Handout 13: Project Management Body of Knowledge

(PMBoK)
principles
The Project Management Body of Knowledge (PMBoK) principle
is a framework that is used for ensuring the optimal
implementation of projects. The PMBoK principle has 9
knowledge areas that must e mastered and ade!uately
demonstrated y project managers. "lthough all projects must e
implemented according to the 9 components of the PMBoK
principle# the stakes are especially high in strategically important
projects such as the $edupi Power plant Project. The successful
implementation of projects depends on the degree to which each
of the 9 principles of PMBoK is adhered to y project managers.
The 9 knowledge areas of PMBoK are%
&. 'ntegration management
(. )cope management
*. Time management
+. ,ost management
-. .uality management
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/. 0uman resource management
1. ,ommunications management
2. 3isk management
9. Procurement management
Eample:
!onsider t"e following case study# and assess and e$aluate
t"e degree to w"ic" t"e fundamental PMMoK principles are
ad"ered to%
&"e !ustom 'oodwor(ing !ompany (!'!)
Bac(ground
The ,ustom 4oodworking ,ompany (,4,) is a small5to5medium
si6ed custom furniture and cainet making company# with a head5
office and a spacious plant site at Mooi 3i7er# a small town in
Kwa8ulu 9atal. 'ts ,hief :;ecuti7e <fficer# 4oody ,arpenter# is
now in his late5si;ties and his wife Mrs. :melia ,arpenter# eing
an aggressi7e usiness woman and somewhat younger than her
husand# now effecti7ely runs the company. 4oody ,arpenter#
after an apprenticeship as a cainet maker# started his small
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furniture manufacturing usiness ack in &91+ and he and his
wife mo7ed to their present location in &919. The company !uickly
gained a reputation for attracti7ely designed and well constructed
furniture# using imported hardwoods and indigenous softwoods for
its products. ,4,=s now produces custom furniture to order#
se7eral lines of furniture for wholesaler>retailers# and a numer of
7ariations of standard kitchen and athroom cainets# including
units made to order. <7er the years ,4, continued to prosper
and uilt up a loyal staff and work force.
More recently the ,arpenter?s son# @ohn ,arpenter# has joined
the company=s management after ha7ing otained a commerce
degree at the local uni7ersity. "t @ohn ,arpenter=s insistence#
lured y longer production runs and higher and more consistent
mark5ups# the company has mo7ed into sucontract work
supplying and installing counter5tops# cainets and similar fi;tures
for new commercial construction. To date# ,4, has estalished
a well5founded reputation for supplying such sucontract work to
the construction industry.
&"e opportunity
'n (AA+ there was a oom in commercial construction in Kwa8ulu
9atal. 4ith the possiility of a new airport# The King )haka
'nternational "irport# and many new industrial and residential
de7elopments in the pro7ince# the marketing manager of the firm#
)iyaonga Mametja# persuaded ,4,=s directors that they were
well placed to e;pand their manufacturing usiness.
Miles 0ama# the Production manager# regularly complained that
the company=s production efficiency was eing thwarted y lack of
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manufacturing space. 0e made a pitch to @ohn ,arpenter for
mo7ing to completely new and more modern facilities. @ohn
,arpenter# with a 7ision of growth ased on computer controlled
automation# talked o7er the idea with his father. 4oody discussed
it with his wife who in turn rought Kim Moodley and )pencer
Moneysworth into the deate. Moodley and Moneysworth felt
strongly that they should remain where they were# since there
was spare land on their property# e7en though not the most
con7enient for plant e;pansion.
They argued that not only would this a7oid the costs of uying
and selling property# ut more importantly a7oid the interruption to
production while relocating their e;isting e!uipment. Besides# the
nearest potential location at an attracti7e price was at
Pietermarit6urg# at least &AA kilometres away from Mooi 3i7er
where most of them li7ed. Polarisation of opinions rapidly ecame
e7ident and so# in May (AA+ 4oody called a meeting of the
directors and key personnel to resol7e the issue. "fter a 7isit to
the factory floor and a prolonged and sometimes itter argument
lasting into the early hours# it was agreed that the company would
stay put on its e;isting property.
&"e project concept
't was agreed at the meeting that additional production capacity
would e added e!ui7alent to (-B of the e;isting floor area. The
opportunity would also e taken to install air5conditioning and a
dust5free paint and finishing shop complete with additional
compressor capacity. :!uipment would include a semi5automatic
woodworking production line# re!uiring the de7elopment and
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installation of specific software and hardware to run it. The ,:<?s
and senior management?s offices would also e reno7ated.
"t the meeting# the total cost of the work# not including office
reno7ation# was roughly estimated at 3 &1 million. 4oody agreed
to commit the company to a udget of 3 &1 million as an asolute
ma;imum for all proposed work and the target date for production
would e eighteen months from now. To gi7e ,M,=s personnel a
feeling of ownership# :melia ,arpenter proposed that the project
should e called ,M, (AA+. )pencer Moneysworth would take
responsiility for Project ,M, (AA+.
