Project

Management

Editor

[Link]. Ilgın ACAR

Authors

CHAPTER 1 Research Assistant Emine AKYOL ÖZER

CHAPTER 2
[Link]. Zühal KARTAL

CHAPTER 3
[Link]. Gülşah HANÇERLİOĞULLARI KÖKSALMIŞ

CHAPTER 4
Emrah KÖKSALMIŞ

CHAPTER 5
[Link]. Ilgın ACAR

Gökrem TEKİR

CHAPTER 6, 8 Savaş ŞAKAR

CHAPTER 7
[Link]. Aydın SİPAHİOĞLU
 T.C. ANADOLU UNIVERSITY PUBLICATION NO: 3956
OPEN EDUCATION FACULTY PUBLICATION NO: 2741

Copyright © 2019 by Anadolu University

All rights reserved.
This publication is designed and produced based on “Distance Teaching” techniques. No part of this
book may be reproduced or stored in a retrieval system, or transmitted in any form or by any means
of mechanical, electronic, photocopy, magnetic tape, or otherwise, without the written permission of
Anadolu University.

Instructional Designer
Research Assistant Aykut Yakar

Graphic and Cover Design

[Link]. Halit Turgay Ünalan

Proof Reading
[Link]. Ali Merç

Assessment Editor
Lecturer Betül Hacıköylü

Graphic Designers
Ayşegül Dibek
Gülşah Karabulut

Typesetting and Composition

Selin Çakır
Burak Arslan
Kader Abpak Arul
Süreyya Çelik
Gözde Soysever
Yasin Narin
Dilek Özbek
Yasin Özkı

PROJECT MANAGEMENT

E-ISBN
978-975-06-3661-5

All rights reserved to Anadolu University.

Eskişehir, Republic of Turkey, December 2019
3325-0-0-0-2002-V01
 Contents

Introduction Defining Project

CHAPTER 1 to Project CHAPTER 2 and Developing
Management a Project Plan
Introduction.................................................... 3 Introduction.................................................... 19
What Is a Project?.......................................... 3 Defining The Project...................................... 19
Attributes of a Project........................... 6 Definition of Project Characteristics.... 19
Project Versus Program ........................ 6 Ordinary Work vs. Project.................... 20
Project Life Cycle.................................... 7 Defining The Project Scope Management and
Project Management..................................... 8 Creating The Work Breakdown Structure... 20
The Importance of Project Defining the Project Scope ................... 21
Management.......................................... 8 Creating the Work Breakdown
The Fundamentals of Project Structure................................................. 24
Management.......................................... 9 Developing The Project Plan......................... 26
Project Management Process........................ 10 Constructing a Project Network........... 27
Initiating Process Group........................ 10 Network Computation Process............. 29
Planning Process Group......................... 10 Activity On Arrow (AOA) Diagrams.... 33
Executing Process Group....................... 11
Monitoring and Controlling Process
Group...................................................... 11
Closing Process Group........................... 11

iii
 Project Resource
CHAPTER 3 CHAPTER 4
Scheduling Management

Introduction.................................................... 43 Introduction ................................................... 65

Project Scheduling Concepts......................... 43 Resource Management Concepts ................ 65
Network Analysis................................... 43 Definition of Resource and Resource
The Components of the Network......... 44 Management ......................................... 65
Drawing Project Network..................... 45 Benefits of the Successful Resource
Program Evaluation and Review Technique Management Applications ................... 67
(PERT)............................................................. 47 Suggestions for Resource
Basic Calculations and Steps of PERT... 48 Management for the Project Success . 67
Probability of Meeting a Scheduled Resource Management Steps and
Date......................................................... 51 Techniques ..................................................... 69
Estimation of a, m and b....................... 53 Estimating Resources ........................... 69
Advantages and Limitations of PERT... 53 Resource Allocating .............................. 70
CPM vs. PERT......................................... 54 Resource Aggregation .......................... 73
Resource Leveling ................................. 74
Resource Forecasting ............................ 81
Project Human Resources Management ..... 82
Resource Management Software ................ 88
Benefits of Resource Management
Software for the Company ................... 88
Criteria for Selecting Resource
Forecasting Software ............................ 88

iv
 The Project
Project Risk
BÖLÜM 5 Manager and the CHAPTER 6
Management
Project Team

Introduction ................................................... 99 Introduction.................................................... 121

Who is the Project Manager? ...................... 99 Project Risks and Planning Risk
Attributes of Being an Effective Management .................................................. 121
Project Manager .................................... 100 Project Risk Types.................................. 121
Responsibilities of Project Manager ..... 101 Reducing Risk Uncertainty................... 121
Project Manager and Project Risk Management Plan.......................... 122
Stakeholders .......................................... 103 Identifying Risks............................................. 124
Managing Versus Leading a Project ............ 104 Inputs to Identify Risks......................... 124
What is Leadership? ............................. 104 Risk Identification Tools and
Leaders vs. Managers ........................... 105 Techniques.............................................. 124
The Project Team ........................................... 109 Risks Identification Outputs................. 126
The Definition of Project Team ........... 110 Qualitative Risk Analysis............................... 127
Staffing and Building a Project Team......  110 Inputs for Qualitative Risk Analysis..... 127
Attributes of the Project Team ............ 113 Qualitative Risk Analysis Tools and
Techniques.............................................. 127
Outputs of Perform Qualitative
Risk Analysis........................................... 129
Quantitative Risk Analysis............................. 130
Inputs to Perform Quantitative
Risk Analysis........................................... 130
Quantitative Risk Analysis Tools and
Techniques.............................................. 130
Outputs of Perform Quantitative
Risk Analysis........................................... 133
Responding to Risk ........................................ 134
Strategies For Negative Risks or
Threats.................................................... 134
Strategies For Positive Risks or
Opportunities......................................... 135
Contingency Reserves............................ 135
Outputs of Plan Risk Responses........... 136
The Implementation of Risk
Responses............................................... 136
Monitoring Risks............................................ 139
Risk Monitoring Tools and
Techniques.............................................. 139
Outputs of Monitor Risks...................... 140

v
 Project
CHAPTER 7 Evaluation and CHAPTER 8 Project Closure
Control
Introduction ................................................... 151 Introduction ................................................... 175
Importance of Project Evaluating ................ 151 Project Closure ............................................... 175
Fundamental Terminology of Earned Project Closing Activities ...................... 175
Value Analysis ................................................ 155 How Can Teams Learn from Projects?.... 176
Subsidiary Indicators for Project Project Closure Plan and Checklist ............... 177
Evaluation....................................................... 164 Developing the Closure Plan ................ 179
Project Closure Plan .............................. 179
Benefits .................................................. 181
The Project Closure Report ........................... 183
Using the Project Closure Report ........ 184
Benefits .................................................. 184
The Postmortem Review .............................. 185
Conducting the Postmortem Review... 185
Using the Postmortem Review ............ 186
Variations ............................................... 187
Benefits .................................................. 187

vi
Preface

Dear Students,
Project management plays an important role The project management book was published
in many companies within the variety of fields as a result of the devoted efforts of the
such as construction, information technology, authors. I would like to thank the authors
engineering, architecture, new product and of chapters for their valuable contributions,
service development and etc. Thus, at any level patience and efforts in the preparation of this
of the organization, it is almost impossible to book. I also would like to express my gratitude
imagine someone who cannot benefit from a to all the staff of Anadolu University for their
degree of expertise in the project management contribution in making the book complete
process. Project management has been the and ready to read.
management of technology, people, culture,
stakeholders and various other elements We hope the content of this book will
necessary to successfully complete a project. be interesting, valuable and useful for all
The role of projects in these organizations students and for those interested in Project
is getting more and more attention. Hence, Management.
Projects are the main tool for achieving and
implementing the strategic objectives of
the organization. Project management has Editor
developed to be a professional discipline [Link]. Ilgın ACAR
having its own knowledge and skills.
Although there are project management
books that focus on different areas such as
engineering, architecture, etc., this book
is compiled from information that has

been made especially suitable for business
management students.
This book’s contents start with the brief
introduction of project and project
management. In the second and third chapters
the definition of project, the project plan and
scheduling project are taken into consideration
in detail. The fourth chapter deals with the
resource management, since the resources are
the crucial elements for a project. The fifth
chapter explores the project manager and its
roles. The projec555t team is also explained in
the fifth chapter. The sixth chapter deals with
the risk management. How to evaluate and
control the project is examined in the seventh
chapter. Finally, the last chapter introduces
the closure of the project.

vii
 Introduction to
Chapter 1 Project Management
After completing this chapter, you will be able to;

1 2
Learning Outcomes

Describe the project Explain the project management

3 Discuss the project management process

Chapter Outline Key Terms

Introduction Project
What Is a Project? Project Management
Project Management Project Life Cycle
Project Management Process Stakeholders
Program

2
 1
Project Management

INTRODUCTION Although Tower of Babel or Egyptian pyramids

Project management is an efficient tool are called some of the first “projects”, it is probable
that improves an organization’s ability to plan, that cavemen ancestors built first projects around
implement, monitor and control its activities 150,000 years ago. It is definitely true that the
and more productive use of people and resources. construction of Boulder Dam and Edison’s
The essential benefit of implementing project invention of the light bulb were also projects.
management techniques is to meet customer’s However, it is assumed that modern project
satisfactions. Accomplishing the project scope management began with the Manhattan Project
in a quality manner, on time, and within budget (Meredith, & Mantel, 2000).
provides a great satisfaction.
The past several decades have been characterized important
by rapid growth in the field of technology and
marketplace which led to an increase in the use Project Management Institute, which
of project management techniques. While project was founded in 1969, is a professional
management was considered as “nice to have”, organization for project management
it is now recognized as a necessity by which specialists. Its services include the
organizations achieve their objectives. Nowadays, development of standards, research,
the project management concept is also being education, publication, networking-
applied in diverse industries and organizations opportunities in local chapters,
such as defense, construction, pharmaceuticals, hosting conferences and training
chemicals, banking, hospitals, accounting, seminars, and providing accreditation
advertising, law, and state and local governments. in project management.
The remainder of this chapter comprises three
sections. The first section provides a description
of the project in as much detail as is required to As long as human beings exist, there will be
understand the nature of the project. As such, the projects. The scale of the projects of the future
definition of project is supported with case studies. will be different in terms of either level of effort
Project life cycle is also explained in this chapter. or advanced technology. The followings can be
Special attention is devoted to the difference given as examples of recent projects: the English
between project and program. In the second Channel tunnel (Chunnel), the International
chapter, reasons for the importance of project Space Station, and SpaceShipOne. The Chunnel
management is rising in recent years are provided. needed tremendous resources, and completion of
The fundamental characteristics of project Chunnel took a decade. The International Space
management are also given in this chapter. The Station (Figure 1.1) required development of new
third section provides a comprehensive overview of technologies, and the efforts of the US, Russian,
project management process. European, Canadian, and Japanese space agencies.
SpaceShipOne is an aircraft developed by a small
company in California for future space tourism.
WHAT IS A PROJECT? (Nicholas, & Steyn, 2012)
Many researchers and organizations have
described the project in different ways. The most important
comprehensive definition is provided by Project
Management Institute as follows:
The Channel Tunnel is an undersea
“A project is a temporary endeavor undertaken tunnel linking southern England and
to create a unique product, service, or result”. northern France. It is operated by the
As stated in the definition, a project can be a company Eurotunnel. The tunnel has
product, service or result. Thus, it can be found one of the longest underwater section
within a rich diversity of projects in our society. of any tunnel in the world.

3
1
Introduction to Project Management

Figure 1.1 SpaceShipOne (Smithsonian National Air and Space Museum, n.d)

In below, Olympic Torch Relay Project is described in detail. The other examples of real-life projects
are summarized in Table 1.1.

Further Reading

Olympic Torch Relay Project

Transferring the Olympic Flame to a destination city during the games –also known as Olympic
Torch Relay- was never an easy thing. Over the years, Torch Relay was getting longer and more
complicated with every Olympic Event, because Olympic Committee wants to take torch as many cities
as possible for a cause of trying to reach as many people as possible by letting them see it.
1996 Atlanta Olympics included a 42-state campaign in 84 days, which had 10,000 runners for a
15,000-mile route. There was also a 40-vehicle convoy with telecommunication, security, medical staff
and equipment for the road. The planning of this relay took two years and cost about $20m. Convoy
had 30 cars, 10 motorcycles with 50 cellphones, 120 radios, 60 pagers and spare equipment for about
20,000 people.
In addition to all these, Torch Relay offers a very big chance for advertisement, especially to
its sponsors. In Atlanta, there were plenty number of trucks with the convoy, which held a very
wide range of souvenirs for games; there were baseball caps, jerseys, t-shirts, sweatshirts and more.
There were also companies like IBM, Motorola, BMW, Coca-Cola, Texaco, BellSouth, Lee etc.
showed themselves at the Torch Relay for different commercial interests besides business commercials
(Meredith, &Mantel, 2000).

4
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Project Management

Table 1.1 Examples of Real-life Projects (Gray, & Larson, 2007)

Company Project Description
Internet and social media rumors address Nintendo’s plans for the $10
billion gaming industry; a completely new hardware standards for a
Production of a New
better visual experience with more storage capacity for digital copies
Nintendo Generation Game
of games instead of physical discs. Rumors also point for previous
Console generations superior control systems, it expands the capability of the
current controllers and detects for a 3-dimensional movement.
Oakland A’s announced their plans for a new ballpark in Freemont, CA in
2006. For their cause of building this new ballpark, they sold the name
rights to an American Company, Cisco Systems for a very good price
of $4 million/year over 30 years. Oakland A’s plan for the new ballpark
Oakland
gathers up old-school American ballparks with World-class standards of
A’s
New Cisco Stadium stadium technologies. Their plans encountered a very large opposition
Baseball from residents of the stadium area and a few major retail companies,
Team which leads to stray away. Its visible that A’s are going to make a new
plan for building the ballpark near the stadium in Oakland or maybe
San Jose, CA. The A’s wants this stadium for prevent lack of audience
and making them compete with other major league clubs.
Chevrolet Volt is a hybrid electric car planning to go on sale in 2011. Volt’s
difference from other hybrid cars available today, its main power source
General is a fully electrical motor, rather than its competitors, it uses combustion
Motors Chevrolet Volt engine for a charging alternative. Because of the bankruptcy danger,
this car is connected with the company’s future. Tom Stephens, the
lead manager of product development says, “We cannot afford to have
anything but a hit, every launch has to be a home-run.”
After the 22 movies of James Bond series, Harry Potter franchise is
Filming of Harry second most viewed franchise with only 5 movies. Warner Bros. is
Potter and the planning two separate films in 2010 and 2011, which is Part 1 and
Warner
Deathly Hallows Part Part 2 for adaptation of final novel in the series, Harry Potter and the
Brothers
1 and Part 2 Deathly Hallows. With current economic conditions and rising of home
entertainment systems, The Harry Potter franchise seen as important
for getting audiences to the theatres by the movie critics.
Lupus, known as a chronic autoimmune disease which causes the
body attacks its own healthy cells. Its symptoms include fatigue, joint
Human pain, light sensitivity and rashes. After years, the new drug Benlysta
Genomic Benlysta has potential for treatment of Lupus in its testing phase. Drug targets
Sciences the protein that causes the body to attack its own healthy cells. It’s
completely a new hope for patients worldwide who suffer from this
disease.
Motorola announced the release of various priced smartphones
working with Android operating system. Chief executive of company,
Sanjay Cha, states that Android has a large ecosystem of over 3000
Smartphones with third party applications and rising developer interest, which is enough
Motorola
Google Android to become a successful competitor for market. With smartphone era,
Motorola’s huge market share of 23 percent (in 2006), drops to 6
percent. Motorola looks this partnership as a life-saver and opportunity
for catching the technology trends to their company.

In this section, attributes of a project firstly are provided and then it is explained differences between
program and project. Lastly, definition of product life cycle and its phases are described.

5
1
Introduction to Project Management

Attributes of a Project
A project is usually a one-time activity with a well-defined set of expectations and objectives. The
fundamental attributes of a project are given as follows:
1. A project states certain specific objectives that can be defined in terms of schedule and cost. For
example, the objective of a project might be to plan a wedding in six months and within a budget
of $8,000. It is expected that the wedding will meet the performance predefined by the bride and
groom.
2. As stated in the definition of project, projects are temporary activities. They have a definite
beginning and ending point, and they can last minutes, hours, days, weeks, months, or years. For
example, a raw food workshop might be organized between January 25 and February 3. However,
a bridge project for Bosphorus can take four years.
3. A project may be unique or may have some unique elements. Especially, megaprojects like Panama
Canal are unique since they have never been done before. Other projects like building a shopping
mall or an apartment building include established set of routines. On the other hand, these projects
are also unique because of the customization.
4. A project uses various resources to conduct
project activities. Such resources can involve
people, equipment, material, machines and
facilities. For example, a bridge project may Budget Limit
Due date
include resources such as machines, concrete,
labor and so on.
Each attribute of a project is directly linked and
each one affects the other two. For example, extending Required
of the type and characteristics of expected outcomes Performance
may need more time or more resources.
As illustrated in Figure 1.2, outcomes of a project
are generally evaluated by three factors: cost, schedule,
and performance. The cost of a project is the budget
which represents financial limits that are needed for
the project implementation. It might include labor Project Objective
costs, material procurement costs, and operating Figure 1.2 The Relationship between Project Objective
costs. For example, if the project is the organization and Three Main Factors of a Project
of a conference, the cost might cover rental of facility
and equipment, food, salaries of personnel, and so on. The project schedule is the timetable that shows in
detail when each activity should begin and end. For example, if you are planning a wedding, invitations are
sent out six weeks before the wedding. Finally, the last one is required performance. It is expected that the
outcomes of the project meet the requirements of the customers. For example, in a new race car project,
the drivers expect high quality engine performance, safety, ergonomic driver’s seat and so on. Otherwise,
it will cause unsatisfied drivers.

Project Versus Program

The program is alternatively used with project due to their similarities. The objective of them is to
accomplish within budget in quality manner and customer’s satisfaction at a given time. However, the
main distinction lies in life span and objective. A program covers a longer time period and includes several
parallel or sequential projects that share common goals and resources. As an example, Climate Change
Program may include several projects such as recycling of paper, plastic, newspaper, glass and aluminum
cans, minimization of carbon emission, increasing planting density, and so on. The other examples can be
Mars exploration program or U.S space program.

6
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Project Management

Project Life Cycle

Although projects are unique and highly unpredictable, most projects pass through similar phases on
the way from origin to completion. These stages are called as the project life cycle. The life cycle indicates
that projects have a specific time frame and that there are changes in the level of effort over the life of
the project. In the project management literature, there are a large number of life cycle models. A classic
project life cycle is set out in Figure 1.3. As can be seen from the figure, project life cycle consists of four
distinct phases: initiation, planning, performing and closure.
Level of Effort

Initiation Planning Performing Closure

Time
Figure 1.3 Phases of Project Life Cycle

1. Initiation Phase: This first phase of project life cycle involves identification and specification of the
project. Project objectives and requirements are determined. The project team members are formed
and their tasks are assigned.
2. Planning Phase: In this phase, the level of effort rises. More formal set of plans are established
to determine when the project will be scheduled, what the budget will be and what quality level
should be maintained. Then, individual tasks and requirements of the project are defined.
3. Performing Phase: A major part of the project occurs in this stage. The performing phase includes
the stages of design, production and implementation. It can be referred as progression through
which a system moves from being an idea to an end item. This phase results in the accomplishment
of project objective in a quality manner within budget and on time.
4. Closure Phase: This phase can be referred as the “termination” phase. It includes certain close-out
activities to be carried out such as completing all payments, releasing project equipment/materials,
and transferring all related documents. In addition to these activities, this phase involves customer
training and obtaining feedback from customers about whether their expectations are satisfied.

Learning Outcomes

1 To Describe the project

Self Review 1 Relate Tell/Share

What is the relation betwe- Identify ten projects in

Tell whether project life
en project, program, task which you have been obser-
cycle depends on industry.
and work packages? ved in you daily life.

7
1
Introduction to Project Management

PROJECT MANAGEMENT managements- mandatory for production

Project management is the implementation of all over the world. These standards are
knowledge, skills, tools, and techniques to project applicable for every possible business in
activities to accomplish project goals. The first part of terms of quality assurance, design and
this chapter deals with reasons why the importance delivery processes. Therefore, project
of project management is rising in recent years. In management is an efficient way to get work
the second part, three main attributes of project done under favor of its focus on time, cost
management that distinguish it from traditional and performance.
forms of management are explained. • Knowledge Explosion: Over the years,
knowledge of new things has significantly
increased, which leads to complexity
in projects. In the beginning of 1900s,
Project management is a system approach building a railroad was not that complex.
to management. A project is a system of But today there are many variables like
interrelated components such as tasks, materials, equipment, codes, required
resources, stakeholders, schedules, budgets, specialists etc. This complexity needs
and plans. The aim of project management different technologies to integrate with.
is to integrate the components to accomplish Project management succeeded to making
the project goal. things possible.
• Corporate Downsizing: In the last
years, organizational life has changed
The Importance of Project dramatically. With rising expenses, many
Management companies tried to downsize and focusing
Project Management Institute had more than core qualifications to survive. Also, today’s
24,000 members in 1997 and current membership organizations are flatter and leaner, and
is now over 500,000 with members from different they need a change. In this respect,
countries. It is the best indicator of the rapid project management does the work of
growth and interest in project management. An middle management for improving things.
increasing percentage of the organization’s effort is Downsizing also lets companies approach
being devoted to projects. In below, some of the their projects differently.
reasons why importance of project management is • Increased Customer Focus: Competition
increasing according to Gray and Larson (2000) between companies have increased the value
are described: for customers. Customers want more specific
products for their needs and enjoyment
• Compression of the Product Life Cycle:
over the old generic products. This situation
One of the most important reasons for
necessitates a closer relationship between
demanding a project management process
the customer and the producer. Because of
is product life cycles. For today, products
that, sales representatives evolve into project
in high-tech industries have an average life
managers for answering their customers’
cycle between 1-3 years. Just 30 years ago,
specific needs. With the increased customer
the average life cycle was 10 to 15 years,
needs, customized products became more
which was considered normal. Because of
common in the industry. For example, if you
the short life cycles, when the product will
want to buy a golf club about 10 years ago,
enter the market is important . This situation
you only looked for price and feeling. But
is so important that if a high-tech products
today, there are many golf clubs like long
development project delays six months, the
or short handles, for power shots or more
revenue will decrease 33 percent.
technical shots etc. Project management
• Global Competition: Today’s market
has become mandatory for producing that
expects better products for lower prices.
kind of customized products for customer
This makes the ISO 9000 -international
satisfaction.
standards for quality and guarantee

8
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Project Management

• Rapid Development of Third World and must also guarantee that appropriate trade-
Closed Economies: With the fall of Soviet offs are made between the time, cost and
Union and Communist Asian countries’ performance requirements of the project.
opening to world, people in these countries 2. Project Team: Team members are people
exploded the demand of customer whom the project manager directs. Based
goods and infrastructure development. on project requirements, the magnitude of
Western companies had a very big chance the team size may change and the team may
for introducing their products to new separate after the project is finished.
markets. Within all these processes, project 3. Project Methodology: The project manager
management helped a lot for finding and project team carry out the project work
new distribution channels and global in phases according to a “project management
operations. These big changes in the world methodology.” When a project continues
created a huge market for construction and from one phase to the next, the project
telecommunications, especially in eastern management methodology helps the project
Europe and Asian countries who were manager to (1) identify the required project
trying to reconstruct their industry. tasks, (2) identify the required resources and
costs, (3) establish priorities, (4) plan and
The Fundamentals of Project update schedules, (5) monitor and control
Management end-item quality and performance, and (6)
measure project performance. (Kerzner, 2003)
Three main attributes of project management
distinguish it from traditional forms of
management: project manager, project team, and
project methodology (Nicholas, & Steyn, 2008). According to the Project Management Institute
1. Project Manager: The most important (PMI®), the term project stakeholder refers to
characteristic of project management is the “an individual, group, or organization, who
role of the project manager who is responsible may affect, be affected by, or perceive itself to
for planning, directing, and combining be affected by a decision, activity, or outcome
the efforts of all project stakeholders to of a project”. The primary stakeholders are
achieve the project goal. Project managers customers, end users, and builders.

Learning Outcomes

2 To explain the project management

Self Review 2 Relate Tell/Share

Try to give other examples

related to reasons that Tell other reasons why
What are the responsibilities cause increase in project importance of project
of project managers? management. management is increasing
in recent years.

9
1
Introduction to Project Management

PROJECT MANAGEMENT PROCESS

The project integration management has a set of control access points that are undertaken by the
Project Manager. According to Project Management Institute (2008), project management consists of
five sets of process groups. These groups are illustrated in Figure 1.4 and explained in more detail in the
following sections.

Initiating Planning Executing Monitoring and Closing

Process Process Process Controlling Process Process

Figure 1.4 Project Management Process Groups

Initiating Process Group

All projects start with an idea. Within the initiating process group, this idea turns into a project
and is described. The initial scope and estimated budget are clearly defined and financial resources are
committed. Project manager is also assigned. The official authorization of a project is handed over during
this process group stage. There are two outputs of the initiating process group: developing a project charter
and identifying stakeholders. Inputs of developing a project charter might be project statement of work,
contract, business case, enterprise environmental factors, and so on. The process of identifying stakeholders
includes defining all people or organizations affected by the project. Inputs of identifying stakeholders
might be the project charter, procurement documents, organizational process assets, and so on.

Planning Process Group

This process involves detailing the project scope, time frames, resources, and risks. The project scope
is also divided and subdivided into major pieces. Project management plan, in which a document is used
to describe every phase of a project, is defined. This plan and the project document provide exploring all
aspects of the scope, time, costs, quality, communication, risk, and procurement. An efficient planning
process includes the following:
• Developing Project Management Plan
• Requirement of stakeholders
Work Breakdown Structure (WBS) is a
• Definition of scope of the reasons for your project
method for dividing the overall project into
• Creating Work Breakdown Structure
smaller elements that is called work packages.
• A list of all activities and their sequence
The WBS usually defines the organization
• A detailed project schedule
or individual responsible for each work
• Estimation of cost and determination of budget
package. It also makes it easier to prepare
• A description of how you plan to manage any
schedules and budgets.
significant risks and uncertainties
• Plans for project communications
• Plans for ensuring project quality

10
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Project Management

Executing Process Group Monitoring and Controlling

This process is performed to accomplish the Process Group
work defined in the project management plan to This process consists of tracking and reviewing
meet customer’s satisfaction. It includes managing the performance of the projects. It also includes
the project team such as giving and explaining tasks controlling changes and monitoring present project
to all team members, defining how the team will activities in accordance with the project management
perform, and so on. A large portion of the budget plan to help ensure project plans are successfully
is expanded in this process group. It includes the applied and the desired results are obtained.
following project management processes: This process group provides that performance of
project is regularly measured for identification of
• Direct and manage project execution:
variances from the project management plan. The
Performing the activities in the project
monitoring and controlling process group includes
management plan,
the following project management processes:
• Perform quality assurance: Controlling
the quality requirements to guarantee • Monitor and control project work
appropriate quality standards, • Perform integrated change control
• Verify scope
• Acquire project team: Confirming human
• Control scope
resource availability,
• Control schedule
• Develop project team: Improving the
• Control costs
team interaction to increase the project • Perform quality control
performance, • Report performance
• Manage project team: Tracking team • Monitor and control risks
member performance and providing • Administer procurement
feedback,
• Distribute information: Ensuring relevant
information to project stakeholders,
Closing Process Group
• Manage stakeholders’ expectations: The closing process group includes two project
working with stakeholders to meet their management processes: closing project or phase
expectations, and closing procurements. Closing project or phase
• Conduct procurements: obtaining seller provides finalizing all activities across all of the
management process groups to formally accomplish
responses, selecting a seller and so on.
the project or phase. Closing procurements involves
the completion of each project procurement.

Learning Outcomes

3 To discuss the project management process

Self Review 3 Relate Tell/Share

Consider a project in which

What are the differences
you have been observed in Try to create a work
between the project
your daily life and describe breakdown structure for the
management process and
things to do related to project project defined above.
project life cycles?
management process.

11
1
Introduction to Project Management

LO 1 Describe the project

A project is a one-time special effort to accomplish a specific goal. There are four fundamental attributes
of a project: a well-defined objective, specific time frame, uniqueness and resources. Each attribute of a
project affects the other three. The outcomes of a project are generally evaluated by three factors: cost,
schedule and performance. The cost of a project is the budget that describes financial limits. The project
schedule is the timetable that shows certain activity times. The last outcome is to meet the requirements
of the customers.
The terms program and project are alternatively used due to their similarities. The main differences are
Summary

associated with life span and objective. A program has more comprehensive time period and involves
several projects that have common goals and resources.
The product life cycle refers that projects have a specific time frame and that level of effort changes during
the life of the project. Project life cycle includes four distinct phases: initiation, planning, performing
and closure.

LO 2 Explain the project management

Project management involves planning and organization of a company’s resources to accomplish a specific
goal. It is a system approach to management. A project is a system of components such as activities,
resources, stakeholders, schedules, budgets, and plans. The aim of project management is to integrate
the components to complete the project goal. There are three main attributes of project management
that distinguish it from traditional forms of management: project manager, project team, and project
methodology.
Project management has a rapid growth and interest in recent years. Some of the reasons why importance
of project management is increasing can be given as follows: Compression of the product life cycle, global
competition, knowledge explosion, corporate downsizing, increased customer focus, rapid development
of Third World, and Closed Economies.

Discuss the project management

LO 3 process

According to Project Management Institute, project management consists of five sets of process groups.
These groups are given as follows: Initiating process group, planning process group, executing process
group, monitoring and controlling process group, and closing process group. In initiating process
group, initial scope and estimated budget of the project are clearly described and financial resources are
determined. Project manager is also assigned and project charters are prepared in this process group.
Planning process group involves detailing the project scope, time frames, resources, and risks. The project
scope is also divided and subdivided into major pieces. Project management plan is defined. Creating Work
Breakdown Structure, a list of all activities and their sequence, a detailed project schedule, estimation of
cost and determination of budget are also provided. Executing process group includes the process that
is the implementation of the activities defined in the project management plan to meet the required
performance. A large portion of the budget is expanded in this process group. Monitoring and controlling
process group consists of controlling and reviewing the performance of the projects. To accomplish
effectively, this process group is required to measure the actual process and compare it to planning progress
on time, and take corrective action immediately, if necessary. Closing process group includes finalizing all
activities across all of the management process groups to formally complete the project.

12
 1
Project Management

1 ………… involves detailing the project 7 Which of the following is false about the
scope, time frames, resources, and risks. project life cycle?
a. Initiating process group a. A major part of the project occurs in the
b. Planning process group performing phase.
c. Executing process group b. Project life cycle consists of five distinct phases:
d. Monitoring and controlling process group identification of a need, initiation, planning,

Test Yourself
e. Closing process group performing, and closure.
c. Performing phase includes the stages of design,
production and implementation.
2 Which of the following is not an example of d. The first phase of project life cycle involves
a project? identification and specification of a project.
a. Building a shopping mall e. Closure phase can be referred as the
b. Hosting a conference “termination” phase.
c. Manufacturing of a washing machine
d. Developing a programming language 8 Which of the following is not one of the
e. Planning a wedding reasons why the importance of project management
is increasing?
3 Which of the following is one of the a. Compression of the Product Life Cycle
evaluation factors of a project outcomes?
b. Global Competition
a. Project budget b. Project team c. Knowledge Explosion
c. Project manager d. Project sponsor d. Corporate Downsizing
e. Project plan e. Slow Development of Third World Economies

4 In which of the following phases of a product 9 Which of the following is not included in an
life cycle, level of effort reaches peak during the efficient planning process?
project?
a. Project management plan
a. Initiation b. Planning b. Work breakdown structure
c. Performing d. Identification of a need c. A detailed project schedules
e. Closure d. Project charter
e. Estimation of cost
5 Which of the following processes is included
in executing process group? 10 In which of the following the project
a. Monitoring and controlling project work management processes are given in correct order?
b. Performing integrated change control a. Initiating - Planning – Executing - Monitoring
c. Verifying scope and Controlling - Closing
d. Controlling costs b. Initiating - Monitoring and Controlling -
e. Acquiring project team Planning - Executing - Closing
c. Initiating - Planning - Monitoring and
6 ………. covers a long time period and Controlling - Executing - Closing
includes several parallel or sequential projects that d. Planning - Initiating - Executing - Monitoring
share common goals and resources. and Controlling - Closing
a. Program b. Project e. Planning - Executing - Initiating - Monitoring
c. Project life cycle d. Project methodology and Controlling - Closing
e. Project management process

13
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Introduction to Project Management

1. b If your answer is wrong, please review the 6. a If your answer is wrong, please review the
“Project Management Process” section. “What Is a Project?” section.
Answer Key for “Test Yourself”

2. c If your answer is wrong, please review the 7. b If your answer is wrong, please review the
“What Is a Project?” section. “What Is a Project?” section.

3. a If your answer is wrong, please review the 8. e If your answer is wrong, please review the
“What Is a Project?” section. “Project Management” section.

4. c If your answer is wrong, please review the 9. d If your answer is wrong, please review the
“What Is a Project?” section. “Project Management Process” section.

5. e If your answer is wrong, please review the 10. a If your answer is wrong, please review the
“Project Management Process” section. “Project Management Process” section.

14
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Project Management

What is the relation between project, program, task and

work packages?

The term “program” is generally used to refer to an exceptionally large, long-

range objective that is broken down into a set of projects. These projects
self review 1 are divided further into tasks, which are split into work packages that are

Suggested answers for “Self Review”

themselves composed of work units.

What are the responsibilities of project managers?

The responsibilities of a project manager can vary from organization to

organization. However, there are some core responsibilities that most project
managers handle. These are given below:
• Planning: In this phase, the project manager describes the project
scope and then develops a project plan and schedule involving efficient
procedures and policies so that the project is delivered to the customer.
This is done in specified time and the given budget. Additionally, planning
includes determining the resources (human, financial, etc.) available.
• Organizing: Organizing is about assigning roles to the team members and
determining deadlines to achieve targets. This step also includes briefing
the members about tools that they can use. The project manager identifies
the services to be provided, the company that provides these services, etc.
• Leading: Leading is the essential role of a project manager. It can be
considered as the most crucial responsibility of project managers. He/she
self review 2 must coordinate with different people to guarantee that the project goes on
in a smooth manner. They ensure that the project team members are meeting
the deadlines and following the guidelines. He/she regularly carries out
meetings and makes sure that the team members do the follow-up actions.
• Monitoring: Project managers have to guarantee that the project is on
the right track. It means they will have to ensure that the resources are
being used efficiently. Also, they have to see to that the project will be
accomplished within its life span.
• Communicating: The project manager has to interact with various people
including team members, project sponsors, clients, external vendors and
other important stakeholders. A lot of decisions are made during the
project. All these require the project member to communicate with the
key people higher up in the chain of command.
• Managing Risk: Projects rarely run smoothly. As such, risk is an inevitable
part of a project. Therefore, managing these uncertain conditions is a
critical role of a project manager.

What are the differences between the project

management process and project life cycles?

Project processes are not project phases. While the processes for managing
the projects are probably the same across industries, project life cycle varies
self review 3 industry wise. For example, project life cycles might consist of feasibility
study, concept design, build, test for complex, and large projects. All of the
project processes would normally be repeated for this project.

15
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Introduction to Project Management

References
Meredith J. R., & Mantel S. J. (2000). Project Kerzner H. (2003). Project Management: A Systems
Management Approach: A Managerial Approach Approach to Planning, Scheduling, and Controlling
(4th ed.). NY, USA: John Wiley and Sons.. (8th ed.). NJ,USA: John Wiley and Sons.
Nicholas J. M., & Steyn H. (2012). Project Management Project Management Institute. (2008). A Guide to
for Engineering, Business and Technology (4th ed.). the Project Management Body of Knowledge. PA,
NY, USA: Routledge. USA: Project Management Institute.
Gray C. F., & Larson E. W. (2011). Project Management
(5th ed.). New Delhi.

Online References
Smithsonian National Air and Space Museum (n.d.). SpaceShipOne [photograph]. Retrieved from https://
[Link]/collection-objects/spaceshipone

16
 Defining Project and
Chapter 2 Developing a Project Plan
After completing this chapter, you will be able to;

1 2
Learning Outcomes

Define the project scope management and

Define the project create a work breakdown structure

3 Develop a project plan with project network

Chapter Outline Key Terms

Introduction Project
Defining The Project Project Scope
Defining The Project Scope Management and Work Breakdown Structure
Creating The Work Breakdown Structure Project Plan
Critical Path
Developing The Project Plan

18
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Project Management

INTRODUCTION • The development of a website, or a service

online, like [Link]
A journey of a thousand miles begins with a single step.
• The construction of the Sydney Opera
Confucius House and the pyramids in Egypt
A project may start in order to meet different • Recent projects, like Istanbul Airport con-
requirements. There might be a market demand for struction
a specific product over a specific period in a specific • Maastricht, Eurovision 2020
market; there might be a strategic opportunity/ All of these developments and events emerged
business need such as development of a software from the management of process. As in the first
application; it might stem from social needs such chapter of this textbook explains; the definition of
as the main aim of World Health Organization a project includes:
(WHO) as “the attainment by all people of the • An activity with a specific and unique
highest possible level of health” (WHO, 2008); it objective,
might derive from environmental considerations • An activity with a start and end date,
of companies to become “greener” as opposed to • Typically, any non-routine activity which
climate change; or it might begin with a customer has never done before,
request to have technological advances and to • An activity that have specific time, cost
establish legal requirements. Whatever the need of and performance requirements,
finishing a project, the projects are defined by a • A project is a temporary endeavor under-
combination of order and chaos. In the projects, taken to create a unique product, service
the chaos is generally preceded by order. Although or result (PMI®, 2008).
they cannot stay together comfortably in a project, More clearly, a project can also be defined as
which are the basic elements of the projects. follows: “A project is a non-simple, non-repetitive,
The purpose of this chapter is to outline what one-time effort limited by budget, schedule and
the project is and the required steps we need to performance specifications designed to meet
take in order to plan projects. The remainder of customer needs” (Larson, & Gray, 2008).
this chapter includes four sections. The first section
gives the definition of project and what is not a Definition of Project Characteristics
project and the difference between the project The major aim of the project is to satisfy the
and repetitive work. We provide details of scope requirements of customers; to achieve this, a
management in the second section and creating project needs to have some characteristics.
work breakdown structure in the third section. In
First, a project has a pre-defined, specific and
the fourth section, we give the details of planning
unique aim which describes the desired outcomes.
a project. This section includes constructing a
The aim of a project must meet time, cost and
project network, network computation process in
performance constraints. Examples of project
which forward and backward passes are explained.
objectives might be constructing a swimming
In addition, this section includes determining
pool in a sport complex by June 12 or releasing
total slack and free slack times. Lastly, “Activity on
the new Android 10 as soon as possible. Because
Arrow” network is summarized in this section.
these objectives are unique, it is obvious that daily
routine works would often be less required.
DEFINING THE PROJECT Having a defined beginning and end point is
What do the following headlines in common? a characteristic of a project since there is a specific
• The development of a new airplane, like aim, which is different from the ongoing duties
the Airbus 350 XWB and responsibilities of traditional jobs. Workers are
• The development of the electrical new car, generally assigned different projects after finishing
the current job contrary to doing the same job
like the Tesla Model S
in a firm. For example, after helping a hospital
• The development of a new personal device,
construction in a city, a civil engineer may be
like the iPhone Xr
assigned to construct a bridge.

19
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Defining Project and Developing a Project Plan

Third, a project should be non-routine and time, cost and quality/performance grid (Kerzner,
includes considerable uniqueness. This feature is 2003). In order to satisfy customer needs, the
often characterized by the first time of performing trade-offs between these triple constraints have to
a job/process such as first MARS landing with be balanced. Obviously, these constraints bring a
NASA orbiter and development of the first laptop. lot responsibility and effort to the project than we
In order to accomplish something for the first mostly encounter in many jobs.
time, it is clear that cutting-edge technology as well
as good problem solving techniques are required to Ordinary Work vs. Project
overcome unsolved problems. However, to finish a
What is not a Project? A project is not related
project, some processes and repetitive actions might
with every day’s routine and repetitive/ordinary
be repeated. Therefore, uniqueness is not an either/or
work. While the routine work, often called Business
issue but a matter of degree (Larson, & Gray, 2008).
As Usual (BAU), occurs/repeats in cycles, a project
Lastly, a project has specific time, cost and is performed just once, and when the desired result
performance requirements. These constraints is reached, the project ends.
are called the triple constraints. The success of
In Table 2.1 some examples of ordinary work
a project is defined as getting the job done on
and projects are given.

Table 2.1 Ordinary Work vs. Projects

Ordinary Work Projects
Taking lecture notes Writing a scientific paper
Giving an answer to a supplier Establishing a production planning software
Practicing yoga poses Creating a new yoga video on Youtube
Routing manufacture of some yacht models Designing a yacht according to a customer request

Learning Outcomes

1 To define the project

Self Review 1 Relate Tell/Share

What is the difference Associate project characteristics

Tell 10 project cases from
between ordinary work and with project examples in
your environment.
project? Project Management.

DEFINING THE PROJECT SCOPE MANAGEMENT AND CREATING

THE WORK BREAKDOWN STRUCTURE
Determining the project scope brings the essential elements for developing a project plan. Its basic
definition is the required work to get the expected result/outcome of a project. Therefore, project scope
management is characterized by the processes to accomplish the project successfully.

20
 2
Project Management

Constraints& Work Breakdown

Assumptions Structure
Scope
Management Scope Statement
Strategic Plan
Initiating/Defining Scope Planning
Change
Management Performance
Management
Figure 2.1 Elements of Scope Management

In Figure 2.1, the elements of the Scope Defining the Project Scope
Management are shown. There are three phases of Scope definition is the process of developing
Scope Management. The first one is the initiation/ a detailed description of the project and product.
defining phase, where the objectives and goals While preparing the project scope, the main
of the project are defined, tasks and resources decision would be what is and is not included in
are allocated, and budget & time constraints are the project. Another definition of project scope is
established, and lastly the limitations of the project the work that needs to be accomplished to deliver
are identified. a product, service, or result with the specified
The second phase of Scope Management is features and functions (PMI®, 2008).
to generate Scope Plan which includes the work Clearly, project scope is the keystone engaging
breakdown structure and writing a scope statement. all elements of a project plan. To guarantee that
Scope statement clearly indicates what activities are scope definition is complete, the following checklist
involved in the project as well as the limitations of can be used:
the project.
a. Project objective
A written scope statement is necessary for both b. Deliverables
projects and subprojects. For example, an engineering c. Milestones
firm contracted to design a petroleum processing d. Technical Requirements
plant must have a scope statement for defining the e. Limits and Exclusions
boundaries of its work on the design subproject. The f. Reviews with customer (Larson, & Gray,
scope statement forms the basis for an agreement 2008).
between the project team and the project customer Project objective: In order to satisfy customer
by identifying both the project objectives and the requirements, the total objective of the project
major project deliverables (PMI®, 2008). needs to be defined at the first step. The project
Scope Change Controlling is regarding to objective gives answers to the “what, when and
the operations whether the project scope is how much” questions.
required to be changed when some modifications Deliverables: Deliverables define the expected
are appropriate. The aim of the performance results over the course of the project. For example,
measurement in this stage is to evaluate the degree deliverables in the early design phase of a project
of any variations/fluctuations which happen during might be a list of [Link] second phase
the project. deliverables could be software coding and a
technical manual. The next phase could be to test
important
prototypes. The final phase could be the final tested
and approved software.
An important part of scope change Milestone: A significant point or event in the
controlling is to determine what is causing project. A milestone is a point with zero duration
the variance and to decide if the variance that indicates a cumulative sequence of events
requires corrective action (PMI®, 2008). while performing the project. It also symbolizes
an important achievement in a project. Because

21
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Defining Project and Developing a Project Plan

beginning and finish date of a milestone is highly related to a task’s beginning and finish date, task
association is the major characteristic of a milestone. For example, coding complete and finished by May
1 of the same year. Some examples of milestones can be seen in Figure 2.2.

