3.

3 Project and Operations Management

What is Operations Management?

Operations management is a field of business concerned with the administration of business
practices to maximize efficiency within an organization. It involves planning, organizing, and
overseeing the organization’s processes to balance revenues and costs and achieve the highest
possible operating profit. An operations manager is tasked with ensuring that the organization
successfully converts inputs such as materials, labor, and technology into outputs in an efficient
manner.

Operations Management (OM) aims to manage processes engaged in production, distribution of

products/ or services. Therefore, it includes set of activities (including product creation,
development, production, distribution and reverse logistics).

Operations management inclusive all operations within the organization (viz. Managing
purchases, Material Management (MM) and inventory control, Production Planning and
Production Management (PP/PM) Quality Control (QC) and Quality Assurance (QA), storage,
Sales and Distribution (S&D) and logistics Management and evaluations). The prime
focus during the operation management is on efficiency and effectiveness of processes.
Therefore, OM includes substantial measurement and analysis of internal processes. Ultimately,
the nature of how operations management is carried out in an organization depends very much
on the nature of products or services in the organization, For example, In the domain of retail,
manufacturing, wholesale, etc. successful operation management involves several decisions in
accordance to time and space. We can broadly classify them as Design/ Strategic decisions and
operations decisions.

The strategic decisions are the design and policy decisions. The operational decisions relate to
day-to-day activities: managing the flow of material and product and other aspects of the
Operation Management in accordance with strategic decisions.

Importance and Role of Operations Management

Operations and sales are the two line functions in a business organization. All other functions—
accounting, finance, marketing, IT, and so on—support the two line functions. Among the
service jobs that are closely related to operations are financial services (e.g., stock market
analyst, broker, investment banker, and loan officer), marketing services (e.g., market analyst,
marketing researcher, advertising manager, and product manager), accounting services (e.g.,
corporate accountant, public accountant, and budget analyst), and information services (e.g.,
corporate intelligence, library services, management information systems design services).

Working together successfully means that all members of the organization understand not only
their own role, but they also understand the roles of others. In practice, there is significant
interfacing and collaboration among the various functional areas, involving exchange of
information and cooperative decision making. For example, although the three primary functions
in business organizations perform different activities, many of their decisions impact the other
areas of the organization.
Finance and operations management personnel cooperate by exchanging information and
expertise in such activities as the following:

1. Budgeting: Budgets must be periodically prepared to plan financial requirements.

Budgets must sometimes be adjusted, and performance relative to a budget must be
evaluated.
2. Economic analysis of investment proposals: Evaluation of alternative investments in
plant and equipment requires inputs from both operations and finance people.
3. Provision of funds: The necessary funding of operations and the amount and timing of
funding can be important and even critical when funds are tight. Careful planning can
help avoid cash-flow problems.

Design Decisions

Design or strategic decision involves the following critical issues:

1. What operational activities should be carried out by the nodal firm and what should be
outsourced?
2. How to select entities/ partners to perform outsourced operational activities and what
should be the nature of the relationship with those entities? Should the relationship be
transactional in nature or should it be a long-term partnership?
3. Decisions pertaining to the capacity and location of the various Production/ Operational
facilities/ Plant Locations.

The decisions pertaining to location and capacity are for those facilities/ Plant Locations that are
owned by the nodal firm. In addition to manufacturing locations and capacities, the firm has also
to worry about locations and capabilities for warehouses (Depots). Supply Chain design
decisions are made for the long term (usually a couple of years) and are very expensive to alter
at short notice.

Operations decisions

Once supply chain design decisions are in place, the firm has to take decisions regarding the
management of supply chain operations for shorter horizons. This involves tactical decisions,
which have horizons of about three months to a year, and operations decisions, which usually
have a horizon ranging from a day to a month. Both tactical and operations decisions involve the
following areas:

1. Demand Forecasting

2. Procurement Planning and Control

3. Production Planning and Control

4. Distribution Planning and Control

5. Inventory Management

6. Transportation Management

7. Customer Order Processing

8. Relationship Management with Partners in the Chain

Location Decisions

As with capacity planning, Operation managers need to follow a three-step procedure when
making facility location decisions. These steps are as follows:

Step 1: Identify Dominant Location Factors. Identify the location factors that are dominant for
the business. This requires managerial judgment and knowledge.

Step 2: Develop Location Alternatives. Once identification of factors is done, operation manager
can identify location alternatives that satisfy the selected factors.

Step 3: Evaluate Location Alternatives. After a set of location alternatives have been identified,
managers evaluate them and make a final selection. This is not easy because one location may be
preferred based on one set of factors, whereas another may be better based on a second set of
factors.

Responsibilities in Operations Management

Operations management is a field of business that involves managing the operations of a

business to ensure efficiency in the execution of projects. It means that the individual in charge
of the department will be required to perform various strategic functions. Some of the functions
include:

1. Product Design

Product design involves creating a product that will be sold to the end consumer. It involves
generating new ideas or expanding on current ideas in a process that will lead to the production
of new products. The operations manager’s responsibility is to ensure that the products sold to
consumers meet their needs, as well as match current market trends.

Consumers are more interested in the quality of the product more than the quantity, and the
organization should create systems that ensure the products produced meet the needs of the
consumer.

2. Forecasting

Forecasting involving making predictions of events that will occur in the future based on past
data. One of the events that the operations manager is required to predict is the consumer
demand for the company’s products.

The manager relies on past and present data on the uptake of the company’s products to
determine future trends in consumption. The forecasts help the company know the volume of
products needed to meet the market demand.
3. Supply Chain Management

Supply chain management involves managing the production process from raw materials to the
finished product. It controls everything from production, shipping, distribution, to delivery of
products.

The operations manager manages the supply chain process by maintaining control of inventory
management, the production process, distribution, sales, and sourcing of suppliers to supply
required goods at reasonable prices. A properly managed supply chain process will result in an
efficient production process, low overhead costs, and timely delivery of products to consumers.

4. Delivery Management

The operations manager is in charge of delivery management. The manager ensures that the
goods are delivered to the consumer in a timely manner. They must follow up with consumers to
ensure that the goods delivered are what the consumers ordered and that they meet their
functionality needs.

If the customer is unsatisfied with the product or is complaining about certain features of the
product, the operations manager receives the feedback and forwards it to the relevant
departments.

What is Plant Location?

Plant location refers to the process of selecting a suitable site or place for establishing a
manufacturing facility or industrial plant. It is a critical decision for businesses, as the location of
a plant can significantly impact the company’s overall success and competitiveness. Plant
location considerations are important across various industries, including manufacturing,
agriculture, energy generation, and more.

Factors Influencing Plant Location

There are several factors that influence plant location. Moreover, moving forward by resolving
all other problems and considering these factors leads to success in business. The major factors
affecting the plant location are listed as follows:

Availability of Raw Materials

The source of raw materials is one of the most important factors influencing the selection of a
plant location. Attention should be given to the purchased price of raw materials, distance from
the source of supply, freight and transportation expenses, availability and reliability of supply,
purity of raw materials and storage requirements.

Proximity to Market

The location of markets or intermediate distribution centers affect the cost of product distribution
and time required for shipping. Proximity to major markets is important consideration in the
selection of the plant location because the buyer usually finds advantageous to purchase from
near-by sources.
Transportation

The transportation of materials and products to and from plant will be an overriding
consideration in the selection of plant location. If practicable, a site that it is close to at least two
major forms of transport: road, rail, waterway or a seaport, should be selected. Road transport is
being increasingly used, and is suitable for local distribution from a central warehouse.

Rail transport will be cheaper for long-distance transport. If possible, the plant location should
have access to all three types of transportation. There is usually a need for convenient rail and air
transportation facilities between the plant and the main company headquarters, and the effective
transportation facilities for the plant personnel are necessary.

Availability of Labour

Labour will be needed for the construction of plant and its operation. Skilled construction
workers will usually be brought in from outside the site, but there should be an adequate pool of
unskilled labours available locally; and labour suitable for training to operate the plant. Skilled
tradesmen will be needed for plant maintenance. Local trade union customs and restrictive
practices will have to be considered when assessing the availability and suitability of labour for
recruitment and training.

Availability of Power, Fuel or Gas

It is important for an organisation to ensure the continuous supply of power, fuel and gas before
selecting a plant location. For example, the location of thermal power plants and steel plants near
coal fields is crucial for reducing cost of the fuel transportation.

Supply of Water

Water is important for survival. It is required for processing in industries like chemical, sugar
and paper industries. Also, water is used for drinking and sanitary purposes. It is important for an
organisation to investigate a quality and probable source of supply. In addition, the chemical
properties like hardness, alkalinity and acidity level of water should be checked. Apart from that,
a thorough study should be conducted related to the disposal of water like effluents, solids,
chemicals and other waste products.

Climatic Conditions

The climate of a region where the plant is to be located has great impact on both capital and
operational costs. Various aspects related to climatic conditions to be considered by an
organisation include the level of snow fall or rain fall in the region, humidity, velocity of wind,
frequency of natural calamities and so on.

In most plant locations, the target is to reduce cost. Some items of cost, like freight, could also be
higher for one city and lower for the other city, but power costs, for instance, may have the
reverse pattern. A little labour supply may cause labour rates to be bid up beyond rates measured
during a location survey.
The sort of labour available may indicate future training expenditures. Thus, although a
comparative analysis of varied locations may point toward one community, an appraisal of
intangible factors could also be the idea of the choice to pick another. The example of a
managerial decision with multiple criteria, where trade-offs must be made between the varied
values and criteria.

Significance of Plant Location

Strategic significance of plant location is connected with capacity decisions. Plant location
involves commitment towards resources to a long-range plan. The criterion for the selection of
location should be profit maximisation and cost minimisation. If the costs of products are
uniform altogether, then the criterion becomes one among minimising relevant costs. Plant
location is generally a stable decision that cannot be changed frequently and requires a lot of cost
and efforts.

Any wrong decision can bring huge losses for the organisation. Therefore, it is important for an
organisation to consider all the factors that impact the plant location before making the selection.
If all processes and costs are independent of location, choices are going to be guided by
proximity to potential customers or clients or similar and competing organisations and centres of
economic activity generally.

What is Plant Layout?

Plant layout is simply a mechanism which involves knowledge of the physical arrangement of
every component of the production Process for the facilities to additional space efficiency for
manufacturing cost reduction to continuous and steady movement of the production cycle.

This arrangement includes the space needed for material movement, storage, indirect labour and
all other supporting activities or services.

Plant Layout is a master blueprint which provides for the most effective utilisation of machine,
manpower, materials for coordinating all operations performed inside the factory to increase
overall productivity.

Objective of Good Plant Layout

 Effective Utilisation of installed machinery and Manpower

 Minimization of Material Handling
 Elimination of bottleneck through line balancing
 Elimination of physical efforts with Low Cost Automation
 High turnover with reduction in Delivery Failure
 WIP(Work in progress) reduction between processes
 Natural light,Ventilation,Control of noise and vibrations for better Ergonomics and
Energy Cost reduction
 Sufficient work space for a better Work Environment
 Aisle and Gangways planning for better Accessibility and Monitoring
 Store designed based on better Flow, Accessibility, Capacity of storage and Traceability
of materials
 Reduction in changeover time through SMED (Single Minute Exchange of Die)
 Dust control based on different types of Clean rooms/ ISO norms
  Distance travel reduction of Material and Manpower etc
 Reduction in Labour cost
 Reduction in manufacturing time
 Increased flexibility
 Future Expansion


 Types of Plant Layout
 Plant Layout is the arrangement of machines, equipment and other physical facilities in a
planned manner.
 We design Plant Layout according to many factors like- Machinery , Product , material
etc. On the basis of arrangement of the factors we have following 4 types of Plant
Layout-

 1-Product or Line Layout
 2-Process or Functional Layout
 3-Fixed or Position Layout
 4-Combination Layout

 Product or Line Layout

 If all the machines are arranged in a line sequence according to the sequence of
operations of the products then it is known as Product or Line Layout.
 In this arrangement each following machine or section is arranged to perform the next
operation that is performed by its preceding machine or section,
 i.e. raw material starts from one end of production lines and moves from one machine to
next with a storage and material handling and minimum work in process in a sequential
path.
 This type of layout is suitable for mass production and for the products having steady
demand.
 This arrangement is also good for the continuous production system where the products
have small parts that are highly standardised and interchangeable.

Advantages

 Low material handling cost

 Less WIP (Work in progress)
 Better utilisation of Machine and Manpower
 Lesser time in Production
 Less space requirements
 Minimum possible cost of manufacturing

Disadvantages

 No flexibility
 Breakdown of any machine in the line may shut down the whole production line
 Difficulty in increase the production beyond the capacities of the production lines
  If the output rate of one machine is slower than the other machine,over all production
rate decreases

 Process or Functional Layout
 In Process or Functional Layout all the similar machines are positioned together so that
all the similar operations are performed at the same place.
 Machines are arranged according to the nature or type of the operations or their functions.
 For all the different types of functions separate machines are available i.e. For carrying
out tapping work, all the tapping machines are grouped together and for carrying out
drilling work all the drilling machines are arranged together.
 This type of layout is useful where low volume of production is needed.
 It is normally preferred for the industries involved in batch production, manufacturing
and maintenance activities of non- repetitive type

Advantages

 In this type of layout there is no need for layout change for different types of products
 Breakdown of any machine can be easily handled by transferring work to another
machine
 Wide flexibility exists regarding allotment of work to workers and equipment
 There is a better utilisation of all the machines
 There is an improved product quality because of separate supervisors and workers for all
types of machines
 Breakdown of any machine does not affect the production of other machines
 Load distribution is easily controlled

Disadvantages

 High cost of material handling

 Large space required
 High investment required for inventory
 High cost of supervision
 Production time is longer
 Bottlenecks occur due to more work is in queue and waiting for further operation
 More floor area is required
 Scheduling is tedious because work does not flow through definite lines

Fixed or Position Layout

In Fixed or Position type of layout the major part of a material remains at a fixed position and all
accessories, material, required tools , machinery and other supporting equipment are brought to
this location and this layout is also known as project layout.
This layout is good for extremely large items manufactured in very small quantities and highly
preferable when the cost of moving a major piece of material is high.

This layout is used in the manufacturing factory of boilers, hydraulic and steam turbines etc.

Advantages

 Less material and workers movement

 Less Capital investment
 Highly flexible for varieties of products
 Ensures Continuity
 Less production cost

Disadvantages

 Complicated fixtures
 Required highly skilled manpower
 Movement of machines is time consuming
 Machines are not fully Utilised
 It is limited to large items only

Combination Layout

Combination Layout is also known as group layout.

In this layout we use a combination of all above layouts.

Every layout has its advantages and disadvantages therefore industries prefer to use a
combination of layouts.

