SPECIALIZATION 2 – PROJECT MANAGEMENT MIDTERM DISCUSSIONS
What is a Project?
In the field of project management, a project is a temporary and unique
endeavor with a defined beginning and end. Its purpose is to create a specific
product, service, or result. A project is fundamentally different from ongoing business
operations. While operations are repetitive, continuous, and intended to sustain the
business, a project is a one-time effort designed to achieve a specific, new goal.
Projects are classified in project management to help organizations choose the
right methodology, allocate resources effectively, and manage risks appropriately.
The classification systems vary but generally categorize projects based on their
purpose, complexity, duration, and industry.
Classification of A Project:
1. Classification by Purpose
This method categorizes projects based on the end goal or type of change they are
meant to achieve. Examples:
Product Development: Creating a new product or service. Examples include
designing a new smartphone model or developing a new software
application.
Process Improvement: Enhancing an existing process for better efficiency,
quality, or cost-effectiveness. Examples include optimizing a manufacturing
assembly line or streamlining a customer service workflow.
2. Classification by Industry or Sector
This is a straightforward way to classify projects based on the domain they belong to.
Examples:
Construction: Building or renovating physical structures like residential homes,
commercial buildings, or infrastructure like roads and dams.
Information Technology (IT): Involves developing, implementing, or upgrading
computer systems, software, and networks.
3. Classification by Complexity and Risk
This is a crucial classification for determining the level of oversight and the project
management approach required. Projects are often ranked on a scale from low to
high complexity. Types:
Low Complexity & Risk: These projects are typically straightforward with a clear
scope, low budget, and a small team. An example might be updating a
company's website with new content.
Medium Complexity & Risk: These projects have a more significant budget and
timeline, a larger team, and some dependencies. An example could be
renovating an office floor.
High Complexity & Risk: These projects are large-scale, with a high budget,
long duration, and many interdependent tasks and stakeholders. They often
involve new technology or significant organizational change. An example is
merging two companies' IT systems after an acquisition.
AR MARK ANTONY T. LLANES, UAP, RMP, MMEP COURSE INSTRUCTOR
SPECIALIZATION 2 – PROJECT MANAGEMENT MIDTERM DISCUSSIONS
4. Classification by Duration
This method classifies projects based on their timeline.
1. Short-term: Completed within a few weeks to a few months.
2. Medium-term: Spanning several months to a year.
3. Long-term: Lasting for several years or more.
Project Costs Classification:
Project costs are typically classified into several categories to help with
budgeting, cost control, and financial reporting. The most common types are based
on how they relate to the project's activities and how they behave in response to
changes in project scope or scale.
1. Direct vs. Indirect Costs
This is one of the most fundamental ways to classify project costs.
• Direct Costs: These are expenses that are directly and exclusively tied to a
specific project. They are easily traceable and would not exist if the project
didn't.
For Example, The salary of a project team member working full-time on
the project, materials and equipment purchased specifically for the
project, and travel expenses for project-specific meetings.
• Indirect Costs: These are costs that are necessary for the overall operation of
the business but cannot be directly attributed to a single project. They support
multiple projects or the entire organization.
For Examples, Office rent, utilities, the salaries of administrative staff or
senior managers who oversee multiple projects, and general overhead
expenses.
2. Fixed vs. Variable Costs
This classification is based on how costs behave relative to the volume of work or the
duration of a project.
• Fixed Costs: These are costs that remain constant throughout the project,
regardless of the project's scope or duration. They are often incurred once or
on a regular, predictable basis.
For Example, The cost of renting a piece of equipment for the entire
project, a project manager's salary for the duration of the project, and
insurance premiums.
• Variable Costs: These costs fluctuate and change in direct proportion to the
amount of work performed or resources used. The more work you do, the
higher the total variable cost.
For Example, The cost of raw materials (more work means more
materials), hourly wages for temporary workers (more hours mean
higher costs), and fuel for equipment.
AR MARK ANTONY T. LLANES, UAP, RMP, MMEP COURSE INSTRUCTOR
SPECIALIZATION 2 – PROJECT MANAGEMENT MIDTERM DISCUSSIONS
3. Sunk Costs
A sunk cost is money, time, or resources that have already been spent and cannot
be recovered. In project management, it's crucial to understand that these costs
should not influence future decisions.