Figure 2.2 Some Milestones Examples

Technical requirements: A product or service will have solver will be installed to the server, but training
technical requirements to guarantee full performance. money is not included.
For example, a technical requirement for a laptop Reviews with customer: To complete the scope
might be the ability to accept 120-volt alternating checklist, a review with the client should be done.
current or 240-volt direct current without any adapters The principle issue here is the understanding and
or user switches. Another example would be the 112 compromising on the anticipations. Are deliverables
emergency service, which has the ability of identifying defining completely what the client desires? Does the
caller’s phone number and the location of the phone. client get what he/she wants? Does the project include
Limits and exclusions: In all projects, the project budget, time and performance requirements? Are the
scope and its borders/limits should be defined project limits and exclusions defined properly? If a clear
properly. Otherwise, to solve the problems, communication in all of these are performed, one could
resources and time on the wrong issues can be avoid claims and misunderstandings at the end of the
overly consumed. GPS for a drone system will be project (Larson, & Gray, 2008).
outsourced; to build the new apartment you have a If the project scope expands in terms of
budget of $1,000,000; in a TÜBİTAK project you requirements, specifications and priorities, then
can have only two graduate students, etc. On the this project may expose scope creep. If the scope
other hand, a project scope should also define what statement can be constituted conscientiously at the
is not included in the project. For example, cancer first stage, scope creep will not be a problem. A
data should be analyzed by the hospital’s data widely written scope statement might cause scope
scientists; a swimming pool should be built but creep. Scope creep generally brings cost overruns
maintenance service is not included; commercial and possible delays.

internet
[Link]

22
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Project Management

Further Reading

Case: The Failed Launch Of www. • Lack of relevant project experience. HHS
[Link] employees and managers had a lot of
The US Government’s failed launch of the experience with private insurance markets
[Link] website highlights issues with and maintaining large government projects,
integrating technology into a large bureaucratic but did not have the required experience in
organization. The affordable care act (increasing technology product launches. Key technical
healthcare access to all Americans), signed by positions were unfilled and project managers
President Obama on 23 March 2010, required that had little knowledge on the amount of work
the United States Department of Health and Human required and typical product development
Services (HHS) launched [Link] on 1 processes leaving very little time to test and
October 2013. This website is going to be the official troubleshoot the website.
health care exchange that would allow residents to • Lack of leadership. There was no formal
compare prices of health care plans, identify if they division of responsibilities in place between
qualify for federal subsidies, and enroll in a chosen the many government offices involved which
plan. The Affordable Care Act gave states the right caused a delay in key decision making or a
to create their own healthcare exchange or opt-in to lack of communication when key decisions
the federal exchange ([Link]). were made. For example, the contractor
[Link] was officially launched on 1 responsible for the log on system estimated a
October 2013 covering residents of 36 states that low demand because the initial website plan
did not create and manage their own healthcare included the option to shop for products
exchange. Problems with the website were without creating an account or logging
apparent immediately. High website demand in. However, due to technical delays, that
(250,000 users [5 times more than expected]) functionality was removed from the initial
caused the website to go down within 2 hours website launch (so all users would need to
of launch. While website capacity was initially log in) without increasing capacity.
cited as the main issue, additional problems • Schedule pressure. Since the launch date was
arose mainly due to the website design not mandated in the Affordable Care Act, HHS
being complete. Users cited issues such as drop employees were pressured to launch on time
down menus not being complete and insurance regardless of completion or the amount
companies cited issues with user data not being (and results) of testing and troubleshooting
correct or complete when it reached them. performed.
In addition, the websites login feature This debacle is an example of poor project
(which is the first step to accessing the website) coordination and communication among
could handle even less traffic than the main key stakeholders, coupled with the risks of
website which created a huge bottleneck. Due overpromising a new system, trying to coordinate
to poor project planning, this same log in massive systems to a fixed deadline, and failing
method was also used by website technicians, to understand the complexities they were trying
making it extremely difficult for them to log in to address. While memory of specific elements
and troubleshoot problems. A total of 6 users of this disaster may fade over time, its lessons
completed and submitted their applications and deserve to be brought up every time a project of
selected a health insurance plan on the first day. this sort is contemplated
Root Causes
The myriad of problems experienced during the Source: HBS Digital Initiative, 2016; Pinto, 2016
websites rollout were due to several factors, primarily:

23
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Defining Project and Developing a Project Plan

Creating the Work Breakdown In order to develop a hierarchical WBS, there

Structure are some major groupings used, which are shown
in Figure 2.3. To define the final deliverable is
After identifying scope and deliverables in a
the first step of WBS. First, the major project
project, the work breakdown structure is defined.
deliverables are defined; to accomplish these larger
The task of work breakdown structure is to divide
deliverables, the subdeliverables are identified. This
the project into smaller and manageable work
process continues until the subdeliverable can be
elements. The Work Breakdown Structure (WBS)
tackled by one person and is small enough to be
is the output of this hierarchical decomposition
manageable. Then, the subdeliverable is broken
process. The WBS organizes and defines the total
down into work packages. While creating WBS,
scope of the project, and represents the work
work packages are the lowest components that a
specified in the current approved project scope
project can be subdivided.
statement (PMI®, 2008).

Project

Phase 1 Phase 2 Deliverable 3 Subproject 4 Subproject n

Deliverable 2.1 Deliverable 2.2 Deliverable 2.3 Deliverable 4.1 Deliverable 4.m

Deliverable Deliverable Deliverable

Deliverable 2.1 Deliverable 2.2 4.1.1 4.1.2 4.1.x

Work Package Work Package

[Link] [Link] Work Package Work Package
3.1 [Link]
Subproject
Work Package Work Package Work Package
[Link]
[Link] 3.2 [Link]

Work Package Work Package Work Package Work Package

[Link] [Link].1 3.3 [Link]

Work Package Work Package

[Link].2 3.4

Figure 2.3 Sample Work Breakdown Structure with Some Branches Decomposed Down Through Work Packages
(PMI®, 2008).

important

When a deliverable cannot break down into any further subdeliverable, then you have a work package.

Seven important points about defining a project work package are as follows (Pinto, 2016):
• The work package typically forms the lowest level in the WBS. Although some projects may employ
the term subtask, the majority leave work package–level activities as the most basic WBS step.
• A work package has a deliverable result. Each work package should have its own outcome. One
work package does not summarize or modify another. Together, work packages identify all the
work that must be contributed to complete the project.
• A work package has one owner assigned—a project team member who will be most responsible for
that package’s completion. Although other team members can provide support as needed, only one
person should be directly answerable for the work package.

24
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Project Management

• A work package may be considered by its ethical behaviour and also adhere to the
owner as a project in itself. If we adopt the accepted behaviours and procedures of the
notion that all work packages, because they organization. 

are of finite length and budget and have • The optimal size of a work package may be
a specific deliverable, can be considered expressed in terms of labour hours, calendar
miniature projects, each package owner can time, cost, report period, and risks. All
view his activities as a micro project. 
 work packages should be capable of
• A work package may include several being tracked, meaning that they must be
milestones. A milestone is defined as a structured to allow the project manager to
significant event in the project. Depending monitor their progress. Progress is usually a
on the size and complexity of a project measurable concept, delineated by metrics
work package, it may contain a number of such as time and cost. 

significant checkpoints or milestones that Let’s think about the projects as the rolling up
determine its progress toward completion. 
 of all other smaller work packages. This hierarchical
• A work package should fit organizational structure will help to assess the organizations in
procedures and culture. Tasks undertaken terms of cost, time and technical performance over
to support project outcomes should be in the course of the project life cycle. A time and cost
accord with the overall cultural norms of estimate for each element of the WBS is required in
the project organization. Performing a work a project. With the help of this kind of estimation,
package should never lead a team member a project can be easily planned according to the
to violate company policy (either codified schedule and budget constraints. This also helps to
or implicit); that is, assigned activities measure the performance of the project in terms of
must pass both relevant legal standards for the organization units and work accomplishment.

Level 1 DRONE
SYSTEM

Level 2
Operations Training Drones Test&
Management Evaluationests

Level 3 Registration Traffic Safety Pilot Services Performing& Technical

Man. Man. Man. T. T. Operational Tests Tests

Level 4 Data Navigation Trajectory Obstacle

Communica System Planner Controller

Level 5 Cloud Solution Global Display Other Map

PRM
Server Server Positioning Sensor Configuration

WP1_S WP1_GPS WP1_D

Workpackages WP2_S WP2_GPS
WP3_GPS

Figure 2.4 Work Breakdown Structure of a Drone System

In Figure 2.4, a simplified WBS of a drone system project is shown. Figure 2.4. shows a simplified
WBS development of a drone system project. A deliverable service or product is established at the first
level. The first level is related to top management. Note here how the levels of the structure can represent
information for different levels of management. For example, level 1 information represents the total
project objective (developing a drone system) and is useful to top management; levels 2, 3, and 4 are
suitable for middle management, and level 5 is for first managers.
Level 2 shows a partial list of deliverables necessary to establish the drone system. One deliverable
is the operations management, which is made up of three sub-deliverables: registration management,
traffic management, and safety management. The other deliverables are training, data, drones, and lastly
test & evaluation. Drones require level 4 and level 5 subdeliverables. Level 4 subdeliverables include
data communication, navigation system, trajectory planner, and obstacle planner. For example, navigation

25
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Defining Project and Developing a Project Plan

planner is composed of three other subdeliverables: according to the technical specifications (Larson,
global positioning system, display, and other sensor & Gray, 2008).
deliverables. These are the subdeliverables that To review, each package in the WBS:
represent the lowest manageable elements of the
1. defines work (what),
project.
2. identifies time to complete a work package
Each subdeliverable requires work packages that (how long),
will be completed by an assigned organizational 3. identifies a time-phased budget to complete
unit. The lowest level of the WBS is called a a work package (cost),
work package. In Figure 2.4., some examples of 4. identifies resources needed to complete a
work packages (WP) are shown. Work packages work package (how much),
are short-duration tasks that have a definite start 5. dentifies a single person responsible for
and stop point, consume resources, and represent units of work (who), and
cost. Each work package is a control point. A work 6. identifies monitoring points for measuring
package manager is responsible for seeing that the progress (how well).
package is completed on time, within budget, and

Learning Outcomes

2 To define the project scope management and create a work breakdown structure

Self Review 2 Relate Tell/Share

Develop a WBS for a project

What are the aims of
where you are going to build
developing a project scope Associate project scope and
a scooter. Try to determine
and what is the duty of work breakdown structure.
all main features and provide
WBS in a project?
three levels of detail.

DEVELOPING THE PROJECT PLAN

The WBS provides information to the project network and it is a graphical illustration of activity flow
in the project. An activity is an element that defines the amount of work performed and it consumes time
in order to convert work packages to appropriate outputs. In the project network, the logical sequence of
project activities which sum up to the longest total duration, gives the “critical path.” The critical path is
the shortest possible time to complete the project, which also includes the interdependencies of activities
and their start and finish times. The project network gives information to the project managers with
respect to whether the project is on time, within budget and the performance measure.
In order to develop project networks, there are two approaches that can be used: activity-on-node
(AON) and activity-on-arrow (AOA) methods. In the first one, a node represents an activity, while in the
latter, an arrow represents an activity. The AON method is generally used by most projects. Therefore, the
AON method will mostly be tackled in this book. In the last part of this section, the AOA method is also
explained briefly .
To draw an AON project network, one needs to obey the following general rules:
• A network commonly flows from left to right.
• When all preceding connected activities have been performed, a new activity can start.
• Precedence relations and flows are represented by arrows on networks, arrows can also cross over
each other.

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Project Management

• An identification number should be given to each activity.

• Activity numbers should be given in an order; it is not convenient to give a smaller number to an
activity if other activities follow it.
• Any loop of activities is not allowed in the network.
• There should be no conditional statements between activities.
• A typical begin and end node should be used to depict the start and end dates of the project.

Constructing a Project Network

There are some terms in the project management that allow project workers and managers to interact
with each other easily. Explanations of these terms are given below, and these fundamentals are also shown
in Figure 2.5. (Larson, & Gray, 2008):
• Activity: For project managers, A is preceded by nothing
A B C B is preceded by A
an activity is an element of
(A) C is preceded by B
the project that requires time.
Typically, an activity consumes
time—either while people work Y Y and Z are preceded by X
or while people wait. Examples of X
the latter are waiting for contracts Y and Z can begin at the same time,
Z
to be signed, materials to arrive, if you wish X is a burst activity
drug approval by the government, (B)
budget clearance. Activities usually
J J,K & L can all begin at the same time, if you
represent one or more tasks from
wish (they need not occur simultaneously)
a work package. Descriptions of K M but
activities should use a verb/noun All (J,K,L) must be completed before
format e.g. developing product L M can begin
specifications. An activity is (C) M is a merge activity
generally shown by a node (box).
Arrows indicate the dependencies X Z Z is preceded by X and Y
and relations among activities
as well as the sequence in which
works must be performed (Figure Y AA AA is preceded by XP and Y
2.5.a.). The letters in the boxes (D)
represent the activities. Figure
2.5.a. is similar to a list of things Figure 2.5 Activity-on-Node Network Fundamentals (Larson, &
to do where you complete the task Gray, 2008)
at the top of the list first and then
move to the second task, etc. This also tells the project manager that activity A must be completed
before activity B can begin, and activity B must be completed before activity C begins.
• Burst activity: This activity has more than one activity immediately following it (more than one
dependency arrow flowing from it). Figure 2.5.b. shows that activities Y and Z cannot begin until
activity X is completed. This figure also indicates that activities Y and Z can occur concurrently or
simultaneously if the project manager wishes; however, it is not a necessary condition. For example,
activity X can take place while activity Z is being accomplished, but activity X must be completed
before activities Y and Z can start. Activities Y and Z are considered parallel activities. Activity X is
referred to a burst activity because more than one arrow bursts from the node.
• Merge activity: This is an activity that has more than one activity immediately preceding it (more
than one dependency arrow flowing to it). Figure 2.5.c. shows us that activities J, K and L can
occur simultaneously if desired, and activity M cannot begin until activities J, K, and L are all
completed. Activities J, K and L are parallel activities. Activity M is called a merge activity because
more than one activity must be completed before M can begin.

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Defining Project and Developing a Project Plan

• Parallel activities: These are activities that can take place at the same time, if the manager wishes.
However, the manager may choose to have parallel activities not occurred simultaneously. In Figure
2.5.d., X and Y are parallel activities that can take place at the same time; activities Z and AA are
also parallel activities. However, activities Z and AA cannot begin until activities X and Y are both
completed.
• Path: A sequence of connected, dependent activities.
• Critical path: When this term is used, it means the path(s) with the longest duration through the
network; if an activity on the path is delayed, the project is delayed for the same amount of time.
• Event: This term is used to represent a point in time when an activity is started or completed. It
does not consume any time.
Considering the aforementioned elements of AON, a simple project network can be drawn right now.
We remark here that the arrows can cross over each other, be angled, or be any length of slope. Another
important point here is that one should find all project activities, their dependencies and time estimates in
the project network. To illustrate a simplified network, project activities and their dependencies of a new
service application releasing of Berkeley Cargo Firm are given in Table 2.2.

Table 2.2 Network Information of a New Service Application of Berkeley Cargo Firm
A New Service Application of Berkeley Cargo Firm
Activity Description Immediate Predecessor
A To present the idea to the top management None
B Preparing the details of the service A
C Traffic jam study reports A
D Cargo driver reports A
E Confirmation from Branch Offices B, D
F Commission confirmation B, C, D
G Waiting for being prepared in Branch Offices F
H First Implementation Trial E, G

In Figure 2.6, we can see the first step in building the AON project network regarding the activities and
their dependencies in Table 2.2. The first node to be drawn is activity A since it has no preceding activity.

B
Preparing the details of
the service

A C
To present the idea to the Traffic jam
top management study reports

D
Cargo driver reports

Figure 2.6 Partial Network of Berkeley Cargo Firm

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Project Management

Next, we need to draw B, C and D separately with three arrows (preparing the details of the service,
traffic jam study reports, and cargo driver reports) since these activities are preceded by activity A. Here,
the figure tells us to start activities B, C and D; activity A has to be accomplished, and activities B, C, and
D can be performed simultaneously, if required. The whole network can be seen in Figure 2.7, with all
activities and their precedences.

B E H
Preparing the details Confirmation from First Implementation
of the service Branch Offices Trial

A C G
F
To present the idea to the Traffic jam Wait for being
Commission
top management study reports prepared İn Branch
confirmation
Offices

D BERKELEY
Cargo driver reports CARGO FIRM

Figure 2.7 Berkeley Cargo Firm—Complete Network

At this stage, the project network represents a graphic map of the project activities with sequences and
dependencies. This information is quite valuable to the people who are responsible to manage the project.
Although this kind of network is so beneficial as there are lots of important information in it, including
time estimates of the activities will further increase the significance of the network. With time estimates,
project can be planned according to a schedule and the project manager can decide the estimation of
project duration as well as which activities can be delayed and which cannot be delayed. It also helps
the project managers to figure out the resources required in terms of money, labor force, and material.
Basically, it can be said that a project network with activity time estimates makes the required connection
among planning, evaluating and controlling phases of that project.

Network Computation Process

In order to draw the project network, it is required to place the activities in the right sequence and
calculating the right start and end time. Expected activity times are then added to the network. Forward
and backward pass calculations will help to observe the project manager whether everything is going on
right over the life course of the project. These are given below.
Forward Pass: Early Start Time and Early Finish Time
1. What is the earliest possible time that an activity can be begun? (the early start time- ES)
2. What is the earliest possible time that an activity can be finished? (the early finish time- EF)
3. What is the earliest possible time that a project can be finished? (expected time- TE)
In the forward pass, one begins with the first project activity/ies and goes along the other sequential
activity/ies through the network to the last activity/ies. Moving left to right, the successor activity times are
added to the predecessor activity times along the path. The longest path indicates the project completion
time and is called the critical path (CP). In Table 2.3., the activity duration times are listed for the same
example we drew a network.

29
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Defining Project and Developing a Project Plan

Table 2.3 Network Information of Berkeley Cargo Firm

A New Service Application of Berkeley Cargo Firm
Activity Description Preceding Activity Activity Time
A To present the idea to the top management None 10
B Preparing the details of the service A 25
C Traffic jam study reports A 20
D Cargo driver reports A 15
E Confirmation from Branch Offices B, D 15
F Commission confirmation B, C, D 10
G Waiting for being prepared in Branch Offices F 150
H First Implementation Trial E, G 50

Figure 2.8 depicts the network with the activity time estimate expected with respect to the node. For
example, activity B has an activity time of 25 days, and activity H has 50 days.

B E H
25 15 150

A C

10 20 F G
10 150
D

ES ID EF 15
BERKELEY
SL CARGO FIRM
LS DuR LF

Figure 2.8 Activity on Node Network

In projects, start time is generally zero principle is to finish activity A. When activity A is
(computations can be done according to the done at 10; B, C, and D can begin. Therefore, the
calendar later). early start of all of these activities are 10 (ES for B,
In Table 2.3, the first activity (A) begins at time C, and D are 10). Their EF times are different from
zero (ES=0). ES of the activities can be seen in the each other when we apply the ES+Duration=EF
upper left corner of the related nodes in Figure 2.9. formula. The EF times are 25, 20, and 15 for
activities B, C, and D, respectively. In the next step,
For activity A, the early finish (EF) is calculated by
when we look at Figure 2.9., we see that activity
summing ES and its duration (ES+Duration=EF),
E is a merge activity and a question arises: What
which is 10 (0+10=10).
will be the ES for activity E? Will it be 35 or 30?
In the figure, there are three successor nodes The answer is the largest activity time, that is 35,
for activity A: activities B, C, and D. In order to because to be able to start activity E, B and C (all of
start to perform these successor activities, the basic its predecessor activities) must be completed.

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Project Management

10 B 35 35 E 50 195 H 245
25 15 50

0 A 10 10 C 30

10 20 35 F 45 45 G 195
10 150
10 D 25

ES ID EF 15
BERKELEY
SL CARGO FIRM
LS DuR LF

Figure 2.9 Activity on Node Network Forward Pass

The same rule applies to determine the ES for Backward Pass-Latest Time
activity F. The predecessors of activity F are activities In the backward pass, one begins with the
B, C and D. The same process is used for determining last project activity/ies and goes along the other
the ES for activity F. The identifier activity here is sequential activity/ies through the network through
again B as it has the longest early finish (35, 30, and the first activity/ies. Moving from right to left, the
25 for activities B, C and D, respectively) predecessor activity times are subtracted from the
activity times along the path to find the LS and
LF. Before the backward pass can be calculated,
It is supposed here that in the forward the late finish for the last project activities must
pass, every activity will begin the instant be determined. Suppose that the project duration
moment in time when the last of its (TE) is the same as the EF (245 days). For activity
predecessors is ended. H, the LF then is 245 days. The backward pass
is similar to forward pass; you need to remember
three things:
To be able to compute early times in the forward To be able to compute latest in the backward
pass, there are three characteristics that need to be pass, there are three characteristics that need to be
remembered: remembered;
1. Throughout each path in the network, the 1. Throughout each path in the network,
activity times are added to the predecessors’ starting with the last activity, the activity
activity times (ES+Duration=EF). times are subtracted (LF-Duration=LS).
2. The early finish (EF) can be passed into the 2. The late finish (LS) is passed into the next
next activity in which it turns its early start preceding activity in which it turns to the
(ES), except for; next preceding activity’s late finish (LF),
3. If the next succeeding activity is a merge except for;
activity, the ES of that activity depends on 3. If the next preceding activity is a burst
the activity’s immediate predecessors, the activity; the LF of that activity depends
choice would be the largest EF times of on the activity’s immediate successors, the
them. choice would be the smallest of LS.
For activity F, the EF is (45) carried to the ES In Figure 2.10, we start by activity H and its
(45) of activity G. The EF of activity E and G LF of 245 days, the LS for activity H is 195 days
are 50 and 195, respectively. Therefore, the ES of (LF-Dur=LS or 245-50=195). The LF for activities
activity H is 195; and since its duration is 50, its E and F is now the LS for activity H. For activities
EF is 245, which tells us the expected earliest time E and G, the LS becomes 180. (195-15) and 45
the project can be finished (TE). days (195-150), respectively. Later, the LF for
activity F comes from the LS for activity G, and
the LS of activity G is 45. With this order, we
now understand that activities B and C are burst

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Defining Project and Developing a Project Plan

activities that are linked with activity E and activity F. The LS of activities E and F becomes the LF for
activity B and C. When we look at the LS for activity E, which is 180 days while the LS for activity F is
35 days. Therefore, we need to pick the smallest time – 35 days. The LF of activity D comes from activity
F (see figure), which is again 35 days. In order to find the LF of activity A, which is a burst activity, and is
linked to activities B, C and D, we need to compute the LS of these activities by using the LF-Duration=LS
formula. The smallest LS comes from activity B, which is 10. So, LF of activity A is 10 and its LS is 0. Now,
we have completed the backward pass.

B E H
10 25 35 180 15 195 195 50 245

A C

0 10 10 15 20 35 F G
35 10 45 45 150 195
D

ES ID EF 20 15 35
BERKELEY
SL CARGO FIRM
LS DuR LF

Figure 2.10 Activity-on-Node Network Backward Pass

important must start at the latest and when it can start at the
earliest. Briefly, total slack gives the amount of time an
activity can be delayed without delaying the project
Whenever we encounter an activity that has
completion. The activities that have total slack are
multiple paths leading back to it (i.e., it has multiple
the noncritical activities on the project network. If an
immediate successors), it is the longest backward
activity has zero slack, it can be said that it is a critical
path that determines the activity’s LF. In other
activity. Therefore, if any critical activity is delayed,
words, it is the backward path (immediate successor)
the project completion will be delayed.
with the smallest LS that determines the activity’s LF
(Nicholas, & Steyn, 2008).
important

Determining Slack Critical activities on critical path cannot be delayed

Once the forward and backward by any amount, since they have zero slack.
passes have been calculated, now we
can decide whether any activity can
be delayed without delaying the duration of the The critical path(s) is (are) simply composed of
project or not by computing the slack or float. the activities which have a slack of zero (LF-EF=0 or
We can compute the total slack of an activity by LS-ES=0). In Figure 2.11., activities A, B, F, G, and
subtracting early start from latest start or by subtracting H identify the critical path, and they are marked
latest finish from early finish (Total Slack=LS-ES=LF- with dashed arrows and nodes. Delay of any of
EF). Another explanation of slack is that the amount these activities will delay the project completion by
of permissible difference between when an activity the same number of days.

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Project Management

10 B 25 35 E 50 195 H 245
0 145 0
10 25 35 180 15 195 195 50 245

0 A 10 10 C
0 5
0 10 10 15 20 35 35 F 45 45 G
0 0
35 10 45 45 150 195
10 D 25
10
ES ID EF 20 15 35
BERKELEY
SL CARGO FIRM
LS DuR LF

Figure 2.11 Activity-on-Node Network with Slack (2. Şekil çizilecek aynı birinci şekil formatında)

important
Total slack time is the maximum allowable
delay that can occur for noncritical Note that the activities on the critical path have zero
activities. Once this slack is used up, total slack and zero free slack.
noncritical activities become critical and
further delays of these activities will delay
the project completion (Nicholas and Activity On Arrow (AOA) Diagrams
Steyn, 2008).
Activity on Arrow (AOA) or arrow diagramming
technique is the most common method for
diagramming networks. The main difference
between AOA and AON is to show the activities
and events in the network. In Figure 2.12., for one
internet activity and its event of an AOA representation can
[Link] be seen.
pdf
2 weeks
1 2
Activity X:
Free Slack (Float) Delivery of
the products
Although total slack can be identified the
amount of allowable time a noncritical activity Figure 2.12 AOA Representation for an Activity and its
can be delayed without delaying the project Start/Finish Events

completion, the free slack can be defined as the

amount of time an activity can be delayed without Remark here that activity X is shown by a
delaying the early start of any successor activity. directed line (arrow) between two node shapes
Free slack is computed by the following formula: (circle). With the nodes, the beginning and
Free slack for activity= ES (earliest start of the finishing events are represented, and the arrow
successor)-EF (activity) between these two nodes depicts the activity
itself. The events are identified by the number
As in our example in Figure 2.11., activity E has
inside each node and the number must not be
the free slack of 145 days (195 (ES of H)-50(EF of
repetitive. They must be unique according to
E)=145). Activities C and D also have free slacks of
which event they represent. While performing the
5 and 10 days, respectively. By determining the free
activity, the direction of arrow should indicate the
slack, managers can quickly point out where the
flow, but the length of the arrow is not important
delay changes the result for other activities. When
(in Gantt Charts, the activity is proportional to
an activity is on critical path, any delay will create
the duration). Activity duration is shown by the
at least one other activity to slip.
number over the line.

33
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Defining Project and Developing a Project Plan

Similar to AON networks, there should be one • The industrial engineer will pay the bill
start and one finish event in an AOA network. after having purchased the laptop.
All arrows should be carried from left to the • The commercial solver will be installed
right and there should be no loops. Again, similar on the laptop after the syntax of the
to AON method, the order of the activities should problem has been developed based on the
be defined by their immediate predecessors. commercial solver will be used.
• The commercial solver will be installed
In the network, any activity should not begin
on the laptop after the laptop has been
until all of its immediate predecessors have been
purchased.
accomplished, when the activity has more than one
Remark here that developing the syntax of the
immediate predecessor. A “dummy” activity used in
problem and purchasing the laptop are not related
this kind of situations is shown in Figure 2.13.
and there is no dependency between them. The AOA
network of the activities is shown in Figure 2.14.
Dummy Activities
In AOA diagrams, a dummy activity depicts
Purchase a laptop Do a payment for
the precedence relationships. It behaves as a link, laptop
but it is not a “real” activity, so it does not have
time duration. In the following example, the
requirement for dummy activities in an AOA Install the
Develop syntax of commercial solver
network can be observed. the problem based on laptop
An industrial engineer wants to solve a on the commercial
solver
mathematical model on a commercial solver and also
to have a fast laptop to run the program on. The order
Figure 2.13 AON Diagram
relationship of the activities (dependencies) is shown
in Figure 2-14. Three dependencies can be obtained:

Purchase a Do a payment for

laptop the laptop
A C E

Start End

B D F

Develop syntax of the Install the

problem based on the commercial solver
commercial solver on laptop

Figure 2.14 Figure 2.13. Converted AOA Diagram

Note here that we see three dependencies in Figure 2.14. despite representing the second and third
dependencies (“install commercial solver” and its immediate predecessors “purchase a laptop” and “develop
the syntax of the problem based on the commercial solver
to be used”) necessitates a dummy activity between the
nodes C and D. Dummy activities are performed when
Although there is no dependency between “develop the one tries to define a logical dependency
syntax of the problem based on the commercial solver to although the activities are not on the same
be used” and “do a payment for the laptop”, this dummy path; one activity cannot begin after the
activity helps the dependencies to be clear. other one is accomplished.

34
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Project Management

The AON and AOA representations of the same problem (Table 2.4.) are given in Figure 2.15.a. and b.

Table 2.4 Network Information

Activity Immediate Predecessor Activity Activity Time
K None 2
L K 5
M None 7
N None 6
O N 8
P O 1

K L

Start M End

N O P

Figure 2.15a AON Representation

2
L=5
K=2

M=7 5
1

N=6
P=1
O=8
3 4

Figure 2.15b AOA Representation

Learning Outcomes

3 To develop a project plan with project network

Self Review 3 Relate Tell/Share

Build a work breakdown

Can some delay on
structure for a wedding
What is critical path and noncritical activities cause
and draw its network
why is it so important? the change of the critical
considering activity times
path on the project network?
and dependencies.

35
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Defining Project and Developing a Project Plan

LO 1 Define the project

A project is defined as a non-repetitive, one-time work constrained by budget, time and performance
requirements designed to meet customer needs. The projects need to have an aim and the objective
of the project must be unique and determined before the project starts, and it should have specific
requirements in order to meet the desired results. Triple constraints as time, budget and performance
constraints are needed to be met by the aim of the project as well.
The project has a defined start and end point, which differs the project from routine jobs. Besides,
a project should not be repeatable and consists of uniqueness to some level. This is much related to
Summary

performing a job for the first time. Lastly, to perform a project, original problem solving methods are
required to figure out unanswered problems.

Define the project scope management

LO 2 and create a work breakdown structure

In the project scope definition, dependencies and work breakdown structure are the main elements to a
project. With the help of the scope definition, the result (end item, process, deliverables) of the project
can be examined. In the project scope, what is to be included and excluded in terms of requirements,
items, conditions, results and deliverables are provided. The result of scope definition is a scope
statement. The scope statement involves three stages; first, the initiation/defining; second, scope plan;
and lastly, scope change control.
Subdividing the total project into smaller features gives us a definition of the “work breakdown structure”.
The aim of the work breakdown structure is to divide the overall project into work packages. If a project
is composed of work packages, getting ready the project schedules, cost estimations, and responsibility
allocations might be much [Link] project has a defined start and end point, which differs the project
from routine jobs. Besides, a project should not be repeatable and consists of uniqueness to some level.
This is much related to performing a job for the first time. Lastly, to perform a project, original problem
solving methods are required to figure out unanswered problems.

Develop a project plan with project

LO 3 network

In order to develop an Activity-on-Node (AON) project network, predecessor and sequence relations of
activities as well as duration times are required. After these relationships are determined, it is possible to
associate the activities to develop the project network. Activity-on-Node defines activities by “nodes”,
and in order to connect activities with predecessor-successor relationship, uses directed arrows.
The critical path is built by the help of forward and backward pass computations. The critical path is
defined as the longest path of the network. Critical activities in the critical path have zero slack although
other activities have some float or slack time with respect to them.
One of the other techniques to draw a project network is Activity-on-Arrow diagramming method.
AOA defines activities by arrows and uses boxes to represent the start and end time of activities. In
order to create AOA network, some unique characteristics are used such as dummy activities. Dummy
activities do not have any work or time values allocated to them.

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Project Management

1 Which of the following is not included in the 5 ….. divides project into small work packages.
definition of the project scope?
a. Scope
a. Summary of work requested b. Input
b. Description of major elements (deliverables) of c. Critical path
the completed project
d. Noncritical activity
c. Items not covered in scope

Test Yourself
e. Work breakdown structure
d. Items covered in the scope
e. Critical Path
6 Which of the following is false related to
work breakdown structure?
2 Which of the following pairs of works presen
a. It defines work
examples to ordinary work and project?
b. It identifies a single person responsible for units
a. Taking math class notes /Writing a novel of work
b. Manufacturing a refrigerator /Serial production c. It identifies monitoring points for measuring
of a car progress
c. Practicing yoga/ Manufacturing of a cell-phone d. It identifies time to complete a work package
d. Practicing lyrical dancing / Serial production of e. It identifies a link between the organizational
a TV model unit and work
e. Manufacturing a washing machine /Practicing
kite-surfing
7 Which of the following gives the critical path
according to the data given below?
3 Which of the following is one of scope
management phases? Activity Immediate Predecessor Activity Times

a. Defining 1 – 2 weeks

b. Executing 2 – 2 weeks
c. Scope Control Changing 3 1,4 4 weeks
d. Delivering 4 2 3 weeks
e. Closing 5 2 1 week
6 3,5 5 weeks
4 ……… isthe shortest total length of a project a. 1,2,6
is determined by the longest path through the b. 1,3,4,6
network.
c. 2,4,3,6
a. Critical path d. 2,,4,5,6
b. Planning e. 2,5,6
c. Project life cycle
d. Scope management
8 Which of the following gives the value of
e. Work breakdown structure critical path in Question 7?
a. 8
b. 9
c. 11
d. 12
e. 14

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Defining Project and Developing a Project Plan

9 A/An …. has no duration and uses no 10 Activity X

resources. Its only goal is to indicate a precedence
relationships.
a. activity Activity Z
b. dummy activity
Test Yourself

c. milestone
d. event Activity Y
e. path
In the figure above, Activity Z is called a ……
a. burst Activity
b. parallel Activity
c. merge Activity
d. precedence Activity
e. path

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Project Management

If your answer is incorrect, review “Defining If your answer is incorrect, review

1. e 6. e
the project scope management and creating “Defining the project scope management
the work breakdown structure”. and creating work breakdown structure”.

2. a If your answer is incorrect, review 7. c If your answer is incorrect, review

“Defining the project”. “Developing the project plan”.

Answer Key for “Test Yourself”

If your answer is incorrect, review
3. c 8. d If your answer is incorrect, review
“Defining the project scope management
“Developing the project plan”.
and creating work breakdown structure”.

4. a If your answer is incorrect, review 9. b If your answer is incorrect, review

“Developing the project plan”. “Developing the project plan”.

If your answer is incorrect, review

5. e 10. c If your answer is incorrect, review
“Defining the project scope management
“Developing the project plan”.
and creating work breakdown structure”.

39
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Defining Project and Developing a Project Plan

What is the difference between ordinary work and

project?
Suggested Answers for “Self Review”

The main difference between ordinary work and project is the type of the
self review 1 outcome. Repetitive works do not aim only one outcome/result; their results
are repeatable. However, the outcome of a project is unique, which is produced
within time, budget, and performance constraints.

What are the aims of developing a project scope

and what is the duty of WBS in a project?

The objectives of project scope are the total objectives of the project to meet
customer requirements for the expected outcome. In the project scope, project
deliverables and works that need to be achieved to reach the deliverables are
identified. To develop a proper project plan, project scope also describes the
inclusions (what is included) and exclusions (what is not included; boundaries)
of the project to deliver an outcome, service, or product. In other words,
project scope helps the project management team to determine how well the
self review 2 project is going on according to the plan.
The work breakdown structure (WBS) provides the project team visually
understandable work packages, which are the decomposition of the project
scope into manageable work elements. The Project Management Body of
Knowledge (PMBOK®) defines the work breakdown structure as a “deliverable
oriented hierarchical decomposition of the work to be executed by the project
team”.
The WBS also organizes and defines the total scope of the project and
represents the work specified in the current approved project scope statement
(PMI®, 2008).

What is critical path and why is it so important?

The critical path, which gives the completion time (duration) of the project,
is defined as the chain of scheduled activities. In order to meet the customer’s
requirements within the deadline of the project, the critical path determines
the longest sequence of activities in the project plan that must be completed
on time. It means if there is a delay in any activity on the critical path, then
the project will be delayed as well. The method uses a step-by-step approach
self review 3 to identify critical and non-critical activities on the project network.
After identifying the critical path, the project manager can zero in on the
activities that need greater consideration and no flexibility in timing because
those tasks along the critical path directly affects the project to be completed
within the deadline. The non-critical activities some floats, which means they
can be delayed without affecting the project duration; however, the critical
activities have zero float, so they need to be completed on time.

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Project Management

References
Gray C. F., & Larson E. W. (2008). Project Management Pinto, J., (2016). Project management: Achieving
(3rd ed.). New Delhi. Competitive Advantage (4th ed.. USA: Pearson
Kerzner H. (2003). Project Management: A Systems Project Management Institute. (2008). A Guide to
Approach to Planning, Scheduling, and Controlling the Project Management Body of Knowledge: PA,
(8th ed.). NJ, USA: John Wiley and Sons. USA: Project Management Institute.
Nicholas J. M., &Steyn H. (2008). Project Management
for Engineering, Business and Technology (3rd ed.).
USA: Routledge.

Online References
HBS Digital Initiative. (2016, November 18). The WHO., (2008). Constitution of the World Health
Failed Launch of [Link] [web Organization [PDF file]. Retrieved from https://
log comment]. Retrieved from [Link] [Link]/governance/eb/who_constitution_
[Link]/platform-rctom/submission/the-failed- [Link]
launch-of-www-healthcare-gov/

41
 Chapter 3 Project Scheduling
After completing this chapter, you will be able to;
Learning Outcomes

1 2
Define the stages of network analysis for a
project and describe the two different ways of
drawing a project network diagram. Explain the major steps of PERT.

Chapter Outline Key Terms

Introduction Network Analysis
Project Scheduling Concepts Activity on Arrow
Program Evaluation and Review Technique Activity on Node
(PERT) PERT
Estimation of Parameters in PERT
CPM vs. PERT

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INTRODUCTION This chapter presents the techniques of network

analysis for project scheduling. Two different forms
One of the most difficult jobs any manager can
take on is managing a large-scale project requiring were developed. The first one is called as critical
the coordination of various operations across the path method (CPM), and the other one is called
organization. A wide variety of information must as program evaluation and review technique
be managed in the organizing of how to cooperate (PERT). Details of the CPM are provided in the
all these operations, the creation of a feasible previous chapter. Therefore, in this chapter, project
timetable, and the screening of project progress scheduling concepts such as network analysis
(Hillier, & Lieberman, 1995). and PERT are discussed. This chapter will be of
invaluable assistance in answering these questions
(Hillier, & Lieberman, 1995):
• How can the project be visually presented
Project scheduling is the time phased to better represent the activity flow?
processing of operations subject to • How long does it take to finish the project
precedence interactions, time constraints, if there are no delays?
and resource constraints in order to achieve • When is it necessary to begin and complete
particular goals (Badiru, 2011). the individual activities (at the latest) in
order to satisfy this project completion
time?
Due to the special nature of many of the activities • When can individual activities begin and
that make up a project, project scheduling is identified end (as soon as possible) if there are no
from job shop, flow shop, and other production delays?
planning issues. The scheduling issue in production • Which critical bottleneck operations should
scheduling meets a conventional procedure that be prevented in order to avoid delays in the
takes into account the features of manufacturing completion of the project?
activities. It can be anticipated that a planning • How much delay can be allowed for other
method that operates for one manufacturing run activities without delaying the completion
will function similarly efficiently for successful and of the project?
identical manufacturing runs. Projects, on the other • What is the likelihood of completing
hand, generally involve one-time actions that may the project by the deadline provided the
not be replicated in the same circumstances. Only in uncertainties in the accurate estimation of
some situations, the concepts of the entire project or the duration of the activity?
a portion of it can be duplicated. Therefore, specific
techniques, such as project scheduling techniques,
need to be developed to manage the projects in real PROJECT SCHEDULING
life (Badiru, 2011). CONCEPTS
Projects were planned utilizing bar charts In this section, basic concepts of the project
until around 1960. Henry Gantt has developed scheduling such as network analysis, components
a notation system to create and use these graphs of networks, and the advantages of network analysis
for reporting system, and they are also frequently are discussed, and different ways of drawing a
referred to as Gantt charts. Nevertheless, the network are introduced.
Gantt chart does not offer any explanation as to
whether a job relies on another task being finished
or whether it only begins simultaneously when any
Network Analysis
other task is finished. This implies that the effect A project’s network of activities provides the
of any change on a project cannot be understood basis for scheduling the project. A network is a
when a subsequent task is delayed or pulled. For visual representation of the project’s content and
this purpose, a new technique was invented in the goals. The fundamental network assessment of the
early 1950s to demonstrate such dependencies. project is typically carried out in three stages: stage
In this technique, arrow diagrams displayed the of network planning, stage of network scheduling,
interactions between activities (Lewis, 2005). and stage of network control (Badiru, 2011).

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Project Scheduling

Network Planning • Arrow: An arrow is a line that connects two

Network planning is also often pointed as nodes to one end with an arrowhead. The
activity planning. This involves identifying the arrow means the activity at the arrow’s tail
specific project activities. The activities needed precedes the one at the arrow’s head.
and relationships of precedence are defined in this • Activity: An activity is a time-consuming
stage. Precedence requirements can be defined by action necessary to accomplish a part of the
technological, procedural or imposed limitations. current project. A node in the AON system
Finally, network diagrams are utilized to visually or an arrow in the AOA system represents an
represent the activities. Activity-on-arrow (AOA) activity. The job represented by the activity
and activity-on-node (AON) demonstrations are the can be demonstrated inside the node or on
two common models for network drawing. Arrows the arrow by a short phrase or symbol.
are used to depict activities in the AOA strategy • Restriction: A restriction is an arrangement
whereas nodes are the beginning and finishing of precedence that determines the pattern of
spots of activities. On the other hand, nodes depict activities. The first is said to be a predecessor
activities in the AON strategy whilst arrows also of the second if one activity has to be finished
constitute relationships of precedence. Projections before another activity can start.
of the time, price, and resource requirements are • Dummy: A dummy is used to show one
created during the network planning stage for significant event (e.g. milestone). A dashed
each activity. The projections can be based on circle denotes it and treats it as a zero-time
actual records, time norms, forecasts, features of activity. The AON method does not require
regression, or other quantitative approaches. a dummy. It may, however, be included on
the project’s progress for simplicity, network
clarity, or to serve as a milestone.
Network Scheduling • Predecessor activity: An activity of the
Network scheduling is carried out using predecessor is the one that instantly follows it.
computational methods for forward passes and • Successor activity: A successor activity
backward passes to calculate the earliest and latest follows one activity immediately.
starting and finishing times of each activity. In • Descendent activity: Any activity limited
this stage, it is also determined how much slack by the one under consideration is a
or float is associated with each activity. To decide descendent activity.
the critical activities, the activity track with the • Antecedent activity: An antecedent activity
minimum slack in the network is used, and the is any activity that must precede one.
durations of these critical activities also define • Merge point: Once two or more tasks are
the duration of the entire project. Other processes predecessors of a single task, a merging
conducted throughout network scheduling are point occurs. Before the merge activity can
resource allocation and time-cost trade-offs. begin, all activities preceding the merge
point should be finished.
Network Control • Burst point: A burst point occurs when
Network control includes monitoring a project’s there is a prevalent predecessor for two
progress on a network schedule basis and taking or more operations. Until the burst point
corrective action when necessary. An assessment activity is finished, no activity erupting
of overall performance versus expected results will from the same predecessor activity can
determine the project progress deficiencies. begin.
• Precedence diagram: A precedence diagram
is a visual representation of a project’s
The Components of the Network activities and the preceding requirements
The components of the network are described for completing the project. Time is usually
below (Badiru, 2011): presented to be from left to right, but there is
• Node: Activities are represented as circular no effort to make the sizes of nodes or arrows
nodes in the network. proportional to the time.

