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

ENGR 281 Projects exist to add value Engineering Scholars •For your client or customer Program •For your firm. Project Management Life •For society. Cycle Overview •For you. K. F. Reinschmidt Project managers exist to J. L. Frank / Marathon Ashland maximize project value. Petroleum LLC Chair in Engineering Project Management kreinschmidt@civil.tamu.edu Project Life Cycle Overview Three Basic Things You Will Find Useful to Know: � Identify an opportunity to provide a product, service, or capital project. •How your client or customer makes money. � Define the project conceptually. •How your firm makes money by adding value � Form the initial project development team. to your client or customer � Write a business plan for the firm, project, product, or service. •How your project makes money by adding � Define the project Statement of Work (SOW). value to your firm and to your client or customer � Identify the required or estimated completion date. � Identify milestones and prepare management- level schedule with decision points. Project Life Cycle Overview Project Life Cycle Overview � Estimate project development costs – top-down, � Assess risks qualitatively; identify potential parametrically, by analogy, etc. showstoppers. � Forecast project benefits (tangible or intangible), � Identify methods to avoid or mitigate any revenues, etc. showstoppers – or terminate the project. � Forecast project operating costs – labor, � Calculate project Internal Rate of Return or other materials, other variable factors. measures of success. � Develop a financial plan. � Repeat above steps until the project is economically feasible – or terminate it. � Forecast cash flows and cash requirements � Identify off-ramps – how to exit the project. throughout the project life cycle. � Identify project risks – business, technological, regulatory, etc.

Project Life Cycle Overview Project Life Cycle Overview � Identify sources of project funding – clients, � Update and refine the SOW. personal equity, corporate, banks, venture � Determine level of engineering, design, and other capitalists, etc. resources needed. � Obtain funding – or revise the project and the � Revise the conceptual cost estimate. financial plan as necessary. � Set cost and schedule contingencies � Form an Integrated Project Team for project (management reserves) based on risks. execution. � Set up timely accounting and reporting methods � Develop a sense of common purpose in the to report costs and progress (earned value). project team Project Life Cycle Overview Project Life Cycle Overview � Identify risk mitigation and risk management � Assemble the engineering – design team. actions. Prepare the project Risk Management � Define the Work Breakdown Structure (WBS) and Plan. WBS Dictionary. � Determine the project organizational structure � Institute a change control (configuration (fully projectized, functional, matrix, etc.) management) process. � Prepare the Project Execution Plan. � Prepare the project network schedules. � Identify available resources and resource � Determine the project critical path or paths. constraints. � Set up the project Quality Assurance Program � Assess remaining risks quantitatively and identify and issue the Quality Assurance Plan (QAP). major risks or common causes (Pareto chart). � Establish metrics for quality control (Six Sigma). Project Life Cycle Overview Project Life Cycle Overview � Perform preliminary engineering design and � Pass periodic management decision points based bottom-up engineering estimate based on WBS. on updated costs, benefits, and financials. � Integrate the WBS cost estimate with the network � Assure that all project participants communicate. schedules (resource load the networks). � Establish approved Budget at Completion (BAC) � Forecast the Budgeted Cost of Work Scheduled (plus management reserve or contingency). (BCWS) for the project duration. � Manage by walking around. � Obtain quotes or bids from vendors, suppliers, � Review vendor drawings and specifications. and subcontractors. Perform make or buy � Assure that all supplier and subcontractor calculations. networks interface to master project network. � Identify delivery dates for significant equipment. � Revise networks to meet cash flow, equipment � File for and obtain any necessary permits. delivery, and other resource constraints.

Project Life Cycle Overview Project Life Cycle Overview � Monthly or weekly during project life cycle: � Monthly or weekly during project life cycle: � Recompute critical path and floats. Follow up if � Forecast Estimated Cost at Completion (ECAC). there are negative floats. Follow up if ECAC > BAC + management reserve. � Determine earned value and Budgeted Cost of � Conduct weekly or monthly project review Work Performed (BCWP), Schedule Variance meetings with the integrated project team (IPT), (SV) or Schedule Performance Index. Follow up if client, vendors, and subcontractors. SV < 0 or SPI < 1. � Determine accrued costs and Actual Cost of Work � Daily during project life cycle: Performed (ACWP), Cost Variance (CV) or Cost � Assure that all project members are Performance Index (CPI). Follow up if CV < 0 or communicating. CPI < 1. Project Life Cycle Overview Project Life Cycle Overview � Perform detailed engineering design and revise � Prepare punch lists. engineering cost estimates. � Start up facility and turn over to users/operators. � Prepare bid packages for subcontractors and � Complete project cost accounts. suppliers. � Prepare as-built drawings and documents for � Review bids and select vendors. turnover. � Expedite vendors as required to meet the � Conduct post mortem on lessons learned. schedule. � Collect final payment. � Disperse funds (accounts payable). � Close out project. � Prepare startup plan and turnover schedule. � Celebrate. � Start new project. Any questions ? Project Life Cycle Overview K. F. Reinschmidt