8. Project Management Performance and Close Out ......................................... 106-117
8.6 Project Close Out
Therefore a lesson that can be learned from above is that the turnkey contract may lead the owner to a state of helplessness putting all his plans hayway. Having put all the eggs in one basket the owner is left with no opportunity to remedy things at a later date. Improper slection of the contractor may lead him to a path of endless troubles. For the selection of a turnkey contractor the schedule or cost quoted is of secondary importance. Instead turnkey contractor must have an excellent track record in management of projects and integrity, which is above reproach.
• Correspondence
• Meeting notes
• Status report
• Contract file
• Technical documents
• Files, program, notes etc.
The hard copy of the records should be stored. The other administrative closure process is the reassignment and reallocation of agency personnel and equipment that have been used during the project.
8.6.2 Financial Closure
Financial closure is the process of completing all financial and budgetary aspects of the project being completed. It is of two types
• External financial closure
• Internal financial closure.
(i) Project account closure
It is an internal process that formalizes the termination of a project for the staff with in the agency. The dates set during planning stage must be met, otherwise the project may run for indefinite period of time allowing personnel to apply resources and labour against it. Project by definition have limited budgeted life spans, so it is necessary to terminate them at some point.
The project completion date for a project is the date that all project related activities needed to produce a product should be completed. Any further work done on the product beyond this date should be considered on operations and maintenance cost.
Most project have account numbers associated with them that allow the financial departments to track labour hours and resource procurement. These numbers should be decoded in a formal manner to avoid their abuse.
The staff members must be informed well in time about the closure of the project for the following reasons:
• The staff employed will know in advance beyond which they can not change their time and resources.
• Management will be able to plan their resources and to use them in a new venture.
• Setting a date provides a sense of responsibility and urgency to resolve issues and complete the job in time.
(ii) Processes of contract closure
It is the process of terminating contract that outside organizations or business have with the agency as pert of the being performed. These contracts may be in the form of vehicle, technical support, or any other services. This can be discontinued for various reasons, including contract completion early termination or failure to perform. It is a simple process, but due care should be exercised to elevate legal complicacies.
In order to close a contract it is important to collect all the pertinent documentation for review, which will include all original contract and supporting documents such as schedules contract changes and performance reports. These should be reviewed thoroughly to ensure that there are no unrealized contract issues that could open up legal liability.
In order to close a contract formally, a written document must be provided stating completion of the contract and reason for termination. It is desirable to keep a complete set of contractual records for the project in a safe and accessible place in case they need to be referenced at any point of time in future.
8.6.3 Financial Audit
It is through examination of a project by an evaluation team and includes detailed overview of the project’s financial procedures, budgets, records etc. Audit can be done department wise or budget as a whole depending upon the size of the project . This can be done any time throughout the project period.
The basic aim of the financial audit is to determine where, in measurable terms, the actual costs on the project may have overrun or underrun and determine the cause of the variation. It also investigates into the ethical and financial responsibility of the staff involved in the project. This also aims at to provide an opportunity for the project managers and agencies to learn where they can improve financially on the implementation of similar project in future.
Audit Information Requirements
To make accurate audit following information is necessary for assessment:
• Budget plans (staff and resources base line)
• Staff time sheets
• Contracts with external organizations
• Procurement guidelines
• Purchase orders
• Budget status reports
• Change control results
Teams either internal or external to the state agency depending upon the size expertise and experience may perform the financial audit. The audit team should be allowed to have full accessibility to the project record and project staff to make well-informed and unbiased assessment of the financial health of the project, care must be taken to avoid misunderstanding, and auditors must avoid comments that may be construed as critical.
8.6.4 Celebration of Success
One step of the closeout phase is the customer’s acceptance of the system. This is a critical and important step, as the customer decides when the project is completed. Success is defined at the early stages of planning the project i.e. initiation phase and is not tied to only budget and schedule. A project may be considered as most successful even though the cost schedule may exceed the time limits.
