PROJECT PLANNING & MANAGEMENT

Definition of Terms
Project
 A project - is an assignment that has an identifiable start and a finish.
 It consists of a series of tasks directed towards a specific outcome/goal.

Project Planning
 Project Planning - relates to the use of schedules to plan and subsequently report progress
within the project environment.

Project Management
 Project management - is the process of combining systems, techniques and knowledge to
complete a project within established goals of time, budget and scope.
 It is the process of leading a team of capable people in planning and implementing a series of
related activities that need to be accomplished on a specific date with a limited budget.

Project Scheduling
 Project Scheduling - is the process of splitting the project into tasks, time estimates and the
resources required to complete each task.
 It involves organizing tasks concurrently to make optimal use of the workforce.

Project Plan
 Project Plan - is a plan showing the resources available to the project, the work breakdown
and schedule for the work.

Characteristics of a Project
1. It has a start and finish
2. It is unique and one time activity
3. It involves several people
4. It has a limited set of resources
5. It has a time frame for completion
6. Sequencing of activities and phases
7. No practice or rehearsals
8. High level of subcontracting
9. Risk and uncertainty exists

Factors That Lead to Successful Projects

 For a project to succeed, a manager should consider the following factors
1. Good/dynamic project team – involves the use of talented project team
2. Good Planning - All stakeholders should be on board during the planning process and know
in which direction the project is going to go.
3. Effective/Open Communication - Keeping open communication within the team is
absolutely essential.
4. Careful Risk Management - carry out risk analysis and produce an action plan for the risks
that the project could face.

Page 1 of 15 Thursday, May 28, 2020

5. Good Project Closure - Releasing people correctly to minimize impact on morale and
performance
6. Good Control - Taking regular measurements of performance and hold regular and frequent
meetings to discuss the outcome

OVERVIEW OF PROJECT PLANNING

 Project planning is at the heart of the project life cycle.
 It tells everyone involved
 Where you’re going
 How you’re going to get there.

Purpose of Project Planning

 The purpose of the project planning phase is to:
1. Establish project requirements
2. Establish cost, schedule, list of deliverables, and delivery dates
3. Establish resources plans
4. Obtain management approval and proceed to the next phase

Project Objectives
 Project Objectives - are goals, plain and simple.
 They describes the project’s outcomes: intended and direct, short- and medium-term effects
on the target group.

Project Planning Processes

 The basic steps of project planning are:
1. Scope planning – specifying the in-scope requirements for the project to facilitate creating
the work breakdown structure
2. Preparation of the work breakdown structure – spelling out the breakdown of the project
into tasks and sub-tasks
3. Project schedule development – listing the entire schedule of the activities and detailing
their sequence of implementation
4. Resource planning – indicating who will do what work and at which time to accomplish the
project tasks
5. Budget planning – specifying the budget cost to be incurred at the completion of the project
6. Procurement planning – focusing on vendors outside your company and subcontracting
7. Risk management – planning for possible risks and considering optional contingency plans
and mitigation strategies
8. Quality planning – assessing quality criteria to be used for the project
9. Communication planning – designing the communication strategy with all project
stakeholders

Project Planning Cycle

 Project planning is a continuous process.

Page 2 of 15 Thursday, May 28, 2020

Parts of a Project Plan
 A project plan has six parts.
1. Need: - proves that your project is actually solving a problem and is needed by the people.
2. Aims: Aims describe the overall changes and benefits that you want to achieve.
3. Outcomes: - Outcomes lay out the specific differences that you want to make.
4. Outputs: - Outputs describe the activities and services your project will deliver.
5. Inputs: - Inputs describe what you need to deliver your project. This includes a budget.
6. Monitoring and Evaluation: - describes
 What information you are going to collect throughout the project
 How it will be collected
 How it will be used to evaluate whether or not the project was a success.

Project Life Cycle

 Project Life Cycle - provides a framework for managing any type of project.
 It refers to the process that is followed by project managers when moving through stages of
project completion.

Page 3 of 15 Thursday, May 28, 2020

Phases of Project Life Cycle/ Phases of Project Management
 The Project Management Life Cycle has four phases:
1. Initiation/ Conceptualization Phase – starting the project
2. Planning phase – organizing & preparing
3. Execution phase – carrying out the work
4. Closure/termination phase – closing the project

Phase 1: Initiation Phase /Conceptualization Phase

 This is the starting point of any project or idea.
 This is where the project’s value and feasibility are measured.
 A strategic need for the project must be recognized by management.