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Drawing Project Network important

To describe a project, three kinds of data are
required (Hillier, & Lieberman, 1995): Activity on Arrow (AOA) and Activity on
• Activity information: Divide the project Node (AON) are two ways to represent the
(at the required point of detail) into its network for a project:
individual operations.
• Precedence relationships: Define the
predecessor(s) for each activity. There are two ways in which a network diagram
• Time information: Forecast each activity’s is generally drawn for a project:
duration. • Activity on Arrow (AOA) representation
All this data requires to be conveyed by • Activity on Node (AON) representation
the project network. A network is a visual As both methods have the same scheduling
representation of the activities of the project and results, which one to use does not make any
its relations. A network of projects is a collection difference. Most software, however, only generates
of arrows and nodes. It is important to ensure that one of them, and it is generally AON. Some
the project has a unique starting and ending point programs, like Primavera, enable you to choose
before drawing the network. When there is more your preferred method (Lewis, 2005).
than one project activity that has no predecessors,
a dummy starting activity must be used. Similarly, Activity on arrow network (AOA)
when there is more than one activity that has no
The arrows depict activities in this technique,
successors, an ending activity must be added to the
while the nodes denote the start and end of an
project network. Network diagrams must also be
activity (Figure 3.1). The arrow distance that
continuous, which means each activity, except for
connects the nodes is meaningless and arrows may
the starting and the ending one, must have both
be direct, bent, or curved. If an activity relies on
preceding and succeeding activities.
another, the two arrows with a shared node occur
on the network diagram (Elbeltagi, 2009).

Activety A Activety B
i j j>i 5 10

A B
5 10 15 B depends on A

A 10 C 15 C depends on A and B
5
B
5

15 B depends on A
B
A C
5 10 15 C depends on A

5 A C 15 B depends on A and B

B 10 15 D depends on A and B
5 D

Figure 3.1 Basic Patterns of AOA Diagrams (Elbeltagi, 2009)

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Project Scheduling

Some principles to adopt, when creating an AOA network diagram, are as follows (Elbeltagi, 2009):
• Each activity must have a distinctive number such as i and j, where j (number at the arrow’s head)
is greater than i (number at the arrow’s tail ).
• A gap between numbers (i.e. 5, 10, 15, etc.) is suggested. This will enable missed operations to be
accommodated.
• Keep away from back arrows
• Use dummy activities when more than one arrow exits the same node and enters at another node.
The dummy activity is a zero-duration activity that uses up no resources, plotted as dashed lines,
and is used to modify the diagram of the network. When one activity relies on two previous
activities and another activity depends only on one of the two previous activities, a dummy activity
must be used. See Figure 3.2 for using dummy activities (Elbeltagi, 2009).

A C A C
5 15 20 5 20 25
D C depends on A and B
B Dummy
D depends on B only
10 25 B D
10 15 30

A
5 15
A
5 15 B
Dummy

B 10

Incorrect representation Correct representation

Figure 3.2 Use of Dummy Activity (Elbeltagi, 2009)

Activity on node network (AON)

This technique is also called the method of the preceding diagram. The nodes depict activities in this
technique and the arrows represent logical interactions between the activities. If the arrow begins at the
end of an activity (activity A) and finishes at the beginning of another activity (activity B), then A is a
predecessor to B as given in Figure 3.3 (Elbeltagi, 2009).

Activity number
10 20
A B
Activity name

10 20 B depends on A
A B

10 30 40 C depends on A and B
A C D D depends on C

20
B
30
C B depends on A
10 20
A B C depends on B
40 D depends on B
D
Figure 3.3 Basic Patterns of AON Diagrams (Elbeltagi, 2009)

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Project Management

PERT and CPM original versions used AOA project networks, so for some years this was the
conventional type. AON project network diagrams, indeed, have some significant benefits over AOA
project network diagrams to express the same data more precisely (Hillier and Lieberman, 1995).

Comparison between AOA and AON

It is possible to use both networks to represent a project network. However, there are some
differencesbetween them:
• The dummy activities in AON representation are
not necessary.
• AON can be drawn and read more readily. AON project network diagrams have become
• In AOA, activity can only begin once all of its extremely popular with professionals. It
predecessors have been completed. indicates quite likely that they are becoming
• AON enables the depiction of overla /lag. the traditional form of network diagram
• AON enables four kinds of relationships to be (Hillier & Lieberman, 1995).
represented while AOA enables only finish to start
relationship.
For these purposes, AON project network diagrams have become extremely popular with professionals.
It indicates quite likely that they are becoming the traditional form of network diagram (Hillier &
Lieberman, 1995).
This chapter presents the techniques of network analysis for project scheduling such as CPM and
PERT. Details of CPM is presented in the previous chapters. Therefore, in the following sections, details
of the PERT are given.
Learning Outcomes

1 Define the stages of network analysis for a project and describe the two different ways of
drawing a project network diagram.

Self Review 1 Relate Tell/Share

Tell which network drawing

What are the stages of Build a relationship between
method you would choose
network analysis? the AOA and AON.
to draw a network diagram.

PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT)

The soul of network based scheduling methods is a visual representation of the plan for accomplishing
the program; such a chart shows the precedence interactions i.e. the dependencies of the activities leading
to the underlying goal. This chart is called as the network. This concept has evolved from the bar charts
through the years (Moder, & Phillips, 1964). The paper on forecasting and planning with probability
based tolerances can be accepted as the pioneer paper for development of the PERT (Flagle, 1954).
PERT and CPM can be applied to various types of projects, including but not limited to the following
types:
• New plant construction
• New product research and development (R&D)

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Project Scheduling

• Space projects probability (Moder and Phillips, 1964). While

• Aircraft production some of the underlying assumptions of PERT are
• Development of new missile systems theoretically challenged, practical procedures that
• Nuclear reactor maintenance can be used to circumvent these criticisms will be
• Management information systems discussed in the following section. In addition to
applications, etc. (Hillier, & Lieberman, that, the criticisms for PERT are provided in the
1995) forthcoming section.
It is useful to recognize that there are basically
two types of project activities: Activities that
may have been carried out before, containing a Basic Calculations and Steps of
considerable number of elements of chance which PERT
are called variable activities, and deterministic To calculate the predicted length and variance
type of activity, i.e. one with appropriately for each activity, PERT utilizes the three time
known average value and minimal variance in estimates given above and simple equations,.
time. Variable activities have comparatively large Hence, the calculation and the steps of PERT will
variance. Development of a new system or research be introduced briefly in the following subsections.
and development projects can be counted as a good
example to variable activities. On the other hand,
maintenance activities, which have a minimal Basic Calculations of PERT
variance, can be a good example to deterministic Calculations of mean and variance in Beta
activities (Moder, & Phillips, 1964). distribution are utilized to calculate the mean time
Projects consisting mainly of deterministic and variance in PERT. The formula for the mean
activities (e.g. maintenance projects) use CPM, is a simple weighted average of the three estimates,
which ignores statistical considerations and assuming that the optimistic and pessimistic
depends on a single estimate of the mean time estimates are equally possible and that the modal is
needed to carry out the activity in hand. Details of four times more likely than these two estimates. The
the CPM calculations are provided in the previous estimation equation for mean is depended on the
chapters. acceptance that most of the observations will fall into
three standard deviations minus or plus or in other
On the other hand, programs mainly consisting
words, distributed in six standard deviations. This
of variable activities may utilize the PERT,
also means that standard deviation is one-sixth of
which emphasizes the control of the program
the range between optimistic and pessimistic time.
performance time element and explicitly addresses
Note that, for these approximation approaches
the uncertainty in the activity performance times.
there is no mathematical verification. The formulas
The PERT system relies on three estimates for each
for calculating the mean and standard deviation in
activity: an optimistic (minimum) time, a highly
PERT are provided as follows (Elbeltagi, 2009):
probable (modal) time, and a pessimistic time
(Moder, & Phillips, 1964).
a + 4m + b
Since the CPM is applied quite commonly te =
6
to programs with single estimate of the average
(b − a)2 (b − a)
activity time, it completely ignores the chance s2 = or s =
component associated with carrying out the 36 6
project activities. For instance, an activity that is
In these formulas:
required to take 10 weeks but may fluctuate from
9 to 11 weeks would not be handled differently “a” is the optimistic performance time. It is the
from an activity that is also required to take 10 time that would only be exceeded once in twenty
days but may fluctuate from 2 to 25 weeks. The trial if the activity could be continuously carried
benefit of the PERT systematic approach is that out under the same circumstances.
it provides a way of dealing with this fluctuation “m” is the most likely time. It is the distribution’s
of chance, enabling it to be used in scheduling modal value, or the duration that is more likely to
and finally using this as a basis for calculating the arise than any other duration.

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Project Management

“b” is the pessimistic performance time. It is the Major Steps of PERT

time that would only be succeeded once in twenty The major steps in PERT analysis can be
trial if the activity could be continuously carried summarized as follows (Badiru, 2011):
out under the same circumstances.
1. Determine three estimates; optimistic
“te” is the mean duration of the activity and can “a”modal “m”, and pessimistic “b” durations
be calculated by using the above given formula. for each activity.
“s2” is the variance of the duration of the 2. Calculate the expected value for each
activity. Standard deviation is the square root of the activity by using a, m, and b.
variance and can be symbolized as “s”. 3. Compute the variance of each activity by
Note that the equations used to calculate mean using the formula for .
and variance are obtained by presuming that the
duration of the activity follows a beta distribution important
under a specific situation. After acquiring the
estimate of the duration for each activity, the Note that CPM analysis cannot compute
network analysis for the PERT can be performed variance of activity duration, since it uses a
in the same way as CPM approach as illustrated in single time estimate for each activity.
the previous chapter.
The network analysis depends on the well- 4. Calculate the expected project duration, Tx.
known “central limit theorem”. The theorem Similar to CPM, the duration of the project
says: “Where a series of sequential independent is calculated by summing up the expected
activities lie on the critical path of a network, modal time of critical activities.
the sum of the individual activity durations will 5. Similar to expected duration, calculate
be distributed in approximately normal fashion, the variance of the project as the sum of
regardless of the distribution of the individual individual variance of activities on the
activities themselves. The mean of the distribution critical path.
of the sum of the activity durations will be the
sum of the means of the individual activities important
and its variance will be the sum of the activities’
variances” (Elbeltagi, 2009). Note that variance of the project duration
Similar to expected duration, variance of the cannot be calculated in the CPM as the
project can be calculated as the sum of individual variances of the activities’ durations are not
variance of activities on the critical path, because available.
all the activities are assumed to be independent on
the critical path.
6. In addition to expected project duration, the
probability of finishing the project within
important specified time limits can be calculated,
which does not exist in CPM.
The duration of the project is calculated by
Example 3.1 (Elbeltagi, 2009)
summing up the expected modal time of
critical activities. Calculate the mean duration and the standard
deviation of the project with nine activities whose
precedence relations, durations, and the estimates
are provided in Table 3.1 and Table 3.2.

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Project Scheduling

Table 3.1 Precedence Relations and Durations (Elbeltagi, 2009)

Activity Description Predecessors Duration
A Site clearing — 4
B Removal of trees — 3
C General excavation A 8
D Grading general area A 7
E Excavation for trenches B, C 9
F Placing formwork and RFT for concrete B, C 12
G Installing sewer lines D, E 2
H Installing other utilities D, E 5
I Pouring concrete F, G 6

Table 3.2 Activity Duration Estimates (Elbeltagi, 2009)

Duration
Activity Mean Standard Deviation
a m b
A 3 4 5 4.0 0.33
B 2 3 5 3.2 0.50
C 6 8 10 8.0 0.67
D 5 7 8 6.8 0.50
E 6 9 14 9.3 1.33
F 10 12 14 12.0 0.67
G 2 2 4 2.3 0.33
H 4 5 8 5.3 0.67
I 4 6 8 6.0 0.67

The mean, varianc,e and standard deviation of each activity can be calculated from these estimates. For
instance; the mean and standard deviation for activity A are calculated as follows:

a + 4m + b (b − a)
tA = SA =
6 6
3+ 4 * 4 + 5 (5 − 3)
tA = = 4 sA = = 0.33
6 6
Similar to CPM calculations, PERT calculations, which take into account the mean duration of each
activity, are performed and provided in Figure 3.4.

4.0 D 10.8 21.3 H 26.6

14.9 6.8 21.7 24.7 5.3 30.0

0.0 A 4.0 4.0 C 12 12.0 E 21.3 21.3 G 23.3 24.0 I 30.0

0.0 4.0 4.0 4.0 8.0 12.0 12.4 9.3 21.7 21.7 2.3 24.0 24.0 6.0 30.0

0.0 B 3.2 12.0 F 24.0

8.8 3.2 12.0 12.0 12 24.0

Figure 3.4 PERT Calculations and Diagram (Elbeltagi, 2009)

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Project Management

Activities A, C, F, and I are on the critical path

for this project, ignoring uncertainty in durations
of activities. Therefore, project duration can be
calculated as the sum of the means for the critical
activities;
Tx = TA + TC+ TF+ TI
Tx = 4.0 + 8.0 + 12.0 + 6.0 = 30.0 days
The sum of the variances and standard
deviation are; Time
S = S +S +S +S
2
x
2
A
2
C
2
F
2
I
Td

Sx2 = (0.33)2 + (0.67)2 + (0.67)2 + (0.67)2 = Figure 3.5 Area Under the Normal Curve (Badiru, 2011)
1.44 days and .
The probability can be obtained from the
important standard normal table presented in Appendix A.
Here, be careful that the table shows the left-hand-
side probabilities since there are some tables in the
PERT is pessimistic about the variance in
literature that show the right-hand-side probability
the project duration. Therefore, if there are
of the standard normal distribution.
multiple critical paths in the project network,
the critical path with the largest variance must
important
be chosen to determine the project duration
and the variance of the project duration.
Be careful that the standard normal table
shows the left-hand-side probabilities since
there are some tables in the literature that
Probability of Meeting a show the right-hand-side probability of the
Scheduled Date standard normal distribution.
According to the Central Limit Theorem, the
probability of meeting a scheduled date, Td, can be Example 3.2
calculated by finding the area under the standard
normal curve on the left-hand-side of Td, assuming Table 3.3 provides the predecessors and the
that the project duration Tx is normally distributed three estimates of the duration of each activity.
as illustrated in Figure 3.5. The expected activity durations and variances of
each activity are calculated and given in the last
Then the probability of finishing a project by a two columns. PERT network diagram is provided
scheduled date Td can be calculated as follows: in Figure 3.6 Network scheduling is carried out
⎛ T −T ⎞ using computational methods for forward passes
P(T ≤ Td ) = P ⎜ z ≤ d x ⎟
⎝ s ⎠ and backward passes, and the earliest and latest
where starting and finishing times of each activity are
calculated.
“Td” is the specified deadline;
“Tx” is the expected project duration based on
network analysis; and
“s” is the standard deviation of the project
duration.

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Project Scheduling

Table 3.3 PERT Project Data

Activity Predecessors A m b te s2
A — 1 2 4 2.17 0.2500
B — 5 6 7 6.00 0.1111
C — 2 4 5 3.83 0.2500
D A 1 3 4 2.83 0.2500
E C 4 5 7 5.17 0.2500
F A 3 4 5 4.00 0.1111
G B, D, E 1 2 3 2.00 0.1111

2.17 2.17
A F 6.17
0 7
2.17 4
4 2.17 11
6.17
6.17 D
5
2.83

0 9 11
0 0 6 11 11
B 9 G
Start End
3 6 9 9 2 11
11
0 11
0

0 9
3.83 3.83
C E
0 3.83 3.83 5.17 9
3.83
Figure 3.6 PERT Network Diagram (Badiru, 2011)

As it is given in Figure 3.6, activities C, E, and G are on the critical path, and the project completion
time is calculated as 11 days. With this given information, what is the probability of completing the
project before a deadline of 10 days (i.e. Td=10 days)?
As we know the activities on the critical path, the estimated (modal) duration of the project and
standard deviation can be calculated as follows:
Te = 11 days
Sx2 = SC2 + SE2 + SG2
Sx2 = 0.25 + 0.25 + 0.1111 = 0.6111
Sx = 0.6111 = 0.7817
Using these values, the probability of completing this project before a deadline of 10 days can be
computed as follows:
⎛ T −T ⎞
P(T ≤ Td ) = P ⎜ z ≤ d x ⎟
⎝ s ⎠
⎛ 10 −11 ⎞
P(T ≤ 10) = P ⎜ z ≤ ⎟
⎝ 0.7817 ⎠
P(T ≤ 10) = P(z ≤ −1.2793)
P(T ≤ 10) = 1− P(z ≤ 1.2793)
P(T ≤ 10) = 1− 0.8997 = 0.1003

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Note that 0.8997 is taken from the standard normal table in Appendix A. Accordingly, there is just over
10% probability of completing the project within 10 days.

Example 3.3
For the same project in the Example 3.2, what is the probability of finishing the project within 13 days?
Probability of finishing the project within 13 days can be calculated as follows:
⎛ T −T ⎞
P(T ≤ Td ) = P ⎜ z ≤ d x ⎟
⎝ s ⎠
⎛ 13−11 ⎞
P(T ≤ 13) = P ⎜ z ≤ ⎟
⎝ 0.7817 ⎠
P(T ≤ 13) = P(z ≤ 2.5585) = 0.9948

This means that the probability of completing the project within 13 days exceeds 99 percent. Keep in
mind that the probability of completing the project in exactly 13 days will be 0. If we want to find the
probability of completing the project in a certain lower limit (TL) and a certain upper limit (TU), the
calculation will simply continue as follows:
Let TL = 9 and TU = 11.5. Then;

P(TL ≤ T ≤ TU ) = P(9 ≤ T ≤ 11.5)

P(9 ≤ T ≤ 11.5) = P(T ≤ 11.5) − P(T ≤ 9)
⎛ 11.5 −11 ⎞ ⎛ 9 −11 ⎞
P(9 ≤ T ≤ 11.5) = P ⎜ z ≤ ⎟ − P ⎜z ≤ ⎟
⎝ 0.7817 ⎠ ⎝ 0.7817 ⎠
P(9 ≤ T ≤ 11.5) = P(z ≤ 0.6396) − P(z ≤ −2.5585)
P(9 ≤ T ≤ 11.5) = 0.7389 − [1− 0.9948 ] = 0.7337

Estimation of a, m and b
Most important inputs of the PERT are the three estimates: optimistic, pessimistic and the modal
duration of each activity in the project network diagram( shown as a, b, and m, respectively). It is possible
to use several approaches to determine the duration estimates necessary for PERT. The following are some
of the strategies (Badiru, 2011):
• Predictions provided by an experienced person
• Estimates derived from historical data
• Estimates obtained from statistical methods such as regression
• Estimates provided by the results of simulation scenarios
• Approximations obtained from heuristic assumptions
• Customer requirements

Advantages and Limitations of PERT

PERT derives the following advantages (Chand, 2014):
• Allows managers to analytically plan their projects and evaluate all the factors that affect the progress
of the project. The network analysis process involves the project planning to be carried out from
start to finish in considerable detail.
• Provides management with a tool to predict the effect of schedule changes and be prepared to
resolve such circumstances. The likely trouble areas are placed earlier which gives enough time to
apply some preventive or corrective steps.

53
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Project Scheduling

• Task relationships are represented visually for easier assessment, and individuals can logically
deduce their role in the overall task requirements at various steps.
• The PERT time is based on a there estimates, and therefore, it is the most objective prediction
under the uncertainties and results in a higher degree of forecast accuracy.
• PERT provides improved communication results. The network diagram provides a mutual interest
for different stakeholders such as project managers, customers, contractors, etc., and they all
understand the role and contributions of each other.
• The network will illustrate situations that require higher priority attention whereas intention can be
applied to key activities without overlooking the lower priority tasks. This provides management a
chance to shift focus to any critical activity in order to finish the entire project on time.
There are some constraints or issues that arise in PERT (Chand, 2014):
• The estimation of duration and resources is uncertain. Keep in mind that these values are just
assumptions and outcomes can only be as good as the assumptions
• Final cost may exceed traditional planning and control techniques. Due to the current nature of
networking and network analysis, it requires a high level of planning skills and more details that
would raise the cost of time and resources for labors,
• It is not appropriate to use PERT for fairly simple and repetitive projects such as fixed-sequence
works.

CPM vs. PERT

While both strategies enable you to predict which series of activities (or paths) will take the longest time
to finish in a project, there are some differences between PERT and CPM. These differences are shown as
a comparison table below.

Table 3.4 Comparison Table of CPM and PERT (Stechies, 2019)

Basis of Difference PERT CPM

It is an essential method for effectively

It is a practical project management keeping project costs and timeline
method for project timeline planning checks and balances. CPM networks
and controlling. The emphasis in PERT are focused on activity and are
Nature is on starting and finishing of the displayed by arrowed lines while circles
events, not activities themselves. It is represent activities. The activities can
not possible to specify the activities be connected in a logical order in
that take place between events. which the duration allocated to each
activity is strongly linked to its cost.

PERT is oriented towards events.

Simply put, PERT networks are willing
CPM is activity-oriented and not time-
Orientation to engage in focusing on starting or
related.
completing various events instead of
the activities themselves.
Probabilistic Model: PERT’s
probabilistic techniques provide
Deterministic Model: CPM’s
several estimates to determine
deterministic techniques provide us
Type of model when projects are completed. These
with a prediction of the cost/duration
probabilistic techniques also monitor
available to complete a project.
all activities to complete a project at a
lower price and faster rate.

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Project Management

Based on three estimates in PERT, the

Trade-off between duration and cost.
time frames for estimating project
It enables project managers to decide
Lay focus on completion are determined: the most
which element of projects should be
likely, the most undesired, and most
decreased or increased.
desirable.
Estimation Three duration estimations One duration estimation
Good for the
Unpredictable activities Predictable activities
management of
Job type and suitability Non-repetitive jobs Repetitive jobs
There is no allowance for uncertainty
Consideration for Uncertainty is allowed with the
regarding the duration of time
Uncertainty estimates.
required to complete the project.
The activity duration is not very
The general activity duration are
precise and definite. Above given
Duration of activity expected to be estimated with a
strategies can be applied to predict
reasonable degree of precision.
them more accurately.
Time and cost are independent in In CPM, the aim is to develop a specific
Relation of cost and time
PERT. and optimal time-cost relationship.

Learning Outcomes

2 Explain the major steps of PERT.

Self Review 2 Relate Tell/Share

Compare two different Share the strategies that can

What are the advantages
network strategies; CPM be used to estimate the a, m,
and limitations of PERT?
and PERT. and b in PERT formulas.

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Project Scheduling

Further Reading

POLARIS MISSILE prescribed scheduled targets at different phases or

milestones in the project. PERT also highlights
PERT’s development started when the the project management control phase through
U.S. Navy faced the challenge of record-time of multiple types of periodic project status reports.
production in the Polaris missile system in 1958. The study of the original PERT research team
Several studies have shown that there is much to be was expanded to the fields of cost planning and
required in terms of the time and cost predictions control and to a slightly lesser degree to the areas
of such projects in the 1950s. (Marshall and of product quality or performance. (DOD &
Meckling, 1959; Peck and Scherer,1962). These NASA Guide, 1962).
analyses stated that real costs were, on average,
two to three times the earliest projected costs,
and the duration of the project were 40 to 50
percent higher than the earliest projections.
Similar surveys showed average cost and time
overruns for commercial projects were also 70%
and 40%, respectively. While many individuals
think that initial estimates need to be optimistic
to obtain contracts, in fact, the absence of
appropriate project management planning and
control methods for hugely complex projects
was a more significant reason for these mistakes
(Moder & Phillips, 1964).
Admiral W. F. Raborn acknowledged that
something smarter was required for the Polaris
Weapons System program in the form of an
embedded planning and control system. A Figure 3.7 Submarine-launched Ballistic Polaris Missile
research team composed of members from (Britannica, 1998)
Lockheed Aircraft Corporation (Polaris’ Prime
Contractor), the Navy Special Projects Office, As a result, Polaris missile system, the first U.S.
and researchers from consulting company was submarine-launched ballistic missile (SLBM), has
assembled to face this challenge. This research become the core of British nuclear capability in
project has been identified as PERT or Program the 1970s and 1980s. In 1960, after The United
Evaluation Research Task, which is called as States four years of research and development,
Project Evaluation and Review Technique by U.S. Navy started deploying each nuclear-powered
the time of the first internal project report. submarines with 16 Polaris missiles. Thanks to
This study team developed the PERT system the advantages gathered by PERT system, three
from methods such as milestone reporting versions were produced: the A-1, with a range of
systems, Line-of-Balance and Gantt charts 2,200 km and a nuclear warhead of one megaton;
(Turban, 1968). Time was the core of the Polaris the A-2, with a range of 2,700 km and a warhead
project, so the research team focused mainly on of one megaton; and the A-3, capable of providing
planning and managing the time as the program three 200 kiloton warheads over a distance of
component. As a consequence, one of PERT’s 4,500 km (Britannica, 1998).
main characteristics is a statistical presentation
of uncertainty in activity time; it involves Source: [Link]
an assessment of the probability of reaching watch?v=eIhobMrdzTk)

56
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Project Management

Define the stages of network analysis for a project and describe

LO 1 the two different ways of drawing a project network diagram

The project’s basic network analysis typically takes place in three stages: network planning stage, network
planning stage, and network control stage.
• Network planning is often referred to as activity planning as well. The activities in the project and
preceding relations between activities are described at this level. Network diagrams are used to describe
the operations visually. Activity-on-arrow (AOA) and activity-on-node (AON) are the two popular
network drawing systems.

Summary
• Network scheduling is performed using mathematical techniques to compute the earliest and latest
start and finish times for each activity. The amount of slack or float associated with each activity is also
determined at this stage.
• Network control involves monitoring the progress of a project on a network timetable basis and taking
corrective action where required. An evaluation of general performance versus anticipated outcomes
will determine deficiencies in project progress (Badiru, 2011).
As indicated above, there are two methods to typically draw a network diagram:
• Activity on Arrow (AOA) representation
• Activity on Node (AON) representation
In AOA, the arrows describe activities while the nodes indicate the start and end of an activity. The
arrow distance connecting the nodes is irrelevant and the arrows can be direct, curved, or bent. On the
other hand, in AON, the nodes represent activities and the arrows show logical relationships between the
activities. If the arrow starts at the end of an activity (activity A) and ends at the start of another activity
(activity B), it can be said that A is a predecessor to B.

LO 2 Explain the major steps of PERT

The major steps in PERT can be explained simply as follows (Badiru, 2011):
• For each activity; three estimated durations such as optimistic “a,” modal “m,” and pessimistic “b”
durations must be determined.
• Using these three estimates, compute the expected value te for each activity.
• Calculate the variance “s2” for each activity.
• By summing up the expected durations of the critical activities, compute the expected project duration, Tx.
• Like the project expected duration, compute the variance of the project as the sum of variance of
activities on the critical path.
• If needed, the probability of concluding the project within a stated time limits can be calculated.

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Project Scheduling

1 Which of the following is not a stage of the 5 What does “m” stand for in the formula
fundamental network assessment? ⎛ a + 4m + b ⎞
of activity expected duration ⎜t e = ⎟ in
⎝ 6 ⎠
a. Network planning
PERT?
b. Network scheduling
c. Network control a. Pessimistic time
d. Network estimation b. Optimistic time
Test Yourself

e. None of above c. Mean time

d. Standard deviation
2 Which of the following is the correct e. Most likely time
definition of an activity in project management?
a. An activity is a line that connects two nodes to 6 Which of the following is not a recommended
one end with an arrowhead. strategy to estimate a, m, and b in PERT?
b. An activity is a time-consuming action necessary a. Predictions provided by an experienced person
to accomplish part of the current project. b. Estimates from rival firms
c. An activity is an arrangement of precedence that c. Estimates derived from historical data
determines the pattern of activities. d. Estimates obtained from statistical methods
d. Once two or more tasks are predecessors of a such as regression
single task, an activity occurs. e. Estimates provided by the results of simulation
e. An activity occurs when there is a prevalent scenarios
predecessor for two or more operations.
7 Which of the following is not an advantage
3
Which of the following is not true about derived from PERT?
AOA and AON? a. Allows managers to analytically plan their
a. The dummy activities in AON representation projects and evaluate all the factors that affect
are not necessary. the progress of the project.
b. AON can be drawn and read more readily. b. Provides management with a tool to predict the
c. In AOA, activity can only begin once all of its effect of schedule changes and be prepared to
predecessors have been started. resolve such circumstances.
d. AON enables the depiction of overlap/lag. c. Task relationships are represented visually for
e. AON enables four kinds of relationships to be easier assessment; however, in PERT, individuals
represented while AOA enables only finish to cannot logically deduce their role in the overall
start relationship. task requirements at various steps.
d. The PERT time is based on a there estimates,
and therefore, it is the most objective prediction
4 Which of the following is not true about AOA? under the uncertainties and results in a higher
a. Each activity must have a distinctive number degree of forecast accuracy.
such as i and j, where j (number at the arrow’s e. PERT provides improved communication
head) is greater than i (number at the arrow’s tail). results.
b. A gap between numbers (i.e. 5, 10, 15, etc.) is
suggested. This will enable missed operations to
be accommodated.
c. Back arrows can be used as much as you need.
d. Dummy activities are used when more than one
arrow exits the same node and enters at another
node.
e) When one activity relies on two previous
activities and another activity depends only on
one of the two previous activities, a dummy
activity must be used.

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Project Management

Table 3.5 Duration Estimations and Predecessor Relationships for the Project
Duration Estimations
Activity Predecessors Optimistic Pessimistic Most Likely
(a) (b) (m)
A - Train workers - 5 13 9
B - Purchase raw materials - 2 10 6

Test Yourself
C - Produce product 1 A, B 3 13 8
D - Produce product 2 A, B 1 13 7
E - Test product 2 D 8 12 10
F - Assemble products 1 and 2 C, E 9 15 12
Source: Winston, W. L., & Goldberg, J. B. (2004). Operations research: applications and algorithms (Vol. 3).

8 What are the expected duration (Tc ) and variance ( Sc2 ) of the activity C in Table 3.5?

a. Tc = 8 Sc2 = 7.28
b. Tc = 8 Sc2 = 2.78
c. Tc = 7 Sc2 = 7.28
d. Tc = 7 Sc2 = 2.78
e. Tc = 6 Sc2 = 7.28

9 What are the expected project duration (Tx ) and variance ( Sx2 ) of the project in Table 3.5?

a. Tx = 38 Sx2 = 7.22
b. Tx = 37 Sx2 = 7.22
c. Tx = 38 Sx2 = 7.02
d. Tx = 37 Sx2 = 7.02
e. Tx = 36 Sx2 = 7.22

10 For the same project in Table 3.5, what is the probability of finishing the project within 35 days?
a. 0.1314
b. 0.1762
c. 0.5000
d. 0.8238
e. 0.8686

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Project Scheduling

If your answer is incorrect, review the If your answer is incorrect, review the
1. d 6. b
section on “Project scheduling concepts” section on “Program evaluation and review
section. technique (PERT)” section.
Answer Key for “Test Yourself”

If your answer is incorrect, review the If your answer is incorrect, review the
2. b 7. c
section on “Project scheduling concepts” section on “Program evaluation and review
section. technique (PERT)” section.

If your answer is incorrect, review the If your answer is incorrect, review the
3. c 8. b
section on “Project scheduling concepts” section on “Program evaluation and review
section. technique (PERT)” section.

If your answer is incorrect, review the If your answer is incorrect, review the
4. c 9. a
section on “Project scheduling concepts” section on “Program evaluation and review
section. technique (PERT)” section.

If your answer is incorrect, review the If your answer is incorrect, review the
5. e section on “Program evaluation and review
10. d
section on “Program evaluation and review
technique (PERT)” section. technique (PERT)” section.

What are the stages of network analysis?

Suggested Answers for “Self Review”

The project’s basic network analysis typically takes place in three stages:
network planning stage, network planning stage, and network control stage.
• Network planning is often referred to as activity planning as well. The
activities in the project and preceding relations between activities are
described at this level. Network diagrams are used to describe the
operations visually. Activity-on-arrow (AOA) and activity-on-node
(AON) are the two popular network drawing systems.
self review 1 • Network scheduling is performed using mathematical techniques to
compute the earliest and latest start and finish times for each activity. The
amount of slack or float associated with each activity is also determined at
this stage.
• Network control involves monitoring the progress of a project on a
network timetable basis and taking corrective action where required.
An evaluation of general performance versus anticipated outcomes will
determine deficiencies in project progress (Badiru, 2011).

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Project Management

What are the advantages and limitations of PERT?

Suggested Answers for “Self Review”

ERT derives the following advantages:
• Allows managers to schedule their projects numerically and to assess
all variables affecting project progress. The method of network analysis
includes project planning to be carried out in significant detail from start
to finish.
• Offers management with a method to estimate and be ready to address
the effects of scheduling alterations. Earlier, the probable problem areas
are situated which provides adequate time to take some preventive or
corrective action.
• Activity interactions are visually represented to facilitate evaluation, and
participants can reasonably deduce their position in the general project
demands at different stages.
• The PERT duration is depending on the estimates available, and is
therefore the most accurate estimate under the uncertainties, resulting in
a greater degree of predictability.
• PERT offers better outcomes in communication. The network diagram
self review 2 gives distinct stakeholders a shared interest such as project executives,
customers, contractors, etc., and they all comprehend each other’s position
and contributions.
• The network will demonstrate situations requiring a greater priority,
whereas intention can be applied to important activities without forgetting
the reduced priority tasks. This gives management the opportunity to shift
attention to any critical activity to complete the entire project on time.
In PERT, there are some limitations or problem areas that can occur, such as:
• Duration and resource estimates are unclear. Bear in mind that these
parameters are merely assumptions, and the results can only be as strong
as the presumptions.
• Final costs may exceed the costs of traditional methods of planning and
control. It needs a high amount of scheduling ability and more information
due to the present nature of networking and network analysis, which
would increase the cost of time and money for laborers.
• Using PERT for relatively easy and repetitive projects such as fixed-
sequence jobs is not reasonable.

61
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Project Scheduling

References
Badiru, A. B. (2011). Project Management: Systems, Marshall, A. W., & W. H. Meckling. (1959).
Principles, and Applications: CRC Press. Predictability of the Costs, Time and Success of
Development (RAND Corp., Report P-1821).
United States. Dept. of Defense., United States.
CA, USA.
National Aeronautics and Space Administration.
(1962). DOD and NASA Guide: PERT COST Moder, J. J., & Phillips, C. R. (1964). Project
Systems Design. Washington, USA: U. S. Management with CPM and PERT. NY, USA:
Government Printing Office. . Reinhold Pub. Corp.
Flagle, C.D. (1954). Probability Based Tolerances Peck, M. J., & Scherer, F. M. (1962). The Weapons
in Forecasting and Planning (Unpublished Acquisition Process; An Economic Analysis.
doctoral dissertation). Johns Hopkins University,
Turban, E. (1968). The Line of Balance-A
Maryland, USA.
Management by Exception Tool. The Journal of
Hillier, F. S., and Lieberman, G. J. (1995). Introduction Industrial Engineering, 19(9), 440-448.
to Operations Research (6th ed.): McGraw-Hill
Winston, W. L., & Goldberg, J. B. (2004). Operations
Science, Engineering & Mathematics.
Research: Applications and Algorithms (4th ed.).
Lewis, J. P. (2005). Project Planning, Scheduling & CA, USA: Brooks/Cole.
Control (4th ed.): McGraw-Hill Pub. Co..

Online References
Chand, S. (2014, February 17). PERT and CPM: Elbeltagi, E. (2009). Stochastic Scheduling [PDF
Techniques of Project Management (Advantages and document]. Retrieved from Lecture Notes Online
Disadvantages) [web log comment]. Retrieved Website: [Link]
from [Link] CM%20CH5%[Link]
project-management/pert-and-cpm-techniques-
Gunneriusson, E. (2017). D0001B:Applied
of-project-management-advantages-and-
Operation Research, Lp3, V17 [PowerPoint slides].
disadvantages/25769.
Retrieved from[Link]
Stechies (2019, April 9). Difference between PERT and document/lulea-tekniska-universitet/tillaempad-
CPM with Comparison Chart. . Retrieved from operationsanalys/lecture-notes/cpm-pert-lecture-
[Link] notes-12/1231598/view
pert-cpm/

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 Chapter 4 Resource Management
After completing this chapter, you will be able to;
Learning Outcomes

Define the resource and the resource

1 2
management concepts and explain
the benefits of the successful resource Apply the resource management steps and
management applications techniques to the projects

3 Explain the project human resources

management and its components 4 Explain the functions and selection criteria of
resource management software

Chapter Outline Key Terms

Resource Management
Introduction Resource Allocation
Resource Management Concepts Resource Leveling
Resource Management Steps and Techniques Human Resources Management
Project Human Resources Management Resource Management Software
Responsibility Assignment Matrix
Resource Management Software Staffing Management Plan

64
Project Management

INTRODUCTION
Resource management is the pre-planning,
Money
scheduling and resource allocation method
for maximizing the effectiveness. Resource
management needs a thorough knowledge of your
goals and ability, and it needs transparency. By
setting up a healthy resource management process,
you can maximize effectiveness and monitor the Resource
Machine
Manpower Management
use of those resources easily.
As part of project management, resource
management aims to do more with less.
Consequently, resource management is focused on
effectiveness and optimization. You can efficiently
plan the ideal manner to use these resources Material
when you understand what you need to create a
successful project . Therefore, in literature, different
techniques are studied for resource management.
Figure 4.1 Four “M”s of Resource Management
The rest of this chapter consists of four sections.
In the first section, resource management concepts
important
are explained and definitions of resource and
resource management are provided. The benefits of
the successful resource management applications Money, material, machine and manpower are
and suggestions for the project success are also the Four M’s, which is a common framework
discussed in this section. In the second section, for defining the resources available for a
we explain the steps and the basic techniques of project.
the resource management. This is followed by an
overview of human resources management. In
the last section, benefits of resource management Definition of Resource and Resource
software and criteria for selecting resource Management
forecasting software are briefly explained. In literature, resources are often described
in units such as two welders or three computers.
RESOURCE MANAGEMENT However, it is also possible to specify them in
CONCEPTS terms of the time they require, such as 16 welder-
hours or 24 computer-hours. In literature, another
In resource management, the first thing is to
classification of resources can be made depending
consider which resources are important enough
on their consumability. While some resources are
to control and manage for our company. While
considered as consumable (e.g. material), other
this looks quite easy at first glance, it can be very
resources, such as workers, can be defined as non-
time consuming when all necessary resources are
consumable which can be used again and again
taken into account. In general, a resource can be
during the project. Consequently, we may need to
defined as all the required things to finish a project
manage and assign the non-consumable resources
on time. Therefore, depending on the type of the
effectively in order to complete the project on
project, it can be a person or a worker, a machine,
time. Therefore, in resource management, we are
financial resources (funds), material, or anything.
more concerned with non-consumable resources
However, in this chapter, we can narrow it to
(Elbeltagi, 2009).
four main resources such as manpower, money,
machine, and material (i.e. Four “M”s) as given Another classification can be made depending
in Figure 4.1, in order to give the details of how on the importance of the resources. There are
resources management techniques can be applied mainly three categories in this classification:
to each type of resources. key resources, secondary resources, and general

65
 Resource Management

resources. As it can be easily understood, key two different approaches: the forward-pass and
resources are the most important resources for our the backward-pass. Both approaches utilize the
project. They are mostly expensive and scarce. The durations of the activities, which means they assume
skilled workers or equipment can be named as the that all the resources (for CPM, the durations of
key resources for a project. Hence, we must pay the activities) are available in hand before we start
more attention to these types of resources in the the project. However, this is not always the case.
resource management process. However, we must Thus, we need to find a proper way of managing
keep in mind that a key resource for a project can resources in our project, which is also the main
be a secondary or a general resource for another objective of the resource management process.
project. Another category is the secondary resources Managing this process is very critical especially
which need less attention than key resources. One when we have limited resource capacity and when
example of secondary resource is workers with we need key and non-consumable resources for our
regular skills. The last category is general resources project.
which are mostly available all the time during The steps of successful resource management
the project, inexpensive, and easy to obtain. This process are provided in Figure 4.2. First, we
type of resources is not the subject of the resource start with determining the necessary sources for
management process. our project. In the second step, we classify them
Until that point, we have defined the resources in with respect to the given classes above such as
terms of project management. From now on, we will consumable, secondary resources, etc. In the
explain the resource management. There does not third step, according to the project scheduling,
exist a unique definition of resource management. we must estimate the required quantity of each
Therefore, we provide the most common source determined in the previous step for all the
definitions in this chapter. According to the APM activities. Finally, resource aggregation, leveling,
(Association for Project Management) Body of and smoothing techniques can be applied, if
Knowledge, which is the largest professional body necessary.
of its kind in Europe, the resource management is
‘the acquisition and deployment of internal and
external resources required to deliver the project,
Define the
programme or portfolio’ (Management, 2012). In necessary
another study, it is defined as “the management resources
capacity and resources of service that are organized
Classify them
effectively and operated efficiently at optimal level” (key resources,
(Demirbag, Lenny Koh, Tatoglu, & Zaim, 2006). non-
consumable,
important etc.)

APM (Association for Project Management) Estimate the

Body of Knowledge, which is the largest required
professional body of its kind in Europe, quantity of
each resource
defines the resource management as ‘the
acquisition and deployment of internal and
external resources required to deliver the
project, programme or portfolio’. Apply the
techniques to
aggregate and
As it is already mentioned in the previous level the
chapter, project activities, durations and the resources
predecessors of each activity are the main inputs of
the project scheduling. In project scheduling, start Figure 4.2 Resource Management in Brief
and finish time of each activity are determined by

66
Project Management

Benefits of the Successful Resource Management Applications

As already mentioned above, the resource management aims to maximize the value resulting from the
company’s limited resources throughout the entire project for all departments and teams. In their websites,
Hansen (2018) and Rius (2019) summarize the benefits of successful resource management for a company
as follows:
• Avoids unexpected delays: By developing resource management plans, necessary resources can be
predicted, and the unexpected delays may be avoided.
• Prevents overloads and fatigue: Effective resource management allows us to prevent overloads
of resources (fatigue for humans) and bottlenecks or roadblocks by using resource allocation,
aggregation and leveling techniques.
• Builds transparency: Resource management provides transparent information about the status
and workloads of resources and builds transparency for all the shareholders of the project.
• Measures efficiency: It allows us to measure the efficiency of resources and enable us to work on
multi-project environment. It also helps us to calculate return on investment (ROI) ratio easily.
• Provides a safety net and projection: Resource management lets us know that we did the best
with the available resources in hand and it offers the future projection for the upcoming projects.
Possible benefits of a successful resource management application for a company is illustrated in Figure 4.3.

Provides a
safety
net and a
projection
Avoid Measures
unexpected efficiency
delays
Builds
transparency

Prevents
overloads
and fatigue

Figure 4.3 Benefits of a Successful Resource Management Application

Suggestions for Resource Management for the Project Success

It is essential to have a good resource management system to complete a project on time and on the
limited budget. Even though we have enough resources, without an appropriate resource management
system, it is not very likely to succeed in a project. In this part, six suggestions for resource management
are explored. According to Leankor (2018) and Bailey (2019), these suggestions can be summarized as
follows:
• In order to get optimal performance from the resources, schedule the most valuable resources (i.e.
key resources) which are the most critical and problematic resources first. This will also help you
organize other resources easier.
• It is very important to have an intelligent resource management software that let you to analyze
the “what-if ” scenarios such as reallocating some resources to other activities. This allows project
managers to see the theoretical results in real time and in a risk-free environment. Resource
management software is a perfect solution to assist project managers respond rapidly and successfully
when new scenarios are encountered in real life.

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 Resource Management

• Gaining visibility on resources and As the socio-economic environment

tracking the project allow project managers changes, the need for a skilled workforce
to monitor the process, to inform the becomes even more crucial. A project
stakeholders, and to control the resources. manager should keep the entire team
It is very important for a project manager happy. Therefore, the skilled workers with
to see where the resources are used and to good performance should be recognized
measure the performance of the necessary and rewarded to improve the morale level.
resources. Therefore, setting up a resource The detailed information about how to
management system, which supports manage human resources will be given in
project managers with the required statistical the following chapters.
analysis and utilization data, facilitates • Finally, be prepared for the worst case.
decision making process. Remember, if you Unfortunately, there will be periods when
cannot measure it, you cannot improve it. things go wrong with the project resource
• Reporting is an important part of the management. Predicting the possible
resource management process. It helps problem areas about resources and having
project managers to scope, estimate, and alternative scenarios to fix the potential
monitor all activities for the project in hand; disasters are very important. However,
and it gives an idea about the resources that sometimes it may not be possible to fix
may or may not be needed in the future. these problems with the resources in hand;
• Remember, humans are also resources, and therefore, it can be better to develop a
as it is always said, human resource is the system that sources you with external
most important resource of the companies. resources.