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Planning t"e project
Moneysworth was keen to show his administrati7e ailities. 0e
decided not to in7ol7e the production people as they were always
too usy and# anyway# that would only delay progress. )o# not
one for wasting time on planning# Moneysworth immediately
in7ited :;pert 'ndustrial $e7elopers (:'$) to !uote on the planned
e;pansion. 0e reasoned that this contractor=s prominence on the
industrial estate and their knowledge of industrial work would
result in a lower total project cost. Meanwhile# Kim Moodley
de7eloped a monthly cash flow chart as follows. Cirst he set aside
3 & million for contingencies. Then he assumed that e;penditure
would e 3 & million in each of the first and last months# with an
inter7ening ten months at 3 &.+ million. 0e carefully locked the
chart away in his drawer for future reference. "ll actual costs
associated with the project would e recorded as part of the
company=s normal ook5keeping. Dpon Moneysworth=s insistence#
:'$ sumitted a fi;ed5price !uotation. 't amounted to 3 (A million
and an eighteen month schedule.
"fter Moneysworth reco7ered from the shock# he persuaded
,4,=s management that the price and schedule were e;cessi7e.
(Cor their part# :'$ elie7ed that ,4,=s would need considerale
help with their project planning and allowed for a numer of
uncertainties). Curther negotiations followed in which :'$ offered
to undertake the work ased on an hourly rate 5 co7ering direct
wages or salaries# payroll urden# head5office o7erheads and
profit 5 ut solicit fi;ed price !uotations for all su5trade work.
Ci;ed price !uotations would e;tend to all engineering#
procurement# construction and commissioning for which :'$
would employ )chemers and Plotters ()EP) ,ontractors for the
uilding and industrial design work. Moneysworth felt that the
proposed hourly rate was reasonale and that the hours could e
monitored effecti7ely. 0e persuaded ,4,=s directors to proceed
accordingly.
6
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&"e design of t"e project
" couple of months later as )EP commenced their preliminary
designs and raised !uestions and issues for decision#
Moneysworth found he needed assistance to cope with the paper
work. @ohn ,arpenter suggested he use 'an Fogetter# a right
young mechanical engineer who had speciali6ed in programming
semi5automatic manufacturing machinery. Moneysworth reali6ed
that this knowledge would e an asset to the project and ga7e
Fogetter responsiility for running the project. 'an was keen to
demonstrate his software skills to his friend @ohn ,arpenter. )o#
while he lacked project management training and e;perience
(especially any understanding of Gproject life5cycleG and Gcontrol
conceptsG) he readily accepted the responsiility.
$uring the initial phases of the mechanical design# 'an Fogetter
made good progress on de7eloping the necessary production line
control software program. 0owe7er# early in design :'$
suggested that ,4,=s should take o7er the procurement of the
production train directly# since they were more knowledgeale of
their re!uirements. Miles 0ama jumped at the opportunity to get
in7ol7ed and decided to change the production train specification
to increase capacity. Because of this# the software program had
to e mostly rewritten# se7erely limiting Fogetter=s time for
managing the project.
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't also resulted in errors re!uiring increased deugging at start5up.
9either Moneysworth nor Fogetter was conscious of the need for
any re7iew and appro7al procedures for specifications and shop
drawings sumitted directly y either )EP or y the suppliers of
the production line. 'n one two5week period# during which oth
0ama and Fogetter were on 7acation# the manufacturing
drawings for this critical e!uipment which had a long lead time
etween order and deli7ery sat in a junior clerk=s in5tray awaiting
appro7al. Cor this reason alone# the deli7ery schedule slipped two
weeks# contriuting to a later construction schedule conflict.
!onstruction
)ite clearing was tackled early on with little difficulty. 0owe7er# as
the main construction got into full swing some eight months later#
more significant prolems egan to appear. The change in
production line specifications made it necessary to add another
fi7e metres to the length of the new uilding. This was only
disco7ered when holding5down olts for the new production line
were laid out on site# long after the perimeter foundations had
een poured.
The catalogue descriptions and specifications for other e!uipment
selected were similarly not recei7ed and re7iewed until after the
foundations had een poured. Fogetter was not entirely satisfied
with the installation of the mechanical e!uipment for the dust5free
paint shop. "s a registered mechanical engineer# he knew that
the specifications go7erned the !uality of e!uipment#
workmanship and performance. 0owe7er# since these documents
had still not een formally appro7ed# he was loath to discuss the
matter with :'$ or )EP. 'nstead# he dealt directly with the
mechanical su5contractor. This led to strained relations on the
site.
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"nother difficulty arose with the paint shop ecause the local
inspection authority insisted that the surplus paint disposal
arrangements e upgraded to meet the latest en7ironmental
standards.
