Name S.

AMEER ABBAS

Roll No. 520955311

Course MBA-Semester-3
Project Planning &
Subject
Scheduling
Subject Code PM 0002-Set-1
1. Distinguish between value engineering & value analysis. Briefly
explain the techniques used in value management?

Value engineering (VE) is a systematic method to improve the

"value" of goods or products and services by using an examination of
function. Value, as defined, is the ratio of function to cost. Value can
therefore be increased by either improving the function or reducing the cost.
It is a primary tenet of value engineering that basic functions be preserved
and not be reduced as a consequence of pursuing value improvements.

VE follows a structured thought process that is based exclusively on

"function", i.e. what something "does" not what it is. For example a screw
driver that is being used to stir a can of paint has a "function" of mixing the
contents of a paint can and not the original connotation of securing a screw
into a screw-hole. In value engineering "functions" are always described in a
two word abridgment of an active verb and measurable noun (what is being
done - the verb - and what it is being done to - the noun) and to do so in the
most non-prescriptive way possible. In the screw driver and can of paint
example, the most basic function would be "blend liquid" which is less
prescriptive than "stir paint" which can be seen to limit the action (by
stirring) and to limit the application (only considers paint.) This is the basis of
what value engineering refers to as "function analysis".

Value analysis is an approach to improving the value of a product or process

by understanding its constituent components and their associated costs. It
then seeks to find improvements to the components by either reducing their
cost or increasing the value of the functions.

How Does It Work?

To understand value analysis it is necessary to understand some key
concepts:
• Value: the ratio between a function for customer satisfaction and the cost
of that function.
• Function: the effect produced by a product or by one of its elements, in
order to satisfy customer needs.
• Value analysis: methodology to increase the value of an object – the
object to be analyzed could be an existing or a new product or process, and
it is usually accomplished by a team following a work plan.
• Need: something that is necessary or desired by the customer.

Value Management uses a unique combination of concepts and methods to

create sustainable value for both organisations and their stakeholders.

Some tools and techniques are specific to Value Management and others
are generic tools that many organisations and individuals use. Detailed below
is a summary of some of the main tools and techniques.

