductive projects and avoiding abortive work. However, you can
only make these savings if you carry out cost-benefit analysis. Forcing a systematic
project plan to be produced can eliminate some of the more frivolous projects. I use the
project plan to check that the project is right for the business and meets the stated
requirements of the project brief. A good plan can also show that the project manager
took every possible precaution to ensure that the end result was positive. The downside
of planning is cost. It takes time to plan and if planning goes on for too long it can drain
the project budget. On reflection I believe that project planning is a value-added
activity.
(Source: Eddie Fisher, Senior Programme Manager at Vodafone Group plc)
5.2.1. Using a Logic Diagram to Identify Key stages: If you want to use a bottom-up
approach to planning, the activity schedule is best compiled by drawing on the collective
experience and knowledge of the project team that is going to carry out the tasks.
Grouping their ideas into related tasks will remove duplication and you can then start to
identify activities that have to run in series and those that could run concurrently. Some
tasks have to be sequential because they are dependent on one another: you can’t put the
roof on a house until you have walls strong enough to take the weight. Other tasks can
run concurrently and the overall plan needs to make the most of these opportunities: the
most successful project plans tend to be those that optimise concurrency because this
reduces the project length and intensifies the use of valuable resources.

From the clusters of activities and tasks you can begin to identify key stages by creating a
logic diagram. This exercise can be approached by writing the key stages on cards or
coloured self-adhesive notepads, so that you can move the notes around and then arrange
them on a whiteboard or a large sheet of paper. Put cards labelled ‘start’ and ‘finish’ on
the board first and then arrange the key stages between them in the appropriate sequence.
Then draw arrows to link the stages in a logical sequence. The arrows indicate that each
stage is dependent on another (sometimes dependent on more than one stage).

EXAMPLE 5.2.2
PROCESSES IN DEVELOPING A DIRECTORY
A training agency that provided work placements for young people decided to develop
a directory of services available for young adults in the community. The key stages
identified were:
A. Secure funds
B. Negotiate with other agencies
C. Form advisory group
D. Establish data collection plan such as questionnaire or interview and FGD protocol
E. Collect data
F. Write directory text
G. Identify printer
H. Agree print contract
I. Print directory
J. Agree distribution plan
K. Organise distribution
L. Distribute directory.
Figure 4 below shows these stages in a logic diagram. Each stage has at least one arrow
entering it and one leaving it: for example organising distribution (K) is dependent on
agreeing a distribution plan (J), and collecting the data (E) cannot happen until a data
collection plan has been established (D). However, preparatory activities for distribution
(J and K) and printing (G and H) can run concurrently. We have assumed that the
advisory group will make decisions about the acceptability of the data collection and
distribution plans and will agree the printing contract.
 Figure 4 Logic diagram for directory production

FINISH
Agree disributional Organize Distribution
Plan J distribution K Directory L
Group C
Secure
Funds A

Negotiate Form advisory Establish data Collect data E Write directory Print directory
START
with other Group C collection plan D text F I
agencies B

Figure 3 Logic diagram for directory production

Identify printer G Agree print
contract H
The following conventions might be helpful in drawing a logic diagram
 time flows from ‘start’ on the left to ‘finish’ on the right, but there is no timescale
 each key stage must be described separately
 the duration of key stages is not relevant yet
 different coloured cards can be used for different kinds of activities
 debate the position of each card in the diagram
 show the dependency links with arrows
 when your diagram is complete, try working backwards to check whether it will
work
 don’t assign tasks to people yet
 keep a record of any decisions made and keep the diagram for future reference

In general, once you have an overview of the key activities and stages of the project, you
have the skeleton of your plan. You can then work out the details in each of the stages.
However, the plan will not be static and the world will not stop while you develop your
plan. Planning takes place while other events are changing the situations that surround the
project. Your understanding of the project will develop and change as you become more
familiar with the issues raised in each stage of planning. Planning is a dynamic process
and one of your main roles in managing a project is to keep the balance between:
 the need to have a plan to ensure that the project outcomes can be achieved
within time, budget and quality requirements, and
 the need to respond to change in the setting surrounding the project and in the
understanding of all of the people involved in the project.

It is helpful to keep the project brief as the starting point in each stage of planning, to
ensure that the purpose of the project is not forgotten in the practicalities of planning. As
each part of the plan develops, use the project brief as a basis for checking that the key
outcomes are still the focus of activity and that the balance of budget, schedule and
quality are being maintained.
5.2.2. Mapping tasks and activities
One of the most difficult aspects of planning a project is estimating how long it will take
to complete each key stage. An estimate might be based on:
 the size of the tasks and the effort required to complete them
 the number of days that are not available for working on the project
 historical data from other projects, including the experience of colleagues.
It is better to be realistic at the outset and be clear about what can be delivered and what
cannot. Productive time may only amount to 3.5 to 4 days each week and time needs to
be built in for meetings, communication, co-ordination and the normal line-management
arrangements. You will also need to allow some extra time for contingencies such as
unexpected interruptions and eventualities that cannot be predicted.

The objectives will have identified what is to be achieved and by when. The objective-
setting process should also have tried to ensure that each objective is manageable,
measurable and achievable, or at least to have considered the extent to which these
conditions could be met. Each objective can then be broken down further to identify the
steps that must be taken to complete the objective and the tasks that will contribute to
achieving the outcome. As in all planning, this process is continuous and as new
information becomes available and as the project progresses, changes will need to be
made to aspects of the objectives and to the sequences of tasks that contribute to
achievement of the completed project. As a starting point, it is usual to break down the
work of a project into tasks that enable matching of project staff to the work to be carried
out.

A) Work breakdown structure enables you to divide the work of a project into
‘packages’. These can be further subdivided into ‘elements’ and then into individual
‘tasks’ which provide a basis for estimating the time and effort required. In a large
project, the work breakdown structure might allow packages of work to be allocated to
teams or team members so that they could identify and schedule the tasks. It is often
beneficial to involve the project team in constructing the work breakdown structure as it
can be one of the initial team-building tasks and can provide the first opportunity to
develop an understanding of the whole project. It can also be helpful to discuss the
deliverables and to identify them in the work breakdown structure so that all the activities
can be seen to contribute towards achieving the deliverables.

Breakdown is a technique by which the project is divided and subdivided for

management and control purposes. Rather than breaking the work of the project into a
low level of detail in a single step, it is devolved through increasing levels of detail.
Focusing on results means we start with a PBS. The PBS is developed by breaking the
asset into intermediate or subproducts. The work required producing each subproduct and
the work required to assemble and commission the facility from the subproducts is then
identified. Figure 5 shows part of the work breakdown structure for the data-collection
package in the directory project. Note that a work breakdown structure does not usually
show the necessary sequence of work, other than through grouping under the key stages.
 Figure 5 Work breakdown structure for data collection package

P
a
k Data Collection
a
g
e

E
l
e Decide policy on Make a list of Estimate costs of Establish team to
m what data to collect sources of data collecting data carry out tasks
e
n
t
s

T
a
s Identify lead data Make contact & Find out in what Discuss proposed
k source person in establish this is form the data are data collection
s each agency the right person available instrument with
source
As the work breakdown is considered, groups of activities might be identified that could be
considered as mini projects in themselves. These also offer useful staff development opportunities
for team leaders in appropriate areas of work..

The full breakdown gives the project manager confidence that the scope of the project
has been correctly defined. It is important to focus on deliverables and not the
contribution required from individual functions. Producing the WBS identifies all the
tasks that need to be done. The next step is to define these tasks. Tasks are at the lowest
level of the WBS. They are therefore the most detailed pieces of work the project
manager needs to consider. All tasks must, have the following characteristics associated
with them:
 skill required
 material
 method of performing (instructions and equipment)
 effort.

The task has not been correctly identified if all four cannot be assigned. The next step is
to produce a network diagram to show the logical relationship between tasks. Key
milestones are identified during the PDW. You need to review the key milestones at the
end of each project phase to check that the project is on target and has not deviated from
the project plan.

Although it is important to keep the work breakdown structure simple by identifying

substantive tasks rather than all of the subtasks, it is important to consider the team or
staffing structure and key responsibilities at this stage.

Breakdown is a technique by which the project is divided and subdivided for

management and control purposes. Rather than breaking the work of the project into a
low level of detail in a single step, it is devolved through increasing levels of detail.
Focusing on results means we start with a PBS. The PBS is developed by breaking the
asset into intermediate or subproducts. The work required producing each subproduct and
the work required to assemble and commission the facility from the subproducts is then
identified. Table 5.1 shows a typical structure, with several levels of deliverables,
associated work elements, and possible relative durations for a project lasting about a
year. This structure shows the project as part of a much larger program of work, required
to deliver the company’s 5- or 10-year objectives.

Example 5.2.3 Cascade of objectives for a project to develop a palm nut plantation.
The project is a palm nut plantation. The work areas are things such as:
1. The cutting down of the jungle and the planting of trees
2. The development of an establishment to run the plantation
3. The development of systems for gathering, storing, and shipping nuts

Table 5.1 Standard Product and Work Breakdown Structures, PBS and WBS
Level Product Example 5.2.3 Work Duration
Vision Good life
Development Mission Economic growth 5 years
Program Aim/purpose Palm-nut oil industry 2 years
Project Facility Plantation work 9 to 18 months
Work area Assembly Cultivation Project area 9 to 18 months
Team Milestone Orchards/area of land Project pack 2 months
Individual Deliverables Planted trees Activity 2 weeks
Holes dug Task 2 days

In work area 1, one team will be given the objective to plant areas of trees. On a given
day, an individual will be given a bag of trees and told to plant them. This illustrates quite
nicely that the lower the level, the more the product and the work are synonymous, and
the higher the level, the more the objectives have many ways of being achieved, and so
are not so directly related to the work that will deliver them.
Working upward, the program of which the project is a part is the development of a
Palm-nut oil industry for Ethiopia, and the development objectives are economic growth
and employment in Ethiopia.

Finally, the project is part of a program to develop a palm nut oil industry. Other projects
in the program might include:
• The creation of distribution systems to take nuts from plantations to factories
• The building of factories to process nuts into oil
• The creation of distribution systems to take oil from factories to customers

The palm nut plantation project will not deliver any benefit until these other projects are
completed. If all we do is develop a palm nut plantation, all we will end up with is
mountains of useless nuts. We can give those nuts a notional value and work out the
expected return from the plantation, but we cannot realize that return until we have
completed all the projects in the program. Many projects are like this; we can get the full
benefit from the project only after we have completed other projects in the program.

Advantages of Using a Breakdown Structure: There are several reasons for using
breakdown:

I)Better Control. There are five principles of good project management. These include:
• Manage through a structured breakdown, with single point responsibility.
• Focus on results: what to achieve, not how to do it.
• Balance results through the breakdown structure.
• Organize the project by negotiating a contract with the parties involved.

• Adopt a clear and simple management reporting structure

The use of a breakdown structure satisfies the first three principles of good project
management. Developing the definition in a structured way ensures better results.
Further, by defining work through its deliverables ensures that, as the project progresses,
only work necessary to produce the facility is done, not work which was envisaged some
months previously but is no longer required. Hence, the plan also becomes more stable.
The work required can change in changing circumstances, but only certain results build
towards the required end objective. This is clearly the case in research and development
projects, where the process of doing the project defines the work to be done.

II) Coherent Delegation. The parcelling of work in a breakdown structure is natural,

because it is aimed at achieving a product. Responsibility can be assigned to individual
parties for each product. In fact, they can be left to identify the actual work required, and
in this way experts retain their integrity, while being set measurable targets. Sometimes
this can be the only way to control progress on a research project, as the work itself is
unknown, only the intermediate results can be measured. If work is defined at a detail
level and amalgamated into packages, then they may not actually be natural packages of
work, and the project manager can appear to be telling people more technically skilled
than themselves how to do the work.

III) Levels of Estimating and Control. The lowest level of work breakdown appropriate
for estimating and control depends on
• The size, type, and duration of the project
• The purpose for which the estimates will be used
• The current stage in the project management life cycle
• The requirement for effective control

In most cases projects of a year’s duration that activities of 2-weeks duration are the
lowest appropriate level for planning and control.

Lowest level of work breakdown: The activity level is the lowest level for central
planning, estimating, and control. However, individuals may plan their own work at the
task level. The lowest level does depend on the size of the project.
Lowest level of estimating: Because of inherent uncertainties, there is only a certain level
of accuracy you can expect. The people on the 7-year project thought planning at lower
levels improved the overall accuracy. Unfortunately, this is not the case.
Lowest level of control: Similar arguments apply to the level at which the project is
controlled: Controlling at a lower level can mean more time is spent in control than doing
work; controlling at a higher level means slippages can get out of hand before they are
recognized.

Containment of Risk: There is no need to take the WBS down to the same level. The
lowest level of WBS may vary according to the level of risk: In areas of low risk you may
stop as high as the work package level; in areas of high risk you may continue to a very
low level of WBS, depending on
 The uncertainty introduced by the risk
 The need to contain the risk

5.2.3 Team Structure and Responsibilities: Teams have great difficulty in working
effectively if they are too large to work together conveniently. Six to eight people is
often considered to be about right. If the project needs more staff in order to deliver all
of the outcomes, the structure could consist of a number of teams, each with a team
leader. The team leaders would form a team themselves to coordinate the project. In
some projects there may not be a team but, instead, a number of individuals or groups
making a specialist contribution at an appropriate time. In this case, the task of
coordinating these inputs becomes vital. It is not necessary to name all of the team
members when structuring the staffing for the project.

