Project Management, Planning and Control. Managing Engineering, Construction and Manufacturing Projects to PMI, APM and BSI Standards

440 Pages·2007·12.36 MB·English

by  Albert Lester

Cross reference to APM and PMI
bodies of knowledge
Chapter No. Topic APM. BoK No. PMI BoK No.
1 Project definition 1.1, 1.2
2 Project management 1.1, 1.6 1.3
3 Programme management 1.2, 1.3
4 Project context (project environment) 1.4 1.6
5 Business case 5.1, 1.5, 4.1
6 Investment appraisal 5.1
7 Stakeholder management 2.2 2.2, 10.4
8 Project success criteria 2.1
9 Organization structures 6.7 2.3
10 Organizational roles 6.8 2.3
11 Project life cycles 6.1 2.1
12 Work breakdown structures 3.1 5.3
13 Planning blocks and subdivision of 3.2
blocks
14 Estimating 4.3 7.1
15 Project management plan 2.4, 6.9 4.3
16 Risk management 2.5 11.1
17 Quality management 2.6 8.1
18 Change management 3.5, 3.8 4.3, 5.5
19 Configuration management 4.7 5.4
20 Basic network principles 3.2 6.2
21 Analysis types 3.2 6.3
22 Precedence or activity on node (AoN) 3.2 6.4
diagrams
23 Lester diagram 3.2
24 Float 3.2 6.3
25 Milestones and line of balance 3.2 6.4
26 Simple examples 3.2
27 Progress reporting 3.2 10.3
28 Project management and planning 3.2 6.2
29 Network applications outside the 3.2
construction industry
viii CrossreferencetoAPMandPMIbodiesofknowledge
30 Resource loading 3.3, 7.1
31 Cash flow forecasting 3.4 7.3
32 Cost control and EVA 3.6 7.3, 10.3
33 Control graphs and reports 3.6 7.4, 10.3
34 Procurement 5.4 12.1
35 Value management 2.3, 4.5 (5.2)
36 Health and safety and environment 2.7
37 Information management 3.7 10.2
38 Communication 7.1 10.1
39 Team building 7.2 9.3
40 Leadership 7.3, 7.7, 7.9 (2.4)
41 Negotiation 7.5 (2.4)
42 Conflict management and dispute resolution 7.4
43 Project close-out and hand over 6.5 12.6
44 Project close-out report and review 6.6 10.3
( ) = Discussed in context of other topic.
Foreword to the first edition
by Geoffrey Trimble, Professor of Construction Management,
University of Technology, Loughborough
A key word in the title of this book is ‘control’. This word, in the context of management,
implies the observation of performance in relation to plan and the swift taking of corrective
actionwhentheperformanceisinadequate.Incontrasttomanyotherpublicationswhichpurport
to deal with the subject, the mechanism of control permeates the procedures that Mr Lester
advocates. In some chapters, such as that on Manual and Computer Analysis, it is there by
implication. In others, such as that on Cost Control, it is there in specific terms.
Thebook,inshort,dealswithrealproblemsandtheirrealsolutions.Icommendittherefore
bothtostudentswhoseektounderstandthesubjectandtomanagerswhowishtosharpentheir
performance.
Preface
The shortest distance between two points is a straight line
Euclid
The longest distance between two points is a shortcut
Lester
The first edition of this book dealt mainly with the fundamentals and industrial applications
of network analysis and a cost/progress control technique called SMAC, which is now known
universally as earned value analysis.
In the light of the rapid advances in computers, especially the development of the PC, the
second edition updated these techniques and included a detailed description of a well-known
computerized project management program.
The third edition expanded the earned value section, described two other computer project
management programs and introduced some of the other ‘hard topics’ required by a project
manager.
BecauseofthedemandcreatedbystudentstakingtheAssociationforProjectManagement’s
APMP examination, the fourth edition included all the hard topics required in the examination
syllabus. The soft topics were deliberately not included, as these were applicable to general
management and not exclusive to project management. To illustrate how these hard topic
techniquescanbeappliedandincorporatedinpractice,severalfullyworkedexamplesoftypical
projects were included.
