Project Management, Planning and Control: Managing Engineering, Construction and Manufacturing Projects to PMI, APM and BSI Standards by Albert Lester • ISBN: 075066956X • Publisher: Elsevier Science & Technology Books • Pub. Date: November 2006 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 blocks 3.2 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) diagrams 3.2 6.4 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 construction industry 3.2 viii Cross reference to APM and PMI bodies of knowledge 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 action when the performance is inadequate. In contrast to many other publications which purport 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. The book, in short, deals with real problems and their real solutions. I commend it therefore both to students who seek to understand the subject and to managers who wish to sharpen their 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. Because of the demand created by students taking the Association for Project Management’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 techniques can be applied and incorporated in practice, several fully worked examples of typical 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 required by the latest syllabus of the APMP examination. In addition the book should also meet 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 since nearly all network planning is now carried out by sophisticated computer programs which 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. Such a practice reduces the possibility of maximizing parallel activities and reducing the overall duration of the project. In other words, it destroys the very essence of network analysis. 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. The book has been designed to be not only a study text for examinees, but also a manual for professional managers. Exercises and sample examination questions and answers (except for the set of bullet points) have therefore not been included but can be found on the book’s accom- panying web site http://books.elsevier.com/companions/075066956X. In addition, 33 questions 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 four chosen industries, have been included because, after many years of lecturing, I found that 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 the many types of projects, but managers should regard this book as a tool box from which the 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, even if not all of them appear to be immediately applicable. Clearly a knowledge of 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 The author and publishers would like to make acknowledgement to the following for their help and cooperation in the preparation of this book. The National Economic Development Office for permission to reproduce the relevant section of their report ‘Engineering Construction Performance Mechanical & Electrical Engineering Construction, EDC, NEDO December 1976’. Foster Wheeler Power Products Limited for assistance in preparing the text and manuscripts 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, Northumberland NE63 8QZ, for the description and diagrams of their Hornet Windmill project management software. Extracts from BS 6079-1-2002 are reproduced with the permission of BSI under licence No. 2003DH0199. Complete editions of the standards are obtainable by post from BSI Customer Services, 389 Chiswick High Road, London W4 4AL. Tel. 44(0)20 8996 9001. A. P. Watt for permission to quote the first verse of Rudyard Kipling’s poem, ‘The Elephant’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. WPMC for their agreement to use some of the diagrams in the chapters on Risk and Quality 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. Table of Contents Cross reference to APM and PMI bodies of knowledge vii Foreword to the first edition ix Preface xi Acknowledgements xiii Project definition 1 Project management 5 Programme management 9 Project context (project environment) 12 Business case 17 Investment appraisal 20 Stakeholder management 27 Project success criteria 30 Organization structures 32 Organization roles 35 Project life cycles 37 Work breakdown structures 40 Planning blocks and subdivision of blocks 46 Estimating 57 Project management plan 61 Risk management 65 Quality management 73 Change management 84 Configuration management 88 Basic network principles 90 Analysis types 102 Precedence or activity on node (AoN) diagrams 125 Lester diagram 132 Float 136 Milestones and line of balance 142 Simple examples 147 Progress reporting 158 Project management and planning 165 Network applications outside the construction industry 176 Resource loading 188 Cash flow forecasting 195 Cost control and EVA 204 Control graphs and reports 212 Procurement 238 Value management 275 [...]... objectives and key performance indicators REQUIREMENTS MANAGEMENT As has been explained previously, the main two components of a business case are ‘what’ is required and ‘why’ it is required Requirements management is concerned with the ‘what’ Clients, end users and indeed most stakeholders have their own requirements on what they expect from the project even if the main objectives have been agreed Requirements... the project by ensuring sufficient resources (especially financial) are available act as business leader and top level advocate to the company board ensure that the perceived benefits of the project are realized Depending on the value, size and complexity of the project the sponsor is a key player who, as a leader and mentor, can greatly assist the project manager to meet all the project s objectives... oil rose above the level at which power generation was no longer economic It is not uncommon for projects to be shelved when the cost of financing the work has to be increased and the resulting interest payments exceed the foreseeable revenues The external economics, often related to the political climate, can have a serious influence on the project Higher interest rates or exchange rates, and additional... Figure 1.2) It can be seen therefore that the priorities can change with the political or commercial needs of the client even within the life cycle of the project, and the project manager has to constantly 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,... enshrined in the business case and confirmed by the project manager in the project management plan It is always possible, however, that one or more stakeholders may wish to change these requirements either just before or even after the project scope has been agreed and finalized The effect of such a change of requirement will have to be carefully examined by the project manager who must take into account... organizations, each programme As each project develops, different pressures and resource requirements will occur, often as a result of contractual changes or the need to rectify errors or omissions Unforeseen environmental issues may require immediate remedial action to comply with health and safety requirements and there is always the danger of unexpected resignations of key members of one of the project teams... 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... 92/43/EEC 86/278/EEC 90/313/EEC 90/679/EEC 79/409/EEC 96/82/EEC 91/156/EEC 87/217/EEC 89/427/EEC 80/779/EEC 75/442/EEC 89/427/EEC 80/1268/EEC 91/698/EEC 78/659/EEC 80/68/EEC 80/778/EEC 89/336/EEC Environmental impact assessment Assessment of effects on certain public & private projects Chapter 4 Environment Protection of the environment Sustainable development Substances hazardous to health Conservation of... cost of the project If the change of requirements is requested after the official start of the project, that is after the cost and time criteria have been agreed, the new requirements will be subject to the normal project (or contract) change procedure and configuration management described elsewhere To log and control the requirement documents during the life of the project a simple ‘reporting matrix’,... particular requirement and to agree with the stakeholder whether it should or could be incorporated, taking into account the cost, time and performance factors associated with this requirement Once agreed, these requirements become the benchmark against which the success of the project is measured Ideally all the requirements should have been incorporated as clear deliverables in the objectives enshrined in . performance parameters.’ The next question that can be asked is ‘Why does one need project management?’ What is the difference between project management and management of any other business or enterprise? Why has project. the general management and people skills, enable the project manager to meet the set criteria of time cost and performance/quality in the most effective way. Many textbooks divide the skills required. for these restrictions which depend on the size and type of project, the size and type of the organization and of course the personality and experience of the project manager, but if the project