Unit no.01 project management and engineering economics
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This document provides an introduction to project management. It discusses the importance of project management, the project life cycle, categories of projects, causes of project failure, and the Project Management Body of Knowledge (PMBOK). It also describes the Project Management Institute (PMI) and the Certified Project Management Professional (PMP) certification.
Unit no.01 project management and engineering economics
- 1. Project Management and EngineeringProject Management and Engineering EconomicsEconomics Unit- 1Unit- 1 By, Kodam R. P.By, Kodam R. P.
- 3. LEARNING GOALS TO STUDY BASIC PROJECT MANAGEMENTAND ITS IMPORTANCE TO STUDYANDABLETO UNDERSTAND OF LIFE CYCLE CONCEPTAND COST COMPONENTS TO KNOW PROJECT PMBOKAND PMP •.•3
- 4. Content Importance, objectives & functions of management , Principles of Management, Categories of project , Project Failure, Project- life cycle Concept and Cost Components , Project Management Book of Knowledge {PMBOK} – Different DomainAreas, Project management Institute and Certified Project Management Professionals (PMP ) Importance of organizational Structure in Management- Authority / Responsibility Relation . 4
- 5. What is the Project? A project is a temporary endeavor undertaken to create a unique product or service Projects can be large or small and take a short or long time to complete . 5
- 6. Project Attributes or Characteristics A project: Has a unique purpose: every project should have a well defined objective. each project has a definite beginning and a definite end. Requires resources, often from various areas Should have a primary customer or sponsor Examples . 6
- 7. What is Project Management? Project management is “the application of knowledge, skills, tools and techniques to project activities to meet project requirements” . 7
- 8. Introduction to Project management & organization Management Art of getting work done through people with satisfaction of employer, employees and public. Management – Art as well as science Scientific basis – Work done can be measured Art – getting work done through others. . 8
- 9. 9 Importance of Management No enterprise can survive without management – huge money, excellent m/c, expert manpower lead to confusion. Guide and control activities Coordinates different activities of departments Provide new ideas and vision Tackles business problems Meet challenge of change Provides stability to the enterprise Helps personality development. . 9
- 10. Functions of Management 1. Forecasting 2. Planning 3. Organizing 4. Staffing 5. Directing – leadership, communication, motivation, supervision 6. Coordinating 7. Controlling 8. Decision making 10 . 10
- 11. 11 1. Forecasting estimates future work – sales or production Relates to cost, finance, purchase, profit or loss 1. Planning Manager anticipates future and discovers alternatives Systematic way of making decisions Essential for utilizing available facilities 1. Organizing Organizing people, materials, jobs, time, etc Determining activities . 11
- 12. 4. Staffing Manager select, train, promote and retire their subordinates Developing and placing of qualified people in jobs 5. Directing Motivating, guiding and supervising subordinates Leadership Quality of behaviors of manager Get max cooperation from subordinate and guide them Communication Process –ideas are transmitted Verbal, written, orders, reports, instruction . 12
- 13. Ineffective communication confusion, misunderstanding, dissatisfaction or strike. Motivation Inspiring subordinates – work effectively and efficiently Supervision Work is going as plan Workers are doing as they directed 6.Coordinating Achieving harmony of individual effect towards the accomplishment of company objectives Making plan to coordinate activities of subordinate. . 13
- 14. 7. Controlling Measures current performance Controlling set standards, measure job perfection, take correct action. 8. Decision making Selecting course of action for getting desired results. . 14
- 15. Various Definitions of Management Donald J. Cough defines, "Management is the art and science of decision making and leadership.” Henry Fayol defines,“ Management as to manage is to forecast and to plan, to organize, to command, to co- ordinate and to control.” Peter F Drucker defines, “Management is a "multi- purpose organ that manages a business and manages managers, and manages worker and work.” . 15
- 16. Objectives of Management: Getting Maximum Results with Minimumum Efforts To secure maximum outputs with minimum efforts & resources. Management is basically concerned with thinking & utilizing human, material & financial resources in such a manner that would result in best combination. This combination results in reduction of various costs. . 16
- 17. Increasing the Efficiency of factors of Production Efficiency can be increased to a great extent which can be obtained by reducing spoilage, wastages and breakage of all kinds, this in turn leads to saving of time, effort and money which is essential for the growth & prosperity of the enterprise Maximum Prosperity for Employer & Employees Management ensures smooth and coordinated functioning of the enterprise. This in turn helps in providing maximum benefits to the employee in the shape of good working condition, suitable wage system, incentive plans on the one hand and higher profits to the employer on the other hand. Human betterment & Social Justice Management serves as a tool for the upliftment as well as betterment of the society. Through increased productivity & employment, management ensures better standards of living for the society. It provides justice through its uniform policies. 17
- 18. HENRI FAYOL’S 14 Principles of Management the first foundations were laid for modern scientific management.