These days most of the manufacturing industries have adopted this kind of layout.

In this type of layout we connect all the good features of all the types of layout to obtain a
compromise solution which will be more economical and flexible.

Advantages

 Reduction in cost of material handling and machine set-up time

 Elimination of excess work-in-process inventory
 Simple production planning functions
 Smooth flow of work

Disadvantages

 Change of the existing layout is costly and time consuming

 Including new components requires thorough analysis
 Complex to use
Here We discuss types of Plant Layout and their advantages & disadvantages after reading that
you can be confused to choose the perfect layout for your Plant so, let’s discuss the factors you
need to keep in mind when choosing layout for your plant.

UNIT – II
Production Planning and Control

Production planning and control (PPC) is a necessity for manufacturing facilities around the
globe that are seeking to maintain a competitive advantage in the market. These strategies allow
manufacturers to effectively generate a production plan, execute it, and ultimately take control of
their operations through continuous improvement initiatives.

Production Planning and Control

As its name suggests, production planning and control is the process of planning and
subsequently controlling all aspects of manufacturing and production. This includes ordering
material, scheduling employees and work on the machines, and even distributing goods to end
customers.

The success of any production company comes with having a robust production planning and
control strategy. This is because virtually all processes that occur within the production facility
rely on each other or on properly carrying out production planning and control.

For example, if you have scheduled production to start on jobs at a certain time but you do not
have the material required for production, you will have to delay the start of production for that
item. This means that you might have to adjust the production schedule so that your machines
are not idle while you are waiting for your materials to arrive. This also means that you might
have late customer orders, especially if you are working with a just-in-time production model.

As you can see, production planning and control is an essential component for any
manufacturing facility that is looking to improve the efficiency of its operations and increase its
profits. In this blog, we will examine some of the main functions and components of production
planning and control.

Key Functions with Production Planning and Control

Some of the key functions within production planning and control include the following:

 Materials Management - One of the functions of production planning and control is the
specific measure of materials that are needed for production within a certain time period.
Accurately determining the amount of material you will need is essential to eliminate
waste, high inventory levels, and other inventory carrying costs. On the other hand, this
also prevents the risk of stock-outs and running out of materials. Overall, managing
materials enables production to run smoothly as raw materials, parts, and other
components can be delivered in a cost-effective and timely manner.
  Equipment - Production planning and control ensures the proper functioning of
equipment. This includes analyzing equipment downtime to identify any bottlenecks and
inefficiencies within the production process. Doing so will ensure that production is
flowing smoothly, staying efficient, and orders are completed on time. In addition, this
component looks at equipment maintenance schedules to prevent any unexpected
breakdowns that could stop production for extended periods of time.
 Methods - This component of production planning and control involves the analysis of
possible alternatives to production processes as well as various schedules that production
can follow. A production planning and scheduling software can generate multiple
schedules to allow manufacturers to choose the best one for their production operations
and constraints.
 Routing - Similarly to the last point, production planning and control ensures that raw
materials are transformed into finished goods using the best route possible. Eliminating
useless steps or excessive motion through the shop floor are the main objective of this
component.
 Estimating - After the process sheet for operations is made available, operation times are
then estimated. The function is then carried out using analysis on areas of operations such
as routing, raw materials, and various other areas.
 Dispatching - This phase of production planning in control involves the execution of the
production schedule. It involves the release of materials, components, and tools to the
machine operators so that production can begin. As one can imagine, this is where the
importance of production planning and control is highlighted. If there are any delays in
procuring materials or inefficient routing or processes, production will be hindered.
 Expediting - This step is also called Follow-Up and involves checking the progress of
production. It also involves the follow up of materials, work in progress, and assembly. In
this step, manufacturers should identify bottlenecks in the production process and work to
remedy them to ensure that the production plan is executed as planned.
 Evaluation - One of the most important steps in production planning and control, and
any process in general, is to evaluate it. This portion helps identify areas where
productivity is still lacking and where improvements could be made. Managers can then
focus on these areas and determine what needs to be changed and then implement
strategies to improve those areas.

Production Cycle

The production cycle is the sequence of production steps that a product or service goes through
from its planning to its delivery to the customer. It includes the steps of product design,
production planning, raw material sourcing, manufacturing, quality control, packaging, and
distribution.

Overview of the Production Cycle

The production cycle is the process of converting raw materials into finished products. It
involves several steps, including planning, sourcing materials, manufacturing, quality control,
packaging, distribution, and customer service.

Each step of the production cycle is essential to ensure the product meets the customer’s
expectations.
There could be few more steps added or some removed from the typical process. Yet, the
production cycle in manufacturing typically includes the following steps:

 Designing
 Planning
 Procurement
 Sourcing materials
 Manufacturing
 Quality Control
 Packaging and Shipping
 Distribution
 Customer Service

Let’s learn about each step in detail in the next section.

Stages of the Production Cycle

The stages of the production cycle in manufacturing can vary significantly from one business to
another depending on the type of products and services being produced, the complexity of the
production process, and the scale of the operation.

For example, a company producing a single product may only have a few stages in the
production cycle, such as design, fabrication, assembly, testing, and packaging. A company with
multiple product lines may have a much longer production cycle with additional stages, such as
quality control, inventory management, and distribution.

Yet, certain types of businesses may require additional stages, such as marketing and customer
service.

The different stages of the production cycle can be described as follows:

Designing
The Designing Stage of the Production Cycle in manufacturing is the initial step in the creation
of a product. This stage involves creating product specifications, choosing materials and
components, and developing a plan for the production process. It also includes creating a
prototype and testing it to ensure that the product meets the requirements established in the
design specifications.

During this stage, the design team may consult with engineers, suppliers, and other stakeholders
to ensure that the product is designed correctly and meets the customer's needs and expectations.

Additionally, the design team may have to adjust the product or the process to meet cost and time
constraints.

Planning
Planning is the next step in the production cycle. This involves determining the product’s design,
materials, and other requirements. It also includes setting production timelines, budgets, and
goals.
It also involves organizing resources, equipment, facilities, and personnel to create a plan for
producing goods and services. It involves the mapping out all the steps necessary to complete the
production process, from raw materials to finished goods.

This stage typically involves identifying the most efficient and cost-effective methods for
completing the production process and estimating the amount of time and resources needed to
complete the job.

It is important to consider the quality of the end product when creating the plan and any safety or
environmental regulations. The planning stage also involves gathering the necessary resources
and personnel, such as raw materials, equipment, and skilled labor. As a result, effective raw
material management is also essential.

Procurement
The procurement stage of the production cycle in manufacturing is the process of buying the
necessary materials, components, and services needed to complete the production process. This
includes locating vendors and suppliers, issuing purchase orders, negotiating prices, and ensuring
that the materials, components, and services meet quality standards.

The procurement stage also involves tracking and monitoring the delivery of the materials,
components, and services to ensure that they are received on time and in good condition. This
stage of the production cycle is critical for ensuring that the production process runs smoothly
and without delays.

Sourcing Materials
Once the product design is finalized, materials must be sourced from suppliers. This involves
researching the best quality and most cost-effective materials and negotiating with suppliers.

The sourcing stage also involves procuring the necessary raw materials, components, and other
resources that are needed for the manufacturing process.

This stage aims to identify the suppliers and vendors, negotiate for the best cost and quality, and
establish a reliable supply chain.

This stage is essential for the successful completion of the manufacturing process as it ensures
that the necessary materials are available at the right time, in the right quantity, and of the right
quality.

Manufacturing
During the manufacturing phase, the materials are transformed into the finished product. This
includes machining, assembly, and any other processes required for production.

During this stage, the materials are transformed into usable products by way of various processes
such as cutting, molding, assembling, and welding. Depending on the product, these processes
may involve the use of specialized equipment, machines, tools, and even robotics.

Quality Control
Quality control is an essential step in the production cycle. This involves inspecting the product
to ensure it meets the specifications and is free from defects.
This is the last stage before the product is released to the public. During this stage, the product is
tested and inspected to ensure that it meets the desired quality standards of the company.

Quality control can be done through a variety of methods such as visual inspection, dimensional
measurements, functional testing, and laboratory testing. It is important to have an effective
quality control process in place in order to ensure that the products being released are safe and of
the highest quality.

Packaging and Shipping

The packaging and shipping stage of the production cycle in manufacturing is the final step in
the production process. At this stage, the finished product is prepared for shipping to the
customer. This includes packaging the product into boxes or other containers, labeling the
product, and arranging for its transportation.

The product must meet all the necessary regulations, such as product safety requirements, and be
ready for shipment. During this stage, the necessary paperwork is also completed to ensure that
the product is delivered on time.

The packaging and shipping process must be done correctly to ensure that the product is not
damaged during transit and that the customer receives the product in a timely manner.

Distribution
The Distribution stage of the Production Cycle in manufacturing includes the activities necessary
for getting the finished product from the production facility to the customer. This includes
activities such as inventory control, packaging, shipping, and transportation.

During this stage, manufacturers must ensure that the product is properly packaged and labeled,
and that it is shipped to the customer in a timely manner.

Additionally, manufacturers must track and manage the inventory levels and ensure that they
have the correct number of products to meet customer demand.

Customer Service
Once the product is delivered, customer service is essential. This includes providing technical
support, handling customer complaints, and resolving any issues with the product. This stage
typically involves customer service representatives who are responsible for providing technical
assistance to customers, handling customer inquiries, and resolving any issues that may arise
during the installation process.

Additionally, customer service may provide training and education on how to use and maintain
the product, as well as provide after-sales support.

By following each step of the production cycle, companies can ensure the product meets the
customer’s expectations and is delivered on time.
 Maintenance management

Maintenance management involves keeping track of assets and parts. The purpose is to ensure
that production proceeds efficiently and the minimum amount of resources are wasted. This is
generally accomplished by a tailored combination of software, practices, and personnel that
focus on achieving these goals.

Objectives of maintenance management

Almost any business process has objectives and maintenance management is no different. The
five main objectives are:

 Budgeting
 Scheduling work
 Regulation compliance
 Optimizing work
 Improving safety

Budgeting

Maintenance managers usually work with a limited budget and they might have many different
items that need that budget. When there is greater budget transparency, there is greater potential
to leverage the funds available.

Scheduling work

Scheduling employees and personnel is always a delicate balancing act. When equipment is not
maintained, the company schedule can be quickly thrown off balance. This objective impacts
many more aspects of the company than just maintenance management.

Regulation compliance

It’s easy to lose track of all the regulations that you must keep track of in your company.
However, most of these regulations don’t change often and can be tracked fairly easily. Quality
maintenance management teams and software keep the needed information to comply with
regulations at your fingertips.

Optimizing work

Well-maintained equipment optimizes all the workflows involving equipment. In turn, this
optimizes employee efficiency and company productivity. In ideal circumstances, this creates a
loop of optimization and efficiency that serves the entire company.

Improving safety

Finally, safety levels increase when maintenance is properly managed. Equipment breaks down
less often, locations are better maintained, and the small risks, such as improperly cleaned floors
and shelves, are dealt with in a timely way.

Types of maintenance management

Not all maintenance management is the same. However, it’s not necessarily the most intuitive
either. Here are some of the different types of maintenance management and their roles for
businesses.

Time-based

Time-based maintenance is an umbrella term used to describe all maintenance that is based on
the calendar. Examples would include daily, weekly, monthly, and more tasks that need to be
done at the same time, every time.

Predictive

Predictive maintenance is a type of condition-based maintenance that specifically monitors asset

conditions using sensors. These sensors send data to a central database so that users can see what
is happening as it’s happening in real-time.

Condition-based

Similar to time-based maintenance, condition-based maintenance is another wide category of

general maintenance management. It is defined by the use of sensor devices on company assets
and equipment.

Run to failure

Perhaps the simplest type of maintenance management, (run to failure maintenance) is reaction-
based. When an asset breaks, this maintenance is performed to get it back up and running again.

Benefits of maintenance management

Before we get into the specifics of what the benefits of maintenance management are, it’s worth
pointing out that many of these are positive results to the general objectives of maintenance
management. That’s not a coincidence; when the objectives are reached, these benefits flow over
the entire company in question.

Cost savings

Measuring and analyzing your assets on a regular basis also enables you to see where
improvements will need to be made. These costs can be calculated well in advance of the need,
enabling the company to find the best price for new and/or improved assets.

Improve workplace safety

Properly maintenance equipment and well-kept facilities prevent more employee accidents than
most other business safety measures. This is particularly true on a day to day basis.

Enhance productivity

When workplaces are safer, employees don’t have to worry about as many daily risks,
particularly risks due to equipment. This has a direct impact on overall productivity.
Minimizes human error

A well-maintained facility also decreases the chances of human error. This is particularly true
when aspects of maintenance become automated.

Uncovers maintenance trends

Finally, a quality maintenance management system uncovers what exactly is going on on a day-
to-day basis. If an asset, a piece of infrastructure, or other key part of your company’s operation
is consistently underperforming, you will find the fault much faster.

Preventive and Breakdown maintenance

Maintenance activities are an integral part of the performance of any plant operations. A
common myth is that a plant is either running on preventive maintenance or breakdown
maintenance. The truth is a plant that is running successfully needs a healthy mix of corrective
maintenance and preventive maintenance strategy to avoid unplanned downtime. It is important
to understand the difference between the two techniques so that the right one can be applied in
the right situation to maximize productivity and efficiency.

Breakdown Maintenance

As the name suggests, breakdown maintenance is the corrective maintenance action required to
be undertaken in case of equipment failure or emergency maintenance. This type of maintenance
management is performed by maintenance teams only when it is urgent and impacts productivity.
For instance, a water cooler that plays an integral role in the production process has broken down
and needs to be repaired immediately.

Preventive Maintenance

As the name suggests, preventive maintenance activities are the maintenance tasks that are
performed in a cycle to keep the overall plant running at high efficiency. The objective of the
preventive maintenance program is to ensure that all minor issues are taken care of at this stage
itself before they balloon into a situation of a breakdown.

Types of Breakdown Maintenance

Breakdown maintenance can be categorized into the following:

Planned Breakdown Maintenance: In this scenario, the management and plant operations team
is aware of a possible breakdown at one of the machines or units in a plant. However, since it
will not directly impact productivity and day-to-day operations of the plant, the organization lets
it wear down and break.

Unplanned Breakdown Maintenance: It is one of the most common types of breakdown

witnessed by almost all companies across the globe. When a machine or plant fails, it will
directly impact the work orders, productivity, and efficiency of the organization. It is
inconvenient, unexpected, and, most importantly, costly to the organization.
Types of Preventive Maintenance

Preventive Maintenance can be categorized into the following:

Risk-based Maintenance: In this method, the risk of failure is assessed for all equipment and
machinery, and the frequency and level of maintenance are decided accordingly. The risk could
be its importance to the manufacturing or process or the cost of breakdown maintenance. Higher
the risk, the higher the importance of preventive maintenance.