The questions that can determine success include:
• Were the success objectives achieved?
• Do the stakeholder and customers view in a positive manner?
• Was the project well managed?
• Did the team worked together and knew wrong and right?
The success of the project can be celebrated in the form of a formal party, and appreciating the efforts of the team members through gifts and certificates.
QUESTIONS
1. Discuss the importance of performance measurements used in project management.
2. Enlist the performance indicators used in project management.
3. Explain the approaches used for performance analysis.
4. How can the performance can be improved in project management?
5. Compare the ‘do it yourself’ and ‘turnkey approach’.
6. Discuss the various factors involved in project close-out.
7. Enlist the factors which influence the project success and failure.
The use of network techniques is very common for any project. It helps in calculating the project time and can be useful to optimise the overall completion time using the concept of crashing of activities. The discription presented here will help the readers to control and expedite the project with optimal cost.
9.1 TRANSITION FROM GANTT CHART TO NETWORK DIAGRAM
Gantt progress chart is a bar chart that gives a comparative picture between actual performance and planned performance i.e. how the planned performance is keeping pace with the fixed targets. Due to the shortcoming or inadequacies of the bar chart in meeting the requirements of the modern day management, efforts were made to modify it by adding new elements. One important modification that forms a link in the evolution of the Gantt chart into PERT/CPM Network is called Milestone system.
Fig. 9.1 Gantt chart
Milestones are key points or events in time, which can be identified when completed as the project progresses. They act as reference points for the management. In a Gantt chart, a bar which represents a long-term job is broken down into several pieces, each of which represents a identifiable major event. While the milestone was definitely an improvement on the bar chart, it still had one great deficiency i.e. it did not clearly show the interdependencies between events. In a milestone chart, the events are in chronological order, but not in a logical sequence.
A natural extension of the milestone chart was network, where arrows connect events in a logical sequence. This led to the evolution of network techniques.
N ETWORK T ECHNIQUES
9
A B C D E
Fig. 9.2 Gantt chart and milestones
9.2 PROBLEMS WITH THE BAR CHARTS
The need of network technique was felt because the conventional bar chart had their limitations as listed below:
• Bar chart becomes too cumbersome while dealing with big and complex projects when considered in detail and efforts were to find out interaction/interdependence.
• Bar chart does not indicate which tasks should be given priorities as regards the resources (i.e. men, money, materials, machinery, etc)
• The changes in schedule cannot be evaluated.
• It does not tell tolerance in activity times.
• It does not show continuing interrelationships of activities.
So from Gantt or Bar chart it is not clear that which are the activities dependant on each other and which are dependant.
9.3 SCHEDULING
The network is a graphical representation of the interrelationships among all activities in the project. Developing the network forces detailed planning of the project and provides a valuable communication tool. After the activities have been identified and the network has been drawn the next step is to assign expected time duration to the activities. The expected duration depends on the planned crew size work method equipment and working hours. A particular level of resource must be assumed to be available when the work is to be performed. The following conditions may exist when the estimates are made:
• The person who is in charge of an activity or activities assumes that some customary and reasonable level of resource will be used and specify an expected duration for the activity. Some completion data is determined. This approach is in keeping with the theory of Critical Path Method (CPM).
• In some actual application a completion time or milestone data is specified and the estimated amount of resources is adjusted so that the duration will be less than equal to the desired amount of time. This approach is in keeping with the theory Programme Evaluation and Review Technique (PERT).
A
B
C 11
1 2 3 4
5 6 7 8
9 12 13
Feb Apr Jun Aug Oct Dec
11 12 13
Feb Apr Jun Aug Oct Dec Gantt Chart with Milestones Gantt Chart with Milestones and Network of Milestones
1 2 3 4
5 6 7 8
9 A
B
C
9.3.1 Advantages of Network Scheduling
Network based scheduling techniques can be beneficial in many ways if they are properly used.