Learning Outcomes

1 To define the resource and the resource management concepts, and explain the benefits
of the successful resource management applications

Self Review 1 Relate Tell/Share

What are the suggestions

Share what major problem you
for resource management Build a relationship between
have encountered in a project
for a successful resource the resource management and
due to the lack of resource
management application in a project success.
management.
project?

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Project Management

RESOURCE MANAGEMENT Estimating resource

STEPS AND TECHNIQUES 1

There are three major constraints of a project: Resource allocation

duration limitations, performance requirements, 2
and the resource constraints, which is also the Resource aggregations
3
subject of this chapter. Even though these three
constraints have equal importance, it is always Resource leveling
difficult to satisfy all of them at the same time. 4
Consequently, a trade-off among these constraints Resource forecasting
must be established. Insufficient resource results 5
in a longer project schedule and an ineffective
resource management can easily affect the quality Figure 4.4 Steps of Resource Management
and the performance requirement of the project.
Therefore, better strategies must be developed to
manage the resources in a company. Estimating Resources
important The first step of resource management is the
estimating of resources. In this step, the project
managers estimate the type and amount of human
Insufficient resource results in a longer
resources, materials, machines, or any resources
project schedule and an ineffective resource
needed to accomplish each activity. The main
management can easily affect the quality and
aim of this step is to identify the types, amount,
the performance requirement of the project.
and characteristics of the resources needed to
Therefore, better strategies must be developed
accomplish the activities, and it allows to estimate
to manage the resources in a company.
the costs and the duration more accurately.
According to Bpayne and Adrienne Watt (2014),
In this chapter, we explain the steps and the there are five techniques and tools to estimate the
basic techniques of the resource management. The resources for each activity in the project schedule.
first step is the estimation of resources. In this step, • Expert judgment: One of the useful
the project managers estimate the type and amount techniques to estimate the resources for
of human resources, materials, machines, or any each activity is to gather experts, who have
resources needed to accomplish each activity. The done a similar project before and who
resource allocation is the second step of the resource knows which resources may be needed for
management. In this step, resources, which are this kind of a project.
defined in the first step, are assigned to the specific
• Published estimating data: Another good
activities in the project schedule. In the third step,
way of estimating resources is to look for
resource aggregation is carried out. In this step, all
published data of other projects such
necessary resources are summed up on a timeline
as articles, books, magazines, etc. This
which depends on the resource allocations carried
technique is widely used among the project
out in the second step. The following step is the
managers to benchmark and compare the
resource leveling step. In this step, we aim to
performance of their project and to estimate
minimize the fluctuations on resource requirements
the future requirement of resources.
for activities throughout the project life cycle
and to minimize the negative effects of resource • Project management software: As already
demands. As an extension of resource leveling, mentioned above, an intelligent resource
the resource smoothing attempts to eliminate the management software, which lets you
peaks and troughs for resources. The last step is the analyze the “what-if ” scenarios, can be very
resource forecasting which allows resource manager useful to estimate the resources required
to anticipate the future resource requirements for future projects. Details about resource
before a project starts. The flowchart of a resource management software are provided in the
management is provided in Figure 4.4. following subsections.

69
 Resource Management

• Bottom-up estimating: In this technique, activities are broken into pieces and resource requirements
are estimated for these small pieces. These estimates are summed up to find the total estimate
of the project. Even though it provides very accurate estimates, it is very time consuming since
each activity in the project schedule must be assessed carefully. Therefore, if the project manager
divides project into smaller pieces, it brings more accuracy, but at the same time more cost to the
technique.
• Alternative analysis: There may be more than one way of accomplishing an activity in terms of
the number and the kind of resources. Therefore, alternative analysis must be developed to decide
which alternative is the most proper one for the project (Watt, & Watt, 2014).

Resource Allocating
The resource allocation is the second step of the resource management. In this step, resources, which
are defined in the first step, are assigned to the specific activities in the project schedule. At that step, we
also determine the required number resources. However, multiple sources may be assigned to a specific
activity, in addition to that, even the requirement for a specific resource may be different for each activity.
For instance, some activities in the initial steps may need fewer workers, while the demand for workers
may increase in the later stages. Moreover, a multi project environment can increase the complexity of
resource allocation process since projects compete for scarce resources. Therefore, in this step of resource
management, we try to optimize the utilization of these resources while we assign them to various project
activities.
In resource allocation step, we can create an allocation table for both the overall project or a specific
activity. However, it is highly recommended to create an overall project resource allocation table to see
the big picture. In his book, Pinto (2006) describes the importance and necessity of this step with a
straightforward example.

Example 4.1
Suppose a project activity network is created based on the activity precedence information given in
Table 4.1., and Figure 4.5. shows the conflict on the network diagram of that project. In Figure 4.5., it
can be observed that activity B (Document Awards) and activity C (Calculate Costs) have been scheduled
to the same dates, and they both require the same person (Jeff). Even though this satisfies the predecessors
constraint, it simply does not satisfy the resource constraint since it requires an overtime for Jeff to finish
both activities in the same week. In brief, this schedule has a misallocation of resources. This situation
forces the project manager to make a trade-off between time and money since there are two options to
finish this schedule: extending the schedule or assigning a new resource to these activities.

Table 4.1 Activity Precedence Table

Activity Description Duration Predecessors Member Assigned

A Assign Bids 5 days None Tom

B Document Awards 5 days A Jeff

C Calculate Costs 5 days A Jeff

D Select Winning Bid 1 day B, C Sue

E Develop PR Campaign 4 days D Carol

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Project Management

Assign Bids Document Awards

Start : Mon 1/31/1 ID: 1 Start : Mon 2/7/11 ID: 2
Finish: Fri 2/4/11 Dur: 5 days Finish: Fri 2/11/11 Dur: 5 days
Res: Tom Res: Jeff

Calculate Costs
Start : Mon 2/7/11 ID: 3
Finish: Fri 2/11/11 Dur: 5 days
Res: Jeff

Figure 4.5 Sample Activity Network with Conflicts (Pinto, 2006)

However, in big and complicated projects where various resources exist, discovering such a conflict
on resources is not easy. Hence, we use resource loading charts to examine the possible conflicts of the
resources. These charts allow us to control the feasibility of the resource allocations. An example of resource
loading chart is provided in Figure 4.6.

Figure 4.6 Resource Loading Chart (Pinto, 2006)

Now, it is easier to discover the resource conflicts on the chart. As a project manager, we can simply
add a new resource (worker) who is responsible for activity C (Calculate Costs) and we have the following
feasible Gantt Chart in Figure 4.7. On this chart, we can see the availability of each resource in a weekly
base and we can form the resource loading chart given in Figure 4.8.

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 Resource Management

Figure 4.7 Sample Project Activity Network and Gantt Charts (Pinto, 2006)

Figure 4.8 Resource Loading Chart (Pinto, 2006)

The resource loading chart table provides some valuable information such as resources, the activities
that the resources are assigned, and the expected time of each resource needs. It also enables us to check
the feasibility of the project schedule by showing the misallocation, overallocation, and underutilized
resources. However, how to react to these problems is the next question that a project manager must
handle (Pinto, 2006).
Even though it has several advantages, the resource allocation has several challenges that a project
manager must be aware of. In their website, Paweł Hałabuda (2019) summarizes these challenges as follows:
• Client Changes: Any changes in the scope, the due date or the budget can easily affect the current
resource allocations. Hence, a good project manager must always be ready to adjust the resources
with respect to the possible changes.
• Availability of Resources: Having multiple projects that share the same resources, broken
machines, or sick workers force a project manager to monitor the resources all the time since
availability of resources can suddenly change.
• Activity Predecessors: A project manager must pay great attention to the activity predecessors
while allocating the resources. In most cases, there exist some activities in the project which cannot

72
Project Management

be started before some other activities are completed. In such cases, the resources to be used in these
activities do not need to be prepared in advance.
• Changes in Priorities: Changes in the priorities among the projects is a common problem for a
company if multiple projects run at the same time. In this situation, the resources, which a project
manager has already allocated, may be needed by the other project that has a high priority for the
company (Hałabuda, 2019).

Resource Aggregation
The third step of resource management is the resource aggregation. In this step, we sum the resources
that are required to complete all the activities with respect to the resource allocation step outputs.
Histograms are very practical to show the results of that aggregation process. For each resource estimated
and scheduled in the previous stages, a separate histogram is required. In the resource aggregation step,
using the same time unit with the allocation step also facilitates the summation process (Elbeltagi, 2009).
This step is very vital when the same resources are shared among different projects in a multi-project
environment. In these kinds of projects, the aggregated amount of a resource cannot be simply determined
without using resource aggregation procedure.
In order to form the histograms, the necessary amount of each resource is written on the bar chart for
each time period, and then they can be summed up to show the total amount needed (Lock, 2016). These
amounts can be presented under the bar chart and used as an input for the histogram as given in Figure 4.9.

Week
1 2 3 4 5 6 7 8 9
Activity

A 10 10

B 8 8 6

C 2 6

D 2 6 10 10 8

E 6 6

Total resource
units requirement 10 18 8 10 12 10 10 14 6

15
Resource
unit 10
aggregation
chart
5

Figure 4.9 Resource Aggregation and Histograms (Resource Unit Aggregation Charts) (Elbeltagi, 2009; Lock, 2016)

The earliest possible times of the activities are taken into account to show the activities on the bar
charts, which means each activity is tried to be finished as soon as possible (Lock, 2016). However, this is
not always the case. Especially, the non-critical activities do not have to be started at the earliest possible
time mainly because they may not change the project total completion time even if they start later. These
non-critical activities are constrained by earliest and latest start and finish times as already mentioned
in the previous chapter. Actually, this allows us to adjust the demand for the resources among the time

73
 Resource Management

periods on the schedule. Figure 4.10 demonstrates this situation. The resource requirement of non-critical
activities, for both earliest and latest start, are illustrated on this figure with the resource requirement of
critical activities. While resource requirement of non-critical activities changes with respect to their starting
time, for the critical activities, it remains constant as illustrated in the figure as a shaded area. The same
figure also expresses that the resource requirements are accumulated to the beginning of the project when
earliest start times are taken into account, and to end of the project when latest start times are considered.
However, it can be observed that both plans are not ideal, and it requires to minimize the fluctuations on
resource requirements for activities throughout the project life cycle to minimize the negative effects of
resource demands. Consequently, this takes us to the next step, the resource leveling.
Resource units
Resource requirement for earliest start
Resource requirement for latest start
8 Resource requirement for activities on the critical path

2 4 6 8 10 12 14
Weeks

Figure 4.10 Effect of Starting Times of Non-critical Activities on the Aggregation (Elbeltagi, 2009,& Lock, 2016)

Resource Leveling
In resource leveling, the aim is to solve the resource conflicts by shifting (mostly delaying) the dates of
the tasks. By doing so, we try to get a smoother distribution of resource allocation. To identify the resource
conflicts, we examine the network diagram in terms of slacks and floats, and determine the tasks that
can be delayed to overcome the overallocations. At that important
point, it is preferable to check the noncritical tasks first,
which does not change the overall schedule. Otherwise,
resolving overallocation can result in delays in project To identify the resource conflicts, we examine
completion date. Even though overallocation is a serious the network diagram in terms of slacks and floats
problem for a company, underallocation is also a case and determine the tasks that can be delayed to
which must be examined carefully to improve the usage overcome the overallocations. At that point, it
of specific resources. Therefore, in resource leveling, we is preferable to check the noncritical tasks first
are interested in both situations, and we aim to minimize which does not change the overall schedule.
the variations in resource usages along the project life Otherwise, resolving overallocation can result
cycle. Figure 4.11. demonstrates a generic example of in delays in project completion date.
resource leveling (Schwalbe, 2012).

74
Project Management

2
A=2 days Project network with Activities A,
B, and C and durations as shown.
B=5 days Activity A has 3 days of slack, and
1 4 Activity C has 2 days of slack.
B has 4 workers, and C has
C=3 days 2 workers.
3

8 8
A
6 6
Workers

Workers
A C
4 B B 4

2 B 2 B
C C

0 1 2 3 4 5 0 12 3 4 5
Days Days
Resource usage if all Resource usage if Activity C
activities on day one is delayed 2 days, its total slack allowance

Figure 4.11 A Generic Example of Resource Leveling (Schwalbe, 2012)

As it can be observed in Figure 4.11, activities A, solution for leveling the resources, however, it is
B, and C can start at the same time. While activity not that much easy to find even a feasible solution
A needs two days and two people, B needs five days for projects where we have thousands of activities.
and four people, and C requires three days and Consequently, we need more common ways
two people. On the left-hand side, a resource usage (heuristics, simplified rule of thumbs) of solving
diagram is given. In this diagram, it is accepted that resource leveling problems in real life (McCray,
all the activities start at the first day. As it can be Purvis, & McCray, 2002).
easily seen in the figure, we need eight workers in Some basic heuristics are provided below.
days 1-2, six workers in day 3, and four workers According to Pinto (2006), assigning the resources
in days 4-5, which means we need at least eight first to activities;
workers to complete this project on time. On the
• with the smallest slack time.
other hand, we need to rest two of them at day 3
and four of them in days 4-5. However, on the right- • with smallest duration.
hand side, a resource usage diagram is presented • with lowest activity identification number
for the case in which activity C is delayed for two (i.e. earlier activities first).
days. It can easily be observed that the diagram is • with most successor activities.
leveled with that delay. Now, we need six workers • which require more resources has significant
to complete the same project on time, and we do effect on resource leveling along the project
not need to rest any worker which will increase the life cycle.
usage of resources (Schwalbe, 2012).
A more complicated and challenging problem
On a project where we have three activities, it about resource leveling is provided in Example 4.2.
may be straightforward to determine a possible (Pinto, 2006).

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 Resource Management

Example 4.2
Activities, durations, and predecessors for the project are provided in Table 4.2, and based on these
data, early start (ES), late start (LS), early finish (EF), late finish (LF), and slack time are calculated
using the process explained in the previous chapter. Activity table of this project is provided in Table 4.3,
and corresponding Gantt chart and project network diagram are given in Figure 4.12 and Figure 4.13,
respectively.

Table 4.2 Activities, Durations, and Predecessors for Sample Project

Activity Duration Predecessors

A 5 —

B 4 A

C 5 A

D 6 A

E 6 B

F 6 C

G 4 D

H 7 E, F

I 5 G

J 3 G

K 5 H, I, J

Table 4.3 Developed Activity Table for Sample Project

Activity Duration ES EF LS LF Slack

A 5 0 5 0 5 —

B 4 5 9 6 10 1

C 5 5 10 5 10 —

D 6 5 11 8 14 3

E 6 9 15 10 16 1

F 6 10 16 10 16 —

G 4 11 15 14 18 3

H 7 16 23 16 23 —

I 5 15 20 18 23 3

J 3 15 18 20 23 5

K 5 23 28 23 28 —

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Project Management

Figure 4.12 Gantt Chart of the Project in Example 4.2. (Pinto, 2006)

5 B 9 9 E 15 16 H 23
6 4 10 10 6 16 16 7 23

0 A 5 5 C 10 10 F 16
0 5 5 5 5 10 10 6 16 23 K 28
23 5 28

15 1 20
18 5 23
5 D 11 11 G 15
5 D 14 14 4 18

ES ID LS 15 J 18
Legend 20 3 23
LS Dur. LF

Figure 4.13 Project Network with ES, EF, LS, LF and the Duration (Pinto, 2006)

Suppose that the number of hours per week that we can assign resources to the activities are as given in
Table 4.4. Total resource hours required for each activity is calculated by multiplying the resource hours
needed per day by the duration of the activity. For instance, activity B takes four days and it requires two
resource hours per day, which results in a total of eight resource hours as given in the last column.

77
 Resource Management

Table 4.4 Resource Needs for the Sample Network

Resource Hours Needed Total Resource Hours

Activity Duration Slack
per Day Required

A 5 0 6 30

B 4 1 2 8

C 5 0 4 20

D 6 3 3 18

E 6 1 3 18

F 6 0 2 12

G 4 3 4 16

H 7 0 3 21

I 5 3 4 20

J 3 5 2 6

K 5 0 5 25

Total 194

After calculating the total resource hours needed for each activity, following steps can be applied to
level the resources.
Step 1. Creating Resource Loading Table: As already mentioned above, the histogram can be used
to show the hours of resource requirements throughout the project life cycle as given in Figure 4.14. In
addition to histograms, the resource loading tables are also very useful to determine the resource conflicts
in the project. Resource loading table of the project in Example 4.2. is provided in figure 4.15. Note that,
the project is assumed to be started on January 1.

12

10
Resource Requirements

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27

Figure 4.14 Histogram of Required Hours of Resources (Pinto,2006)

78
Project Management

January February
Acivity 12345 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 29 30 31 1 2 5 6 7
A 66666
B 2 2 2 2
C 4 4 4 4 4
D 3 3 3 3 3 3
E 3 3 3 3 3 3
F 2 2 2 2 2 2
G 4 4 4 4
H 3 3 3 3 3 3 3
I 4 4 4 4 4
J 2 2 2
K 5 5 5 5 5
Total 66666 9 9 9 9 10 8 9 9 9 9 8 9 9 7 7 3 3 3 5 5 5 5 5

Figure 4.15 Resource Loading Table of the Project (Pinto, 2006)

Step 2. Determining Activity Late Finish Dates: The second step is the determination of activity late
finish dates by using the slack times and modifying the resource loading table. Modified resource loading
table of the project is given in Figure 4.16. Late finish dates of the activities with slack time are shown
with a bracket. Note that, activities on the critical path have no slack time, therefore their late finish dates
do not alter.
January February
Acivity 12345 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 29 30 31 1 2 5 6 7
A 66666
B 2 2 2 2
C 4 4 4 4 4
D 3 3 3 3 3 3
E 3 3 3 3 3 3
F 2 2 2 2 2 2
G 4 4 4 4
H 3 3 3 3 3 3 3
I 4 4 4 4 4
J 2 2 2
K 5 5 5 5 5
Total 66666 9 9 9 9 10 8 9 9 9 9 8 9 9 7 7 3 3 3 5 5 5 5 5
- Late Fininsh
Figure 4.16 Modified Resource Loading Table of the Project (Pinto, 2006)

Step 3. Identifying Resource Overallocation: After modifying the resource loading table with late
finish dates, we are ready to identify the resource overallocations. At that point, we know how many
resources we need in each period during the project life cycle. So, the question is whether we can supply
that much resource for this project. If the answer is ‘no’, then we have a resource overallocation problem
which must be resolved to complete the project on time and in the budget limits. For our example,
suppose that we have nine units of resources, therefore in January 12, we have overallocation problem since
we need ten units of resources at that specific day.
Step 4. Leveling the Resource Loading Table: This step is the main step of the resource leveling
procedure. At that step, in order to eliminate the overallocation determined in the previous step, the
resource loading table is reorganized iteratively. First of all, the activities on conflict point are investigated,
which is January 12 in our example. We have activities C, D, and E scheduled on this day. As we already
know, activity C is on the critical path, which is not preferred to be modified. Therefore, in the second
phase, we can examine activity D and E. In order to determine which activity is going to be modified,

79
 Resource Management

above given resource prioritization heuristics can be applied. Even though we can modify both, not to split
the activity D (if we choose to modify activity D, then we have to split this activity into two parts. The first
part starts on January 8 and stops on 12, later it restarts on January 15 and stops again on January 16),
we choose modifying activity E, which has three days of slack. The new resource loading table is provided
in Figure 4.16. As shown in Figure 4.17., resource overallocation is solved for January 12, which requires
seven units of resources now.

January February
Acivity 12345 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 29 30 31 1 2 5 6 7
A 66666
B 2 2 2 2
C 4 4 4 4 4
D 3 3 3 3 3 3
E 3 3 3 3 3 3 3
F 2 2 2 2 2 2
G 4 4 4 4
H 3 3 3 3 3 3 3
I 4 4 4 4 4
J 2 2 2 2
K 5 5 5 5 5
Total 66666 9 9 9 9 7 8 9 9 9 9 9 9 9 9 7 3 3 3 5 5 5 5 5
- Late Fininsh
Figure 4.17 New Resource Loading Table of the Project (Step 4) (Pinto, 2006)

Finally, we have to check the new table for all periods to find out if the latest reconfiguration disrupts
the balance at any point on the project life cycle. Since each modification can cause a ripple effect, we have
to check the entire table at each iteration. Note that, activities on the critical path may also change with this
modification. When we check the entire table after the first modification, we see that a new overallocation
of resources occurs on January 22 (11 units of resources needed) by lagging the activity E one day. So,
we have to go back to the second iteration to overcome this problem. On that day, we have activities E,
F, I, and J scheduled. Since E and F are now on the critical path, we do not modify them. We have two
options to modify, activity I and J. Since earlier heuristics suggest to first modify the activity with less slack
time, we choose to modify activity J by one day as
important
given in Figure 4.16. This solves the overallocation
problem on January 22. However, as already
mentioned above,, we need to check the entire table Modified table must be checked for all periods to
after each iteration to see if this modification causes find out if the latest reconfiguration disrupts the
any other overallocation problem on any period. balance at any point on the project life cycle. Note
For this example, the latest modification lowers the that, activities on the critical path may also change
required number of resources to nine, which satisfies with this modification.
our requirements.
By applying the above steps, in this example, we important
manage to level the resource without delaying the
project and without adding an additional resource.
Resource leveling process and necessary steps for
However, for this example, we assume that we
this exercise can be attained in Project Management:
have nine units of available resources for each day.
Achieving Competitive Advantage and MS Project by
However, we could have had less than nine resources
Pinto (2006).
in our hand, for instance eight resources. This case is
left as an exercise to the readers.
Finally, the basic flowchart of resource leveling process is given in Figure 4.18 (Pinto, 2006).

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Project Management

Create Identify Repeat

Create a Develop a
resources resource previous step,
project activity time-phased
requirement conflicts, use if necessary, to
network resource
table for each the heuristics eliminate the
diagram loding table
activity for priortizing resource
resources conflicts

Figure 4.18 Basic Flowchart of Resource Leveling

Resource Forecasting
Resource forecasting is the process of estimating the resource requirements of a company in a large
timescale. Even though it is recommended to be done before a project starts, it can also be beneficial to
do it after a project finishes to investigate the future projection of resources for upcoming projects besides
predicting the resource constraints, unexpected costs, and possible risk areas. Different from the resource
estimation process, in resource forecasting, instead of identifying the types, amount and characteristics of
the resources needed to accomplish the activities in detail, we only draw the big picture about the resource
requirements of the company in a large time base.
In order to predict the resource requirements correctly, project lifecycle, expectations and the availability
of resources within the company should be known and be accessible by the project manager. At that point,
a project management software, which will be explained in detail in the following part, can help the project
manager a lot.
Top-five tips for resource forecasting in project management are as follows:
• Skills needed for the project must be thoroughly understood.
• Strengths and weaknesses of the project team members must be clarified.
• Investigate the recent projects to determine the usage (over or underutilized) of the resources and
use these data to predict the future resource requirements.
• Assign the right resources to right activity in the project plan.
• Statistics about the resources such as employee turnover rate, recruitment trends, and return on
investment must be kept under control (Daugherty, 2019).
Learning Outcomes

2 To apply the resource management steps and techniques to the projects

Self Review 2 Relate Tell/Share

Build a relationship between Share your experience

What are the basic steps of the the resource management and about a successful resource
resource management? the performance evaluation of management application that
the labors. shortens the project duration.

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 Resource Management

PROJECT HUMAN RESOURCES MANAGEMENT

As many managers have said, among all the resources, people are the most important asset of the
companies. Therefore, in this subsection, we summarize the basics of project human resources management.
Success or failure of projects is highly related with the performance of the workers. The human
resources management aims to set up an environment in a company that enables project managers to use
workers more efficiently (Klimoski, Dugan, Messikomer, & Chiocchio, 2014). Project human resources
management gives the project manager the ability of leading and managing the project teams.
In project human resources management, the
important
main purpose is to guarantee that there are enough
human resources, with the right skills, knowledge,
and experience to complete the project successfully. As many managers have said, among all the
The human resources management consists of resources, people are the most important asset of
four main parts:organization chart for the project, the companies. Success or failure of projects is
responsibility assignment matrix, histogram for highly related with the performance of the workers.
resources, and staffing management plan.
The first step of developing a project human resources management plan is to identify the skills and
types of necessary people for the project. After determining the skills and types of the people, the project
manager can create an organization chart with the help of other top stakeholders of the project. A project
organization chart graphically shows the distribution of authority and responsibility within the project
(Schwalbe, 2012). However, level, size, and complexity of the project organization charts differ depending
on the project. There are mainly four types of organization charts: functional organization, projectized
organization, matrix organization, and composite organization.
The functional organization is the most common category of organizational structure. In classical
functional organization, each staff has one clear functional manager, and they are grouped based on
specialized functional areas such as manufacturing, finance, or marketing. An example of functional
organization is provided in Figure 4.19.

Chief Project
Executive Coordination

Functional
Functional Functional
Functional Functional
Functional
Manager
Manager Manager
Manager Manager
Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Figure 4.19 Functional Organization (Project Management Institute, 2000)

On the other hand, in a projectized organization, team members are collocated and the project managers
is on the top of their hierarchy. The project manager has all the resources to complete the project, and the
team members are directly connected to the project manager. An example of projectized organization chart
is provided in Figure 4.20.

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Project Management

Project
Coordination Chief
Executive

Functional
Project Functional
Project Functional
Project
Manager
Manager Manager Manager
Manager

Staff Staff Staff

Staff Staff Staff

Staff Staff Staff

Figure 4.20 Projectized Organization (Project Management Institute,2000)

The matrix organization is the third type of organizational structures in project management. In this
organization type, team members report more than one project manager. The matrix organization is the
blend of first two organization types, functional and projectized organization. There are three types of
matrix organization: weak, balanced, and strong. While the weak matrix organization has most of the
features of the functional organization, the strong matrix organization maintain many characteristics of
the projectized organization. An example of strong matrix organization is provided in Figure 4.21.

Chief
Executive

Functional
Functional Functional
Functional Functional
Functional Functional
Manager of
Manager
Manager Manager
Manager Manager
Manager Manager
Project Managers

Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Project
Coordination

Figure 4.21 Strong Matrix Organization (Project Management Institute, 2000)

The last organization type is the composite organization. As the name suggests, it involves all the
characteristics of above given organization structures at different levels. This type of structure is mainly
formed in a company when the company works on different types of projects at the same time. Therefore,
the composite organization is used by most of the modern organizations in the world since the companies
usually manage more than one project at a time. Figure 4.22 illustrates the composite organization chart.

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 Resource Management

Chief
Executive

Functional
Functional Functional
Functional Functional
Functional Functional
Manager of
Manager
Manager Manager
Manager Manager
Manager Manager
Project Managers

Staff Staff Staff Project Manager

Project B Coordination
Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Project
Coordination

Figure 4.22 Composite Organization (Project Management Institute, 2000)

A responsibility assignment matrix is a matrix that assigns the activities of the project to the team
members who are responsible for performing the corresponding activity. Depending on the preferences
of the project managers and the complexity of the project, responsibility assignment matrix can assign
the activities to individuals, teams, or organizations. Especially for big projects, which include numerous
activities, it is better to assign activities to the teams or organization for simplicity. In these matrices,
in order to ensure the healthy communication among the team members, the responsibilities of the
stakeholders can be defined by different categories such as accountable, participant, providing input, and
review. Notice that each activity may be performed by more than one team member, and each member
may perform more than one activity (Schwalbe, 2012).
Even though there are different models to describe the responsibilities, RACI model is the most widely
used model in the literature, which is derived from the key responsibilities: Responsible, Accountable,
Consulted, and Informed, .
In RACI model;
• Responsible (R) refers to the person who does
the activity, In addition to RACI, there are other alternative
• Accountable (A) is the person who is ultimately models to describe the responsibilities such
answerable for the activity. as PARIS (Participant, Accountable, Review
• Consulted (C) is the adviser for the given Required, Input Required, Sign-off Required)
activity or the entire project. and RASCI (Responsible, Accountable, Support,
• Informed (I) is the person who needs to be Consulted, and Informed) (Project Management
notified about the activity or the project. Institute, 2000; Hightower, 2008).

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Project Management

Figure 4.23 Example of RACI Matrix (Viet Thai International, n.d.)

In RACI matrix, activities form the rows; individuals or groups form the columns; and intersecting
cells contains the letters R, A, C, or I depending on the responsibility type of the team member on that
activity. For instance, in Figure 4.23., while the executive is accountable for implementing the roadmaps,
the process owner is responsible for the same activity. In this matrix, each activity (row) may have multiple
R, C, and I; however, it cannot have more than one A to point out the specific person that is accountable
for the activity. In addition to that, each individual or group may have more than one responsibility for
each activity. For instance, in Figure 4.23, the process owner is both responsible and accountable for
maintaining operation gains.
Finally, these matrices can be used to measure the workload of each individual or the group for the
project. For instance, it can be concluded that if a team member has too many activities that he or she is in
responsibility role (R), this member can be overloaded for the project, or vice versa. However, man-hours
of the activities can differ, therefore, they must also be taken into consideration while investigating the
workloads of the project team members.
The third component of the human resources management is the resource histogram. It is a bar chart
that illustrates the number of required resources for a project throughout the project life cycle. Depending
on the preference of the project manager, bars can also show the amount of time that a specific resource is
scheduled. Since they are straightforward charts to examine, they can provide fast and easy view of resource
allocations at any time on the schedule. They also provide information about how long a resource will be
involved in the project.
An example of a resource histogram is provided in
Figure 4.24. This project requires a project manager,
business analysts, programmers, and technical writers as The resource histogram is a bar chart that
given at the bottom of the figure with different colors. illustrates the number of required resources
Each bar represents the number of people needed for for a project throughout the project life cycle.
the corresponding month. For instance; in January, Depending on the preference of the project
one project manager, two business analysts, and one manager, bars can also show the amount of
programmer are needed for this project. In the same time that a specific resource is scheduled.
way, we can find the number of required people in each
month. In addition to that, we can also develop a similar chart to show the required number of man-hours
per month. They can also be used to make inferences about the utilization of each resource. For instance,
Figure 4.24 shows that even though we need one programmer at the beginning of the project, we will need
a maximum of four programmers later in the project.

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 Resource Management

8
7

Numbers of People
6
5
4
3
2
1
0
Jan Feb Mar Apr May Jun
Managers Business Analysts Programmers Technical Writers

Figure 4.24 Example of Resource Histogram (Williamson, 2012)/

important
The last component of the human resources
management is the staffing management plan. It is a A good staffing management plan consists
document that explains when and how people will be of introduction, staffing requirements, staff
part of and dismissed from a project. It also provides the assignments, and training, rewards and
necessary information about training, reward mechanism, reassignment parts.
and reassigning process for the resources.
A good staffing management plan consists of introduction, staffing requirements, staff assignments, and
training, rewards and reassignment parts; and it may include the following information (KnowledgeHut,
2019):
• Description of human resources
• How the human resources will be obtained
• Criteria to use for human resources recruitment
• Internal and external sources for human resources
• When the resources will be part of the project
• When the resources will be dismissed from the project
• Necessary trainings and training programs for the project teams and individuals
• Strategic employee rewards and recognition systems,
• Methods to track the performance of the team members and different ways of motivating them.

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Project Management

Figure 4.25 Example of Staffing Management Plan (Schwalbe, 2012)

Learning Outcomes

3 To explain the project human resources management and its components

Self Review 3 Relate Tell/Share

What are the four components Build a relationship between Share your experience about an
of the human resources human resources management unsuccessful human resources
management? and project success. management application.

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 Resource Management

RESOURCE MANAGEMENT • establish more effective communication

SOFTWARE between team members, project manager,
and other stakeholders,
Resource management software is the best
assistant of the project manager. In literature, it is • predict possible problem areas and provide
sometimes referred as resource capacity planning valuable information for risk management
software. Resource management software makes plans,
it easy to plan, schedule and reschedule (if • implement different objective methods for
necessary) the resource needed especially for prioritizing the activities and analyze the
big projects. It can assign your resources to the output of what-if scenarios,
tasks and define the cost for man, material, and • prepare customizable, summarized and
machine resources. automated reports to give each stakeholder
the insight they require (Townsend, 2019).

Benefits of Resource Management

Software for the Company Criteria for Selecting Resource
Forecasting Software
Resource management software can provide a
clear view of resource usage and prevent resource Although everyone agrees upon the necessity
allocation conflicts. It also allows us to follow who of software, there is great uncertainty about
is working on which project, when the activity which software to use for resource management.
started, and how long it will take. Furthermore, A wide range of software options, such as
it provides some real-time data analytics and Microsoft Project and Hub Planner, are available
historical and forecasted resource usages that on the market. Therefore, determining which
give the project managers and other stakeholders of the available software should be selected and
valuable insights to trace the progress of the which is the most suitable for the company is a
project over time. big problem. In order to evaluate the resource
management software, the following criteria can
important be used (Aston, 2019).
• User Interface (UI): Does the design of
Resource management software makes it easy to the software maximize the usability and
plan, schedule and reschedule (if necessary) the the user experience? Is the user’s interaction
resource needed especially for big projects. It can simpler and efficient enough to accomplish
provide a clear view of resource usage and prevent the user’s goals?
resource allocation conflicts. It also allows us to • Usability: Is it easy to use and learn? Are
follow who is working on which project, when there comprehensive tutorials and training
the activity started, and how long it will take. about the software? Do they provide
necessary technical support?
• Features & Functionality: Do the
Incorporating an effective resource management functions and features of the software
software into the company can realize the following meet the demand of the company? How
functions and enable the company to: powerful are they? Especially the following
• determine the actual demand and capacity, features are very important.
• prioritize project requests for both project - Scheduling and allocation tools:
manager and clients, Is it easy to assigning the resource to
• obtain actual resource availability, the right activities? Does the software
• assign the necessary resources on the correct provide necessary data for possible
work and at the right time, allocation strategies? Does it include an
• find out which skills and roles are needed auto-scheduling feature?
and provide labor hiring plans,

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Project Management

- Skills tracking: Does it have a feature to filter workers based on their skills and availability? Is
it easy to search by skill? Does it provide you feedback about necessary skills?
- Forecasting: Does it have a resource forecasting tool to predict the upcoming resource
requirements of the company? Does it collect data on sales, schedules, activities, progress of the
project, and launches? How long does the forecasting tool cover?
- Utilization management tools: Does it provide necessary data about the utilization of the
resources? Does it offer you alternative ways of utilizing resources throughout the project
lifecycle?
- Reporting: Does it have a reporting tool? Is it easy to use? Does the reporting tool allow you to
extract and present data in charts, tables, and other visualizations? How well does the sharing
option of these reports work?
• Integrations: Does it work in an integrated and compatible way with other software recently used
in the company? Does the data transmission options fit with the available management systems in
the company?
• Price-performance ratio: Are there any buying options for different requirements? When
compared with the similar software, how appropriate is the price? Does the price cover possible
system upgrades? Is there a time-based usage fee, such as an annual usage fee or annual licensing
fee?

Learning Outcomes

4 To explain the functions and selection criteria of resource management software

Self Review 4 Relate Tell/Share

Associate the resource

What are the benefits of Share the most important
management software with
using software for resource criteria in selecting resource
the effective reporting system
management in a project? management software.
for the stakeholders.

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 Resource Management

Further Reading

Microsoft Project: A Software Program for Project Management

Microsoft Project is a project management software program created and sold by Microsoft to help a
project manager develop a schedule, assign resources to tasks, monitor progress, manage the budget, and
analyze workloads. It became the dominant PC-based project management software within a few years
of its launch. According to Project Management Zone website, MS Project is the most popular project
management software among other 230 software as of September, 2019 (Project Management Systems,
2019).
Project’s first professional version is published in 1984 for DOS. In 1985, Microsoft purchased
all software privileges and published the version 2. The final DOS version published in 1986 and the
first version for Windows is released in 1990 and it is labeled as version 1 for Windows. A Macintosh
version of Project software is published in 1991 for the first time. Latest version for Windows is
published in 2019 as version 17. The project is accessible in two Standard and Professional editions ;
both versions are accessible as 32 or 64bit alternatives. The Professional edition involves all standard
version characteristics as well as additional characteristics such as team collaboration tools and the
capacity to connect to Microsoft Project Server (Haughey, 2019).
Even though MS Project is wealthy in features, similar to other software, it requires the project
manager to efficiently drive a project. Microsoft Project generates critical path schedules, although
ProChain and Spherical Angle provide a critical third-party add-ons chain. Schedules may be resource-
leveled and it uses Gantt Charts to visualize the chain .
Microsoft Project has 3 types of resources such as working resources, material resources and cost
resources. Labors and machines are called as working resources and they need time (hours, days, weeks,
etc.) to perform tasks in MS Project. Consumables such as cable, oil, paint, etc. are called as material
resources which are independent of time in MS Project. MS Project enables us to work on multi project
environment by sharing resources between projects using a shared resource pool (Haughey, 2019).

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Project Management

Define the resource and the resource management

LO 1 concepts, and explain the benefits of the
successful resource management applications.

In literature, all the required things to finish a project on time are defined as the resource. Therefore, it
can be a human, a machine, financial resources (funds), material, or anything. APM Body of Knowledge
describes the resource management as ‘the acquisition and deployment of internal and external resources
required to deliver the project, programme or portfolio’. Successful resource management benefits the
company in a variety of ways that can be summarized as follows:

Summary
• Avoids unexpected delays: By creating resource management plans, it is possible to predict needed
resources and avoid unexpected delays.
• Prevents overloads and fatigue: Effective resource management enables the use of resource allocation,
aggregation and leveling methods to avoid overloads of assets (human fatigue) and bottlenecks or
roadblocks.
• Builds transparency: Resource management offers transparent resource status and workload data and
creates transparency for all project shareholders.
• Measures efficiency: It enables us to assess resource efficiency and to operate on multi-project setting.
It also enables us to readily calculate the ROI ratio.
• Provides a safety net and projection: Resource management lets us know that with the accessible
funds in hand we have done the best, and it provides the future projection for future initiatives.

Apply the resource management steps and

LO 2 techniques to the projects

The first resource management phase is resource estimation. In this phase, project executives estimate
the type and quantity of material, human resources, equipment, machines, or any resources required
to carry out each activity. Resource allocation is the second step of resource management. In this phase,
resources are allocated to the particular operations in the project schedule, which are defined in the first
step. Resource aggregation is performed in the third phase. All the required resources are summarized in
this phase on a timeline that depends on the resource allocations made in the second step. The next stage
is the phase of resource leveling. In this phase, we aim to minimize the changes in resource requirements
for operations throughout the life cycle of the project and minimize the adverse impacts of resource
requirements. The last stage is the forecasting of resources. It is the method of estimating a time-scale for
the company’s resource demands. Although it is suggested to do so before a project begins, it may also be
useful to do so after a project ends to explore future resource projections for future projects in addition to
anticipating resource constraints, unexpected expenses, and potential risk areas.

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 Resource Management

Explain the project human resources management

LO 3 and its components

People are the company’s most significant asset among all the resources. Project success and failure is
extremely linked to employee performance. The primary aim of project human resources management is
to ensure that sufficient human resources are available with the correct abilities, expertise, and experience
to effectively finish the project. human resources management comprises of four primary components:
organization chart for the project, responsibility assignment matrix, histogram for resources, and staffing
Summary

management plan.
• The distribution of power and accountability within the project is shown graphically in a project
organization chart. There are mainly four types of organization charts: functional organization,
projectized organization, matrix organization, and composite organization.
• A matrix for assigning accountability is a matrix that assigns project operations to the laboratories
responsible for carrying out the respective activity.
• The resource histogram is the third element of human resources management. It is a bar chart that
shows how many resources a project needs throughout the life cycle of the project.
• The last element of human resources management is the staffing management plan, a document that
explains when and how individuals are going to be part of a project and rejected from it. It also offers
the required training data, reward mechanism, and resource allocation process.

Explain the functions and selection criteria of

LO 4 resource management software

Resource management software is the project manager’s best assistant. Resource management software
makes the resource required particularly for large projects simple to plan, schedule, and reschedule (if
necessary). Software for resource management can provide a clear perspective of resource use and avoid
disputes in resource allocation. It also enables us to follow who is working on which project, when the
activity began, and how long it will take. Software for resource management offers some real-time data
analysis and historical and predicted uses of resources.
While everyone agrees on the need for software, there is considerable uncertainty as to which software
to use for resource management. The following criteria may be used to assess the resource management
software:
• User Interface
• Usability
• Features & Functionality
• Integrations
• Price-performance ratio

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Project Management

1 Which of the following is not one of the four 5 What would be the total project delay if we
M’s in resource management? limit the working hours to eight hours instead of
a. Manpower b. Method nine hours in Example 4.2?
c. Machine d. Money a. 1 b. 2 c. 3 d. 4 e. 5

Test Yourself
e. Material
6 In which step of the resource management,
the resources, which are required to complete all the
2 Which of the following is not true about activities with respect to the resource allocation step
resource management? outputs, are summed to show the total amount needed?
a. In order to get optimal performance from a. Estimating Resources
the resources, first schedule the most valuable b. Resource Forecasting
resources. c. Resource Allocating
b. It is very important to have an intelligent d. Resource Aggregations
resource management software. e. Resource Leveling
c. Gaining visibility on resources and tracking
the project allow project managers to monitor 7 Which of the following is not part of the
the process, to inform the stakeholders, and to
human resources management?
control the resources.
d. Material resources are always the most a. Organization chart for the project
important resource of the companies. b. Responsibility assignment matrix
e. Predicting the possible problem areas about c. Staffing management plan
resources and having alternative scenarios to fix d. Histogram for resources
the potential disasters are very important. e. Work breakdown structures

3 What is the correct order of the resource 8 Which of the following shows the activities
management steps? and the labors who are responsible for performing
the corresponding activities?
a. Estimating Resources - Resource Allocating -
Resource Aggregations – Resource Leveling – a. Organization chart for the project
Resource Forecasting b. Responsibility assignment matrix
b. Estimating Resources - Resource Forecasting - c. Staffing management plan
Resource Allocating - Resource Aggregations – d. Histogram for resources
Resource Leveling e. Resource estimation
c. Estimating Resources - Resource Aggregations
– Resource Allocating - Resource Leveling – 9 Which of the following is not a function that an
Resource Forecasting intelligent resource management software can realize?
d. Estimating Resources - Resource Allocating -
Resource Leveling – Resource Aggregations – a. Generating reports only for the project manager
Resource Forecasting b. Determining the actual demand and capacity
e. Estimating Resources - Resource Aggregations c. Obtaining actual resource availability
– Resource Allocating - Resource Forecasting– d. Assigning the necessary resources on the correct
Resource Leveling work and at the right time
e. Implementing different objective methods for
4 What is the most proper way of solving the prioritizing the activities and analyzing the
output of what-if scenarios
resource conflicts in resource leveling step?
a. Shifting the due date of the project 10 Which of the following is not a criterion for
b. Adding more resources to the company selecting resource management software?
c. Shifting (mostly delaying. the dates of the tasks
a. User Interface b. Usability
d. Starting the project earlier
c. Price-performance ratio d. Speed
e. Adding more activities to the project
e. Features & Functionality

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 Resource Management

If your answer is wrong, please review

1. b If your answer is wrong, please review the 6. d
the “Resource management steps and
“Resource management concepts” section.
techniques” section.
Answer Key for “Test Yourself”

If your answer is wrong, please review the

2. d If your answer is wrong, please review the 7. e
“Project human resources management”
“Resource management concepts” section.
section.

If your answer is wrong, please review If your answer is wrong, please review the
3. a 8. b
the “Resource management steps and “Project human resources management”
techniques” section. section.