Phase 2: The Planning Phase

 This is the preparation of a well-written project plan after the management has given the OK
to launch a project.
 A well-written project plan gives guidance for
 Obtaining resources
 Acquiring financing
 Procuring required materials.

Phase 3: The Execution Phase

 This is when the actual work of the project is performed.
 Required materials, tools, and resources are transformed to reach the project goals.
 Monitoring and control are combined with execution because they often occur at the same
time.
 As teams execute their project plan, they must constantly monitor their own progress.

Phase 4: Termination Phase

 Termination Phase is also referred to as Project Closure.
 This phase begins once the project has been completed.

The Termination Phase typically involves:

 The disbandment of the project team.
 Personnel and tools are reassigned to new duties.
 Resources released back to parent organization.
 Project transferred to intended users.

Page 4 of 15 Thursday, May 28, 2020

 PROJECT TRIANGLE /SCOPE TRIANGLE

 Scope Triangle - is also known as the Quality Triangle.

 In project planning, the triangle shows the Relationship between
1. Resources - cost
2. Time - schedule
3. Quality-scope

1. Time – is the available time to deliver the project

2. Cost – represents the amount of money resources available
3. Quality – represents the fit-to-purpose that the project must achieve.

 Most projects have a specific time limit, budget and scope.

 The combination of these elements (time, money and scope) is referred to as the project
triangle or the triple constraints of a project.

Note
 If u adjust any one side of the triangle, the other two sides are affected.
 For example if you decide to adjust the project plan to:
 Reduce the scheduled time – you might end up with increased costs and a decreased scope
 Reduce the project budget – the result might be a longer schedule and a decreased scope
 Increase scope – your project might take more time and cost more money in the form of
resources, such as workers.

PROJECT TEAM
 A project team - is a group of individuals teamed together for the purpose of working
towards a particular project.

Responsibilities of the Project Team

1. Understanding the work to be completed
2. Planning the assigned activities in more detail if needed
3. Completing assigned work within the budget, timeline and quality expectations
4. Informing the project manager of issues, scope changes, risk and quality concerns
5. Proactively communicating status and managing expectations

 Project team includes: -

1. Project Manager
2. Team Leader
Page 5 of 15 Thursday, May 28, 2020
 3. Project Team Members
4. Project Sponsor
5. Business Analyst

Project Manager
 A project manager - is a person who is responsible for leading the project.
 He spearheads of a project.
 He ensures that the project is completed within the specified deadline and budget.

Duties of a Project Manager:

1. Develop a project plan
2. Identify needed resources
3. Manage deliverables according to the plan
4. Recruit project staff
5. Lead and manage the project team
6. Determine the methodology used on the project
7. Establish a project schedule and determine each phase
8. Assign tasks to project team members
9. Negotiate with higher authorities
10. Provide regular updates to upper management
11. Communicating with all the stakeholders - project sponsors, clients, external vendors,
management, project team member, etc.

Team Leader
 A team leader - directly reports to the project manager especially in large projects.

Roles of Team Leader

1. Initiating - the leader draws attention to actions that must be taken for team goals to be met.
2. Modeling - He uses his own behavior to shape others’ performance
3. Negotiating - He negotiates for the resources needed.
4. Listening - He gathers from the environment signal of impending trouble, employee
discontent, and opportunities for gain.
5. Coaching - He finds ways to help team members maximize their potential and achieve
agreed-upon goals.
6. Working member - the leader must do a share of the work, particularly in areas where he has
special competence.
7. Coordinating team logistics
8. Communicate team status, task accomplishment, and direction

Project Team Members

 Project team members - are the individuals who actively work on one or more phases of the
project.
 They may be in-house staff or external consultants, working on the project on a full-time or
part-time basis.

Duties of Project team members:

i. Contributing to overall project objectives
ii. Completing individual deliverables

Page 6 of 15 Thursday, May 28, 2020

 iii. Providing expertise
iv. Working with users to establish and meet business needs
v. Documenting the process

Project Sponsor
 The project sponsor - is the driver and in-house champion of the project.
 They are typically members of senior management – those with a stake in the project’s
outcome.
 Project sponsors work closely with the project manager.