Failure-finding Maintenance: There is some equipment in a machine that only functions if the
normal scenario has been disturbed. These could be safety belts, valves, bulbs, etc. This
maintenance method works on finding out if such equipment is working properly.

Time-based Maintenance: Also known as scheduled maintenance, regular maintenance is

undertaken for assets regardless of their state under this method. It is done with the belief that all
equipment has a lifespan, and it is essential to undertake regular maintenance to increase the
overall life of the asset.

Condition-based Maintenance: This method focuses on only a part of the machinery showing
signs of failure. The idea is to avoid a breakdown and undertake corrective maintenance before
the functional breakdown.

Predictive Maintenance: This method of maintenance uses advanced techniques like analytics,
the internet of things (IoT), and machine learning, etc., to predict the performance map of an
asset and look for declining performance. This method allows technicians to look for possible
breakdowns early on with the help of technology and undertake corrective maintenance.

Breakdown Maintenance Example

Planned breakdown maintenance work is for parts that are non-essential and easily replaceable.
For instance, parts like batteries, bulbs, and hand tools are part of the planned breakdown
maintenance.

On the other hand, unplanned breakdown maintenance is about handling the emergency by
reducing the breakdown time and getting the asset up without much effect on productivity and
efficiency. For instance, the racing cars used in Formula One Championship may face a flat tire
at any point during the race. This is part of the unplanned maintenance. The maintenance team at
the pit stop is so trained that they can repair it in a matter of seconds.

Preventive Maintenance Example

Taking the Formula One example further, while a flat tire is not seen regularly due to advanced
technology, a pit-stop break is a regular affair. It is part of the preventive maintenance activities.
A world record of 1.82 seconds was achieved by Aston Martin’s Red Bull’s F1 team in 2019,
beating the previous record of 1.88 seconds.

The team of technicians at the pit stop is expected to change tires, make wing adjustments, clean
helmet visors, and fix any other mechanical problems that may exist. The seamless work at
Formula One pit-stops is one of the best examples of preventive maintenance.
Breakdown Maintenance vs. Preventive Maintenance: Key differences

The key differences between breakdown maintenance and preventive maintenance can be
categorized as follows:

Breakdown Maintenance Preventive Maintenance

This maintenance activity begins in This maintenance activity prevents any breakdown
Definition
case of a breakdown of an asset. and keeps the planning running at total efficiency.

The trigger for breakdown

The trigger for preventive care is to save time and
Trigger maintenance is the occurrence of
maintain efficiency.
downtime

The cost of breakdown The cost of preventive maintenance is relatively

Cost
maintenance is high lower.

Cost The cost-saving depends on asset

Cost-saving is expected to be around 12 to 18%.
Savings breakdown and maintenance plan

· Reduces maintenance costs for · Increases asset lifespan.

non-critical assets.
Pros
· Increases efficiency & productivity.
· Reduces spending on preventive
maintenance for non-critical assets. · Better utilization of organizational resources.
It is more suitable for a limited
number of assets
Cons It looks like an expensive item to get started.
Requires meticulous planning and
execution
A technician is required to replace
Replacement of filters and other parts in the plant
Use case a belt that has worn out in a
based on the advice provided by the manufacturer.
machine

Material Management
Material Management is a system that effectively controls and manages materials and supplies
used in an organization. The goal of material management is to ensure that the right materials are
available at the right time and in the right quantities, to support the production process and meet
customer demand.
Here are some key points to consider when exploring material management:
 Material management plays a crucial role in the success of an organization by ensuring
that materials are available when needed and in the right quantities.
 It helps to minimize waste and reduce costs by ensuring no over-stocking or under-
stocking of materials.
 It helps to improve customer satisfaction by ensuring that orders are delivered on time
and with the correct items.
  The critical components of material management include material planning, procurement,
inventory control, and distribution.
 Material planning involves forecasting demand, determining the materials needed, and
developing a plan to acquire those materials.
 Procurement involves sourcing and purchasing materials from suppliers.
 Inventory control involves managing the flow of materials into and out of the
organization and monitoring inventory levels to ensure they remain within acceptable
limits.
 Distribution involves the physical movement of materials from the organization to the
customer.
Types of Material Management
The following are the different types of material management:
 Inventory Management
Inventory management involves the maintenance of a company's stock of raw materials, semi-
finished goods, and finished products. It includes identifying the optimal inventory level to be
maintained, determining the reorder points, and ensuring that the inventory is stored correctly.
Inventory management aims to strike a balance between the costs of holding too much inventory
and the costs of running out of stock.
 Purchasing Management
Purchasing management involves procuring raw materials, supplies, and services required for
production. It consists of the selection of suppliers, negotiation of prices, preparation of purchase
orders, and management of supplier relationships.
The objective of purchasing management is to buy the required materials at the best possible
price and quality while ensuring timely delivery.
 Warehouse Management
Warehouse management involves the storage and handling of materials, as well as the
management of the physical movement of goods within a warehouse. It includes receiving,
storing, and shipping materials, as well as managing inventory levels and the location of
materials within the warehouse.
The goal of warehouse management is to optimize the use of space and minimize the cost of
storing and handling materials.
 Material Requirements Planning (MRP)
Material Requirements Planning (MRP) is a computer-based inventory management system used
to plan production schedules and manage the procurement of materials.
MRP considers the lead time for ordering materials, the time required for production, and the
inventory levels of materials. MRP aims to ensure that suitable materials are available at the right
time and in the correct quantity to meet production needs.
 Transportation Management
Transportation management involves the physical movement of materials from one location to
another. It includes the selection of carriers, negotiation of freight rates, preparation of shipping
documents, and management of delivery schedules. Transportation management aims to ensure
that the materials are delivered on time and at the lowest possible cost.
Objectives of Material Management
The following are the five primary objectives of material management:
 Right Material
The first objective of material management is to ensure that suitable materials are available for
production. It involves identifying the materials required for production and ensuring that they
are of the correct quality, specification, and quantity.
By ensuring that the right materials are available, companies can minimize the risk of production
delays and ensure customer satisfaction.
  Right Time
The second objective of material management is to ensure that the right materials are available at
the right time. It involves managing the movement of materials within the warehouse, reducing
lead times, and improving the efficiency of delivery processes.
 Right Amount
The third objective of material management is to ensure that the right amount of materials are
available for production. It involves determining the optimal inventory level to maintain and
implementing processes to manage the movement of materials within the warehouse.
By ensuring that the right amount of materials are available, companies can minimize the risk of
stock shortages, reduce the cost of storage and handling, and increase efficiency.
 Right Price
The fourth objective of material management is to ensure that materials are purchased at the right
price. It involves negotiating with suppliers to obtain the best possible prices and implementing
cost-saving measures, such as reducing waste, reducing lead times, and improving the efficiency
of delivery processes.
 Right Sources
The fifth objective of material management is to ensure that materials are sourced from the right
sources. It involves identifying reliable suppliers, developing partnerships with suppliers, and
ensuring that materials are purchased from approved suppliers only.
By sourcing materials from the right sources, companies can reduce the risk of defective
materials, minimize the risk of production delays, and ensure customer satisfaction.
Importance of Material Management
 Cost Reduction
One of the primary objectives of material management is to reduce the cost of materials. It
includes reducing the cost of purchasing materials, as well as reducing the cost of storing and
handling materials.
Cost reduction can be achieved through effective planning, procurement, and storage processes,
as well as through implementing cost-saving measures such as reducing waste, reducing lead
times, and improving the efficiency of delivery processes.
 Improved Quality
Another objective of material management is to improve the quality of materials and products.
This includes ensuring that the materials and products used in the production meet specified
standards of quality and implementing processes to prevent defects.
Improving the quality of materials and products can help ensure customer satisfaction, improve
the company's reputation, and reduce the cost of rework and warranty claims.
 Timely Delivery
A third objective of material management is to ensure the timely delivery of materials and
products. This includes ensuring that the right materials are available at the right time and in the
right quantity to meet production needs and implementing processes to prevent delays in the
delivery of materials.
Timely delivery is critical to any business's success and can help improve customer satisfaction,
reduce inventory costs, and improve production process efficiency.
 Inventory Optimization
Another objective of material management is to optimize inventory levels. This includes
determining the optimal inventory level to maintain and implementing processes to manage the
movement of materials within the warehouse.
Inventory optimization can help to reduce the cost of storage and handling and minimize the risk
of stock shortages or obsolescence.
 Efficient Supply Chain
A final objective of material management is to ensure the efficiency of the supply chain. This
includes reducing lead times, improving the efficiency of delivery processes, and optimizing the
movement of materials within the warehouse.
An efficient supply chain can help to reduce the cost of materials, improve customer satisfaction,
and increase the competitiveness of the business.
What Does A Material Manager Do?
A material manager oversees the procurement, storage, and delivery of materials required for
production. This professional plays a vital role in ensuring the efficiency and success of a
company's supply chain. The following are the main tasks and responsibilities of a material
manager:
1. Facility Management
A material manager is also responsible for managing the facilities used for storing and handling
materials. This includes ensuring that storage areas are secure, accessible, and compliant with
safety regulations.
A material manager must also be able to manage the maintenance of facilities to ensure that they
are in good condition and ready for use at all times.
2. Inventory Management
A material manager is also responsible for managing the movement and storage of materials
within the warehouse. This involves determining the optimal level of inventory to be maintained,
monitoring stock levels, and ensuring that materials are stored safely and efficiently.
3. Operations Management
A material manager ensures that operations are running smoothly and efficiently. This involves
coordinating with production and logistics teams, monitoring performance metrics, and ensuring
that materials are delivered to production on time and in the correct condition.
4. Production Planning
A material manager is also responsible for supporting production planning by ensuring materials
are available when needed. This involves managing inventory levels, monitoring lead times, and
ensuring that materials are delivered to production in the proper condition.
5. Cost Management
A material manager is responsible for managing the cost of materials, including reducing the cost
of purchasing materials and reducing the cost of storage and handling. This involves negotiating
prices with suppliers, reducing lead times, and improving the efficiency of delivery processes.

What is Store?
Store is an important component of material management. Store keeps the materials such that
the materials are well accounted for, are maintained safe, and are available at the time of
requirement. Storage is an essential and vital part of the economic cycle and store management is
a specialized function, which can contribute significantly to the overall efficiency and
effectiveness of the materials function.
The main processes of store are:
 to receive the incoming materials (receiving),
 to keep the materials as long as they are required for use (keeping in custody), and
 to move them out of store for use (issuing).
Functions of Store
The main functions of store are:
i. Maintain all documents of materials that are able to trace an item, show all its details and
preserve it up to its shelf life in the manner prescribed or till it is issued for use.
ii. Ensure the safety of all items and materials whilst in the store which means protecting
them from pilferage, theft, damage, deterioration, and fire.
iii. Efficiently and economically provide the right materials at the time when it is required
and in the condition in which it is required.
 What is Store Management?
Store management is concerned with ensuring that all the activities involved in storekeeping and
stock control are carried out efficiently and economically by the store personnel.
The basic responsibilities of store are to act as custodian and controlling agent for the materials
to be stored, and to provide service to users of these materials. Proper management of store
systems provide flexibility to absorb the shock variation in demand and enable purchasing to
plan ahead.
Since the materials have a cost, the organization is to manage the materials in store in such a way
so that the total cost of maintaining materials remains optimum and an efficient store
management can help with this.

Objectives of Store Management

An efficient store management has normally the following main objectives:
 To ensure uninterrupted supply of materials without delay to various users of the
organization.
 To prevent overstocking and understocking of the materials.
 To ensure safe handling of materials and prevent their damage.
 To protect materials from pilferage, theft, fire and other risks.
 To minimize the cost of storage.
 To ensure proper and continuous control over the materials.
 To ensure most effective utilization of available storage space.
 To optimize the efficiency of the personnel engaged in the store.
An efficient store management can ensure that right materials reaches right person in right time
hence avoiding any kind of production delays. It also ensures that materials are stored properly
hence least wastage of materials occurs.

What Is Inventory
Inventory is the accounting of items, component parts and raw materials that a company either
uses in production or sells. As a business leader, you practice inventory management in order to
ensure that you have enough stock on hand and to identify when there’s a shortage.
The verb “inventory” refers to the act of counting or listing items. As an accounting term,
inventory is a current asset and refers to all stock in the various production stages. By keeping
stock, both retailers and manufacturers can continue to sell or build items. Inventory is a major
asset on the balance sheet for most companies, however, too much inventory can become a
practical liability.
Inventory
An organization’s inventory, which is often described as the step between manufacturing and
order fulfillment, is central to all its business operations as it often serves as a primary source of
revenue generation. Although inventory can be described and classified in numerous ways, it’s
ultimately its management that directly affects an organization’s order fulfillment capabilities.
For example, in keeping track of raw materials, safety stock, finished goods or even packing
materials, businesses are collecting crucial data that influences their future purchasing and
fulfillment operations. Understanding purchasing trends and the rates at which items sell
determines how often companies need to restock inventory and which items are prioritized for
re-purchase. Having this information on hand can improve customer relations, cash flow and
profitability while also decreasing the amount of money lost to wasted inventory, stockouts and
re-stocking delays.
13 Types of Inventory
There are four different top-level inventory types: raw materials, work-in-progress (WIP),
merchandise and supplies, and finished goods. These four main categories help businesses
classify and track items that are in stock or that they might need in the future. However, the main
categories can be broken down even further to help companies manage their inventory more
accurately and efficiently.
1. Raw Materials: Raw materials are the materials a company uses to create and finish
products. When the product is completed, the raw materials are typically unrecognizable
from their original form, such as oil used to create shampoo.
2. Components: Components are like raw materials in that they are the materials a
company uses to create and finish products, except that they remain recognizable when
the product is completed, such as a screw.
3. Work In Progress (WIP): WIP inventory refers to items in production and includes raw
materials or components, labor, overhead and even packing materials.
4. Finished Goods: Finished goods are items that are ready to sell.
5. Maintenance, Repair and Operations (MRO) Goods: MRO is inventory — often in
the form of supplies — that supports making a product or the maintenance of a business.
6. Packing and Packaging Materials: There are three types of packing materials. Primary
packing protects the product and makes it usable. Secondary packing is the packaging of
the finished good and can include labels or SKU information. Tertiary packing is bulk
packaging for transport.
7. Safety Stock and Anticipation Stock: Safety stock is the extra inventory a company
buys and stores to cover unexpected events. Safety stock has carrying costs, but it
supports customer satisfaction. Similarly, anticipation stock comprises of raw materials
or finished items that a business purchases based on sales and production trends. If a raw
material’s price is rising or peak sales time is approaching, a business may purchase
safety stock.
8. Decoupling Inventory: Decoupling inventory is the term used for extra items or WIP
kept at each production line station to prevent work stoppages. Whereas all companies
may have safety stock, decoupling inventory is useful if parts of the line work at different
speeds and only applies to companies that manufacture goods.
9. Cycle Inventory: Companies order cycle inventory in lots to get the right amount of
stock for the lowest storage cost.
10. Service Inventory: Service inventory is a management accounting concept that refers to
how much service a business can provide in a given period. A hotel with 10 rooms, for
example, has a service inventory of 70 one-night stays in each week.
11. Transit Inventory: Also known as pipeline inventory, transit inventory is stock that’s
moving between the manufacturer, warehouses and distribution centers. Transit inventory
may take weeks to move between facilities.
12. Theoretical Inventory: Also called book inventory, theoretical inventory is the least
amount of stock a company needs to complete a process without waiting. Theoretical
inventory is used mostly in production and the food industry. It’s measured using the
actual versus theoretical formula.
13. Excess Inventory: Also known as obsolete inventory, excess inventory is unsold or
unused goods or raw materials that a company doesn’t expect to use or sell but must still
pay to store.
 UNIT - III
Quality Control (QC)

Quality control is a procedure with well defined steps implemented and executed by
organizations to make sure that their product or service is governed by certain quality standards,
thresholds, limits and guidelines. This activity enables firms to have a minimum threshold for its
products, processes & services in terms of quality. Quality control ensures its products are high
quality & cost effective, with less wastage, and giving customer a high satisfaction.

