ADVANCED PROJECT

MANAGEMENT
& PROJECT CLOSURE
──────────────────────────────────────────
Module 4 Study Notes
Project & Production Management | KTU [Link] Mechanical Engineering

Topics Covered 6 Major Sections

1. Reducing Project Duration — Crashing Activities

2. Project Risk Management
3. Project Evaluation
4. Project Progress & Performance Management
5. Project Closure and Oversight
6. Project Management Software Tools
 1. REDUCING PROJECT DURATION — CRASHING

1.1 What is Project Crashing?

Project crashing is a schedule compression technique that involves adding extra resources (cost) to
critical activities in order to reduce the overall project duration. It is used when a project is behind
schedule or when there is an external deadline that must be met.

Key Idea
Crashing involves a deliberate trade-off — you spend more money to save time. The goal is
to compress duration at minimum additional cost.

1.2 Important Terminology

Term Definition
Normal Time (NT) The standard time to complete an activity under normal
conditions with normal resources.
Normal Cost (NC) The cost incurred to complete an activity in Normal Time.
Crash Time (CT) The minimum possible time to complete an activity by adding
maximum resources.
Crash Cost (CC) The cost incurred to complete the activity in Crash Time (always
> Normal Cost).
Cost Slope The incremental cost per unit time saved by crashing. Cost
Slope = (CC - NC) / (NT - CT).
Crash Duration The difference between Normal Time and Crash Time (NT - CT):
the maximum time you can crash.
Indirect Costs Overhead costs (rent, supervision, etc.) that decrease as project
duration decreases.
Direct Costs Resource costs that increase when crashing. Direct cost
increases with crashing.
Optimum Duration The project duration at which Total Cost (Direct + Indirect) is
minimized.

1.3 Key Formulas

Cost Slope Formula

 Cost Slope = (Crash Cost - Normal Cost) / (Normal Time - Crash
Time)

Total Cost
Total Project Cost = Direct Cost + Indirect Cost

Maximum Crash Limit

Time Saved = Normal Time - Crash Time (per activity)

1.4 Step-by-Step Crashing Procedure

Follow these steps to crash a project optimally:
• Step 1: Draw the network diagram and identify all paths.
• Step 2: Find the Critical Path and its duration.
• Step 3: Calculate the Cost Slope for each activity on the critical path.
• Step 4: Select the critical path activity with the LOWEST cost slope (cheapest to crash).
• Step 5: Crash that activity by 1 unit (or maximum allowable), check if critical path changes.
• Step 6: Recalculate total cost (add crash cost, subtract indirect cost savings).
• Step 7: Repeat until optimum duration is reached (Total Cost stops decreasing).

⚠️Important Rule
You can only crash activities on the CRITICAL PATH. Crashing non-critical activities wastes
money without reducing project duration.

1.5 Other Duration Reduction Techniques

Fast Tracking
Performing activities in parallel that would normally be done sequentially. This increases risk (rework
may be required) but does not necessarily increase cost.
• Example: Starting construction before detailed design is 100% complete.
• Risk: Activities may need to be redone if the parallel activity has changes.

Resource Levelling vs. Resource Loading

Resource Levelling: Adjusting the schedule to smooth out peaks and valleys in resource usage — may
increase project duration.
Resource Loading: Assigning the required resources to each activity (not a compression technique, but
affects feasibility).

1.6 Direct vs. Indirect Cost Behaviour

 Cost Type As Duration Decreases As Duration Increases
(Crashing)
Direct Costs Increases (more resources Decreases (normal pace)
needed)
Indirect Costs Decreases (less time overhead) Increases (more overhead time)
Total Cost Has a minimum (Optimum Rises on both extremes
Point)

Optimum Duration
The point where Total Cost is minimized is the Optimum Project Duration. Before this point,
crashing is worthwhile; beyond it, crashing increases total cost.

1.7 Worked Example Structure

In exam problems, you will typically be given a table with activities, predecessors, NT, NC, CT, CC. The
procedure:
• Construct the network and find the critical path.
• Calculate cost slopes for all critical activities.
• Crash cheapest critical activity by 1 week at a time.
• Update total cost = previous direct cost + cost slope, minus indirect savings per week.
• Stop when crashing would increase total cost.
 2. PROJECT RISK MANAGEMENT

2.1 Definition of Risk

A project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on
project objectives (scope, schedule, cost, quality). Risk is NOT the same as a problem — a problem
has already occurred; a risk is something that might happen.