)tart*up
Two years after the project was first launched# the time to get the
plant into production rapidly approached. 0owe7er# neither
Moneysworth nor Fogetter had prepared any meaningful planning
for completion such as owner=s inspection and acceptance of the
uilding# or testing# dry5running and production start5up of the
production train. They also failed to insist that :'$ otain the
uilding occupation certificate.
Moreo7er# due to late deli7ery of the production line# the
municipality?s connections for power# water and sewerage
scheduled for the annual two5week maintenance shut5down could
not in fact take place until two weeks later. These factors together
resulted in a loss of se7eral weeks of production. ,ustomer
deli7ery dates were missed and some general contractors
cancelled their contracts and placed their orders for su5contract
work elsewhere. Cinished goods in7entories were depleted to the
point that other sales opportunities were also lost in the special
products areas on which ,4,?s reputation was ased.
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!ontrol
,osts arising from these and other changes# including the costs of
delays in completion# were charged to ,4,=s account. Project
o7errun finally ecame reality when actual e;penditures e;ceeded
the udget and it was apparent to e7eryone that the project was
at est only 2-B complete. Moodley was forced to scramle for
an additional loan for project financing at prime plus ( &>(B# an
e;cessi7e premium gi7en ,4,=s credit rating. Crom then on#
,4,=s were in a fire fighting mode and their aility to control the
project diminished rapidly. They found themsel7es throwing
money at e7ery prolem in an effort to get the plant operational.
Curthermore# during the project period# construction acti7ity in the
Kwa8ulu 9atal region fell dramatically with general demand for
,4,?s products falling similarly. :7en though )iyaonga
Mametja launched an e;pensi7e marketing effort to try to regain
customer loyalty# it had only a marginal effect.
Post project appraisal
The net result was that when the new e!uipment e7entually did
come on stream# it was seriously underutilised. Production morale
eed. )ome staff pulicly 7oiced their 7iew that the slowdown in
regional construction acti7ity could ha7e een foreseen e7en
efore the project started# especially o7er5supply of commercial
retail and hotel space and new residential de7elopments# the
prime source of ,4,=s contracts. @ohn ,arpenter# not a fa7ourite
with the older staff# was lamed for introducing these Gnew
fangled and unnecessarily complicated ideasG.
Because of this e;perience# ,4,=s President :melia ,arpenter
retained project management consultant 4in :asy "ssociates to
conduct a post5project appraisal. :asley had some difficulty in
e;tracting solid information ecause rele7ant data was scattered
amongst 7arious staff# who were not keen to re7eal their short5
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comings. <nly a few formal notes of early project meetings could
e traced. Most of the communication was on hand5written
)peedy memos# many of which were undated. 0owe7er#
inter7iews with the key players elicited considerale information#
as has een outlined ao7e.
+e,uired
"s the project management consultant attached to this project y
4in :asy# pro7ide a detailed report analysing the project?s
shortcomings and successes.
-ote to students
Hou are not e;pected to pro7ide project management ser7ices.
Hou are only re!uired to critically assess and e7aluate the
suitaility of the plans drawn up y ,4, for managing and
implementing the project. 'n cases where you find the plan drawn
up y ,4, inappropriate or inefficient# please pro7ide an
alternati7e plan that is etter or at least as good as the plan drawn
up y ,4,.
.uestion /ased on case study
$iscuss the project ased on the
fundamental principles of PMBoK
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(Project Management Body of
Knowledge) y addressing the entire life
cycle of the project.
)olution
The lifecycle of the project has the following + stages%
$efining stage of project
Planning stage of project
:;ecution stage of project
$eli7ery stage of project
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Cor each of the + stages in the lifecycle of the project# students
must pro7ide key conclusions ased on PMBoK (Project
Management Body of Knowledge) principles. The 9 knowledge
areas of project management (PMBoK) must e addressed.
The 9 knowledge areas of PMBoK are%
&. 'ntegration management
(. )cope management
*. Time management
+. ,ost management
-. .uality management
/. 0uman resource management
1. ,ommunications management
14
2. 3isk management
9. Procurement management
That is# for each of the + stages shown elow# students must
discuss factors that were responsile for the success or failure of
acti7ities in the project drawn up y ,4,.
$efining stage of project
Planning stage of project
:;ecution stage of project
$eli7ery stage of project
)tudents must address other issues considered salient. :;amples
of salient issues are%
)takeholder management
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,onsideration of the e;ternal en7ironment
,ompetitors# the economy# suppliers# customers# and the
like.
)tudents must pro7ide answers to the following key !uestions%
Fi7e e;amples of processes in the project that are
interconnected with each otherI
0ow do these interconnected processes affect the
successful implementation of the projectI
's the planning of the project suitale for a successful and
efficient implementationI
4hat defects does the plan ha7eI
)uggest feasile remedial actions.
4hat are your key conclusions aout the projectI
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