Value = Function or objective / cost

i.e getting what you require/ for what you will pay

Tool Description Benefits

Brainstorming of Idea generation that Allows a large volume to be
Mind Showering focuses on creation generated a short period of time.
of ideas by volume Also strives to ensure all parties
(no judging) are involved – no ideas are
discounted initially (later
evaluation and filtering
undertaken)
Cost Benefit Used to analyze the Often used in VM on procedure or
Analysis costs of process type projects. Can be
implementing combined with other tools e.g.
something process mapping, option
compared to the selection.
 benefits to be
achieved. Assists
business case
submissions.
Criteria Weighting A tool used to assist Enables option selection and
Technique in option selection. alternatives to be reviewed in
Uses functional order to support decisions being
drivers (or made.
objectives) that are
weighted for scoring
options against.
Excursion/Metaphors A tool used to take Very effective in bringing
delegated on an creativity to the forefront. Often
outward and return used as a precursor to
journey (possible brainstorming or other idea
excursion). Moves generation tells.
delegated away
from a problem to
somewhere where
creativity flourishes.
The return journey
often releases such
creativity and ideas
that would no
normally be evident
Function Analysis Identification of Determines what functions are
System Technique functions (at the delivered i.e. what they do or
(fast) heart of Value must do, not what they are
Management ) of (avoiding solution mode). The
products, processes, FAST diagram works by asking
projects or services. how the functions (primary and
Focused on client secondary) relate to each other
needs and wants. by ask How and Why questions o
 check the logic works. Later costs
are added to functions to assist
in indentifying any VM
mismatches or areas of over –
engineering
Objectives Hierarchy Diagrammatic Assists in focusing input where
process for the key objectives are as the
indentifying diagram is constructed is
objectives in a descending order.
hierarchical manner.
Often used in
conjunction with
functions.
Issues Generations A way of eliciting Voting of the top 10 important
and Analysis many issues issues follows. Actions to address
connected with a issued then explored.
problem or
opportunity. Team
members write
down their issues on
post-it notes and
they are displayed
on the wall under
appropriate
categories or
groupings .e.g.
Requirements,
Constraints,
Problems,
Opportunities,
Assumptions,
Uncertainties, Risks
Pair Wise Enables ranking of Enables option selection and
Comparison items by means of alternatives to be reviewed in
comparisons order to support decisions being
between all possible made.
pairs of items.
Pareto Analysis Often called the Focuses on those items or
20/80 rule. Aim to activities that can achieve the
concentrate on the optimum.
top 20% of items
that often have
biggest (often 80%)
impact.
Process Mapping Uses flow charts to Identifies processes in a
review steps in diagrammatic format is a step by
processes step manner. Often used in
manufacturing of system type
processes. Used to identify
omissions or superfluous items in
the process for corrections.
Risk Analysis A structured Often used in parallel with Value
approach to Management as there are
indentify risks that genuine links. Assists decision
could affect project, making or option selections.
product, process or
service success.
Risks are identified,
evaluated (in terms
of cost, time, other
impact) and robust
action planning
applied.
Stakeholder Analysis Indentifies those Can assist in focusing attention
key stakeholders where the priorities are required
(group of i.e. satisfaction of key
 individuals) with an stakeholder interests.
influence or interest
in project, product,
process or service.
SWOT Analysis Indentifies Assists in understanding
strengths, strengths, weaknesses,
weakness, opportunities and threats that
opportunities and can impact on an organization ,
threats. A tool used individual, product or process
in many
organization to
assist in focusing
activities where
required and
minimize those
items that can
impact negatively.
Value Analysis Structured team Optimization and maximization or
based approach to value to the client or customer.
indentifying Optimum balance between
functional function and cost without
requirements of detriment to quality
projects, products,
processes or
services.
5W’s and H A technique for Who- e.g. is responsible?
exploring problems Why – e.g. is the end date
which provokes important?
further depth of What – e.g. what would happen if
questioning about the scheme were delayed?
the dimensions When – e.g. must the work start?
framing the Where – e.g. might the problem
problems or occur?
 opportunity How – e.g. might we do this
seemingly impossible thing?
SCAMPER Used as checklist to This could help with moving an
develop ideas by idea from a creative thought to a
applying separate more practical use, expand on
verbs to chosen the concept behind ideas, find
ideas singly or different ways of expressing the
together with idea, provoked new ideas, etc.
others. E.g.
combine, amend,
modify, put to other
use, expand,
reverse /reduce.

Value Management is a structured team based approach to identify functional

requirements of projects/contracts to achieve Optimum Function for
Minimum Cost

2. What is meant by project viability? How do you assess financial

viability of a project?

Project viability

The rationale for the project is set out in the business case which will be
expressed in terms of a set of benefits which contribute towards strategic
goal(s). The project framework and planning should be written to ensure that
achievement of those benefits is maximised.

Many things can affect project viability

1. Cost overruns. If the project is based on a rate of return on capital

invested, then an increase in project costs can eliminate this
 2. Time overruns. Some projects have to be delivered within a certain
time frame to deliver benefits. Extending time may completely
eliminate the benefits.
3. Changes to specifications and scope. As projects progress changes to
the plan or even the scope will inevitably be requested. These need to
be carefully assessed against the continued ability to deliver the
benefits

4. Quality problems. It may become clear during the project life cycle
that the original quality expectations cannot be met. This can have an
impact on the acceptability and hence the usability of the project's
outputs by the end user. Changes to quality must be assessed against
the benefits.

5. Change in the business environment. Sometimes organisations have to

take a different strategic path, making the need for the project
obsolete. There is little point carrying on committing resources to a
project for which there is no longer a need.

Assessing Financial Viability of the Project

Certain tools help us assess the financial viability of any project where
investment is contemplated. We will discuss some tools in brief.
Tools that determine the adequacy of the surplus:

RETURN ON INVESTMENT (ROI)

As we know, a project collects funds from two sources for long-term
investment.
The amount collected is used to create assets and operation, which
generates surplus for the enterprise. Surplus is required to be distributed to
the contributors of the funds. Interest is the compensation given to
contributors of borrowed capital, and net profit and depreciation are given to
contributors of own capital. Why should one add depreciation here? Though
depreciation reduces profit, it is a non-cash provision made to recover the
original investment. Thus, the cash profit of the enterprise is increased to
the extent of depreciation.