As with the previous volumes, this fifth edition was written to meet a specific need. In this
case it was the fulfilment of a request by the publishers and some of my lecturing colleagues
at University College London, to produce a book which included all the hard and soft topics
requiredbythelatestsyllabusoftheAPMPexamination.Inadditionthebookshouldalsomeet
the needs of the PMI examination as stipulated in the PMI Body of Knowledge.
When starting a new edition, one inevitably wonders whether any section of the current
edition has become obsolete and whether it should therefore be updated or left out altogether.
After all, a plethora of computer-generated coloured printouts such as Gantt charts showing
base schedules and updates, tables, summaries, histograms, pie charts, ‘S’ curves and even
networks themselves have replaced hand-drawn or typed documents. My first thoughts were
therefore to leave out the chapters on arithmetical analysis and the case for manual analysis
sincenearlyallnetworkplanningisnowcarriedoutbysophisticatedcomputerprogramswhich
not only take the chores out of the analysis process, but also enable ‘what if’ scenarios to be
rapidly examined.
However, we have not yet reached the stage when computers can think for themselves, so
that the creation of the logic of a network must still be done by humans. Except for standard
repetitive projects where it is possible to design logic modules, each project network of any
xii Preface
reasonable size should still be hand-drafted and discussed with colleagues before being keyed
into the computer for processing. For this reason the section on manual analysis has been
retained. In any case the trend to generate a Gantt chart direct from a table of preceding and
succeeding activities and then printing out a network diagram is putting the cart before the
horse.Suchapracticereducesthepossibilityofmaximizingparallelactivitiesandreducingthe
overalldurationoftheproject.Inotherwords,itdestroystheveryessenceofnetworkanalysis.
A single textbook can never replace a good course of lectures on project management in
which a lecturer can illustrate the subject with anecdotes from his or her own experience. For
this reason some of the subjects in the book have been enhanced by descriptions and practical
advice useful to a practising project manager who may already have passed the qualifying
project management examinations.
Thebookhasbeendesignedtobenotonlyastudytextforexaminees,butalsoamanualfor
professional managers. Exercises and sample examination questions and answers (except for
thesetofbulletpoints)havethereforenotbeenincludedbutcanbefoundonthebook’saccom-
panyingwebsitehttp://books.elsevier.com/companions/075066956X.Inaddition,33questions
and answers can also be found on the companion web site.
The worked examples at the end of the book, which are only loosely representative of the
fourchosenindustries,havebeenincludedbecause,aftermanyyearsoflecturing,Ifoundthat
what students appreciated most was the opportunity to see how all the project management
techniques they were taught during the course actually ‘hang together’. The important thing to
remember is that not all the techniques are applicable to all situations and certainly not to all
themanytypesofprojects,butmanagersshouldregardthisbookasatoolboxfromwhichthe
most appropriate tool can be used for the particular job in hand.
Project management methods have been adopted by many manufacturing industries, com-
mercial organizations and financial institutions since they were first brought to the UK in the
early 1950s by the American petrochemical construction companies and as most of my expe-
rience has been with major civil engineering and process plant contractors, it is not surprising
therefore that many of the examples in the book have been taken from these industries. I
must stress, however, that all the techniques given can be tailored or modified to suit other
industries,evenifnotallofthemappeartobeimmediatelyapplicable.Clearlyaknowledgeof
man management, communication management, health and safety and cost control is required
for every type of project whatever the nature of the enterprise, but there is no doubt that by
applying some of the less-well-known techniques such as network analysis and earned value
analysis, performance and control can be enhanced.
A. Lester
Acknowledgements
Theauthorandpublisherswouldliketomakeacknowledgementtothefollowingfortheirhelp
and cooperation in the preparation of this book.
TheNationalEconomicDevelopmentOfficeforpermissiontoreproducetherelevantsection
of their report ‘Engineering Construction Performance Mechanical & Electrical Engineering
Construction, EDC, NEDO December 1976’.
FosterWheelerPowerProductsLimitedforassistanceinpreparingthetextandmanuscripts
and permission to utilize the network diagrams of some of their contracts.
Mr P. Osborne for assistance in producing some of the computerized examples.