Like all other scheduling techniques, however, they are not panaceas or substitutes for good management judgment. Since scheduling is an attempt to plan future work, the required work times are estimated. No technique will make poor estimates any better. Scheduling can help plan work, but the accuracy of plans and schedules depends on the accuracy of the time estimates used in their development. Knowledgeable people and/or reliable techniques should be used to provide the time estimates.
Assuming that the estimates for a network scheduling method are as good as those for other scheduling methods, the network techniques may offer some advantages:
1. They lead to planning a project to the selected level of details so that all parts of the project and their intended order of accomplishment are known.
2. They provide a fairly accurate estimate of the length of time it will take to complete the project and the activities that must be kept on time to meet the schedule.
3. They provide a graphical picture and standardized vocabulary to aid in understanding work assignments and communicating among people involved in the project.
4. They provide a means to track progress on a project (that is, show where work is with respect to the plan).
5. They identify and focus attention on potentially troublesome activities to facilitate management by exception.
6. They provide a means of estimating the time and cost impact of changes in the project plan at any stage.
9.4 NETWORK BASED SCHEDULING TECHNIQUES
The biggest advance in project scheduling since the development of the Gantt Chart in 1917 was made between 1956 and 1958. During this period, two new scheduling techniques were developed that have much in common, although they were developed independently. These techniques are the Program Evaluation and Review Technique (PERT) and the Critical Path Method (CPM). Both are based on the use of a network or graphical model to depict the work tasks being scheduled. Both were designed to schedule long-duration projects that were to be performed only once or in low volume. Computer programs are available for both PERT and CPM, which are helpful in developing timely information about large projects, particularly those that are to be updated and revised several times before completion. Following techniques can be used to solve a problem through a network:
• PERT: Programme Evaluation and Review Technique
• CPM: Critical Path Method
• RAMS: Resource Allocation and Multi-project Scheduling
• GERT: Graphical Evaluation and Review Technique
• MOSS: Multi Operation Scheduling System
• COPAC: Critical Operating Production Allocation Control
• LCS: Least Cost Scheduling
• MAP: Man Power Allocation Procedure
• RPSM: Resource Planning and Scheduling Method
However PERT and CPM are most commonly used techniques. CPM was developed by E.I. Du Pont de Nemours and Company in conjunction with the Remington Rand Corporation.
Du Pont described a technique to improve the scheduling of construction and extensive maintenance shutdowns of its production facilities. Most activities to be scheduled with this technique were similar to previously performed construction and maintenance, so the length of time the tasks were expected to require was treated as though it were a deterministic (known) number.
PERT was developed under the auspices of the U.S. Navy’s special projects Office working with representatives of Lockheed and Booz, Allen and Hamilton. The technique was developed to assist in managing the development of the Polaris missile-submarine system. This project required the coordination of more than 250 prime contractors and over 9000 subcontractors including suppliers and other agencies: an immense management and scheduling challenge.
Since many of the activities involved in this project had never been performed before, the time that they might require was uncertain and consequently was treated as probabilistic variable.
Finally the cost of applying critical path methods to a project is sometimes used as a basis for criticism. However the cost of applying PERT/CPM rarely exceeds 2% of the total project cost. When used with added features of work breakdown structure and various reports, it is more expensive but rarely exceeds 5 % of the total project costs. Thus added cost is generally outweighed by the savings from improved scheduling and reduced project cost.
9.5 STEPS IN USING NETWORK TECHNIQUES
Three major steps are involved in the use of network scheduling:
• Planning the project.
• Analyze the project by determining all the individual activities
• Show the planned sequence of these activities on a network
• Scheduling the project.
• Estimate how long it will take to perform each activity
• Perform computations to locate the critical path. This information will also provide information for scheduling
• Use this information to develop a more economical and efficient schedule
• Monitoring the project.
• Use the plan and schedule to control and monitor progress
• Revise and update the schedule throughout execution of the project so that the schedule represents the current plans and current status of progress.
9.6 SOME OF THE ASSUMPTIONS IN PERT OR CPM ARE GIVEN BELOW
• Project activities can be identified as entities (there is a clear beginning and ending point for each activity).