If a product doesn't meet a quality standard for a customer, they would not buy it. Also to
differentiate and establish a product in the market, quality is one of the foremost parameter hence
is needed to be controlled.

Importance of Quality Control

Quality control is the ultimate aim of an efficient business. Any product or service which is
produced as to be at a certain quality level which a business strives for.

Customers always seek high value & good quality in the products & services that they pay for.
Thus it becomes critical for companies to deliver high performance goods.

This is why concepts like total quality management are used to ensure high quality finished
goods.

Companies use quality control as a mechanism to have standard operating procedures with
minimum levels of quality. Improvement in processes, reduction in wastage, streamlined
timelines, training of workers etc. all form a part of quality control.

Quality Control Process

The steps to control product & process quality involves:

1. Establish controls
Establishment of specific set of controls to which product and service quality are to conform.
These should be properly defined and documented so that there is no issue in understanding and
implementing them. The development and the quality department should both be aligned with
the controls before the production or development begins.

2. Test and check the Product/service

Checking product or service quality is very important even if the manufacturing was done as per
defined controls. The testing includes testing the product or service as a whole and as modules to
make sure to cover as many scenarios as possible.

3. Analyze Variance
Analyzing variances between set controls and actual quality. Ideally there should not be any
variances but if there are then they should be well analyzed and documented to make sure that
right numbers are there and the extent of quality issues can be assessed.
4. Check and Define Limits
There should be proper checking as to whether the variances are within statistical limits. These
are defined as tolerance levels.

The tolerance can be defined at e.g. 5% or 10%. If the quality variances are within these limits
then the variances are documented but no action is taken.

5. Corrective Decisioning
If the variances are way over the tolerance limits then a corrective action and decision has to be
taken for sure. Either it can be rejecting a batch or sending them back for rework to improve the
overall quality.

The entire process would be repeated to make sure that no product of inferior quality reaches the
customers.

6. Benchmark and Feedback

This includes establishing procedures so that the variances do not arise again. Quality control is
an ongoing process which keeps improving in every development cycle. These quality data and
feedback should all be properly analyzed and looped back in quality control definition step to
ensure that the next time, the quality is even higher within the budgetary limits though.

Quality control attaches immense importance to statistical procedures as it these procedures that
lend quantitative authenticity to statistical controls.

Quality Control Methods

Broadly there are 2 quality control methods in modern business:

1. Automated & Statistical

This method focusses on automating the entire manufacturing process in which there is a
constant monitoring of quality control limits and thresholds against the manufactured products.
Statistical methods and systems are used to evaluate the actual product data with control limits
and a real time view of the quality is created through charts and various methods like x-bar chart,
pareto etc.

These days with robotics coming up in every process, the quality control can be entirely done by
the robotics through machine vision and analysis. The automated quality control systems can
monitor, control and improve the overall development process in real time. This ensure the
highest level of quality.

2. Manual Sampling Driven

In many business, the method of sampling and inspection is used where a random sample is
taken from the inventory of almost finished goods and are manually inspected by the quality
assurance department. If the sample is within the quality control limits then the entire batch is
passed else corrective actions and decisions have to be considered.

Discarding the entire batch can be one of the decisions if the variances are very high.

Difference between Quality Control and Quality Assurance

These both concepts are quite interlinked but there is a difference. They both form part of the
overall quality process and system in an organization. The quality control is more related to the
definition and documentation of certain quality limits and thresholds which can be used for
testing, research, development and overall mindset of the company.

But the quality assurance is the overall execution and inspection of the produced goods and
services against the limits set by the quality control.

Both the quality control and quality assurance complement each other and makes sure that the
company can product highest quality products and services which match the customer
requirements as much as possible.

Statistical Quality Control

1. Statistics: Statistics means data, a good amount of data. Or simply, the collaborative
study of accumulation, analysis, interpretation and presentation of massive volumes of
data.

“Statistics are valuable representations of data that assist in the analysis and decision making
process”.

2. Statistical tools: Applications of statistical methods in order to visualize, interpret and

anticipate outcomes over collected data.
3. Quality “ a characteristic of fitness for purpose at lowest cost” , or “degree of perfection
that suffices the customer requirements”. Quality can be defined as “the entirety of
features and characteristics for products and services satisfying implicit and explicit
demands of customers.
4. Control: An approach of measuring and inspecting a certain phenomenon for a product
or a service, control suggests when to inspect, and how much to inspect. The system
includes feedback to understand the causes for poor quality and necessary corrective
steps. The control system basically determines the quality characteristics of an item,
correlates the same with predefined quality standards and distinguishes between defective
items from non-defectives ones.
5. Quality control: Quality control is one of the most important tools deployed to check the
definite level of quality of products, or services. In todays’ highly competitive business
environment, quality control has evolved as a prominent tool and a critical factor via any
successful industry to ensure standard quality. In 1982, Peters and Waterman recognized
quality as a crucial element in the virtue of excellence.

Therefore, quality control is the employment of appropriate techniques and activities in order to
accomplish, sustain and upgrade the quality of products and services and to satisfy customer’s
needs in terms of price, safety, availability, reliability, usability, etc.

The method employs statistical techniques based on probability theory to establish standards of
quality and uphold it in the most economical manner. (From)

Let’s understand the technique of applying statistical methods for quality control systems.

Statistical Quality Control (SQC)

 Employing a number of statistical methods, SQC validates the quality of premium goods and
services. In 1924, Walter A. Shewhart produced the basic ideas for statistical quality control,
since after the area of SQC has been scattered its foundation with extensive work of researchers,
quality controlled philosophers and statisticians.

Making use of statistical tools and techniques in order to monitor and manage product quality
across various industries including food, pharmaceutical and manufacturing units, the process is
named as Statistical Quality Control. The method can be conducted as

 A part of production process,

 A part of last-minute quality control check
 A part of eventual check by quality control department

“Statistical quality control can be simply defined as an economic & effective system of
maintaining & improving the quality of outputs throughout the whole operating process of
specification, production & inspection based on continuous testing with random samples.” -YA
LUN CHOU

Statistical quality control techniques are extremely important for operating the estimable
variations embedded in almost all manufacturing processes. Such variations arise due to raw
material, consistency of product elements, processing machines, techniques deployed and
packaging applications. Moreover, any of these factors or combination of two can impact the
eventual quality of finished product.

The method incorporates legislation allowing manufacturing units to make sure that the finished
product must contain the net quantity mentioned in packaging. Any overfilled quantity can lead
to financial loss for the manufacturer and therefore must be avoided. Fill control, validating
weight and weight variation are hugely deployed statistical quality control techniques that make
use of weights of individual products in the statistical data analysis.

In case of pharmaceutical goods, such as tablets, pills, capsules, syrups etc, the standard weight
must not be exceeded the upper limit that saves consumers from taking high doses of active
ingredients that might result in severe consequences. At the same time, the weight shouldn’t be
too less, if not the drug might not be effective. In this case, the weight variation based statistical
quality control test is used to ensure the consistency of the dosage unit, and also to support
product identity, reliability and quality.

Another example would be, in the production of food and beverages, it is required to inspect the
weight of packages rendering quick confirmation such that filled quantities fulfil the legal
necessities. Any deviation from standard value signifies errors in the production process,
imprecise ingredient-quantities leading to impactful consequences.

In addition to this, while confirming consumer satisfaction, safety and compliance with
regulations, SQC with weight determination is highly important. Though, it is recommended to
employ actual balances or measuring scales and software suitable for particular applications.
Advantages of Statistical Quality Control

One of the excellent scientific tools, SQC has the following advantages;

1. Cost reduction: In this method, only a fragmentary output is inspected to ensure the
quality of product, therefore probe cost would be reduced greatly.
2. Huge efficiency: Inspection of a fractional portion requires lesser time and tedium in
comparison to holistic investigation leading to huge escalation in efficiency and
production.
3. Easier to use: Pitching SQC not only reduces process variability but also makes the
process of production-in-control. Even, it is much to apply by an individual without
having such extensive specialized guidance.
4. Authentic anticipation: SQC is the most preeminent approach that can accurately
predict future production. To ensure the degree of perfection and product performance,
SQC provides a great predictability.
5. Prior fault detection: Any deviation from standard control limits depicts signs of danger
in the underlying production process that invites necessary corrective measurement to be
taken earlier. SQC is helpful in early detection of faults.

While in holistic inspection, unnecessary fluctuations under quality control process would be
detected in the final stage, but for the time being numerous defective items have already been
produced.

In such conditions, SQC (using chart controls) enables a pictorial view of how the production
process is performing and where curative steps must be accounted for for smooth functioning of
the process. (Source)

SQC vs SPC

Both SQC and SPC support smooth operations in order to escalate efficiencies, desired output
and optimized performance while playing a key role in overall success in operations, but in
different ways. Lets’ understand the difference;

1. SPC: is the procedure of collecting and computing parameters of a process such as speed,
pressure, vernier caliper etc with respect to standard values using various statistical
methods validating values must reside within limits while aiming to minimize variation
and execute to achieve desired/optimum targets.

SQC: is the process of compiling and determining data on the subject of particular
specifications regarding a product and to meet requirements, for example, size, weight,
texture etc. while aiming at validating process outcomes to meet the user requirements or
the next stage of the manufacturing process.

2. SPC is responsible for reduction of variation in processes and run efficiently, in contrast
to this, SQC facilitates manufacturers to accomplish user requirements.

For example, in food and beverage manufacturing there are various numbers of different
products being produced, SPC monitors that operations are executing effectively at their
entirety, SQC controls measurable quality characteristics used during production so that
finished products must live up with customer requirements/expectations.
 WORK STUDY

Work study is defined as a term used to define the techniques of method study and work
measurements which are employed to ensure the best possible use of man and material
resources according to the International Labour Organization.

The work study helps to increase productivity and it is a tool for managing the analytical study
for a job or operation. It is the investigation of the system of work done in an organization to
attain best utilization of resources for improving productivity.

Objectives of Work Study

The main objectives of work study are as follows:

 To improve and bring higher productivity.

 To improve existing methods of work to lower costs.
 To eliminate wasteful resources and to set standards for performance.
 To save time and loss of materials.

Scope of Work Study

Work study is associated with both method study and work measurement; those are closely
linked to each other. The content of the job is reduced by method study whereas establishment of
standard time for job by reducing ineffective time by work measurement. Thus efficient working
operations can result in an increased productivity of the work process.

Advantages of Work Study

Here are a few advantages of Work Study.

 Work study can increase productivity and operational efficiency.

 Work study reduces manufacturing costs.
 Work study improves the layout of workplaces and helps to provide fair wages for
employees.
 Work study provides better working conditions to employees and improves workflow.
 Work study reduces material handling costs and provides a standard of performance to
measure labour efficiency.
 Work study provides better job satisfaction to employees.

Process of Work Study

The steps involved in work study are as follows:

 Select: At first, the job or process to be suited must be selected.

 Record: Everything that happens must be recorded from direct observation and data is
obtained for analysis.
 Examine: The recorded facts are to be examined by considering the purpose of activity,
the place it is performed and the person doing it.
  Develop: By taking into consideration all the circumstances, the most economic method
is developed.
 Measure: The amount of work involved in the method must be measured and a standard
time for doing the work should be calculated.
 Define: The new method and the time required to complete it must be then defined.
 Install: The new method and time which is defined on agreed standard practices can be
installed.
 Maintain: The new standard practices are maintained by proper control procedures.

Techniques of Work Study

Two techniques are basically involved in work study. They are as follows:

 Adopting a sequential order of the correct procedure for effective results of method
study.
 Similarly, adopt a logical order of correct procedure for effective results of work
measurement.

Method Study
Method study is basically a part of work study that is conducted to simplify the work and
working methods for higher productivity. It is defined as a procedure for examining various
activities in a systematic manner. It ensures a critical evaluation of the existing factors and in
addition imaginative approach while developing improvements. The improvement can be
introduced quickly and economically that concerns management and workforce.

Procedure of Method Study

Below is the procedure of Method Study.

 The work to be studied is identified. The relevant facts for the work currently performed
must be identified.
 Record the sequence of activities performed and time required to complete them. This
provides a critical baseline for analysis.
 Review the facts related to work and identify alternative ways to complete the work.
 The most practical and effective alternatives are to be developed by eliminating activities,
merging them, changing the sequence of events or reducing the work to simplify the job.
 At last, install the alternative method and review it periodically.

Work Measurement
Work measurement is the application of techniques for determination of time required to perform
a unit of work for promoting productivity of an organisation. According to the British Standard
Institution, work measurement is defined as the application of techniques designed to establish
the time for a qualified worker to carry out a specified job at a predetermined level of
performance.
Work measurement is useful in comparing the times of performance by alternative methods and
enables the preparation of work schedules. Its main objective is to determine the standard costs
and prepare budgets.

The work measurement can be estimated by four techniques. They are as follows:

 Direct time study

 Synthesis method
 Analytical estimating
 Predetermined motion time system
 Work sampling or ratio delay method.

Procedure of Work Measurement

Procedure of work measurement is as follows.

 At first, divide the jobs into elements.