Claremont Controls Limited, Suite 43, Wansbeck Business Centre, Rotary Parkway, Ash-
ington,NorthumberlandNE638QZ,forthedescriptionanddiagramsoftheirHornetWindmill
project management software.
ExtractsfromBS6079-1-2002arereproducedwiththepermissionofBSIunderlicenceNo.
2003DH0199. Complete editions of the standards are obtainable by post from BSI Customer
Services, 389 Chiswick High Road, London W4 4AL. Tel. [phone].
A.P.WattforpermissiontoquotethefirstverseofRudyardKipling’spoem,‘TheElephant’s
Child’.
Daimler Chrysler for permission to use their diagram of the Mercedes-Benz 190 car.
The Automobile Association for the diagram of an engine.
WPMCfortheiragreementtousesomeofthediagramsinthechaptersonRiskandQuality
management
Jane Walker and University College London for permission to include diagrams in the
chapters on project context, leadership and negotiations
The Association for Project Management for permission to reproduce their APMP Learning
Objectives
Tony Benning, my co-author of ‘Procurement in the Process Industry’, for permission to
include certain texts from that book.
1 Project definition
PROJECT DEFINITION
Many people and organizations have defined what a project is, or should be, but probably the
most authoritative definition is that given in BS 6079-1 ‘Guide to Project Management’.
This states that a project is:
‘Auniquesetofco-ordinatedactivities,withdefinitestartingandfinishingpoints,undertakenbyan
individualororganizationtomeetspecificobjectiveswithindefinedschedule,costandperformance
parameters.’
Thenextquestionthatcanbeaskedis‘Whydoesoneneedprojectmanagement?’Whatisthe
difference between project management and management of any other business or enterprise?
Why has project management taken off so dramatically in the last twenty years?
The answer is that project management is essentially management of change, while running
a functional or ongoing business is managing a continuum or ‘business-as-usual’.
Projectmanagementisnotapplicabletorunningafactorymakingsausagepies,butitwillbe
therightsystemwhenthereisarequirementtorelocatethefactory,buildanextension,orproduce
adifferentproductrequiringnewmachinery,skills,stafftrainingandevenmarketingtechniques.
It is immediately apparent therefore that there is a fundamental difference between project
managementandfunctionalorlinemanagementwherethepurposeofmanagementistocontinue
the ongoing operation with as little disruption (or change) as possible. This is reflected in
the characteristics of the two types of managers. While the project manager thrives on and is
proactive to change, the line manager is reactive to change and hates disruption. In practice
this often creates friction and organizational problems when a change has to be introduced.
Projectsmaybeundertakentogeneraterevenue,suchasintroducingmethodsforimproving
cashflow,orbecapitalprojectswhichrequireadditionalexpenditureandresourcestointroduce
a change to the capital base of the organization. It is to this latter type of project that the
techniques and methods described in this book can be most easily applied.
Figure1.1showsthetypeofoperationswhicharesuitableforaprojecttypeoforganization
and which are best managed as a functional or ‘business as usual’ organization.
Bothtypesofoperationshavetobemanaged,butonlytheonesincolumn(a)requireproject
management skills.
Itmustbeemphasizedthatthesuitabilityofanoperationbeingrunasaprojectisindependent
ofsize.Projectmanagementtechniquesareequallysuitableforbuildingacathedraloragarden
shed. Moving house, a very common project for many people, lends itself as effectively to
project management techniques such as tender analysis and network analysis, as relocating a
major government department from the capital city to another town. There just is no upper or
lower limit to projects!
2 ProjectManagement,PlanningandControl
(a)Projectorganization (b)Functionalorlineorganization
Buildingahouse Manufacturingbricks
Designingacar Massproducingcars
Organizingaparty Servingthedrinks
Settingupafilingsystem Doingthefiling
Settingupretailcashpoints Sellinggoodsandoperatingtills
Buildingaprocessplant Producingsausages
Introducinganewcomputersystem Operatingcreditcontrolprocedures
Figure1.1 Organizationcomparison
Asstatedinthedefinition,aprojecthasadefinitestartingandfinishingpointandmustmeet
certain specified objectives.