It can be helpful to identify people in terms of the expertise or skills that are needed to
complete each of the main tasks. If there is a need to recruit members to the team, this
process will help to identify the criteria for selection. If some of the project team have
already been identified, or if the team leaders have been appointed, there is an
opportunity to include them in determining the team structure. At this stage, the key
responsibilities can be allocated.
It can be helpful to create a clear plan to show where the authority lies for approval of
each element of the project. Once the team structure has been determined it is possible to
draw up a chart that will confirm levels of authority. It might be helpful to involve the
sponsor in deciding on these levels as the ultimate approval of the project rests with the
sponsor. Elbeik and Thomas (1998) identify four levels of authority:
 must approve
 must be informed
 must be consulted
 must prepare

Other categories could be added if the project requires additional levels, for example,
‘must assemble’ or ‘must check’. In some projects it might be appropriate to have
authorities for recording and storing information or for ensuring security. It may also be
important to identify who is responsible for ensuring that action is taken once all of the
approvals have been gained.

Elbeik and Thomas (1998) give an example of an authority chart for a pilot project in an
e-commerce organization (Figure 6). This chart shows the key activity areas on the left-
hand side and the authority levels across the top. The key shows the levels of authority
held by individual managers for each of the areas of activity.
Fig 6 Authority chart for an e-commerce pilot project (Elbeik and Thomas, 1998, p.

Project Manager
57)

HR Managers
Researchers

IT Manager
Sponsor

Presenter
Legal
Planning
×
Reviews
×
Progress Meetings
×
Build Team
×
Interviews & research
×
New department
×
Legal
×
Technical Infrastructure
×
Report
×
Client presentation
×

Must approve Must be informed

Must prepared
Must be consulted ×
The project manager will usually retain the responsibility for ensuring that the decisions
reflected in the authority chart are carried out. Once the levels of authority have been
decided it is not difficult to decide how the approval will be sought and recorded, how
those who should be informed will be told and how consultation will be arranged. All of
these activities involve subtasks that can be allocated to individual team members.

5.2.4) Scheduling: Scheduling is about deciding the time that each task will take to do
and the sequence in which the tasks will be carried out. Scheduling is important because
it obliges a project manager to estimate the time involved for each of the main tasks and
to consider what costs will be incurred. There are a number of approaches to estimating
the time and effort (and, therefore, cost) required to complete a project. Some estimates
may be based on past experience but, because each project is essentially unique, this
alone may not be sufficient.

A clearer picture can be obtained by measuring each task in terms of the content of the
work, the effort required to carry it out, and its duration. This should enable you to
estimate resource requirements in order to begin scheduling, taking account of the current
workloads of the members of the project team and their capacity to carry out the work.
Another important aspect of scheduling is that it allows you to identify the sequence in
which tasks must be carried out. Usually there are some things that must be completed
before others can be carried out. This is called dependency. When one task is dependent
on another, it is essential that the sequence be planned, but there is also the possibility of
delay if the dependent task cannot be started until the previous task is completed. There
are two useful techniques that will help you to plan for each of these issue

The Gantt chart enables you to establish the sequence of tasks and subtasks and to
estimate a timescale for each task. It will allow you to block out periods of time
throughout the duration of the project to ensure that it is completed on time. However, the
Gantt chart is not so useful in demonstrating the dependencies and the impact of delay if
any of the foundation tasks are not completed as scheduled. A technique called Critical
Path Analysis (CPA) is frequently used to plan the implications of dependencies. We
shall look at each in turn.

A) Drawing up a Gannt Chart: Gantt charts show all the key stages of a project and
their duration as a bar chart, with the timescale across the top. The key stages are placed
on the bar chart in sequence, starting in the top left-hand corner and ending in the bottom
right-hand corner (Figure 7). A Gantt chart can be drawn quickly and easily and is often
the first tool a project manager uses to provide a rough estimate of the time that it will
take to complete the key tasks. Sometimes it is useful to start with the target deadline for
completion of the whole project, because it is soon apparent if the timescale is too short
or unnecessarily long. However, the detailed Gantt chart is usually constructed after the
main objectives have been determined.
 Figure 7 Gantt chart for directory production
Weeks Number

Key stage description 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2 2 25 2 27 28

3 4 6

A. Secure fund

B. Negotiate with other

agencies
C. Form advisory
group

D. Establish data
collection plan
E. Collect data

F. Write directory text

G. Identify printer

H. Agree print contract

I. Print directory
J. Agree distribution
plan
K. Organise
distribution

L. Distribute directory

Key: Critical path Activity not on the critical path Line to indicate float time

Mile stone
Progress meeting Review of progress
In this example, key stage K (‘organise distribution’) starts at week 23 so that its end-
point coincides with key stage L (‘distribute directory’). However, K could begin as early
as week 17, as soon as key stage J is completed. Key stage K is therefore said to have
slack. Key stage H (‘agree print contract’), has been placed to end at week 12. However,
it could end as late as week 22, because key stage I (‘print directory’), does not begin
until week 23. Key stage H is therefore said to have float. Float time can be indicated on
the chart by adding a line ahead of the bar to the latest possible end-point. Slack and float
show you where there is flexibility in the schedule, and this can be useful when you need
to gain time once the project is up and running.

You can add other information to a Gantt chart, for example:

 milestones – if you have special checkpoints, you can show them by using a
symbol such as a triangle
 project meetings could be indicated by another symbol such as a circle
 reviews of progress could be indicated by a square.

For a complex project you may decide to produce a separate Gantt chart for each of the
key stages. If you do this shortly before each key stage begins, you will be able to take
any last-minute eventualities into account. These charts provide a useful tool for
monitoring and control as the project progresses

Once the outline plans have been made, for someone who has learned to use them,
computer programmes provide a very flexible way of managing the project. For those
whose work will often include project management it is a good idea to develop skills and
familiarity with some of the available software. Some organizations use a project
management protocol for all of their projects to ensure that there is a similar approach to
project management and to enable a central record of projects to be available to
managers.
B) Identify the critical path: The critical path describes the sequence of tasks that
would enable the project to be completed in the shortest possible time. It is based on the
idea that some tasks must be completed before others can begin.
A critical path diagram is a useful tool for scheduling the dependencies and controlling
a project. In order to identify the critical path, the length of time that each task will take
must be calculated. We will use the logic diagram for production of the directory of
services for careers as a starting point, because it is usual to complete a logic diagram
before making a critical path analysis. The length of time in weeks for each key stage is
estimated:

Table 5.2: Key stages and time estimate for Directory production project
Key stages Estimated Time in weeks
A. Secure funds 0
B. Negotiate with agencies 4
C. Form advisory group 4
D. Establish data collection plan 6
E. Data collection 4
F. Write directory text 4
G. Identify printer 2
H. Identify printer 2
I. Agree print contract 4
J. Agree distribution plan 12
K. Organize distribution 4
L. Distribute directory 2

We have given the key stage ‘secure funds’ an estimated time of zero weeks because the
project cannot start without the availability of some funding, although estimates would
provide detail at a later stage. The stages can now be lined up to produce a diagram
(Figure 8), which shows that there are three paths from start to finish and that the lines
making up each path have a minimum duration.

If we now trace each of the possible paths to the ‘finish’ point (i.e. the ‘distribute
directory’ stage in this example), taking dependencies into account, the route that has
the longest duration is known as the critical path. This is the minimum time in which it
is going to be possible to complete the project.
 Fig. 8: Critical path for Directory production

J. Agree on distribution
plan K. Organize distribution
12 4

A. Secure B. Negotiate C. Form D. Establish E. Collect F. Write I. Print L Distribute

Fund with agencies advisory data Col. data Directory Directory Directory
0 4 committee Plan 4 text 4 2
4 6 4

G. Identify printer H. Agree print contract

2 2
In this example the critical path is A–B–C–D–E–F–I–L, and the earliest completion date
for the project is the sum of the estimated times for all the stages on the critical path – 28
weeks – from the point of securing the funding. All the key stages on the critical path
must be completed on time if the project is to be finished on schedule.

If the projected total time is a long way off the project sponsor’s expectations, you will
need to renegotiate the timescale. Mapping the critical path helps to identify the
activities that need to be monitored most closely.

We have used a relatively straightforward example to illustrate this technique, but a more
complex project may have several lines of key stages operating at first in parallel but
later converging, so that several critical activities may have to be completed before
another can start.
 CHAPTER 6: COST ESTIMATING AND BUDGETING
6.1. Cost Estimating process
Planning a project includes preparation of financial and related projections. Frequently,
these will be used to:
 weigh up the economic feasibility of the project
 obtain approval from a higher authority in the organization for the project to
proceed
 set boundaries of delegation or empowerment in a formal budget
 provide the basis for accounting for project revenues and costs
 provide a means of diagnostic and, possibly interactive control of the project.

At the project preparation and planning stages, your focus is on understanding and
shaping the future. Among important questions you should be addressing are those along
the lines of:
 what resources will we require and what will they cost the organization?
 what products will be produced, in what quantity and of what quality?
 depending on the type of organization:
o for what prices can our for-profit organization sell these products and how
much revenue will they generate?
o how much must our non-profit organization charge users for these
products if these charges are to cover resource costs?
o in producing these products, how much economic, political and/or social
value will our governmental organization confer on their direct
beneficiaries, and on other citizens and other taxpayers generally; and by
doing so, what private costs will our governmental organization impose on
citizens and other taxpayers?
o what cost savings will accrue to our organization from these products or
what fines/penalties will our organization avoid by producing these
products?
This does not mean that all costs and benefits are in the future. Planning a project is an
iterative process, involving having ideas, trying them out and formulating them into
something coherent enough to call an outline proposal for a project. All these activities
result in an opportunity cost, mainly of staff time (spent on thinking, corridor
discussions, meetings, etc.) that is not, therefore, being devoted to other valuable matters.

These ongoing costs tend not to be identified, although the activities that they underlie
are very valuable in any organization. Organizations need to be running in terms of ideas,
innovations, constructive criticism and self-evaluation just to stand still in a competitive
and increasingly changing world. As soon as most of these costs are incurred, however,
they are sunk, irrecoverable and, therefore, irrelevant to analysis of the future, at least in
economic terms.

One trap to watch out for is to be sucked further and further into a project on the
political grounds that the organization has invested (or sunk) so much money and effort
in it so far that it can’t afford to pull out now.

It is very important to get to grips with projected benefits and costs at an early stage in
the life of the project, reckoning as far ahead as possible, preferably until when the
project would be completed. This is partly to help you become organized, set boundaries
and provide direction; and partly to bring to an end, sooner rather than later, ideas or
potential projects that are not worth pursuing on economic grounds.

Before doing too much detailed planning, therefore, the people initiating an idea should
try to make an initial estimate. They must have a case that shows that the benefits
exceed the costs by a large enough margin to warrant spending more planning time on
the project, instead of working on alternative organizational activities.

These figures can also be used to inform senior management and to persuade them to
agree to further work, perhaps including the appointment of a project manager and a
project team. This further work might be relatively informal or – at the other extreme,
particularly with strategic projects – might involve a formal feasibility study.

One of the tasks to be completed as part of this further work would normally be to
improve the accuracy and to increase the detail of the financial projections about the
project. This would form the basis for production of a project budget for which formal
approval can be sought as part of the project implementation specification.

Estimating is an inexact science at least, an art and a province for ‘guesstimating’ for the
most part. Thus, estimates are the best guess that you can make given the information
available at the time of estimating. It is very important to make the best you can of
estimating because the result gives you a method of testing the extent to which the
desired aims are likely to be achieved by the organization within the financial resources it
can make available internally or raise externally.

It is only when you have a detailed breakdown of work and a schedule of timing that
you can be more specific about the revenues and costs involved. The worst scenario for
estimating is a project that is unique, not one that differs slightly from previous activities,
but one that is genuinely original in purpose and in method with few precedents.

You will find that the most difficult part of the estimates for such a project is to estimate
the benefits. However, it is imperative that these benefits are reasonably accurate if they
take the form of sales or other market revenues that are to finance the project. This is
particularly important if the project is so big that if it were a disaster, the organization
would be in danger of ruin.

In fact, few projects are genuinely unique. Many are look-alikes and a prime source of
estimates is similar activities, past or present, elsewhere in the organization. Data,
published and otherwise, should be available from other organizations, especially those
that that aren’t direct competitors. Often you just have to telephone or email the right
person as you can make use of networking to establish useful contacts.
It also helps to distinguish between development and operational costs, and to analyze
these further into stages or components of the project, based on Gantt and/or critical path
charts. These components will each require effort and resources, and these inputs can
be analyzed and translated into monetary values simply by applying unit prices or rates.

Revenue and intangible benefit estimates can be approached in a similar way, based on
other experiences and components of your market. Be aware, however, of monetary
amounts being assigned to intangible benefits because these may give rise to an
impression of objectivity that is not deserved.

6.2. Revenue: Projects vary in how they are eventually financed. At one extreme, there
are purely commercial projects from which the products are sold at market prices, and
so eventually the revenues they generate are expected to cover the costs and provide an
operating profit.

In the meantime, development costs and working capital have to be financed from share
and loan capital raised by the organization, the cost of which will be met from the profit
the project makes. At the other extreme there are projects, in both for-profit and non-
profit organizations, that are regarded as a cost item, for example, a staff training
program that is to be financed from within an organization, using general revenues.