• Project activity sequence relationships can be specified and networked.
• Project control should focus on critical path
• The activity times in PERT follow the Beta Distribution with the variance of the project assumed to equal the sum of the variances along the critical path.
9.6.1 Symbols Used in Network 1. Activity by (arrow)
Arrow can have any size or slope. It starts from tail and ends at the head of arrow e.g., assembly of parts, mixing of concrete, preparing budget etc.
2. Dummy Activity (broken arrow)
These activities consume no time. This is introduced to prevent dangling. This happens when an activity ends with out being joined to end event, so breaking continuity.
3. Event O (circle or node)
Event is represented by node. Event takes no time but it connects two or more activities.
Events may be classified into three categories merge event, burst event, merge and burst event e.g. design completed, pipe line laid, started issue, tested.
Fig. 9.3 Events directions
TERMINOLOGIES USED IN NETWORKS INCLUDE THE FOLLOWING Network
It is the graphic representations of projects operations composed of activities and events to achieve objective of project showing planning sequence.
Event (node)
It is a recognizable as particular instant of time and does not consume time or source.
Generally represented on network by circle, rectangle or hexagon.
Activity
It is a task or item that consumes time, money, effort etc. It lies between preceding and succeeding events.
Float or Slack
The term slack time refers to an event-controlled network and float time refers to the activity network. But generally float and slack are used inter changeably. Float or Slack is defined, as amount of time an activity can be delayed without effecting the duration of project.
On a critical path, the float is zero. So float gives an indication criticalness of an activity. An activity with little float, stands a good chance of delaying project and should be carefully monitored.
ES (a) = Early start time of activity ‘a’
EF (a) = Early finish time of activity ‘a’
LS (a) = Late start time of activity ‘a’
LF (a) = Late finish time of activity ‘a’
t = duration of the activity considered TF = total float
FF = Free float
IF = Independent float
Merge event Burst event Merge and Burst event
Total Duration
Total duration of time available for any job is the difference between its earliest start time and latest finish time. If activity 1-2 is considered then.
Maximum Time Available = LF (1-2) – ES (1-2)
Earliest Start Time (ES)
This is the earliest occurrence time for the event from which the activity arrow originates.
Earliest Finish Time (EF)
This is the earliest occurrence time for the event from which activity arrow originates plus duration for the activity
EF (a) = ES (a) + t
Latest Start Time (LS)
This is the latest occurrence time for the node at which activity arrow terminates minus the duration for the activity
LS = LF – t
Latest Finish Time (LF)
This is the latest occurrence time for the node at which activity arrow terminates.
9.7 PRECEDENCE RELATIONSHIPS
Some activities cannot be performed until other activities have been completed. This type of requirement establishes a technical precedence relationship. There may sometimes be options as to the way activities may be performed, but management’s prerogatives or differences in costs lead to a particular planned sequence of activities. Other activities may be performed independently. Task independence and precedence relationships should be incorporated into the job plan and indicated on the project network.
9.8 NETWORKING CONVENTIONS: AON AND AOA
A network is a graph using circles and arrows to represent the planned relationships among the activities required to complete a project. Either of two conventions can be used to develop a network. One uses circles to represent the project activities, with arrows linking them together to show the sequence in which they are to be performed. This is called the activity-on-node (AON) convention, or Precedence notation. An alternative is to show the activities as arrows and use circles to connect predecessor and successor activities. This method is called the activity- on-arrow (AOA) convention. With this convention, the circles or nodes represent events, which are points in time at which activities begin or end. An event consumes no resources, whereas an activity consumes time and other resources.
A network is drawn after all activities and their relationships have been defined. There is no proven best approach to the identification of activities. Some people start with what they believe to be logically the first activity and proceed in what they believe to be chronological order; others may start with the last activity and work backward; still others list activities in random sequence. After the activities are identified, one may ask:
1. Which activity must immediately precede this one?