Broadly these objectives, which are usually defined as part of the business case and set out
in the project brief, must meet three fundamental criteria:
1 The project must be completed on time;
2 The project must be accomplished within the budgeted cost;
3 The project must meet the prescribed quality requirements.
These criteria can be graphically represented by the well-known project triangle (Figure 1.2).
Some organizations like to substitute the word ‘quality’ with ‘performance’, but the prin-
ciple is the same – the operational requirements of the project must be met, and met
safely.
In certain industries like airlines, railways and mining, etc. the fourth criterion, safety, is
considered to be equally important, if not more so. In these organizations, the triangle can be
replaced by a diamond now showing the four important criteria (Figure 1.3).
Theorderofprioritygiventoanyofthesecriteriaisnotonlydependentontheindustry,but
alsoontheindividualproject.Forexample,indesigningandconstructinganaircraft,motorcar
orrailwaycarriage,safetymustbeparamount.Theendproductmaycostmorethanbudgeted,
may be late in going into service and certain quality requirements in terms of comfort may
havetobesacrificed,butundernocircumstancescansafetybecompromised.Aeroplanes,cars
and railways must be safe under all operating conditions.
The following (rather obvious) examples show where different priorities on the project
triangle (or diamond) apply.
Time
S
Safety
Cost Quality
performance
Figure1.2 Projecttriangle
Projectdefinition 3
Time
Quality
Cost
performance
Safety
Figure1.3 Projectdiamond
TIME-BOUND PROJECT
A scoreboard for a prestigious tennis tournament must be finished in time for the opening
match, even if it costs more than anticipated and the display of some secondary information,
such as the speed of the service, has to be abandoned. In other words, cost and performance
may have to be sacrificed to meet the unalterable starting date of the tournament.
(Inpractice,theincreasedcostmaywellbeamatteroffurthernegotiationandthetemporarily
delayed display can usually be added later during the non-playing hours.)
COST-BOUND PROJECT
A local authority housing development may have to curtail the number of housing units and
mayevenoverruntheoriginalconstructionprogramme,buttheprojectcostcannotbeexceeded,
becausethehousinggrantallocatedbycentralgovernmentforthistypeofdevelopmenthasbeen
frozenatafixedsum.Anothersolutiontothisproblemwouldbetoreducethespecificationof
the internal fittings instead of reducing the number of units.
PERFORMANCE (QUALITY)-BOUND PROJECT
An armaments manufacturer has been contracted to design and manufacture a new type of
rocket launcher to meet the client’s performance specification in terms of range, accuracy and
rate of fire. Even if the delivery has to be delayed to carry out more tests and the cost has
increased,thespecificationmustbemet.Againiftheweaponswererequiredduringawar,the
specification might be relaxed to get the equipment into the field as quickly as possible.
SAFETY-BOUND PROJECT
Apartfromtheobviousexamplesofpublictransportgivenpreviously,safetyisafactorthatis
required by law and enshrined in the Health & Safety at Work Act.
Notonlymustsafepracticesbebuiltintoeveryproject,butconstantmonitoringisanessential
element of a safety policy. To that extent it could be argued that all projects are safety-bound,
sinceifitbecameevidentafteranaccidentthatsafetywassacrificedforspeedorprofitability,
some or all of the project stakeholders could find themselves in real trouble, if not in jail.
A serious accident which may kill or injure people will not only cause anguish among
the relatives, but, while not necessarily terminating the project, could very well destroy the
4 ProjectManagement,PlanningandControl
company.Forthisreasonthe‘S’symbolwhenshowninthemiddleoftheprojectmanagement
triangle gives more emphasis of its importance (see Figure 1.2).
Itcanbeseenthereforethattheprioritiescanchangewiththepoliticalorcommercialneeds
oftheclientevenwithinthelifecycleoftheproject,andtheprojectmanagerhastoconstantly
evaluate these changes to determine the new priorities. Ideally, all the main criteria should be
met (and indeed on many well-run projects, this is the case), but there are times when the
project manager, with the agreement of the sponsor or client, has to take difficult decisions to
satisfy the best interests of most, if not all, the stakeholders.