Aspect Description
Risk Event A specific uncertain event that may affect the project.
Probability The likelihood that the risk event will occur (0 to 1).
Impact The consequence on project objectives if the risk occurs.
Risk Exposure Probability × Impact — a quantitative measure of overall risk.
Residual Risk Risk remaining after risk response has been implemented.
Secondary Risk New risks created as a result of risk response actions.
Risk Owner Person responsible for monitoring and responding to a specific
risk.

2.2 Risk Management Process (PMBOK Framework)

Step 1: Plan Risk Management

Define how risk management will be conducted for the project. Output: Risk Management Plan
(includes methodology, roles, categories, probability/impact scales, thresholds).

Step 2: Identify Risks

Systematically identify all risks that could affect the project. Techniques used:
• Brainstorming — Team members generate risks freely.
• Delphi Technique — Expert opinions gathered anonymously and refined.
• SWOT Analysis — Strengths, Weaknesses, Opportunities, Threats.
• Checklist Analysis — Using historical risk checklists from past projects.
• Cause-and-Effect (Fishbone) Diagrams — Identify root causes of risks.
• Expert Judgment — Knowledge from subject-matter experts.
Output: Risk Register (list of identified risks with initial details).

Step 3: Perform Qualitative Risk Analysis

Prioritize risks using probability and impact — quick, subjective assessment.
 • Probability-Impact Matrix (Risk Matrix): Classify risks as High / Medium / Low.
• High probability + High impact = Priority risks requiring immediate action.
• Low probability + Low impact = Accept and monitor.

Risk Prioritization Score

Risk Score = Probability × Impact

Step 4: Perform Quantitative Risk Analysis

Numerically analyze the effect of identified risks. Techniques:
• Monte Carlo Simulation — Runs thousands of simulations to predict possible outcomes.
• Expected Monetary Value (EMV): EMV = Probability × Monetary Impact.
• Decision Tree Analysis — Evaluates multiple decision paths and their outcomes.
• Sensitivity Analysis — Identifies which risks have the most impact on objectives.

Expected Monetary Value

EMV = Probability × Impact (in monetary terms)

Step 5: Plan Risk Responses

Develop strategies to address risks. Four strategies for negative risks (threats):

Strategy Description
Avoid Change the project plan to eliminate the risk or protect
objectives from its impact. Remove the cause.
Transfer Shift the negative impact to a third party (e.g., insurance,
contracts, outsourcing). Risk remains but responsibility shifts.
Mitigate Reduce the probability or impact of the risk to an acceptable
level. Most common strategy.
Accept Acknowledge the risk and take no action (Active: prepare
contingency plan; Passive: document and accept).

Strategies for Positive Risks (Opportunities)

Exploit (ensure it occurs), Share (partner to increase chance), Enhance (increase
probability/impact), Accept (take advantage if it occurs naturally).

Step 6: Implement Risk Responses

Execute the planned risk response actions. Monitor triggers (warning signs) that indicate a risk is about
to occur.
Step 7: Monitor Risks
Track identified risks, monitor residual risks, identify new risks, evaluate response effectiveness
throughout the project.

2.3 Risk Register

The Risk Register is the primary risk management document. It contains:
• Risk ID and description
• Risk category (technical, external, organizational, project management)
• Probability and Impact ratings
• Risk score / priority
• Planned response strategy
• Risk owner
• Current status

2.4 Risk Breakdown Structure (RBS)

A hierarchical representation of risks organized by category. Similar to a Work Breakdown Structure but
for risks. Categories typically include: Technical, External, Organizational, Project Management.
 3. PROJECT EVALUATION

3.1 What is Project Evaluation?

Project evaluation is the systematic assessment of a project's design, implementation, and outcomes. It
determines whether the project is achieving its goals and delivering value. Evaluation can occur at
different stages:

Type of Evaluation When & Purpose

Ex-Ante Evaluation Before the project starts. Assesses feasibility, expected benefits,
(Pre-evaluation) and risk — used for go/no-go decision.
Mid-Term / Formative During project execution. Assesses progress, identifies
Evaluation problems, allows course correction.
Terminal / Summative At project completion. Measures achievement of objectives and
Evaluation outcomes.
Ex-Post Evaluation After project completion (months/years later). Assesses long-
(Post-evaluation) term impact and sustainability.