 The work measurement techniques and each element must be recorded and observed.
 Applying rating factor to set up unit time values by extending observed time into normal
time for each unit.
 Relaxation allowance is evaluated to get the work content.
 The frequency of occurrence of each element in the job is ascertained and then multiplied
by the work content.
 Contingency allowance is added wherever required to get the standard time for
performing the job.

Work Measurement

A Work Measurement Study is a systematic approach to determining a task’s work content and
completion time using industrial engineering techniques.
Work measurement is a way to determine if improvements to a project are genuine. Work
measurement determines how long it will take to accomplish a task systematically.
Work measurement uncovers non-standardization in the workplace as well as non-value-adding
activities. The following reasons explain why work should be measured:
 For Identifying and eliminating wasted or ineffective time.
 To establish a standard time for measuring performance.
 A realistic expectation is to be used to measure performance.
 Goals and objectives are set to ensure a successful operation.
Work Measurement Importance
The purpose of the work measurement method is to cover all the work to be measured.
Work measurement involves estimating the amount of human effort required to produce a unit of
output.
Work measurement refers to measuring the volume of work completed and the time it took to
complete it.
List of Five Reasons Why Work Should Be Measured
Clear and actionable performance measures help clarify and focus on goal setting and objectives
and ensure they are achieved.
Here are five reasons why you should measure your work:
1. Enables your growth and development:
Measurement and management of employee performance are important since they allow
businesses to determine how efficient workers are.
The measurement of work by itself will not enable growth. It can, however, be combined with
continuous feedback to enable employees to self-assess and improve their skills.
2. Ensure alignment of goals and growth of the company
Employee performance measurement can determine those goals by identifying areas where
someone is doing well and could be stretched and areas where they are not yet strong.
3. Better understand your company’s performance.
Your company’s performance can be predicted by knowing how well you perform through work
measurement.
4. Create a fair culture of recognition
Equal treatment of employees is ensured by work measurement. Employees who are good
performers and those who are procrastinators are distinguished, which creates a fair recognition
culture.
5. Identifying and eliminating wasted or ineffective time.
Work measurement eliminates wasted or ineffective time. Measuring work is concerned with
reducing and ultimately removing unproductive time, i.e., a time when no effective work is being
done.
Objectives of Work Measurement
As the name implies, work measurement measures the time a task or series of tasks takes so that
ineffective time can be differentiated from effective.
Objectives of work measurement are given below:
 To standardize efficient methods for completing tasks.
 A realistic schedule and workforce requirements can be prepared by estimating the target
time for each job.
 Analyzing alternative methods to compare performance times.
 Preparation of a realistic schedule of work.
 Identifying unnecessary activities related to a career to reduce or eliminate them.
 Assist in the organization of labor by comparing the actual performance daily.
 A logical comparison can be made when alternative methods are compared based on their
basic times.
 To standardize the efficient process of performing operations.
 Establish supervisory objectives and measure supervisor performance based on those
objectives.
 Work measurement is used in determining machine effectiveness.
Techniques of Work Measurement
Work measurement involves a variety of techniques. Here are 6 lists of work measurement
techniques:
1. Time-Directed Method
The direct time method determines the time needed to carry out a unit of work. To determine
how long each unit of an operation will take, observation and recording of time are required for
each unit of a process.
2. Synthesis Method
Synthesis is a time measurement technique used to build Standard Times using previous time
studies. Thus, conducting a new time study is unnecessary, so it is economical.
It provides reliable information about how long it will take to complete different tasks. Since it is
based on many past time studies, it is reliable.
3. Analytical Estimating
Analytical estimating is a structured estimation method often used in work measurements, which
analyzes a task in terms of its basic components.
It is economical since it uses standard data when calculating each job’s normal time. Also, it
helps in planning and scheduling production activities.
4. Predetermined Motion Type System(PMTS)
Predetermined motion time systems measure how quickly humans can perform certain manual
tasks in a particular environment.
PMTs are frequently used in labor-oriented industries to determine wage rates, piece rates, and
incentive schemes by measuring the time required to complete certain tasks.
5. Sampling or Ratio Delay Methods
The work sampling technique determines the time workers spend in different activity categories.
This technique uses random samples of several employees’ work to determine the overall
operation percentage.
6. Historical Data Method
The historical data method is one of the simplest and most inexpensive ways to measure
workplace productivity.
The use of the historic data method has become one of the standard tools, serving 3 main
purposes:
 The purpose of this study is to determine how past work impacts current work outcomes.
 Modern economic theories can be tested through the use of unique natural experiments.
 It is important to use modern economic theories to refine the understanding of historical
events.
This technique is advantageous because it is easy to understand, easier to estimate, and easier to
implement.
Steps Involved in Work Measurement
Work measurement involves analyzing the size of a task, its method of performance, and
production efficiency.
1. Decompose the job into its components.
2. Measure the elapsed time on the various elements using either time studies, synthesis,
analytical estimation, or other methods.
3. To set up elemental time values, take the observed time and convert it into normal time
using the rating factor.
4. Evaluate the amount of relaxation, physical and mental exhaustion involved in carrying
out each element.
5. Count the time allotted for relaxation when arriving at the work content for each element.
6. Identify the number of times each element occurs in the job, multiply each element’s
work content by its frequency (i.e., how often it appears in the position), and add all the
times together.
7. Contingency allowances should be added if necessary to arrive at the standard time to
complete the work.
Measurement of work helps estimate labor costs. Moreover, it provides information on the
estimation of tenders, the assessment of delivery schedules, and the fixing of selling prices.
Benefits of Work Measurement
Organizations determine whether work programs, investments, and acquisitions achieve their
objectives in work measurement.
A good work measurement system has the following benefits.
 A better understanding of work measurements enables better control over work methods
and processes.
 Evaluate the suitableness of the workforce assigned to an organization.
 A good management system reduces labor costs, increases productivity, and improves
performance appraisal, planning, and scheduling.
  Work measurement enables the development of realistic work schedules through an
accurate assessment of human work compared to plant capacity for production and
maintenance planning.

 Detailed instructions are provided on how to prepare estimated selling prices and delivery
schedules for tenders.
 The effectiveness of work planning can be determined.
 Prevents backlogs of work.
 Streamline work processes.
 Simplifies workforce planning through an analysis of actual and standard time. The cost
and labor requirements of the future can be estimated. The purpose of this is to provide a
framework for estimating and controlling labor costs.

 What is Time Study?


 Time study is an “art of directly observing and measuring the time needed to
perform a specific task.”
 In time study whole task is broken into small activities called elements. Time required to
perform for each element is recorded. This results in estimation of time required to
perform each task.

The purpose of time study is to determine the standard time taken by workman with specified
skills and ability to performance task to know…

 Number of Workers
 Numbers of Machines
 Lead Time
 Overall Production Schedule
 Set Production Goals
 Labor Cost etc.

Type of Time Study Methods / Time Study Techniques :

1. Stopwatch Time Study:

Stopwatch time study is a method of time study that involves the use of a stopwatch to measure
the time taken by a worker to complete a task. Stopwatch time study is useful in situations where
the task or activity being studied is highly repetitive and the environment is stable. It is the cost-
effective way to identify opportunities for improvement and increase efficiency.

However, it may not be appropriate for tasks that are variable or require a lot of judgment and
decision-making.
Benefits / Importance of Time Study Methods:

 Increase Efficiency:

Time study helps in identifying inefficient processes and areas of waste within an
organization. By analyzing the time taken to complete a task, it is possible to identify
areas where the process can be improved or streamlined, leading to increased efficiency
and productivity.

 Better Resource Allocation:

Time study helps in determining the required resources and staff for a given task. This
helps in avoiding overstaffing, reducing labor costs and reducing unnecessary resource
consumption. Effective Resource Allocation can be possible with used of varieties of
Industrial Engineering tools like

1.
1. Man-Machine Chart
2. SWCT (Standard Work Combination Table)
3. Rotation of Resources
4. Line Balancing, etc.

 Improved Planning and Scheduling:

With accurate data from time study, it is possible to create accurate project plans and
schedules, which can improve planning and decision-making in an organization.

 Cost Control:

By identifying areas of waste and inefficiency, time study can help to reduce costs,
optimize resources, and increase profitability.

2. Predetermined Motion Time System (PMTS):

PMTS is based on the principle that every task consists of a series of predetermined basic
motions, each of which takes a certain amount of time to complete.

The PMTS system involves breaking down a task into its individual basic motions and assigning
a predetermined time value to each motion. These time values are based on extensive time and
motion studies and are stored in a database or reference manual.

PMTS is a standardized system that is based on empirical data, which makes it objective and
reliable. It is also easy to learn and apply, which makes it suitable for a wide range of tasks and
industries. PMTS can help organizations to identify inefficiencies, optimize work processes, and
improve productivity.
3. Work Sampling:

This is the statistical technique which is used to determine the time frame that workers spend on
various tasks or activities.

Work sampling is particularly useful when it is difficult or impractical to perform a time study on
every activity or task. It can be used to obtain a representative sample of a worker’s activities
without having to monitor them constantly.

Work sampling is a powerful tool for process improvement and resource allocation. It is used in
a wide range of industries, including manufacturing, healthcare, and service industries.

4. Production Study:

Production study is a method of time and motion study that is used to measure the time taken to
produce a product or complete a project. It involves analyzing the entire production process,
including all the activities and tasks involved, to identify areas of inefficiency and waste.

Production study is an effective tool for process improvement and cost reduction. By recognizing
areas of inefficiency and waste, it can help to optimize production processes and increase
productivity. It can also lead to improved worker safety, job satisfaction, and morale, as workers
are more likely to enjoy their work when it is optimized for efficiency.

UNIT - V
What Is a Project?
A project can be simply defined as an endeavor that involves completing tasks to achieve an
objective with a limited set of resources and a finite timeline. Based on this definition, it’s clear
that most businesses, nonprofits, governments and other types of organizations execute projects
of some sort and therefore, need to implement a project management process.

What Is Project Management?

Project management is a process that allows project managers to plan, execute, track and
complete projects with the help of a project team. To do so, they must use project management
principles, skills, methodologies and tools to lead team members through each of the project
management steps which are known as the project lifecycle.

However, project management can’t be defined in one paragraph. In this guide, we’ll cover the
basic concepts you need to know to understand what project management is, the stages of the
project management process, different types of project management approaches and the tools
you can use for managing projects.

In addition, you’ll need project management software to plan, execute and track projects.
ProjectManager, for example, has the project planning, scheduling and tracking features you
need to manage timelines, resources, costs and teams in one online tool. Use our Gantt charts,
kanban boards, and calendars to create project schedules and assign work with real-time resource
availability. Get started for free today.

Why Is Project Management Important?

In a nutshell, project management is important because it helps organizations control all the
moving parts of projects to bring them to successful completion. These moving parts are known
as project management areas, which are key project aspects that must be overseen as projects
progress.

Project Management Process Or Life Cycle

The project management process consists of five steps or phases that all projects must go
through: initiation, planning, execution, monitoring and control and closure. These project
management phases are also known as process groups, the project management cycle or the
project lifecycle. Let’s review each of these steps.

1. Project Initiation

This is the starting phase where the project manager must prove that the project has value and is
feasible through a series of project management documents. Here are the most important ones:

 Business case: A business case justifies the need for the project, project objectives and return
on investment.
 Feasibility study: A feasibility study proves that the project can be executed within a reasonable
time and cost.
 Project charter: A project charter conveys what the project is going to deliver.

Once the project gets approved, the project manager must assemble a project team and set up a
project management office. The project initiation phase ends with a kickoff meeting, which is
when project goals and scope are defined.

2. Project Planning

The goal of the project planning phase is the creation of the project plan, a comprehensive
project document that explains in great detail how the project will be executed. Here’s a quick
overview of the most important sections of a project plan.

 Project schedule: The project schedule defines a timeline for the execution of tasks and
resource allocation.
 Project budget: A project budget is the sum of all the estimated project costs.
 Scope management plan: Explains how your project scope will be tracked throughout the
project.
 Risk management plan: Explains the risks that might affect the project, along with strategies to
mitigate them.
 Resource management plan: Describes how your resources will be obtained, allocated and
managed during the project.
 Stakeholder management plan: Identifies all project stakeholders and the guidelines to manage
them.
Project managers often lay out their project plan using Gantt chart software, which provides a
visual representation of the entire project schedule and project scope. Some Gantt charts
automatically identify critical path activities.

3. Project Execution

The third project management phase is project execution, which is when the project plan is
executed to meet the project goals and objectives.

The project execution phase is when project managers need to oversee the project management
knowledge areas as their project progresses toward the monitoring and control phase.

Along the way, the project manager will reallocate resources or adjust time and scope as needed
to keep the team working. In addition, they’ll identify and mitigate risks, deal with problems and
incorporate any changes.

4. Project Monitoring and Control

The fourth project management phase, project monitoring and control, takes place concurrently
with the execution phase of the project. It involves monitoring the progress of the project
execution activities to ensure the project team stays on schedule and within budget. Quality
control procedures are applied to guarantee quality assurance.

Reporting is also a critical part of this project management phase. First, it allows project
managers to track progress, and second, it provides data for stakeholders during presentations to
keep them in the loop. There are many project management reports such as project status,
timesheets, workload, allocation and expense reports.

5. Project Closure

The fifth project management phase is project closure, in which the final project deliverables are
presented to the stakeholders. Once approved, resources are released, documentation is
completed and everything is signed off on.

Now that we’ve learned about the project management life cycle, let’s look at some project
management approaches.

Project planning
Project planning refers to the phase in project management in which you determine the actual steps to
complete a project. This includes laying out timelines, establishing the budget, setting milestones,
assessing risks, and solidifying tasks and assigning them to team members.

What are the 5 stages of project planning?

Project planning typically follows a structured approach with 5 key stages:

1. Initiation: Defining the project's purpose and laying the groundwork

2. Planning: Laying out the project's specifics and creating a roadmap for execution

3. Execution: Formally launching the project and clarifying roles and expectations

4. Monitoring: Ensuring the project stays on course and adapts to changes.

5. Closure: Completing the project and reviewing for lessons learned.

Benefits of project planning

Project planning is important because it helps form the steps to complete a project successfully.
Planning helps teams avoid potential problems and roadblocks to ensure the project stays on
track. The benefits of a good project plan include the following:

 Helps ensure projects are completed on time, within budget, and to the required standard
 Facilitates effective communication between all members of a project team
 Helps identify potential risks and issues at an early stage
 Helps you communicate your vision and objectives to your team
 Keeps everyone focused on the goal

Project Screening
Project screening is a process used in project management to evaluate and filter potential projects
based on their feasibility, potential for success, and alignment with the organization's strategic
goals. It is a crucial step in the project selection process, as it helps organizations prioritize their
resources and focus on projects that are most likely to deliver value.