Furthermore, there are projects, predominantly in non-profit organizations in the private

and public sectors, funded by an external grant, sponsor, for example, a community
project financed by a grant from a local government authority. If the entire cost of your
project is to be borne by the organization in which it is located or by an external sponsor,
the issue of estimating revenue is really one of estimating costs.

The estimating and the presenting of the estimates should be done in a way that is likely
to meet with the approval of the person or group that has the authority to approve this
funding. This may be an informal, and – perhaps – stealthy, approach to getting funds
released and laying claim to physical resources within the organization that evades
formal procedures of approval and control.

At the other extreme, you might have to complete formal applications for grants and
appear before committees of bodies that are experienced in distributing funds to worthy
projects. To obtain external funding in particular, you will need to tailor your application
to the formal aims, objectives, policies and grant-making criteria of the potential
sponsor.

You should address social and technical issues as much as economic ones, and indicate
how well planned the project is and how reliable you are as the intended beneficiary.
Whatever the case, you will need to be aware of the politics and social niceties of dealing
with the persons and bodies concerned; and will need to comply with the procedures laid
down by the funder.

A similar range of considerations applies to raising capital to finance the development

costs, working capital, and so on of a commercial project, pending the receipt of sales
revenue. In place of the external sponsoring body, however, you could be faced with
representatives of banks, investment companies, potential business partners, and so on.
These persons will be as interested in the market and the expected stream of project
revenues as they will be in the costs. Estimating market revenue from sales of outputs
for a speculative project isn’t easy.

The following considerations apply not only to purely commercial projects run by for-
profit organizations, but also to projects that depend on user charges to cover costs and
break even. Estimates can be linked with knowledge about previous similar projects in
other similar locations, with similar emphasis. It’s important to try to understand the
basis of demand in these other places (e.g. climate, demographics, socio-economic status
of customers, level of competition, cultural practices and religious beliefs), and to make
allowances for differences in the circumstances of the project from which information is
derived and the proposed project.
It is different, of course, if you sell the output before the project really gets going; for
example, if you are building a hotel under contract to a hotel company. You will,
however, still need to win the tender, negotiate an agreement with the contracting
organization over stage payments for work done at various junctures in the project
schedule, and raise capital finance to cover the lag between capital and operating outlays
and the receipt of revenues.

In any event, it may be useful to carry out market analysis/research to ensure that the
proposal will be welcomed. Also, check out the reasonableness of prices that will have
to be charged to cover both costs and the normal organizational mark-up. Compare these
prices with similar products already on offer and with what the market research indicates
consumers will be willing to pay. Also, allow for a gradual build up of demand, rather
than assuming you will start up at full speed immediately. .

Finally, in estimating revenues, it is usual to err on the low side as it is usual to err on the
high side in estimating costs. Be careful, however, that you don’t become too
conservative with your estimates because this would kill off too many risky projects, and
reduce the organization to the safe and mundane (unless, of course, that is why investors
want to put their money into your organization).

Demand and market analysis techniques: A project consists of a time bound

investment of capital with the intention of creating productive asset. It is expected that
these assets will produce benefits over a time-span, which is much greater than that of the
initial investment. However, if the demand for a product or service of a project is either
greater or less than initially estimated then this can lead to the situation of under-design
or over-design of the project.

Therefore, in order to get a deeper insight for characterization of current market and
guard against the possibility of both under and over-design of a project, it is necessary to
forecast the future demand for the product/service based on information gathered about
the various aspects of the market and demand from primary and secondary sources.
Forecasting is distinct from projection, which is simply a future extrapolation of current
data. The basis for forecasting is to examine data over an existing period of time (the
observation period) in an attempt to identify trends, which can be projected into the
future (the forecast period). There are three categories of forecasting methods/
techniques to the project and market analyst.

1 Time series forecasting methods: These techniques are based

on the principle that analysis of the historical movement of such variables as demand
or production provides a basis for forecasting of these variables into the future. The
most important time series projection methods are:
(a) Exponential smoothing method: In this method forecast are modified in
the light of observed errors. If the forecast value for year t, F t, is less than the
actual value for year t, S t, the forecast for the year t+1, F t+1, is higher than Ft. If Ft
> St, Ft+1 is set lower than Ft. In general
--------------------------------------------- (1)
Where, Ft+1= Forecast for year t+1
Smoothing parameter (which lies between 0 and 1)
Error in the forecast for year t =
For choosing , consider several values in the range between 0 and 1 and choose
the value that minimizes the MSE (mean square error) in the warm-up period. The
MSE is defined as:

------------------------------------------- (2)

Where, Actual value of sale in period i,

Forecast value of sale in period i,
Number of periods in the “warm-up” sample
How should the first forecast (Ft) and the smothering parameter be chosen? A
simple and satisfactory rule of thumb is to choose F 1 as the mean of the warm-up1
sample. Suppose the number of periods in the wrap-up sample is 5. Hence, the
smoothing parameter is 1/5 or 0.2. Therefore, how the forecasts would be
1
The warm-up sample consists of several observations preceding the period for which the forecasting
exercise is began.
 arrived at given an initial forecast of F 1 = 29.0 and is given in the table
below. Recall that the numbers are rounded to one digit.

Table 6.1: Derivation of Forecasts (for a hypothetical sale)

Time Data Forecast Error Forecast for t+1
(t)
1 28.0 29.0 -1.0 F2 = 29.0+0.2(-1.0) =28.8
2 29.0 28.8 0.2 F3 = 28.8+0.2(0.2) =28.8
3 28.5 28.8 -0.3 F4 = 28.8+0.2(-0.3) =28.7
4 31.0 28.7 2.3 F5 =28.7+0.2(2.3) = 29.2
5 34.2 29.2 5.0 F6 = 29.2+0.2(5.0) = 30.2
6 32.7 30.2 2.5 F7 = 30.2+0.2(2.5) = 30.7
7 33.5 30.7 2.8 F8 = 30.7+0.2(2.8) = 31.3
8 31.8 31.3 0.5 F9 = 31.3+0.2(0.5) = 31.4
9 31.9 31.4 0.5 F10 = 31.4+0.2(2.5) = 31.5
10 34.3 31.5 2.8 F11 = 31.5+0.2(2.8) = 32.1
11 35.2 32.1 3.1 F12 = 32.1+0.2(3.1) = 32.7
(b) Moving Average Method: As per this simple but commonly used forecasting
method, the forecast for the next period is equal to the average of the sales
data for several preceding periods. Symbolically:

Where, Ft+1= Forecast for the next period,

St = Sales for the current period
n = Period over which averaging is done
If n is set equal to 4 (n has to be specified by the forecaster), the forecast for
period 52, using the sales data in table 5 above, will be equal to

The forecast for period 6 is equal to

Other forecasts are shown in the table below.

Table 6.2: Forecast using Moving Average Method

Time Data Forecast Forecast for t+1
2
Note that if n is equal to 4, then the first forecast can be made only for period 5.
 (t)
1 28.0
2 29.0
3 28.5
4 31.0
F5 = (28.0+29.0+28.5+31.0)/4 = 29.1
5 34.2 29.1 F6 = (29.0+28.5+31.0+34.2)/4 = 30.7
6 32.7 30.7 F7 = (28.5+31.0+34.2+32.7)/4 = 31.6
7 33.5 31.6 F8 = (31.0+34.2+32.7+33.5)/4 = 32.9
8 31.8 32.9 F9 = (34.2+32.7+33.5+31.8)/4 = 33.1
9 31.9 33.1 F10 = (32.7+33.5+31.8+31.9)/4 = 32.5
10 34.3 32.5 F11 = (33.5+31.8+31.9+34.3)/4 = 32.9
11 35.2 32.9 F12 = (31.8+31.9+34.3+35.2)/4 = 33.3
12 36.0 33.3

2 CASUAL METHODS/MODELS: More analytical than the

three methods. Casual methods seek to develop forecasts on the basis of cause-effect
relationship specified in an explicit quantitative manner. The important casual methods
are
(a) End use method: Suitable for estimating the demand for intermediate
products. It involves the following steps:
1) Identify the possible uses of the product.
2) Define the consumption coefficient of the product for various uses.
3) Project the output level for the consuming industries and
4) Derive the demand for the product by multiplying 2 and 3.

Suppose industries A, B, and C uses the intermediate product of Firm X. In such a

case the above steps can be summarized in the following manner.

Table 6.3: Projected Demand for industry X output.

Users of X product Consumption Projected output in Projected DD for X
Coefficient year Y in year Y
A 2.0 10,000 20,000
B 1.2 15,000 18,000
C 0.8 20,000 16,000

Nevertheless, it may be difficult to estimate the projected output levels of consuming

industries (firms). More importantly, the consumption coefficient may vary from one
 period to another in the wake of technological changes and improvements in the
methods of manufacturing.

(b) Leading indicator method: leading indicators are variables that change
ahead of other variables, the lagging variables. Hence, observed changes in the
leading indicators may be used to predict the changes in lagging variables. For
example, the change in the level of urbanization can be used to predict the
changes in the demand for air conditioner.

Two basic steps are involved in using the leading indicator method: First, identify the
appropriate leading indicator(s). Second, establish the relationship between the
leading indicator (s) and the variable of forecast. The principal merit of this method is
that it does not require a forecast of an explanatory variable. Its limitations are that it
may be difficult to find an appropriate leading indicator(s) and the led-lag relationship
may not be easily observed.

The DD forecasting methods discussed are however characterized by the inability to

handle unquantifiable factors. Most of the methods, being quantitative in nature, cannot
handle unquantifiable factors and uncertainties or in short threats, which sometimes can
have immense significance. Among others the DD forecasting methods ignore:
 The influence of abnormal factors: Some of the information
obtained from market survey and used to forecast future demand may be influenced
by abnormal factors like war and natural calamities.
 Uncertainties in business environment: Macro environment in
which business functions is characterized by numerous uncertainties. Some of the
important sources of uncertainty are:
 Technological change: This is a very important factor but hard to
predict its influence/effect on business prospects. A technological advancement
may create a new product or enhance the innovativeness of competitors to deliver
improved and up to date (fashionable) product or service, which performs the
 same function more efficiently and economically, thereby cutting into the market
for the existing product.
 Shift in government policies: In countries where government
regulation of economic activities is extensive the predictability of business
environment will be difficult. Changes in government policy, which may be
difficult to anticipate, could have a telling effect on the business environment:
granting of licenses to new investors, particularly foreign companies, may alter
the market situation significantly; relaxation of interest rate, foreign exchange,
price, and distribution controls may widen the market considerably and intensify
competitiveness.
 Development in the international scene: This may have a profound
effect on investors in all sectors. The most classic example of recent times is the
OPEC price hike in the 1970s, which led to a near-stagnation of many industries
and high unemployment for a decade in developed world and the adoption the
WB and IMF initiated SAP in LDC in 1980’ and 1990’s, global financial crisis
since 2008.

Hence, secondary data, thought useful, often does not provide a comprehensive basis for
demand and market analysis. It needs to be supplemented with primary information
specific to the project gathered through a market survey and analyzed using the following
qualitative methods.

3 QUALITATIVE METHODS: These methods rely on the

judgment of experts to translate qualitative information into quantitative estimates. The
important qualitative methods are
(a) Jury of executive method: This method, which is popular in practice,
involves soliciting the opinion of a group of managers on expected future sales
and combining them into a sales estimate. The advantages of this method include
(1) It is an expeditious method for developing demand
forecast
 (2) It permits variety of factors like economic climate,
competitive environment, consumers’ preferences, and technological
development so on to be included in the subjective estimates provided by
experts.
(3) It has immense appeal to managers who end to
prefer their judgment to mechanistic procedures.
The disadvantages of this method are:
(1) The basis underlined subjective estimates cannot be earthed easily.
(2) The reliability of this method is questionable due to biased estimate.

(b) Delphi method: This method is used for eliciting the opinion of a group
of experts with the help of a mail survey. The steps involved are
(1) A group of experts is sent a questionnaire by mail
and asked to express their views
(2) The response received from experts are
summarized without disclosing the identity of experts, and sent back to the
experts along with a questionnaire meant to probe further the reasons for
the extreme views expressed in the first round.
(3) The process may be continued for one or more
rounds till a reasonable agreement emerged in the view of the experts.

It appeals to any organizations for it is intelligible to users and seems to be more accurate
and less expensive than the traditional face-to-face group meetings and interview. While
the Delphi method is appealing, there are certain question marks: What is the value of
the expert opinion? What is the contribution of additional rounds and feedbacks to
accuracy?

6.3. Types of Costs:

1. Labour cost: The work breakdown plan and the schedule provide much of the
information that is essential to cost the project. Once you are confident that these are
realistic and can be achieved, it is possible to cost the time of staff and staff-related
costs. These include salary-related costs, for example, employment and social security
taxes, holidays, overtime, training, travel and subsistence, and accommodation for the
number of staff for the time they will be needed (don’t forget office furniture and
equipment, including telephones and computers).
This raises all sorts of questions about the basis on which staff are costed and the
relationship of the project budgeting system to other budgets and costing systems in the
organization. The basic assumptions underlying allocation of resources need careful
consideration early in a project, particularly if there is likely to be substantial investment
of staff time in the start up stages of operations, to prepare for higher expected levels of
demand in the pipeline.