If your answer is wrong, please review

4. c 9. a If your answer is wrong, please review the
the “Resource management steps and
“Resource management software” section.
techniques” section.

If your answer is wrong, please review

5. c the “Resource management steps and
10. d If your answer is wrong, please review the
“Resource management software” section.
techniques” section.
Suggested Answers for “Self Review”

What are the suggestions for resource management

for a successful resource management application in a
project?

Suggestions can be summarized as follows:

• In order to get optimal performance from the resources, schedule the
most valuable resources (i.e. key resources) which are the most critical and
problematic resources first.
• It is very important to have an intelligent resource management software
that lets you to analyze the “what-if ” scenarios such as reallocating some
resources to other activities.
• Gaining visibility on resources and tracking the project allow project
managers to monitor the process, to inform the stakeholders, and to
self review 1 control the resources. It is very important for a project manager to see
where the resources are used and to measure the performance of the
necessary resources.
• Reporting is an important part of the resource management process.
• Remember, humans are also resources, and as it is always said, human
resource is the most important resource of the companies.
• Finally, be prepared for the worst case. Unfortunately, there will be periods
when things go wrong with the project resource management.
• Predicting the possible problem areas about resources and having
alternative scenarios to fix the potential disasters are very important.

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Project Management

What are the basic steps of the resource management?

Suggested Answers for “Self Review”

There are five basic steps of the resource management. The first step is the
estimation of resources. In this step, the project managers estimate the type
and amounts of material, human resources, materials, machines, or any
resources needed to accomplish each activity. The resource allocation is the
second step of the resource management. In this step, resources, which are
defined in the first step, are assigned to the specific activities in the project
schedule. In the third step, resource aggregation is carried out. In this step,
self review 2 all necessary resources are summed up on a timeline which depends on the
resource allocations carried out in the second step. The following step is the
resource leveling step. In this step, we aim to minimize the fluctuations on
resource requirements for activities throughout the project life cycle and to
minimize the negative effects of resource demands. As an extension of resource
leveling, the resource smoothing attempts to eliminate the peaks and troughs
for resources. The last step is the resource forecasting which allows resource
manager to anticipate the future resource requirements before a project starts.

What are the four components of the human resources

management?

The first component is the organization charts. After determining the skills
and types of people required for the project, the project manager can create
an organization chart with the help of other top stakeholders of the project. A
project organization chart graphically shows the distribution of authority and
responsibility within the project.
The second component is the responsibility assignment matrix. A responsibility
assignment matrix is a matrix that assigns the activities of the project to the
labors who are responsible for performing the corresponding activity.
The third component of the human resources management is the resource
histogram. It is a bar chart that illustrates the number of required resources
self review 3 for a project throughout the project life cycle. Depending on the preference
of the project manager, bars can also show the amount of time that a specific
resource is scheduled. Since they are straightforward charts to examine, they
can provide fast and easy view of resource allocations at any time on the
schedule. They also provide information about how long a resource will be
involved in the project.
The last component of the human resources management is the staffing
management plan. It is a document that explains when and how people
will be part of and dismissed from a project. It also provides the necessary
information about training, reward mechanism, and reassigning process for
the resources.

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 Resource Management

What are the benefits of using software for resource

management in a project?
Suggested Answers for “Self Review”

Incorporating an effective resource management software into the company

can realize the following functions and enable the company to:
• determine the actual demand and capacity,
• prioritize project requests for both project manager and clients,
• obtain actual resource availability,
• assign the necessary resources on the correct work and at the right time,
• find out which skills and roles are needed and provides labor hiring plans,
self review 4 • establish more effective communication between team members, project
manager, and other stakeholders,
• predict possible problem areas and provide valuable information for risk
management plans,
• implement different objective methods for prioritizing the activities and
analyzing the output of what-if scenarios,
• prepare customizable, summarized and automated reports to give each
stakeholder the insight they require.

References
Demirbag, M., Lenny Koh, S., Tatoglu, E., & Zaim, McCray, G. E., Purvis, R. L., & McCray, C. G. J.
S. (2006). TQM and Market Orientation’s Impact P. M. J. (2002). Project management under
on SMEs’ Performance. Industrial Management uncertainty: The impact of heuristics and biases.
Data Systems, 106(8), 1206-1228. Project Management Journal, 33(1), 49-57.
Hightower, R. (2008). Internal Controls Policies and Pinto, J. K. (2006). Project Management: Achieving
Procedures. NJ, USA: John Wiley & Sons. Competitive Advantage and MS Project. Harlow,
UK: Prentice-Hall, Inc.
Klimoski, R. J., Dugan, B., Messikomer, C., &
Chiocchio, F. (2014). Advancing Human Resource Project Management Institute. (2000). A Guide to the
Project Management CA, USA: John Wiley & Project Management Body of Knowledge (PMBOK®
Sons. guide) (Vol. 2). PA, USA: Project Management
Institute.
Lock, D. (2016). Project Management in Construction:
Routledge. Schwalbe, K. (2012). An Introduction to Project
Management (4th Edition). Minneapolis, USA:
Management, A. f. P. (2012). APM body of knowledge
Kathy-Schwalbe-LLC.
(6th ed.). Buckinghamshire, UK: Association for
Project Management.

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Project Management

Online References
Aston, B. (2019, January 1). The 10 Best Resource Leankor. (2018, October 29). 10 Quick Tips
Management Software & Tools of 2019. About Effective Resource Management. [web
[web log comment]. Retrieved from https:// log comment]. Retrieved from [Link]
t h e d i g i t a l p ro j e c t m a n a g e r. c o m / re s o u rc e - [Link]/10-quick-tips-effective-resource-
management-software/ management/
Bailey, G. (2019, May 23). 5 Project Success Factors Project Management Systems - Popularity
in Resource Management. [web log comment]. Ranking. (n.d.). Retrieved from [Link]
Retrieved from [Link] [Link]/ranking/planning
project-success-factors/
Rius, A. (2019, February 12). What is Resource
Daugherty, S. (2019, May 13). 5 Tips for Resource Management What are the Benefits? [web log
Forecasting in Project Management: Resource comment]. Retrieved from [Link]
Guru. [web log comment]. Retrieved from https:// com/blog/what-is-resource-management-
[Link]/5-tips-for-resource- definition
forecasting-in-project-management/
Townsend, S. (2019, April 2). Top 12 Resource
Elbeltagi, E. (2009). Lecture Notes on Construction Management Best Practices. [web log comment].
Project Management. [PDF document]. Retrieved from [Link]
Retrieved from [Link] resources/articles/top-12-resource-management-
edu/6799991/LECTURE_NOTES_ best-practices/
ON_CONSTRUCTION_PROJECT_
Viet Thai International. (n.d.). RACI Matrix-
MANAGEMENT
An Effective Tool to Assign Responsibilities.
Halabuda, P. (2019, June 28). Resource Allocation: Retrieved from [Link]
A Complete Guide for Project Managers. [web vn/news/raci-matrix-an-effective-tool-to-assign-
log comment]. Retrieved from [Link] responsibilities-in-the-project.35a53475/en
io/project-management/resource-allocation-for-
Watt, B., & Watt, A. (2014). Resource Planning.
project-manager
In Project Management (Chapter 11). Retrieved
Hansen, B. (2018, September 27). What Is Resource from [Link]
Management & Why Is It Important? [web log chapter/chapter-11-resource-planning-project-
comment]. Retrieved from [Link] management/
com/blog/what-is-resource-management/
Williamson, D. (2012, February 27). Resource
Haughey, D. (2019, January). An Introduction to Histogram. [web log comment]. Retrieved from
Microsoft Project. Retrieved from [Link] [Link]
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[Link]
KnowledgeHut. (2019, February 27). Staffing
Management Plan in Project Management.
[web log comment]. Retrieved from https://
[Link]/tutorials/project-
management/staffing-management-plan

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 The Project Manager and
Chapter 5 the Project Team
After completing this chapter, you will be able to;
Learning Outcomes

1 Define the project manager

2 Distinguish between managing and leading a
project

3 Explain how to build high performance project

teams

Chapter Outline Key Terms

Introduction Project Manager
Who is the Project Manager? Managing Versus Leading a Project
Managing Versus Leading a Project Project Team
The Project Team

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Project Management

INTRODUCTION that all work is completed on time, within budget

In the previous four chapters, we described the and scope, and at the correct performance level.
project, project management, and how projects The definition of PM provided by Project
are planned and scheduled. We also covered the Management Institute is given as follows:
resource allocation under the resource management “They are organized, passionate and goal-
section. Before more moving on and more progress oriented who understand what projects have
can be made, a project manager should be in common, and their strategic role in how
presented. However, the project manager alone is organizations succeed, learn and change” According
not enough to successfully sustain and terminate a to PMBOK® (2017), the project manager is the
project, other elements should also be considered. person assigned by the performing organization to
Hence, the team, as the other input to the project lead the team that is responsible for achieving the
is also introduced in this chapter. Since the chapter project objectives.
is about project manager and the project team, The role of the PM seems to be very
leadership and building high performance project misunderstood throughout the world (Heagney,
teams are also considered in this chapter. 2012). Because organizations or companies
The chapter begins with a brief description of smuggle their engineers, technicians, scientists,
the project manager. We also discuss the differences salespeople, and many others into the role of PM
between leading and managing a project briefly. as a natural development from their jobs almost
There are key objectives assigned to a project every day. Those people are really good at what
manager behaviorally. One of them is building and they do daily. However, they undertake a big
staffing a high-performance project team. Thus, responsibility by being a PM, they are eventually
the remainder of this chapter comprises three responsible for the success or failure of the project.
sections. The first section provides a description of No matter who is in the team and how this team
the project manager as much brief as is required to works from the initiation to the execution, the PM
understand what the project manager does. Since is the only one who has both the authority and
leadership is discussed along with management, a responsibility and will be facing the customer. A
comparison of leadership and management will be PM is a kind of bridge. Mechanisms are developed
made. Hence, managing versus leading a project is to facilitate communication between the PM and
discussed in the second section. We tried to express top management, the functional areas, and the
how we can make the team more effective by first client (Meredith, & Mantel, 2009, p. 108).
defining a team, which consists of people with As mentioned in the first chapter, a project is
different skills in the concluding section. temporary so that the project manager position
is temporary and may end when the assigned
WHO IS THE PROJECT project is completed. Every time a new project is
MANAGER? initiated, its resources including the team must be
changed. When the project is closed, all resources
Project Manager (PM) has been described in are not kept anymore. Furthermore, all engineers,
different ways in many studies. A PM is the person technicians, scientists, salespeople, or others in the
who leads a project from its phases of initiation to team are released to go back to their routine jobs.
closure in the project life cycle. This also includes
the planning, managing people and resources, and important
performing of the project. Thus, the PM must
possess disparate set of skills such as management of If you are a PM and assigned to a project with an
conflict, team and risk change, leadership, technical end date that you did not determine, avoid the
problem solving, and customer relationship. These temptation to improve your schedule by working
skills could be extended, but the main point is: backwards from the end date to the current date.
“The PM is the one who gets the jobs done!”. This will give a wrong intention of what is achievable
According to Heagney (2012, p.24), the primary and hide the actual level of risk involved in the
responsibility of the project manager is to ensure meeting at that time.

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 The Project Manager and the Project Team

strong technical knowledge to understand

the technical aspects. Moreover, technical
The task of the project manager is to ensure that
as well as theoretical knowledge can greatly
everyone in the project team has what they need to
help the manager take strategic initiative
do their job well.
when needed.
3. Managing resources: This may also be
Attributes of Being an Effective called management skills. In general, this
Project Manager may be either cost management or task
One of the most important decisions concerning management. However, those are not
the project is the selection of the PM. Meredith the only two management elements. As
and Mantel (2009, p127) mentioned a list of some time, money, people, equipment, etc. are
of the most popular attributes, skills and qualities the resources to be managed, an effective
that have been sought in the selection of the PM: manager should be good at managing
resources.
• A strong technical background 

4. Good decision maker: Since there are always
• A hard-nosed manager 

decisions to be made, the project manager
• A mature individual 
 should be a very good decision maker.
• Someone who is currently available 
 These decisions can be instantaneous, as
• Someone on good terms with senior well as time-consuming decisions.
executives 5. Managing Risk: Whether the project
• A person who can keep the project team is small or large, the risk is inherent.
happy Therefore, identifying, evaluating, and
• One who has worked in several different controlling risk before carrying out the
departments project is the risk management attribute
that the project manager must possess in
• A person who can walk on (or part) the
order to be effective.
waters
6. Perfect visionary: The project manager
In general, most of the efforts are considered to
needs to be able to see the few steps ahead
be focused on the performance improvement of the
and estimate the results of the existing
project in spite of the fact that the PM may have
actions. A visionary project manager
roles based on some attributes. A good manager
can take the team members in the right
knows what he/she is doing, can start new projects,
direction and easily adapt to changes on
and face the challenges that come with them.
their way.
Although the main role of a PM is to get the job
done, there are many other roles. Some of the roles 7. Negotiating skills: For example, as a
may be based on the PM’s attributes. The attributes project manager, you will receive requests
of the project manager that determine their roles in from stakeholders that may possibly affect
a project are as follows: the scope of a project. You’ll have to push
them back, but diplomatically, all interested
1. Powerful communication skills: A PM
parties think they get what they want. Then
must be a good communicator so that he/
there are inevitable conflicts that will arise
she can connect with people either in the
between team members or other people
project team or other at all levels. The PM
involved in the project. If you are good at
must clarify the goal of the project together
negotiation, you can resolve these disputes
with the responsibilities and tasks of team
before threatening and failing the project.
members, expectations and feedback.
8. Team building: The project manager
2. Proficient technical skills: There are some
cannot execute a project alone. Therefore,
crucial project management software and
the project manager should form a team to
related programs to achieve the project
work with before continuing the project.
goals. Thus, an effective PM must have
Project managers need to manage the team

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Project Management

operationally as well as leading a team from a strategic perspective. We will give details regarding
this attribute in the following sections.
9. Leadership: This attribute is a vogue word for project management world. The concepts of manager
and leader are all mentioned together. In general, leadership is the top first attribute of a project
manager, but we mentioned it last because we believe that this should be given in detail. Thus, the
following section will focus on the managing versus leading a project topic.

Responsibilities of Project Manager

Although the PM is novice or experienced, he/she must inspect many functional areas, each with its
own experts. Hence, the PM who uses systems approach, should be more skilled at synthesis. Meredith
and Mantel (2009) present the typical responsibilities of a project manager in a project organization by
indicating those functional areas (Figure 5.1).

Project
manager

Finance Engineering Contracts Planning Manufacturing Procurement Quality

Figure 5.1 Typical Responsibilities of a Project Manager in a Project Organization (Meredith, & Mantel, 2009, p. 109)

The PM has many responsibilities but they are primarily divided into three separate groups:
• The responsibility to the main company includes the appropriate care of resources, convenient and
correct project communications, adequate and apprehensive project management.
• The responsibility to the project and the customer is fulfilled by ensuring that the integrity of the
project is maintained despite the contradictory demands of many parties with legitimate interests.
• The responsibility to the project team is determined by the finite nature of the project and the
expertise structure of the team. Because the project is, by definition, a temporary entity and must
come to an end, the PM must be concerned with the future of the people who serve on the team
(Meredith and Mantel, 2009).
Since there are many responsibilities,
there are cons and pros of becoming The Pros and Cons of Becoming
a project manager just like in every a Project Manager
profession or work as being a project Pros:
manager could happen accidentally and • It can often be a steppingstone to promotion.
you may not know anything about how • It provides a strong sense of accomplishment.
• There’s considerable variety: no two days are alike.
to run a project. On the other hand, • There’s significant freedom of choice.
although you are an experienced PM, your • It affords the opportunity to effect change across the organization.
environment may be different. According Cons:
to Herkens (2002, p. 3) these pros and • It requires significant tolerance for politics.
cons are as given in Figure 5.2. • It requires significant tolerance for ambiguity and uncertainty.
• There’s a lot of responsibility, but little or no authority.
Since a project is unique, meaning each • You may feel “disconnected” from your technical discipline.
project has its own characteristics, a PM’s • You may be perceived by some as not having “a real job.”
project environment differs although his/
her roles do not change. Let’s cover up the Figure 5.2 The Pros and Cons of Becoming a Project Manager
possible cons and pros given in Figure 5.2. (Herkens, 2002, p:3)
briefly

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 The Project Manager and the Project Team

Pros:
• As a PM, there are various industries, companies and consultancy opportunities that you can work.
Hence, you can be an IT project manager, a consulting project manager, or even a movie project
manager. Thus, you have a chance to experience different environments.
• As your project topic and project teams change, you will always have the opportunity to learn new things.
• It can be a very valuable job to successfully close a project by thoroughly completing its steps and
to see the results achieved by your team.
• You have an influential leadership position that can make positive change at all levels of an organization.
Cons:
• Sometimes the requirements of a project, the steps to be taken later, and all the resources available
to implement the project are vast question marks. A PM needs to develop the ability to act on
uncertain conditions and focus on the next step.
• The ability of the project manager to manage team members, resources, and programs is often based on
discussion with managers, department managers, and even other project managers. This brings a lot of
responsibility but a lack of authority. PMs must have extensive interpersonal skills to deal with this.
• As mentioned under the pros, you may be a PM in an environment different from your occupation
or background. You may feel that you are away from your technical discipline.
• Since a project has a start and a finish date, a PM’s job is going to end when the project is completed.
Therefore, it may be perceived that you do not have a real job by others.

In Practice

In Search of Effective Project Managers sufficient. The failure rate for these project manager
Pureswing Golf, Inc., manufactures and sells a volunteers is over 40%, too high for a company of
full line of golf equipment, including clubs, golf balls, Pureswing’s size. With such steady turnover among
leisure- wear, and ancillary equipment (bags, rain the volunteers, successful managers have to pick up
gear, towels, etc.). The company competes in a highly the slack—they often manage five or six projects
competitive and fast-paced industry against better- simultaneously. Top management, worried about
known competitors, such as Nike, Taylor Made, burnout among these high- performing project
Titleist, PING, Calloway, and Cleveland. Among managers, has decided that the firm must develop
the keys to success in this industry are the continuous a coordinated program for finding new project
introduction of new club models, innovative managers, including creating a career path in project
engineering and design, and speed to market. As a management within the organization.
smaller company trying to stay abreast of stronger Questions
competitors, Pureswing places great emphasis on 1. Imagine you are a Human Resources
the project management process in order to remain (HR) professional at Pureswing who has
profitable. At any time, the company will have more been assigned to develop a program for
than 35 project teams developing new ideas across recruiting new project managers. Design
the entire product range. a job description for the position.
Pureswing prefers to find promising engineers 2. What qualities and personal characteristics
from within the organization and promote them to support a higher likelihood of success as
project manager. It feels that these individuals, having a project manager?
learned the company’s philosophy of competitive
3. What qualities and personal characteristics
success, are best equipped to run new product
would make it difficult to be a successful
introduction projects. For years, Pureswing relied
project manager?
on volunteers to move into project management,
but lately it has realized that this ad hoc method
for finding and encouraging project managers is not Source: (Pinto, 2016, p. 137)

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Project Management

Project Manager and Project Stakeholders

Those who will be project managers for the first time are very ambitious to implement their own ideas
and manage their team so that they can complete the projects successfully. What they soon learn is that
the success of the project depends on the cooperation of a wide range of individuals, many of whom do
not report directly. Many of the PMs find themselves spending much of their time with negotiating and
working with consultants, technical specialist, and other managers instead of working with their team to
complete the project. Thus, the customer is the most important project stakeholder that influences the
success of the project depending on its nature.
Each of these groups of stakeholders brings different expertise, standards, priorities, and agendas to the
project (Larson, & Gray, 2018) A stakeholder is an individual, group, or organization that may affect, be
affected by, or perceive itself to be affected by a decision, activity, or outcome of a project (PMBOK®, 2017).
An effective PM must comprehend how stakeholders can influence the project and develop methods for
managing the dependency. Figure 5.3 presents the nature of these dependencies. Please refer to their study
for the definitions of each.

Other Customers
organizations Top Project
management sponsors

ject Tea
m
Pro

Project Project Functional

manager manager managers

Pro m
je ct Tea

Government Administrative Contractors

agencies support

Figure 5.3 Project Stakeholders (Larson,& Gray, 2018, p.342)

103
 The Project Manager and the Project Team

External Stakeholders
Customers
End users In PMBOK® (2017), it was mentioned that
Suppliers there could be internal and external project
Shareholders stakeholders, which might be actively involved,
Regulatory bodies
passively involved, or unaware of the project.
Competitors
Figure 5.4 depicts examples of these internal
and external stakeholders (PMBOK®, 2017,
Internal Stakeholders
Sponsor p550).
Resource manager In the first part of this chapter we
Project management
introduced the project manager, a PM’s roles
office (PMO)
Portfolio steering and responsibilities, and the relationship with
committee project stakeholders. In general, leadership
Program manager is the top first and very trendy attribute of a
PMs of other projects
project manager we mentioned. Thus, the
Team members
following section will focus on leadership.

Figure 5.4 External and Internal Stakeholders

Learning Outcomes

1 Define the project manager

Self Review 1 Relate Tell/Share

Build a relationship between Tell whether project manager’s

Identify the external stakeholders
project manager and the project roles differ according to the
in a construction project
itself project

MANAGING VERSUS LEADING A What is Leadership?

PROJECT Before moving forward regarding the
As pointed out in the previous section, the words management vs leadership, let’s look at what
project manager and leader (or project management leadership is. Leadership is a very tough word
and leadership) are overlapping concepts, and because of the variety of definitions that can be
they are often confused and used interchangeably. made by authors who study leadership. Pinto (2016,
Hence, the question that comes to mind when we p.118) mentioned that the topic of leadership has
say leadership is: ‘Is every manager a good leader?’ generated more than 30,000 articles and thousands
or ‘Is every leader a good manager?’ The answer of books. Although there are many definitions of
leads us to an expectation for project managers to leadership, Summerfield (2014) studied and came
be leaders; however, project manager and leader up with eight suitable and simple definitions. Some
(or project management and leadership) are two of the definitions expressed the concept by what
different things. Although the management and leaders do while others by what leadership is. The
leadership are two different things, a PM should eight definitions given by Summerfield’s (2014) are
ensure both of them in order to be successful. as follows:

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Project Management

“Leadership is taking people to places they’ve never been before.”

Marie Kane

“Leadership is the process of influencing the activities of an organized group toward goal achievement.”
C. F. Rauch and O. Behling

“The leader is one who mobilizes others toward a goal shared by leaders and followers. Leaders,
followers, and goals make up the three equally necessary supports for leadership.”
Garry Wills

“Great leaders rally people to a better future.”

Marcus Buckingham

“The fundamental purpose of leadership is to produce useful change, especially non-incremental

change.”
John Kotter

“Leadership is a process whereby an individual influences a group of individuals to achieve a common

goal.”
Peter Northouse

“Leadership is successfully creating positive change for the common good.”

T. Sorensen, A. Traynor, and K. Janke

“Great leaders drive change

Jeff Immelt

To summarize these definitions in terms of project

management, leadership is the process by which PM The leadership is the action of leading a group of
influences the project team to get the job done! people or an organization to achieve the goals.

Leaders vs. Managers

Project managers focus more on administrative skills while leaders bring emotional intelligence to the
forefront for the achievement of project success. Thus, PMs count on authority, leaders on impact. The
management role is more administrative like other management roles. Leadership, on the other hand, is
about interpersonal relations. Larson and Gray (2018, p.340) denoted that management is about coping
with complexity, while leadership is about coping with change. There are also comparisons between
management and leadership based on PMBOK® (2017) as given in Table 5.1.

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 The Project Manager and the Project Team

Table 5.1 Management vs Leadership

Management (Project Managers) Leadership (Leaders)
Direct using positional power Guide, influence, and collaborate using relational power
Maintain Develop
Administrate Innovate
Focus on systems and structure Focus on relationships with people
Rely on control Inspire trust
Focus on near-term goals Focus on long-range vision
Ask how and when Ask what and why
Focus on bottom line Focus on the horizon
Accept status quo Challenge status quo
Do things right Do the right things
Focus on operational issues and problem solving Focus on vision, alignment, motivation, and inspiration

important

Although the management and leadership are

considered together, there are also some differences. Although project manager and the leader are two
Figure 5.5 shows some of the differences between overlapping concepts and mentioned together, they
managers and leaders. are different from each other.

do the right thing command respect

develop new processes focus on people
innovate LEADERS inspire trust
originate focused on potential
earn their position have long-term goal

do things right demand respect

maintain the status quo focus on systems
administer MANAGERS strive for control
imitate focused on the bottom line
state their position short-term view

Figure 5.5 Difference between Managers and Leaders (Pinto, 2007, p.119)

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Project Management

Further Reading

UNDERSTANDINGTHE DIFFERENCES: • Communication Skills: keep your team

LEADERSHIP VS. MANAGEMENT informed of the journey, where you are, where
Is a good manager automatically a good you are heading and share any roadblocks
leader? What is the difference between leadership you may encounter along the way
and management? SOME OF THE COMMON TRAITS
The main difference between leaders and SHARED BY STRONG MANAGERS ARE:
managers is that leaders have people follow them • Being Able to Execute a Vision: take a
while managers have people who work for them. strategic vision and break it down into a
A successful business owner needs to be both roadmap to be followed by the team
a strong leader and manager to get their team • Ability to Direct: day-to-day work efforts,
on board to follow them towards their vision of review resources needed and anticipate needs
success. Leadership is about getting people to along the way
understand and believe in your vision and to work • Process Management: establish work rules,
with you to achieve your goals while managing is processes, standards and operating procedures
more about administering and making sure the
• People Focused: look after your people, their
day-to-day things are happening as they should.
needs, listen to them and involve them
WHILE THERE ARE MANY TRAITS
In order for you to engage your staff in
THAT MAKE UP A STRONG LEADER, SOME
providing the best service to your guests, clients
OF THE KEY CHARACTERISTICS ARE:
or partners, you must enroll them in your vision
• Honesty & Integrity: are crucial to get your and align their perceptions and behaviours.
people to believe you and buy in to the You need to get them excited about where you
journey you are taking them on are taking them while making sure they know
• Vision: know where you are, where you want what’s in it for them. With smaller organizations,
to go and enroll your team in charting a path the challenge lies in making sure you are both
for the future leading your team as well as managing your day
• Inspiration: inspire your team to be all they to day operation. Those who are able to do both,
can by making sure they understand their will create a competitive advantage. Are you both
role in the bigger picture a leader and a manager; what would your staff say
if you were to ask them?
• Ability to Challenge: do not be afraid to
challenge the status quo, do things differently
and have the courage to think outside the box Source: go2hr, n. d.

In project management, effective team leaders can usually create a partnership approach between
themselves and their teams. The idea of leadership as a partnership is crucial for project management
because it emphasizes the importance of all leaders ultimately dependent on their teams to achieve their
project objectives. Four things are required to develop the idea of partnership between the project manager
and the team (Pinto, 2016, p118):
1. Exchange of purpose: Partnerships require that every worker be responsible for defining the
project’s vision and goals. A steady dialogue between the project manager and team members can
create a consistent and widely shared vision.
2. A right to say no: It is critical that all members of the project team feel they have the ability to
disagree and to offer contrary positions. Supporting people’s right to voice their disagreements is a
cornerstone of a partnership. Losing arguments is acceptable; losing the right to disagree is not.

107
 The Project Manager and the Project Team

3. Joint accountability: In a partnership, each member of the project team is responsible for the
project’s outcomes and the current situation, whether it is positive or shows evidence of problems.
The project is shared among multiple participants and the results of the project are also shared.
4. Absolute honesty: Partnerships demand authenticity. An authentic atmosphere promotes
straightforwardness and honesty among all participants. Because we respect each team member’s
role on the project, we make an implicit pact that all information, both good and bad, becomes
community information. Just as honesty is a cornerstone of successful marriages, it is critical in
project team relationships.
Figure 5.6 shows a summary of the
characteristics, style, and overall desires that Hearing and
a leader should have to be an effective PM. Querying
As we understand from the starter of Anticipating Imression
this chapter, a big portion of the PM’s
role and responsibility includes people.
A PM has to be face to face mainly with Imagining Strategy
customer and team. Thus, a PM should
Success
analyze the behaviors and motivations
of people. Since the leadership is crucial of
to the project success as discussed above, Authoritative Project Team Builder
a PM should be a perfect leader. At this
point, in PMBOK® (2017, p. 61), research
shows that a leader’s qualifications and Figure 5.6 Summary of the Characteristics, Style and Overall
Desires
skills are and are not limited to those
given below.
• Being a visionary (e.g., help to describe the products, goals, and objectives of the project; able to
dream and translate those dreams for others);
• Being optimistic and positive;
• Being collaborative;
• Managing relationships and conflict by:
• Building trust;
• Satisfying concerns;
• Seeking consensus;
• Balancing competing and opposing goals;
• Applying persuasion, negotiation, compromise, and conflict resolution skills;
• Developing and nurturing personal and professional networks;
• Taking a long-term view that relationships are just as important as the project; and continuously
developing and applying political acumen.
• Communicating by:
• Spending sufficient time communicating (Research shows that top project managers spend
about 90% of their time on a project in communicating);
• Managing expectations;
• Accepting feedback gracefully;
• Giving feedback constructively; and
• Asking and listening.
• Being respectful (helping others retain their autonomy), courteous, friendly, kind, honest,
trustworthy, loyal, and ethical;

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Project Management

• Exhibiting integrity and being culturally • Being able to sift through massive
sensitive, courageous, a problem solver, and amounts of information to obtain the
decisive; most important information.
• Giving credit to others where due; • Having a holistic and systemic view of the
• Being a lifelong learner who is results- and project, taking into account internal and
action-oriented; external factors equally;
• Focusing on the important things, • Being able to apply critical thinking (e.g.
including: application of analytical methods to reach
decisions) and identify him or herself as a
• Continuously prioritizing work by
change agent.
reviewing and adjusting as necessary;
• Being able to build effective teams, be
• Finding and using a prioritization method
service-oriented, and have fun and share
that works for them and the project;
humor effectively with team members.
• Differentiating high-level strategic
A Project Manager is the rudder of a project.
priorities, especially those related to
He or she has both technical and interpersonal
critical success factors for the project;
skills that were defined in detail in the previous two
• Maintaining vigilance on primary parts of this chapter. In the last part, the backbone
project constraints; of a project, the team and how the team should be
• Remaining flexible on tactical priorities; built, will be introduced.
and

Learning Outcomes

2 Distinguish between managing and leading a project

Self Review 2 Relate Tell/Share

Try to give examples of Tell other reasons why

What are the responsibilities of leaders related to reasons that importance of leadership
a project manager as a leader? cause an increase in project in project management is
management. increasing in recent years.

THE PROJECT TEAM

Coming together is a beginning. Keeping together is progress. Working together is success.
—Henry Ford
As we stated earlier, a PM is assigned to a project, but he/ she cannot carry out the project alone. If you
refer back to the first section, it was pointed out that building a team was one of the PM’s attributes and
is crucial to end up the project successfully. Hence, the project manager should form a team to work with
before continuing the project. In this section, we consider the structure of the project team, considering
that different projects have very different personnel requirements. In addition to this, we will introduce
the team building process and how to manage the team.

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 The Project Manager and the Project Team

The Definition of Project Team

A project team consists of a group of people who have come together to carry out activities that
contribute to achieving the goal of a common task. A PM builds up a project team of skilled employees
from the same or different function areas to work on a project. In this sense, Sundstrom, Meuse and
Futrell (1990) defined team as “an interdependent collection of individuals who work together towards a
common goal and who share responsibility for specific outcomes of their organizations”. Since the project
teams work on specific projects, this definition is generally appropriate.
Staffing and building a project team as well as encouraging cross-functional cooperation among team
members are not supporting topics in project management but those are the key behavioral skills that
PMs face and manage. Staffing and building will be introduced in the following section. A project team
consists of team members from different departments of an organization, thus most project teams can
be classified as cross-functional teams. The cross-functional team may include team members from the
departments of Research and Development (RD), finance, marketing, human factors, etc. and from all
levels of the organization. In addition, members may also be from external stakeholders such as suppliers
and consultants. Pinto (2016, p.199) mentioned one project on project teams which has uncovered a set
of critical factors that contribute to cross-functional cooperation. Figure 5.7 depicts the two-stage model
that was given by Pinto (2016, p.199).

Superordinate Goals
Task
Outcomes
Rules and Procedures
Cross-Functional
Cooperation
Physical Proximity
Psychosocial
Outcomes
Accessibility

Feedback Loop

Figure 5.7 Cross-Functional Cooperation in Project Teams

Superordinate Goals, Rules and Procedures, PM is faced with the challenge of creating a high-
Physical Proximity, and Accessibility are the critical performing and cohesive project team from a set
factors affecting the cooperation, which has an of diverse individuals (Pinto, 2016, p.189). The
influence on both task and psychosocial outcomes. PM should spend a great deal of effort and time to
Task outcomes ensure that the project is done right develop a project team. Then, at the point where
while psychosocial outcomes are the emotional and they start working jointly, the project team develops
psychological impacts for the strong performance its members and obtains positive dividends from
of the project team. the joint performance of the project. However, the
preferred process should be configured as much as
possible; the staff is ideally in line with the decision
Staffing and Building a Project Team of the project manager on what is best for the
A person in an organization can be assigned as project. Figure 5.8 illustrates a flow chart to build
a PM by chance; however, project teams do not a project team with the key decisions or the critical
happen by chance. As soon as a PM is assigned interfaces.
to conduct a project, he/she should start building
up a team. Regardless of the circumstances, the

110
Project Management

Identify skills
required (from WBS)

Identify personnel to • From permanently assigned

match the skills staff or functional groups

Talk to potential • Explain nature of project

The team members can
team members and gauge their interest also work on one or more
project stages. In addition,
Negotiate with the
when one of the team
functional supervisor members is responsible
• Develop skills for a task, he/she can
inventory matrix play a key supportive
• Develop
Success?
Assemble role for another task.
the team responsibility matrix
• Clarify roles Responsibility matrix is
• Clarify methods the best way to express
and procedures this, as illustrated in Figure
Renegotiate with
top management 5.9. The responsibility
matrix will be introduced
briefly in the following
YES chapter.
Success?

NO

Try to get partial Adjust project schedule, Notify top management

assistance budget, and/or priorities of consequences

Figure 5.8 Flowchart of Building a Project Team (Pinto, 2016, p 190)

Project Team

Task Richard Dan Dave Linda Elizabeth

Identify target customers R S S

Develop draft questionnaire R S S

Pilot-test questionnaire R S

Finalize questionnaire R S S S

Print questionnaire R
Prepare mailing labels R

Mail questionnaires R

Receive and monitor returned questionnaires R S

Input response data R

Analyze results R S S

Prepare draft of report S R S S

Prepare final report R S

R= Responsible
S= Supports/assists

Figure 5.9 Team Members on a Responsibility Matrix

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 The Project Manager and the Project Team

We can understand that the roles can change according to the type of a project. However, the duties of
the project team members remain. These duties are as follows:
• Providing effort to the whole project to meet the objectives
• Completing individual products of the project such as reports, models, designs, plans, etc. by the
due date
• Delivering expertise
• Working with users to identify and meet business requirements
• Reporting status updates to PM
• Establishing records of project including the documents
• Attending and active participation in the meetings
• Ensuring the tasks to be completed on time
• Performing assigned activities
As humans develop in certain ways in the first months of their lives, many experts argue that groups
are developing in a predictable model. Furthermore, Larson & Gray (2018) and Pinto (2016) mentioned
that one of the most popular models identified five stages in which groups developed into effective teams.
These five stages are forming, storming, norming, performing and adjourning. Although the model and
its stages are same, Figure 5.10 shows the description of Larson & Gray (2018) while Table 5.2 shows
Pinto’s (2016).

Project Activity Group Process

Stage 1: Forming Orjentation to project Testing and dependence

Stage 2: Forming Emotional response to the Intragroup conflict

demands of the project

Stage 3: Forming Open exchange of Development of group

relevent information cohesion

Stage 4: Forming Emergence of a solution Functional roles emerge

Stage 5: Forming Dissolution of the group

Figure 5.10 The Five Stage Development Team Model (Larson, & Gray, 2018)

Table 5.2 The Five Stage Development Team Model (Pinto, 2016)
Stage Defining characteristics
Forming Members get to know one another and lay the basis for project and team ground rules.
Conflict begins as team members begin to resist authority and demonstrate hidden agendas
Storming
and prejudices.
Members agree on operating procedures and seek to work together, develop closer
Norming
relationships, and commit to the project development process.
Performing Group members work together to accomplish their tasks.
Groups may disband either following the completion of the project or through significant
Adjourning
reassignment of team personnel.

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Project Management

The PM must use his/her

leadership skills to negotiate with
department managers to provide Inspiring
qualified members for the team.
Supportive Team players
Furthermore, we must accept
that no project team will be “fully
assembled” and ready to start a
project. Developing a group by
bringing different individuals thinking Self-starters
creative
together is not the same as
building a team. Team
members
are
Attributes of the Project
Team devoted Motivational
If a PM is bringing the
team members together for the
upcoming project, it is essential
that she/he know the attributes of having skills
comm
an effective project team. This will unicators and
let the PM select the right people experience
for every attitude of the project and dependable
look for a successful project. The
attributes of an effective project
team is given in Figure 5.11. Figure 5.11 The Attributes of an Effective Team

Parker (2008) indicated four styles of team members

Challenger Contributor where each contributed in different ways to the success of
Question Task the team, and each style had a downside when carried to an
extreme. Figure 5.12 presents these styles.
According to Parker’s study:
Team • A Contributor is a task-oriented team member who
Player enjoys providing the team with good technical
information and data, does his or her homework, and
then pushes the team to set high performance standards
Communicator Collaborator and to use their resources wisely.
Process Goal • A Collaborator is a goal-directed member who sees the
vision, mission, or goal of the team as paramount but is
Figure 5.12 Four Team Player Styles (Parker,
flexible and open to new ideas, is willing to pitch in and
2008)
work outside his or her defined role, and is able to share
the limelight with other team members.
• A Communicator is a process-oriented member who is an effective listener and facilitator of
involvement, conflict resolution, consensus building, feedback, and the building of an informal,
relaxed climate.
• A Challenger is a member who questions the goals, methods, and even the ethics of the team, is
willing to disagree with the leader and others, and encourages the team to take well-conceived risks.
Pinto (2016) stated that successful teams shared common underlying features, including a clear sense
of mission, an understanding of team interdependencies, cohesiveness, a high level of trust, a shared sense of
enthusiasm, and a results orientation. Besides, Larson and Gray (2018) highlighted the conditions where

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 The Project Manager and the Project Team

high-performance project teams are likely to states that the active involvement is established if
develop. These conditions are as follows: there are 10 members or less, a detailed project
• There are 10 or fewer members per team. 
 can consist of a complex group of interdependent
teams of more than 50 professionals. It is better
• Members volunteer to serve on the project
to be a volunteer, but functional managers or
team.
human resources departments may assign the
• Members serve on the project from team members with very little input from the
beginning to end. PM. Team involvement may be part time, and/or
• Members are assigned to the project full team members may move internal or external to
time. the project as needed to optimize the usage of the
• Members are part of an organization’s resources. Unless it is specified, none of the team
culture that fosters cooperation and trust. members work full time on the project.
• Members report solely to the project The reasons for why teams fail are as important
manager. as the development characteristics of high-
• All relevant functional areas are represented performance and effective project teams. It is not
on the team. unexpected that project teams fail to carry out their
potential in many conditions since there are always
• The project involves a compelling objective. 

deep challenges in building a high performance
• Members are located within conversational and effective project teams. Pinto (2016) indicated
distance of each other. that project teams perform at less than optimum
These conditions may not be applied or performance for a number of reasons including
considered exactly. Applicability or consideration poorly developed or unclear goals, poorly defined
may vary depending on the project and/or the project team roles and interdependencies, lack of
project environment. For instance, the PM may not project team motivation, poor communication or
always be assigned to a project that will meet all these leadership, turnover among team members, and
requirements. Hence, although the first condition dysfunctional behavior.

Learning Outcomes

3 Explain how to build high performance project teams

Self Review 3 Relate Tell/Share

What is the relationship

Identify the attributes of the Develop a project team for a
between project team members
four team styles. construction project.
and the responsibility matrix?

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Project Management

LO 1 Define the project manager

A PM is the person who leads a project from its phases of initiation to closure in the project life cycle
including planning, managing people and resources, and performing of the project. The PM has attributes
that determine PM’s roles in a project. These are powerful communication skills, proficient technical skills,
managing resources, good decision making, managing risk, perfect visionary, negotiating skills, team building,
and leadership. A PM is a bridge between the project and the main stakeholder, customer. A stakeholder
is an individual, group, or organization that may affect, be affected by, or perceive itself to be affected by

Summary
a decision, activity, or outcome of a project. An effective PM must comprehend how stakeholders can
influence the project and develop methods for managing the dependency.

LO 2 Distinguish between managing and leading a project

The words project manager and leader (or project management and leadership) are overlapping concepts,
and they are often confused and used interchangeably. The management role is more administrative like
other management roles. Leadership, on the other side, is about interpersonal relations. Besides, PMs
focus more on administrative skills while leaders bring emotional intelligence to the forefront for the
achievement of project success. Since the leadership is crucial to the project success, a PM should be a
perfect leader.

LO 3 Explain how to build high performance project teams

Building a team is one of the PM’s attributes and is crucial to end up the project successfully. Hence, the
project manager should form a team to work with before continuing the project. A PM builds up a project
team of skilled employees from the same or different function areas to work on a project. A project team
consists of team members from different departments of an organization, thus most project teams can be
classified as cross-functional teams. Forming, Storming, Norming, Performing and Adjourning are the five
stages to develop a team. The PM selects the right people for every attitude of the project and looks for a
successful project.

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 The Project Manager and the Project Team

1 The project manager spends a great deal of 5 Which of the following is not the stakeholder?
her time communicating with project stakeholders.
Which of the following represents an example of a. Customer b. Sponsor
an external project stakeholder for the project? c. Program Manager d. Supplier
e. Consultant
Test Yourself

a. Top management
b. Customers
c. Team members 6 Which of the following plays a key role in the
success or failure of a project?
d. Sponsor
e. Resource management a. Company b. Project Team
c. Time d. Cost
2 Effective leadership involves all of the e. Customer
following, except...
a. managing oneself through personal time 7 A project manager is meeting with his team
management, stress management, and other for the first time and wants to create the right
activities. environment in which relationships develop
positively. Which of the following is necessary to
b. managing team members through motivation,
create an effective partnership with his team?
delegation, supervision, and team building.
c. maintaining tight control of all project resources a. Exchange of purpose
and providing information to team members b. Absolute dishonesty
only as needed. c. No right to say no
d. inspiring the team members. d. Unshared accountability
e. listening to the team members and managing e. Lack of experience
the conflict.
8 In which of the following stages of team
3 Which of the following is one of the development do group members work together to
characteristics that the project manager should accomplish their tasks?
have?
a. Forming b. Storming
a. Being inexperienced c. Norming d. Adjourning
b. Lack of management experience e. Performing
c. Low communication skills
d. Leadership 9 Which of the following is true about leaders?
e. Incompetent technical skill
a. Leaders focus more on administrative skills.
b. Leaders count on authority.
4 Which of the following is an obstacle to the
performance of the project team? c. Leaders consider interpersonal relations.
d. Leaders cope with complexity
a. Management support e. Leaders have large technical skills
b. Good relations between team members
c. Recognition of success
d. Lack of top management support
10 Whose duty is providing effort to the whole
project to meet the objectives?
e. Quality team members
a. The project manager
b. The sponsor
c. The client
d. One of the project team members
e. The program manager

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Project Management

1. b If your answer is incorrect, review “Who is 6. b If your answer is incorrect, review “The
project manager”. project team”.

Answer Key for “Test Yourself”

2. c If your answer is incorrect, review “Managing 7. a If your answer is incorrect, review “Managing
versus leading a project”. versus leading a project”.

3. d If your answer is incorrect, review “Who is 8. e If your answer is incorrect, review “The
project manager”. project team”.

4. d If your answer is incorrect, review “The 9. c If your answer is incorrect, review “Managing
Project Team”. versus leading a project”.

