PROJECT MANAGEMENT

MODULE 8 NOTES

Overview
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Project Management

CONTENTS
1. Introduction 3
2. Making a success 3
3. Who are the stakeholders? 4
4. Who is the project manager? 6
5. Budgets 7
6. Wrap-up 10

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PROJECT MANAGEMENT | MODULE 8 NOTES | OVERVIEW
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1. INTRODUCTION
During the course, we addressed the project management terminologies, methodologies, and stages in
the lifecycle. We’ll take all the definitions of project management into consideration and see that project
management can be defined as the discipline of planning, organising and managing resources to bring about
the successful completion of specific project goals and objectives. The project management discipline can be
highlighted from various angles and sub-disciplines and contains important issues such as project objective
and scope management, human resource management and setting the roles and responsibilities of all
participants and stakeholders of a project, planning principles and resource allocation models.
The characteristics of a project are that it is unique in nature and temporary with a start and an ending. Usually,
there is involvement from various departments, and the project team has to be multi-disciplinary.
By the end of this module, you should be able to:
• Describe the success parameters
• Explain who is the stakeholder
• Identify who is the project manager
• Classify project management communication

2. MAKING A SUCCESS
Successful projects are all executed within certain parameters:

Someone is in charge
Even in a two- or three-person project, someone needs to make the final decisions and is accountable to your
‘client’ (internal or external) for the success or failure of your project.

Your project is well-defined

Some projects fail because no one defined what success is. Is it clear what the outcome is and how you’ll know
when your project is complete?

Everyone understands your project goals

But it’s not enough that your project goals be explicit, everyone on your project has to understand the goals. It
is why the kick-off or sunrise meeting is so important. It’s also important that people who join your project after
the kick-off be given an orientation so they can understand your project goals and plan too.

The timetable is realistic

Your project timetable is likely to be ‘aggressive’ - a euphemism for barely achievable. But it still has to be
achievable, not a fantasy. Software developers have long had a mantra: “You can’t make a baby in one month
by getting nine women pregnant.” Some things take time. Good project managers know how to make realistic
time estimates.

People are committed and accountable

Do your team members care about the outcome of your project? Do they deliver on their commitments? Are
they present and engaged in project meetings? If not, the chances of success are dismal.

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Management is engaged
Is management paying attention to the progress of your project? There are few things worse than no one
caring about your project.
It is up to your project board through the project management to control the various parameters and ensure
that you deliver your project according to the specification of your customer’s requirements. We think of
project managers as small business managers. Many of the characteristics that are required to be successful in
managing a small business are the same as those that are necessary for the proper management of projects.
In fact, since many project managers today are rooted in technical disciplines, it is surprising that the skills they
are called upon to have were previously considered unusual skills for technical managers.
Today, as a project manager, you are expected to be familiar with and have considerable knowledge in the
areas of finance, accounting, sales, marketing, manufacturing, research, and development, strategic and
operational planning.
Additionally, you need to be fully versed with the characteristics of organisations, personnel, administration,
managing work relationships, motivation, and other people skills.

Additionally, you need to be fully versed with the characteristics of organisations, personnel,
administration, managing work relationships, motivation, and other people skills.

It is necessary because project managers are managing projects much like people manage small businesses.
The multi-disciplined project team becomes an entity in itself, focused on the needs of the project and trying
to satisfy those needs in the best way possible.

3. WHO ARE THE STAKEHOLDERS?

The stakeholder in a project is a person or organisation:
• Who is actively involved in the project
• Whose interests may be positively or negatively affected either by the work of the project or the outputs
from the project
• Who may exert influence over the project or its deliverables

All stakeholders are not equal. Every stakeholder has expectations, and requirements and you need to handle
the stakeholder in the way he/she expects. By knowing your stakeholder, their needs, expectations, and
requirements increase the chance of a project’s success. If any important stakeholder is missed then in later
stages you, as a project manager, may face many difficulties, for example, causing a delay in the project, cost
overrun, and in the most severe case, your project may be terminated.
It is extremely important for you to identify all stakeholders at the beginning of your project and create a
stakeholder management strategy to manage them as early as possible. It will help you to run your project
smoothly.
Stakeholders can be positive or negative. A positive stakeholder sees your project’s positive side, benefited by
its success, and helps your project team to complete your project successfully.
On the other hand, a negative stakeholder sees the negative outcome of your project, may be negatively
affected by your project and you will be less likely to successfully complete your project.
There are two categories of stakeholders: internal and external stakeholders.