Importance of Project Screening

Project screening is important for several reasons:

 Resource Allocation: It helps in the efficient allocation of resources by prioritizing projects that
are most likely to succeed and provide the highest return on investment.
 Risk Management: It aids in identifying and mitigating potential risks associated with each
project.
 Strategic Alignment: It ensures that the selected projects align with the organization's strategic
objectives.

Project Screening Models

There are several models that can be used to screen project ideas. Here are three examples:

1. Financial Models: These models focus on the financial aspects of the project, such as the
expected return on investment (ROI), net present value (NPV), and payback period. For
example, a project with a high ROI and a short payback period would be considered more
favorable.
2. Scoring Models: These models use a weighted scoring system to evaluate various
aspects of the project, such as its strategic alignment, potential risks, and expected
benefits. Each aspect is assigned a weight based on its importance, and the project with
the highest total score is selected.
 3. Bubble Diagrams: These are graphical models that plot projects on a graph based on two
or three important criteria, such as cost, benefit, and risk. The projects that fall in the
most favorable area of the graph (e.g., high benefit, low cost, low risk) are selected.

Benefits of Using Screening Models

Using project screening models offers several benefits:

 Objective Decision Making: These models provide a systematic and objective way to evaluate
and compare projects, reducing the influence of personal biases and subjective judgments.
 Comprehensive Evaluation: They allow for a comprehensive evaluation of the project,
considering multiple aspects such as financial viability, strategic alignment, and risk.
 Clear Communication: They provide a clear and visual way to communicate the evaluation
results to stakeholders, making it easier to justify the project selection decisions.

In conclusion, project screening is a vital part of project management that helps organizations
select the most valuable and feasible projects to pursue. The use of screening models enhances
the objectivity and comprehensiveness of this process.

Work Breakdown Structure

Work Breakdown Structure (WBS) is the tool that utilizes this technique and is one of the
most important project management documents. It singlehandedly integrates scope, cost and
schedule baselines ensuring that project plans are in alignment.

The Project Management Institute (PMI) Project Management Book of Knowledge (PMBOK)
defines the Work Breakdown Structure as a “deliverable oriented hierarchical decomposition of
the work to be executed by the project team.” There are two types of WBS: 1) Deliverable-Based
and 2) Phase-Based. The most common and preferred approach is the Deliverable-Based
approach. The main difference between the two approaches are the Elements identified in the
first Level of the WBS.

The work breakdown structure provides a common framework for the natural development of the
overall planning and control of a contract and is the basis for dividing work into definable
increments from which the statement of work can be developed and technical, schedule, cost,
and labor hour reporting can be established.[6]

A work breakdown structure permits the summing of subordinate costs for tasks, materials, etc.,
into their successively higher level "parent" tasks, materials, etc. For each element of the work
breakdown structure, a description of the task to be performed is generated. [7] This technique
(sometimes called a system breakdown structure[8]) is used to define and organize the total scope
of a project.

Financial module
The finance module assists with risk management by automating workflows, letting you define
and configure the rules and processes for granting and monitoring user access based on what
each role requires. It also provides audit trails for transactions and helps enhance your broader
financial controls.
The Financial module is to define and manage currency codes, exchange rates, general ledger
accounts and resource codes. You can also track project management costs.

 Currency Codes
You use the Currency Codes application to define and manage currencies. A currency code is a
user-defined value that represents a currency. For example, CND represents the Canadian
dollar.
 Exchange Rates
In the Exchange Rates application, you can create exchange rates and modify existing rates. You
can also configure multiple base currencies to ensure that all appropriate currencies and
exchange rates are in the database. You can also ensure that all affected applications perform
the correct calculations.
 Chart of Accounts
In the Chart of Accounts application, you can set up organization-specific general ledger
accounts and resource codes for standard accounting functions. You create accounts and
resource codes to correspond with accounts that you use in your external accounting system.
You can also set up financial periods, and specify general validation options.
 Cost Management
You use the Cost Management application, with an external project costing system, to track
project costs and manage budgets more effectively. By creating a project in the Cost
Management application and linking work orders to that project in the Work Order Tracking
application, you can generate project cost information to track the financial resources required
to complete the project.
 Budget monitoring
In the Budget Monitoring application, you can create budget records to monitor transactions in
a financial period. Monitoring budget costs can help to ensure that projects or activities, such as
work orders, are completed within an agreed budget and can improve estimation of the costs of
future projects.

UNIT - V
What Is Project Termination? (Types, Reasons And How To)

Some projects might require termination even before they reach the completion stage. During the
project termination process, managing project resources, timelines and team members is beneficial to
ensure a smooth end of a project. If you are a project manager, understanding how to end a project can
help you terminate them properly. In this article, we define what termination of a project is, outline its
reasons and types, explain the different categories, outline the steps to end a project, review who can
do so and list how companies can prevent it.

What Is Project Termination?

Project termination is the end of a project, regardless of whether the project is complete. Typically,
when a project terminates, the resources become unavailable and the senior management might
transfer team members to other projects or the company might end their contracts. Terminating a
project at the right time is beneficial for companies as it can help save time and money.
Reasons To Terminate A Project
Here are a few reasons to terminate a project:

 Lack of funding: Often, a project might end prematurely when the initial estimate of a project is
wrong. A client or senior management might terminate a project when the initial cost exceeds
the funding cost.
 Project length: When projects exceed their initial time frame, it might become costly to
complete them because the team requires additional resources. Ending a project with no
definite deadlines allows a company to transfer or reposition employees in other projects.
 Natural occurrence: Certain unpredictable natural events can be a reason for terminating a
project. Events like earthquakes, floods, tsunamis and hurricanes might prevent project
completion due to damage to the project resources.
 Unrealistic expectations: A client expects companies to exceed their expectations when
completing a project. Terminating such projects can keep the client's expectations more
realistic.
 Failure in the testing process: A project might fail during the testing process. Rather than
spending more energy and resources, project managers might prefer to terminate such projects.

Types Of Project Termination

Here are two ways of terminating a project:

Natural termination of projects

Typically, natural terminations of projects occur when a project reaches its end goals and closes
naturally. For example, a development team might terminate a project after delivering software to the
client. This allows a team to deliver a report, measure the speed and efficiency at which the project
progressed and ensure the team can save project files. When a team successfully completes a project, it
allows them to close all project needs and transfer to another project or take a rest period before
starting another task.

Unnatural termination of projects

The unnatural termination of a project occurs when a project reaches a premature end. Reasons such as
the end of funding and change in investors might force a company to terminate a project. For instance, a
client might end the contract with a software development company and give the contract to another
company that offers greater resources at a lower cost

Categories Of Terminating A Project

Here are four categories of terminating a project:

Termination by extinction
Termination of a project by extinction occurs when the client stops a project because it has a successful
or unsuccessful outcome. Typically, this termination occurs when the client accepts the final project
outcome or when external factors, such as technological advancement or market crises, negatively
affect the project's outcome. Another reason a client might terminate a project is because it failed to
achieve its goals. When terminating these projects, all project activities stop.
Termination by addition
In termination by addition, if the project is successful, it might get terminated by institutionalising it as a
new and formal part of the parent company. This process might result in an added department,
subsidiary, entity and division depending upon the project's importance. When termination by addition
happens, resources such as materials, equipment and employees transfer to the parent company's
newly created entity.

Termination by integration
In termination by integration, the project that a client is terminating either gets integrated into larger
projects or becomes an integral part of the ongoing operations of the client's company. As a result, the
project loses its purpose and identity as an individual project. Typically, senior management distributes
the project resources, such as materials, equipment and employees, among the existing projects of the
client's company.

Termination by starvation
Termination by starvation happens because of budget constraints. Such a project terminates because
the project team fails to accomplish their goals. Typically, project managers might terminate this project
without warning to save cost and embarrassment in front of clients.

How To Terminate A Project?

Terminating a project requires several steps to ensure that project managers notify the right people or
departments. Here are a few steps to follow when terminating a project:

1. Provide notice of the project's termination

Regardless of whether the client or senior management is terminating the project, focus on informing
the project managers and team members. In addition, explain the reason for termination. Excellent
communication helps everyone understand why the project is ending and what the team members and
project managers can expect. Give details about why the team could not deliver the final
[Link]: A Step-By-Step Guide On How To Manage Projects (With Tips)

2. Pause all work on the project

Notifying everyone in the company can help you pause the project's progress. This might mean
transferring resources to other projects, closing some programmes and removing access to certain tools
to prevent any further progress. Putting a pause on all projects' progress helps ensure that the company
faces lower financial losses. For example, when a remote employee receives a notice about the end of a
project, the company can immediately end their contract, which helps in saving time and money.

3. Focus on the project's resources

The next step is accounting for all the project's resources, including any programmes, tools and physical
resources dedicated to the project. Typically, these resources have a financial value and recovering them
can help managers use them in the future. When considering the project's resources, focus on
comparing the used resources with the original estimate to understand how much the team used in the
previous projects and how much remains for the future. This allows the company to create a
termination [Link]: Resource Allocation In Project Management: A Complete Guide
4. Collect project reports and submit relevant documents
The last step in terminating a project includes creating a report that details the project's progress and
termination. Before creating the termination report, collecting as much information as possible might be
beneficial. Though some clients might not require termination reports, creating a detailed document can
help you keep records of each project. Maintaining records of terminated projects can help a company
understand why the project failed and what the company can do to prevent future [Link]:
How To Write A Project Progress Report In 7 Easy Steps

Who Can Terminate A Project?

Only some people in a company can terminate a project. Here are some people who have the motive
and opportunity to end a project:

 Client: A client has the power to end the project. As the client has an interest in obtaining
project deliverables, they might try every possibility to avoid this termination.
 Senior management: The senior management and client might start or accept a project through
a contract. This gives senior management the power to decide whether to terminate the
project.
 Investors: Though investors might only be relevant in some projects, some investors, like
venture capitalists, can decide whether to terminate the project. Often, these investors make
quick termination decisions.

How Can Companies Prevent The Termination Of Projects?

Companies can prevent the termination of projects in the following ways:

 Communicate the project strategy.

 Communicate how and why the project supports this strategy and under what circumstances
the project does not support it.
 Ensure a high level of senior management attention, even for smaller projects.
 Conduct periodic meetings with clients, investors and senior management to discuss the
project's progress.
 Ensure open discussions with the senior management and client about potential problems and
ways to prevent them.
 If ending a project, clear communication and commitment from senior management can help a
team follow the project closure procedures.

What Is a Project Team?

A project team is a cross-functional group of individuals that are working together towards a
common goal. This can include executives, a project manager, team leaders from different
departments and team members. How this project team operates depends on how it’s organized,
which can take the form of different project organizational structures. While the project manager
is a must-have role, there are other important members to consider for your project team.
What Is the Project Team Structure?
Managing all of your team members can be a little overwhelming, but it doesn’t have to be that
way if you use the right organizational structure for your project management team. Once you’ve
built a team, you can use project planning software such as ProjectManager to manage your team
member’s workload, automate workflows and collaborate with team members in real time.

Types of Project Team Structure

There are three main types of project team structures, which mainly differ on the degree of
authority that’s given to the project manager and how teams are configured. Here’s a brief
description of each of these project team structure types.

Project-Based Team Structure

This is the most traditional project team structure that’s used in most projects. In this type of
project team, the project manager is given the most authority over team members and they all
report to him or her. This individual is also in charge of creating a project plan and schedule,
assembling a team, assigning tasks and responsibilities and overseeing the project every step of
the way. For this reason, we characterize this type of structure as “projectized” because the
structure of the team is driven by the demands of the individual project.

Functional Project Team Structure

In a functional project team structure, there are multiple functional managers that oversee their
teams instead of just one project manager. As the name suggests, those teams accomplish
specific functions for an organization, such as marketing, sales or product development.

Below each leader, the next tier is made up of a group of team members. For example, the tier
below a marketing leader might be made of a content writer, an editor, an email manager, etc.
These team members report to their respective leaders, and the leaders report to the project
manager at the top. Having such a structure is important for team management.

Matrix-Based Project Team Structure

A matrix-based organizational team structure is a hybrid between project and functional project
team structures. It’s typically used by larger organizations that execute programs and project
portfolios that require leadership from leaders other than project managers such as executives,
functional managers, program managers and portfolio managers. In this project team structure,
the project manager has less authority and leads a team that reports to other leaders.

Characteristics of Successful Project Teams

7 characteristics of effective teams

Here are some common characteristics of successful teams:
1. Clear leadership
Successful teams usually have effective leadership, where one or several members act as team leaders.
This helps unify the entire team to work toward the same goals. Effective leaders often provide
guidance, motivation and [Link] may offer encouragement when the team encounters a challenge.
A team might decide to rotate its leadership regularly, offering each member the chance to guide the
group's work. Shared leadership can provide a sense of common responsibility and accountability,
possibly improving a team's performance.

2. Defined goals
Before working on their tasks, an effective team may first establish their goals. The team might work
together to identify common objectives that align with a company's organizational [Link] members
may find it easier to commit to a project's goals when they find them meaningful. They can create plans
for how to accomplish these goals, assigning roles and making [Link] teams often
determine how they can measure their success and evaluate the outcomes of a project. This helps team
members understand what they're working toward and know when they've completed a task. A team
might review their goals regularly to determine if they require any adjustments.

3. Assigned roles
When each team member has an assigned role, they can make effective contributions to their group and
help ensure its success. The team leader might designate these roles, or the entire team may work
together to best understand each other's skills and expertise and assign roles [Link] team
might determine specific roles depending on its overall goals. For example, a team may have different
roles if its objective is to launch a marketing campaign, compared to the goal of developing a new
product.A leader might determine the required roles before assembling a team. This allows them to find
team members who fit best with the designated roles. A team's roles might change throughout the
lifetime of a project. Effective teams often reevaluate roles once a leader assembles the group to ensure
each member can fulfill the expectations of their roles.

4. Open communication
A team with open communication allows members to discuss their ideas and feel that their input
matters. Successful teams often welcome diverse thoughts and opinions that help them solve problems
and complete tasks in creative [Link] communication also involves active listening, where
members make a conscious effort to hear their teammates' ideas and reflect before responding to
them. This allows a team to share its knowledge, experiment with new ideas and work together to
develop effective [Link]: Working Well on a Team: Types of Teams and Tips for Finding Team
Success

5. Collaboration
Effective teams rely on collaboration to complete their tasks and accomplish collective goals.
Collaboration involves seeking help when problems arise and sharing suggestions with one
[Link] members may collaborate continuously throughout a project's lifetime to ensure they're
working on the right tasks and contributing to the planned outcomes. Collaborative work helps
encourage innovation through the exchange of ideas and the collective expertise of a team.
6. Trust
Teams that have trust between members often accomplish their goals because they believe in the work
process of a project. Trust contributes to open communication, problem solving and collaboration. A
successful team might rely on team-building exercises to increase trust between its members.

