03 - Project Management

Corporate Technology
Project
j
Management
Dr. Ulrich Lwen
Siemens AG, Erlangen
CT RDA CES
+49 (9131) 7-32948
ulrich.loewen@siemens.com
Copyright Siemens AG 2016. All rights reserved.
Content and Objective

Content
Objective
Introduction to Project Management
Understand principles of project

management
Project
j
Management
g
Phases
Project Initialization and Definition
Project Planning
Explanation of interfaces between

engineering and project management
Introduction of key methods of project
management
Project Controlling
Project Management
04/2016
Page 2
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Do not distribute for personal use only

Siemens AG, Corporate Technology
Introduction to Project
Management
Project Management
04/2016
Page 3
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Project and Project Management

Project
A temporary and unique endeavor, consisting of a set of concerted,
managed activities, which is undertaken to meet unique goals and
objectives considering constraints regarding time and resources
The temporary nature of projects indicates a definite beginning and end
Project management
Discipline of planning, organizing, securing, and managing resources
to bring
g about the successful completion
p
of specific
p
p
project
j
g
goals and
objectives
Application of knowledge, skills, tools and techniques to project
activities to meet project requirements
Project Management
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Elements of Project Management

Project management is the application of general applicable management
f
functions
ti
to
t a task
t k organized
i d as a project
j t
Project
Management
Ti
Time
Quality
Budget
Planning: Define what is targeted

Organization and coordination: Make
it work
Guidance: Goal oriented g
guiding
g of
other people
Controlling: Tracking with respect to
successful project execution
Iterative process along entire project lifecycle

Plan: Define targets
and plan measures
Project Management
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Do: Execute
measures
Check: Monitor
achievement of goals
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Act: Improve
measures

PM@Siemens
Overview
Reference Process
Project categorization
A, B, C, D, E, and F projects
Project management profiles
Project manager
Senior project manager
Project director
Project Management
04/2016
Page 6
PM@Siemens modules
Processes
P
and
dR
Roles
l
Contract Management
Project Controlling
Qualityy Management
g
in Projects
j
Project Procurement
Project Management Career Path
Training and Development
Collaboration in Projects
IT Applications
Continuous Improvement
PM@Siemens Implementation
Internal Projects
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PM@Siemens
Reference Process for Plant Projects
Project Acquisition
Lead
Management
Opportunity
pp
y
Development
Bid
Preparation
Contract
Negotiation
Project
j
Handover
PM010
PM020
PM040
PM070
PM080
Go/no-go
decision
Bid
decision
Bid
approval
Project
won/lost
Start of
project
Project Execution
Project Opening Detailed
& Clarification
Planning
PM080
Start of
project
PM100
Purchasing
Dispatch
& Manufacture
PM200
PM300
PM400
Order receipt Approval of

Dispatch
clarified detailed planning approval
W
Warranty
t Phase
Ph
Construction/ CommisInstallation
sioning
PM550
Acceptance
PM600
Material and Construction/

resources
Installation
at site
p
completed
Project
Closure
PM650
PM670
Release for Customer

acceptance acceptance
Project
closure
Warranty
PM650
PM670
PMx
PM700
Project
End of
Customer
closure
warranty
acceptance
Project Management
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Milestone
PMy
Quality Gate

Interrelation of Engineering Reference Process

and Project Management Process
Plant Lifecycle
Project Execution
Project Acquisition
Operation
Project Management Process

Project
Purchasing
PreProject
Bid
Contract
Project
Detailed
ConstructionCommissioopening &
& manu- Dispatch
Acceptance
acquisition acquisition preparation negotiation handover
planning
Installation
ning
clarification
facture
Project
closure
Bid
decision
Start of
project
Approval
of basic
design
Approval
of detail
planning
Customer
acceptance
PM020
PM080
PM150
PM200
PM650
Conceptual
Engineering
Basic
Engineering
Warranty
Installation,
Commissioning
Detailed
Engineering
Engineering Reference Process