3.2 Criteria for Project Evaluation

The OECD-DAC framework provides five standard evaluation criteria:
• Relevance — Is the project aligned with beneficiary needs and organizational strategy?
• Efficiency — Were resources used economically? Did inputs convert to outputs efficiently?
• Effectiveness — Did the project achieve its objectives?
• Impact — What are the broader changes (positive or negative) resulting from the project?
• Sustainability — Will the benefits continue after the project ends?

3.3 Financial Evaluation Methods

Net Present Value (NPV)

Net Present Value
NPV = Σ [Cash Flow_t / (1+r)^t] − Initial Investment
Decision Rule: Accept if NPV > 0. Higher NPV = Better project.

Internal Rate of Return (IRR)

The discount rate at which NPV = 0. Decision Rule: Accept if IRR > Required Rate of Return (hurdle
rate).
Payback Period
Simple Payback
Payback Period = Initial Investment / Annual Cash Inflow
Decision Rule: Accept if Payback Period < Maximum acceptable period. Ignores time value of money.

Benefit-Cost Ratio (BCR)

Benefit-Cost Ratio
BCR = Present Value of Benefits / Present Value of Costs
Decision Rule: Accept if BCR > 1. BCR > 1 means benefits exceed costs.

3.4 Technical and Social Evaluation

• Technical Evaluation: Assesses technical feasibility, design quality, technology choice, and
conformance to specifications.
• Social Evaluation: Examines social impacts — employment generation, community benefits,
equity, and stakeholder satisfaction.
• Environmental Evaluation: Environmental Impact Assessment (EIA) — assesses effects on
ecology, pollution, resource depletion.
• Economic Evaluation: Macro-level analysis including multiplier effects, contribution to GDP,
employment.
 4. PROJECT PROGRESS & PERFORMANCE
MANAGEMENT

4.1 Monitoring and Control Overview

Project progress management involves continuously tracking the project's actual performance against
the planned baseline (scope, schedule, cost). The purpose is to identify deviations early and take
corrective action.

4.2 Earned Value Management (EVM)

EVM is the most widely used quantitative technique for project performance measurement. It integrates
scope, schedule, and cost into a single framework.

The Three Baseline Values

EVM Term Definition

Planned Value (PV) / Budgeted Cost of Work Scheduled — the authorized budget for
BCWS work scheduled to be done by a point in time.
Earned Value (EV) / Budgeted Cost of Work Performed — the value of work actually
BCWP completed, measured against the budget.
Actual Cost (AC) / Actual Cost of Work Performed — the actual cost incurred for
ACWP work completed.
Budget at Completion The total approved budget for the entire project.
(BAC)

EVM Performance Metrics

Schedule Variance
Schedule Variance (SV) = EV − PV
SV > 0: Ahead of schedule | SV = 0: On schedule | SV < 0: Behind schedule

Cost Variance
Cost Variance (CV) = EV − AC
CV > 0: Under budget | CV = 0: On budget | CV < 0: Over budget

Schedule Performance Index

 Schedule Performance Index (SPI) = EV / PV
SPI > 1: Ahead of schedule | SPI = 1: On schedule | SPI < 1: Behind schedule

Cost Performance Index

Cost Performance Index (CPI) = EV / AC
CPI > 1: Under budget | CPI = 1: On budget | CPI < 1: Over budget

EVM Forecasting Formulas

Forecast — Most Common

Estimate at Completion (EAC) = BAC / CPI

Remaining Work Cost Estimate

Estimate to Complete (ETC) = EAC − AC

Final Cost Variance Forecast

Variance at Completion (VAC) = BAC − EAC

Required Future Performance

To-Complete Performance Index (TCPI) = (BAC − EV) / (BAC − AC)

Memory Aid
PV = Planned, EV = Earned (what you got for what you spent), AC = Actual spent. CV and
SV use EV as starting point: CV = EV−AC (cost), SV = EV−PV (schedule).

4.3 Milestone Reporting

A milestone is a significant event or achievement in the project (zero duration). Milestone reporting
tracks whether key milestones are met on time. Types:
• Internal milestones — For project team's internal control.
• External milestones — For client/stakeholder reporting (contractual obligations).

