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Project Management, Unit 6

Project Management, Unit 6. Managing Project Time, Cost, and Procurements. Unit Objectives. At the end of this unit the learner will be able to: Define project time management activities Define project cost management activities Define project procurement activities. Unit Outline.

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Project Management, Unit 6

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  1. Project Management, Unit 6 Managing Project Time, Cost, and Procurements Health IT Workforce Curriculum Version 1.0/Fall 2010

  2. Unit Objectives At the end of this unit the learner will be able to: • Define project time management activities • Define project cost management activities • Define project procurement activities Health IT Workforce Curriculum Version 1.0/Fall 2010

  3. Unit Outline This unit consists of the following lesson topics: • Unit Introduction and Overview • Define project activities and develop project schedule • Develop project cost and develop the project budget • Develop a project procurement management plan and evaluate make-or-buy decisions Health IT Workforce Curriculum Version 1.0/Fall 2010

  4. Unit Introduction and Overview Health IT Workforce Curriculum Version 1.0/Fall 2010

  5. Process Group Sequence Time, Cost, Procurement Management Take Place Here PROJECT INITIATION PROJECT PLANNING PROJECT EXECUTION PROJECT CLOSURE MONITOR & CONTROL . PROJECT PLANNING Health IT Workforce Curriculum Version 1.0/Fall 2010

  6. Essential Planning Processes • Collect Requirements Process • Define Scope Process • Create WBS Process • Define Activities Process • Developing Schedule, Determining Budget & Making Procurement Decisions Health IT Workforce Curriculum Version 1.0/Fall 2010

  7. Project Activities by Process Group Health IT Workforce Curriculum Version 1.0/Fall 2010

  8. Collect Requirements Process Health IT Workforce Curriculum Version 1.0/Fall 2010

  9. Define the Scope Process Health IT Workforce Curriculum Version 1.0/Fall 2010

  10. Create the WBS Process Health IT Workforce Curriculum Version 1.0/Fall 2010

  11. Work Breakdown Structure (WBS) PROJECT 1.1 1.2 1.3 1.1.1 1.1.2 1.2.1 1.2.2 1.1.1.1 1.1.1.2 1.1.1.3 Level 1 Level 2 Level 3 WORK PACKAGE LEVEL discrete activities w/definable end results Health IT Workforce Curriculum Version 1.0/Fall 2010

  12. Work Breakdown Structure (WBS) COST ESTIMATING HR PLANNING ACTIVITY DEFINITION & ACTIVITY RESOURCE PLANNING WBS WORK PACKAGE RISK MANAGEMENT PLANNING COMMUNICATION PLANNING QUALITY PLANNING PLAN PURCHASES & ACQUISITION Health IT Workforce Curriculum Version 1.0/Fall 2010

  13. Define Activities Process Health IT Workforce Curriculum Version 1.0/Fall 2010

  14. Developing Schedule, Determining Budget & Making Procurement Decision Health IT Workforce Curriculum Version 1.0/Fall 2010

  15. Schedule and Cost Constraints Early in the project it is important for the project team to work with the key stakeholders to identify project constraints related to scope, time, cost and other (technical, legal, etc). Health IT Workforce Curriculum Version 1.0/Fall 2010

  16. Class Exercise • Ask the students to list project constraints inherent in their organization (2 minutes) • Ask the students to list unique constraints they have encountered on individual projects (2 minutes). Health IT Workforce Curriculum Version 1.0/Fall 2010

  17. Project Constraints PROJECT MANAGER Manages the Project Constraints Health IT Workforce Curriculum Version 1.0/Fall 2010

  18. Triple Constraint: Basic Foundation of Project Management Competing demands on projects: • Scope • Time • Cost Consider all constraints equal unless otherwise stated Cost Time Scope Health IT Workforce Curriculum Version 1.0/Fall 2010

  19. Strategies to Manage Schedule and Cost Constraints Questions to ask: • Importance of each constraint? • Is possible to prioritize the constraints (rank order)? • What is the flexibility of a constraint? • Can the deadline or budget be negotiated? • What is the customers’ risk tolerance? Health IT Workforce Curriculum Version 1.0/Fall 2010

  20. Time Management Process Sequence Health IT Workforce Curriculum Version 1.0/Fall 2010

  21. Time Management Processes and Outputs Health IT Workforce Curriculum Version 1.0/Fall 2010

  22. Developing a Project Schedule • Activities are sequenced (predecessors and successors are determined) • Activity paths are determined • Duration of each path is calculated • Critical path is identified (longest path & determines the soonest the project will complete) Health IT Workforce Curriculum Version 1.0/Fall 2010