- 19. 14 Principles of Management Division ofWork Authority Discipline Unity of Command Unity of Direction Subordination of Individual InterestsTo The General Interests Remuneration •. Centralization Scalar Chain Order Equity Stability of Tenure of Personnel Initiative Espirit De Corps •19
- 20. 1. Division of Work Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization. . 20
- 21. 2. Authority Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. . 21
- 22. 3. Discipline A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort. 22 .
- 23. 4. Unity of Command Workers should receive orders from only one manager. He should not receive instructions from more than one person . 23 .
- 24. 5. Unity of Direction The entire organization should be moving towards a common objective in a common direction. Without unity of direction, unity of action cannot be achieved 24 .
- 25. 6. Subordination of Individual Interests To The General Interests The interests of one person should not take priority over the interests of the organization as a whole. 25 .
- 26. 7. Remuneration Remuneration to be paid to the workers should be fair, reasonable, satisfactory & rewarding of the efforts. It should accord satisfaction to both employer and the employees. 26 .
- 27. 8. Centralization Centralization means concentration of authority at the top level. In other words, centralization is a situation in which top management retains most of the decision making authority. 27 .
- 28. 9. Scalar Chain It is chain of superiors ranging from the ultimate authority to the lowest. Every orders, instructions etc. has to pass through Scalar chain. 28 .
- 29. 10.Order For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible. 29 .
- 30. 11.Equity All employees should be treated as equally as possible. 30 .
- 31. 12.Stability of Tenure of Personnel Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers. 31 .
- 32. 13. Initiative Initiative means eagerness to initiate actions without being asked to do so. Management should provide opportunity to its employees to suggest ideas, experiences& new method of work. 32 .
- 33. 14. Espirit De Corps It refers to team spirit i.e. harmony in the work groups and mutual understanding among the members. Management should encourage harmony and general good feelings among employees. 33 .
- 34. Conclusion on the 14 Principles of Management The 14 principles of management can be used to manage organizations and are useful tools for forecasting, planning, process management, organization management, decision- making, coordination and control. . 34
- 35. Categories of Project: Depending upon Location . 35
- 36. Depending Upon Size Schedule A Schedule B Schedule C . 36
- 37. Project Failures: Owner: Decision making problems Poor estimating Goal and vision Lack of integral budget and planning Incomplete and fluid design Lack of proactive risk management Unrealistic schedule Insufficient tool and project management infrastructure Contractor: Inexperience or unequal project team Poor estimating Unfavorable contract Lack of senior management support Design issue Overly aggressive schedule Lack of Risk management Lack of Project co-ordination.•.•37
- 38. Project Life Cycle A project life cycle is a collection of project phases that defines: What work will be performed in each phase What deliverables will be produced Who is involved in each phase How management will control and approve work produced in each phase A deliverable is a product or service produced or provided as part of a project. 38
- 39. Five Phases of the Project Life Cycle . 39
- 40. Project Management Body of Knowledge: This book which focus on standard terminology and guidelines for Project Management. This book is overseen by PMI (Project management Institutes). The Latest Fifth edition was publishing in 2013. The first PMBOK was published in 1996 by PMI. . 40
- 41. Contents of PMBOK Inputs (documents, plans, designs, etc.) Tools andTechniques (mechanisms applied to inputs) Outputs (documents, plans, designs, etc.) . 41
- 42. Purpose of PMBOK PMI global standards provide Guidelines Rules And Characteristics For Project Program and portfolio management. When consistently applied, they help you and your organization achieve professional excellence The PMBOK Guide is also used as a support to prepare the certifications offered by the PMI . 42
- 43. Phases of the Project Life Cycle as PMBOK 1. Conception/initiation 2. Definition/planning 3. Production/acquisition 4. Operation 5. Divestment/termination . 43
- 44. Conception/initiation First phase includes o Determine existing needs o Establish system concepts o Check technical feasibility o Examine alternatives . 44
- 45. Definition/Planning – includes Firm identification of human and non human resources. (human resources, such as labor and management, and nonhuman resources, such as land, capital goods, financial resources) Pre of detailed plan Prevent of cost . 45