Project Management
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Project Management Phases

Project Management
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Project Phases
Phases: Division in connected sequences
Project phase divide project lifecycle in temporal connected sequences
and reflect project execution from perspective of activities of various
organizational units
Process model defines how the work to deliver the results of the project
have be executed in phases and therefore supports monitoring and
controlling of the project
Acquisition
Go/No Go
Decision
Bid
decision
Bid
approval
Project
Won/lost
Start of
project
Order
receipt
clarified
Approval
of detail
planning
Dispatch
approval
PM010
PM020
PM040
PM070
PM080
PM100
PM200
PM300
Material & Construction/Release for

resources installation customer Customer
completed acceptanceacceptance
at site
PM400
PM550
PM600
PM650
Project
Purchasing
PreProject
Bid
Contract
Project
Detailed
& manu- Dispatch
Acceptance
planning
Installation
ning
clarification
facture
Project
j
Phases
Project Management
04/2016
Page 10
Milestone
Project
closure
End of
warranty
PM670
PM700
Project
closure
Warranty
Qualityy Gate
Lwen, CT RDA CES


Project management phases are oriented towards logical connected
activities of project managements and describe activities necessary to
manage a project
DIN 69901 distinguishes 4 project management phases
Initialization, definition
Planning
Planning
Initialization
Controlling
D fi iti
Definition
Controlling
Closure
According to DIN 69901 project
management
g
p
phase are further
divided in 59 more detailed phases
Closure
In reality overlapping of phases, especially planning and controlling

Project Management
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Interrelation of Project Phases and Project

Management Phases
Planning
Planning
Initialization
Definition
Closure
Initialization
Definition
Closure
Control
Control
Projects
Realization Project
Acquisition Project
Plant Lifecycle
Project Execution
Project Acquisition
Operation
Project
j
Management
g
Process
Acquisition
Go/No Go
Decision
Bid
decision
Bid
approval
Project
Won/lost
Start of
project
Order
receipt
clarified
Approval
of detail
planning
Dispatch
approval
PM010
PM020
PM040
PM070
PM080
PM100
PM200
PM300
Material & Construction/Release for

resources installation customer Customer
completed acceptanceacceptance
at site
PM400
PM550
PM600
PM650
Project
Purchasing
PreProject
Bid
Contract
Project
Detailed
& manu- Dispatch
Acceptance
planning
Installation
ning
clarification
facture
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Project
closure
End of
warranty
PM670
PM700
Project
closure
Warranty

Project Initialization and

Definition
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Project Idea and Project Targets

Shaping of project idea
Project targets
Concrete project targets

Conditions to be observed
Budget,
g , quality,
q
y, and time,, which are
often interrelated contrary
Define expected result (numbers,

data, facts)
Have to be documented and agreed
g
between customer and contractors
Described in an operational way:
evaluable and measurable
Should not comprise solution aspects
Comprise criteria for assessment of
solution and acceptance criteria
Refine responsibility
May be adapted during project
execution
Should be inline to other targets, e.g.
strategic objectives of enterprise
Time
Quality
Budget
Shaping of project idea is first project

planning
Project Management
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Success Factors in Early Phases

Handover from Acquisition to Realization Project
Early appointment and involvement of project manager depending on
the complexity and probability of winning the order
Bid
Preparation
Contract
Negotiation
Project
Handover
Project Opening
& Clarification
PM040
PM070
PM080
PM100
Bid approval
Project won/lost
Start of project
Order receipt clarified
Bid calculation
Limits of authority
As sold calculation
Project Acquisition
Order position calculation
Project Execution
Sales
S
l E
Expertt
Bid Manager
Project
P
j t
Manager
Early involvement of engineering (technical limits of authority)

Early involvement of procurement (leverage of procurement potentials)
Project Management
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Project Planning
Project Management
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Typical Roles in Acquisition and Realization