Duties of the Project Sponsor:

 Make key project decisions for the project
 Approve the project budget
 Ensure availability of resources
 Communicate the project’s goals througout the organization

Executive Sponsor
 The executive sponsor - is ideally a high-ranking member of management.
 He or she is the visible champion of the project with the management team
 He is the ultimate decision-maker, with final approval on all phases, deliverables and scope
changes.

Duties of Executive Sponsor:

i. Carry ultimate responsibility for the project
ii. Approve all changes to the project scope
iii. Provide additional funds for scope changes
iv. Approve project deliverables

Project Analyst
 Project Analyst - defines needs and recommends solutions to make an organization better.
 They ensure that the project’s objectives solve existing problems or enhance performance,
and add value to the organization.
 They can also help maximize the value of the project deliverables.

Duties of Project Analyst:

1. Assist in defining the project
2. Gather requirements from business units or users
3. Document technical and business requirements
4. Verify that project deliverables meet the requirements
5. Test solutions to validate objectives

Benefits of Project Management

1. Improved communications
2. Prediction of potential problem areas
3. Systems integration
4. Tighter control
5. Better efficiency in delivering services
6. Improved / increased / enhanced customer satisfaction

Page 7 of 15 Thursday, May 28, 2020

7. Growth and development of the team members

Ways of improving communications in projects

1. Sharing important information regularly
2. Make it Transparent by making any required information accessible by all the stakeholders
3. Make it engaging by involving the stakeholders at all stages
4. Getting the views of the stakeholders regularly towards the project

RISK MANAGEMENT PLANNING

 Risk Management Planning - is the Prediction of potential problem areas in Project
Management
 You can use risk planning to
i. Identify potential problems that could cause trouble for your project,
ii. Analyze how likely they are to occur,
iii. Take action to prevent the risks you can avoid, and
iv. Minimize the ones that you can’t.

 There are four basic ways to handle a risk.

1. Avoid: - If you can prevent it from happening, it definitely won’t hurt your project.
2. Mitigate: If you can’t avoid the risk, you can mitigate it. This means taking some sort of
action that will cause it to do as little damage to your project as possible.
3. Transfer: One effective way to deal with a risk is to pay someone else to accept it for you.
The most common way to do this is to buy insurance.
4. Accept: When you can’t avoid, mitigate, or transfer a risk, then you have to accept it.
There’s nothing you can do to reduce its impact.

ELEMENTS OF COST

 Prime Cost = Direct Material + Direct Labour + Direct Expenses

 Overheads = Indirect Material + Indirect Labour + Indirect Expenses

 Costs are classified into

1. Direct costs
2. Indirect costs.

Direct cost –

Page 8 of 15 Thursday, May 28, 2020

 Direct cost – are the cost which can be identified and allocated to a particular cost object or
product.
 The cost that can be directly attributable to/identified with/ associated with the specific cost
center or product.

Classes of Direct Costs

 The direct costs are classified into the following parts:
1. Direct Material: The cost of material that can be allocable to production e.g. raw material
consumed during production of the unit.
2. Direct Labor: Wages to the laborers that can be identified with a cost object e.g. bonus,
gratuity, provident fund, perquisites, incentives, etc.
3. Direct Expenses: It includes all the other expenses that are directly linked to the production
of a product e.g. Job processing charges, hire charges for tools and equipment,
subcontracting expenses.
 When all these three costs are taken together, they are known as Prime Cost

Indirect Cost
 Indirect cost – are all the costs which are not tied to a particular cost center or cost object,
i.e. It is difficult to trace the cost to a single product
 The indirect cost is divided into the following categories:
1. Indirect Material: Material Cost which cannot be identified with a particular product or
project.
Example: Lubricants
2. Indirect Labor: Salary to the employees that cannot be allocable to a particular cost
object.
Example: Salary to the management team and employees of the accounts department.
3. Indirect Expenses: All the expenses other than indirect material and labor are included
in this category.
Example: Interest, Rent, Tax, Duty, etc.

COSTING
 Costing - is a process for determining the cost of a product.
 It is a technique for determining the cost of production of any product or service in the
organization.
 A product costing system helps in estimating: -
1. The closing value of materials inventory,
2. Work-in-progress
3. Finished goods inventory.

Costing Systems
 There are two main cost accounting systems:
1. The job order costing
2. The process costing.

1. Job Order Costing: - is a costing system that accumulates manufacturing costs separately
for each job.
2. Process Costing: - is a costing system that accumulates manufacturing costs separately for
each process.
Page 9 of 15 Thursday, May 28, 2020
3. Hybrid costing system: - There are situations when a firm uses a combination of features of
both job-order costing and process costing.