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Internal
Internal stakeholders are internal to the organisation and will include:
• A sponsor
• Internal customer or client (if project arose due to internal need of an organisation)
• Project team
• A program manager
• A portfolio manager
• Management
• Other group’s manager internal to the organisation; e.g. functional manager, operational manager or
admin manager

External
External stakeholders are external to the organisation and will include:
• External customer or client (if project arose due to a contract)
• End users of project’s outcome
• Suppliers
• Sub-contractors
• Government
• Local communities
• Media

Your project owner is the main stakeholder and stands to win or lose the most in terms of the outcome of
your project. The project owner will accept full authority for your project as well as have accountability for the
performance of your project. The project owner will provide the resources. The responsibilities of the project
owner, who will normally sit on the project board, are to:
• Give guidance on the overarching vision and strategy in terms of the project
• Ensure that project objectives remain aligned with corporate and business needs
• Identify the project manager
• Supervise the processes, procedures, budget and monitoring
• React pro-actively on potential risks
• React on issues (i.e. risks that materialised)
• Ensure that the project has the required resources
• Help to eliminate the conflict of resources
• Manage the benefits of the project (after completion of the project)

In project management, it is very important for all your stakeholders to understand the responsibilities
and accountabilities of each person. While smaller teams can have more informal rules to keep track of
responsibilities, in bigger teams with cross-department and inter-organisational collaboration, it is very
important to create a more formal process to track responsibilities. It helps reduce confusion and leads a
project to faster completion.

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4. WHO IS THE PROJECT MANAGER?

A great influencer of the success or failure is the appointment of the right project manager. Experience in the
specific type of project is always crucial. As the single point of responsibility, it is you, as the project manager,
who integrates and co-ordinates all the contributions and guides them to complete the project.
You are responsible for:
• Obtaining buy-in from all stakeholders
• Managing relationships with all stakeholders
• Selecting the core project management team
• Determining roles and responsibilities
• Acknowledging and rewarding performance
• Reviewing team performance
• Providing regular feedback to project board

Ultimately, your role as the project manager is to manage your project including:

The ideal characteristics of a project manager are to be flexible, adaptable, creative and imaginative, self-
disciplined, well-organised, confident and with attention to detail. The project manager must be a leader and
be able to motivate the human resources. The project manager should also be somebody who understands
finances and can control budgets.

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5. BUDGETS
The definition of project success often includes completing your project within budget.

Developing and controlling a project budget that will accomplish your project objectives is a
critical project management skill.

Although clients expect you to execute your project efficiently, cost pressures vary on projects. On some
projects, your project completion or end date is the largest contributor to your project complexity. The
development of a new drug to address a critical health issue, the production of a new product that will
generate critical cash flow for a company, and the competitive advantage for a company to be first in the
marketplace with a new technology are examples of projects with schedule pressures that override project
costs.
Often you, as a project manager, will be evaluated on your ability to complete a project within budget. If
you have effectively managed your project resources and project schedule, this should not be a problem.
It is, however, a task that requires your careful attention, as there are many sudden changes, referred to as
“variables”. It includes exchange rates, a sudden drop in demand and price increases. The budget is, in fact,
a financial plan of how you allocate the money in your project. Before a budget can be drawn up, there are
certain factors that you need to consider and analyse. Aspects such as working out what all the project costs
are then estimating how much each activity will cost.
The reality is that the real cost of your project is unknown until it is complete. All projects need money whether
the project only consists of labour costs to a huge construction project or one that uses masses of labour,
materials, and equipment. You have to use the information available to you to make the best possible cost
“estimations” as possible. It is an estimate and is the most accurate guess you, as a project manager, can make
regarding the project cost. It does not mean that you make rush decisions and make up figures; it means that
based on the information you have available, you calculate your figures.
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

When the estimated cost of an item is uncertain, your project budget often includes a design
allowance.

It is money that is set aside in your budget “just in case” the actual cost of the item is wildly different than your
estimate. Unusual weather or problems with suppliers are always a possibility on large projects. Companies
usually include a contingency amount in the project budget to cover these kinds of things.

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All projects incur costs. Project costing is a key factor in making project decisions. You need to be aware of the
type of costs that impact the project. Project costs can be divided into the following categories:

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

Costs related to the rest of the organisation’s employees, secretaries, cleaners, etc.

Indirect material costs

Stationery and cleaning materials.

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Indirect equipment costs

Costs such as computers.

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 a 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.

Monitoring of in progress costs, timescales and quality is a major issue for consideration throughout
your project. It is not merely sufficient to have a workable project plan. It is also vital that you manage the
implementation carefully and as it unfolds; or if your plan is modified that you do so in a controlled and
informed manner. The key to solving any problem is catching that problem as early as possible. A problem
caught early may be trivially easy to solve. The same problem caught too late may be impossible to solve.

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6. WRAP-UP

A successfully completed project is one where the specified level of quality is achieved, on or before the
deadline, and within budget. Each of these parameters is specified in detail during the planning phase of the
project. These specifications then form the basis for control during the implementation phase. The monitoring
of in progress costs, timescales and quality is a major issue for consideration throughout the project.
It is insufficient to have only a workable project plan. It is also vital to manage the implementation of that plan
as it unfolds carefully; or if you modify the plan that you do so in a controlled and informed manner. The key to
solving any problem is catching that problem as early as possible. A problem caught early may be trivially easy
to solve. The same problem caught too late may be impossible to solve.
You have now reached the end of your course. Please make sure that you have completed all of your
assignments. Remember to upload your assignment answers to Moodle so that you can get the results and
important feedback from your tutor.
As soon as your results have been consolidated by your tutor, and should you have successfully competed all
of the assignments, a certificate will be issued to you.

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