A recurrent issue is that of how to treat the use of existing staff and other resources
that are to be allocated to the project on a temporary basis. It’s common to overlook
these opportunity costs. Indeed, it is normal to do so in the interim, before ideas are
distinguished as a project and formal recognition is given through an appointment of a
project manager and the approval of a project budget. It is common for these costs to be
ignored deliberately because leaving them out will make the project look more
attractive. Moreover, not formalizing the allocation of resources between the project and
other organizational activities leaves more room for maneuvers for the various managers
who share claims on a resource; for example, in exploiting staff commitment to the
organization and the project, at the expense of their private lives.

However, if the opportunity cost of existing staff time is not calculated in some way,
there is a danger of overlooking the cost of losing the time that these staff would
normally spend on the core work of the organization.

Furthermore, if the project is to be staffed with existing staff, rather than incurring the
costs of additional staff, it is important to reveal what these would have been. This is so
that you can include it in comparing the cost of the project with the value that the project
is expected to provide to the organization. Similarly, this analysis would clarify occasions
when it would be less costly for an organization to hire staff specifically to work on a
project, rather than to redeploy existing staff. For example, situations occur when the skill
requirements would entail training existing staff before they could carry out the project
tasks – probably less efficiently and with more mistakes, due to lack of experience – than
if experienced outsiders were used. This, of course, raises another issue, because part of
the purpose of the project may be to train staff to be more skilled, in which case the cost
of training is a necessary project cost.

The way in which staff costs are calculated depends greatly on the nature of the project.
Development staff costs can be estimated by analysing the project into tasks that staff
must complete, working out staff requirements in terms of the quantity and expertise, and
finding out rates of pay and staff-related items. Organizations that use project approaches
in much of their work often have standard approaches to calculating and costing staff
time. Projects of a construction or engineering nature (for example, roads, houses, office
buildings or ships) may be unique, but most of their components are not, being
replications of previous work. The uniqueness derives from the mixture of components
and how they are to be combined. Projects of a human service nature (e.g. schools,
hospitals) often use formulae to develop operations costs. These formulae include ratios
of staff to clients (for example, the number of teachers to students) and of one staff group
to another (clinical staff to administrative staff).

2. Equipment costs: In many projects, staff costs are the most expensive element, but
there are other groups of costs to consider, such as materials and equipment. Indeed, in
some projects (for example, some military and space projects) these other costs are at
least as significant as staff costs. For organizational accounting purposes, a distinction
will be required between capital expenditure, or the acquisition of fixed assets, and
revenue expenditure, or the incurring of expenses.

The work breakdown plan and the schedule give information about the nature of each
task and this can be used to estimate the costs related to use of materials and equipment.
If the organization already has the necessary equipment, the only costs relating to the
project may be those associated with redeploying the equipment for temporary use on the
project, including any loss of value through wear and tear. However, if equipment is
normally in use elsewhere there will be an opportunity cost incurred in taking it away
from its normal use.

If the organization does not already have the necessary equipment, or cannot spare it
from elsewhere for temporary use on the project, it may be bought or hired. There are
similar considerations to those relating to whether to hire new staff or train existing staff.
If one of the project objectives is to purchase new equipment and to train staff to use it
confidently, then identifying suitable equipment and purchasing it will be entirely
appropriate. If this is not so, it may be more appropriate to hire what is needed for the
length of time that it is needed.

Equipment costs are not limited to acquisition costs. Most equipment needs regular
maintenance, it will break down and need repairing, it will require fuel or energy, and it
will need accommodation or garaging and security. All these costs of keeping and
operating equipment should be considered. And, someone will probably be needed to
work the equipment. This might entail costs relating to skilled use of equipment and
supervision and training for staff unfamiliar with the equipment.

3.Plant and Equipment. These are materials used in delivering the facility, but which are
not consumed, and so are available for reuse on subsequent projects. They may be bought
or hired, but either way each project only pays a part of their price new. On engineering
projects, plant and equipment includes welding machines and earthmoving machinery.
On information systems projects it includes hardware used by programmers. On
organizational development projects it may include equipment used in the preparation
and delivery of training programs, and temporary accommodation used during office
moves.

4. Material Cost: There will be many categories of materials, supplies and consumables
used in a project. Once again, the materials that are in constant use and easily and ‘freely’
available in an organization might be overlooked in costing the project. For example, it is
easy to assume that stationery will be available in much the same way as it is for day-to-
day work. However, a project is a bounded activity, and if you are to understand the full
cost of achieving the outcomes, you will need to know how much the whole range of
activity costs. For example, a project can easily and inconspicuously increase the
organization’s operating costs of postage and telephone, or of paper and printing. If the
project involves constructing something from materials, there will be a cost related to raw
materials. This may include costs for transport and storage if the materials have to be
moved to the site at which they will be used and stored safely. Materials that are fragile
or that have a limited life will need special consideration. For example, if the purpose of
the project is to stage an event at which there will be food served, the timing and storage
considerations will be very different from projects that involve use of materials that will
last indefinitely.

5. Subcontract. This includes the cost of labour and materials provided by outside
contractors. Costs will be included in this heading where their control is not within the
scope of the parent organization.

6. Management Overheads and Administration. This includes the cost of people and
materials to manage the project. These costs are attributable to the project, but not
specific tasks, and include the cost of the manager and team leaders, the project support
office, a project management information system if required, and temporary site services.
Management costs are typically 3 to 6 percent of the cost of the project.

7. Fees and Taxation. Fees may include insurance and finance; licence agreements and
taxation may be regarded as a special type of fee.

8. Inflation. In these days of low inflation it can be reasonably ignored on projects lasting
less than about 18 months. It is only really significant on large programs of work lasting
several years, or for contractors bidding for fixed-price contracts.
9. Interest rate and exchange rate change: These two are serious concerns to a project
when they change in the middle of project planning. For instance when interest rate
increases before obtaining fund from the financier of the project (say bank) this requires
the revision of the initial estimate up ward due to the increase in interest payment on
anticipated loan. Exchange rate change, particularly depreciation of the currency in which
agreement is entered with suppliers, contractors, consultants etc outside will increase the
cost of the project during planning stage.

6.4 Estimating Techniques

There are four basic techniques for estimating.
Detailed, Bottom Up. This is estimating from first principals. You follow the work break-
down to the lowest level, and estimate the detailed cost of every task and every piece of
material bought. However it is very expensive. On average this type of estimate accurate
to ±5 percent costs 5 percent of the cost of the project. The way to get cheaper estimates
is to maximize the use of historical knowledge, which the other three methods do.

Comparative, Top - Down. The other extreme is to do comparative estimates, top down.
You find similar projects you have done in the past, and extrapolate the cost, making
allowances for differences in size, scope, or risk. With runners (of familiar projects) you
may extrapolate at the project level, and with repeaters, at each stage of the life cycle.
With strangers you may even be able to find familiar work packages, and extrapolate the
cost of those, leaving detailed estimating for the completely unfamiliar parts.

Functional Estimating. With this technique, you identify the functions that the new
asset will have, and using a wealth of historical data, estimate from past experience the
cost of delivering each function. It requires a wealth of historical data, which you have to
start collecting sometime. But you will find that in the engineering, building, and
computer industries, people have been collecting that data for some time, and you can
obtain ready access to it.
Parametric Estimating. You determine the cost of main components of the new asset
and estimate the cost of all the standard peripheral equipment using standard ratios.
Again you need to start collecting the historical data at some point, but it is published in
the engineering, building, and computer industries. At later stages of the life cycle you
will estimate the cost of the main components using supplier quotes, but at the earlier
stages you may use functional or comparative estimating to estimate their cost.

Functional and comparative estimating cannot really deliver estimates accurate to ±5

percent and so will be used at the earlier stages of the life cycle. Parametric estimating
can deliver estimates that accurate, and at a cost of 1 percent of the cost of the project.

6.5. Who should estimate? The person managing the project is not necessarily the best
one to prepare the estimates, although they should be closely involved, both as a source of
information and because they need a clear understanding of what the estimates mean and
what they assume about outputs, inputs and the transformation process. If there are others
who have more experience or more knowledge about some of the areas of work, these
people may be the best ones to make estimates for the project or parts of it.

Ask each person to work independently and then meet to compare estimates and to
discuss how to arrive at realistic figures for revenues and costs. Similarly, it is often
helpful to involve other perspectives to ensure that you have not forgotten revenues and
costs that arise as part of carrying out areas of work unfamiliar to you. If there is someone
associated with the project who has experience of estimating, it could be very valuable
to involve them. It is also often helpful to take advice about any risks relating to the areas
of revenues and costs; for example, if you will need to buy materials, the prices of raw
materials might vary overtime or according to the quantity of the order. In a large project,
the services of an experienced buyer might contribute cost savings.

6.6. Planning for quality: Having considered estimating for time and for costs, the third
dimension of projects needs to be reconsidered because the project cannot succeed unless
the outcomes are of an appropriate quality. The need to achieve a particular level of
quality may mean that more time must be spent completing one task or another or that
more resources must be made available for a particular purpose.

Once the time and cost estimates have been made, review them to ensure that this
estimate will allow an outcome of the right quality. If there is insufficient information
available to make this calculation, it might be possible to carry out a small part of one
task to give a little more information about the practical realities. If the project involves
staff in carrying out unfamiliar tasks, there might be a training need. If training is
required, it might be important to consider how quickly staff will be able to carry out the
task once they are confident and experienced – and how long it will take for them to
reach this level of competence.

Many organizations have corporate quality assurance systems in place, which have to
be applied to any project for which they are responsible. However, difficulties may arise
when several quality assurance systems are in operation in a multi-agency project. In
such a case, it would be possible to include the development of an appropriate quality
assurance framework as part of the project itself, so that the project sponsors and
stakeholders are fully included in the processes that deliver outcomes to them.

Quality assurance procedures should be set up as early as possible in a project’s life-

cycle, so that appropriate systems can be put in place and the procedures for monitoring
can be communicated throughout the project system. Maylor (1996) defines the purpose
of quality assurance as: ‘to provide a formalized system within the project system which
ensures that the needs of the customer or the stated objectives of the system are
continually being met’.

Part of the documentation for a project may include a ‘quality manual’, which describes
the aims of the project, how each part of the project system is organized functionally,
procedural documentation that states how each task is to be completed, and any relevant
technical specifications. The quality assurance process needs to be monitored and
communicated to stakeholders, with regular reviews built into the reporting cycle.
Assuring the Quality of the Product: In order to assure the quality of the product it is
beneficial to have
• A clear specification
• Use of defined standards
• Historical experience
• Qualified resources
• Impartial design reviews
• Change control

Clear Specification. Without a clear idea of what is to be achieved, the team has no
direction. It is possible to specify both the end product of the project, and the
intermediate products: milestones resulting from work packages; and deliverables of the
activities at lower levels. The lower the level at which the deliverables are specified the
tighter the control.

However, there are risks associated with a highly detailed specification: it may be
inconsistent; it may confuse rather than clarify; and the lower level products may become
an end in their own right, rather than a means of delivering the new asset. The next three
are about trying to maximize the use of previous experience.

Use of Defined Standards. You can use standard designs and packages of work which,
from previous experience, are known to deliver results of the required specification.

Historical Experience. Hence, the greater the historical experience, the better will be the
standards and specification. For this reason, it is not always possible to create a clear
specification of R&D, high technology, and organizational development projects.
However, the learning curve in industries with time, with it taking perhaps 50 years to
build up a credible body of data.

Qualified Resources. If the people used on the project have access to that body of data,
either through their own experience or training, then that makes them better able to apply
standards and achieve the specification. This applies equally to professional staff
(engineers, IT staff, researchers, trainers, and managers) and artisans (electricians,
mechanics, and programmers). The use of qualified resources also applies to material and
financial resources, but these can be tested against the standards.

Impartial Design Reviews. The use of auditors to check the design can help to assure that
the customer’s requirements are properly met. You may think that this is insulting to the
design team, but there is ample evidence that human beings find it very difficult to
discover their own mistakes and hence the use of auditors to check the design can be
worthwhile. However, you need to check that you do not overdo it.

Change Control. This is vital to achieve the specification where change is necessary. It
does not mean that changes are eliminated, because that can result in a product that does
not meet requirements. The purpose of each change must be carefully defined, the impact
on the design assessed, and the cost compared to the benefit, so only those changes that
are absolutely necessary and cost-effective are adopted.
 Chapter 7: Project implementation, monitoring and control
7.1. Introduction
In the previous unit you learned about project planning, how to get the project up to the
stage where the resources and actors are now available to bring the project to life, plans
and procedures have been discussed and agreed, and all stakeholders and influence
groups are engaged. This unit discusses the crucial stage in project management, which is
the implementation of project and monitoring project progress to ensure the project is
performing according to plan. Project management changes from stimulating the initial
action to monitoring and reviewing it in order to control the project’s progress.

The first part considers how the activities of a project start. The second part will brief and
equip you with the concepts and skills that will help you to learn how monitor progress
overtime and control a project. Control systems are essential in managing a project of any
size, to ensure that the project achieves its intended outcomes. Later in this unit you will
be introduced to the importance of conducting meetings and some useful skills for the
management of meetings.