Essentials (Characteristics) of a Good Costing System:-

 A good costing system should possess the following characteristics.
1. Should be suitable to its nature and size of the business and its information needs.
2. Should be economical - the benefits should be more than the cost of operating of the same.
3. Should be simple to operate and understand - unnecessary complications should be avoided.
4. Should ensure proper system of accounting for material, labor and overheads.

Job Costing
 Job costing - is a method of costing where production is measured in terms of completed
jobs.
 The production is against customer’s orders and not for stock.
 The following costs are involved in costing
i. Direct materials cost
ii. Direct labour
iii. Direct expenses
iv. A percentage of the overhead costs

Objectives of Job Costing:

1. To maintain the development of each job
2. To estimate the price of a certain work based on the price of the previous jobs.
3. To identify profitable and non-profitable jobs
4. To differentiate departments from one another on the basis of the cost taken and the amount
of materials required.
5. To provide detailed information of what is happening in each department to the customer.

Documents Used in a Job Order Cost System:

1. Production Order or Manufacturing Order:
 This is a works order authorizing the production department to produce a specified quantity
of a product which constitutes the job.
2. Job Order or Job Cost Sheet:
 This is the basic document used by a job order system to accumulate product costs.
 For recording costs,
3. Store requisitions:
 Store requisitions are used to charge job cost sheets for direct materials used.
4. Work tickets:
 Work tickets are used to charge job cost sheets for direct labour used for a job.
5. Clock Card:
 Clock Card is used for determining individual worker’s earning.

Page 10 of 15 Thursday, May 28, 2020

Others documents recording costs include
Costs Document used Details
Recorded
Materials Material requisition Document requesting for materials from the
stores to start production
Bill of materials It shows the materials, prices, components, sub
components for manufacturing the product.
Materials issue Consists of
analysis sheet:  Materials
 Their related details
 When they were issued for production.
Wages Operation schedule: It is a timetable for the allocation and re
issuing of resources
Job card  A card showing the details of the job to be
done.
 It shows instructions of what is to be done
Wages analysis sheet It consists of the payroll statements showing
the wages for both the manufacturing and non-
manufacturing employees
Overheads Miscellaneous costs These are hidden costs such as transportation,
stocking, storage, food, infrastructure etc.

Job Costing Procedure:

 The job cost accounting procedures as a summary are given below:
1. Receiving an enquiry:
 Before placing the order, the customer usually studies about the manufacturer,
i. What their rates are
ii. What is the quality of the materials that they use,
iii. The time usually taken by them to complete the order and so on.
2. Estimation of price of the job:
 The cost of the job is done by considering
i. The needs and taste of the customer i.e. The customer’s preferences and choices.
ii. The change in the cost of the materials in the recent years
3. Receiving of order:
 The customer will place the order if he is content with the job costs.
4. Production order:
 If the job is accepted, then a production order is given by the manufacturer within its
subsidiaries.
 It is a form of authorized order which officially starts the production of the job.
5. Recording of costs:
 The costs are recorded and collected for each kind of job.
 For each department a certain job card is used, where the costs from different aspects of the
jobs are taken into consideration.
6. Completion of job:
 On the completion of the job, a report stating the completion of the job is given to the
accounts department where the final cost calculation takes place.

Page 11 of 15 Thursday, May 28, 2020

 The final cost statement is then compared with the estimated cost, to ensure whether it was a
profit or loss.
7. Calculating the profit or loss:
 These costs are calculated when the final expenditure is compared with the estimated
expenditure.

Job Costing Example

XYZ Engineering Co. engaged in job work has completed all the jobs in hand on 30th August
2017 except job no. 447. The cost sheet on 30th August 2017 showed direct material and direct
labour cost of shs. 40,000 and shs. 30,000 respectively as having being incurred on job no. 447.
The cost incurred by the business on 30th August 2017, the last date of the accounting year were
as follows:

Description Cost incurred (Shs)

Direct material 2,000
Direct labour 8,000
Indirect labour 2,000
Miscellaneous factory overhead 3,000

The company follows the practice to make job absorbed factory overheads on the basis of 120%
of direct labour cost.
Prepare a composite job cost sheet for job 447 showing analytical computation. If any, of the
value of WIP on job no. 447.

