ACCA Strategic Business Planning

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ACCA Strategic Business Planning Development

• Lecture 10
• Project Management

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Learning outcomes - check

• At the end of this lecture you will
• Understand the definition and meaning of project
  management
• Know and be able to apply planning and resource
  techniques
• Be able to use project planning tools
• Understand what is meant by research and
  development

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What is a Project?
"an undertaking that has a beginning and an end
and is carried out to meet established goals
within cost, schedule and quality objectives"
(Haynes)
Characteristics

• Specific start and end points
• Well defined objective
• Unique, 'one-off'
• Cost and time schedules
• Cuts across organisational and functional lines

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Examples of Projects
Personal

• Plan a wedding
• Paint a house
• Plan a trip
• Build a tunnel
• Introduce a new product
• Implement a TQM system
• Develop a management information system
• Build a new processing plant

Business
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Project Management
the managing and directing of time, material,
personnel and costs to complete a particular
project in an orderly, economical manner and to
meet established objectives in time, monetary and
technical results
(Spinner, 1992)
Quality
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Functions of Project Management

• Organisation and leadership of project specialist
  groups - both directly hired and contracted
• Control of project cost, time and value by
  techniques
• Liaison with other sections of the company
• Liaison with other companies, public and
  semi-public organisations and groups affected by
  the project

(Hackney, 1991)
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Project Management - Problems

• Teambuilding
• Expected problems
• Unexpected problems
• Delayed benefit
• Specialists
• Stakeholders

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Why Do Projects Go Wrong?

• Unproven technology
• Over-optimism
• Changing client specifications
• Lack of control
• Politics
• Deadlines unrealistic

• Poor planning
• Project mangers are technicians out of depth
• Poor timetabling and resourcing
• Lack of senior management support

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Project Life Cycle

• Conceiving and defining the project(including
  objectives and success criteria)
• Planning the project("chunking", estimating and
  scheduling resources)
• Implementation and control
• Completion and evaluation (post-audit)

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Role of Project Manager

• Co-ordinating project activities
• Monitoring and controlling
• Problem resolution
• Quality control

• Outline planning
• Detailed planning
• Teambuilding
• Communication

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Planning and ResourcingTechniques

• Ball-park estimates
• Comparative estimates
• Feasibility estimates
• Definitive estimates
• How to improve estimates
• Learn from past mistakes
• Ensure design information is adequate
• Ensure customer specification is as detailed as
• possible
• Analyse job into its constituent units

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Work Breakdown Structure (WBS)

• WBS is the analysis of a project into different
  units or tasks
• WBS helps identify the actual work that must be
  done
• WBS helps identify the sequence of tasks
• WBS helps identify the resources needed for the
  project, and allocates them in the optimum way

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Example of Work BreakdownStructure
Total ProjectBuild House
First Level
Foundations
Draining
Brickwork
Plumbing
Painting
Wiring
Second Level
The process of work breakdown continues until
activities cannot be meaningfully broken down
any further
Digging
Filling
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Cost Estimation Using WBS

• Devising estimates lists, checklists and
• estimation forms
• Analysis of costs direct, overhead, in-house,
• subcontracted
• Labour time estimates can be difficult
• Material estimates total costs, lead times,
• contingencies, additional work, price increases

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Project Planning Tools
The activities described in the WBS need to be
performed in sequence (e.g. dig the
foundations before painting the house) Project
planning tools include

• Gantt charts
• Critical path analysis (network analysis)
• Resource histograms

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Gantt Charts

• Illustrates the activities that are to be
  performedin a project.
• Also the time scale over which they must be
  performed
• From these, float times can be identified, when
  thereis a certain amount of leeway between the
  end of oneactivity and the start of another
  (e.g. if this subsequent
• activity depends on the completion of a number
  of
• activities)
• A critical activity has no float time

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Gantt Chart
TIME (DAYS)
Descriptionof work oractivity
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
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Excavate forfoundations services (drainage)
1
Concretefoundations
2
Build walls soakawaysfor drainage
3
4
Construct roof
Fit garagedoors
5
Provide services(electric)
6
Plaster
7
8
Decorate
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Critical Path (Network) Analysis

• Aims to map, very precisely, the
  relationshipbetween activities and the time they
  take
• The critical path is the minimum amount of
  timethe whole project will take with normal
  resources
• Time can be shortened by throwing resources at
  thecritical path (crashing the time). A crash
  cost islikely to be higher than the original cost

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Critical Path - How is it Done?

• Establish and work through stages to establish
• what activities are to be done
• what activities depend on each other
• how long will they take
• when they have to be done

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Network Example
Earliest start date
Event
Latest start date
Earliest start date latest start date float
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Network Example
4
D
3
4
2
9
1
3
A
F
0
E
3
1
3
0
6
B
5
12
G
5
9
C
6
3
5
12
7
9
2
3

• Letters activities
• Thick arrow critical path

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Resource Histograms

• Bar charts
• Might be used to plot labour requirements
• over time
• Map demand with supply

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Resources - Example 1
2
A
B
4
TASKS
C
2
D
3
E
3
F
represents float)
(
2
G
3
12
10
8
RESOURCES
6
4
2
0
WEEKS
1
2
3
4
5
6
7
8
9
10
11
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Limited Resources

• Suppose the supply of resources (e.g. labour) is
  limited to 10, how could the work be rescheduled?

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Resources - Example 2
2
A
B
4
TASKS
C
2
D
3
E
3
F
2
G
3
12
10
8
RESOURCES
6
4
2
0
WEEKS
10
11
5
1
2
3
4
6
7
8
9
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Criticisms of Critical Path(Network) Analysis

• Effective WBS may be difficult
• Assumption of linear and sequential
  relationshipsbetween activities
• Problems in estimation
• Absorption of indirect overheads
• Contingency planning?
• Assumption of a trade-off between time and cost

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Management Implications
Central issue is that work can be broken down
into units that can be analysed independently of
each other

• Parallel engineering - project managementtechniqu
  es applied to RD process
• Management by objectives
• Management by exception

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Research and Development

• Research
• Pure
• Applied
• Development
• Product research
• Process research

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New Product Development

• Idea generation
• Initial screening
• Building of business case
• Physical development of project
• Testing and validation
• Full production and market launch
• Post implementation review

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Existing Products

• Value engineering
• Extension of life cycle
• Backwards compatibility

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Process Research

• Processes
• Productivity
• Planning
• Quality management

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Problems with RD

• Organisational
• Financial
• Evaluation and control
• Staff problems
• Cultural problems

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Benefits of Innovation

• Reputation attracts early adopters
• Customers locked in due to switching costs
• Learning curve brings cost advantages
• May define industry standard