5. e If your answer is incorrect, review “Who is 10. d If your answer is incorrect, review “The
project manager”. project team”.

Suggested answers for “Self Review”

Identify the external stakeholders in a construction
project.

In general, external project stakeholders are clients, competitors, suppliers,

environmental, political, and other intervenor groups. In a construction
self review 1 project, for example, these external stakeholders may be a painter, decorator,
roofer, electrician, plant operator, or the municipality.

What are the responsibilities of a project manager as a

leader?

Leadership is one of the top skills that a PM should have. The responsibilities
of a PM as a leader are as follows:
• Motivating
• Inspiring
self review 2 • Team Building
• Negotiating
• Communicating
• Listening
• Influencing

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 The Project Manager and the Project Team

Identify the attributes of the four team styles.

Suggested answers for “Self Review”

The four team styles are contributor, collaborator, communicator and challenger.
The attributes of each are as follows:
Contributor:
• Dependable • Clear
• Responsible • Relevant
• Organized • Pragmatic
• Efficient • Systematic
• Logical • Proficient
Collaborator
• Cooperative • Accommodating
• Flexible • Generous
• Confident • Open
• Forward - looking • Visionary
self review 3 • Conceptual • Imaginative
Communicator
• Supportive • Friendly
• Encouraging • Patient
• Relaxed • Informal
• Tactful • Considerate
• Helpful • Spontaneous
Challenger
• Candid • Outspoken
• Ethical • Principled
• Questioning • Adventurous
• Honest • Aboveboard
• Truthful • Brave

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Project Management

References
Gray C. F., & Larson E. W. (2018). Project Management Parker, G. (2008). Team Players and Teamwork New
(7th ed.). McGraw and Hill. Strategies for Developing Successful Collaboration
(2nd ed.), NY, USA: John Wiley and Sons.
Heagney J. (2012). Fundamentals of Project
Management. USA: American Management Pinto, J. (2016). Project Management: Achieving
Association. Competitive Advantage (4th ed.). Upper Saddle
River, New Jersey, USA: Prentice Hall.
Herkens, G.R. (2002). Project Management. USA:
McGraw and Hill Project Management Institute. (2017). A Guide to the
Project Management Body of Knowledge. (6th ed.).
Luo, X., Slotegraaf, R. J., & Xing, P. (2006). Cross-
PA, USA: Project Management Institute.
Functional “Coopetition”:The Simultaneous
Role of Cooperation and Competition Within Summerfield , M.R. (2014). Leadership: A Simple
Firms. Journal of Marketing, 70, 67–80: American Definition. Am J Health-Syst Pharm, 71(3), 251-
Marketing Association. 253
Meredith J. R., & Mantel S. J. (2009). Project Sundstrom, E., De Meuse, K.P., & Futrell, D., (1990).
Management Approach: A Managerial Approach Work Teams: Applications and Effectiveness.
(7th ed.). NY, USA: John Wiley and Sons. American Psychologist, 45(2), 120-133

Online References
go2hr.(n.d.) Understanding the Differences: Leadership vs Management [web log comment]. Retrieved from
[Link]

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 Chapter 6 Project Risk Management
After completing this chapter, you will be able to:

1 2
Learning Outcomes

Explain project risks and plan risk

management Identify risks

3 Analyze risks by qualitative techniques 4 Analyze risks by quantitative techniques

5 Implement risk response strategies 6 Monitor risks

Chapter Outline Key Terms

Introduction
Risk
Project Risks and Plan Risk Management Risk Management
Identifying Risks Risk Management Plan
Qualitative Risk Analysis Risk Analysis
Quantitative Risk Analysis Risk Response
Risk Monitoring
Responding to Risk
Monitoring Risks

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INTRODUCTION Project Risk Types

Projects involve many different risks. Risks Project risks can be found at any point
are likely to affect project objectives positively or throughout the life cycle of the project. To identify
negatively. With Project Risk Management, we potential risks, you should consider which events
take precautions against the risks that will adversely may cause risks and which issues may affect the
affect our project and try to use the risks that will project. Time, budget, scope, requirements,
affect positively in our favor. infrastructure, processes, and personnel are some
of the areas that can be affected.
PROJECT RISKS There are two types of risks: individual risk
and overall project risk. Individual risks are
AND PLANNING RISK specific events or conditions that may affect
MANAGEMENT project objectives. Individual risks can positively
Risk is an uncertain event or condition that, if or negatively affect one or more of the project
it occurs, has a positive or negative effect on one or objectives, elements, or tasks. Overall project risk
more project objectives (PMI®, 2017, p. 720). Overall demonstrates the impact of uncertainty on the
project risk is the effect of uncertainty on the project project as a whole (PMI®, 2009, p. 10).
as a whole, arising from all sources of uncertainty
including individual risks, representing the exposure
of stakeholders to the implications of variations in Reducing Risk Uncertainty
project outcome, both positive and negative. Success in project risk management requires
Project risks are divided into two categories: a proactive approach. Responding when the
negative and positive risks. Negative risks are problem arises leads to unnecessary use of time
threats, positive risks are called opportunities. and resources. Striving to avoid problems is more
Negative risks can harm project objectives while important than correcting problems.
positive risks can benefit the project objectives. In risk management, it is necessary to reduce the
For example, suppose that you are managing a uncertainty of risks and determine the appropriate
project to renovate your office. You will need to responses for possible risks that cannot be avoided.
supply new decoration and technical equipment In this way, you can eliminate the negative
and change the seating arrangement: consequences. You can benefit if the risk arises and
• Technical: Technically new computers need has positive consequences.
to be bought and the heating and lighting To reduce uncertainty in projects, you must first
system needs to be rebuilt. You know that identify the likelihood, consequences, impact, and
you will work with multiple suppliers. You possible causes of the risk that needs to be taken:
have concerns that each supplier will do its • The possibilities may be low, medium, or
job at the right time and content. high. For example, you determine how
• Decoration: You have to take into account likely it is that supply delays will stop the
the future staff growth. First, you need to project. You make an estimate based on your
determine the seating arrangement and then experience. When you look at past projects,
supply the furniture. Otherwise, you are more you will see a 50% chance of delay.
or less likely to purchase unfit furniture. You • Risks can affect the scope, cost, time, and/or
know that you must follow the legal rules that quality of projects. You need to determine
must be followed in the offices, otherwise you how serious the impact is (impact on project
may pay legal penalties. objectives).
• You can determine the effect by a specific
important number or percentage. You must determine
a measure of the severity of the impact. For
Taking a risk isn’t just jumping into a river. You need example, you can set the delay to be good if
to look at the speed and depth of the water. If you it is less than 5 days, moderate between 5-10
don’t, you’re going to trust your luck. days, bad if more than 10 days.

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• It is important to standardize the impact of Expert judgment includes obtaining opinions of

risks in a common language. You can ensure experts (project team members, technical experts,
that the project team and stakeholders etc.) about the project. The Project manager should
understand the impact of risk in the same organize planning meetings without skipping
way. relevant stakeholders and ensure that timely and
appropriate decisions are made.
Risk Management Plan • The Project Risk Management Plan
Risk management planning is the process of (Figure 6.1), which describes what the
defining how to conduct risk management activities risk management activities will be, should
for a project. The key benefit of this process is that include (Tekir, & Şakar, 2016, p. 407) the
it ensures that the degree, type, and visibility of risk following
management are proportionate to both risks and • The Project Risk Management Methodology
the importance of the project to the organization is an explanation of how you plan to
and other stakeholders (PMI®, 2017, p. 401). implement the project risk management
plan.
Project risk management planning is the process
• The roles and responsibilities of the persons
of determining how risk management activities are
performing the activities in the Project Risk
carried out in the project. It provides a basis for
Management Plan are explained.
assessing project risks and guides you to allocate
• The budget, the unexpected situation and
the necessary resources and time.
the principles of using a management
In order for the Project Risk Management Plan reserve are specified for Project Risk
to be compatible with other plans, it is necessary Management.
to review the sub-plans (time, cost, etc.) included • The timing of Project Risk Management
in the Project Management Plan. Project Charter, (when, how often), the principles regarding
which includes project deliverables, constraints, the use of contingency reserves related to
and objectives, is another input. Project documents the schedule, and the risk management
such as assumptions log and stakeholder register activities to be included in the project
may contain information on risks that may prevent schedule are explained.
the project from achieving its objectives. Finally, • Potential cause groups (Risk Categories) are
environmental organizational factors (stakeholder identified.
risk tolerances, etc.) and organizational process • Risk probability and impact levels are
assets (policy, procedures, etc.) should be defined. Stakeholder tolerances that are
considered. valid for the project being studied are
In order to effectively monitor and control risks indicated on the Probability-Impact matrix.
in a project, planning is necessary. • The content and format of risk reports, how
Stakeholder-based risks can be assessed using to record risk activities and how to manage
data analysis techniques such as stakeholder risk management processes are explained.
analysis. Stakeholder risk attitude indicates how
much tolerance your stakeholders have for risk.
Stakeholders’ overall risk appetite is high or low,
which can affect the project.

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Project Management

Figure 6.1 Project Risk Management Plan (Tekir, & Şakar, 2016, p. 408-409)

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Project Risk Management

Learning Outcomes

1 To explain project risks and plan risk management

Self Review 1 Relate Tell/Share

You will take the exam from

different lessons within
a year at the university.
There will be risks that Tell what can happen if we
Do all projects carry risk?
you will encounter in these don’t prepare ourselves for
Why?
exams. Prepare an impact- risks.
probability matrix to assess
these risks and create
categories for your risks.

IDENTIFYING RISKS Risk Identification Tools and

Identifying risks means the process of Techniques
identifying individual project risks as well as the Document analysis - Document analysis is a
sources of overall project risk and documenting term used to review all relevant project documents
their characteristics (PMI®, 2017, p. 409). that can help you identify risks. These documents
are plans, assumptions, constraints, previous
project files, contracts, agreements, and technical
Inputs to Identify Risks
documentation (PMI®, 2017, p. 415). Particular
A risk cannot be managed unless it is first attention should be paid to the assumptions and
identified. Consequently, after risk management constraints documented for the project in all
planning has been completed, the first process in documents. Identifying associated risks allows
the iterative Project Risk Management process them to be addressed early.
aims to identify all the knowable risks to project
Brainstorming - Brainstorming is to obtain a
objectives.
comprehensive list of individual project risks and
It is, however, impossible to identify all the sources of overall project risk (PMI®, 2017, p. 414).
risks at the outset of a project. Over time, the An efficient brainstorming session can help you to
level of project risk exposure changes as a result of see the many risks associated with the project in a
the decisions and actions taken previously in the short time. For the success of the brainstorming
project (internal change) and of externally imposed sessions, people with different backgrounds,
change. perspectives and expertise should be brought
The purpose of risk identification is to identify together. A brainstorming session will make it
risks to the maximum extent that is practicable. The easier for you to set risk categories (techniques,
fact that some risks are unknowable or emergent processes, etc.) that you have previously set.
requires the Identify Risk process to be iterative,
repeating the Identify Risks process to find new risks
which have become knowable since the previous
iteration of the process (PMI®, 2009, p. 25).

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important SWOT analysis - SWOT analysis is one of the

data analysis methods used to identify and classify
risks. SWOT expresses Strengths, Weaknesses,
It is necessary to ensure the full participation
Opportunities, and Threats. SWOT analysis can
of the right people in the brainstorming
be done by brainstorming or interviews.
session.
SWOT analysis lists factors that have a definite
impact on the project. The best way to perform
SWOT analysis is to create a simple matrix
Interviews - You can engage with team members, (Figure 6.2) for each of the four factors: Strength,
stakeholders, customers and suppliers to uncover Weaknesses, Opportunities, and Threats.
potential risks. Brainstorming and negotiations
on identified risks can be made. In the interviews,
SWOT ANALYSIS
additional risks will be identified and the existing
risks can be classified. During the interviews, the Helpful Harmful
to achieving the objective to achieving the objective
risk list can be reviewed and the causes and effects

(attributes of the environment) (attibutes of the organization)

of the risks can be evaluated. Risks can be dealt with

W
in detail. The risks identified in the interviews can
be grouped according to their source, area affected Internal origin
by the project and the relevant stage. Grouping Strengths Weaknesses
risks for common reasons may work in terms of
generating a common response.

O T
important
External origin

Opportunities Threats
Interviews allow you to focus better on
getting the information you need.

Figure 6.2 SWOT Matrix (SWOT analysis, n.d.)

Root cause analysis - Root cause analysis not only
helps you identify and manage potential risks, but
•
In the Strengths section, the strengths,
also helps you develop preventive actions.
capabilities, knowledge, etc. of the sponsor,
Risks should be examined in detail to determine project manager, or the project team are
root causes. Root cause analysis should be done included.
with experts. The experiences and perspectives of • In the Weaknesses section, weaknesses or
the stakeholders who are familiar with the project, deficiencies of the sponsor, the project
the product of the project, and the environment manager, or the project team are evaluated.
provide a better understanding of the risks and These are issues that could jeopardize the
possible causes. success of the project.
The following questions should be asked for • In the Opportunities section, topics that
root cause analysis: may benefit the project are listed.
• What can cause this risk? • In the Threats section, factors that could
• Under what conditions can this risk turn harm or prevent the achievement of project
into a problem or an opportunity? objectives are listed.
Even after identifying the possible causes of a Assumption Analysis - Assumption Analysis is to
risk, one should continue to ask questions and try examine the validity of assumptions to evaluate the
to find other relevant causes. possible impact of false assumptions on the project.
Constraint Analysis is to identify potential risks to
the project by analyzing constraints. In

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Project Risk Management

Table 6.1 Assumptions Log (Şakar, 2018)

Assumption Log
Project:
Record
NO Category Assumption Responsibility Status Actions
date

Assumption Analysis, continuous evaluation is made depending on whether the assumptions are correct
or not. Assumptions related to the project must be kept in the Assumption Log. (Table 6.1)
Constraints include budget, time or available resources, etc. in your project are limitations. The project
manager needs to plan and execute in accordance with these constraints. Therefore, it is very important to
analyze the constraints as it can severely affect the project. If there are positive developments (additional
resources, budgets, etc.) related to the constraints, new opportunities may arise for the project. Constraint
Analysis should be performed continuously like Assumption Analysis. It is very important that the project
manager know the current constraints.
Checklists - Checklists are used to identify important issues to consider and ensure that they are not
omitted. In the process of determining risks, checklists compiled from the problems experienced in
previous projects, lessons learned or prepared in the sector specific are used.
The checklist should assess whether the risks identified are valid for the current project. By reviewing
the risk records of similar projects, you should add potential risks to your checklist for your current
project. The risk checklist should be updated as the project progresses. The risk checklist should also be
reviewed and updated during project closure.

Risks Identification Outputs

Risk Register appears at the end of the risk identification process. (Table 6.2) Risk Register is a document
that lists the risks that you defined in the project. Risk Register is an important input for the project risk
management processes. Risk records are updated during the project.

Table 6.2 Risk Register (Tekir, & Şakar, 2016, p. 415)

RISK REGISTER
Project: Date:
Risk Etki
Risk NO Probability Score Risk Response
Description Scope Quality Schedule Cost

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Project Management

important

For a real experiment about risk

There is no medicine without side effects. Most identification, you can read ”Deadliest catch:
surgical interventions involve risks, even if they risk identification in the vast Bering Sea”.
are performed in the most perfect manner, Winters, L. (2009). Deadliest catch: risk
with the possibility of failure. Project Managers identification in the vast Bering Sea. Paper
should share risks and impacts, as doctors tell presented at PMI® Global Congress 2009—
risks to patients and their relatives. North America, Orlando, FL. Newtown
Square, PA: Project Management Institute.

Learning Outcomes

2 To identify risks

Self Review 2 Relate Tell/Share

You are about to take the

Almost 90% of the project final exam of a difficult
Tell the technique(s) used
problems are predictable. lesson. Make a list of the
to identify risks.
What do you think? risks you might encounter
in the exam.

QUALITATIVE RISK ANALYSIS

Qualitative Risk Analysis is the process of prioritizing individual project risks for further analysis or
action by assessing their probability of occurrence and impact as well as other characteristics. The key
benefit of this process is that it focuses efforts on high-priority risks (PMI®, 2017, p. 419).

Inputs for Qualitative Risk Analysis

The Risk Records, Assumption Log, and Stakeholder Register are inputs that contain detailed
information on the risks to be analyzed. Records from past completed projects, similar to the project you
are working on, help determine how to prioritize specific risks.

Qualitative Risk Analysis Tools and Techniques

There are seven different tools and techniques that you can use to perform qualitative risk analysis:
• Expert Judgement - When conducting qualitative risk analysis, you will rely on the expert judgment
of individuals and groups with expertise and knowledge about the project.
• Interviews - Interviews are conducted to collect the data needed to conduct a qualitative risk
analysis.
• Interpersonal and team skills - Interpersonal and team skills to increase the effectiveness of qualitative
risk analysis as they enable the project team and stakeholders to reach consensus and express

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their views. This ensures that the disputes be analyzed, the technique of assessment of risk
between the participants are resolved and parameters is used. The parameters that are thought
the process is carried out correctly. to affect the project should be evaluated.
• Meetings - In the qualitative risk analysis
process, the project team can organize risk
workshops and meetings to review, evaluate, important
categorize, and prioritize project risks.
• Risk categorization includes technical, The analyzed data can be presented visually
external (suppliers, legal, etc.), and internal using data presentation techniques.
(infrastructure, resources, etc.) risk groups.
It identifies the areas that may affect the
project the most and provides the right risk
response plan. Risk Probability and Impact Assessment - Risk
• Risk data quality assessment - If the Probability and Impact Assessment uses probability
information collected about the risks is and impact matrix is a grid for mapping the
incorrect, biased, or incomplete, the results probability of each risk occurrence and its impact
of the qualitative analysis will not be reliable. on project objectives if that risk occurs (PMI®,
Therefore, risk data quality assessment is 2017, p. 425). Risks can be prioritized according
performed during the qualitative risk to the relative threat or opportunity levels they
analysis process. The source of the data, represent.
the accuracy of the data, its relevance to The project team uses expert opinion to estimate
your project, and its specific conditions are the likelihood of each risk occurring and the extent
evaluated. You may need to collect better of the impact if it occurs. The scales to be used may
quality data if the current data quality is be different. It may be simply low, medium, and
not sufficient to perform a comprehensive high, or 0 to 5, or 0 to 10. If you have information
analysis. about probability based on past records, you can
• Risk probability and impact assessment - also assign a real percentage to the probability
As another data analysis technique, risk of risk. To reach the risk score, the impact and
probability and impact assessment (See probability scores are multiplied by each other.
Figure 1.1) is performed to determine the In the example below (Figure 6.3), the impact
likelihood of a particular risk occurring in and probabilities are scored between 1 and 5. The
your project. likelihood of Risk 1 is Likely (4) and the impact
In addition to the possibility and impact, if score is Very High (5). The risk score is 4 x 5 = 20.
other risk characteristics (urgency, proximity, The probability of Risk 2 is Very Unlikely (1) and
manageability, controllability, detectability, the impact score is Normal (3). The risk score is 1
connectivity, strategic impact, etc.) are wanted to x 3 = 3.

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Very Risk 1
High
4 x 5 = 20
(5)

High
(4)
IMPACT

Normal
Risk 2
(3)
1x3=3

Low
(2)

Very Low
(1)

Very Unlikely (1) Unlikely (2) Possible (3) Likely (4) Very Likely (5)
PROBABILITY

Figure 6.3 Example Probability and Impact Matrix (Tekir, & Şakar, 2016, p. 418)

Probability and impact may not be accurate by After qualitative risk analysis, risks are
themselves. Taken together, accurate results can be categorized. In this way, common root causes
achieved in prioritizing risks. Thus, a numerical of risks can be identified and the risks and risk
score will be assigned to each risk. Numerical responses can be managed more easily.
scores determine the overall risk rating and used to The risk urgency assessment performed during
compare and rank risks. qualitative risk analysis provides new information
on which risks require the most attention.
Outputs of Perform Qualitative Therefore, the risk register is updated by marking
immediate risks as important and urgent.
Risk Analysis
As shown in the example probability and impact
matrix (Figure 6.3), Risk 1 falls into the high risk important
category in the dark area. If the risk assessment
team uses a numerical scale, each risk score has a Project planning processes serve several purposes,
numerical value. Numerical values make it easier but probably the most important for risk
to prioritize risks. management is to differentiate the parts of the work
If sequential values are used to assess possibilities that are well understood, and therefore less risky,
and impacts, risks can be ranked according to their from the parts where you are clueless. Often, what
associated priorities. Priority risks are those with separates an impossible project from a possible
the highest numerical value. one is isolating the most difficult work early, so it
Prioritizing risks helps to plan risk responses. For receives the attention and effort required to deal
example, high-priority threats can be approached with it (Kendrick, 2015, p.161-177).
more easily than aggressive, low-priority threats.

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Learning Outcomes

3 To analyze risks by qualitative techniques

Self Review 3 Relate Tell/Share

You are about to take the

final exam of a difficult
lesson. Make a list of the Tell how we can do Risk
Why is risk prioritization
risks you might encounter Probability and Impact
important?
in the exam and decide Assessment?
the impact and probability
values to prioritize them.

QUANTITATIVE RISK ANALYSIS Quantitative Risk Analysis Tools

Performing Quantitative Risk Analysis is the and Techniques
process of numerically analyzing the combined It is necessary to convert the information
effect of identified individual project risks and about project risks into statistical data through
other sources of uncertainty on overall project quantitative risk analysis process. Effective data
objectives (PMI®, 2017, p. 428). collection techniques are essential for the success
In the qualitative risk analysis process, project of this process.
risks are evaluated according to their probability Interviews - Interviews allow you to get the
and possible effects. In the process of quantitative information you need by referring to expert
risk analysis, risks are analyzed using more objective judgements. Experts may be members of the
methods. Thus, to what extent the risks may affect project team, as well as professionals, academicians,
the project objectives is determined numerically. consultants, experienced senior executives from
outside the project team.
Inputs to Perform Quantitative Expert Judgement - The purpose of taking expert
Risk Analysis judgement is to collect data on the likelihood of
achieving project objectives by addressing the
In order to measure the impact of a risk, time, impacts of risks. The questions to be asked to the
cost, and scope baselines must be identified as experts are explained in the following sections.
reference. It will be necessary to compare the
effects of risks on the scope, time, and cost targets Assumption analysis - In addition to seeking
with these baselines. In this context, the project expert judgement, it is necessary to record
management plan that is formed as a result of the assumptions on which the information is based.
planning processes is an important input of this Are there some factors that experts assume when
process. assessing the impact of risk on the project? Are
these factors likely to change over time? When you
In order to realize this process effectively, it will make these queries, you usually reach the three-
also be necessary to use assumption log, cost and point prediction method. The three points are:
time estimates, bases of estimates, milestone list, optimistic, most likely, and pessimistic.
resource requirements, and so on.
For example, you ask for expert opinion
on how bad weather can affect the cost of a
construction project. You will need to ask experts

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to make predictions based on their past experiences From the formula above, you can use a similar
about the possible cost if the weather is good, if technique in cost estimation. Suppose you ask the
the situation is often encountered, and if the experts to comment on the possible cost of a job to
weather is bad. In addition to these estimates, it be made to the supplier.
is important for them to record the rationale and You’ve collected estimates from experts that the
the assumptions on which they are based. These lowest estimates are $ 150,000, the most likely $
give an idea of the reliability and accuracy of the 180,000, and the worst $ 240,000. With a similar
estimates. formula, you can estimate the expected cost of
If it is necessary to examine how this analysis your project.
technique works based on numbers, you have an Expected Cost = (150000 + 4x180000 +
activity to consult with expert opinions to estimate 240000) / 6 = $ 185000
its duration or cost. All information that is specific
Sensitivity analysis - Sensitivity analysis is
or uncertain about the content of the activity
an analysis technique used to determine which
should be shared with the estimators. If the experts
variables in a system affect the system more. By
you apply do not have the same information about
fixing other variables, the effect of a variable on the
the activity, there will be inconsistency between the
system is tested by changing the values. For each of
estimates. After sharing the necessary information,
the variables, you can determine which one has the
your experts said that the work will be done in 100
greatest effect by repeating the process one by one.
hours at best, 120 hours at most possible, and 200
hours at worst. With these three values, you can Tornado graph (Figure 6.4) is used to describe
use the Project Evaluation and Review Technique the effect of variables. In such a diagram, a bar
(PERT). The PERT technique is an approach that represents each risk and the range of impact it can
allows you to produce a single estimate based on take from negative to positive impact. The length
optimistic, approximate, and pessimistic estimates. of each bar indicates the relative impact of risks.
Bars are ordered from the largest to the smallest.
The formula to be used is as follows.
Expected duration = (optimistic + 4 x most
likely + pessimistic) / 6 = (100 + 4x120 + 200) / 6
= 130 hours

Negative Effect Positive Effect

Risk A

Risk B

Risk C

Risk D

Risk E

-10.000 -5.000 5.000 10.000 20.000

Figure 6.4 Tornado Diagram (Tekir, & Şakar, 2016, p. 422)

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The consequences of a defined risk prevention may be positive and negative. For example, if you go
to reduce the number of project team members, this would pose a time-threatening, while reducing fixed
staff costs. The Tornado chart will help the project manager to compare negative and positive impacts.
Decision Tree Analysis - The importance of risk in a project is not only related to the magnitude of its
damage. The likelihood of risk is also effective. Based on this principle, it is possible to evaluate the threat
value on the project as time and money with decision tree analysis (Figure 6.5). It is called a decision
tree because it allows the presentation of a diagram representing the choices between at least two or more
options.

Cost Outcome Sales Net

Revenue Profit
Success 2.000.000 TL + 1.800.000 TL

200.000 TL

Failure 0 TL - 200.000 TL

Success 360.000 TL + 340.000 TL

20.000 TL

Failure 0 TL - 20.000 TL

Neither 0 TL

Figure 6.5 Decision Tree

In the branches of the decision tree, there are the the project and that the risk is likely to occur at 20%,
topics that the project manager has to decide. Each the expected monetary value is $ 32,000.
decision option can be further subdivided into sub- After applying the above mathematical process
scenario branches. In these branches, there are sub- from the sub-scenarios of all decision options in
arnatives of the decision to be made. the branches of the decision tree, the analysis is
For example, you can rent or buy a construction completed by selecting the decision option with the
machine in a two-year project that you will start highest monetary value expected.
soon. You have compared the purchase cost with Simulations - The aim of the simulation study
the rental costs throughout the project. However, is to simulate a system. Thus, you measure how
when you evaluate the risks in your project, your the system reacts under various conditions. By
project has a delay risk of one month, two months, modeling the project, the impact of risks on
or three months, and this will increase your rental targets can be analyzed. The most commonly used
costs. Here we use decision tree diagrams to create modeling example is Monte Carlo Simulation.
scenarios for such risky situations.
The activities in the project and the order of the
The next step is to calculate the expected activities are defined in a software that performs
monetary value. Given both the effects of the risk and Monte Carlo Analysis. Optimistic, most likely, and
the likelihood of occurrence, the expected monetary pessimistic forecasts for risky activities are added to
value analysis is used to determine the relative the system. In addition, if there is statistical data
significance of the risks. To calculate the expected about the duration of the activities in the past, these
monetary value of a risk, you need to multiply the values can be added to the system. For example, a
potential impact and probability. If we know that a secretary can write a 100-page plain document
risk could bring an additional cost of $ 160,000 to on the computer in an average of 4 hours and a

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standard deviation of 30 minutes. It was determined that the historical data corresponded to the normal
distribution.
After entering this data into software, Monte Carlo Analysis software starts to generate random
numbers by referring to time alternatives and distributions of risky activities. This study is inevitable with
a computer because random numbers may need to be determined thousands of times. Theoretically, the
greater the number of repetitions, the more reliable the result will be from the system.
As a result of Monte Carlo Analysis, the computer program creates cumulative probability graphs
(Figure 6.6) in a way that can be seen below . The results from these graphs are generally considered as
follows and presented to the decision makers.
• Comment 1 - As a result of the assessment of delay risks, the probability of completion of this project
on the targeted date of 31.12.2020 is 80%.
• Comment 2 - When we evaluate the cost risks with Monte Carlo Analysis, the probability of this
project ending up to $ 1,000,000 or less is 73.25%.
• Comments are examples.

Probability (%)

80 (%)

50 (%)

20 (%)

Value Expected Value

Figure 6.6 Monte Carlo Analysis (Tekir and Şakar, 2016, p. 423)

Outputs of Perform Quantitative Risk Analysis

Given the identified individual project risks and other sources of uncertainty, it indicates the likelihood
that the project will achieve its main objectives. In addition, the degree of variability remaining in the
project at the time of analysis is indicated by the range of possible project results.
The amount of emergency reserve required to maintain a certain level of confidence and the individual
project risks or other sources of uncertainty that have the greatest impact on the critical path are identified.

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Learning Outcomes

4 To analyze risks by quantitative techniques

Self Review 4 Relate Tell/Share

You are about to take the

final exam of a difficult
lesson. Make a list of the
risks you might encounter Tell technique(s) which are
How can we estimate risk
in the exam and estimate used to quantitative risk
probability and impact?
how much time you analysis.
can lose if they happen .
Evaluate the the likelihood
of those risks.

RESPONDING TO RISK traffic delays along the highway. At that time, a

Plan Risk Responses is the process of developing journalist from a local media calls you to ask you
options, selecting strategies, and agreeing on to explain a case about tolls along the highway. You
actions to address overall project risk exposure, know that disclosure will put you, your project, and
your organization at risk of negative media interest.
as well as to treat individual project risks. (PMI®,
In addition, the subject is beyond the scope of
2017, p. 437). Through this process, it is aimed to
your project and your knowledge. You direct the
reduce the impact of threats on the project and to
reporter to the law or public relations department.
increase the impact of opportunities.
You then record the risk in the registry.
Sometimes, a negative risk is so costly and so
Strategies for Negative Risks or likely that taking that risk will cause great damage
Threats to the project. In this case, it should be avoided.
For risk response strategies, expert opinions The following strategies can be used to avoid risk
are important. It can be provided by any group according to the situation of project and risk:
or person with knowledge, skills, experience, or • Removal: For this, it is necessary to remove
training in creating risk responses. Occasionally, the risk activity or work package from
risks that require a method of prevention outside the the project. At the end of this strategy,
authority of the project manager can be identified. we encounter a decrease in scope but
The project manager should transfer such risks to we eliminate the risk completely. The
the project sponsor or higher management, which implementation of this strategy requires the
has a higher authority than the project manager. approval of stakeholders who have agreed
The project manager cannot manage these risks, on the scope.
but is responsible for passing all the detailed • Transferring risk and insurance:
information about the risks to the sponsor or Transferring risk includes shifting the
senior management. The project manager can also risks to the third party. The risk does not
provide suggestions and solution methods. disappear. You transfer responsibility to a
For example, you are working as an administrator party outside the project. An example of
in the project of developing automatic toll system this strategy is to delegate risky activities
on the highway. Your goal in the project is to reduce or work packages to a specialized supplier.
Another example is the insurance method.

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Both methods may require changes to to another country. An example of this strategy
increase the costs of the project. The is to agree with a local firm that knows well the
difference between the loss you will incur market and culture of the target country and to
in case of risk and the cost increase caused share the gains within this framework.
by the transfer of risk should be evaluated. Enhance an opportunity - This includes taking
• Mitigation: Mitigation includes reducing steps to increase the likelihood of the opportunity
the likelihood of risk occurring or the effect or its positive impact on the project. For example,
of damage. For example, having the tests if a firm that provides consultancy on project
performed by two different end-users to management regularly shares tips on how to
prevent errors in a software project increases manage the project in social networks, its expertise
the likelihood that one tester will catch the will be seen by its potential customers and the
error missed by another. Another example: possibility of consulting will increase.
When agreeing with a supplier, selecting a
Accept - Accepting the risk, not taking any
supplier who has already worked with our
action and continuing the project as planned can
company can reduce many risks.
be an action plan. Even if the acceptance strategy
• Acceptance: Acceptance is an appropriate
is chosen, when the opportunity arises and why
strategy where a risk has little impact
the chosen strategy is “Accepting” should still be
and probability. There are two types of
documented.
acceptance: passive and active. Passive
acceptance involves not doing anything
unless there is a risk, just documentation. Contingency Reserves
Active acceptance requires planning in Reserves are project funds but may include time,
advance how to deal with the consequences money, and staff. It is used to offset the impact of a
if the risk arises and allocating time or risk on the scope, time, cost, or quality of a project.
money reserves to activities or work When determining reserves, risk tolerances in
packages. These are known as contingency targets are taken into consideration. The lower the
reserves. risk tolerance, the higher the reserves. The reserves
of a project whose deadline is legally the night of
Strategies for Positive Risks or 31.12.2020 will be higher than any other project
Opportunities with time tolerance.
Exploit - It is aimed to find the best way to take Expected Monetary Value can be used to
advantage of the opportunity by eliminating the calculate reserves. By multiplying the action risk
uncertainty in the project. For example, suppose (time or cost) of the transaction risk, you multiply
that you are working on a new private school the likelihood of that risk. For example, if the
project. One of your friends said that a well- chance of a risk occurring is 5%, and the impact
known mathematics teacher was dissatisfied with on your project is $20,000, you can use $1,000 as
the management of his current school and was in the Expected Monetary Value by multiplying 0.05
search of another school. Including that teacher by $20,000.
in your staff will positively affect the prestige and Another example is to determine the time
quality of your new school. To take advantage of reserve. A supplier you previously worked with is
this opportunity, your proposal and negotiations doing quality and cheap work, but we know that
with him may affect your project costs. However, 3 out of 10 past projects had an average delay of
the revenue you get from the opportunity will 20 days. Based on these data, if the probability
provide a return above these costs. of delay is considered to be 30%, and the delay is
Share - This strategy involves merging with considered as 20 days, the reserve to be allocated
a firm to increase the chances of securing gains for the relevant activity can be predicted as 30% x
and agreeing to share rewards. For example, a 20 days = 6 days.
manufacturing company wants to sell its products

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Outputs of Plan Risk Responses This process should be repeated while the project
Defining project risks is not enough. In is actually in progress. Because unpredictable risks
particular, people who will provide financial may occur in the first place, risks with low threat
support to the project, such as the project sponsor, levels may change over time.
would like to hear from the project manager about
their risk response plans. If the project manager The Implementation of Risk
fails to provide satisfactory strategies, trust in the Responses
project may be shaken and stakeholders’ support
The purpose of the implementation of risk
may be reduced.
responses is to execute agreed risk strategies. In this
At the end of this process, risks with high process, planned strategies are implemented.
threat level should be discussed in detail. Risks
The individuals or groups that implement these
at low threat level should also be listed, but the
strategies may not be part of the project team.
information should be provided to stakeholders to
They may be outside the project team or outside
monitor change in these risks.
the company. Therefore, project managers should
After explaining in detail the risks with high threat ensure that the necessary strategies for risks are
value, you should explain the response strategies that implemented by negotiating with stakeholders,
you recommend for these risks with their reasons. guiding them, and raising their awareness.
You will need to present how the strategies you
This process has two consequences:
propose will change the impact and likelihood of the
risk, but how much should be allocated to the plan • Working performance data. This data
as additional time or reserve cost. records when response plans are actually
implemented and how much effort or cost
This process requires sponsors, customers,
occurs.
project managers, and team members to come
• On the other hand, the lessons learned and
together and negotiate. This is because when the
all related project documents will need to
project manager lists the suggestions or alternative
be updated. In the light of this information,
strategies, the sponsor and the client can accept,
future project managers will be able to
reject, or make different suggestions. According to
see which response strategies are being
the latest decisions, the project management plan
implemented and accordingly choose the
will require updates, and the project sponsor or
best method.
client will have to accept it.

Further Reading

Using Risk Management in Your Projects Risks can arise anywhere in the SDLC. Even
Risk management is a routine used by as organizations venture into new projects, there
project managers to minimize potential is a need to monitor the ones in operation. For
problems that can affect the project. this reason, risk management is continuous.
Risks are possible events that can impact You can make risk assessment and
resources, processes, technology, or project management less tedious by creating a risk
participants during the system development management protocol. It may comprise of a
lifecycle (SDLC). consistent set of tools and templates as well as
training of project participants. By embedding
The results of risk are often unclear before
risk management to your daily routine, your
it strikes. Through risk management, you can
company can assume better health and overall
estimate threats beforehand and put control
performance.
measures if necessary.

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Your 6-Step Guide to Risk Management quantitative analysis techniques and tools are
Uncertainties are inevitable in projects, and useful in risk analysis.
so is risk management. The process is about Once you analyze various risks, you should
acting before a risk turns into an actual problem. have a picture of their effect on the budget,
You can eliminate it, mitigate its impact, scope, and the timeline of the project. You may
or accept it if you can accommodate its also be able to define how the risks can affect the
consequences. However, your course of action quality of your project.
should be a result of careful. Here are six steps to 3. Prioritization of Risks
follow to manage risks in your projects. Risk levels are different, and there is a need
1. Risk Identification to distinguish them based on severity. Without
It’s impossible to solve a problem that you this knowledge, you cannot determine the
can’t pinpoint. You can identify risks in different appropriate control measures to put in place to
ways, including interviews, brain-writing, root tackle the threat. Unpreparedness often leads to
analysis, and more. project failure or over expenditure when fixing
issues.
Visualize the project as if it’s complete and
running. Think about what could go wrong and An extensive list of risks can be intimidating,
note your fears down. Analyze historical data on but you can handle it by classifying risks as either
similar projects and record any deficiencies found. low, medium or high. You must address high
risks as soon as possible. A situation that would
You can set up interviews with the help of
be in this category in IT projects is poor data
the project team, colleagues, and stakeholders
integration between the two technologies.
to gather information on issues to emphasize.
Consider inviting people known for critiquing. Medium-priority risks are worth your
Their opinions can divulge essential insights attention, and you can mitigate their impact
which could have easily slipped through the with appropriate controls. Low risks may have
cracks. little to zero influence. You can either control or
accept them.
2. Risk Analysis
4. Risk Assignment
After populating a list of potential problems,
the next step is to determine the likelihood of For tracking, you should assign risks to
each. You should fill this information in your someone. Look for talented individuals in
risk register as well. your team and let them oversee risks. Apart
from monitoring, they should spearhead the
During your risk assessment, you should
resolution efforts for the uncertainties.
think about the possible consequences if the risk
came true. Some questions to ask yourself at this Failure to assign risks negates the effort of
stage are: identification and prioritization. The project
would ultimately suffer the maximum impact,
• Can the risk lead to project failure or delay?
accumulate more risks, and probably flop.
• Will it raise regulatory issues?
• Is there a likelihood of legal disputes? 5. Response to Risk
• How does it relate to various compliance Now you know the threats and your team
standards? is ready to resolve them. Before taking action,
Primarily, you will want to evaluate all separate positive risks from negative ones. The
possible outcomes if the risk happens no matter latter represents events which threaten to cause
the magnitude. The process can be tricky because harm.
there is never enough information. Find out if A positive risk is an unplanned situation
your industry has a risk assessment outline to use that you can exploit to benefit the project. Some
as a checklist. people look at it as a condition that produces
You will need to compute the risk factor too much of the desired deliverables. Decide the
associated with each risk to estimate the action to take.
severity of the probable impact. Qualitative and

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Create a plan to mitigate all risks that can Another area worth your attention is the
hurt your project. The strategy can be through American Disability Act. It requires owners of
preventative measures or a contingency plan. public accommodations to make them accessible
Together with the risk owners, decide which for all visitors. The regulation includes websites
approach solves the problems best. open to the public.
6. Risk Monitoring In 2014, a blind Seattle woman filed a case
The risk owner will continue tracking the because she couldn’t access the resources on the
risk to see how it responds. You will also have to district website resources. After the ruling, the
look out for any new threats that might develop. district would spend up to $815,000 to make
the site ADA compliant, pay legal fees, and
It’s crucial for all parties in the project to
compensate the lady for damages.
understand your risk management measures.
When you are transparent, the team will be The EU’s GDPR privacy standard affects
proactive as they will know what to do. Set up entities inside and outside the EU. You must
different channels for efficient communication comply with the unforgiving conditions of
with your team. GDPR if you are to transact with businesses
within the EU territory.
How Risk Management Relates to
Compliance Automation for Agility in Compliance
Projects
Modern SDLC relies on agile development,
a methodology based on the 12 principles of Since compliance mimics software
the Agile Manifesto. Agility, in this case, means development projects, automation can enable
that the software product can adapt to changes organizations to meet standards effortlessly. For
through its lifecycle. Nowadays, compliance vendors to satisfy the needs of their customers
projects are assuming the shape of agile and protect their information, they must be
development. compliant. They can generate and monitor
customer risk profiles and act accordingly to
Government compliance regulations are
maintain trust.
continually developing. Therefore, you should
know the policies affecting your organization and By providing communication tools and
implement them in your projects. These include motivating your stakeholders, you can promote
standards established in your industry as well as compliance in your organization. Self-assessment
external regulations that touch your businesses. and audits inform the compliance department
whether their controls are adequate.
You can adopt compliance planning project
management to identify risks emanating from Businesses should provide compliance
the outside. Take the HIPAA privacy rule, for officers with the tools they need for compliance
example, whose origin is the healthcare industry. projects. By so doing, customers and partners
will rest assured organizations are at par with
It demands the protection of electronic
standards.
medical records and health information about
individuals. It also sets the limits for disclosure
and usage of such information. When developing Source: Lynch, n.d.
for the health sector, you must in mind data
processing, storage, and security.

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Learning Outcomes

5 To implement risk response strategies

Self Review 5 Relate Tell/Share

You are about to take the

final exam of a difficult
What is the purpose lesson. What response
Tellthe strategies for threats
of implementing risk strategies do you determine
and opportunities?
responses? in response to the risks you
might encounter in the
exam?

MONITORING RISKS Risk Monitoring Tools and

Monitoring Risks is the process of monitoring the Techniques
implementation of agreed-upon risk response plans, Risk Audits and Meetings - Meetings are the
tracking identified risks, identifying and analyzing most effective means of information exchange. For
new risks, and evaluating risk process effectiveness risk management, the project should be carried
throughout the project (PMI®, 2017, p. 453). out regularly according to the workload. At regular
The following activities are carried out in the status meetings, discussing risks should always be
risk monitoring process; Monitor warning signs an agenda item. The benefit of doing so is to make
that risks may arise, control risks using identified all risks in the project identifiable and traceable.
responses, identify and analyze emerging risks. It will also help to keep risk management as a
Project managers need to monitor risks discipline that all stakeholders consider.
throughout the project. The aim here is monitoring Audits are used to assess the effectiveness of risk
risks and evaluating responses. As the project management in projects. It is realized as the project
progresses, some risks may be more dangerous progresses. During risk audits, risk management
while others may be completely erased. Through team or external auditor assesses and reports on
this process, project managers will be able to see risk responses and effectiveness. After the audit, the
the risk intensity at any time during the project. project manager should decide how to respond and
On the other hand, which prevention method evaluate the risk response plans when necessary. For
is decided should be monitored in this process. example, one of the risks for a software development
Monitoring may indicate that the planned response team is the likelihood that software developers will
to risk is ineffective. In this case, emergency plans decrease. By adding two additional developers,
can be implemented to control risk. they realize that they are lagging behind time, even
though they have developed a risk plan. In order to
The project manager should also consider the fix the problem, they look for three more developers
impact thresholds for the risks. If the impacts to borrow from other projects in the company. In
exceed the specified thresholds, emergency plans such a case, this event should be recorded in the
are implemented. Thresholds may be in terms of lessons learned. This information can then be used
money, duration, or number of resources based on to avoid the same problem in future projects.
tolerance. For example, if an intermediate target is
delayed for 5 days and the tolerance is 3 days, the As a result of audits, there may be changes in
risk response (emergency) will need to be activated. risk ratings, prioritization, or responses, or it may
be concluded that their responses are sufficient.

