Project Management Life For society. Cycle Overview For you. K. - - PDF document

ENGR 281 Engineering Scholars Program

Project Management Life Cycle Overview

• K. F. Reinschmidt
• J. L. Frank / Marathon Ashland

Petroleum LLC Chair in Engineering Project Management kreinschmidt@civil.tamu.edu

Projects exist to add value

• For your client or customer
• For your firm.
• For society.
• For you.

Project managers exist to maximize project value. Three Basic Things You Will Find Useful to Know:

• How your client or customer makes money.
• How your firm makes money by adding value

to your client or customer

• How your project makes money by adding

value to your firm and to your client or customer

Project Life Cycle Overview

Identify an opportunity to provide a product, service, or capital project. Define the project conceptually. Form the initial project development team. Write a business plan for the firm, project, product, or service. Define the project Statement of Work (SOW). Identify the required or estimated completion date. Identify milestones and prepare management- level schedule with decision points.

Project Life Cycle Overview

Estimate project development costs – top-down, parametrically, by analogy, etc. Forecast project benefits (tangible or intangible), revenues, etc. Forecast project operating costs – labor, materials, other variable factors. Develop a financial plan. Forecast cash flows and cash requirements throughout the project life cycle. Identify project risks – business, technological, regulatory, etc.

Project Life Cycle Overview

Assess risks qualitatively; identify potential showstoppers. Identify methods to avoid or mitigate any showstoppers – or terminate the project. Calculate project Internal Rate of Return or other measures of success. Repeat above steps until the project is economically feasible – or terminate it. Identify off-ramps – how to exit the project.

Project Life Cycle Overview

Identify sources of project funding – clients, personal equity, corporate, banks, venture capitalists, etc. Obtain funding – or revise the project and the financial plan as necessary. Form an Integrated Project Team for project execution. Set up timely accounting and reporting methods to report costs and progress (earned value).

Project Life Cycle Overview

Update and refine the SOW. Determine level of engineering, design, and other resources needed. Revise the conceptual cost estimate. Set cost and schedule contingencies (management reserves) based on risks. Develop a sense of common purpose in the project team

Project Life Cycle Overview

Assemble the engineering – design team. Define the Work Breakdown Structure (WBS) and WBS Dictionary. Institute a change control (configuration management) process. Prepare the project network schedules. Determine the project critical path or paths. Assess remaining risks quantitatively and identify major risks or common causes (Pareto chart).

Project Life Cycle Overview

Identify risk mitigation and risk management

• actions. Prepare the project Risk Management

Plan. Determine the project organizational structure (fully projectized, functional, matrix, etc.) Prepare the Project Execution Plan. Identify available resources and resource constraints. Set up the project Quality Assurance Program and issue the Quality Assurance Plan (QAP). Establish metrics for quality control (Six Sigma).

Project Life Cycle Overview

Perform preliminary engineering design and bottom-up engineering estimate based on WBS. Integrate the WBS cost estimate with the network schedules (resource load the networks). Forecast the Budgeted Cost of Work Scheduled (BCWS) for the project duration. Obtain quotes or bids from vendors, suppliers, and subcontractors. Perform make or buy calculations. Identify delivery dates for significant equipment. File for and obtain any necessary permits.

Project Life Cycle Overview

Pass periodic management decision points based

• n updated costs, benefits, and financials.

Assure that all project participants communicate. Establish approved Budget at Completion (BAC) (plus management reserve or contingency). Manage by walking around. Review vendor drawings and specifications. Assure that all supplier and subcontractor networks interface to master project network. Revise networks to meet cash flow, equipment delivery, and other resource constraints.

Project Life Cycle Overview

Monthly or weekly during project life cycle: Recompute critical path and floats. Follow up if there are negative floats. Determine earned value and Budgeted Cost of Work Performed (BCWP), Schedule Variance (SV) or Schedule Performance Index. Follow up if SV < 0 or SPI < 1. Determine accrued costs and Actual Cost of Work Performed (ACWP), Cost Variance (CV) or Cost Performance Index (CPI). Follow up if CV < 0 or CPI < 1.

Project Life Cycle Overview

Monthly or weekly during project life cycle: Forecast Estimated Cost at Completion (ECAC). Follow up if ECAC > BAC + management reserve. Conduct weekly or monthly project review meetings with the integrated project team (IPT), client, vendors, and subcontractors. Daily during project life cycle: Assure that all project members are communicating.

Project Life Cycle Overview

Perform detailed engineering design and revise engineering cost estimates. Prepare bid packages for subcontractors and suppliers. Review bids and select vendors. Expedite vendors as required to meet the schedule. Disperse funds (accounts payable). Prepare startup plan and turnover schedule.

Project Life Cycle Overview

Prepare punch lists. Start up facility and turn over to users/operators. Complete project cost accounts. Prepare as-built drawings and documents for turnover. Conduct post mortem on lessons learned. Collect final payment. Close out project. Celebrate. Start new project.

Project Life Cycle Overview

• K. F. Reinschmidt

Any questions ?