Acceptance Rule
For the investment to be financially viable, the RoI should be greater than
the cost of investment.
DEBT SERVICE COVERAGE RATIO (DSCR)
Running an enterprise with financial support from banks/financial institutions,
requires their loans to be repaid with interest. Therefore, an entrepreneur
must generate surplus, adequate to meet repayment obligations

Acceptance Rule
A project is considered financially viable if the cumulative DSCR during
repayment period is at least 2:1

BREAK-EVEN POINT (BEP)

This is another important tool. The break-even point is the level of activity
where the total contribution is equal to the total fixed cost. Contribution is
the excess of sales over variable cost,

DEBT-EQUITY RATIO
This ratio indicates the extent to which the promoter’s funds are leveraged to
procure loans. The formula of DER is:

Contribution = Sales – Variable Cost

A higher debt equity ratio indicates more risk due to a higher fixed cost of
interest. The BEP of such enterprises will go up.

3.Explain work breakdown structure of a construction activity with

example:
 A work breakdown structure (WBS) in project management and
systems engineering, is a tool used to define and group a project's discrete
work elements (or tasks) in a way that helps organize and define the total
work scope of the project

A work breakdown structure element may be a product, data, a service, or

any combination. A WBS also provides the necessary framework for detailed
cost estimating and control along with providing guidance for schedule
development and control. Additionally the WBS is a dynamic tool and can be
revised and updated as needed by the project manager.

The Work Breakdown Structure is a tree structure, which shows a subdivision

of effort required to achieve an objective; for example a program, project,
and contract. In a project or contract, the WBS is developed by starting with

• the end objective and

• successively subdividing it into manageable components
• in terms of size, duration, and responsibility (e.g., systems,
subsystems, components, tasks, subtasks, and work packages)
• which include all steps necessary to achieve the objective

Application of Work Breakdown Structure

Work is effort performed by people to transform or create products, to solve
identified problems or to satisfy specific needs. Just as the Implementing Agency
hierarchically structures the people who perform work, so the work breakdown
structure hierarchically structures the products/ deliverables to be produced.

In order to use the work breakdown structure as a framework for structuring the
technical objectives of a project –in addition to its use as a management tool for
cost and schedule control- it is important that the work breakdown structure be
product–oriented. Its elements should represent identifiable work products whether
they are goods, equipment, software, data, infrastructure elements or service
products.
Sample WBS of a construction project:
 Name S.AMEER ABBAS

Roll No. 520955311

Course MBA-Semester-3
Project Planning &
Subject
Scheduling
Subject Code PM 0002-Set-2

1. What is meant by Project Scheduling? Explain the steps involved in

Scheduling of a project.
 In project management, a schedule consists of a list of a project's
terminal elements with intended start and finish dates. Terminal elements
are the lowest element in a schedule, which is not further subdivided. Those
items are often estimated in terms of resource requirements, budget and
duration, linked by dependencies and scheduled.

Before a project schedule can be created, a project manager should

typically have a work breakdown structure (WBS), an effort estimate for each
task, and a resource list with availability for each resource. If these are not
yet available, it may be possible to create something that looks like a
schedule, but it will essentially be a work of fiction. They can be created
using a consensus-driven estimation method like Wideband Delphi. The
reason for this is that a schedule itself is an estimate: each date in the
schedule is estimated, and if those dates do not have the buy-in of the
people who are going to do the work, the schedule will be inaccurate.

In many industries, such as engineering and construction, the

development and maintenance of the project schedule is the responsibility of
a full time scheduler or team of schedulers, depending on the size of the
project. And though the techniques of scheduling are well developed, they
are inconsistently applied throughout industry. Standardization and
promotion of scheduling best practices are being pursued by the Association
for the Advancement of Cost Engineering (AACE), the Project Management
Institute (PMI). In some large corporations, scheduling, as well as cost,
estimating, and risk management are organized under the department of
project controls.