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Data analysis - Two data analysis techniques As a result of this process, the following outputs
are very important in the risk monitoring process: are obtained: work performance information,
technical performance analysis and reserve analysis. change requests, project management plan updates,
• Technical performance analysis - Technical project documentation updates, and corporate
performance analysis focuses on product- process assets updates.
related risks such as scope, functionality, Earned value analysis measurements can be
and quality. It compares actual and planned taken as an example of the work performance
technical achievements. Success of technical information generated during the risk monitoring
performance analysis depends on the team process.. With these measurements, the situation
that determines the performance parameters of the project is evaluated in terms of time and
at the beginning of the project. It includes budget.
measurements of the product’s characteristics Risk monitoring activities may generate requests
such as size, speed, or capacity. for changes to the level that would require changes
• Reserve analysis - Reserve analysis involves to the project management plan or baselines. For
comparing the remaining emergency example, if you decide a risk-avoidance strategy
reserves with the remaining risks. Thus, with a high impact and probability, all plans and
whether the reserves are sufficient to see the baselines will be affected as the scope of the project
end of the project is decided. During the changes. When this change situation is recorded,
project, some risks may arise with positive requests for change occur.
or negative effects on the budget or time.
Preventive actions are the steps taken to
Reserve analysis aims to protect the budget
prevent risks from threatening project objectives.
and time by ensuring that its reserves are
For example, if there is a risk that a particular job
sufficient to meet these impacts.
will not be completed in time, overtime may be
planned, and then, it is necessary to update the
Outputs of Monitor Risks project management plan with new information
The results of the Risk Monitoring process with overtime planning. The cost baseline may
should be monitored on a continuous basis and change, and updates should be made to resource
should inform the project team’s knowledge of the plans with overtime assignment to relevant
risks until the project is closed. resources.
Updates to project documents may also be
required; examples include assumption log,
problem register, lessons learned, risk register, and
updates to the risk audit report (Figure 7).

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Figure 6.7 Risk Audit Report (Tekir and Şakar, 2016, p. 431)

As a result of this process, changes in internal procedures may be required. This reduces the likelihood
that the company will face the same problems or risks in the future.

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In Practice

The rapid growth of the telecom industry are using. I consider these facts equivalent to a
made it apparent to Packer’s executives that validation of the templates.”
risk management must be performed on all Sponsor: “Shouldn’t the templates be tailored
development projects. If Packer were late in the to our methodology for managing projects and
introduction of a new product, then market our life cycle phases? These templates may have
share would be lost. Furthermore, Packer could undergone validation, but not at Packer. The
lose valuable opportunities to “partner” with probability distributions are also based upon
other companies if Packer were regarded as being someone else’s history, not our history. I cannot
behind the learning curve with regard to new see anything in your report that talks about the
product development. justification of the probabilities.
Another problem facing Packer was the “The final problem I have is that the
amount of money being committed to R&D. templates are based upon history. It is my
Typical companies spend 8 to 10 percent of understanding that risk management should be
earnings on R&D, whereas in the telecom forward looking, with an attempt at predicting
industry, the number may be as high as 15 to 18 the possible future outcomes. I cannot see any of
percent. Packer was spending 20 percent on R&D, this in your templates.”
and only a small percentage of the projects that
PM: “I understand your concerns, but I don’t
started out in the conceptual phase ever reached
believe they are a problem. I would prefer to use
the commercialization phase, where Packer could
the next project as a ‘breakthrough project’ using
expect to recover its R&D costs. Management
these templates. This will give us a good basis to
attributed the problem to a lack of effective risk
validate the templates.”
management.
Sponsor: “I will need to think about your
THE MEETING
request. I am not sure that we can use
PM: “I have spent a great deal of time trying
these templates without some type of risk
to benchmark best practices in risk management.
management training for our employees.”
I was amazed to find that most companies are in
the same boat as us, with very little knowledge in QUESTIONS
risk management. From the limited results I have 1. Can templates be transferred from one
found from other companies, I have been able to company to another, or should tailoring
develop a risk management template be mandatory?
for us to use.” 2. Can probability distributions be
Sponsor: “I’ve read over your report and looked transferred from one company to another? If
at your templates. You have words and expressions not, then how do we develop a probability
in the templates that we don’t use here at Packer. distribution?
This concerns me greatly. Do we have to change the 3. How do you validate a risk management
way we manage projects to use these templates? Are template?
we expected to make major changes to our existing
4. Should a risk management template be
project management methodology?”
forward looking?
PM: “I was hoping we could use these
5. Can employees begin using a risk
templates in their existing format. If the other
management template without some form of
companies are using these templates, then we
should also. These templates also have the same specialized training?
probability distributions that other companies

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Learning Outcomes

6 To monitor risks

Self Review 6 Relate Tell/Share

Tell your response plan for

anything in your school
life - You are about to take
the final exam of a difficult
lesson. Your exam will last
2 hours. During the exam,
Why should a project Tell how we can determine
you have taken preventive
manager monitor risks? true response strategy?
actions against the risks you
have previously determined,
but in the middle of the exam
you decide to implement
the risk monitoring process.
What should you do?

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Explain project risks and plan risk

LO 1 management

The projects you’ll manage will face many different risks. First of all, let’s define what we mean by risk. Project
risks have two characteristics. They’re events that might happen, and they have the potential to impact one
or more of the project objectives. Project risk management planning is the process of determining how risk
management activities are carried out in the project. Risk management planning is the process of defining
how to conduct risk management activities for a project. The key benefit of this process is that it ensures
that the degree, type, and visibility of risk management are proportionate to both risks and the importance
of the project to the organization and other stakeholders.
Summary

LO 2 Identify risks

A risk cannot be managed unless it is first identified. Consequently, after risk management planning
has been completed, the first process in the iterative Project Risk Management process aims to identify
all the knowable risks to project objectives. Risk identification is an iterative process to identify threats
and opportunities that may impact a project and document their characteristics. Document analysis,
brainstorming, interviewing, root-cause analysis, SWOT analysis, assumption and constraint analysis, and
checklists are the main tools and techniques to make a list of risks. Risk Register appears at the end of the
risk identification process. Risk Register is a document that lists the risks that you defined in the project.

LO 3 Analyze risks by qualitative techniques

Qualitative risk analysis process aims to to prioritize risks according to their probability and impact.
Interviews, impact and probability assessments are the main tools and techniques to manage this process
successfully. After qualitative risk analysis, risks are categorized. In this way, common root causes of risks
can be identified, and the management of risks and risk responses can be managed more easily.

Analyze risks by quantitative

LO 4 techniques

Quantitative risk analysis process involves analyzing the effects of identified risks on the project objective
and assigning numerical ratings to these risks based on their probability and impact. Monte Carlo Analysis,
sensitivity analysis, and decision tree analysis are the main tools and techniques of this process. In this
process, given the identified individual project risks and other sources of uncertainty, it indicates the
likelihood that the project will achieve its main objectives.

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LO 5 Implement risk response strategies

During risk response planning, strategies you may identify for responding to threats include escalating,
avoiding, transferring, mitigating, or accepting negative risks. On the other hand, responding to
opportunities include escalating, exploiting, sharing, enhancing, accepting, or a combination of these
strategies. In all cases, expert judgement should inform the choice of risk response strategies. At the end of
this process, risks with high threat level should be discussed in detail. Risks at low threat level should also
be listed, but the information should be provided to stakeholders to monitor change in these risks.

Summary
LO 6 Monitor Risks

The risk monitoring process is part of a monitoring and controlling process group. It is also the last process
in the project risk management knowledge area. During this process, you monitor warning signs, activate
risk responses, and identify new risks as they arise. As a result of this process, the following outputs are
obtained: work performance information, change requests, project management plan updates, project
documentation updates, and corporate process assets updates.

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1 How is project risk defined? 6 Which one is not a risk response?

a. An event that could possibly happen and that a. Increasing the project budget
would impact one or more project objectives b. Adjusting the project schedule
b. An old, well-established principle or procedure c. Stacking project resources
c. A delay which has caused a revision in the d. Changing the project scope
project schedule
e. Ignoring the risk until it’s more likely
d. An upcoming status review for meeting project
Test Yourself

objectives
e. An event that could possibly happen that would 7 Which one is NOT used for Qualitative Risk
impact team morale analysis?
a. Scope baseline
2 Which factor of risk do you need to determine b. Risk register
in order to reduce uncertainty? c. Historical information
a. The likelihood of the risk happening d. Industry studies of similar projects
b. The owner of the risk e. Resource management plan
c. The origin of the risk
d. The chances that the majority of stakeholders 8 What is the purpose of sensitivity analysis?
are aware of the risk a. To determine which risks have the greatest
e. The most recent reference to the risk in the news potential impact
b. To identify which risks have the highest
3 Which one is not input to Risk Identification probability of occurring
process? c. To identify which risks may impact project
objectives
a. Risk management plan d. To calculate the values of the positive versus
b. Stakeholder register negative impacts of the risk events
c. Cost and duration estimates e. Forecast impact and probability of risks
d. Scope baseline
e. Risk documentation format
9 Which strategy is not used for responding to
positive risks?
4 Which one is not a tool and technique you a. Exploiting
can use to perform qualitative risk analysis?
b. Sharing
a. Meetings c. Enhancing
b. Expert judgment d. Accepting
c. Risk categorization e. Mitigating
d. Assumptions log
e. Hierarchical charts
10 Which output is not typical of the risk
monitoring process?
5 Project document updates are the typical a. The assumptions log is updated when you find
outputs of a qualitative risk analysis. Which out a designer will be available a week earlier
document is updated? than expected.
a. Stakeholder list b. The results of risk response audits are recorded
b. Risk register in the lessons learned database.
c. Adjusted project budget c. The risk register indicates that a top priority risk
d. Adjusted project schedule is an impending strike at the production plant.
e. Project budget d. The schedule baseline is updated when a risk
is audited and found to require additional
response time.
e. You issue a change request to increase a budget
to add more resources to an activity that may be
delayed.

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If your answer is wrong, please review the

1. a 6. e If your answer is wrong, please review the
“Project risk and plan risk management”
“Responding to risk” section.
section.

Answer Key for “Test Yourself”

If your answer is wrong, please review the
2. a 7. e If your answer is wrong, please review the
“Project risk and plan risk management”
“Qualitative risk analysis” section.
section.

3. e If your answer is wrong, please review the 8. a If your answer is wrong, please review the
“Identifying Risks” section. “Qualitative risk analysis” section.

4. d If your answer is wrong, please review the 9. e If your answer is wrong, please review the
“Identifying Risks” section. “Responding to risk” section.

5. b If your answer is wrong, please review the 10. c If your answer is wrong, please review the
“Identifying Risks” section. “Monitoring risks” section.

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Doall projects carry risk? Why?

Suggested Answers for “Self Review”

All projects carry risk. So there’s no way to avoid it. Projects, no matter how
self review 1 small or simple, have some level of uncertainty.

Almost 90% of the project problems are predictable.

What do you think?

self review 2 Most of the project problems come from known risks.

Why is risk prioritization important?

To determine where project risks are concentrated, so you can focus on those
self review 3 areas when you develop risk responses.

How can we estimate risk probability and impact?

We can use scope, schedule and cost baselines, risk register, project documents,
self review 4 organisational process assets, and enterprise environmental factors.

What is the purpose of implementing risk responses?

The purpose of implementing risk responses process is to ensure that the

self review 5 agreed upon risk responses are actually executed.

Why should a project manager monitor risks?

Project managers monitor risks for tracking risks and evaluating responses so
self review 6 that new risks can be identified, analyzed, and planned.

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References
Tekir, G., & Şakar, S. (2016). Hayatımız Proje - Proje PMI®. (2009). Practice Standard for Project Risk
Yöneticisinin El Kitabı. Turkey Management. PA, USA: Project Management
Institute Inc
Kendrick, T. (2015). Identifying and Managing
Project Risk (3rd Edition), Quantifying and PMI®. (2017). Project Management Body of Knowledge
Analyzing Activity Risks, 161-177. NY, USA: (6th Edition). PA, USA: Project Management
AMACOM Institute Inc.

Online References
Lynch, K. (n.d). Using Risk Management in Your SWOT analysis. (n.d.) In Wikipedia. Retrieved
Projects. [web log comment]. Retrieved from August 14, 2019, from [Link]
[Link] [Link]?q=aHR0cHM6Ly9lbi53aWtpcGVka
[Link] WEub3JnL3dpa2kvRmlsZTpTV09UX2VuLnN
2Zw
Şakar, S. (Producer). (2018). Proje Yönetimi
Dokümanları ve Uygulamaları Podcast retrieved
from [Link]
dokumanlar-ve-uygulamalar

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 Chapter 7 Project Evaluation and Control
After completing this chapter, you will be able to;
Learning Outcomes

1 Recognize the importance of project evaluating

2 Interpret the fundamental terminology of
Earned Value Analysis (EVA)

3 Analyze a project by using subsidiary

indicators

Chapter Outline Key Terms

Introduction Evaluating a Project
Earned Value Analysis
Importance of Project Evaluating
Fundamental Terminology of Earned Value Analysis
Subsidiary Indicators for Project Evaluation

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INTRODUCTION
Management of a project is a dynamic and Baseline plan is a master plan, which has
compelling process as the project is under the effect been executed at the end of the planning
of its environment. Any of contingency affects the phase of a project. It can not be changed.
project directly such as machine breakdown, lack However, different plans may be constituted
of labour supply, weather conditions, behaviour based on different scenarios. After declaring
of competitors, government decisions, and so the baseline plan, the project team realize
on. Project manager should manage the project activities based on this plan.
despite all these environmental impacts. In order
to overcome this difficulty, a project has to be
monitored and evaluated carefully, and corrective important
actions must be taken if needed. One of the
most effective project evaluation and monitoring Man-hour is calculated as multiplying
methods is Earned Value Analysis (EVA) which workforce by duration. Actually, in order
was developed in the 1960’s. EVA compares the to define the size of an activity, man-hours
planned and actual (realized) cost and workload should be predicted, not the duration of the
values for a specified date (status date) determined activity. For example, if an activity has 120
by project manager. Then, it gives a numerical man-hours, this means, this activity can
value if there is a deviation between the plan be finished within 12 hours if you have 10
and the actual situation. Eventually, the project workers; or it can be finished within 120
manager obtains valuable information about the hours if you have only 1 worker. Similarly,
progress of the project. In order to understand a lot of calculations may be done. That’s
EVA, fundamental terminology should be why the important thing is prediction of
comprehended. The following sections, first, man-hours for an activity. Duration can be
describe the importance of project evaluating, calculated considering the resources on hand.
and then clarifies the fundamental and subsidiary
indicators which will be used in EVA.
Since management of a project is a dynamic
IMPORTANCE OF PROJECT process, no matter how well it is planned, facing
EVALUATİNG with deviations in terms of cost and workload is
unavoidable. For example, a machine breakdown or
Three important metrics can be used to define
an accident, which can not be estimated beforehand,
the size of a project: project completion time
may cause both extra cost and tardiness. Therefore,
(PCT), budget, and workload. Project completion
the project manager has to control whether jobs
time is the difference between the latest finish date
are performed according to their calendar after the
of the last activity and the earliest start date of the
project starts. Additionally, this control should be
first activity of a project. Budget means the total
done in terms of cost and schedule (workload).
cost to be spent for the whole project. Finally,
If there are deviations according to the baseline
workload means the total amount of man-hours
plan such as exceeding budget or tardiness for
to be used in the project according to the baseline
some jobs, corrective actions should be taken
plan. For example, a project that has 10 days PCT
immediately. Otherwise, PCT target or budget
and another project that has 1,000 days PCT are
quite different. Additionally, budget and workload target may be missed. Both of them are unwanted
are good evaluating metrics to comprehend work situations. Especially, in long-term projects, the
amount in a project. For example, a project that risk of encountering these kinds of deviations is
has 1,000,000 man hours workload means it is bigger. As a result, a project must be monitored
quite a big project. and evaluated periodically (for example, weekly

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or monthly) after starting, and corrective actions differ from planned budget and workload. And
should be taken if needed. In order to evaluate a let’s assume that the actual cost is T3,000 and the
project, a date should be specified, which is called actual workload is 1,300 man-hours at the end of
the status date. After calculations, performance the 50th day. In this case, is it possible to say that
indicators of a project can be determined by the the project is on the way? In other words, is the
status date. actual situation of the project consistent with the
baseline plan?
important
Please be careful for the given example that PCT
of the project was 100 days and the status date was
Tardiness means delay. If an activity or
chosen as the middle of project completion time
a project delays, this situation may cause
serious problems such as penalty payoff.
(Namely, end of 50th day). When the project calendar
That’s why tardiness is unwanted. In order shows the middle of PCT, should also be exactly
to evaluate whether there is a tardiness for an spent half of budget? Similarly, should be achieved
activity, monitoring the performed workload exactly half of the workload? If we assume like that,
or using a tracking Gantt chart is a good way. the actual cost should have been T2,500. However,
it is given as T3,000. Similarly, the actual workload
Let’s assume that we have finished the planning should have been 1,500 man-hours. However, it is
phase of a project and we have got a baseline plan. given as 1,300 man-hours. So, is it possible to say
According to the baseline plan, PCT is 100 days, that this project has more spending and less work?
budget is T5,000 and workload is 3,000 man-hours. It is not easy to answer this because a project starts
Let’s assume that 50 days passed after starting the slowly, improves rapidly, and finishes slowly, in
project and we got actual cost and actual workload. general. Therefore, a diagram of cumulative cost
Actual cost means total money spent by the status versus time and a similar diagram of cumulative
date (evaluation date), and actual workload means workload value versus time depict an S type curve.
total man-hours realized by the status date. Of This diagram can be called cumulative cost and time
course, actual cost and actual workload may diagram, which it is shown in Figure 7.1.

Cost
Rapid
improvement

Slow
Slow
fininsh
start

Time

Figure 7.1 S-type Cumulative Cost and Time Curve of a Project

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Project Management

As can be seen in Figure 7.1, cumulative cost performance of a project numerically. By using this
(spending) curve is not linear. That’s why, reaching technique, we can answer the following questions:
the middle of the project completion time does not • Is the improvement of a project coherent
need that half of the budget should be spent. with its baseline plan? (In terms of budget
In general, the situation of more spending and and workload)
less work occurs in a project. Then, a question • Are there differences between planned and
appears: How can a project be evaluated especially actual cost and workload?
in terms of budget and workload? For doing this,
• If so, how far is the project from the plan?
we have some techniques such as Earned Value
Analysis (EVA), tracking Gantt chart, and Control After applying EVA, the step of taking action is
chart (Larson, & Clifford, 2011). In fact, EVA realized, if needed.
is more effective than others since it is able to In order to understand this technique, a group
demonstrate the situation of project numerically. of concepts (terminology) should be explained.
In order to evaluate and control a project ,you Terminology can be divided as fundamental
should follow these four steps (Larson, & Clifford, and subsidiary indicators. These indicators are
2011): explained in the next sections in detail. Before
1. Setting a baseline plan explaining the terminology, two points should be
clarified. The first one is the status date. Status date
2. Measuring progress and performance
is the evaluating date of a project, which should be
3. Comparing plan with the actual between starting and finishing dates of the project.
4. Taking action The second one is the calendar properties. If there
Earned Value Analysis takes part in the 3rd step is no special information about the calendar, the
of the project evaluation process. standard calendar is used. That means one workday
EVA was developed in 1967 by the US is equal to eight hours, one week is equal to five
Department of Defence. It aims to clarify the workdays, and one month is equal to 20 workdays.

Learning Outcomes

1 Recognize the importance of project evaluating

Self Review 1 Relate Tell/Share

Do you think that Earned

What do you think can happen Value Analysis can also be Identify the techniques to
if a project is not monitored used to evaluate your personal evaluate a project apart from
and evaluated properly? targets in your life? Give an the Earned Value Analysis.
example.

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Further Reading

The Cybersonic Project will send representatives. This meeting becomes

Miles Wilder, project manager for the Cybersonic problematic for three reasons. First, several new
project, considers himself a “project manager’s problems about the project are raised and, again,
project manager.” He claims to know and use the the ensuing discussion drags out and there is not
principles of good project management, starting enough time for everyone to give a status report.
with having a good plan and then carefully tracking Second, during the 5-hour long meeting, only six
the project. He announces to his team leaders that team leaders of a scheduled eight give their reports.
status meetings will be held on alternating Mondays Also, some of the team leaders disagree with Miles
throughout the expected year-long project. All 18 about actions assigned at the previous meeting.
project team leaders must attend and give a rundown Because no minutes had been taken at that meeting,
of the tasks on which they are currently working. each leader had followed his or her own notes about
actions to take, many of which now conflict with
All the team leaders show up for the first status
Miles’s expectations. Further, people at the meeting
meeting. Seven are currently managing work for the
who are “representatives” are not fully aware of what
project and are scheduled to give reports; the other
was discussed at the previous meetings, do not have
11 are not yet working on the project (as specified
sufficient information to give complete reports or
by the project schedule) but attend because Miles
answer questions, and are hesitant to commit to
wants them to stay informed about project progress.
action without their team leader’s approval.
The meeting is scheduled for 3 hours, and the team
leaders are to report on whatever they think is The next several meetings follow the same
important. After almost 5 hours of reports by five of pattern. They run longer than scheduled. Fewer
the leaders, Miles ends the meeting. Several major team leaders and more representatives attend. Some
problems are reported that Miles tries to resolve at status reports are not given because of inadequate
the meeting. Specific actions to resolve some of the time. Attendees disagree over problems identified
problems are decided, and Miles schedules another and actions to be taken. The project falls behind
meeting for the afternoon 2 days later to address the schedule because problems are not addressed
others and hear the remaining two reports. Some of adequately or quickly enough.
the team leaders are miffed because they will have to Miles feels that too much time has been wasted
change their schedules to attend this new meeting. on resolving problems at the meetings, and that
Miles arrives an hour late at the next meeting, many of them should, instead, be resolved entirely
which, after 3 hours, allows enough time to resolve by the team leaders. He instructs the leaders to
the problems raised at the first meeting but not work out solutions and changes on their own, and
enough for the two leaders to give reports. Miles to report at status meetings only the results. This
asks them if they are facing any major issues or reduces the length of the meetings, but it creates
problems with their tasks. When they respond “no,” other complications. Some of the team leaders
he lets them skip the reports but promises to start take actions and make changes that ignore project
with them at the next meeting in 2 weeks. A few dependencies and conflict with other team leaders’
of the team leaders are assigned actions to address work tasks. Even though everyone is working
current problems. Some of the attendees feel the overtime, the Cybersonic project falls further
meeting was a waste of time. behind schedule.
Before the next meeting, a few of the team
leaders inform Miles they cannot attend and Source: Nicholas & Steyn, 2012

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FUNDAMENTAL TERMINOLOGY OF EARNED VALUE ANALYSIS

There are two basic indicators to evaluate a project in terms of cost and workload. The first one is the
cost performance index (CPI) and the other one is the schedule performance index (SPI). These values are
positive, and if they equal to one, that means the project in on the way. For example, CPI is equal to one
at the status date, that means actual spending has been realized in accordance with the baseline plan. If
CPI is less than one, that means there is much spending according to the baseline plan, and vice versa if
CPI is greater than one. Similarly, if SPI is equal to one, actual workload has been realized in accordance
with the baseline plan by the status date. If SPI is less than one, it means that less work has been done
according to the baseline plan (schedule), and vice versa if SPI is greater than one. Shortly, values of CPI
and SPI greater than 1.0 indicate that work is ahead of schedule and under budget, respectively. Values less
than 1.0 indicate the opposite (Nicholas, & Steyn, 2012). In other words, you can think that obtaining
less than one for CPI and SPI is not good, and it means more spending, less work. Besides, the greater
deviation for CPI and SPI we get, the more discordance between the actual situation at the status date
and the baseline plan it means. As a result, these two values are the most important indicators that reveal
the performance of the project. In order to calculate these two performance indicators, some other values
should be calculated firstly. They are given in the following entries based on the Project Management book
written by Burke (Burke, 2001).
1. BAC (Budget at Completion): BAC is budget of an activity or a project, and it is also called the
baseline cost which means the cost of the baseline plan. It is calculated at the end of the planning
phase. Of course, each activity has its own budget. Project budget is the summation of all activity
budgets and other expenditures such as setup cost, fixed cost, and general expenses. Budget of an
activity can be calculated as follows considering all costs:
BAC=regular shift duration*regular shift rate +overtime duration*overtime rate + setup cost + fixed
cost

important

Setup cost means the money spent for any kind of setup. It may be transportation cost, warming
or cooling of a machine cost, amortization cost, per usage cost of a machine, and so on. On the
other hand, fixed cost means the money spent to do a job. For example, if you need a special
machine to do a job and if you buy this machine, the cost of machine is a fixed cost.

Example 7.1
Duration of activity A in a project is 2 weeks. In order to realize this activity, 2 workers, a machine, and
10 kg raw materials are needed. Costs are given as 10T/hour for a worker, 500 T/one usage, and 20 T/kg
for raw material, and additionally, T100 for raw material transportation. Calculate budget and workload
of activity A.

Solution 7.1
Since one week is equal to five workdays, and one workday is equal to eight hours in the standard
calendar, the duration of activity A is 2*5*8=80 hours.
Let wA show the workload and BACA show the budget of activity A.
Please be careful that working duration of machine is added to workload amount. Therefore,
wA=80*2+80*1=240 man-hours.
This value means, two workers and one machine will work along 80 hours, and the total workload is
240 man-hours.
BACA=160*10+500+20*10+100=T2400.

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 Project Evaluation and Control

That means, T1600 will be paid to workers for 80 hours performance. Cost of machine is T500.
Since it is per usage cost, it does not depend on the duration of the activity. Additionally, there are
T200 for raw material and T100 for setup cost. Total cost (budget) is equal to T2400.
2. PC (Percentage Complete): There are two different PC values. The first one defines the percentage
complete according to planned workload by the status date, and it is called PCp, planned percentage
completion. It is assumed that planned workload is linear versus time. The second one is PCa, and
it shows the percentage complete according to actual (performed) workload by the status date.
In example 7.1, the duration of activity A was two weeks and the planned workload was 240 man-
hours. At the end of the 5th day, 120 man-hours work should have been performed because it is
assumed that the planned workload is linear. Then when we reach the middle of the project time,
half of the workload should have been performed. (Please be careful. We can say this for an activity,
not for the whole project.) In brief, the planned percentage completion of activity A is
PCp=120/240=0.5=50%
Similarly, it can also be calculated by other PCp values. For example, if the status day is chosen
as the end of the 8th day, PCp would be equal to 8/10=0.8=80%. That means 0.8*240=192 man-
hours work would have been performed by the end of the 8th day.
On the other hand, let’s assume that the actual (performed) workload is equal to 96 manhours at
the end of the 5th day. Then the actual percentage completion is PCa=96/240=0.4=40%
It is understood from these values that 50% of workload was planned to perform, however, 40%
of workload has been performed yet by the status date.
3. BCWS or PV (Budgeted Cost for Work Scheduled): This value shows planned cost by the status
date. It is also called the planned value (PV). BCWS is calculated as follows:
BCWS=PCp*BAC
In example 7.1, the budget of activity A was T2400. If the status date is at the end of the 5th day,
what is the planned cost?
BCWS=0.5*2400=T1200. (That means T1200 value of work should be performed by the status
date).
4. BCWP or EV (Budgeted Cost for Work Performed): This value shows the cost for the work
performed by the status date. However, please be careful, unit of this value is not man-hours, but
monetary unit. That’s why it is also called earned value (EV) because you get a value as you perform
work. It is calculated as follows:
BCWP=PCa*BAC
In example 7.1, BAC was T2400 and PCa was 0.4 at the status date. Then, what is the earned value
for activity A?
BCWP=0.4*2400=T960. (That means, the value of performed work is T960. However, it should
have been T1200 value of work according to the baseline plan).
5. ACWP or AC (Actual Cost for Work Performed): This is actual spending by the status date. In
other words, it is the real (current) cost of the project. Of course, it may be different from the
BCWS and BCWP values.
If BCWS, BCWP, and ACWP values are the same (or if there are small differences), that means the
project is on the way, and there is only one cumulative S-type cost-time curve in the diagram. However,
these values are usually different. Frequently, actual cost (ACWP) is more than planned cost (BCWS), and
the value of work performed (BCWP) is less than planned cost (BCWS). Therefore, in the project cost-
time diagram, three different s-type curves occur. This situation is given in Figure 7.2, graphically.

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Cost
ACWP

BCWS
BCWS

Status Time
date

Figure 7.2 General Representation of Cumulative Cost-time Diagram for a Project

In Figure 7.2, curve of BCWS is not dashed line because it shows the baseline plan. On the other
hand, curves of BCWP and ACWP are drawn as dashed line after the status date because the values after
status dates are predicted. The greater differences among these curves after status date you get, the more
deviations according to baseline plan in the project it means.
6. CPI (Cost Performance Index): This indicator shows the financial performance of the project. CPI
is the ratio of earned value to actual cost. In other words, it shows the value of work performed
against actual spending. If this rate is equal to one, that means actual spending is coherent with the
baseline plan. Otherwise, that means there is a deviation. The rate is calculated as follows:
CPI=BCWP/ACWP
In example 7.1, let’s assume that the actual cost is equal to T1300. Since BCWP is calculated as
T960, then we get,
CPI=960/1300=0.7384≈0.74.
That means T1 has been spent, however, only T0.74 value has been acquired for activity A. This is
quite a big deviation. The planned budget may be exceeded if expenditures continue like that.
7. SPI (Schedule Performance Index): This indicator shows the schedule performance (work
performed) of the project. SPI is the rate of earned value in the planned budget. In other words, it
shows the value of work performed against the cost of baseline plan by the status date. If this value
is equal to one, that means actual workload is coherent with the baseline plan. Otherwise, there is
a deviation. The rate is calculated as follows:
SPI=BCWP/BCWS
In example 7.1, BCWS was equal to T1200. Then we get,
SPI=960/1200=0.8
That means, T1 work has been planned, however, only T0.8 value has been acquired for activity A.
The project completion time may be missed if schedule performance continues like this.
8. TCPI (To Complete Performance Index): TCPI shows the performance to be done after the status
date in order to meet the project budget and the schedule targets. TCPI is achieved by dividing the
rest of earned value into the rest of the budget as follows:
TCPI=(BAC-BCWP)/(BAC-ACWP)

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In example 7.1,
TCPI=(2400-960)/(2400-1300)=1440/1100= 1.309≈%131. That means, if you want to meet the
project targets, 1.3 times more work is required for the rest of the project.
Scenarios that can be encountered according to CPI and SPI rates are given in Table 7.1

Table 7.1 Different Scenarios for Different CPI and SPI Rates
SPI<1 SPI>1
Cost is high and schedule is behind the plan. Cost is high and schedule is ahead the plan.
CPI<1 Bad situation. Both budget and project There is no problem about project completion
completion time may be missed. time; however, budget may be missed.
Cost is low and schedule is behind the plan. Cost is low and schedule is ahead the plan.
There is no problem about project budget; This is a utopian situation. Most probably
CPI>1
however, project completion time may be there is a planning mistake, or more resources
missed. than necessary are consumed.

The cell (1,1) in Table 7.1. (CPI<1 and SPI<1) shows a situation to be encountered frequently. However,
the important thing is the size of deviations. Low size deviations can be tolerated, and the project can be
put on its way by taking corrective actions. Baseline plan needs to be revised. However, if the size of
deviations is crucial, then a new baseline plan should be done for post status date. The cells (1,2) and (2,1)
show the other situations which are possible to be encountered. The cell (2,2) is a kind of utopian situation
and shows a planning mistake.

Example 7.2
At the end of the planning phase, the following values are obtained for a project: PCT is 100 day, the
total workload is 5,000 man-hours and the budget is T20,000. After starting the project, at the end of the
50th day, performed workload is calculated as 2,300 man-hours. What are the planned and earned values
for the whole project at the status date? Interpret these values.

Solution 7.2
At the end of the 50th day means that half of the project has passed. Then, PCp is equal to 50%.
Therefore, BCWS=0.5*20,000=T10,000. On the other hand, since performed workload is equal to 2,300
man hours, PCa=2300/5000=0.46. Then, BCWP=0.46*20,000=T9200.
That means T10,000 value of work has been planned, however, T9200 value of work has been realized
yet, by the status date (end of the 50th day).
In earned value analysis, making an evaluation only for the whole project or only for an activity can be
misleading. Evaluation should be done for each activity and the whole project. Please check the following
examples in order to understand calculations in detail.

Example 7.3
In the following table, duration and resource requirements are given for a project having 3 activities.
Standard calendar will be used and there exist enough resources. Costs of resources are given like that: T10/
hour for a worker, 50 T/hour for an engineer, 20 T/kg for raw material, and T500 per usage for a machine.
Calculate the cost and workloads for each activity. What is the project budget and the total workload?
(Hint: The values in the parentheses for resources show the resource amount to be used for this activity.
For instance, workers (300%) means three workers will be used for activity A.)

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Activity Duration Resources

A 4 days workers (300%)
B 2 weeks engineer (100%); worker (200%)
C 20 hours worker (100%); machine; raw material (20)

Solution 7.3
Let’s define;
I={A, B, C} set of activities
wi: workload of ith activity.
BACi: Budget (cost) of ith activity.
WA=4*8*3=96 man-hours
WB=2*5*8*(1+2)=240 man-hours
WC=20*(1+1)=40 man-hours
Total workload of project=96+240+40=376 man-hours
BACA=96*10=T960
BACB=80*50+80*2*10=T5600
BACC=20*10+500+20*20=T1100
Project budget=T7660

Example 7.4
There are 6 activities in a project given below. The first table shows predecessors, durations, and budgets
about activities. The second table shows actual percentage complete and actual costs for activities at the
end of the 4th day. (Cost values are in currency, workload values are in man-hours). Evaluate the project
using earned value analysis. (Evaluation should be done for each activity and for the whole project. Hint:
CPI=BCWP/ACWP; SPI=BCWP/BCWS).

Time Budget
Activities Predecessors
(day) (BAC)
A - 3 500
B - 5 3000
C - 8 800
D A(SS+1) 6 1600
E B(SS+2) 5 1500
F A(FS+2) 5 800

Activities PCa (%) ACWP

A 100 550
B 75 2100
C 40 320
D 60 1000
E 30 650
F 0 0

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Solution 7.4
Gantt chart of the project, which is drawn based on predecessors, is given below.

1 2 3 4 5 6 7 8 9 10
A

As can be seen from the Gantt chart, project completion time is 10 days, and the status date is drawn
as red line in the diagram. By using Gantt chart, planned percentage complete values can be calculated.
For example, since activity A finished at the end of the 3rd day, its PCp value is equal to 100%. On the
other hand, activity B is 5 days long, and at the end of the 4th day, the part of 4 days of activity B should
be finished. Then its PCp value is 4/5=0.8=80%. Other PCp values are as follows: 4/8=50% for activity C,
3/6=50% for activity D, 2/5=40% for activity E, and 0% for activity F (as activity F has not been started
yet at the end of 4th day).
Calculated financial values for the project are given in the following table.

Activities BAC PCa (%) BCWP ACWP CPI Status

A 500 100 500 550 0,90 Over budget
B 3000 75 2250 2100 1,071 Under budget
C 800 40 320 320 1 On budget
D 1600 60 960 1000 0,96 Over budget
E 1500 30 600 650 0,923 Over budget
F 800 0 0 0 * *
Total 8200 * 4630 4620 1.002 Under budget

Calculated schedule values for the project are given in the following table.

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Activities BAC PCp (%) BCWS BCWP SPI Status

A 500 100 500 500 1 On time
B 3000 80 2400 2250 0,9375 Behind
C 800 50 400 320 0,8 Behind
D 1600 50 800 960 1,2 Ahead
E 1500 40 600 600 1 On time
F 800 0 0 0 * *
Total 8200 * 4700 4630 0,985 Behind

As can be seen in the last lines of the tables, there is a little more spending and there is less work for
the whole project. Tardiness should be investigated, especially for activity C. Since activity C has not been
finished yet, it can be accelerated. There are no successor activities for activity C in this project. However,
if it happened, it would require making provisions for especially critical successor activities.

Learning Outcomes

2 Interpret the fundamental terminology of Earned Value Analysis (EVA)

Self Review 2 Relate Tell/Share

There are three activities

in a project as A, B and C.
Furthermore, different cost
values for a specified status
date are given in the following
table. (All cost values are
in currency). What is the Is it possible to encounter a
performance of the project in What do you understand from project having bigger than 2
terms of cost and schedule? the term ‘earned value’? What or more cpi and spi values for
(Hint: CPI=BCWP/ACWP; is earned in the project? a given status date? What does
SPI=BCWP/BCWS). it mean?

Activities BCWS BCWP ACWP

A 200 300 300
B 800 600 700
C 1200 1200 1000
Total 2200 2100 2000

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Further Reading

Planned Value (PV), Earned Value (EV) & Example of Planned Value (PV):
Actual Cost (AC) in Project Cost Management You have a project to be completed in 12 months.
I have discussed earned value management The budget of the project is 100,000 USD. Six
in my previous blog post in detail and provided months have passed, and the schedule says that 50%
a short brief of its three elements: Planned Value of the work should be completed. What is the project’s
(PV), Actual Cost (AC), and Earned Value (EV). Planned Value (PV)?
We are going to look at these elements in detail. Given in the question.
You’re going to see mathematical calculations from
Project duration: 12 months
this point onward. Therefore, I request you go
through every step thoroughly. Further calculations Project cost (BAC): 100,000 USD
will be complicated for you if you miss any step or Time elapsed: 6 months Percent complete: 50%
don’t understand the concept, and you may have (as per the schedule)
problems with understanding more advanced cost Planned Value is the value of the work that
management concepts. Therefore, understand should have been completed so far (as per the
the concepts well before proceeding further. The schedule). We should have completed 50% of the
calculations for finding Planned Value, Earned total work in this scenario.
Value, and Actual Cost are simple, and once you Planned Value = 50% of the value of the total
understand them, the rest will be simple. Although work
I’m going to explain them thoroughly, I suggest you
= 50% of BAC = 50% of 100,000 = (50/100) X
obtain a good Project Management Professional
100,000 = 50,000 USD
(PMP) exam reference book for further reading and
practice questions. Therefore, the project’s Planned Value (PV) is
50,000 USD.
Planned Value (PV):
Application of Planned Value (PV)
This is the first element of earned value
management. Planned Value is the approved value Planned Value is used to calculate Schedule
of the work to be completed in a given time. It is the Variance and Schedule Performance Index.
value that you should have earned as per the schedule. Actual Cost (AC):
According to the PMBOK® Guide, “Planned Value This is the second element of earned value
(PV) is the authorized budget assigned to work to be management. Actual Cost is the total cost incurred
accomplished for an activity or WBS component.” for the actual work completed to date. In other
You calculate Planned Value before actually doing words, it is the amount of money you have spent
the work, which also serves as a baseline. Total to date. According to the PMBOK® Guide, “Actual
Planned Value for the project is known as Budget Cost (AC) is the total cost actually incurred in
at Completion (BAC). Planned Value is also called accomplishing work performed for an activity or
Budgeted Cost of Work Scheduled (BCWS). WBS component.” Actual Cost is also known as the
The formula to calculate Planned Value is simple. Actual Cost of Work Performed (ACWP).
Multiply the planned percentage of the completed Finding Actual Cost is the simplest of all.
work by the project budget; it will give you the There is no unique formula to calculate Actual
Planned Value. Cost. It is an amount that has been spent, and you
Planned Value = (Planned % Complete) X can find it easily in the question.
(BAC)

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Example of Actual Cost (AC) Value (EV)?

You have a project to be completed in 12 months. In the above question, you can see that only
The budget of the project is 100,000 USD. Six months 40% of the work is completed, and the definition of
have passed, and 60,000 USD has spent already, but on Earned Value states that it is the value of the project
closer review, you find that only 40% of the work has been that has been earned.
completed so far. What is the project’s Actual Cost (AC)? Earned Value = 40% of the value of total work
Actual Cost is the amount of money that you
= 40% of BAC = 40% of 100,000 = 0.4 X
have spent so far. In the question, you have spent
100,000 = 40,000 USD
60,000 USD on the project so far. Hence, the
project’s Actual Cost is 60,000 USD. Therefore, the project’s Earned Value (EV) is
40,000 USD.
Application of Actual Cost (AC)
Actual Cost is used to calculate Cost Variance Application of Earned Value (EV)
and Cost Performance Index. Earned Value is used for calculating Schedule
Earned Value (EV): Variance, Cost Variance, Schedule Performance
Index, Cost Performance Index, Estimate at
This is the third and last element of earned
Completion, and To Complete Performance Index.
value management. Earned Value is the value of the
work actually completed to date. Earned Value will You will be given a scenario and asked to identify
show you the value that the project has produced these three elements in your PMP exam. Please note
if the project is terminated today. According to the that these elements are also called by different names;
PMBOK® Guide, “Earned Value (EV) is the value of Planned Value referred to as Budgeted Cost of Work
work performed expressed in terms of the approved Scheduled (BCWS), Actual Cost as Actual Cost of
budget assigned to that work for an activity or WBS Work Performed (ACWP), and Earned Value as
component.” Although all three elements have their Budgeted Cost of Work Performed (BCWP). It is
significance, Earned Value is more useful because it unlikely that you will see these terms in your PMP
shows you how much value you have earned from exam, so concentrate on the terms mentioned in the
the money you have spent to date. Earned Value is PMBOK® Guide rather than these old names.
also known as Budgeted Cost of Work Performed Summary
(BCWP). There is a difference between Planned
Value and Earned Value. Planned Value shows you Earned Value, Planned Value, and Actual
how much value you expected to earn in a given Cost are fundamental elements of earned value
time, while Earned Value shows how much value management. They can be used to generate a basic
you have actually earned on the project. overview of your project status. Earned Value is
The formula to calculate the Earned Value the value of the work completed to date, Planned
is simple. Multiply the actual percentage of the Value is the value that you should have earned as per
completed work by the project budget; you will get the schedule, and Actual Cost is the amount spent
the Earned Value. on the project to date. You can find the current
status once you have this information at hand, and
Earned Value = % of completed work X BAC
compare it with the planned progress. You can now
(Budget at Completion).
move on to the next blog post on schedule variance
Example of Earned Value (EV) and cost variance which explains if you are ahead of
You have a project to be completed in 12 months. schedule or behind schedule and whether you are
The budget for the project is 100,000 USD. Six months under budget or over budget.
have passed, and 60,000 USD has been spent. On
closer review, you find that only 40% of the work has
been completed to date. What is the project’s Earned Source: Usmani, 2019

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SUBSIDIARY INDICATORS FOR PROJECT EVALUATION

Subsidiary indicators are side indicators that derive from fundamental indicators. However, they are
useful to obtain information about projects quickly in monetary value. They are given in the following
entries based on the book Project Management written by Burke (2001).
1. EAC (Estimate at Completion): Predicted budget. In other words, budget to be obtained at project
finish date if the speed of project remains like that.
EAC=BAC*(ACWP/BCWP) = (BAC*ACWP)/PCa*BAC) = ACWP/PCa
Referring back to Example 7.1 in Page 4, let’s assume that the actual cost is equal to T1300 by the
end of the 5th day. What is the predicted budget for activity A?
ACWP=T1300, then
EAC=1300/0.4=T3250
That means, if spending remains like that, the finish budget of activity A will be T3250.
2. BV (Budget Variance): Budget deviation. This value may be negative. If so, that means there is a
budget exceed and it requires additional money. The opposite means the budget gives surplus.
BV=BAC-EAC
In example 7.1, since BAC was equal to T2400,
BV=2400-3250=-850 (Extra T850 is required to complete activity A)
3. CV (Cost Variance): Cost deviation. If this value is negative, that means value for work has not
been earned as spent actually.
CV=BCWP-ACWP
In example 7.1,
CV=960-1300=-340 (Spent extra T340 against work performed)
4. CVI (Cost Variance Index): Percentage of cost deviation.
CVI=CV/BCWP
In example 7.1,
CVI=-340/960=-35.41%
5. SV (Schedule Variance): Schedule deviation as a monetary value. If SV is negative, that means the
project is behind the plan against work performed. The opposite means the schedule is ahead of
time.
SV=BCWP-BCWS
In example 7.1,
SV=960-1200=-240 (Earned value less than T240 against work performed)
6. SVI (Schedule Variance Index): Percentage of schedule deviation as monetary value.
SVI=SV/BCWS
In example 7.1,
SVI=-240/1200=-20%

Example 7.5
Calculate the subsidiary indicators for 7.4.