- 46. Production/acquisition Testing and final standardization of effort so that operation can begin Operation If project is marketable product then this phase includes life cycle phase of market introduction, growth, maturity and portion of deterioration. Divestment/termination Includes the real location of resources.. 46
- 47. . 47
- 48. Knowledge areas of PMBOK. 1. Project INTEGRATION Management Identification of process and activities, defining activities, combination of activities to achieve project objectives. 2. Project SCOPE Management Identification of requirement of Project and only work required. 3. Project COST Management It involves planning, estimating, budgeting, financing, finding, management and controlling cost so that project should completed within approved budget. 4. Project QUALITY management Determine quiddity policities, qualitative objectives of project, and responsibilities. So than it’s up to client satisfaction. . 48
- 49. 5. Project HUMAN RESOURCES management This process involved organizing, managing and lead the project them. 6. Project COMMUNICATION Management Project requires a timely and appropriate Planning and information. 7. ProjectTIME Management Processes required managing timely completion of project. 8. Project RISK management This includes process of conducting risk management planning, identification, analysis, response planning analysis and controlling risks. . 49
- 50. 9. Project PROCUREMENT management This includes to acquire products , services and result needed. 10.Project STAKEHOLDER Management To identify all people or organization impacted by project, analyzing, and developing management strategies for effectively engaging stakeholders. . 50
- 51. Project Management Institute The PMI provides services including the Development Of Standards, Research, Education, Publication, Networking-opportunities In Local Chapters, Hosting Conferences AndTraining Seminars, And ProvidingAccreditation In Project Management. . 51
- 52. PMI has recruited volunteers to create industry standards, such as " A Guide to the Project Management Body of Knowledge ", which has been recognized by the American National Standards Institute (ANSI). In 2012 ISO adapted the project management processes from the PMBOK Guide 4th edition. . 52
- 53. Professional PMP Most Important industry recognizing certification for Project Mangers. Globally recognized and demanded. PMP shows that you have experience ,education and competency to lead and direct projects. Who should apply Experience project manager looking to solidify. Your skill stands out to employers and maximize yours earings potentials. . 53
- 54. The PMP signifies that you speak and understand the global language of project management and connects you to a community of professionals, organizations and experts worldwide. Become a PMP and become a project hero . 54
- 55. Certified Project Management Professionals (PMP ) You can find PMPs Leading projects in nearly every country Geography or domain, the PMP is truly global. As a PMP, you can work in virtually any industry, with any methodology and in any location. . 55
- 56. Examples The PMP also increases your earning potential. PMP certification holders earn 20 percent more than their non- certified peers according to Earning Power:Project Management Salary Survey,Ninth Edition. When more than one-third of their project managers are PMP-certified, organizations complete more of their projects on time, on budget and meeting original goals. (Pulse of the Profession® study, PMI, 2015.) . 56
- 57. . 57
- 58. Organization . 58 Organization is a group of person working together to achieve a predefined/establishment goal. Defining and delegating responsibility and authority According to Chester Barnard, “Organizing is a function by which the concern is able to define the role positions, the jobs related and the co-ordination between authority and responsibility. Business executive
- 59. Importance of Organization Specialization Well defined jobs Clarifies authority Co-ordination Effective administration Growth and diversification Sense of security Scope for new changes . 59
- 60. Importance of Organization Specialization - Organizational structure is a network of relationships in which the work is divided into units and departments. This division of work is helping in bringing specialization in various activities of concern. . 60
- 61. Well defined jobs Organizational structure helps in putting right men on right job which can be done by selecting people for various departments according to their qualifications, skill and experience. This is helping in defining the jobs properly which clarifies the role of every person.. 61
- 62. Clarifies authority - . 62 Organizational structure helps in clarifying the role positions to every manager . This can be done by clarifying the powers to every manager and the way he has to exercise those powers should be clarified so that misuse of powers do not take place. Well defined jobs and responsibilities attached helps in bringing efficiency into managers working. This helps in increasing productivity.