Many project scheduling software products exist which can do much of

the tedious work of calculating the schedule automatically, and plenty of
books and tutorials dedicated to teaching people how to use them. However,
before a project manager can use these tools, he or she should understand
the concepts behind the WBS, dependencies, resource allocation, critical
paths, Gantt charts and earned value. These are the real keys to planning a
successful project.

In order for a project schedule to be healthy, the following criteria must be

met:

• The schedule must be constantly (weekly works best) updated.

• The EAC value must be equal to the baseline value.
• The remaining effort must be appropriately distributed among team
members, taking into consideration vacations.

Steps in a a Basic Project Schedule

Whether you are leading a church picnic committee or a $500 thousand

project, a basic project schedule is a must for effective leadership. For
professional project managers, this may be second nature, but for the new
project manager or for someone thrust into leadership for the first time,
there are four basic steps to creating a project schedule that will help you to
achieve your objectives.

1. Define the Tasks

Either by yourself or with the people on your project team, come up with a
list of tasks that will need to be performed. Be thorough. You want to make
sure each task is captured in your schedule. In general, if a task takes more
than one week, it should probably be divided into subtasks.

List all of your tasks in one vertical column, leaving space to the right for
other information. You may want to try to sort the tasks chronologically, but
this is not necessary in your first pass. There will be time to sort them later
to better reflect the progression of the project.

For large projects, it may be easiest to divide the tasks into three to five
high-level phases. For example, in managing a software development
project, you might divide the tasks into: Design, Development, Testing, and
Deployment. Using categories like these will help you to think through each
phase to make sure you are not missing tasks.

2. Relate Dependencies

With your tasks listed in one column, identify tasks that cannot be completed
until a previous task is completed. This is called a dependency. The task
depends upon the completion of one or more previous tasks.

You can represent dependencies simply with lines that interconnect the tasks
you have listed. For larger projects, lines may become too confusing. In this
case, consider numbering each task. If a task is dependent upon another
task, list the number of the tasks on which it depends to the right of the
task.

With your dependencies defined, you can order the tasks in your list so that
they more closely follow the dependencies. For example, if task B is
dependent on task A, put task A before task B in your list. This is not always
possible, since task may have complex interrelationships that are not easily
defined in a linear, sequential list. Just make it close enough to be
understandable.

3. Assign Owners

With the tasks and dependencies identified, it is very important that task
owners be defined. You may want to write the name of the task owner to the
right of the task and dependency information. Be specific. Assigning a task to
a group often means the task will not be completed. If a group needs to
complete a task, ask one person from the group to be accountable to the
project team for the task.

If any of the task owners do not participate in creating the schedule, make
sure you check with them first on their availability and willingness to own the
task. Putting their names on the project plan will not automatically get it
done. Collaborate, communicate, and follow up with each task owner to
make sure he or she understands what it means to complete the task.

4. Estimate Effort/Duration

With the tasks assigned, ask the owners to provide an estimate. Having the
owner estimate the work will provide greater accuracy and will help the task
owner to think through and own the task more completely than if you decide
on an effort or duration.

What type of estimate should be provided, effort or duration? This is a great

question.

If you are working with a predefined budget of hours or dollars, effort will be
more important, since it allows the person to be spread across multiple
projects, but only charge your project for the amount of time spent on it.
Effort helps you with hours spent on the project, but not necessarily with
meeting deadlines.

If you are working with more of a date driven schedule, duration will be more
important, since this allows task owners to commit to dates, knowing what
other commitments they have. In other words, durations are based on the
deadlines, not the amount of hours spent.

This is an important distinction. Make sure whichever you choose to use, that
you are consistent for all tasks in your schedule. If you mix them together,
you will not be sure of what you are committing to.

Note: For experienced project managers using software like Microsoft Project,
it is easy to combine effort and duration by allocating a percentage of a
persons time to a defined duration. For example, you can define that a task
will take five days to complete with Sam allocated at 20%. This means that
Sam will meet his deadline by completing the work in five days, but he will
not spend forty hours to complete it. Instead, he will spend 20% of 40 hours,
or 8 hours. This is important if Sam is responsible for work outside of your
project.