Solution 7.5

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CVI
Activities BAC PCa (%) BCWP ACWP EAC BV CV
(%)

A 500 100 500 550 550 -50 -50 -10

B 3000 75 2250 2100 2800 200 150 6,6
C 800 40 320 320 800 0 0 0
D 1600 60 960 1000 1666,67 -66,67 -40 -4,2
E 1500 30 600 650 2166,67 -666,67 -50 -8,3
F 800 0 0 0 800 0 0 0
Total 8200 * 4630 4620 8783,34 -583,34 10 0,22

SVI
Activities BCWP BCWS SV
(%)

A 500 500 0 0
B 2250 2400 -150 -6,25
C 320 400 -80 -20
D 960 800 160 20
E 600 600 0 0
F 0 0 0 *
Total 4630 4700 -70 -1,51

As can be seen from the results, CVI and SVI values show there is just a little deviation for the whole
project. Additionally, the biggest deviation according to cost is in activity A, and according to schedule, for
activity B and C. Especially, activity C should be investigated.

Example 7.6
For a project, indicators achieved in the middle of the project duration are given below. (Cost values
are in T). PCT is 100 days. Draw the cumulative cost-time diagram for this project.
BCWP=1,800; BCWS=2,000; ACWP=2,500; BAC=3,500; EAC=4,000.

Solution 7.6
By using these values ,we can calculate subsidiary indicators.
BV=BAC-EAC=3,500-4,000=-500
CV=BCWP-ACWP=1800-2,500=-700
SV=BCWP-BCWS=1800-2,000=-200
The cumulative cost-time diagram is given in Figure 7.3

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Cost
(TL)
4000 ACWP
BV
3500 BCWS
BCWP

2500
CV

2000
SV
1800

Time
(days)

Figure 7.3 Representation of Cost-time Diagram for Example 5.

Learning Outcomes

3 Analyze a project by using subsidiary indicators

Self Review 3 Relate Tell/Share

Is it possible to obtain a
In order to calculate subsidiary
cumulative cost-time diagram
indicators for Example 7.3, What does variance mean in
having BCWP curves at the
what kind of extra information earned value analysis?
top and ACWP curves at the
do you need?
bottom? Explain.

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Recognize the importance of

LO 1 project evaluating

There are three metrics to define a project: Project completion time (PCT), budget, and workload. By
calculating these values, the size of a project can be understood, and the project can be compared to
others. Additionally, these metrics are also useful to monitor and evaluate a project after giving start
because they are baseline plan metrics and used to clarify the improvement of the project by comparing
actual cost and workload values for a status date.

Summary
Since management of a project is a dynamic process, no matter how well it is planned, facing with
deviations in terms of cost and workload is unavoidable. Deviations cause extra cost and tardiness, which
are unwanted situations. Therefore, a project has to be monitored and evaluated periodically by the project
manager, and corrective actions should be taken if needed. Otherwise, PCT target or budget target may
be missed. Evaluation of a project should be done in terms of cost and schedule (workload). Earned Value
Analysis (EVA) is one of the most useful techniques to evaluate a project since it can demonstrate the
situation of a project by giving numerical values about cost and workload deviations.
EVA answers the following questions:
• Is the improvement of the project consistent with its baseline plan? (In terms of budget and workload)
• Are there differences between planned and actual cost and workload?
• If so, how far is the project from the plan?
At the end of the evaluation phase of a project, the project manager understands whether the project is
on the way.

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Interpret the fundamental

LO 2 terminology of Earned Value
Analysis (EVA)

There are two basic indicators to evaluate a project in terms of cost and workload. The first one is cost
performance index (CPI) and the other one is schedule performance index (SPI). These values are calculated
for a given status date and they demonstrate the size of deviations for both the budget (BAC) and the
schedule. If CPI and SPI are equal to one, that means the project is on the way. On the other hand, if CPI
and SPI are less than one, that means there is more spending and less work according to the baseline plan.
Summary

The greater deviation for CPI and SPI we get, the more discordance between the baseline plan and the actual
situation it means. In order to calculate these two performance indicators, BCWS, BCWP, and ACWP values
should be calculated, firstly. BCWS defines the total cost according to the baseline plan. BCWP defines the
earned value (monetary value of performed workload) and ACWP demonstrates the actual cost. Another
important concept is the percentage complete value for a job. There are two different PC values: PCp, which
means planned workload percentage by the status date, and PCa, which means actual (performed) workload
percentage by the status date. The formulations about these concepts can be given like that.

BCWS=PCp*BAC
BCWP=PCa*BAC
CPI=BCWP/ACWP
SPI=BCWP/BCWS

If BCWS, BCWP, and ACWP values are the same or there are small differences among them, that means
the project is on the way, and there is only one cumulative S-type cost-time curve in the diagram. However,
these values may be different. In general, actual cost (ACWP) is more than planned cost (BCWS) and
value of work performed (BCWP) is less than planned cost (BCWS) due to unforeseen reasons.

Analyze a project by using

LO 3 subsidiary indicators

In order to evaluate a project, subsidiary indicators can also be used such as budget variance (BV), schedule
variance (SV), and cost variance (CV). Subsidiary indicators derive from fundamental indicators and they give
useful information about project quickly. One of them is EAC, which means the predicted budget. Others
are the values for variances and percentage variances. Formulations are given in the following paragraph.

EAC=BAC*(ACWP/BCWP) = (BAC*ACWP)/PCa*BAC) = ACWP/PCa

BV=BAC-EAC
CV=BCWP-ACWP
CVI=CV/BCWP
SV=BCWP-BCWS
SVI=SV/BCWS

These indicators are useful for understanding the size of deviations in monetary value.

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1 What is baseline plan? 6 Please answer questions 6-10 considering the

a. Budget plan following example.
b. Workload plan Let’s assume that BAC=1000; EAC=1400 for a
c. Schedule plan project. PCp=60% and PCa=75%; ACWP=800 at

Test Yourself
d. Master plan the status date.
e. Cost plan What is BCWP value at the status date?

2 a. 600
Are there both cost and schedule deviations
in a project? b. 750
c. 900
a. No, it is impossible. There can be only one. d. 1125
b. Yes there are. e. 1200
c. Yes there are, but one can be positive while the
other is negative.
7 What is BCWS value at the status date?
d. Yes there are, but the deviations should not be
bigger than 1.0. a. 600
e. Maybe, but the difference between deviations b. 750
should not be large. c. 900
d. 1125
3 What is the unit of BCWP? e. 1200
a. Currency
b. Man-hour 8 What is CPI value at the status date?
c. Hour a. 1.476
d. Amount b. 1.125
e. Piece c. 1.0
d. 0.9375
4 What is the total workload for a 2-week e. 0,75
activity which requires 2 machines and 3 workers.
a. 80 man hours 9 What is SPI value at the status date?
b. 160 man hours a. 1.476
c. 240 man hours b. 1.125
d. 320 man hours c. 1.0
e. 400 man hours d. 0.9375
e. 0,75
5 Is it possible that TCPI value is smaller than 100%?
a. Yes it is, but the value can not be smaller than 10 What is BV value?
50% a. -400
b. No it is not because this value indicates the rest b. -200
of performance. c. 20
c. Yes it is. (There is no condition) d. 400
d. No it is not because this value indicates the e. 600
performance to be needed.
e. No it is not because this case means there is a
planning mistake.

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If your answer is incorrect, review the section

1. d If your answer is incorrect, review the section 6. a
on “Fundamental terminology of Earned
on “Importance of project evaluation” section.
Value Analysis” section.
Answer Key for “Test Yourself”

If your answer is incorrect, review the section If your answer is incorrect, review the section
2. b 7. b
on “Fundamental terminology of Earned on “Fundamental terminology of Earned
Value Analysis” section. Value Analysis” section.

If your answer is incorrect, review the section If your answer is incorrect, review the section
3. a 8. e
on “Fundamental terminology of Earned on “Fundamental terminology of Earned
Value Analysis” section. Value Analysis” section.

If your answer is incorrect, review the section If your answer is incorrect, review the section
4. e 9. d
on “Fundamental terminology of Earned on “Fundamental terminology of Earned
Value Analysis” section. Value Analysis” section.

If your answer is incorrect, review the section If your answer is incorrect, review the
5. c on “Fundamental terminology of Earned
10. a
section on “Subsidiary indicators for project
Value Analysis” section. evaluation” section.

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Project Management

What do you think can happen if a project is not

monitored and evaluated properly?

Suggested answers for “Self review

If a project is not monitored and evaluated properly, the project manager can
not manage the progress of the project. Budget and schedule targets may be
self review 1
missed. That means more spending than the budget and tardiness in schedule
will happen.

There are three activities in a project as A, B and C.

Furthermore, different cost values for a specified status
date are given in the following table. (All cost values are
in currency). What is the performance of the project in
terms of cost and schedule? (Hint: CPI=BCWP/ACWP;
SPI=BCWP/BCWS).

Cost Schedule
Activity CPI SPI
Performance Performance
A 300/300=1 On budget 300/200=1,5 Ahead
B 600/700=0,857 Over budget 600/800=0,75 Behind
C 1200/1000=1,2 Under budget 1200/1200=1 On time
Total 2100/2000=1,05 Under budget 2100/2200=0,95 Behind
self review 2
According to the results for the whole project (the last line of the table), there
is less spending and less work in the project. In addition, deviations are at most
5%. That means there is no big problem for the project. If the rest of jobs can be
accelerated a bit, project completion time target is reachable. Moreover, there is
no budget problem already. For the evaluation of each activity, it is clearly seen
that activity B is the most problematic one because it has more spending and
less work. There corrective actions should be taken immediately for activity B.

In order to calculate subsidiary indicators for Example

7.3, what kind of extra information do you need?

In Example 7.3, you obtained workloads and budget for each activity and for
the whole project. That means you know BAC and planned workloads. First,
you need the project completion time and the status date in order to calculate
self review 3 BCWS. In addition, you need actual percentage complete (PCa) values to
calculate BCWP. Last, you need ACWP at the status date for each activity.
Then you can calculate the EAC, BV, CV, CVI, SV and SVI values easily.

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 Project Evaluation and Control

References
Burke R, (2001). Project Management, Planning and Control Techniques. (3rd Edition). Chichester, UK: John
Wiley & Sons.
Larson E. W., & Clifford F. G. C. (2011). Project Management for Managerial Process. (5th Edition): McGraw-
Hill.
Nicholas J. M., & Steyn H. (2012). Project Management for Engineering, Business and Technology. (4th Edition):
Routledge.

Online References
Usmai, F. (2019 January 21). Planned Value (PV), Earned Value (EV) & Actual Cost (AC) in Project Cost
Management. [web log comment]. Retrieved from [Link]
earned-value-ev-actual-cost-ac-analysis-in-project-cost-management-2/

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 Chapter 8 Project Closure
After completing this chapter, you will be able to;
Learning Outcomes

1 Describe the project closing activities

2 Prepare a project closure plan and checklist

3 Develop a project closure report

4 Interpret and use the postmortem review

Chapter Outline Key Terms

Introduction Project Closure
Project Closure Project Closure Plan
Project Closure Plan and Checklist Project Closure Report
The Project Closure Report Postmortem Review
The Postmortem Review Lessons Learned

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Project Management

INTRODUCTION
The Project Closing Process is the process of officially completing a project, stage, or contract (PMI®,
2017, p. 634). It formally identifies the completion of the project or the project phase. The main benefit
of this process is the completion of the project and its phases in accordance with the requirements and the
contract. It should be noted that companies may have their processes related to project, stage or contract
closure (PMI®, 2017, p. 633).
Early closure or cancellation of projects will be handled within this process. Project Managers use various
tools and techniques to make project closure correct and easy. In the context of continuous improvement,
Project Managers transfer the project experiences and lessons learned for the next projects.

PROJECT CLOSURE
Projects can have a wide range of dimensions, scope, and complexity. However, all projects follow a
general lifecycle from start to finish. In general, a project cycle consists of startup, planning, execution,
monitoring and control, closure (Figure 8.1).

Initiating Planning Executing Closing

Figure 8.1 Project Life Cycle (Martinelli, & Milosevic, 2016, p. 352)

Figure 8.1 shows the life cycle of a project. Each process interacts with others. There are concurrent
works associated with several process groups (scope, time, cost, etc.) throughout the project life cycle. For
example, project closure activities take place at almost every stage of the project’s life cycle, but project
managers and teams usually carry out such activities only at the closing stages of the project. If they are
only at the end of the project, focusing on project closure activities limits learning and increases project
risk. Each stage and milestone must be completed successfully, and closing processes must be implemented
throughout the project life cycle.
The project closing process group consists of works required to complete or close the project activities
throughout the project life cycle. In this process, contractual obligations are generally fulfilled, procurement
documents are completed, transfer contracts between project and operation teams are made, and resources
are reallocated.
All projects end, even though it may not be because the planned deliverables have been achieved
(Cleland and Ireland, 2002, p. 435).

Project Closing Activities

In project closing activities, the responsibility of the project manager is to ensure that all necessary and
planned work is completed and the objectives are met. This makes the work a step ahead, the milestone
being accomplished, and for the whole project.
Cleland and Ireland (2002, pp. 443–444) summarize their view of these activities as follows:
1. Ensure that all project deliverable end products are properly transferred to the new asset owners,
along with appropriate standard records.
2. Review that all contractual requirements have been met and properly record any variations along
with their resolution conditions.
3. Define the list of stakeholders related to new environment (i.e., product or process support) .
4. Help the project team members find other project assignments.
5. Prepare “lessons learned” to assist future project teams in assessing similar situations.

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 Project Closure

6. Analyze the weaknesses and strengths of the project, and explain how the project team dealt with
the problems and what is necessary for future project teams to avoid negative situations and utilize
the positive items identified.
There are two important issues related to the Project Closing process:
1. Ensure that the planned work is actually completed - During the project planning work, all expectations
regarding scope, time, cost, quality, and other activities are detailed and sorted along a timeline.
Project closure activities ensure that the plans are carried out according to expectations. If there is a
difference between what is planned and what is completed, the project manager should determine
the cause. Then, depending on the cause of the variance, the project manager should determine
if any adjustments should be made. Deviations here may have a positive or negative effect on the
successful completion of the project.
2. Lessons Learned - Learning organizations have processes, systems, and culture to promote information
sharing. The project manager is responsible for publishing the lessons learned, implementing
best practices, and providing solution tactics to other project managers and project teams in the
organization. The Project Manager shares information that will enable project teams to plan and
execute their projects more efficiently and effectively in future projects. The more efficient the
projects are delivered, the more business value is created for the business.
The purpose of the project closure should be to ensure that all relevant activities are completed. It
should be noted that Project Closure is related to learning. Learning requires participation of the project
manager, team members, and stakeholders. Project Managers should focus not only on the completion of
the project, but also on learning, and should perform their controls carefully.
All projects require many resources, deliveries, and decisions throughout their lifecycle, whether small
or large. Each deliverable or decision point is the closing process that points to the end point. Figure 8.2
shows the closing process starting with planning and progressing step by step.

Initiating Planning Executing Closing

Figure 8.2 Project Closing Work (Start & Finish) During the Life Cycle

As can be seen from the chart in Figure 8.2, the team members must record their experiences and
project closure is not a process that is carried out learned lessons during the project life cycle. Lessons
at the end of the project. The review of progress is must be published and shared with other project
related to the completion of the work and taking managers and project team members. If the project
lessons from the project throughout the life cycle. team waits until the end of the project’s life cycle for
project closure, it loses opportunities for learning
and improvement. This will reduce the likelihood
How Can Teams Learn from Projects? that similar errors will occur in subsequent projects.
After the project is completed, meetings can be
held with the project team. The information gathered important
by the project team during the project is put on the
table. Those who work for future projects will try to Project managers should determine how
identify. The aim is not to repeat the same mistakes closing activities will be implemented
and to evaluate the opportunities. All project throughout the project life cycle.

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Project Management

Learning Outcomes

1 To describe the project closing activities

Self Review 1 Relate Tell/Share

What do you understand Suppose that you’ll have a

Explain the relationship
from this sentence? “Lessons holiday this summer. What
between the closure of a
Learned are the most can you do not to repeat
project and what the company
important output of a project.” mistakes you made in past
will learn from that project.
holidays?

PROJECT CLOSURE PLAN AND “No” answer, the Project Manager should do the
CHECKLIST necessary work to make the answer “Yes“. This may
sometimes require support from the Sponsor and
When best practices are considered, it is
Senior Management.
recommended to start work in the planning phase
to ensure the correct closure of the project. Thus, it 2. In project closure, using the Project close
is ensured that the resources related to the project checklist is useful for guiding closing
closure are allocated and the expectations of how operation and ensuring that all areas are
the project closure activities will be carried out handled.
throughout the project are clarified. This leads to Horine (2009, p. 294–296) outlines the
the following two important questions: following 13 important topic areas to be covered in
1. What activities are associated with project the project checklist:
closure? 1. Obtain client acceptance: This stage has to
2. When should the project closure be done? be accomplished before the team attempts
to close the project. In this activity, the most
There are three main tasks that project managers
important result is that the client formally
should supervise in closing works:
verifies and accepts the project deliverable,
1. Evaluate whether the results of the and this event is formally documented.
project, decisions, and deliveries meet the
2. Transition deliverables to owner: In this
expectations of the stakeholders. This can be
activity, the team formally hands off the
summarized with the following questions:
project deliverables to the new owner. This
• Are all deliveries and milestones complete? includes not only the possession of the item,
• On the basis of works to date, is the project but also the ability to support the item for
and the team good? long term.
• Are the stakeholders ready for the next 3. Close out contract obligations: The project
phase (or commissioning) of the project, team will coordinate with procurement
based on the work done so far? personnel to document the status of all
• Are all contract and purchase works contractual relationships. This should
completed and up to date? include not only the status, but resolution
• Is the Project Team prepared for the next plans for all variances to the agreements.
phase of the project? Items such as warranty process and bonus
clauses need to be documented as well.
These questions serve as the basis for project
managers to start project closure activities. The
answer to all questions is “Yes“. If there is a

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 Project Closure

4. Capture lessons learned: Documenting 9. Conduct performance evaluations: The

the project team’s experience-related PM needs to ensure that appropriate
activity will enable future projects to avoid performance feedback is performed and
some mistakes and challenges faced by the documented for all team members.
existing team. Horine explains that “lessons 10. Update team resumes: The team members
learned should be documented throughout should update their resumes to reflect the
the project lifecycle and include both new project activity.
positive and negative aspects of the project.”
11. Market project accomplishments: Formally
5. Update organization’s central recognize team member accomplishments
information repository: This activity and overall project positive experiences.
involves documenting project records and
12. Review project performance with clients:
deliverables as a formal archive for the
Horine says that “the best testament to
organization. Horine states that “it is a
evaluate client satisfaction is to see whether
powerful way to reduce learning curves and
the sponsoring or [user] individuals
gain efficiency on future projects.”
(organization) will officially endorse team’s
6. Document final project financials: This work.” This is a process to know whether
activity involves documenting the final the team really achieves the desired goal.
project financial reports such as a budget
13. Celebrate: From at least a moral standpoint,
status summary and variance analysis.
it is important to find something to celebrate
7. Close various accounts and charge codes: at the conclusion of a project. Almost all
This activity involves the process of closing projects have had some good experience, and
team member accounts and codes related to reminiscing about these is a good way to leave
financials, infrastructure, and security. the project team feeling positive about their
8. Update resource schedules: Work to ensure experience. These experiences have a long-
that team members have appropriate job lasting motivational value to the individuals
opportunities following the closure. involved and help build a positive culture.
Table 8.1 presents a general project closure checklist.
Table 8.1 Generic Project Closure Checklist (Martinelli and Milosevic, 2016, p. 357)
CHECK DESCRIPTION
Yes-No Verify all project deliverables completed
Yes-No Conduct project closure meetings
Yes-No Develop a resource reassignment plan
Yes-No Close out all work orders, contracts, and subcontracts
Yes-No Prepare final reports (project, financial, quality, and so on)
Yes-No Submit final reports to customer and top management as required
Yes-No Finalize the project file
Yes-No Close out all financial documents
Yes-No Ensure all costs are charged to the project
Yes-No Submit final invoices to customer and pay final invoices from suppliers
Yes-No Document final change management log and final project scope
Yes-No Document actual delivery dates of all deliverables
Yes-No Conduct the final postproject rewiew meeting
Yes-No Submit final customer or client acceptance documentation
Yes-No Officially notify the customer or client of project completion
Yes-No Officially notify vendors, suppliers, and partners of project completion
Yes-No Compile and store all required documentation for long-term data management
Yes-No Dispose of all equipment and materials
Yes-No Recognize the work of project team members
Yes-No Collect and document all project lessons learned
Yes-No Celebrate success

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3. Project Managers should document closure and the timeline. The project management plan
information. These documents mean usually includes the following sub-plans:
updating the project work, updating the • Scope
documents regarding the future stages of
• Schedule
the project, and preparing the best practice
documents for other project teams. • Costs
The lessons learned should be shared with the • Quality
relevant stakeholders, and the project templates • Communication
should be updated if necessary. It means sharing, • Risk
publishing, and distributing the lessons learned. • Procurement
Project managers should communicate effectively
In the planning phase of the project, the closing
and focus on the implementation of the courses to
activities for the above items should be taken into
be taken from one project to another. Thus, teams
account. The relationship of each substance to the
and organizations can be smarter and faster. When
others indicates the importance of closing correctly.
knowledge sharing becomes a cultural expectation
Therefore, the first step in ensuring the proper
among project managers and their teams,
closure of the project is to develop the closing plan
intellectual capacity passes significantly from one
of the project during the planning phase of the
team to another. Continuous improvement of
project.
best practices, tools, processes, and know-how is
ensured. Ensuring that the project closes properly is
critical to the project and the process of determining
what needs to be closed. These requirements include
Developing the Closure Plan decisions, outputs, and milestones anywhere in
Correct planning ensures that the project the project life cycle. Figure 8.3 below shows the
is successful. Project managers develop project project closure plan according to the inputs and
closing plans according to the scope of the project outputs.

INPUTS

Scope
• Work Breakdown Structure
• Project Schedule OUTPUTS
• Resource Plan
• Project Closure
• Stakeholder Register
Plan and
• Project Budget
Process
• Procurement Management
• Project Closure
Plan
Checklist
• Communication Plan
• Risk Management Plan
• Organizational Processes

Figure 8.3 Project Closure Inputs and Outputs

Project Closure Plan
Basically, the entries required to plan the project closure include project management sub-plans. These
plans should be detailed at the planning stage and processes, applications, expectations, and checklists
related to the project closure plan can be created.

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 Project Closure

As each project is different, the details of the Executive Summary - It is a summary

project closure plan will be different for each information about the effort, timing, and desired
project. It should be noted that it is difficult to benefit related to the project closure. In summary,
achieve the closure of the project. It is easy to say it outlines the findings, problems, best practices,
that project closing activities will be carried out at recommendations, and lessons learned.
every turning point for project managers. It should Project Scope and Business Objectives - Summarize
be clear that the project manager will prepare, the scope and business objectives of the project. In
update, or share documents on time, cost, and this section, deliverables and/or project outputs
resource at critical points in the project. are put together with stakeholders according to
The project closure plan is the basis for the business objectives.
content of the project closing report after the Start and End Dates of Project Phases of Work
project is completed. A project closing plan should - Summarize the project’s estimated start and end
include the following sections: dates. Some project managers may prefer to use
• Executive Summary the milestone chart in this section. In this way,
• Project Scope and Business Objectives the timing of the project’s critical points and at
which points closing activities will be carried out
• Start and End Dates of Project Phases of
is emphasized. The dates in this section allow the
Work
relevant project resources (especially staff) to be
• Project Completion Criteria and Metrics ready for closure.
• Project Closure Deliverables Project Completion Criteria and Metrics - In this
• Project Closure Documentation section, the project and business completion criteria
• Project Closure Resources and metrics to be used to evaluate the completion
• Project Closure Communication Plan of the project are detailed. Table 8.2 can be used to
determine activity (or delivery) based completion
• Final Approval
criteria and completion criteria.
Table 8.2 Project Completion Template (Martinelli, & Milosevic, 2016, p. 361)

Activity/Deliverable Completion Criteria Completion Metries

Project Closure Deliverables

This section describes two closing needs. First, it serves as a checklist for reviewing whether the project
deliveries have been completed. Secondly, the actions that need to be taken to handover project deliveries
to the relevant operational stakeholders are explained.
Table 8.3 shows the Project Closing Deliveries Table with Deliveries, Operational Owners, Completion
Information, and Handoff Plan.

Table 8.3 Project Closure Deliverables Table (Martinelli and Milosevic, 2016, p. 361)
Deliverable Operational Owner Complete Handoff Plan

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Project Management

Project Closure Documentation

All project documents must be reviewed, updated and archived. To do this, each document or record
must be elaborated at the project planning stage and updated throughout the project life cycle. This part
of the Project Closure Plan is to indicate the location and version of the relevant documents during and
after the project.

Project Closure Resources

This section summarizes the resources required for project closing activities. Making resource planning
at the beginning of the project helps to ensure their usability during the closing activities. Table 8.4 is an
example that can be used in this regard.

Table 8.4 Project Closure Resource Template (Martinelli and Milosevic, 2016, p. 362)
Resource Name Closure Activity Responsibility Allocation Approved Duration of Work Effort

Project Closure Communication Plan

This section describes how to share and communicate lessons learned, new best practices, updated
tools, and templates with stakeholders. It can be prepared with a table similar to Project Communication
Plan (Table 8.5).

Table 8.5 Project Closure Communication Template (Martinelli and Milosevic, 2016, p. 362)
Owner Message Audience Distribution Method Timing

Final Approval
This section is approved by the project manager and the project sponsor, which generally includes
name, signature, and date. It indicates that the project was officially closed and all resources were released.
The Project Manager should ensure that resources related to the Project Closing Plan and checklists
are assigned.

Benefits
During the project, important activities such as handover operations, decisions, and deliverables are
realized. The difference between project success and failure can be seen by using the project closure plan
and checklist. It is important to follow an appropriate closing plan and checklist and to gain an advantage
by creating faster learning than competitors.

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 Project Closure

Learning Outcomes

2 To prepare a project closure plan and checklist

Self Review 2 Relate Tell/Share

What is the importance of Develop a closure plan that

Explain what needs to be done
planning the closure process you will execute after your
to close a project.
group? next holiday.

In Practice

The Project That Wouldn’t Die original project manager for Regency.”All of a
Ben walked into his boss’s office Tuesday sudden, light dawned on Ben. “Harry Shapiro?
morning in a foul mood. Without wasting any You mean Vice President Harry Shapiro?”
time on pleasantries, he confronted Alice. “How “That’s right. Harry was promoted to the
on earth did I get roped into working on the VP job just over a year ago. Prior to that, he was
Regency Project?” he asked, holding the memo that responsible for getting Regency off the ground.
announced his immediate transfer. Alice had been Think about it—do you really expect Harry to
expecting such a reaction and sat back a moment kill his brainchild? Useless or not, Regency will
to collect her thoughts on how to proceed. be around longer than any of us.”Ben groaned,
The Regency Project was a minor legend “Great, so I’m getting roped into serving on
around the office. Begun as an internal audit of Harry’s pet project! What am I supposed to
business practices 20 months earlier, the project do?”Alice offered him a sympathetic look.
never seemed to get anything accomplished, was “Look, my best advice is to go into it with good
not taken seriously within the company, and had intentions and try to do your best. I’ve seen the
yet to make one concrete proposal for improving budget for Regency, and top management has
working practices. In fact, as far as Ben and many been trimming their support for it. That means
other members of the company were concerned, it they must recognize the project isn’t going well.
appeared to be a complete waste of time. And now They just don’t want to kill it outright.”
here Ben was, assigned to join the project! “Remember,” Alice continued, “the project
Ben continued, “Alice, you know this may not die because Harry’s so committed to it,
assignment is misusing my abilities. Nothing but that also means it has high visibility for him.
has come from Regency; in fact, I’d love to know Do a good job and you may get noticed. Then
how top management, who are usually so cost your next assignment is bound to be better.”
conscious, have allowed this project to continue. I Alice laughed. “Heck, it can’t be much worse!”
mean, the thing just won’t die!” Questions
Alice laughed. “Ben, the answer to your 1. What termination method does it appear the
question can be easily found. Have you bothered company is using with the Regency Project?
taking a look at any of the early work coming out 2. What are the problems with motivation
of Regency during its first three months?” When when project team members perceive that a
Ben shook his head, she continued, “The early project is earmarked for termination?
Statement of Work and other scope development
3. Why would you suspect Harry Shapiro has a
was overseen by Harry Shapiro. He was the
role in keeping the project alive?

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Project Management

THE PROJECT CLOSURE REPORT

The Senior Management and the Project Sponsor expect the final report after the project. The Project
Closing Plan forms the basis of the Project Closure Report. (Figure 8.4). The Project Closing Report
documents the official closure of the project and acceptance of the project by the client.

INPUTS

Scope
• Work Breakdown Structure
• Project Schedule OUTPUTS FINAL
• Resource Plan
• Project Closure
• Stakeholder Register • Project
Plan and
• Project Budget Closure
Process
• Procurement Management Report
• Project Closure
Plan
Checklist
• Communication Plan
• Risk Management Plan
• Organizational Processes

Figure 8.4 Manifestation of the Project Closure Report

Developing the Project Closure Report

The project closure report covers the whole project. It indicates that the project is complete. It also
emphasizes the difference between what is planned and what is actual. These differences can be the
schedule, cost, resource utilization, and other related issues. It also includes results related to the problem
or opportunity specified in the business case. For simplicity, the same template and format can be used
with the Project Closure Plan:
• Executive Summary
• Project Scope and Business Objectives
• Start and End Dates of Project Phases of Work
• Project Completion Criteria and Metrics
• Project Closure Deliverables
• Project Closure Documentation
• Project Closure Resources
• Project Closure Communication Plan
• Final Approval
In some cases, important and critical closing activities may need to be tracked through a checklist at
the executive level. A checklist can be prepared to include milestones, deliveries, and key decisions that
need to be followed at the executive level.
Table 8.6 shows the sample executive level checklist used in the project closing report. The details and
contents of the table will change from project to project

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 Project Closure

Table 8.6 Project Completion Template (Martinelli and Milosevic, 2016, p. 364)
Item Complete (yes/no) Notes or Actions
All deliverables complete
All milestones complete
All contracts closed out
All issues resolved
All handoffs signed off
All payments made
All invoices submitted
All accounts closed
All artifacts updated

All lessons learned gathered, documented, and shared

All personnel reassigned

All excess materials disposed of or stored

After the preparation of the Project Closing Report, the sponsor or stakeholders may request a
presentation.

Using the Project Closure Report

In the planning phase of the project life cycle, the project closing report activities begin. The project
manager, project sponsor and other stakeholders are determined at the planning stage of what the project
needs. Thus, the project manager determines what is to be delivered in the project closing report. The
purpose of the report is the official approval of the sponsor and the documentation of the project results.
The Project Manager should periodically update the report between planning and closing. They should be in
constant communication with the project team. They should
important
listen to the project team, celebrate achievements, and motivate
them to learn from mistakes. The closure of the project is not
only related to the closure of the project, but it should also Project Closure Report will be finalized upon
facilitate the transition of the project team to the next project. completion of the project.

Benefits
Project Closure Report is a summary of the entire project for the sponsor. It is a transition document
for the project manager and his team to start working on other projects. For other project teams, the
lessons learned and best practices are included in this document.
Learning Outcomes

3 To develop a project closure report

Self Review 3 Relate Tell/Share

What can be the difference Create a checklist that will

Describe the benefits of the
between planned and actuals show your success criteria for
project closing report.
in a project? your next holiday project.

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Project Management

THE POSTMORTEM REVIEW

The Postmortem Review is a review of the project after the closure or acceptance of the project. The
project manager works with the project sponsor and the operation team. The following questions are
examined in the examination:
1. Was the project successful?
2. Are all closing activities completed?
3. Are the lessons learned shared with relevant stakeholders throughout the organization?
4. Has the project achieved the operational results and the objectives outlined in the business reason?
5. Postmortem Review is the final step (Figure 8.5) in the process that begins with planning documents.

INPUTS

Scope
• Work Breakdown Structure
• Project Schedule OUTPUTS FINAL POST MORTEM
• Resource Plan
• Project Closure
• Stakeholder Register • Project • Post Mortem
Plan and
• Project Budget Closure Report
Process
• Procurement Management Report
• Project Closure
Plan
Checklist
• Communication Plan
• Risk Management Plan
• Organizational Processes

Figure 8.5 Project Closure Cycle

Conducting the Postmortem Review 1. What was done right?

The postmortem review is performed in three 2. What was wrong?
steps: 3. What should be done in the next project?
1. To collect feedback from project and Information collection can be done by face-
operation teams, to-face interviews, e-mail, web-based surveys, and
2. Organizing a meeting between the Project related documents.
Team and key stakeholders, and Conducting the Meeting - Before the meeting,
3. To report the results of the meeting. information about the feedback is summarized
Gathering Feedback - Baca (2007, p. 447) states and shared with the participants. The aim of the
that the lessons learned process helps in evaluating meeting is to develop future projects and to raise
processes, tools, and techniques that worked either awareness of the project and operational teams.
well or poorly on the project. Documenting the Postmortem Report - The
After the closing of the project, opinions Postmortem report is explaining what to do and
and suggestions of project team members and what not to do in future projects. What should
operational stakeholders should be taken. The be very general or very detailed? The aim of the
following questions should be asked to the project report is to benefit not only the project and related
manager, the sponsor, the key stakeholders, and the operational teams but also the whole organization.
project and operational teams:

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 Project Closure

The use of the project closing checklist will be useful important

for preparing the closing meeting and the final report. The
sample checklist in Table 8.7 contains different questions Learn the lessons and share them.
from the previous checklists.

Table 8.7 Project Post Mortem Checklist Questionnaire (Martinelli and Milosevic, 2016, p. 370)
Category Question Notes
Project planning 1 Did the business case clearly detail the problem or opportunity?
2 Were business goals and project objectives clear and measureable?
3 Was the project scope, schedule, budget, and quality clearly detailed?
4 Were project plans detailed, accurate, and usable?
Customer focus 5 Was the voice of the customer evident in all phases of the project?
Did deliverables and milestones meet customer (and stakeholder)
6
target expectations?
7 Was communication with customers effective?
Deliverables 8 Did the outcome (all outputs) of the project meet your expectations?
What gap or variance (if any) exists between your expectations and the
9
final deliverable?
10 Were project monitoring and controlling efforts effective?
Scheduling 11 Was planning and scheduling resources for the project effective?
Was there a visible schedule available to “see” milestones and critical
12
project work?
Resourcing 13 Was the project resourced properly?
Was the team effective? Would you describe the team as “high
14
performing”?
15 Was there a skill assessment conducted to determine resource need?
Was there clarity in roles, functions, responsibilites, and proper
16
awareness of interdependencies?
17 Was there active (proper) senior management sup-port?
Managing risk 18 Was there a deliberate risk management plan and pro-cess in use?
19 How effective was the planning and management of risk?
20 Were contingency plans in placa and effective for all risk?
Was there a clear decision makingi process (including an escalation
Decisions 24
process) in place and used?
25 Were decisions made fast enough?
Other 26 What are your most critical lessons learned from this project?

Using the Postmortem Review The work and workload associated with
Postmortem examination meetings and final postmortem activities should be minimal.
reports, such as the project closure report, begin These activities should focus on benefiting from
at the planning stage of the project. The actual experiential information to improve future projects,
postmortem work is done one to six months after to build higher-performing project teams and to
the project team, the operation team or the customer increase business value.
deadline. The timing between project handoff and It is important that these meetings focus on
postmortem work is necessary to ensure that the processes rather than people.
operation team understands the value of the project The agenda of the post mortem meeting may be
and provides sufficient time to benefit. It should be as follows:
noted that the tools and templates for postmortem • Introduction
work are related to the future, even if they are
• Transfer of ground rules
related to the past.

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Project Management

• Summary information Lessons learned from variances will determine

• Problems and critical success factors the necessary improvements for the success of the
project. The management should take decisions on
• “What went wrong”
the implementation of improvements implemented
• “What went right” within the organization, and in a methodical
• Recommendations for improvement manner, to the targeted projects.
• Next steps
Benefits
Variations The projects start in various ways; they are
It is necessary to periodically evaluate the planned, executed and closed. Errors are possible
progress of a project in achieving business in all of these processes. The important thing is to
objectives. Project activities carried out in a Project ensure that the error is not repeated. There are also
Life Cycle should be evaluated and improvements good things in the projects. These gains should not
should be made in the rest of the project. At best, be lost or repeated. If we can’t learn from projects,
learning can be applied to the next project. we have to repeat the mistakes or forget the good
Variances are differences between planned things. Learning is a key element of project closure.
and actual. It enables the project to be evaluated. Transferring learning from one project to another
Evaluating team performance is important to will increase the likelihood of success.
understand what is good and what goes wrong in Postmortem study is very important in the
the project. information management process after the lessons
Analyzing the variances allows positive taken from past projects that help increase the
changes in projects. success probability of future projects.
The analysis of the problems or the effect of the Learning is a long-term benefit. The short-term
changes made forward is examined through variances. benefit is the delivery of the project in accordance
with the needs of the operation team or the client.
important

Continuous monitoring of variances

accelerates learning and development.

Learning Outcomes

4 To interpret and use the postmortem review

Self Review 4 Relate Tell/Share

Which questions should Create a postmortem checklist Describe the importance of

be asked to get feedback to questionnaire for your next a postmortem review for a
Postmortem Review? holiday project. project manager.

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 Project Closure

Describe the project closing

LO 1 activities

The Project Closing Process is the process of officially completing a project, stage, or contract. The main
benefit of this process is the completion of the project and its phases in accordance with the requirements
and the contract. The project closing process group consists of works required to complete or close the
project activities throughout the project life cycle. In project closing activities, the responsibility of the
project manager is to ensure that all necessary and planned work is completed and the objectives are met.
Summary

Prepare a project closure plan and

LO 2 checklist

The Project Closure Plan ensures that the resources related to the project closure are allocated, and the
expectations of how the project closure activities will be carried out throughout the project are clarified. In
project closure, using the Project close checklist is useful for guiding closing operation and ensuring that
all areas are handled. Ensuring that the project closes properly is critical to the project and the process of
determining what needs to be closed.

LO 3 Develop a project closure report

The project closure report indicates that the project is complete. It also emphasizes the difference between
what is planned and what is actual. These differences can be schedule, cost, resource utilization, and other
related issues. The Project Closure Report is a summary of the entire project for the sponsor. The Project
Manager should periodically update the report between planning and closing. It is a transition document
for the project manager and his team to start working on other projects.

Interpret and use the postmortem

LO 4 review

The Postmortem Review is about lessons learned, and it ensures that the operation team understands the
value of the project and provides sufficient time to benefit. The postmortem review is performed in three
steps: (1) to collect feedback from project and operation teams, (2) to organize a meeting between the
project team and key stakeholders, and (3) to report the results of the meeting. Postmortem study is very
important in the information management process after the lessons taken from past projects that help
increase the success probability of future projects.

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Project Management

1 In which stage of the project cycle do the risk 6 The actual postmortem work is done….
activities take place?
a. three to six months after the project team, the
a. Initiating operation team, or the customer deadline.
b. Planning b. one to three weeks after the project team, the

Test Yourself
c. Executing operation team or the customer deadline.
d. Monitoring & Controlling c. three to six days after the project team, the
e. All of above operation team or the customer deadline.
d. immediately after the project team, the
operation team or the customer deadline.
2 Which one is not true about the project e. once after the project team, the operation team
closure report? or the customer deadline.
a. It covers the whole project.
b. It indicates that the project is complete. 7 To evaluate whether the results of the project,
c. It covers only completed stages. decisions, and deliveries meet the expectations of
the stakeholders. Which one is not a true question?
d. It emphasizes the difference between what is
planned and what is actual. a. Are all deliveries and milestones complete?
e. It includes results related to the problem or b. Are the stakeholders ready for the next phase
opportunity specified in the business case. (or commissioning) of the project, based on
the work done so far?
c. Are all contract and purchase works completed
3 What can we do to ensure the correct closure and up to date?
of the project? d. Is the Project Team prepared for the next phase
a. Prepare the budget of the project?
b. Prepare the Project Closure Plan e. Are all reports shared with stakeholders?
c. Motivate the team
d. Make daily reporting
8 What will the project team lose if they wait until
the end of the project’s life cycle for project closure?
e. Make daily meetings
a. Motivation
b. Customer satisfaction
4 Which one is not an input for the Project c. Awards
Closure Plan? d. Opportunities for learning and improvement
a. Work Breakdown Structure e. Money
b. Resource Plan
c. Resource Calendars 9 Which one is not included in the agenda of
d. Procurement Management Plan the postmortem meeting?
e. Organisational Processes a. Problems and critical success factors
b. Discussions on “what went wrong”
5 c. Discussions on “what went right”
Which one is not a closure activity?
d. Recommendations for improvement
a. Contractual obligations are generally fulfilled . e. Company vision, mission, goals, and strategy
b. Procurement documents are completed .
c. Project plans are updated. 10 How often should the project manager
d. Transfer contracts between project and update the Project Closure Report?
operation teams are made. a. Once, at the end of the project
e. Resources are reallocated. b. At the beginning of each phase
c. When project customer requested
d. Periodically
e. When project sponsor requested

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 Project Closure

1. e If your answer is wrong, please review the 6. a If your answer is wrong, please review the
“Project Closure” section. “The Post Mortem Review” section.
Answer Key for “Test Yourself”

If your answer is wrong, please review the

2. c If your answer is wrong, please review the 7. b
“The Project Closure Plan and Checklist”
“The Project Closure Report” section.
section.

If your answer is wrong, please review the

3. b 8. d If your answer is wrong, please review the
“The Project Closure Plan and Checklist”
“Project Closure” section.
section.

If your answer is wrong, please review the

4. c 9. e If your answer is wrong, please review the
“The Project Closure Plan and Checklist”
“The Post Mortem Review” section.
section.

5. c If your answer is wrong, please review the 10. d If your answer is wrong, please review the
“Project Closure” section. “The Project Closure Report” section.

What do you understand from this sentence? “Lessons

Suggested answers for “Self Review”

Learned are the most important output of a project.”

All project team members must record their experiences and the lessons
learned during the project life cycle.
Lessons must be published and shared with other project managers and
self review 1 project team members. This will reduce the likelihood that similar errors will
occur in subsequent projects.

What is the importance of planning the closure process

group?

During the project, important activities such as handover operations,

decisions, and deliverables are realized. The difference between project success
self review 2 and failure can be seen by using the project closure plan and checklist. It is
important to follow an appropriate closing plan and checklist and to gain an
advantage by creating faster learning than competitors.

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Project Management

What can be the difference between planned and actuals

in a project?

Suggested answers for “Self Review

These differences can be the schedule, cost, resource utilization, and other
self review 3 related issues. It also includes results related to the problem or opportunity
specified in the business case.

Which questions should be asked to get feedback to

Postmortem Review?

1. What was done right? 2. What was wrong? 3. What should be done in the
self review 4
next project?

References
PMI® (2017), Project Management Body of Martinelli, R.J. and Milosevic, D.Z.(2016), Project
Knowledge (6th Edition), Project Management Management Toolbox, 2nd Edition, John Wiley
Institute INC, USA & Sons, Inc., Hoboken, New Jersey
Cleland, D.I. and L.R. Ireland (2002), Project Lester, A. (2017), Project Management, Planning and
Management: Strategic Design and Control, Managing Engineering, Construction
Implementation, 4th ed., McGraw-Hill, New and Manufacturing Projects to PMI®, APM and
York BSI Standards (7th Edition), Project Close-Out
Horine, G.M. (2009), Absolute Beginner’s Guide Report and Review (413-414), MA, USA:Elsevier
to Project Management, 2nd Edition, Que Horino, Gregory M. (2009), Absolute Beginner’s
Publishing, Boston, MA Guide to Project Management (2nd Edition),
Baca, C.M. (2007), Project Management for Mere Ending a Project (p. 294-296). USA: Que
Mortals: The Tools, Techniques, Teaching, Publishing
and Politics of Project Management, Pearson
Education Inc., Boston, MA

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