Broad Explanation, The sunk cost fallacy is the irrational tendency to continue
a project or effort because of past investments, even if it's no longer a good
decision. Rational decision-making focuses only on future costs and benefits,
not what has already been spent.
For Examples, Money spent on research and development for a product that
is later canceled, or fees for a consultant who completed work on a project
that is now being abandoned. These costs are "sunk" because they are
unrecoverable.
Tools for Project Management:
In project management, several tools and techniques are used to plan,
organize, and monitor a project. A Work Breakdown Structure (WBS), RACI Matrix,
PERT/CPM, and Gantt chart are four of the most fundamental.
Work Breakdown Structure (WBS)
A Work Breakdown Structure (WBS) is a hierarchical decomposition of the total
scope of work a project team needs to accomplish. Think of it as a detailed, top-down
outline of the project. It breaks down the project's main deliverables into smaller, more
manageable components, like phases, sub-deliverables, and ultimately, individual
work packages. The lowest level of the WBS is called the work package, which is the
point at which work can be reliably estimated for cost, duration, and resources.
Structure: It's typically represented as a tree structure or an outline. The project's
final deliverable is at the top, followed by major phases or deliverables, and
then sub-deliverables, until you get to the work packages.
Purpose: The WBS provides a clear, organized view of all the work that needs
to be done. It ensures that no work is left out and helps in defining project
scope, assigning responsibilities, and creating accurate estimates for schedules
and budgets.
RACI Matrix Diagram
A RACI matrix, also known as a Responsibility Assignment Matrix, is a diagram used to
clarify roles and responsibilities for specific tasks or deliverables within a project. It
ensures that everyone on the team knows who is responsible for what, which prevents
confusion and improves communication. The acronym RACI stands for four key roles:
Responsible: The person who does the work to complete the task. There can
be multiple responsible individuals for a single task.
Accountable: The person who is ultimately answerable for the completion of
the task. This is the individual who approves the work and signs off on the
deliverable. There should only be one accountable person per task.
AR MARK ANTONY T. LLANES, UAP, RMP, MMEP COURSE INSTRUCTOR
SPECIALIZATION 2 – PROJECT MANAGEMENT MIDTERM DISCUSSIONS
Consulted: A subject matter expert who needs to be consulted or provide input
before the work is done. This is a two-way communication.
Informed: People who must be kept up-to-date on the progress or completion
of a task. This is a one-way communication.
A RACI matrix is typically set up as a table, with tasks listed vertically and team
members listed horizontally. The intersection of each row and column contains an R,
A, C, or I to define that person's role for that specific task.
PERT and CPM Method
PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method) are
two complementary project scheduling techniques used to analyze and represent
the tasks involved in a project. They are used to identify the project's timeline and the
most critical activities.
PERT: This technique is used for projects with uncertain task durations. It uses
three-time estimates for each activity: an optimistic time (best-case), a
pessimistic time (worst-case), and a most likely time. From these estimates, a
single expected duration for the task is calculated. PERT is ideal for research
and development projects where timelines are not well-defined.
CPM: This method is for projects with well-defined, predictable tasks. It uses a
single, deterministic time estimate for each activity. The main goal of CPM is to
find the Critical Path, which is the longest sequence of tasks that must be
completed on time for the entire project to finish on schedule. Any delay on a
task on the critical path will delay the entire project.
Both PERT and CPM use a network diagram to visualize the sequence and
dependencies of tasks, which helps project managers identify the critical path and
manage project timelines effectively.
Gantt Chart
A Gantt chart is a visual tool used for project scheduling. It's a horizontal bar chart that
illustrates a project schedule against a timeline. It's one of the most widely used project
management tools.
Structure: The left side of the chart lists the project's tasks, while the horizontal
axis at the top represents the timeline (e.g., days, weeks, or months). Each task
is represented by a horizontal bar whose length indicates the duration of the
task.
Features: Modern Gantt charts also include features like task dependencies
(showing which tasks must be completed before others can start), milestones
(markers for key project events), and resource assignments (showing who is
responsible for each task).
Purpose: Gantt charts provide a clear, at-a-glance overview of the project's
schedule. They help project managers and teams track progress, identify
potential bottlenecks, and communicate the project plan to stakeholders.
AR MARK ANTONY T. LLANES, UAP, RMP, MMEP COURSE INSTRUCTOR