4.4 S-Curve Analysis

An S-Curve plots cumulative cost or progress against time. It is called an S-Curve because of its
characteristic shape — slow start, rapid middle progress, tapering at end.
• Planned S-Curve: Shows how spending was expected to occur over time.
• Actual S-Curve: Shows how money was actually spent.
• Gap between curves reveals cost and schedule performance.
4.5 Project Status Reports
Regular status reports keep stakeholders informed. Typical contents:
• Work completed in the period
• Work planned for next period
• Budget and schedule status (with EVM data)
• Issues, risks, and change requests
• Key decisions required

4.6 Change Control

A Change Control System (CCS) is a formal process to manage changes to project scope, schedule, or
cost. Steps:
• Change Request raised (any stakeholder can initiate)
• Impact Assessment — evaluate effect on scope, time, cost, quality, risk
• Change Control Board (CCB) review and decision (approve / reject / defer)
• Update project documents if approved
• Communicate decision to stakeholders
 5. PROJECT CLOSURE AND OVERSIGHT

5.1 What is Project Closure?

Project closure is the final phase of the project lifecycle where all activities are formally completed,
deliverables are handed over, and the project is officially terminated. Proper closure ensures lessons
are captured and resources are released.

5.2 Types of Project Closure

Type Description
Normal Closure Project completed successfully, all deliverables accepted by
client/sponsor.
Premature Closure Project terminated before completion — usually due to changes
in strategy, budget cuts, or changing priorities.
Failed Project Closure Project terminated due to failure to meet objectives, technical
infeasibility, or inability to complete.
Changed Priority Project de-prioritized — resources reallocated to more important
Closure initiatives.
Perpetual Projects Projects that never seem to end due to scope creep or lack of
clear completion criteria — must be forcefully closed.

5.3 Project Closure Process

Step 1: Verify Scope Completion

Confirm all deliverables have been completed as per the project scope statement and accepted by the
client. Formal product acceptance is documented.

Step 2: Financial Closure

Close all project accounts. Ensure all invoices are paid and received. Reconcile actuals against budget.
Prepare final financial report.

Step 3: Administrative Closure

Archive all project documents (project plan, contracts, reports, change logs). Transfer documentation to
the client or operational team.
Step 4: Contract Closure
Close all vendor and procurement contracts. Verify all contractual obligations fulfilled. Process final
payments. Release contractor obligations.

Step 5: Lessons Learned

Document what went well, what went poorly, and what could be improved. Feed lessons into the
organizational process assets for future projects.
• What was planned vs. what actually happened?
• What techniques worked or failed?
• Recommendations for future similar projects.

Step 6: Release Project Team

Formally release team members back to their functional departments or other projects. Performance
reviews and recognition conducted.

Step 7: Project Sign-Off

Obtain formal sign-off from the project sponsor and key stakeholders confirming the project is complete
and deliverables are accepted.

5.4 Project Oversight

Project oversight refers to the governance mechanisms that monitor project performance throughout its
lifecycle — not just at closure.

Oversight Mechanism Description

Project Steering Senior management body that provides strategic direction,
Committee resolves escalations, and approves major changes.
Project Management Centralized unit that standardizes project management
Office (PMO) practices, provides support, and maintains the portfolio view.
Gate Reviews / Stage Formal checkpoints at the end of each phase where continuation
Gates of the project is approved or terminated.
Project Audits Independent reviews of project processes, documentation, and
performance to ensure compliance and identify issues.
Portfolio Management Managing multiple projects to ensure they collectively align with
organizational strategy and resource availability.

5.5 Post-Project Review (PPR)

A structured review conducted after project completion to evaluate overall project performance. Key
questions:
• Were objectives and deliverables met?
• Was the project delivered on time and within budget?
• Were stakeholders satisfied?
• What risks materialized? How were they handled?
• What process improvements should be adopted?

Closure Checklist Summary

Deliverables accepted ✓ | Financial accounts closed ✓ | Contracts closed ✓ | Documents
archived ✓ | Lessons learned documented ✓ | Team released ✓ | Sign-off obtained ✓
 6. INTRODUCTION TO PROJECT MANAGEMENT
SOFTWARE

6.1 Need for PM Software

As projects grow in complexity, manual scheduling and tracking becomes impractical. Project
Management software automates planning, scheduling, resource allocation, communication, and
reporting.

