Professional Documents
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PROJECT MANAGEMENT
Faculty of Chemical Engineering
By: Cik Siti Khatijah Jamaludin
Course Outcomes
1) Ability to apply the knowledge and function
effectively as a project manager and team
member.
Program Outcomes
1) Ability to communicate effectively not only
with engineers but also with the community
at large.
2) Ability to function effectively as an
individual and in a group with the capacity to
be a leader or manager as well as an
effective team member.
3) Ability to apply entrepreneurial business
acumen in engineering.
Credit hours : 3
Contact hours : 4 (3 hrs lectures & 1 hr tutorial)
Core subject
No pre-requisite required
Methods of instruction: Lecture, tutorial,
presentation, cooperative learning & mini-projects.
Text books.
1) Project Management in Practice
(4th Ed., 2011)
Authors: Samuel J. Mantel Jr. , Jack R.
Meredith , Scott M. Shafer , Margaret M.
Sutton
Publisher: Wiley & Sons Inc.
Assessment
Final Exam
: 60 %
Mini-project
: 20 %
Test
: 10 %
In-class assessment : 10 %
Total : 100 %
Instructors/ Lecturers
Week 1-7 : Cik Siti Khatijah Jamaludin
email :sitikhatijah@salam.uitm.edu.my
Contact : 03-5544 8209 / 017-4595937
room : Lecturers Room, Level 9, FKK
Week 8-14: Puan Siti Fatma Abd. Karim
Lecture 1 Week 1
Learning Objectives
1) To define the term project
2) To recognize the characteristics of a project
3) To provide examples of projects
4) To differentiate between a project and a nonproject
5)Define and provide the scope of project management
6)Explain the difference between project management
and general management
What Is a Project?
A project is a temporary endeavor undertaken to
accomplish a unique product or service-(PMBOK
Guide 2000, p. 4)
Stands for Project
Management Book of
Knowledge.
a book which presents a
set of standard
terminology and
guidelines for project
management
Published by: Project
Management Institute
(PMI) - http://www.pmi.org
Involve uncertainty
Has unknown elements, which therefore create risk
Brings about change
Often multidisciplinary
Example of Projects
Building a house
Yes
No
Yes
No
Yes
No
Planning a wedding
Yes
No
Setting up a business
Yes
No
Megaprojects
Examples of megaprojects
Program
Program: A group of related projects managed in
a coordinated way to obtain benefits and
control not available from managing them
individually.
Project Management
Management : is the process of Planning, Organizing,
Controlling and Measuring
Planning: The most critical and gets the least amount of
our time
**Beginning with the End in mind-Stephen Covey**
Organizing: Orderly fashion
(Contingent/Prerequisites)
Controlling: Critical if we are to use our limited resources
wisely
Measuring: To determine if we accomplished the goal or
met the target.
Project Stakeholders
Stakeholders are the people involved in or affected
by project activities
Stakeholders include
the projects sponsor/client and its project team
he projects contractor and its project team
support staff
users
suppliers
opponents to the project
Project Management.
General
Management
Higher
level of
conflict
Conflict
Unique
Uniqueness
Planning
Budget
Lower level
of conflict
Routine
Requires
good
planning
Primarily
modifications of
budgets for the
same activities of
previous periods
General
Management
Each project
has own
schedule
Schedule/
sequence
Conflict
of activities
Not altered
Yes (crosses
disciplines
freely)
Multidisciplinary
No (rarely
crosses the
boundary)
Difficult to define.
Responsibility
without the
authority of rank or
position is common
in PM
Managerial
Hierarchy
Structured
and
reasonably
well defined
Learning Objectives
By the end of this lecture, students should be able to:
3 Goals of a Project
All projects have 3 interrelated objectives:
Scope : Generate deliverables that satisfy the client
Time : Finish on schedule
Cost : Meet the budget limit
But.
Types of negotiation in
PM
Win-win
negotiation
Win-lose
negotiation
Time
Beginning/Early Stage
Idea/ concept developed
Project authorized
PM must ensure project plan reflects the
wishes of client/sponsor.
PM must gauge the abilities of the project
team.
PM must ensure the project plan is
consistent with the goals of his/her firm.
Middle Stage/
Implementation Stage
PM must keep the project on budget
and schedule
PM must anticipate uncertainties and
interruptions in progress, and negotiate
appropriate trade-offs to minimize
damages.
Final Stage/End
Stage
Results delivered, final
report issued
PM to ensure the
specifications of the project
are truly met.
PM must must handle all the
closing out details, making
sure there are no loose ends.
The
S shape
The
J shape
Project Selection
The process of evaluating individual projects or
groups of projects, and then choosing to
implement some set of them so that the
objectives of the parent organization will be
achieved.