Learning outcomes
By the end of this unit, you should be able to:
 manage the routine activities of a project and contribute to the implementation of
project activities
 monitor, and recommend adjustments to, activities, resources and plans
 maintain communications with project stakeholders
 contribute to developing solutions to project problems
7.2. Project implementation
Once a project has been planned and financial support been secured, implementation can
start. The agreed resources are used in an efficient, effective, and transparent way to
achieve the project purposes and to contribute to the wider - Overall Objectives. Along
with project implementation, progress is monitored in order to make adjustment to
changing circumstances.
Project management is responsible for implementation. Project implementation is a
central part of project management. In project management terminology, it refers to the
process of carrying out the project plan by performing the activities included therein (The
Executive Agency for Health and Consumers, 2011). Usually, projects are implemented
over several years. Hence, project implementation is the longest phase of the project life
cycle in terms of duration. It is the stage where you translate planned activities into
action, using key concepts to help you determine how best to use your group activities
and resources, and motivate members of your project team to work in the best interests of
the customers or the community.

In order to meet customer’s expectations, the project manager monitor and control the
activities being undertaken, the resources, and expenditures required to build each
deliverables throughout the implementation phase (Method 123, 2003).For project
implementation of a project, the implementation schedule is an important tool. It is an
administrative planning and monitoring document covering administrative milestones and
sequencing from the preparatory phases to project completion and evaluation.

7.2.1 Drawing implementation plan:

Once the detailed planning and risk assessments have been carried out, you are ready to
assemble your implementation plan. A typical implementation plan, including diagrams
and charts where appropriate, will contain:
 a description of the background to the project
 its goals and objectives in terms of intended outputs and/or outcomes
 the resource implications (budget, personnel – including any training
requirements – and facilities)
  the project schedule
 how action will be taken and by whom
 a description of how the project will be managed
 the reporting and review arrangements
 the evaluation plan – how success will be measured
 the risks and contingency plans.
The project plan should also include an executive summary, providing the basic
information and main goals and objectives in a few paragraphs.

7.2.2 Getting organised

In order to succeed in project implementation you need basic skills and knowledge on
getting organised, building and defining team responsibilities, motivating and preparing
project teams, and resourcing the project.

Getting organised is the first stage in bringing together the right combination of human,
physical and financial resources to successfully undertake your planned activities. As the
Ethiopian proverb says, ‘When spiders’ webs unite, they can tie up a lion.”

You will find that organising activities or groups of activities involves planning all your
activities in order to avoid any duplication of jobs. For instance, if activities are not
properly arranged, two or more people may end up doing the same job at the same time.

Box 7.1 Getting organised

Organising is the means by which:
 the right things are done (what)
 in the right place (where)
 at the right time (when)
 in the right way (how)
 by the right people (by whom).

7.2.3 Building and Defining team responsibilities

Though implementation action comes next to project plan this does not mean that project
team will start working on project tasks as soon as the plan is complete. If there are a
number of different types of project team, they may start and finish tasks at different
times. Hence, when the work of one project team depends on another having completed
in time the relationships between the people in the teams can have a profound influence
on the process, with the potential to add considerable value or cause considerable
disruption. Depending on the size of a project, responsibility for each key stage of the
project should be allocated to members of a project team clearly. It is also important to
establish clear lines of accountability for each team member (Modesto and Tichapondwa,
2009).

Target dates: The overall plan will indicate the start dates for each group of activities, or
each task. A useful way of focusing activities on achieving outcomes is to provide
‘milestones’; that is, clear dates for completion of stages and of final outcomes. They
ensure that progress is being made towards attaining project outputs and purposes at
regular intervals during a project’s life. When the last milestone is reached, we say that
the project has been completed

Coping with risks and conflicts: It is clear that when individuals work in team there
might be some misunderstandings and uncooperative behavior. Performance management
processes is the tool used to control misunderstandings and uncooperative behavior in
many organizations. The first informal process is face-to-face contact with the person
misbehaving. However, if such unpleasant behavior continues to disrupt progress more
formal procedure is needed to bridge the gap in understanding and minimize project risk.
A risk analysis is conducted in order to isolate the most likely ones, and involves
answering the question “What could go wrong?”

Conflict is a risk to the success of the project, but it can be manage like any other type of
risk – in a controlled manner. From the beginning to the end project managers need to
identify the risks, analyze them, develop a risk mitigation plan, and then monitor the
risks. In this regard Modesto and Tichapondwa (2009) noted that, the causes of most
conflicts are differences in information, ethics, commitment, skill, beliefs, opinion, and
ideas held by individual members of a team. Conflicts may also arise during problem
solving when team members try to define a given problem and arrive at solutions. When
members disagree, it is likely that arguments will occur, tensions will rise, and this might
pull the team apart until an acceptable decision is reached.

7.2.4 Motivating and preparing project teams

The ability of project team to perform tasks effectively as a group determines the
project’s outcome. Thus, group members’ interests regarding the project are highly likely
to different at the outset. As a result, Turner (2009) suggested the need for asking the
project team the following three questions that are helpful to identify the success criteria
and the stakeholders for the project at the start-up process. That is,
Q1: On the last day of the project what will the project team deliver to the
operations team?
Q2: How will the successful achievement of that be judged/measured?
Q3: Who has identified questions 1 and 2? PP50

The first question ensures that the team has a common understanding of the project
deliverables. The second question identifies differing opinions about the success criteria.
The last question identifies key stakeholders.

The tasks allocated to staff must be realistic and achievable, and agreed with teams or
individuals so as to enable teams or individuals air their concerns. In allocating roles
among project team members who are drawn from routine work, it is also important to
recognize their existing levels of responsibility and authority. Thus, before allocating
roles among project team members at the start of project implementation the project
manager should ensure that the project organizational structure takes into account the
existing levels of responsibility and authority of project team members.

In the mean time it is inevitable for new skills and understanding to be developed, in
order for new tasks to be carried out. As a result, the project manager may have to
arrange for training and support, whether or not this was anticipated in the initial
planning. In some cases, it may be necessary to review the staff allocation to reduce the
need for additional training and support. Staff development might be addressed without
additional resources being allocated to the project if the staff development needs that
have emerged are recognized. More importantly, motivation is important at the start-up of
a project. In resourcing the project it may be worthwhile to build in a reward system that
helps to motivate project team members.

Box 7.2 Keeping project team motivated

 Take the time to meet with and listen to team members.

 Provide teams with specific and frequent feedback about their performance, and
support them in improving their performance.

 Recognise, reward and promote high performance; deal quickly with poor
performance so that they can improve and learn from mistakes.

 Provide information on how the organisation has achieved or failed to achieve the
community health goals.

 Involve teams in decisions, especially those decisions that affect them.

 Give members of the team the opportunity to grow and develop new skills.

 Provide team members with a sense of ownership in their work and their working
environment.

 Strive to create a work environment that is open, trusting and fun.

 Encourage new ideas, suggestions and initiatives.

 Celebrate individuals’ successes and take time for morale building team meetings
and activities.

7.2.5 Resourcing the project

Project works are usually disrupted if the necessary materials and equipment are not
readily available. Though the project manager is responsible for overall resource
allocation and utilization, it is possible to delegate much of the work. For instance,
budget delegation will be easy if resources are clearly linked to project stages or areas of
responsibility. That is, more direct links between costs and outcomes can be established
by conferring responsibility to achieve an outcome within the budget, which in turn
reduce the potential for people to hoard resources against possible contingencies.
According to Turner (2009), the basic process of resourcing a project includes the
following steps:
 Identify what is to be achieved

 Identify the skills and skill types required

 Identify the people available

 Assess their competence

 Identify any training required to overcome any deficiencies in skill levels

 Negotiate with the resource providers

 Ensure appropriate facilities and equipment are available

7.3 Monitoring a project

During project implementation it is very rare for any project to go exactly according to
plan. In fact it is not uncommon for a project to take on a direction and a momentum that
was completely unanticipated during planning. Hence, project managers have important
and difficult task of establishing sufficient controls over the project to ensure that it stays
on track towards the achievement of its objectives. This is done by monitoring, which can
be defined as the systematic and continuous collection, analysis and use of information
for management control and decision-making (Information Training and Agricultural
Development, 1999).
The implementation schedule or the activity and resource schedules provide the basis for
monitoring. One of the practical questions that arise frequently in implementation and
monitoring of a project is ‘what should be monitored and controlled?’

There are two forms of project monitoring that should be addressed– process and impact
monitoring. Process monitoring reviews three main aspects of a project:
 the physical delivery of structures and services provided by the project (activities)
 the use of structures and services by the target population (outputs)
 the management of financial resources.

On the other hand, impact monitoring focuses on the progress of the project towards
achieving the project purpose and the impact of the project on different groups of people.
The process of data collection, particularly with regard to impact assessment, should
facilitate participation by a cross section of stakeholders.

7.3.1 Monitoring as Control

To control you need a plan that indicates what should happen and information that tells
you what is actually happening. By comparing the information about actual progress
against the plan, you will be able to identify any variations. You can control the project
by taking action to correct those deviations from the plan that can be controlled, or by
revising the plan in the light of new knowledge or environmental change.

The purpose of control is neither to hold meetings nor to punish people for failing to
achieve the plan. If people believe that is the purpose of control they will withhold
information. The purpose is to monitor progress, to compare progress to the plan, and to
take necessary action to achieve the project’s goals. That requires people to be open and
honest about progress on the project. If people know they are reporting progress because
it is time to report progress, and the information will be used to help and support them,
they will be more willing to give a true picture of progress.
The basic success factors in monitoring progress and controlling project include
monitoring progress against plan; holding effective review meetings; combining
responsibility with authority; and understanding the purpose of control (Turner, 2009).

1 Monitoring Progress against the Plan

Purpose: Monitoring considers the question ‘Are we doing the project correctly?’Its
purpose is to alert management to any problems that arise during implementation.
Monitoring works within the existing project design, focusing on the transformation of
inputs and activities to outputs. It ensures that inputs are made available on time and are
properly utilised. If any unexpected results are observed, their causes are noted and
corrective action identified in order to bring a project back onto target.

Focus: Monitoringfocus on tracking control parameters or Key Performance Indicators

(KPIs) which measure progress towards achievement of the success criteria.

Responsibility: Monitoring is not an activity that is solely carried out by the project
manager. If the project team is meeting regularly to review progress, monitoring becomes
more dynamic and changes to the plan can be achieved by consensus. Involving the team
not only helps to keep everyone on target – it also builds commitment.

Box 7.3: Checklist for regular Project Monitoring

The following basic issues need to be monitored regularly and periodically:

 Are the activities taking place as scheduled? Which activities are underway and
what progress has been made (e.g. at weekly intervals)?
 At what rate are means being used and cost incurred in relation to progress in
implementation (e.g. monthly)?
 Are the desired results/outputs being achieved (e.g. quarterly update)? (efficiency)
 To what extent are these results/outputs furthering the project purpose (e.g. half-
year analysis)? (effectiveness)
 How are the beneficiaries responding to the project?(ownership)
  Identify possible causes of differences between actual and target performance.
Were the original targets realistic?
 Have any unexpected outputs arisen?
 Are the assumptions identified during planning relevant or do the assumptions
hold true? Have any killer assumptions emerged? Have any new risks appeared?
 Are there changes in the project environment? (i.e., changes of key stakeholder
groups, local strategies and policies etc.)
 What is the likely achievement of the project purposes?
 Recommend corrective action that would improve the implementation of the
project

2. Steps of managerial control

Control is the process of regulating activities so that your performance conforms to
expected standards and goals, and ensures that the necessary corrective action is taken
whenever deviations occur. According to Information Training and Agricultural
Development (1999), control is a basic managerial function involving the following four
essential steps.

Identifying target performance indicators: This is the first step in the control process
to ensure that achievements are in accordance with your overall plan. Key performance
indicators (KPIs) must be expressed in a simple way that the people concerned can easily
understand them and the outcomes can be measured without difficulty. For instance, one
of the KPI might be to increase the number of pregnant women attending antenatal care
by 20% in the village this year.

Measuring performance: The second step in the control process is the accurate
measurement of performance. It involves gathering data on progress and measuring
actual performance so as to compare it with the targeted/planned performance in the later
step. Quantitative measurements should be done for performance targets set in numerical
terms; for example 500 pregnant women should attend your antenatal care service this
year. Performance can also be measured in terms of qualitative factors, for example, how
well the model household training went?

Comparing performance to the plan and forecast future results: You can base your
comparison on the monitoring information collected for that services that you have
provided or activities you have organised and determine whether the project is behaving
as predicted. That is, by comparing the information about actual progress against the
plan/target you will be able to identify any variations and calculate the size and impact of
the variances. For instance, using time as a measure of project progress the differences
between planned and actual performance is calculated and summarised as shown in the
table below.

Table 7.1: Comparison between planned and actual performance

Activities Planned Performed Percentage
(target) (actual) achieved
Children vaccinated during the year 500 250 50%
Train model households during the 180 120 66%
year
Number of community events 3 2 66%
conducted

The performance figures indicate that the project is not progressing as planned. You can
also review performance based on activity cost and evaluate whether there is deviation in
cost. This enables project team uses the reports to forecast time and cost at completion
(see the detail under 4).This step also involves analyzing the reasons for variation
between progress and plan.