Project
Acquisition project
Realization project: core team
Senior management
Sales manager
Bid project manager
Commercial bid project manager
Scheduler
Project procurement manager
Quality manager in project
g
Contract manager
Systems engineer
Project manager
Technical project manager
Commercial project manager
Scheduler
Quality manager in project
Contract and claim manager
Dispatch logistics manager
g
Site manager
Project administrator
Realization project: extended team

For allll iimportant
F
t t roles
l should
h ld b
be d
defined
fi d
role descriptions including
Tasks
Responsibilities
Competencies
Project Management
04/2016
Page 17
Steering
St
i committee
itt
Senior management
Project procurement manager
Systems engineer
Engineers
Service operation manager
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Example: Project Organization of Realization

Project
Commercial
Responsible
espo s b e
Project
Manager
a age
Steering
Committee
Co
ee
Contract/Claim
Manager
Steering committee
Sales Manager
Sub-Project
j
Manager Craft1
Quality
Manager
Sub-Project
Manager Craft 2
System
Engineer
Sub-Project
Manager Craft 3
Project
Purchaser
Sub-Project
Manager Craft 4
Scheduler
Established for larger projects

Consists of decision makers of
customer and contractor, additional
experts on demand
Highest authority in case of high level
decisions resp. escalations, e.g.
Claims
Controlling of project progress
Release of milestones
Regional
Company
Project Management
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Work Breakdown Structure

Definition of adequately sized work packages
Deliverable-oriented
Deliverable oriented hierarchical decomposition of the work to be
executed by the project team to accomplish the project objectives and
create the required deliverables
g
and defines the total scope
p of the p
project
j
Organizes
Each descending level represents an increasingly detailed definition of
the project work
Supports resp.
resp enables accurate tracking and reporting
Facilitates detailed estimation and planning of efforts in cost
breakdown structure, time schedule, resource allocation, and
documentation structure
Ensures that all required deliverables are constantly produced
Change and claim management as well as risk and opportunity
management procedures result in tasks in work breakdown structure
Project Management
04/2016
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Example of Work Breakdown Structure

Project
xyz
Project
Project
Management Clarification
WP11
Project
Planning
Project
Realization
WP21
WP3.1
WP4.1
WP 2.2
WP3.2
WP4.2
WP3.3
WP4.3
Project management and phase oriented

breakdown on level 2
Work packages on level 3
Example of representation in MS-Project
Project Management
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Risk and Opportunity Management

Risk management
Project risk
Explicit handling of risks that endanger

a project leading to an increased
planning certainty in the project and
thus to an increased planning certainty
in the company
Approach for identifying, analyzing,
responding to, and monitoring risks in
p
order to minimize their impact
Uncertain events or possible situations

with negative impact in form of
damages to success of entire project,
specific project targets, deliverables, or
incidents
Risk management process
Risk may change during project

execution, e.g. with respect to their
impact
Risk management is an integral part of

successful
f l project
j t managementt
Continuous closed-loop process during
entire project
Very important in early phases of a
project and retrospective at the
conclusion of the project
Project Management
04/2016
Page 21
Duality of risks: Each risks entails to the

pp
y
same extent an opportunity
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Risk Mitigation Strategies

Measures for risk protection
Prevention: Do not take the risk
reduce
very high
high
medium
transfer
restrict
prrevent
Impactt (relatively to p
project budget)
Risk classification heat map
low
accept
i i ifi
insignificant
t
improbable possible
> 1%
> 10%
probable very probable

> 20%
> 50%
Reduction: Reduce impact

p
and
likelihood of occurrence of identified
risk
Restriction: Keep impact and
likelihood of occurrence of risk on low
level
Probability of occurrence
Red: Urgent need for action (reduce,

transfer, prevent)
Yellow: Observe, act if necessary
Green: Monitor,
Monitor no action required at
the moment
Project Management
04/2016
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Transfer: Transfer risk to other

organization, e.g. assurance,
customer
Acceptance: Carrying the risk itself
Lwen, CT RDA CES

