MODULE 8: OVERVIEW

Assignment no 2
Task 1
Questions within the various categories or themes, in order to obtain the correct data to ensure
efficient planning.

➢ In the development of every plan, ask yourself the following questions: “Who? What?
When? Where? Why? How?”. These questions establish the reasons for doing the project
and sets the planning process in motion. An acronym is used to refer to five concepts which
it represents, to regulate this process. Each answer to the questions asked above must
measure up to being -Smart, Measurable, Attainable, Realistic, Time constrained
➢ From here onwards, some people in the organisation will be progressively mobilised to
prepare the bid. Strategically, it needs to be considered whether the organisation would
partake in the process of bidding that can culminate in a project.
➢ This decision is based on one or more of the following considerations:

• Is your project within the field of expertise of the business?

• Is the range of competition too great, thus minimising the probability of award?
• Is the work essential, in relation to the current order book?
• What is the level of risk? • Is now the time to decline to bid at all?
• What are the expected margins from that market or that specific client

Understand what to cover in your execution plan. It may be worth anticipating the kinds of
questions which could arise from your team when launching a major bid effort. Here are some
examples grouped thematically:

➢ Estimation

• What class of estimate is required – budget or definitive?

• How is the project to be awarded – via lump sum or fixed price, or reimbursable or cost
plus?
• Where will equipment and material be sourced?
• Where are all the available drawings?
• Is there a prescribed work breakdown structure (WBS), or cost breakdown structure
(CBS)?
• Does the client expect a particular breakdown or structure of the estimate?
• Are you required to use the client code of accounts, or your own?
• Does the bid schedule allow adequate time for estimate reviews and estimate risk
analysis?

➢ Commercial

• How can the objectives be aligned with those of the client so that you optimise your
chances of winning, and establishing a good rapport with your client?
• Is the client business case well understood, and what can we do to support him in
realising it?
 • How can you avoid conflict?

➢ Health, Safety and the Environment

• Which safety legislation is relevant?

• Is your client making any particular HSE demands?
• Does your client have any legal requirement to observe local HSE regulations?
• When can the project safety strategy be described to the team?
• Are you going to impose normal standards on the site, and to what extent can you enforce
it?
• Are there any specific, local, environmental issues?
• To what extent is the environment local to the site addressed?

➢ Engineering

➢ • What is the status of design?

• Is there an equipment list?
• Is there any specialised, long delivery equipment?
• How much of the equipment is designed by the suppliers?
• Where are all the available drawings?
• What are your expected deliverables?
• Is the concept agreed?
• Whose process licence is involved?
• What, if any, are the safety issues to be addressed in the design?
• Do you have to do any design during the bid period for the estimate?

➢ Procurement

• What is the procurement strategy – local or worldwide?

• Are there any markets ruled out by your client for political reasons?
• Is there a client-preferred supplier listing? • Is there an equipment list?
• Is there any specialised, long delivery equipment?
• What type of contract will you have?
• How much involvement does your client want or need in the purchasing cycle?

➢ Construction

• What is the exact location of the site?

• Which safety regulations are applicable?
• Can international subcontractors be used, or is there a prescribed local labour contractor?
• What are the assignment conditions you can offer staff?
• What is the nature of any heavy lifts?
• Is a construction camp provided and managed?

➢ Commissioning

• Is commissioning within our scope?

• Which safety regulations are applicable?
 • What is your client’s involvement?
• Is training of your client’s operators required?
• At what stage does your client want to start operator training?

➢ Planning

• What is the expected award date and what is the target completion date?
• Is there a prescribed work breakdown structure (WBS)?
• Is there a prescribed cost breakdown structure (CBS)?
• To what extent is planning and the cost control done?
• What are the procurement and subcontractor strategies?
• Is there an equipment list?
• Where are all the available drawings?
• What are the client reporting requirements?
➢ Cost Control

• Is there a prescribed work breakdown structure (WBS)?

• Is there a prescribed cost breakdown structure (CBS) within which we must work?
• To what extent are you going to engage in the planning and the cost control?
• How are you going to manage the transition from the estimate to the control budgets?
• Who are the nominated budget holders?
• What are the cost reporting formats and requirements to satisfy your client?
• What is the strategy for cost trending and forecasting?

➢ Document Control

• Do you have to use your client’s document numbering system or can you use your own –
or is it both?
• Can you use your document management systems and processes?
• Is there a need to engage with your client regarding the asset register?
• What is the extent of client involvement in the comment, review, or approval cycle?
• Does your client have a prescribed document distribution matrix for its organisation?

➢ Quality Management

• Which quality management system will apply to the project?

• Are any major changes to the quality management system required for this project, or
only the normal level of customisation?
Task 2
Discussing the process, you would follow in order to manage product delivery (PM) efficiently.

The process for managing the delivery of products where an external supplier is not involved in the
project and where all resources managed by the project are internal; it is also appropriate where
there is a mixture of both.
The process comprises the following:

➢ Step 1
Make certain that work on products allocated to each external team or team member
resource is properly authorised.
➢ Step 2
Ensure that packages of work are identified, discussed, agreed, authorised and accepted by
those responsible for the creation of products
➢ Step 3
Check that all interfaces between the customer and supplier organisations are identified,
recorded, observed and handled in an appropriate way.
➢ Step 4
Ensure that all the work is carried out, as agreed.
➢ Step 5
Ensure that the progress of work and forecasts of the time and effort to completion are
regularly assessed.
➢ Step 6
Check that all finished products conform to their agreed quality criteria.
➢ Step 7
Obtain approval for completed products. It will usually be at three levels – producer and
reviewer level, project manager level and, ultimately, endorsement by the project board at
the end of each project stage. These levels of approval will be reflected in both your
customer and specialist supplier organisations, although it is not necessary that either will
be working within a PRINCE environment; it is essential, however, that all involved are
working within a suitably controlled project management environment (Bradley, 2005).
Task 3

List of parameters and explaining how the project manager can achieve the success parameters.

Traditionally, you would measure the success of a project through the completion of your project
within the constraints of time, cost and performance.

These parameters have been expanded to include more factors.

These are:

• Within the allocated period

• Within the budgeted cost • At the proper performance or specification level

• With acceptance by your customer or user

• With minimum or mutually agreed-upon scope changes

• Without disturbing the main workflow of the organisation • Without changing the corporate
culture

Analysing Cost-time Trade-offs as a Measure of Success

Time and budget are the two primary objectives of project management. Execute the project at
minimum cost at all times, but there are some cost-time trade-offs. A project can be completed
earlier than the deadline if you institute double shifts or extra workers are brought in but will incur
additional costs, and you will do so only if there is a financial benefit to finishing early. The total
project costs are calculated through the sum of direct costs, indirect costs, and penalty costs.

• Direct costs

Direct costs include labour, materials and any other expenses directly related to project activities.

• Indirect costs

Indirect costs are administration, finance and other variables which can be reduced when the
project finishes early.

• Penalty costs
Penalty costs incur when a project runs overtime. It is, therefore, in some instances, necessary for
you to crash or expedite, to make the deadline.
Task 4
Discussing the categories and the costs associated with each.

➢ To make the best predictions for cost, as project manager, you need to do the following:
• Identify the work elements
• Distinguish the types of costs involved in the project
• Also, consider the following factors in your costing:
• Costs Estimated, actual, variability
• Contingencies Weather, suppliers, design allowance, exchange rate
• Profit Cost, contingencies, the remainder
➢ These are the costs that are specifically related to the activity. Cost such as:
• Direct management cost
Refers to running the project office costs. Costs such as salaries for a project
manager, project accountant, etc.
• Direct labour costs
The costs of the people working on the activity, for example, the builders, fitters,
etc.
• Direct material costs
The costs of the materials used in the activity i.e. the materials used to produce the
product.
• Direct equipment costs
The costs of the machinery and tools used to complete the activity.
• Direct expenses
Such as sub-contractor fees, equipment hire, etc. Direct costs are the easiest costs
to track and control as they relate directly to the activity.

These are the overhead costs which are not directly related to the activity but are necessary to keep
the business functioning properly. Costs such as:

• Indirect management costs

Costs related to salaries of senior management, sales and marketing, accounts dept
• Indirect labour costs
Cost related to the rest of the organisation’s employees, secretaries,
cleaners, etc.
• Indirect material costs
Stationery and cleaning materials.
• Indirect equipment costs
Cost such as computer.
• Indirect expenses
Insurance, Training, etc.
Indirect costs are often harder to track, and it is, therefore, advised to add an additional amount of
labour costs for the internal running costs.

An even more dangerous type of cost is referred to as “hidden costs”. These are costs that appear
out of nowhere and at the worst possible time. Examples are any “extra costs” created by poor
planning, machine breakdown or natural acts like floods, heat or wind. Source: (Burke: 2003).
Fixed costs are similar to indirect costs, as fixed costs are costs that do not change according to the
production or sales level. They are costs that are not dependent on the project or business activities.
Costs such as:

• Rent
• Property tax
• Salaries of permanent employees
• Fixed costs are those that do not change throughout the lifecycle of the project.

The variable costs are similar to direct costs, those costs affected by the production or sales levels,
and are subject to change according to the organisation’s output. Variable costs are expenses that
change in proportion to the activity of an organisation. Costs such as:

• Cost of labour for specific output

• Materials and equipment used in production or sales

• Variable costs, as the name suggests, are costs that change during the project lifecycle

• Construction projects usually have a long duration and can easily span several years

If a project’s duration is reduced or extended, this could affect the costs of the project. It is
important for you, as project manager, to identify costs that could increase with time.

Costs such as:

• Running costs (such as electricity and water) might change if the project time is reduced or
extended.

• Rent might change if your project is extended.

• If your project has to be completed in a shorter time, it might affect the labour cost rate especially
if overtime has to be implemented.

Ref from Damelin Online UNI4 Manuals

Module 5, page 6-8

Module 6, page 12-13

Module 7, page 6

Module 8, page 7-9