Taking corrective action: To close the control loop, the team must take effective action
to overcome any deviations from the plan that can be controlled.When problems are
identified, corrective action is obviously necessary. The earlier action is taken the better,
because it is cheaper to recover or abort the project should it prove nonviable.The
implication is that the project manager should take appropriate decisions, such as there
planning or revising the implementation plan to reflect the variances or redrawing of
goals or standards and perhaps changing the way that things are done. This implies that
taking timely effective action will prevent the problems from becoming worse and
preferably reducing or eliminating them. Details of any action have to be included in the
next progress report.
Box 7.4. Essential elements of project control
 a standard – the project plan
 collection of monitoring information, primarily from team members
 a mechanism for comparing progress against the project plan to identify problems
 a process to identify the causes of problems, and to generate solutions
 winning support and agreement to proposed changes to the plan
 implementing corrective action, either to bring the project back in line with plan or
change the plan

2 Constructive and effective feedback

Successful control of a project depends on the flow of information. This means that it is
important to have systems in place to make sure that you get feedback on what is
happening. We all need feedback to help us improve. If a member of your team does
something well you will want to praise and reward them, but if they are performing
poorly you should let them know so they can improve. Try to be specific. People
generally want to know about their performance but giving negative feedback can be
difficult for it hurt feelings or cause offence.

In this regards, Walmsley (1996) noted that feedback, progress and review are an
essential part of the change processes which are built into project management. Progress
becomes evident which reinforces the movement towards further change. Hence,
feedback to individuals must be based on the evidence gathered during the monitoring
and controlling process. Feedback must also be timely – it is not good giving the
feedback after the opportunity for improvement has already passed. A summary of key
principles is given in Box 7.5 below.

Box 7.5: Giving effective feedback

 based on previously established performance goal
  timely
 regularly given
 specific
 constructive
 motivating
 a routine function of management function

3 Project Status Reports

Project status reports are regular and formal. You need to decide how often they are
necessary. The degree of risk involved and the time it would take to recover from failure
to complete important milestones are guides for deciding the frequency of reporting. The
project sponsor may also have a preference about the frequency of reports and review
meetings. In order to prepare the report, you will need to have information from the
members of the project team on
 completion of delegated tasks
 completion of key stages
 any work that is behind schedule (and why)
 any issues that need to be resolved (as soon as they arise)
 any difficulties anticipated in the near future.

Effective reporting system should satisfy the requirements below:

Reports should be made against plan. To ensure people are interpreting the reports in the
same way, they should be made against the plan. It is important to note that in case where
the project manager and team members work on different plans, team members may
make verbal reports and report satisfactory progress. However, the project manager may
not understand why they were not achieving his milestones.

There should be defined criteria for control. Likewise it is important to have defined
criteria. If people are asked to make ad hoc reports, they tend to report the good news and
hide the bad news. If asked to report against a set of closed questions, they will usually
answer honestly. If they report dishonestly, it will become obvious at the second or third
reporting period. Defined criteria are given in Table 7.2 below.

Table 7.2Criteria for Control and Required Data

Criteria for control Quantitative data Qualitative data
Time and cost - Actual start/finish
- Forecast start/finish
- Effort to date
- Effort remaining
- Other costs to date
- Other costs remaining
Quality - Achievement of milestone and activity
measures
- Problem encountered
Organization - Responsibility chart kept
Scope - Issue
- Change
- Special problem
Source: Turner (2009), PP 289

The control tools should be simple and friendly. Team members should spend as little
time as possible filling in reports. If submitting reports takes an excessive time, people
rightly complain they are being distracted from productive work. Simple friendly tools
means single-page reporting nested in the work-breakdown structure (WBS)and reports
against the plan with defined criteria requiring numeric or yes/no answers.

Reports should be made at defined intervals. Just as it is necessary to report against

defined criteria, it is also necessary to report at defined intervals. The frequency of the
reporting period depends on the length of the project; the stage in the project; and the risk
and consequence of failure. Turner (2009) suggests that you may report fortnightly at the
activity level on a yearlong project. In areas of high risk you may report more often.
Towards the end you may report weekly or even daily.Depending on the size and nature
of the project, it might be monthly or quarterly. In some situations reports might need to
be hourly, if a problem is causing serious concern and has the potential to seriously delay
progress. Daily reports might be necessary if there are implications for arranging work
for the following day.
Reports should be discussed at formal meetings. To be effective the reports must be
made and discussed at formal meetings. To keep the meetings short and effective, the
discussion should focus only on identifying problems and responsibility for solving them.
In other words, the meeting should not attempt to solve the problem.

The reports should stimulate creative discussions. To link into the next steps of control
the reports must generate creative discussion, so the team can identify where variances
are occurring and ways of taking effective timely action.

4. Tracking Progress
Gantt charts and critical path diagrams are useful for tracking project activity and for
making necessary changes to the project plan.The process of project control involves not
only gathering data but also reviewing and comparing information from its beginning to
its end, to identify implications for the progress of the project so that action can be taken
to get back on track.

Gathering data: The first step in the control process is to gather data on progress. These
are usually collected at the activity level but may be collected at the work-packages or
task levels. When collected at a lower level they can be aggregated to report at a higher
level.

Calculating Progress: The data gathered is used to calculate progress on all five project
management functions: time, cost, quality, project organization, and scope. In particular,
with the first two we try to forecast the final outturn, the time and cost to completion, as
this gives better control than reporting the actual time and cost to date. This concept is
part of the forward-looking control. This is an important principle of project management
—you can only control the future, not the past. The only value of the past is to give you
information to help you control the future. But you cannot undo the past; all you can
influence is the future and so it is the future you need to control. Thus, we try to forecast
time and cost to completion.
Forecasting time to completion: Time is the simplest function to monitor and that is
perhaps why it receives the greatest attention. All you have to do is schedule the rest of
the project in the same way you scheduled it initially (see Table 7.4).

If critical milestones have been delayed, or if the critical path has been delayed (and no
other path has become “more critical”), then it is likely that the project has been delayed
by that amount. If the team has maintained an-up-to- date network for the project, that
can be used to forecast the completion date for the project in exactly the same way it was
used to predict the end date initially. The record of effort to date versus effort remaining
can also be used to control time in one of two ways:

By revising estimates of duration: If there is a consistent estimating error, this will be

indicated by a trend. The estimates of duration can be revised accordingly.

By indicating the cause of delays: Table 7.3 below shows possible outcomes of duration
and effort. Both may be on (or under) budget, in which case all is well. The project
maybe on time but effort over budget, in which case there may be minor errors but the
team is coping perhaps by working unplanned overtime. The project may be late but no
additional effort has been expended. Then the cause of the delay must be due to external
factors perhaps other people failing to fulfill their responsibilities, late delivery of some
materials, or perhaps the project teams have been occupied on work of higher priority to
them. If both time and effort are over budget then the cause may be serious estimating
errors, rework due to poor quality, or rework due to change.

Table 7.3: Determining the Cause of Delays by Comparing Effort and Completion Dates
Effort Duration on time Late
As Predicted - No problem - External delay
- Responsibility not fulfilled
Over budget - Minor estimating - Estimation errors
error - Major changes
- Minor changes - Major quality problem
Source: Turner (2009), Page 293
7.3.2. Controlling the Quality of the Product: Quality control is a process of diagnosis
and cure. As the new asset is delivered it is checked against the specification to ensure
that it is of the required standard, and any variances are eliminated. There are four steps
in the control process (Fig. 7.1):
• Plan the work required, and do work to deliver results.
• Monitor the results achieved.
• Compare the results to the plan, to discover variances.
• Take action to eliminate variances.

Fig 7.1: A four-step control cycle.

Work
Plan Results

Monitor
Replan

Variance
Achievement
Compare

The quality plan for the project’s product means understanding how every deliverable at
all levels of the PBS will be judged to have been achieved. The work package scope
helps for judging achievement of the milestone.

The specification for the overall facility, (the client requirements and functional
specifications), should run to several pages, that for each milestone, (in the systems
specification), should be half a page, and that for the deliverable of each activity, (the
detail specification), should be a couple of lines.

The specification for each activity should be a couple of pages, and for the facility should
be just six words, “every previous quality check has worked.” The point they were trying
to make is that if you get the detail right, there is no need to check the overall facility.
What it means in practice is the specification for the new asset should run to several
pages, but you check it throughout the project not right at the end.

Monitoring results and calculating variance means checking of the specification of

each deliverable as it is achieved. It is important to do this from the start, from the
earliest activity for the earliest milestone. It is no good waiting until the end of the
project, and finding a mistake was made on the first day. Mistakes must be identified as
they occur.

Taking action from the start builds up a momentum for success, carried through the
project. There is a major difference here between project and operations. In an operation
where you are doing something repetitively, once the process is setup correctly, it will
usually not go wrong suddenly. This shifts the emphasis much more onto quality
assurance and quality control at early stages of the project as described.

7.3.3. Controlling costs: earning value for money

In describing how to control cost, we start with a simple method. Then see the earned
value method (EVM), which is appropriate for larger, more complex projects.

1) Simple Method: Fig. 7.1 shows a control cycle, and indicates that we need to compare
what we are achieving against what we planned to achieve. In the simple, direct method
of controlling cost this means comparing our forecast costs at completion against the
planned cost at completion.

The forecast cost at completion can be calculated quite simply as:

Forecast cost at completion = actual cost to date + estimated cost remaining

The two elements on the right-hand side of this equation can be further broken down so
that:
Forecast cost at completion = actual cost of work finished + actual cost of work in
progress + estimated cost to complete work in progress + estimated cost of work not yet
started

Three components on the right-hand side are easily determined. We can gather
information on how much we have spent to undertake the work we have done so far,
both that finished and that in progress, and we can estimate the cost of the work not yet
started as simply as we estimated the cost in the first place. In fact, with the work not yet
started we can either use the original estimate, or update the estimate if we have some
new information that suggests it might be different than what we first thought. The one
element for which there is some doubt is the forecast to complete the work in progress,
because that requires us to estimate how much of it we have already done, which is
notoriously difficult.

One is to ask people to report on their time sheet how much work they have got left to
do, and hopefully they will make an honest estimate, and not just subtract what they have
done from the original estimate..

Table 7.4 below gives a simple example of this in practice. The project consists of five
packages of work, each estimated to cost 100 Birr, so the estimate for the project is 500.
The third column shows what we expect to have spent on the mid-day of the project. It
shows the amount of work we expect to have done, measured by how much we estimate
it will cost. We planed to finish A and B, done half of C, and none of D and E. The
fourth column shows what we have actually spent on that day. This shows the difficulty
we run in comparing the actual cost to what we have planned to spend, comparing the
fourth with the third column. All we can see is that D has started early, and that A is
overspent. But are A and B finished, and how much of C and D have we done for what
we have spent?
 Table 7.4: Simple Cost Control Example
Work Original Planned Actual Completed Work Work
Package Estimate work (Birr) (%) remaining remaining
(Birr) 1 (2 -5) 2
A 100 100 120 100 0 0
B 100 100 90 100 0 0
C 100 50 60 40 60 90
D 100 0 20 30 70 50
E 100 0 0 0 100 70
Total 500 250 290 270 230 210
Forecast at completion 520 500

In the fifth column we have asked the team to estimate how much they have done. A and
B are finished, so A is overspent and B under spent. C is running behind schedule, but
worse, the work we have done has cost us 50 percent more than it should. D has started
early, but the work done has cost us a third less than it should. So in the sixth column we
estimate how much it will cost to finish C, D, and E, assuming the original estimate is
correct. That gives us a forecast cost at completion of 520, (the 290 we have already
spent and the 230 we have left to spend).

However, do we believe the sixth column? We are 50 percent overspent on C (60-

40/40*100) so do we expect the rest to cost the original estimate? The seventh column
recalculates the estimated cost remaining. We expect the remaining 60 percent of C to
cost 90. With D we are one third under spent (30-20/20*100), so at the end we expect it
to have cost us 46.6. We have rounded this up to 50 and said there is 50 remaining.

What information do we have about E? Here we know D and E are identical, so if D

costs 70 (50+20) so will E. That gives us a revised forecast cost at completion of 500 (the
290 we have already spent and the revised estimate of 210 remaining). So we are still on
target for our project.
However, the calculation of forecast cost at completion can be made in three ways:
Actual Cost Is Commitment. When calculating actual cost, you need to include
everything that you are committed to spend, not just what you have actually spent. The
team will have completed their time sheets; you know what they have spent. But for
external suppliers, they may not have submitted their invoices yet, or you may not have
paid them. But once the work is done you are committed to that expenditure and so it
must be included in the calculation of actual cost.

Contingency. The estimates for work remaining should include contingency. If you have
added contingency as a blanket percentage, you should continue to add it as the same
percentage to the estimates of work remaining. If originally you added contingency to
individual components of work, you should continue to add it to those components not
started, and a proportion to those not finished. For work completed, contingency is
automatically consumed through the actual.

Earned value. So far we have compared forecast cost at completion to the original
estimate. That is quite simple, and provides a neat solution. However, many people like
to compare what they have spent on the work they have done. Therefore they calculate
what is known as earned value as a measure of the amount of work they have done, and
compare that to the actual cost. They can then see whether they are over- or under spent
on the work they have done so far.

Thus in Table 7.4, using the first estimate of work remaining, earned value is 270 (500 -
230), and so we are 20 units overspent on the work we have done. Using the second
estimate it is 290 (500 - 210) and we are exactly on plan. This is what we determined
above focusing on the figures at completion. This is known as forward-looking control.