- 63. Co-ordination Organization is a means of creating co-ordination among different departments of the enterprise. It creates clear cut relationships among positions and ensure mutual co-operation among individuals. Harmony of work is brought by higher level managers exercising their authority over interconnected activities of lower level manager. . 63
- 64. Effective administration The organization structure is helpful in defining the jobs positions. The roles to be performed by different managers are clarified. Specialization is achieved through division of work. This all leads to efficient and effective administration. . 64
- 65. Growth and diversification A company’s growth is totally dependant on how efficiently and smoothly a concern works. Efficiency can be brought about by clarifying the role positions to the managers, co-ordination between authority and responsibility and concentrating on specialization. In addition to this, a company can diversify if its potential grow. This is possible only when the organization structure is well- defined. This is possible through a set of formal structure. . 65
- 66. Sense of security . 66 Organizational structure clarifies the job positions. The roles assigned to every manager is clear. Therefore, clarity of powers helps automatically in increasing mental satisfaction and thereby a sense of security in a concern. This is very important for job- satisfaction.
- 67. Scope for new changes Where the roles and activities to be performed are clear and every person gets independence in his working, this provides enough space to a manager to develop his talents and flourish his knowledge. A manager gets ready for taking independent decisions which can be a road or path to adoption of new techniques of production. This scope for bringing new changes into the running of an enterprise is possible only through a set of organizational structure.. 67
- 68. Importance of Organization Stimulates independent, creative thinking Permits optimum use of technical and human resources Minimize corruption and inefficiencies Does not generate confusion Less wastage and expenditure. . 68
- 69. Principles of Organization 1. Consideration of objectives 2. Relationship of basic components of the organization 3. Responsibility and authority 4. Span of control 5. Dividing and grouping work 6. Effective delegation 7. Communication 8. Line and staff relationship 9. Balance, stability and flexibility. 69
- 70. 1. Consideration of objectives Consider that objectives which increases productivity and improve quality 2. Relationship of basic components of the organization personnel Objective determine type of work decides selection of physical facilities . 70
- 71. 3. Responsibility and authority - Responsibility means accountability - authority means right or power to act - Must go together - When a person is authorized then he is held responsible for its performance. 4. Span of control No of subordinates that reports to executive or no of subordinates that an executive can supervise directly . 71
- 72. 5. Dividing and grouping work - Divisionalisation gives a greater sense of responsibility to personnel - Grouping is essential for specialization and coordination 6. Effective delegation - Passes down tasks to his subordinates 7. Communication - Transmitting instructions and information's within organization and to outside - Free two way communication72 .
- 73. 8. Line and staff relationship All activities in two types primary act or line function are directly contribute to the objectives Supporting act or staff function add to line functions. 9. Balance, stability and flexibility All units should be balanced Stability refers capacity to withstand the losses Flexibility specifies to adjust the work assignment . 73
- 74. Types of organization 1. Line, military or scalar organization 2. Functional organization 3. Line and staff organization . 74
- 75. Line, military or scalar organisation Resembled to old military organisation Simple form of organisation Based upon authority and responsibility Followed : Govt. Dpt. And autonomous engineering college Application : all type of small firms , industries like sugar factories, paper mills etc. . 75
- 76. Line, military or scalar organization Features: Have only direct vertical relationships between different levels in the firm. 76
- 77. Advantages Simple, easy to understand and flexible Makes clear division of authority Strong in discipline Disadvantages Neglects specialist Overload few key executives Small concern . 77
- 78. 2. Functional organization F W Taylor suggested this organization A functional organization is a common type of organizational structure in which the organization is divided into smaller groups based on specialized functional areas, such as IT, finance, or marketing. Application : not is used in construction industry but modified forms is used in most modern and advanced concerns . 78
- 79. 2. Functional organization Features: 1. Line and staff have direct vertical relationship between different levels. 2. Staff specialists are responsible for advising and assisting line managers/officers in specialized areas. 3.These types of specialized staff are (a) Advisory, (b) Service, (c) Control . 79
- 81. at FedEx . 81
- 82. Advantages 1. Since one foreman is responsible for one function, he can perform his duties in a better manner 2. Reduces no of accidents, wastage 3. Quality of work improved . 82
- 83. Disadvantages 1. Difficult to maintain discipline 2. Worker remain confused about authority 3. Difficult to fix up responsibility . 83
- 84. 3. Line and Staff organization Secretary BOD Legal advisor Acct Off GM Sales manager personal man purchase engg design engg WM industrial engg stores officer suptd A suptd B FM FM FM FM W O R K E R S BOD – Board of Directors GM – General Manager WM – Works Manager Suptd – Superitendant FM - Foreman . Feature: Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure 84
- 85. . 85