6.2 Functions of PM Software

• Work Breakdown Structure (WBS) creation
• Network diagram (CPM/PERT) generation
• Gantt chart creation and management
• Resource allocation and levelling
• Cost tracking and budgeting
• Risk registers and issue logs
• Document management and collaboration
• Progress reporting and dashboards

6.3 Major PM Software Tools

Microsoft Project (MS Project)

Industry-standard desktop PM software by Microsoft. Features:
• Gantt charts, network diagrams, resource calendars
• Critical path calculation, baseline comparison
• Resource levelling, EVM reports
• Integration with Microsoft 365 suite
Best for: Traditional waterfall projects, large enterprises

Primavera P6 (Oracle)
Powerful enterprise-grade PM software for large, complex projects. Features:
• Advanced scheduling with multiple critical paths
• Enterprise resource management across many projects
• Earned Value Management (EVM) built-in
• Risk analysis integration
Best for: Construction, engineering, oil & gas mega-projects
JIRA (Atlassian)
Popular agile project management and issue tracking tool. Features:
• Scrum and Kanban boards
• Sprint planning and backlog management
• Bug and issue tracking
• Integration with developer tools (GitHub, Confluence, etc.)
Best for: Software development, IT projects using Agile/Scrum methodology

Trello
Simple, visual Kanban-based project management tool. Features:
• Card-based drag-and-drop interface
• Boards, lists, and cards for task management
• Checklists, due dates, labels, attachments
Best for: Small teams, simple projects, personal task management

Asana
Cloud-based team and project management platform. Features:
• Task assignments, timelines (Gantt-style), and dependencies
• Workload view for resource management
• Project portfolio overview
Best for: Marketing, product, and cross-functional teams

[Link]
Visual work operating system with flexible boards and automation. Features:
• Highly customizable project views (Gantt, Kanban, calendar, timeline)
• Workflow automation
• Integration with 200+ apps
Best for: Teams wanting flexibility and visual management

Basecamp
All-in-one collaboration and PM tool focused on simplicity. Features:
• To-do lists, message boards, file sharing
• Group chat and direct messaging
Best for: Small to medium teams, client collaboration

6.4 Comparison of PM Software

Software Type / Methodology Best Use Case

MS Project Traditional / Waterfall Large projects, enterprises
Primavera P6 Traditional / Enterprise Construction, engineering
mega-projects
JIRA Agile (Scrum/Kanban) Software and IT development
Trello Kanban / Simple Small teams, personal projects
Asana Hybrid / Collaborative Cross-functional teams
[Link] Flexible / Visual Any team wanting custom
workflows
Basecamp Collaborative / Simple Client work, SMBs

6.5 Criteria for Selecting PM Software

• Project size and complexity
• Team size and distribution (co-located vs. remote)
• Methodology (Waterfall vs. Agile vs. Hybrid)
• Integration with existing tools
• Budget and licensing cost
• Ease of use and learning curve
• Reporting and analytics requirements

KTU Exam Tip

For software questions, be ready to name at least 4-5 tools and describe their key features.
MS Project and Primavera P6 are most relevant for mechanical/construction projects. Know
JIRA for Agile contexts.
 QUICK REVISION — KEY FORMULAS & CONCEPTS

Crashing Formulas
Cost Slope = (Crash Cost − Normal Cost) / (Normal Time − Crash
Time)

Total Cost = Direct Cost + Indirect Cost → Minimize!

EVM Formulas

Formula Meaning
SV = EV − PV Schedule Variance (+ve = ahead, −ve = behind)
CV = EV − AC Cost Variance (+ve = under budget, −ve = over budget)
SPI = EV / PV Schedule Performance Index (>1 = ahead)
CPI = EV / AC Cost Performance Index (>1 = under budget)
EAC = BAC / CPI Forecast final cost
ETC = EAC − AC Remaining cost to complete
VAC = BAC − EAC Variance at completion
TCPI = Performance needed to meet BAC
(BAC−EV)/(BAC−AC)

Risk Response Strategies

For Threats (Negative For Opportunities (Positive Risks)

Risks)
Avoid Exploit
Transfer Share
Mitigate Enhance
Accept Accept
Project Closure Checklist
• All deliverables completed and accepted
• Financial accounts closed
• All contracts closed
• Project documents archived
• Lessons learned documented
• Team formally released
• Formal sign-off obtained

PM Software — Quick Reference

• MS Project — Gantt, CPM, Resource Levelling (Waterfall)
• Primavera P6 — Enterprise, Construction, EVM (Waterfall)
• JIRA — Agile/Scrum, IT Projects
• Trello — Kanban, Simple tasks
• Asana — Team collaboration, timelines

Last-Minute Reminder
Crashing: Always crash the CHEAPEST critical activity first. EVM: CV/SV negative = bad.
Risk: Mitigate = reduce probability or impact. Closure: Get formal sign-off!