In fact, for the sixth column in Table 7.4 it leads to the same answer as we shall see; it is
270 units. But this is backward-looking or rearview mirror control, and using that you
cannot calculate the seventh column in Table 7.4 which gives us a better picture of the
project.

Earned Value Analysis: Earned value analysis, or the earned value method, has now
become a core, established technique of project management. It is very powerful and
recommendable (though perhaps in the simplified form described above on smaller
projects). It measures the amount of work done, so it is a measure of the value earned for
the money spent. We control costs by measuring the value we have earned for the money
we have spent

Planned value (PV): Before the project starts, we estimate how much each element of
work will cost, and schedule when it will be done. We can therefore calculate the
expected cash flow through the project. We call this the planned value, the value of the
work we have planned to have done at each point through the project.

Actual cost (AC): On a certain day we can calculate how much money we have actually
spent on the project. It includes all commitments, not just money actually paid. This has
always been called the actual cost of work complete (ACWC)

Earned Value (EV): The comparison of PV and AC tells us nothing. If AC is less than PV
we do not know if that is because the work is under spent, or behind schedule .In fact
one of the most misleading things is when the work is well behind schedule and
overspent, but you are lulled into thinking it is under spent. For this reason we also need
to monitor how much work has already been done. We do this by calculating the value
earned, that is the estimated cost of the work that has actually been done for the money
spent to date.

The comparison of EV with AC tells us whether the project is over- or under spent for
the work we have done. The comparison of EV with PV tells us whether on average the
project is ahead or behind schedule. It is only on average; progress on the critical path
tells us how we are doing on the work which will determine the duration of the project.
We can calculate four further parameters to indicate overall project performance: cost
variance (CV); schedule variance (SV); cost performance index (CPI); and schedule
performance index (SPI).
CV = AC - EV
SV = PV - EV
CPI = EV/AC
SPI = EV/PV

If CV is positive the project is overspent, and if SV is positive the project is behind

schedule. However, it is best practice to describe the two variances as favorable
(negative) or unfavorable (positive). If CPI is less than one the project is over spent, and
if SPI is less than one the project is late. Using the sixth column in Table 7.4, CV = 20
unfavorable, we are 20 units overspent, and SV = 20 favorable, we are 20 units ahead of
schedule. CPI = 93 percent and SPI = 108 percent. We can also use these figures to
calculate the forecast cost at completion (FCaC). We either assume the rest of the
project will be done according to the estimate, in which case:
FCaC = Estimate + CV

or we assume that we continue to overspend (or under spend) at the same rate, in which
case:

FCaC = Estimate/CPI

For Table 7.4, this gives 520 or 538. The first figures were also the first calculated above
using the simple method; that is not coincidental. Thus, for Table 7.4 we calculate three
different numbers for FCaC. Using forward-looking control we calculated 500, and using
backward, rearview-mirror looking control we calculated 520 or 538.
.
 Table 7.5: Estimate at the milestone level for the CRMO Rationalization Project..

Project responsibility chart Project Progress Report

Project: Rationalization of the customer repair and maintenance organization
Project sponsor Steve Kenny Labour Cash
Project Manager Rodney Turner
X eXecutes the work

Plant & equipment

Project sponsor Of
D Take decision

Network manager
Project manager

Labour estimate
d takes decisions
JU Team leader

Personnel( HR)

% Completed
jointly
JU Managers
Op. Manager

% completed

Earned value

Earned value
Sub contract
P manage progress

Calculated

Calculated
Cost Total
remaining

remaining

remaining

remaining
Operation

Estimated

Estimated
Materials
Supplier
T on-the-jobTraining
JU staff

Actual

Actual
I must be informed
C must be consulted
A may Advise
No. Milestone Name SK SK SK SK SK SK SK SK SK SK SK SK SK SK SK SK % SK SK SK SK SK % SK SK
P1 Project definition 3 40 40 0 1 40 0 25 25 0 1 0 25
T1 Technical design 10 5. 5.0 20 60 75 0 1 60 0 0 0 0 0 1.0 0
O1 Communication 6 10 6 5 0 1 0 6 0 10 10 1 10 0
plan
O2 Operational 10. 40 50 50 1 50 1
Procedure
O2 Job and 10 20 50 80 80 1 80 1
management
design
T2 MIS specification 10 10 40 60 55 1 60 1
design
O4 Staff allocation 10 10 40 60 65 1 60 1
T3 Technical roll out 5 5.0 10 5 5.0 40 40 1.0 40 5 1.0 10 5
plan
P2 Financial approval 5 10 10 5 5.0 5 5 40 20 20 0.5 20 20 10 5 0.5 5 5
A1 Site 1 and 2 25 60 20 40 0.3 18 42 25 25 0.3 8 18
available
O5 Management 10 10 20 40 10 25 0.3 12 28 0.3
changes
T4 Systems in site 1& 10 10 80 80 80 30 30 30
2
O6 Redeployment & 20.0 60 210 80 80 80 210 210 210
 training
A2 Site 1 & 2 ready 10.0 10.0 10 20 180 50 50 50 200 200 200
T5 MIS delivered 5.0 10 20 35 35 35 260 260 260
O7 Procedures 10 20 20 160 50 50 50 160 160 160
implemented
P3 Intermediate 10 10 10 40.0 10 10 45 90 90 90 55 55 55
review
A3 Roll-out 10 40 40 20 40.0 10 40 20 20 320 320 320 20 20 20
implemented
P4 Post completion 20 40 40 40 20 900 160 160 160 900 900 900
review
13 60 221 130 85 140 65 135 40 190 0 55 1535 1401 385 930 28.6 420.5 961 1910 1181 740 17.1 29 1883
 Chapter 8: Project close-up/ Termination and Evaluation
8.1. Introduction
The last stage of the life cycle is close out. During the closing stages, the team must
maintain their vigilance to ensure the work is completed and it is completed in a timely
and efficient manner.

During execution, the team concentrates on doing the work within time, cost, and
specification. Now they must remember why they are undertaking the project; they are
not doing the work for its own sake, but to deliver beneficial change. It is easy to
complete the work within the constraints and think that it is a successful project, while
failing to use the new asset to deliver the change and obtain the expected benefits, which
justified the money spent.

As the project comes to an end the team disbands. If the project is completed efficiently,
the team may be rundown over some time. Team members may have made significant
contributions, or even sacrifices, to the success of the project. If this is not recognized, at
best the project will end on an anticlimax, and at worst it will leave lasting resentment
which will roll over into the next project. You must ensure the team members are given
due reward for their contribution and that the end of the project is marked appropriately.

Finally, there is data to be recorded or lessons learnt for the operation of the facility, or
for the design, planning, estimating, and management of future projects. Because the
team’s attention may be focused on completing the task and looking forward to the next
project, this often remains undone. .

It also costs money, spent after the asset has been commissioned, so it provides no
immediate benefit. It is money which can be easily saved, especially if the project is
overspent. However, it is precisely when a project is overspent that it is important to find
out why that happened, so the information can be used for the planning and estimating of
future projects.
This chapter describes first how to bring the project to a timely and efficient completion.
Then it explain how to hand the facility over to the users, while ensuring that it is fully
commissioned to obtain the benefits and that a proper support mechanism is put in place
as it moves into its operation phase. It also identifies the key data to be recorded at the
end of the project, how it is obtained and the purpose for which it is used-it is called
evaluation stage. This is the second most critical stage of a project.

This session aims to enable you to manage handovers and deliveries in a project and to
plan the completion and closure of a project. It also aims to enable you to contribute
constructively to the evaluation of projects, through an understanding of different uses
and types of project evaluation.

Learning Outcomes
By the end of this session, you should be able to:
 explain the key components of project closure and their importance
 plan an effective project closure
 ensure that the project activities have been completed
 be alert to problems that may need to be resolved at the closure stage
 contribute to evaluating a project
 plan personal development to improve your performance in managing projects.

8.2. Timely and Efficient Completion

As the project draws to a close, the team must ensure all work is completed in a timely
and efficient manner. The following can aid this process:
 Producing checklists of outstanding work
 Planning and controlling at lower levels of work breakdown to provide tighter
control
 Holding more frequent control meetings to ensure problems are identified and
solved early
  Planning the rundown of the project team as the work runs down to ensure people
are released for other work
 Creating a task force with special responsibility for completing outstanding work
 Closing contracts with suppliers and subcontractors to ensure that no unnecessary
costs are booked
 Supporting the project manager by a deputy with finishing skills

Planning and Control at a Lower Level of Breakdown. As you near the end, you begin
to look at what needs to be done to complete outstanding work. Instead of waiting two
weeks to find out what work has been achieved, you create daily lists of work to
complete the asset, hand it over to the client and commission it. This leads naturally to
planning at a lower level of work breakdown and holding more frequent control
meetings.

Towards the end, the risk of delay becomes greater and so it becomes necessary to
review progress more frequently, weekly, daily, or even twice daily.

Disbanding the Team and Forming Task Forces. As the project nears its end, you
require fewer resources. To ensure the most efficient completion, you must plan the
release of resources in advance. You do not want them turning up one day, and sitting
around until you realize they are not needed, because that is inefficient for both the
project and the organization as a whole. You tell people one or two weeks in advance
they will not be required on a certain date. You also tell their line managers, so they can
make full use of their people when they are released.

As the teams run down it becomes essential to combine the members into task forces to
retain natural hunting packs. David Frame describes task forces created at the end of a
project as surgical teams. The surgical team is a cross discipline team able to work
together to complete the daily task lists and tie up other lose ends.

Closing Contracts. Closing contracts with suppliers and subcontractors is another way of
planning the rundown of the project team.

Manager with Finishing Skills. The skills required to finish a project can be different to
those required to start it up and run it. Therefore, it may be appropriate to change
managers in the final stage. However, if this change is to be seamless the new manager
ought to be a former deputy who has been involved for some time. One approach is to
have a single project manager for design execution and close out with a deputy for each
of design, execution, and close out, a design manager, execution manager, and
commissioning manager, respectively.

8.3. Completing the project

As handovers can take place at many stages – not just the concluding stage – of a project,
handover is not, in itself, completion of the project. If the project’s objectives were
clearly set out, the completion or acceptance criteria should flow logically from them.
Such criteria might include the following:
 the key stages and milestones are all completed
 the outputs or outcomes meet the quality specifications
 the project sponsor has accepted and signed off the project
 the project has been completed on time and within the budget anticipated.

8.3.1. Closure task

The closing stages of a project need as much, if not more, attention as the early stages.
There is a number of actions that must be taken to close the project and ensure that any
necessary maintenance arrangements have been made. The project manager has to make
sure that all project staff actually stop work on the project, and that payments for time
and expenses are completed and discontinued. The final review of the project must be
arranged, when all of the learning that has been gained during the project is gathered
together and presented.

One key task is to ensure that the client formally ‘signs off’ the project, to confirm that
it has produced the outputs and outcomes that were required. There will be
documents to complete to formalize the successful conclusion, and to confirm that all
contractual requirements have been met. If this formal process is not gone through the
client may expect on-going response and support that should have been treated as on-
going maintenance, and not part of the project itself.

The financial aspects of a project need special attention in the closing stages. The
manager of the project is usually responsible for the budget, and needs to ensure that all
expenditure is accounted for in the final statement of costs. This is particularly
important if the client has authorized additional expenditure that was not part of the
original estimate. Clients do not always realize the extent to which small additional items
of expenditure can add up to substantial sums.

There should be a clear record of purchases made, shown through orders, delivery
notes and payments against invoices. Any discrepancies should have explanations,
supported wherever possible by evidence: in some cases it might be necessary to hold a
formal financial audit. The financial accounting must be completed, and some
arrangements made for outstanding unpaid invoices or left-over fixed assets or materials.

There are other record-keeping responsibilities. Many projects build up enormous piles of
paper records. The plan should have detailed a systematic process for record-keeping
during the progress of the project. One task to be managed during the closure is to
identify the records that need to be kept beyond the life of the project, and to arrange for
their storage in a way that will enable retrieval in future.

There may be a number of different contracts to be filed for future reference, should any
issues arise that require the original agreement to be revisited. Some letters and other
communications may need to be kept for similar reasons. Also usually retained are the
minutes of major meetings, and all versions of the project plan with the notes that related
to changes made. Staff records, of those who worked on the project, should likewise be
kept for future reference.
Closure checklist
Like all aspects of managing a project, management of the closure can be planned, and
the tasks can be delegated. A detailed list of closure tasks will be even more useful if it
has columns showing who is responsible for each task, and the dates by which actions
can be started and should be completed.

Each project will have different requirements, but closure lists are likely to include all or
most of the following:
 handover complete for all deliverables
 all deliverables as accepted signed off by client or sponsor
 final project status reports completed
 all financial processes and reports completed
 project review completed l staff performance evaluations and reports completed
 staff employment on project terminated
 all supply contracts and processes terminated
 site operations and accommodation used for project closed down
 disposal of equipment and materials l announcement of completion of project
(internal, external and public relations contacts)
 completion and storage of project file.

If the manager of the project moves on to another assignment before

all these tasks are complete a list showing appropriate responsibilities
will provide a framework for effective completion.

8.3.2. Dismantling the team

Closing a project can be quite an emotional experience for team members who have
worked together for some time, particularly if close bonds have developed. The plan will
have shown when each task should be finished, and some staff may have moved to other
work before the project is completed. Even if they have not moved on, many of the
project team will have been planning their own futures after the project. So a sense of
loss may be tempered by the prospect of new opportunities resulting from skills and
experience gained while working on the project.