7. Conflict resolution
Successful teams usually have effective methods for resolving any conflicts that may arise. During a
disagreement, members may speak to one another calmly, respect each other's ideas and focus on
finding a [Link] helps them listen to differences in opinion and find resolutions that satisfy
the needs of the entire group. Effective teams often view disputes as a way to improve their decision-
making and problem-solving strategies.

Cross-functional teams and virtual teams are specialized types of teams that organizations may
utilize to leverage diverse skills, expertise, and resources, and address specific challenges or
opportunities. While both types of teams offer unique advantages and challenges, they differ in
their composition, structure, communication, and collaboration dynamics. Here’s a comparison
of cross-functional teams and virtual teams:

Cross-Functional Teams:

1. Composition: Cross-functional teams consist of members from different departments,

functional areas, or disciplines within an organization. These teams bring together
individuals with diverse skills, expertise, and perspectives to collaborate on specific
projects, initiatives, or objectives.
2. Purpose: The primary purpose of cross-functional teams is to integrate knowledge,
resources, and capabilities from various parts of the organization to address complex
challenges, drive innovation, and improve performance. These teams facilitate cross-
departmental collaboration and alignment of strategies, goals, and objectives.
3. Structure: Cross-functional teams may have a designated leader or project manager
responsible for coordinating activities, managing resources, and ensuring collaboration
among team members. The team’s structure and composition may evolve based on the
project’s requirements, stages, and objectives.
4. Communication: Effective communication is essential in cross-functional teams to
ensure alignment, coordination, and collaboration among members from different
departments or functional areas. Clear communication channels, regular updates, and
feedback mechanisms help mitigate misunderstandings, conflicts, and barriers to
collaboration.
5. Challenges: Cross-functional teams may face challenges related to integrating diverse
perspectives, aligning priorities, managing conflicts, and ensuring accountability.
Effective leadership, communication, and collaboration strategies are crucial to
overcoming these challenges and maximizing team performance.

Virtual Teams:

1. Composition: Virtual teams consist of members who are geographically dispersed and
collaborate remotely using digital communication and collaboration tools. These teams
may include individuals from different locations, time zones, and cultural backgrounds,
working together to achieve common goals.
2. Purpose: The primary purpose of virtual teams is to leverage technology and remote
collaboration platforms to access global talent, enhance flexibility, and drive innovation.
 Virtual teams enable organizations to overcome geographical barriers, reduce costs, and
adapt to changing work environments.
3. Structure: Virtual teams often operate without a traditional physical office or face-to-
face interactions. The team’s structure may be decentralized, with members working
independently or in smaller sub-teams, depending on the project’s requirements and
objectives.
4. Communication: Effective communication is critical in virtual teams to ensure clarity,
alignment, and collaboration among geographically dispersed members. Virtual teams
rely on digital communication tools, video conferencing, instant messaging, and
collaborative platforms to facilitate interactions, share information, and coordinate
activities.
5. Challenges: Virtual teams may face challenges related to time zone differences, cultural
diversity, technology limitations, and building trust and rapport among remote members.
Establishing clear communication protocols, fostering a collaborative culture, and
leveraging technology effectively are essential to overcoming these challenges and
maximizing virtual team performance.

cross-functional teams and virtual teams are specialized forms of collaboration that enable
organizations to leverage diverse skills, expertise, and resources to address complex challenges,
drive innovation, and achieve shared goals. While cross-functional teams focus on integrating
knowledge and capabilities from different departments or functional areas, virtual teams
emphasize remote collaboration, flexibility, and leveraging technology to overcome geographical
barriers and access global talent. Effective leadership, communication, and collaboration
strategies are crucial to maximizing the performance and success of both types of teams.

What Is Project Monitoring and Control?

Before we get to the steps to monitor your project, let’s put the concept into context. There are
five phases in the project management process: initiation, planning, execution, monitoring and
controlling and closing. Project monitoring and controlling occur in tandem with the execution
phase in the project life cycle.

Project monitoring and control is a project management phase that’s dedicated to measuring
project performance and making sure that it adheres to what’s been set in the project plan.
Project managers will closely track the progress and performance of the project, review project
status, identify potential problems and implement corrective actions when required to keep the
project on schedule and within budget.

Why Is Project Monitoring and Controlling Important?

Project monitoring and controlling are so important to project management that it’s one of the
five project management processes. As noted, project monitoring goes hand-in-hand with project
execution to ensure that as tasks are being completed they’re staying on schedule and keeping to
the project’s budget.

Besides keeping a project on schedule and avoiding overspending, project monitoring is also a
great way to manage risk and avoid scope creep. By tracking various metrics, a project manager
can identify risk earlier when it shows up in the project as an issue. Earlier detection means
earlier mitigation. The same is true with scope creep. When changes are applied to the project,
control procedures like change requests can help keep them from negatively impacting the
schedule.

Project Monitoring Steps

Once the project manager has scheduled tasks and created a project plan that the project sponsors
approve, it’s time to move on to the project execution phase. As defined above, project
monitoring is done together with the project’s execution in order to make sure the project is
executed as per the schedule and budget. Below are the eight steps to take to ensure that you’re
properly monitoring the project.

1. Create a Project Scope Baseline

A project scope defines the expectations and requirements of the project stakeholders. It’s used
throughout the project to monitor progress. A project scope baseline captures those expectations
and requirements and can be used to measure the planned effort against the actual effort to
ensure that the project execution aligns with the project plan. The scope baseline can be reviewed
and revised during the project, but only through a formal change control process to avoid scope
creep.

2. Make a Project Schedule Baseline

When your schedule has been approved by key stakeholders, save it. That’s called a project
schedule baseline. That can then be used throughout the project like a scope baseline, but in this
case, it’s used to compare your actual progress against your planned process. This allows project
managers to track project variance and take corrective action to get the project back on track. It
also helps with stakeholder communication, as they’re always interested in if the project is on
schedule. A project schedule baseline is another necessary project control.

Estimate Project Costs and Define a Project Budget

The more accurate your project costs, the more accurate your project budget. Once you’ve
submitted a budget and it’s been approved by stakeholders, the last thing you want to do is
request more funds to deliver the project. There are various techniques you can use to accurately
estimate costs and plan your budget accordingly. Now, you’ll want to monitor all project
expenses and use change control systems to track the project costs and respond to any
discrepancies. You can also make a baseline of the budget to use that to compare actual against
planned costs as a way to monitor spending.

4. Use a Risk Log

One of the most important things to look for when monitoring a project is risk. During the
planning phase, you can create a risk log that collects the risks you think might show up in the
project. Then you can note the risk’s potential impact on the project and who’s responsible for
identifying and mitigating it. You can also set priorities to help determine which risks must be
dealt with immediately or if they can wait. While you’re monitoring the project, the risk log will
help you stay alert for issues that are likely to impact the project, whether for good or bad. If an
issue is identified, you can respond quickly and effectively.
What Is Project Evaluation?
Project evaluation is the process of measuring the success of a project, program or portfolio. This
is done by gathering data about the project and using an evaluation method that allows evaluators
to find performance improvement opportunities. Project evaluation is also critical to keep
stakeholders updated on the project status and any changes that might be required to the budget
or schedule.

Every aspect of the project such as costs, scope, risks or return on investment (ROI) is measured
to determine if it’s proceeding as planned. If there are road bumps, this data can inform how
projects can improve. Basically, you’re asking the project a series of questions designed to
discover what is working, what can be improved and whether the project is useful. Tools such as
project dashboards and trackers help in the evaluation process by making key data readily
available.

Project Evaluation Methods

There are three points in a project where evaluation is most needed. While you can evaluate your
project at any time, these are points where you should have the process officially scheduled.

1. Pre-Project Evaluation

In a sense, you’re pre-evaluating your project when you write your project charter to pitch to the
stakeholders. You cannot effectively plan, staff and control a new project if you’ve first not
evaluated it. Pre-project evaluation is the only sure way you can determine the effectiveness of
the project before executing it.

2. Ongoing Project Evaluation

To make sure your project is proceeding as planned and hitting all of the scheduling and budget
milestones you’ve set, it’s crucial that you constantly monitor and report on your work in real-
time. Only by using project metrics can you measure the success of your project and whether or
not you’re meeting the project’s goals and objectives. It’s strongly recommended that you use
project management dashboards and tracking tools for ongoing evaluation.

3. Post-Project Evaluation

Think of this as a postmortem. Post-project evaluation is when you go through the project’s
paperwork, interview the project team and principles and analyze all relevant data so you can
understand what worked and what went wrong. Only by developing this clear picture can you
resolve issues in upcoming projects.

What Are Project Controls?

Project controls are processes that minimize the performance gap between planning and
execution. While project controls often refer specifically to the monitoring and controlling stage
of the project lifecycle, they are important from initiation to closure. Project control specialists
use project controls to mitigate risk and solve problems in order to keep a project on time and
budget.
What Are Project Control Processes?

Project control processes help ensure that performance meets standards. Control processes are
data-driven, efficient, and highly visible. Project managers must first identify a performance
problem, and then determine what caused it and how to fix it.

Instituting project controls involves a four-stage process:

 Establish performance standards to create a baseline.

 Measure performance through data collection.
 Compare performance to the baseline to identify deviations and determine their causes through
data analysis.
 Correct the performance deviation to keep the project on time and on budget.

Project Management Guide

Your one-stop shop for everything project management

Importance of Project Controls

Project controls are vital to a project’s success. They help maintain scope, schedule, cost, and
quality to minimize the waste of resources such as time and money. Project controls help the
team make the best decisions to complete a project successfully.

Project Control Cycle

The project control cycle puts project controls into action. Follow each step and repeat the cycle
in order to anticipate and fix deviations from the plan.

1. Create a baseline plan for project performance and progress.

2. Collect and measure progress data against the baseline.
3. Analyze and compare actual progress and performance to the baseline.
4. Identify and determine the causes of variations in performance from the baseline.
5. Correct the deviation and repeat steps 2 through 5.
Project Control Methods
Project control methods should be precise and data-driven. A project manager needs to
understand the problem, what caused it, and how to fix it to save time and money. Specific
project controls perform particular functions.

 Project Charter: Successful projects begin with an all-encompassing overview, which you can
provide by creating a project charter. A detailed project charter should list the critical
components with precision and clarity.
 Responsible, Accountable, Consulted, Informed (RACI) Matrix: A RACI matrix defines project
team members’ association according to their task assignments. Read our RACI guide to learn
more about each association role and the value of a RACI matrix.
 Work Breakdown Structure (WBS): A WBS begins with a project outcome. Then, the structure
breaks down the outcome into smaller deliverables and identifies the tasks necessary to deliver
them.
 Critical Path Method: The critical path method helps you identify essential tasks of a project in
terms of time. This six-step method divides a project into work tasks and calculates the time it
will take to complete each task.
 Project Milestones: A project milestone is a specific point in the project lifecycle that marks
important dates, such as the start, end, and review, and deliverable due dates. Find the best
milestone template for your project in its working format in order to help your team achieve
those milestones.

Components of Project Controls

Project control components inform project managers and teams to make better decisions and stay
on task. Controlling these components puts an organization’s resources to best use in achieving
project outcomes.

 Scheduling: Project control components begin with a project schedule that lists tasks and
assignments, as well as the time required to complete them. A Gantt chart illustrates tasks and
important dates along a project’s timeline and schedule.
 Costs: A cost management plan optimizes project resources in financial terms, which makes it a
vital project control component. In this component, you estimate costs and anticipate financial
risk in order to keep a project on budget.
 Risk: Project controls identify and mitigate risk for a project. Risk threatens projects and
organizations, so it’s critical to have a risk management plan that identifies risks and predicts
outcomes.
 Performance: Project controls work best during the monitoring performance phase, as they
serve to identify baseline deviations, and then correct them. When you consider the primary
function of project controls, this component immediately comes to mind.
 Communication: Project controls evaluate and report project status throughout the project
lifecycle, so it’s vital to maintain clear and consistent communication with the project manager.
Status reporting keeps the project team on task and provides stakeholders with valuable
information.

How to Create a Project Control Plan

An effective project control plan establishes a baseline for the project controller to follow, and
provides the clarity, consistency, and flexibility needed for successful project execution. Project
controllers follow these steps to create a project control plan:

1. Strategize a Plan with a Specific Project Controls Approach in Mind: Not all projects are alike,
so create controls that are particular to the project. A project change control plan template
documents everything needed in a change request.
2. Create an Editable Project Control Plan: Flexibility and adaptability are essential qualities for
resolving issues and keeping a project on track. You can use a change control template to
identify the change, explain why it is necessary, and estimate the time and money required to
complete it.
3. Customize Task Schedules and Workflows to Ensure the Controls Cover Everything During the
Project Lifecycle: It costs time and money when you miss and fail to fix a problem. A change
control plan identifies the controller requesting the change and catalogs it with an identification
number.
4. List Specific Guidelines for Project Control Duties and Tasks: Controls must be consistent from
project initiation through closure. The control form lists change evaluation, approval, and
execution dates for consistency throughout the project lifecycle.

Download Project Change Report Template

Download Project Change Report Template

Use this customizable template as a guide for creating a project change control document to
detail the what, why, and who of a change request. This template also provides space to add brief
summaries of evaluation, approval, and implementation. Add the impact and work required,
along with approval status and signatures.

See more of our project templates in “The Ultimate Guide to Project Cost Management with
Templates.”

How to Implement Project Controls

You should implement project controls at the project’s start, and they should be in place before
forecasting begins. At this point, performance standards are already in place, so project
controllers and control specialists implement controls when actual performance deviates from the
baseline.

To do so, follow the below steps:

1. Identify the issue.

2. Draft an issue log.
3. Assess the issue’s impact on cost and schedule.
4. Determine how to resolve the issue.
5. Correct the issue by implementing the solution.
6. Monitor the solution to determine its effectiveness.
Project Control Department Functions

Project control departments advise project managers and keep project stakeholders informed to
help them make the best decisions. Control departments operate externally and remotely to
perform the following basic functions:

 Meet and assign control tasks to department members who specialize in them.
 Monitor project performance to identify problems.
 Create solutions to fix the problems and minimize risk.
 Report to and advise the project manager.

Best Practices for Project Controls

Skillfully administered project controls increase the likelihood of project success. Use the
following project control best practices to optimize project team performance and project
outcome:

 Tailor and contextualize project controls to the specific industry, project management style, or
situation to save time and money. There is no one-size-fits-all approach when it comes to
project controls.
 Be proactive. Project controls are more effective sooner than later. Reworking grows
exponentially in terms of time and expense the further along a project is.
 Use key performance indicators (KPIs) to optimize team performance for specific tasks.
Designing or finding the right KPI dashboard makes the difference.
 Implement project controls that promote accountability and empowerment in the project team.