2. Distinguish between PERT & CPM. Explain their uses in Project

Scheduling

Project management will always be a challenging job; however, tools

exist to help manage and organize tasks. Two of these tools are PERT and
CPM. In 1957, the Critical Path Method (CPM) was developed as a project
management model. The model uses a fixed time limit to keep track of every
activity. The Program Evaluation and Review Technique (PERT) is a project
management model that allows variable time limits, which is more realistic.
It was introduced by the U.S. Navy's Polaris project in the late 1950s.

PERT is a method to analyze the involved tasks in completing a given project,

especially the time needed to complete each task, and identifying the
minimum time needed to complete the total project.

PERT was developed primarily to simplify the planning and scheduling of

large and complex projects. It was developed by Bill Pocock of Booz Allen
Hamilton and Gordon Perhson of the U.S. Navy Special Projects Office in
1957 to support the U.S. Navy's Polaris nuclear submarine project. It was
able to incorporate uncertainty by making it possible to schedule a project
while not knowing precisely the details and durations of all the activities. It is
more of an event-oriented technique rather than start- and completion-
oriented, and is used more in projects where time, rather than cost, is the
major factor. It is applied to very large-scale, one-time, complex, non-
routine infrastructure and Research and Development projects.

This project model was the first of its kind, a revival for scientific
management, founded by Frederick Taylor (Taylorism) and later refined by
Henry Ford (Fordism). DuPont corporation's critical path method was
invented at roughly the same time as PERT.
The essential technique for using CPM is to construct a model of the project
that includes the following:

1. A list of all activities required to complete the project (typically

categorized within a work breakdown structure),

2. The time (duration) that each activity will take to completion, and
3. The dependencies between the activities

Using these values, CPM calculates the longest path of planned activities to
the end of the project, and the earliest and latest that each activity can start
and finish without making the project longer. This process determines which
activities are "critical" (i.e., on the longest path) and which have "total float"
(i.e., can be delayed without making the project longer). In project
management, a critical path is the sequence of project network activities
which add up to the longest overall duration. This determines the shortest
time possible to complete the project. Any delay of an activity on the critical
path directly impacts the planned project completion date (i.e. there is no
float on the critical path). A project can have several, parallel, near critical
paths. An additional parallel path through the network with the total
durations shorter than the critical path is called a sub-critical or non-critical
path.

These results allow managers to prioritize activities for the effective

management of project completion, and to shorten the planned critical path
of a project by pruning critical path activities, by "fast tracking" (i.e.,
performing more activities in parallel), and/or by "crashing the critical
path" (i.e., shortening the durations of critical path activities by adding
resources).

3. What is Project Review? What are the contents of project review

report?
 These activities have many names: Project Reviews, Debreifs,
Retrospectives, Post Project Reviews, Mid Project Reviews, Project Audits,
Lessons Learned.
Most often called Postmortems on software projects, Project Reviews are
examinations of projects or events for the purposes of:

• Reviewing the events that occurred.

• Evaluating not only what happened, but also why those events
happened.
• Determining the correct actions to take to improve the results of the
next event or project.

Project Reviews can occur at any time during a project and can be used to
evaluate the success of both events and projects.

Project review

• Put into place a set of documented, well-understood procedures and

guidelines that are available to all participants prior to the event.
• Make clear to all participants that the process will be positive and
blame-free.
• Provide an environment that fosters openness and candor.
• Ensure that lessons learned from Project Reviews are shared widely
and have a positive effect on future projects.
• Provide an appropriate balance between the cost of Project Reviews
(precious people time) and the return on investment to the team and
organization. This includes the benefit of getting closure, as well as
insight into root causes and their effects, and actions taken - real
changes in behavior on the part of the organization.
• Provide a flexible set of tools and methods that will allow project
teams of all sizes and complexity to analyze significant project events
and synthesize the findings into a plan of action for remediation.
 • Provide a link from lessons learned to solutions implemented on future
projects.

Contents of a project review: