1. Planning the project
Project Management

2. Strategic and tactical levels of planning
Hierarchy of plans
Strategic plans:
Focus on the big picture
Long term goals (2-5 years)
„What?” & „Why?”
Tactical plans:
Focus on the operations
Short term goals (1-18 months)
„How?”

3. Strategic and tactical levels of planning
Strategy provides a framework for the tactics. Tactical plans should fit the needs of the strategy.
To permit effective tactical decision making strategy should be:
Explicit
Intelligible (easy to understand)
Capable of accepting change
Capable of being monitored
Tactical plans on higher levels act as ‘strategies’ for lower levels in the organisation.

4. Opportunity cost
That which is sacrificed by choosing or failing to adopt a different course of action to that which is currently planned to be taken; =
the value of the next best alternative foregone (that is not chosen).
Every time when we make a decision, there is an opportunity cost. It is even has an opportunity cost not to do anything. It is easier to imagine as the utility/gain we have failed (or we will fail) to obtain.

5. Opportunity cost: simple examples
There are two alternative project. Only one of them can be selected.
Project ‘A’ has an expected net cash flow of 100.
Project ‘B’ has an expected net cash flow of 80.
What is the opportunity cost of choosing project ‘A’?
What is the opportunity cost of choosing project ‘B’?
There are 3 investment opportunities with given expected net cash flow:
‘A’ = 300; ‘B’ = 250; ‘C’ = 150.
Only one investment can be made. Which one should be selected, and what is its opportunity cost?
Someone has 1000 HUF. It can be deposited at a bank (interest is 15%). What is the opportunity cost of not investing?

6. The project plan
In its simplest form: „it is an attempt at the timetable for ALL the activities which make up the project”.
As a minimum, it sets out:
‘how’
‘who does what’
‘when’
A more sophisticated plan also states:
‘what quality’
‘what cost and resources’
Its preparation is an iterative process with continuous reviewing and updating throughout the life of the project (it is never static document but a working tool).

7. Detailing the plan Amount of details included should vary in time.
Short term: fully detailed
The short-term horizon is moving forward (the plan become more-and-more detailed).

8. Who is responsible for the project plan?
The project manager and the project management team
With the advice and assistance of:
the project sponsor
the customer(s)
and other stakeholders

9. Elements of project planning
Project goals (Project SOW):
Project product specifications, costs, quality, deadlines, project deliverables etc.
Project management plan
Work breakdown structure (WBS)
Project network (connections of tasks)
Responsibility assignment
Project schedule (timetable)
Budget (resources & costs)
Risk assessment and risk management
Iterative process

10. Statement of Work (SOW)
SOW for the whole project: a detailed narrative description of the work required for a project. Can be written in the form of a legal contract, if we do the project for an other organisation.
The effective SOW contains:
Introduction and background
Technical description
Timeline and milestones
Client expectations
There are SOWs for subprojects and even tasks, too.

11. Statement of Work for the tasks within the project
Describes the activities in the tasks in sufficient detail.
Content:
estimated durations
resources required
costs
measures of perfomance (performance indicators)
risks and uncertainties
reporting procedures

12. Project deliverables (milestones)
a list of things or activities that need to be delivered to meet the defined goals
when and how each item or activity must be delivered
an estimated delivery date for each item or activity

13. Work Breakdown Structure
Similar to the assembly (Gozinto) charts.
A tool used to define and group a project's discrete work elements (tasks) in a way that helps organize and define the total work scope of the project.
The project is divided into hierarchical groups of tasks (work packages, and work units).
Tasks, work packages and work units should be budgetable (money, labor hours, and other resources).
The technique of creating a WBS is non-uniform.
Gozinto chart: named after the FICTIVE Italian mathematican, Zepartzat Gozinto .

14. Assembly chart (Gozinto chart) example
The technique was developed by Andrew Vázsonyi (and not by the famous Italian mathematician Prof. Zepartzat Gozinto who did not ever exist)

15. Original slide is from the internet
Example of a WBS
Original slide is from the internet

16. Possible levels in a WBS
Project
Sub-projects
Deliverables
Sub-deliverables
Work packages
Work units

17. Another WBS example

18. Another example of WBS: “Holiday”
travel
documents
booking
household
passport
tickets
choose
resort
confirm
cat!
brochures
insurance
Original slide is from the internet

19. Discussion question
What is the greatest difference between a Gozinto and a WBS chart?

20. Gantt charts
Named after Henry Gantt ( ) an American mathematical engineer.
A Gantt chart is a type of bar chart that illustrates a project schedule.
Gantt charts illustrate the start and finish dates of the work elements (tasks) of a project.
Elements of a Gantt chart:
Task names
Start and finish dates of each tasks (graphically)
Dependency relationships
Task duration in an additional column
Lag relationships (start-to-start, finish-to-start etc.)
Name of the project worker responsible for the task or
Resource specifications
other

21. Gantt chart example ID Activities Who is responsible? Time intervals 1. 2. 3. 4. 5. 6. 7. 8 9
10.
11.

22. Benefits of the Gantt chart
Easy to read and comprehend
Easy to create
Identify the project network coupled with its schedule baseline
Allow for updating and project control
Useful for resource planning

23. Limitations
Can become quite unwieldy for projects with too many activities.
Projects are often too complex for a Gantt chart.
Gantt charts represent only a part of the project constraints.
The technique of creating a Gantt depends on the features of the project.

24. Gantt chart example
Some Gantt charts also show the dependency relationships between activities. 6. 5. 4. 3. 2. 1.
time
activities

25. Gantt chart example

26. Gantt chart example
Gantt charts can be used to show current schedule status using percent-complete shadings, or colour lines and a vertical "TODAY" line. 6. 5. 4. 3. 2. 1.
time
Activities
today

27. Readings
Lockyer – Gordon (2005) Chapter 4

28. Seminar exercises

29. WBS problem solving 1
There is a marketing-research project containing a focus group interview and a questionnaire survey with 200 responders. The survey is based on the analysis of the focus group results.
For the focus we have to gather the participants (7 days), organize the event (place, time, equipment etc. – 2 days), implement the interview (1 day), record the interview (2 days), analyse it (3 days) and write a brief research report for the client/sponsor (1 day).
For the survey we have to construct the questionnaire (2 days),test and modify it (1 day), do the sampling (2 day), train the interviewers (1 day), fieldwork (2 days), record the data (1 day), analyse the data (2 days) and write the final study (3 days).
The project manager want to keep a 5 days buffer time for safety at the end of the project.

30. Gantt exercise 1
Given the marketing research project plot a Gantt chart with the following information:
Task names
Task durations
Time schedule
Use a backward planning (deadline is the 30th day) and try to reach the shortest total project time (TPT).

31. WBS problem solving 3
A firm plans to increase its manufacturing capacity with investing into 2 new production facilities (A & B). To this, the necessary activities are: 1. Planning (both): 3 months (resp.: R&D dept.) 2. Authorization of the plans (both): 4 months (resp.: legal dept.) 3.1. Construction of building ‚A’: 4 months (production dept.) 3.2. Construction of building ‚B’: 6 months (production dept.) 4.1. Installing machinery in building ‚A’: 1 month (R&D dept.) 4.2. Installing machinery in building ‚B’: 1 month (R&D dept.) 5. Working in test mode (both): 2 months (production dept.) 6. Final authorization (both): 1 month (legal dept.)

32. GANTT exercise 3
Given the construction project plot a Gantt chart with the following information:
Task names
Responsibilities
Task durations
Time schedule
Calculate the TPT (Total Project Time)
Mark precedence relations

33. Thanks for the attention!