Is the project
required by law or
the rules of an
industrial
association?
Is the project
potentially
profitable?
Does the
organization
currently have the
capacity to carry out
the project on its
proposed schedule?
Conditions to
Consider in a
Project
Selection
Process
Does the
organization/firm
have the knowledge
and skills to carry out
the project
successfully?
Project Selection
Models
Numeric
Models that use numbers for
evaluation.
Examples: Payback Period,
Return on Investment (ROI),
Discounted Cash Flow, Internal
Rate of Return, Profitability
Index, Scoring Methods.
a.k.a. project
selection
methods
Nonnumeric
Models that do not use
numbers for evaluation.
Examples: Sacred Cow,
Operating/ Competitive Necessity,
Product Line Extention,
Comparative Benefit Model.
Realism
Capability
Flexibility
Cost
Easy
Computisation
Nonnumeric Models
Sacred Cow
Operating Necessity
Competitive Necessity
Q-Sort Method
Q-Sort method is a type of Comparative Benefit Model.
It is normally used as a rank-ordering method when
there is a large number of projects (>15 or 20 projects)
need to be rank-ordered simultaneously in an
organization.
Of the several techniques for ordering projects, the QSort is one of the most straightforward.
Class Activity
You are given a handout on Q-Sort method by
your instructor. In a group of 3, discuss the Q-Sort
method. Thereafter, you are required to present
your understanding on Q-Sort method in the
class.
Numeric Models
Financial Assessment
Methods/ Profitability
Methods
Select projects on the
basis of their expected
economic value to the firm
Concerns with cost and
revenues of the projects
Non-discounted
Cash Flow
Payback Period
Discounted Cash
Flow
Scoring Methods
Initial Cost
Year
0
1
2
3
4
Payback Period
3 years
Example 3
Cash Flows (RM)
Year
Project A
Project B
Project C
(120000)
(120000)
(120000)
60000
45000
40000
60000
45000
70000
3
Payback
Period
60000
45000
80000
2.67 years
2.125 years
2 years
Future Value
Present Value
In order to compare Ringgit today to Ringgit in the future, we must convert one
into an equivalent amount of money in the other's time period. For example,
assume you are asked, "Which do you prefer to receive - RM4,000 today or
RM5,000 in four years?" To compare the two numbers, we might convert the
RM5,000 to be received in five years into an equivalent amount of money in
"today's Ringgits.
The time value of money concept is concerned with two topics: (1) future
value, and (2) present value.
As shown in the illustration below, the two are mirror images of one
another. (Year 0 stands for "at the present time" or "right now" since year 1
would be 1 year from now, etc.) :
Discount
rate
or
minimum required rate
of return or cost of
capital or cut-off rate
or hurdle rate
Where,
NPV Example
Initial investment of RM100,000 with a net
cash inflow of RM25,000 per year for 8 years,
a required rate of return of 15%, and an
inflation rate of 3% per year, we have:
8
(1 + 0.15 + 0.03)t
RM 25,000
t =1
= RM1,939
The present value of the inflows is greater than the present value of the outflow the
NPV is positive. Therefore the project is acceptable.
NPV Example 2
The management of Fine Electronics Company is
considering to purchase an equipment to be attached with
the main manufacturing machine. The equipment will cost
RM6,000 and will increase annual cash inflow by RM2,200.
The useful life of the equipment is 6 years. After 6 years it
will have no salvage value. The management wants a 20%
return on all investments.
a) Compute net present value (NPV) of this investment
project.
b) Should the equipment be purchased according to NPV
analysis?
Meredith & Mantel (2009) Project management: a managerial approach. 7th ed. Wiley.
Project A
1
1
1
0
0
0
1
1
1
1
0
0
7
Project B
0
1
0
1
0
1
1
1
0
1
1
1
8
Selection Criteria
Alignment with core business
Top-management support
Positive impact on stakeholders
Stage of technology development
Adequate knowledge of technology
Existing facility and equipment
Availability of raw materials
Potential market for output
Probability of share of market
Ability to reach market timely
Adequate return on investment
Adequate payback period
TOTAL
Project A
4
4
5
1
2
1
5
5
5
5
2
2
41
Project B
4
4
2
4
2
3
5
5
1
3
3
5
41
to
its
perceived
Weighting
Score
4
4
5
1
2
1
5
5
5
5
2
2
Project B
Weighted
Score
52
40
50
7
14
4
45
50
50
40
16
10
378
Score
4
4
2
4
2
3
5
5
1
3
3
5
Weigh
Score
52
40
20
24
14
12
45
50
10
24
24
25
340