  23. Schedule Terminology • Duration • Effort • Project schedule network • Activity relationships • Schedule Health IT Workforce Curriculum Version 1.0/Fall 2010

  24. Activity Duration Estimates The project team can estimate the likely number of work periods required to perform an activity by using any of the following techniques: • Analogous • Expert Judgment • Parametric • Three point estimate • PERT (three point estimate with weighted average) Health IT Workforce Curriculum Version 1.0/Fall 2010

  25. Dependency Determinations The project team must determine the existence of dependencies between activities when preparing a schedule. There are three types of dependencies or relationships between activities. • Mandatory • Discretionary • External Health IT Workforce Curriculum Version 1.0/Fall 2010

  26. Activity Sequencing - Precedence Diagramming Method (PDM) B 5 C 12 D 2 START H 11 FINISH A 8 E 5 F 14 G 17 Health IT Workforce Curriculum Version 1.0/Fall 2010

  27. Student exercise:(5 minutes) Identify other paths thru the above network, calculate the duration of the paths, and then determine which path is the critical path. Health IT Workforce Curriculum Version 1.0/Fall 2010

  28. Duration Compression Techniques • Crashing - involves adding additional resources to perform an activity to compress the schedule, but may result in increased cost to the project • Fast tracking - involves over lapping activities which normally are performed in sequence. Compressing the schedule by performing activities at the same time or in parallel may result in increased project risk and rework. Health IT Workforce Curriculum Version 1.0/Fall 2010

  29. Project Cost Management - Develop Estimates for Project Cost and Budget • The project team aggregates the estimated costs of individual activities or work packages to establish a cost baseline. • A cost management plan is developed by the project team and describes how project costs will be planned, managed and controlled (i.e. cost estimates, cost budgeting, cost baseline, cost variances). • During project execution the project team uses the cost performance baseline to monitor and control project costs. Health IT Workforce Curriculum Version 1.0/Fall 2010

  30. Project Cost Management - Develop Estimates for Project Cost and Budget Project Cost Management Processes which Occur in Project Planning, Execution, and Monitor & Control: • Estimate costs • Determine budget • Control Costs Health IT Workforce Curriculum Version 1.0/Fall 2010

  31. 3 project cost management processes and key outputs Health IT Workforce Curriculum Version 1.0/Fall 2010

  32. Types of Project Costs • Direct cost • Indirect cost • Fixed cost • Variable cost Health IT Workforce Curriculum Version 1.0/Fall 2010

  33. How are Costs Estimated? • Analogous • Parametric • Bottom-up Health IT Workforce Curriculum Version 1.0/Fall 2010

  34. How are Costs Controlled? • Cost management plan • Project performance • Change request Health IT Workforce Curriculum Version 1.0/Fall 2010

  35. Project Procurement Management Processes Project Procurement Management Processes which occur in Project Planning, Execution, Monitor & Control, and Closing: • Plan Procurements • Conduct Procurements • Administer Procurements • Close Procurements Health IT Workforce Curriculum Version 1.0/Fall 2010

  36. Project Procurement Management Processes and Key Outputs Health IT Workforce Curriculum Version 1.0/Fall 2010

  37. Types of Contracts There are three main types of contracts. The type of contract selected may be based on the good or service to be purchased or level of scope of work definition. • Fixed-Price or Lump-Sum Contracts • Cost-Reimbursable Contracts • Time and Material Contracts Health IT Workforce Curriculum Version 1.0/Fall 2010

  38. What are Procurement or Bid Documents? • Invitation for Bid (IFB) • Request for Proposal (RFP) • Request for Quotation (RFQ) Health IT Workforce Curriculum Version 1.0/Fall 2010

  39. Contracting Environments: Centralized & Decentralized Health IT Workforce Curriculum Version 1.0/Fall 2010

  40. Administer Procurements Process & Close Procurements Process Administering the procurement process involves monitoring and controlling the contract performance, managing procurement relationships, and making changes and corrections when required. A procurement audit is performed at the completion of each contract. Contracts must be closed before the project can be closed. Health IT Workforce Curriculum Version 1.0/Fall 2010

  41. Summary • Developing a realistic schedule and budget and accurately making procurement decisions is based on having well defined project scope • The project manager must continually monitor and control the schedule, budget, and procurements to ensure project success. Health IT Workforce Curriculum Version 1.0/Fall 2010

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