The manager of a project has some obligations to staff who have worked for some time
on it. Build into the plan a closure interview with each member of staff, so that their
contribution can be formally recognized and recorded. Many staff will need help to
recognize the skills and experience that they have gained and how these have been
evidenced in their contribution and achievements. They may welcome a signed record of
their achievements, and some will need references to progress to their next jobs. Others
might need and welcome support in reviewing their careers, and in considering new
directions that may have been made possible by their involvement in the project.

Some will need to leave before the project is fully finished, and some will not have jobs
to go to. For those managing the project, there are similar concerns. Once again, planning
well in advance can reduce the stress of the final stages.

8.3.3. The closure meetings

The final meeting is a time for celebrating successful completion. It could have a
similar format to the launch meeting, and involve many of the same people. It might
include:
 reviewing the outputs or outcomes
 confirming the arrangements for any follow-up work
 thanking the team, the sponsor(s) and the stakeholders for their support
 presenting the completion report for approval and sign-off.

8.4 Transferring the asset to the users or completing the project;

Key issues in transferring the new asset to the users are discussed in following sections.
Planning for the Transition. There must be a clear understanding of how responsibility
for the facility is to transfer from the project manager to the operations manager.
Ensuring that the Users Accept the Product. At the end of the project the users must be
given the opportunity to agree the facility meets that specification. On a strict
contractual relationship, the owner should sign completion certificates to accept the
product.

Training the Users in the Operation of the Facility. The users will usually not be experts
in the operation of the facility and so will require training in its use. This should be
planned as part of the project. It is probably too late if it is not addressed until close out.
However, it is in the transition stage that much of the training should take place. Training
will be in the use of the facility, but may also include simple maintenance procedures.
Training can be a significant proportion of the cost of a project.

Ensuring a Definite Cutover. The planned transition and signed completion certificates
should result in a definite cutover, at which responsibility is transferred, and final
payments made.
Ensuring Continuing Service or Maintenance of the Facility. The users may be able to
undertake simple service or maintenance and operating manuals may help them.
However, it is usually ineffective, if not impossible, for them to become experts in the
technology of the asset, and so it is necessary to ensure appropriate mechanisms are in
place to provide backup. This requires channels of communication and logistics support
between owner and contractor throughout the life of the asset. These channels should be
defined as part of the handover.

8.5 Evaluating the project

Judging the worth of a project can be a continual process. It may take place before a
project proposal is accepted, during the progress of a project, at completion, and some
time afterwards. The final evaluation will consider whether the project achieved what
was intended, and this may not be evident for some time
8.5.1 Evaluating while developing the vision
A project is often shaped through discussion among those developing the vision and
direction of the project. They may agree in general terms about what is to be achieved,
but have to make a number of choices before deciding how to proceed. It may be
important to allow time for different views to be heard and considered, and for attitudes
to change and – hopefully – converge.

Many stakeholders may become involved in evaluation in the early stages of a project, in
imagining what it might mean for them and how it might present advantages or
disadvantages. The anticipated impact of the project can be usefully evaluated in the
early stages, to ensure that the investment of energy and resources can be expected to
achieve the intended results.

8.5.2. Evaluating during the planning stage

Developing a project plan has a different set of dynamics. Those involved in such
development have practical concerns about the time tasks will take, scheduling tasks,
and the budget and resources. Evaluation at this stage is usually concerned with
whether plans represent good value for money.

It may be appropriate to evaluate inputs to the project, to ensure that their quality and
quantities are sufficient to achieve the objectives. In large building projects, many
specialist tasks are subcontracted. Specifications are developed, and potential contractors
are invited to tender for work. The element of competition can lead to problems if some
tenderers are over-anxious to win contracts. They may be tempted to offer very low
prices or attractively fast times, making no allowance for setbacks or delays outside their
control. If they fail to meet their deadlines there may be a knock-on effect, when other
tasks cannot start till they finish. Those evaluating tenders need to be able to estimate the
budget and timing required for a particular piece of work: the cheapest is not necessarily
the best, nor the one that promises the fastest completion.
Even when a tendering process is carried out with care, to ensure that the contract results
in a partnership that will be successful for everyone, it is impossible to predict all the
potential risks. Some contingency sum might be agreed, but many contracts also
incorporate a process for negotiating liability for additional costs, when these arise
unexpectedly.

8.5.3. Evaluation during implementation of the project

Once a project is being implemented, different concerns about evaluation emerge. At this
stage the project activities are monitored to determine the extent to which their timing,
quality and cost match the plan. This is the normal control process: activities are
matched to the project plan through routine monitoring. The results of this monitoring are
reviewed to see whether the plan needs to be modified. Making such modifications may
be regarded as routine, when they do not significantly alter the dimensions of the project.

There may also be a more fundamental evaluation to determine whether the project is
going in the right direction, particularly if its circumstances are changing quickly. New
environmental conditions may indicate the need to change the organization’s strategic
direction. It might be necessary in that case to re-align the project, so that the outcomes
relate to the new direction. In some cases it may be necessary to abort the project, if it is
no longer appropriate or likely to make a useful contribution.

Incorporating this kind of evaluation as part of the project plan (formative evaluation)
can considerably enhance the likelihood of achieving useful outcomes. If change is
anticipated during the life of the project there will be implications for all aspects of its
management. If formative evaluation is to take place, it should be integral to the project’s
design. It can facilitate a more organic change process, with testing and refining built in
as the project progresses. But formative evaluation can increase the complexity of a
project, because of the need to timetable an extra set of deadlines. It will also add new
items to the risk log, particularly the risk of delays. If formative evaluation results in
decisions to make significant changes to the project, it may lengthen the timescale,
increase the budget or necessitate additional quality measures.
8.4.4. Evaluation at the end of the project
Many different types of evaluation may take place at the end of a project. A common one
is determining the extent to which the project outcomes have been achieved. This is
often done in a meeting of the sponsor, key stakeholders and project team leaders, and
sometimes informed by reports from key perspectives. An evaluation of this nature may
be the final stage of the project, and the main purpose might be to ensure that the project
has met all of the contracted expectations and can be ‘signed off’ as complete.

A different type of evaluation may be a review of the process, with the purpose of
learning from experience. This is often done by comparing the project plan with what
actually happened, to identify all the variations that occurred, in both processes and
outcomes. The aim is to draw out how to avoid such variations in future projects or how
to plan more effectively for contingencies.

Although monitoring takes place throughout a project, evaluation based on the

information thus gained is likely to happen at the end of the project, in a final summative
evaluation. Summative evaluation is a process for identifying:
 what the project has achieved
 the aspects of the project that went well
 the aspects that went less well l things that you would do differently next time.

The aim of this type of evaluation is to understand and learn from the reasons for
success or failure, so that we can perform better in future.

At the end of a project it is possible to evaluate the extent to which each stage went as
planned, and explore the implications of any deviations from plan. Evaluating the
separate stages is likely to produce information that can be used to improve the
management of future projects.

Other lessons have been learnt from such post-project evaluations. The following four
have been recognized as very important to BP:
  Determine costs accurately – this has led to budgets being approved in phases,
so that they become more accurate as the details of the project are determined. It
has also led to more attention being paid to estimates, in particular those
associated with technical requirements, health and safety, legislation and
ensuring that contractor’s bids are not too low to allow high quality
performance.
 Anticipate and minimize risk – in particular, be more careful
in considering opportunities, for example to acquire other
businesses or to expand the existing business.
 Evaluate potential contractors– this includes researching
their past performance, and checking they have the necessary
technological expertise.
 Improve project management– this has led to training and developing project
managers, and their early involvement in decision-making. It has also led to the
development of project management processes including regular reporting of
monitoring information, so that the situation can be reviewed and evaluated at
any time.

8.4.5 Designing a formal evaluation

Reviews and informal evaluations will often be sufficient, but sometimes a formal
evaluation will be needed. A formal evaluation can be both time-consuming and
expensive, and so must be carefully planned. There are many different ways of carrying
out such an evaluation, and the process chosen will influence the attitudes of those
involved and whether their response to the project is positive or negative.

There are a number of decisions that have to be made in designing an evaluation:

 Decisions about goals: what is the evaluation for, and who wants the evaluation?
 Decisions about focus: what is to be evaluated?
 Decision about methods: how and from what sources will the information be
gathered?
 Decisions about evaluation criteria: how will criteria be set, and by whom?
  Decisions about process: who will do the evaluation, and who will manage the
process?
 Decisions about application: what use will be made of the findings?
 All of these decisions relate to the overall purpose of the evaluation; and, if each
is considered as part of the design process, the answers will enable the process to
be planned.

Planning an evaluation: The evaluation should have clear aims and objectives. It is also
helpful to decide where its boundaries should lie – how much or how little is to be
evaluated?

To address these questions, you will need information from a wide range of sources. If
you plan to carry out this type of evaluation it is helpful to collect the appropriate data
when it becomes available, rather than expecting to find that it is still all available at the
end of the project.

A key decision in the planning stage is who should be involved in the evaluation: in its
design and/or its implementation. The planning stage should consider timing and
resourcing, and the extent to which already available information might be used to
avoid unnecessary expense.

An outcome evaluation might be for the sponsor of the project, but a performance
evaluation part-way through a project might be undertaken for a service provider. The
nature of the audience may determine how the results of the evaluation are reported and
used.

The purpose of the evaluation will also influence who carries it out. The outcome of a
major publicly-funded project would often be evaluated by an external and independent
body, to give the findings. A collaborative project, in contrast, might be formally
evaluated by a group of the key stakeholders, each reporting back to their own
organization. An external evaluator may be costly; but an internal evaluation will draw on
time and energy that might be better devoted elsewhere. The evaluation’s timing may be
particularly significant if it is to involve project team members.

Collecting and interpreting data: In many projects it can be difficult to make

comparisons with anything similar. However, there may be quality standards that can
be used for one of more of the outcomes, perhaps alongside different targets for
timescales and resource use. Benchmarks are another possible source of comparative
data; they have been established for many processes, and data is available from industry
sector and professional support bodies.

A number of potential methods could be used to collect and analyze data. You may have
planned some data collection as part of the project activities. For example, records kept
for monitoring purposes may be used to make comparisons between activities. Records of
meetings and other formal events may also provide useful data on the sequencing of
decisions and discussion of issues.

Other data might be collected purely for the purposes of the evaluation, via interviews,
questionnaires or focus groups. Observation or role-play might provide useful insights
into how activities are carried out. The balance between qualitative and quantitative data
is important, because each can supplement the other and it is difficult to achieve an
overall picture if only one type of data is used.

The methods you choose to collect information will be influenced by the availability of
resources. However, the key things to take into account are:
 the cost of obtaining the information, in relation to its contribution to the
evaluation
 the number of sources from which information should be obtained if sufficient
viewpoints are to be represented to ensure that the results are credible
 the time it will take to obtain and analyze the information
 the reliability of the information obtained
  the political aspects of the process – for example, some ways of gathering
information may help build up support for the evaluation.

Direct contact with those involved in the project might be the only way in which
sufficient information can be obtained to make the evaluation worthwhile.

8.4.6 Analyzing and reporting the result

When planning what data to use in the evaluation it is helpful to consider how the data will be
analysed. Usually, there is a lot of data, perhaps in several different forms. If you have set clear
objectives, it should be possible to identify the data that is relevant to each issue. It is usual to
follow the steps below:
 consider numbers, for example how much has been achieved at what
cost
 consider quality, whether appropriate and not too high or low
 seek out both positive and negative evidence
 make comparisons, and
 look for patterns in the evidence

It may be that several different evaluation reports must be prepared on completion of a

project. One may be shared with the client or sponsor; another will inform the project
team’s organization about what can be learned from their experience; and there may
even be different types of evaluation report for different stakeholders. For example, some
funding bodies require to be told how their funding contributed to the success of a
project, and so need a report relating only to one aspect. It is usually for the manager of a
project to identify the number and types of report that are required, and to ensure that
they are prepared and presented appropriately.

A project report is similar to other business reports. You need to consider the audience
and use language that they will understand, avoiding unfamiliar jargon. Make sure that
the background to the project is explained, and relate the evaluation to the context of the
project. Explain how the evaluation was planned, and the methods that were used to
collect and analyse data. Present the evidence, and how it has been interpreted. Draw
conclusions, and offer recommendations for future practice.
8.4.7. Following up the reports
The evaluation report will often contain recommendations for further actions. These
recommendations and their consequences will need to be discussed. Many projects spawn
other projects, particularly if they have been successful and the outcomes well received.
There may be a commercial opportunity to develop the relationship with the sponsor or
client, and to carry out a further similar project. There may be recommendations that
relate to processes and procedures within the organization. A project often identifies
areas within organizations that need to change in response to external developments.

Project evaluation and debriefing can be a learning experience for the organization as a
whole, as well as for individuals. Such learning can be lost, however, if its facilitation has
not been thought through before the project ends. The highlights may stick in the mind,
but the detail will disappear unless it is documented. In a large organization, and when
projects represent very significant investment, the lessons they teach may well lead to
changes to the organization’s policies and procedures. For example, British Petroleum
gathers the lessons learned from post-project appraisals in a series of booklets that are
then used as guidance for writing project proposals.

In some circumstances it may be helpful to run seminars to discuss the lessons learned,
and to develop better processes with other potential project managers.