Benefits of Project Controls

Project controls collect and analyze data, and help keep projects on task and schedule. Because
controlled projects achieve their outcomes on time and within budget, project controls have
many benefits, including these noted by two experts:

Elizabeth Harrin, an experienced project manager, author, and mentor, describes the benefits of
project controls: “Project control data is essential for communication, forming the basis of
standard and exception reporting to help stakeholders feel confident that the project team is
performing well. Controls help the team recognize trends that may cause issues and keep the
project moving forward in the right way, meeting agreed-upon commitments.”

Alan Zucker is the founder of Project Management Essentials, LLC and has more than 25 years
of project leadership and management experience. He lists the benefits of project controls at
specific parts of the project lifecycle: “Project controls at the front end of a project promote
sticking to the objectives, avoiding redundancy or conflicting controls. During the lifecycle,
controls identify problems, allowing for course corrections to determine feasibility. Back-end
controls ensure the final project meets expectations, quality standards, and the specific needs of
customers.”

Project controls deliver real-time status reporting for accuracy and transparency, and they boost
confidence in the organization. Controls improve job satisfaction in the project team and provide
benchmarks for future projects.

Virtual project teams

Within many organizations core internal project teams are getting smaller while the reliance on
remote project professionals is increasing. Thanks to digital technology these workers do not
need to be in the same physical location. In fact they can be based anywhere in the world,
working in virtual teams. This brings many benefits, not least an end to the traveling, logistic and
other administrative costs. To be successful, these virtual teams need good communication
channels, such as Slack and Google Hangouts, and good project management software.

“Project management software that helps with task management is totally indispensable to my
role,” says Ali Newton, a remote working project management team leader at digital marketing
firm Exposure Ninja, “I can track the projects I‘m working on and where each of our tasks are at.
Without it, it would be impossible to manage as many successful projects at one time.”

What is a project budget?

A project budget is a plan that details how much you’ll spend, for what, and by when. When you
create a budget plan in advance and use it to monitor spend throughout your project, you can
reduce the likelihood that you’ll run out of resources or go over budget—a common occurrence
in many workplaces. In fact, respondents in a 2021 Project Management Institute survey reported
that in the last 12 months, only 62% of projects in their organization were completed within the
original budget.

Budgeting before you begin your project helps you scope work and control costs. It’s also a good
way to pitch your project to stakeholders and get the funds you need, because a detailed spending
plan helps approvers understand how costs contribute to your objectives. And as your project
progresses, you can use your project budget as a baseline to compare actual spend to budgeted
spend and mitigate extra costs as they arise.

9 steps to create a project budget

Creating a project budget may seem daunting, but you can do it by following a sequence of steps.
We’ve laid out each part of the budgeting process below.

1. Set project objectives

Project objectives are what you plan to achieve by the end of your project. They’re a good place
to start because they help you understand where work is headed, and act as a north star while you
iron out the rest of your project plan.
The best objectives are clearly defined and falsifiable, so you can use them as a benchmark to
measure success once your project is finished. To write clear objectives, use the SMART
methodology. SMART stands for specific, measurable, achievable, realistic, and time-bound. For
example, if you were trying to boost visitors to your website, you might set this objective: “By
the end of this quarter, increase organic traffic to the website homepage by 10%.”

2. Define project scope

Once you’ve set your objectives, you can determine the scope of work you’ll need to achieve
those goals. Your project scope sets boundaries for your project, such as what work you’ll do—
or not do—and what deadlines and deliverables you’re working towards. When defining your
project scope, consider the following:

 Available resources: Before you determine the specific deliverables you want to target,
take stock of the resources available to you. If you’re working with a hard budget cap or
limited project team bandwidth, you may need to adjust your deliverables accordingly.
As such, it’s useful to be aware of any limitations before you dive into the details of
deliverables and required resources (which we’ll get to in later steps).
 Time restrictions: Is there a time crunch for this project, or can you take as long as you
need? A tight project schedule can influence the cost of resources. For example, you may
need to pay freelancers a rush rate if you’re working with a tight deadline.
 Non-goals: What’s outside the project scope? It can be helpful to identify what you’re
not trying to achieve, so you can avoid scope creep and potential overspending.

Remember that your project scope is all about setting boundaries. It helps you understand what
you want to achieve, what type of work you’ll do, and what deliverables you’re working
towards.

3. Break deliverables into sub-dependencies

Next up, list out all the deliverables that fall within your project scope and break them down into
sub-dependencies. For example, imagine that one of your project deliverables is to publish a blog
post. You might break it down into the following line items:

 Draft blog
 Edit blog
 Create design images
 Stage in Wordpress
 Share on social media

This method helps you include any hidden project expenses when you create your budget. For
example, if you just tried to estimate the budget for publishing a blog post as a whole, you’d be
more likely to omit extra costs—such as the hourly rate for a freelance editor, or the price of paid
social posts.

If you prefer diagrams over lists, try creating a work breakdown structure (WBS). This visual
tool breaks down work into multiple levels, starting with your main objective at the top and
branching out into deliverables and sub-dependencies below.
4. List required resources

Now that you’ve laid out all of your deliverables and sub-dependencies, it’s time to list the
resources required for each item. Be as specific as possible, and remember that “resource” can
mean more than just staff or equipment—it may also include indirect costs like training or a
physical space to work in.

To get you started, here are some common project cost categories to consider:

 Team members: Who are you relying on to do the work? Make a note if they’re salaried
in-house staff, or if you need to hire additional hourly contractors.
 Procurement: What do you need to do to acquire external resources? For example, you
may need a team member to research the best products to use, communicate with sales
reps, and purchase a tool.
 Training: Do team members need time or resources to get up to speed? Think of the time
needed for staff to train new employees or courses required to learn new skills.
 Equipment: What tools are required? This can include things like extra computer
monitors, design software, or even internet service.
 Space: Where is your team going to work? For example, consider if you’ll require
meeting rooms or desk space for new team members,
 Research: What data do you need? Think if you’ll rely on information like user research
studies, web analytics, or polling.
 Professional services: Do you need to hire external experts, like legal or marketing
consultants?
 Travel: Does your team need transportation, lodging, or an allowance for on-the-go
meals?

5. Estimate amounts

Ultimately, a budget is an estimate of costs. But while we can’t predict the future, there are a few
methods to help you make the most accurate estimates possible. And you don’t have to stick to
just one—you can use a combination of these approaches, depending on your unique project
circumstances.

Here are a few of the estimation techniques you can use:

Estimate and sum the cost of each individual piece

Often called a bottom-up estimate, this is the best approach if you know exactly what
deliverables and sub-dependencies will comprise your current project. If you’ve created a work
breakdown structure, you’re already set up nicely to use this method.

To cover your bases, you can also compare your cost estimates with another one of these
methods—for example, you could note how the budget was spent for a similar project in the
past.

Work backwards from a fixed amount

In this approach, you start with a fixed budget amount and break it up into deliverables or project
milestones. While working backwards can get a bit hairy—especially if you don’t already know
how much project deliverables might cost—it can be helpful if you need to determine what
objectives you’re able to achieve with a limited budget.

If you need to use this method, try combining it with another one of these options. For example,
once you determine what you’re able to achieve, take a bottom-up approach to ensure you’re not
missing any critical pieces.

Compare budgets from similar projects

Previous projects are a gold mine of historical data, because they’re a real-life record of where
spend stayed on (or off) track. As such, they can help you see costs you might have overlooked,
or how unexpected circumstances might influence spend. If possible, see if you can review
lessons learned from a similar project in the past.

Consider different scenarios

Estimation can be hard for complex projects with a wide range of potential outcomes. For
example, if you’re planning an outdoor event in April, costs may vary depending on the
weather—you might need tents or fans to mitigate unexpected heat, heaters if it’s too cold, or an
indoor venue if it rains.

In this case, it’s useful to estimate spend for each of these scenarios. Depending on your budget
flexibility, you can play it safe and plan for the most expensive scenario. Or, you could calculate
expected spend for the worst, best, and most likely outcome—then take the average of all three.

6. Set aside a contingency fund

Sometimes, the unexpected happens. Tools break, schedules change, and once-in-a-century
pandemics make things a bit harder. Or, you might uncover an unexpected opportunity during
your project—like the chance to purchase a business asset at a reduced cost. Contingency
reserves give your budget extra padding when plans change. The typical recommendation is to
set aside 5-10% of your total budget for contingencies.

Budgeting is a process of estimation, so you should always include a contingency fund. And if
you’ve created a 100% accurate budget and don’t end up needing that extra padding, you can
bolster your company’s bottom line with the leftover funds.

7. Build your budget

At this point you’ve identified all of your project’s deliverables, allocated resources, and
estimated costs. Now, it’s time for the fun part—creating your actual budget document. Here are
some key components to include:

 Line items for each deliverable, sub-deliverable, and required resource—plus the
expected cost of each.
 A timeline of when you’ll need each resource, and when you expect to spend funds.
 The person responsible for each budget component. For example, you might note that
your assistant editor is responsible for tracking freelancer hours and invoices.
  Clear documentation of which part of the company budget you’ll pull from for each line
item. For example, you may use the marketing department budget to create video ads,
and the IT department budget for computer upgrades.
 A total of expenditures for your entire project. If applicable, include individual totals for
each department budget you’ll be using.
 A place to track actual costs vs. budgeted costs once your project kicks off.

Project budgeting tools

Selecting the right project budgeting tool is important, too. Make sure the program you choose
has functionality to automatically total dollar amounts, so you don’t have to manually recalculate
every time you need to adjust a line item. Also, your chosen tool should let you easily share and
update your budget in real time, so you can make sure all team members are working with the
most current version.

There are lots of options to choose from, including basic excel spreadsheets and more robust
project management software. Not surprisingly, we’re partial to Asana because it lets you input
and total line items, build custom fields, assign owners, and easily share information with
teammates. And aside from your actual budget, you can iterate on past workflows, create process
documents, and save project budget templates to ensure you’re not missing any steps.

8. Make a plan to monitor spend

A budget is only good as long as you stick to it. Plan in advance how often you’ll keep tabs on
actual costs vs. budgeted costs, so you can mitigate potential issues before they get too big. You
can also decide up-front what you’ll do if you go over (or under) budget.

The benefit of a tool like Asana is that it lets you share, manage, and track your budget in real
time. For example, Asana’s Universal Reporting feature automatically pulls data from your
projects and displays spend, task status, and completed milestones in one place—so you don’t
have to dig to figure out if you’re on track or not.

9. Get approval from key stakeholders

Now that you have your project budget plan in hand, it’s time to share it with project
stakeholders and ask for sign-off. Thankfully, the detailed plan you’ve made should give
approvers a crystal clear picture of how each individual line item will contribute to your project
objectives.

How to measure project performance

Here are examples of metrics you can use to determine the success of your projects:

1. Calculate how much money you spent

Cost evaluates your project performance from a financial perspective. Compare the original budget you
created before starting the assignment to the funds you consumed when executing your plan. If the
figures are similar, then you may conclude you've accurately estimated the necessary monetary
resources. If the actual spending is lower than your budget, then you can celebrate saving money while
completing your project. Accruing spending that exceeds your estimates may encourage you to
investigate how you committed [Link] can also review your cost management during the
project. For example, if your purchasing habits have already drifted from your budget, then you can
implement strategies to reduce the monetary setback before it escalates. If you discover that your work
has been cost-effective, then you might consider dedicating the leftover funds to new equipment or
recruitment of additional team members. Your organizational leaders may appreciate that you
submitted quality work at little cost, and you can have more financial resources to participate in future
[Link]: 12 Cost Estimating Methods for Project Managers

2. Determine if you met your deadlines

Contemplate if you submitted the assignment by the date and time the client or stakeholder specified.
Meeting the deadlines for a project can show that you and your teamwork productively under pressure.
It can also serve as a testament to the success of your leadership style as a project manager. Consider
establishing milestones to represent your progress. For example, when developing a website, one
milestone can indicate that you've finalized the color scheme for every webpage and another shows
you've built the navigational menu. Delivering a quality project on time can increase client satisfaction.

3. Evaluate the efficiency of your team

Your project performance can reveal the quality of collaboration on your team. Use your success to
acknowledge the strength of the interpersonal connections between you and your colleagues. When
every member of your team welcomes new perspectives and holds one another accountable for their
professional conduct, they can boost their performance as a group. Cohesive teamwork can also
contribute to higher quality products. As you investigate how to enhance your performance, you can
measure the closeness of your team to decide if you want to coordinate training programs or divide new
teams to complete tasks.

4. Identify if you reached your goals

Goal acquisition is another positive indicator of your project's execution. Project managers often design
achievements that reflect the company's business objectives and the team's professional growth.
Examples of common goals include increasing revenue, superseding competitors and boosting brand
awareness. Compare your outcomes to the results you visualized. Your desires coming to fruition can
demonstrate the high performance of your team. If the final product fell short of your ideals, then you
can analyze the circumstances that prevented you from fulfilling your vision. Rewarding your team for
reaching the goals may inspire them to work hard [Link] more: How To Set and Achieve
Goals

5. Gauge your return on investment

The return on investment (ROI) reveals the possibility of your company experiencing financial gain from
the project. Review its performance to ensure your outcomes are profitable, which can enable the
business to make more money. It may be helpful to calculate the ROI of multiple project performances
to determine which strategy was the most beneficial investment decision for the company. Chief officers
may strive to ensure the results of the work assignment exceeded the costs for achieving those results.

6. Assess customer satisfaction

Focus on the reactions of your customers to interpret the triumphs of your work. Increased customer
satisfaction is often a sign that you've met their needs effectively and delivered a quality product that
engages them. Consider monitoring conversations on social media to learn how your supporters feel
about the work you delivered. You can also distribute customer satisfaction surveys, where the
questions can ask respondents to rate the usefulness of the product and the likelihood they'd purchase
from your company again. Positive reactions from consumers may illustrate the effectiveness of your
strategies.

7. Discover the value of the final product

The quality of your submission to the client is a testament to your production as a team. Contemplate if
the outcome of your project matched the components you hoped to design during the production
phase. You can also analyze the impact your contributions had on the growth of the [Link] your
work provided value, then you can acknowledge its success. For instance, your project was to create
comprehensive training materials that orient new warehouse employees to workplace safety. Your
program substantially reduced injuries among your coworkers, an improvement you used to declare
that your work was valuable. Another way to unearth the impact of a project is to assess the gratitude of
your clients and stakeholders. Judge if the assignment was worth the time commitment and monetary
resources it required.