- 86. 1. Line executives marked vertically and staff executives are placed horizontally 2. For growing industry it is required Advantages 1. Expert advice from specialist are available 2. Less wastage of material, man hours 3. Quality of product is improved 4. No confusion . 86
- 87. Disadvantages Product cost will increase Frictions and jealousies developed Applications Used in medium and larger enterprises. . 87
- 88. Matrix Organizational Structure: It is a permanent organization designed to achieve specific results by using teams of specialists from different functional areas in the organization. Use: Industrial like electronics, advertising, banking etc. Feature: Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure . 88
- 89. . 89
- 90. Matrix Organizational Structure: Advantages: Disadvantages: 1. Decentralized decision making. 2. Strong product/project co-ordination. 3. Improved environmental monitoring. 4. Fast response to change. 5. Flexible use of resources. 6. Efficient use of support systems. 1. High administration cost. 2. Potential confusion over authority and responsibility. 3. High prospects of conflict. 4. Overemphasis on group decision making. 5. Excessive focus on internal relations.•.•90
- 91. Modified Matrix Organizational Structure: When organisation grown To avoid the difficulty Appointed as project director PD = controls all PM and reports to GM directly •.•91
- 92. Differences between Authority and Responsibility Authority Responsibility It is the legal right of a person or a superior to command his subordinates. Authority is attached to the position of a superior in concern. Authority can be delegated by a superior to a subordinate It flows from top to bottom. It is the obligation of subordinate to perform the work assigned to him. Responsibility arises out of superior-subordinate relationship in which subordinate agrees to carry out duty given to him. Responsibility cannot be shifted and is absolute It flows from bottom to top. •92
- 93. Delegation of Authority - A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results. Delegation is about entrusting someone else to do parts of your job. . 93
- 94. Session Outcomes Able to understand a basic of project management and its importance. Able to classify the categories of project and conceptualizes the life cycle and phases come in project. Able to know about project management book of knowledge, professional certification and its credit. Able to understand professional learning of project management by PMI, about PMP. Able to understand organizational work on the basis of responsibility and authority. Able to describe the different types of organization and its work according to the same . 94
- 95. ASSIGNEMENT NO.1 INTRODUCTION TO PROJECT MAMAGEMENT Que.1Write a short note on Project Categories. Que.2. Explain with sketch Matrix Organization, state advantages and disadvantages. Que.3 Explain Project Life Cycle. Que.4 Explain with suitable example Line and Staff Organization. Que.5 Explain functional type of organization in detail. Que.6 Explain functions of management. . 95
- 96. Que.7What is PMBOK? Focus on its contents. Que.8What is PMI?Which type of certifications carried out by it? Explain PMP. Que.9What is Project Management? State its importance. Que.10 Explain principles and objectives of Project Management. Que.11 Differences betweenAuthority and Responsibility . 96
- 97. . 97
- 99. Elements of Delegation Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be well- defined. All people who have the authority should know what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority. Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with an equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from accountability. Accountability still rest with the person having the utmost authority. Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that. Accountability - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For •.•99
- 100. Relationship between Authority and Responsibility Authority is the legal right of person or superior to command his subordinates while accountability is the obligation of individual to carry out his duties as per standards of performance Authority flows from the superiors to subordinates,in which orders and instructions are given to subordinates to complete the task. . 100
- 101. example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest with ’B’, but accountability still rest with ’A’.The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job.Accountability, in short, means being answerable for the end result.Accountability can’t be escaped. It arises from responsibility. For achieving delegation, a manager has to work in a system and has to perform following steps : - Assignment of tasks and duties Granting of authority . 101
- 102. Delegation of authority is the base of superior- subordinate relationship, it involves following steps:- Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be the first step in delegation. Granting of authority - Subdivision of authority takes place when a superior divides and shares his authority with the subordinate. It is for this reason, every subordinate should be given enough independence to carry the task given to him by his superiors.The managers at all levels delegate authority and power which is attached to their job positions. . 102
- 103. It is only through authority, a manager exercises control. In a way through exercising the control the superior is demanding accountability from subordinates. If the marketing manager directs the sales supervisor for 50 units of sale to be undertaken in a month. If the above standards are not accomplished, it is the marketing manager who will be accountable to the chief executive officer.Therefore, we can say that authority flows from top to bottom and responsibility flows from bottom to top.Accountability is a result of responsibility and responsibility is result of authority.Therefore, for every authority an equal accountability is attached. . 103