Advantages of Job Order Costing:

1. Profitability of each job can be individually determined.
2. It provides a basis for estimating the cost of similar jobs which are to be taken in future.
3. It provides the detailed analysis of the cost of material, labour and overheads for each job
4. Plant efficiency can be controlled
5. Spoilage and defective work can be identified.
6. Job costing is essential for cost-plus contract where contract price is determined directly on
the basis of cost.

Limitations of Job Order Costing:

1. It is expensive to operate as it requires considerable detailed clerical work.
2. With the increase in the clerical work the chances of errors are increased.
3. Job order costing cannot be efficiently operated without highly developed production control
system.

Page 12 of 15 Thursday, May 28, 2020

4. The costs as ascertained are historical as they compiled after incidence and therefore does not
provide control of cost

Process Costing
 Process costing - is a method of assigning costs to units of production.
 It is a type of operation costing which is used to ascertain the cost of a product at each
process or stage of manufacture.
 It is applicable where goods or services result from a sequence of continuous or repetitive
operations or processes.
 The unit costs are more like averages.
 The cost of each product produced is assumed to be the same as the cost of every other
product.

Process Cost Procedures

 There are four basic steps in accounting for Process cost:
i. Summarize the flow of physical units of output.
ii. Compute output in terms of equivalent units.
iii. Summarize total costs to account for and Compute equivalent unit costs.
iv. Assign total costs to units completed and to units in ending work in process inventory.

Cost Control in Project Management?

 Cost is one of the key performance indicators for projects.
 Cost Control - is the task of overseeing and managing project expenses as well as preparing
for potential financial risks.
 Cost control involves managing the budget, planning, and preparing for potential risks.
 Costs are controlled to ensure that the project is completed within the approved budget.

Cost Control Techniques

i. Planning the Project Budget
ii. Keeping a Track of Costs
iii. Effective Time Management
iv. Project Change Control
v. Use of Earned Value

Project Baselines
 Baseline - refers to the accepted and approved plans & their related documents.
 Project baselines - are approved by project management team
 They are used to measure and control of project activities.
 A baseline - is used to perform analysis to find current performance against to the expected
level for a specific activity in established time-phase.
 A baseline indicates:
1. Original Scheduled Start and Finish Dates
2. Planned Effort (may be expressed in hours)
3. Planned or Budgeted Cost
4. Planned or Budgeted Revenue

Main Benefits of Project Baselining

 The main benefits of having a project baseline are:
Page 13 of 15 Thursday, May 28, 2020
 i. Ability to assess performance
ii. Earned Value calculation
iii. Improved future estimating accuracy

Resource Loading
 Resource Loaded Schedule - is a project schedule that consists of a timeline with details on
allocated resources, planned activities and preset milestones.
 It is a time management document.

Monitoring Project Progress

 Steps to follow in monitoring the progress of a project
1. Write down your goals for the project and when they should be met.
2. Make a list of personnel and the responsibilities assigned to each individual participating in
the project.
3. Divide the project into segments. It will be easier to track the progress this way.
4. Hold regular meetings.
5. Update your records as you complete segments and meet goals.
6. Make the necessary adjustments to keep your project on track.
 Reassign tasks
 modify schedules
 Reassess your goals.

PROJECT COMMISSIONING
 Project commissioning - is the process of assuring that all systems and components of a
project are designed, installed, tested, operated, and maintained according to the operational
requirements of the owner/client.
 It involves planning, documenting, scheduling, testing, adjusting, verifying, and training, to
provide a facility that operates as a fully functional system per the owner’s project
requirements.

Phases of Commissioning
1. Design Phase
 Develop detailed and comprehensive commissioning specifications and critique of design as
it pertains to commissioning.
2. Construction Phase
 Review and coordinate the application of the testing plan through the observation and
documentation of all equipment and systems, ensuring function complies with the facility’s
project systems requirements, objectives, and all contract documents.
3. Acceptance Testing
 Providing on-site testing, commissioning, and performance testing. This is the most critical
phase in the commissioning process.
4. Warranty Phase
 One year functional retesting of all equipment and systems within the commissioning
contract.
 Final testing results, documentation, and reports shall be incorporated into the existing
commissioning record.
 The project is then handed over.
Page 14 of 15 Thursday, May 28, 2020
 NETWORK ANALYSIS
 Network techniques are quite useful for proper planning, scheduling and controlling of the
activities.

Page 15 of 15 Thursday, May 28, 2020