Changes and Change Request Management

Changes in project
Change request management
Accompanied by increasing detailing of

project deliverables there arise change
requests towards original project
definition
Establishment of framework conditions

and processes guaranteeing a well
defined management of change
requests in the project
Examples
Additional requests of customer
(increase)
Change requests of customer
because of new technical insight or
additional requirements
Mistakes in project definition of
contractor maybe because of design
errors or imprecise input of customer
Changes from authorities, new
standards unexpected events
standards,
events, etc
etc.
Examples
Decision-making body for change
requests defined and implemented
Document and configuration
management, especially versioning
and release procedures
Processes and templates for
processing of change requests,
change orders, and error reports
Clear rules for dealing with financial
impact of changes
Project Management
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Changes and Change Request ManageDistinction

Between Change Request and Claim
Change request
Claim
Financial, time, or factual-related

demand of one of the contractual
parties mostly leading to increase or
decrease and typically resulting in
change of contract or additional order in
mutual understanding
Financial, time, or factual-related

demand of one of the contractual
parties due to act, nonfeasance,
deviation improvements
deviation,
improvements, difficulties
in context with fulfillment of the contract
in case of gray areas or violation
Examples
Technical demand
Additional benefits
Examples
Financial claims
Demands of timing
Technical demands
Change request management

Handling of demands for a deviation
from a fixed scope of supply and
service
Claim management
Handling of partner's claims on
account of defects or deficiencies in a
contractual provision of service
Project Management
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Effect of Changes During Project to Result of

Project
Risks
Change
Order
Claim
Non Conformance Cost
Cost
Improvement
Profit
Profit
PM080
PM670
Order entry
calculation
Project
closure
planned sales
Project Management
04/2016
Page 25
planned costs
Lwen, CT RDA CES

Project Controlling
Project Management
04/2016
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Earned Value Management

Project management technique for measuring project performance and progress in an
objective manner combining measurements of
Scope
Schedule
Cost
in single integrated system being able to provide accurate forecasts of project performance
Measured information
Planned value PV: budgeted costs for
planned activities till monitoring point
Earned value EV: implemented scope till
monitoring point
Actual cost AC: real costs at monitoring
point
Predicted information
Estimate to complete EtC
Budget at completion BaC
Estimate at completion EaC
Project Management
04/2016
Page 27
Derived information
Variances actual versus planned and
performance indices
Cost variance CV = EV AC
Schedule variance SV = EV PV
Variance at completion VaC = EaC - BaC
Cost performance index CPI = EV / AC
Schedule performance index SPI = EV / PV
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Illustrative Graphic Performance Report

Estimate at Completion (EaC)
Variance at Completion (VaC)
cum
mulated valu
ues
Estimate to Complete (EtC)
Planned
Value (PV)
Budget at
Completion
(BaC)
Cost Variance (CV)

Schedule Variance (SV)
Actual
Costs ((AC))
Earned
Value (EV)
data
Project Management
04/2016
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Lwen, CT RDA CES
time
Escalation Management
Successful project controlling requires
Early
E l recognition
iti off arising
i i conflicts
fli t
and problems
Established procedures and
processes for decision making
p
g and
escalation management
To react in case of conflicts early and
adequately
Conflicts
May arise within project team,
between project manager and team,
or between project and environment,
e.g. line management, customer
Reasons are manifold , e.g. costs,
resources objectives
resources,
objectives, priorities
priorities,
procedures, responsibility, persons
Project Management
04/2016
Page 29
Project manager is responsible for

d fi iti off escalation
definition
l ti managementt
processes
Definition of escalation level and
paths
p
Within project
From project to line organization
From project to customer
Definition of escalation criteria
(thresholds), e.g. for time delays, cost
overruns, quality issues
Communication of escalation strategy
within project and environment
Lwen, CT RDA CES

Escalation
n levels
Example: Decision Making Process and

Escalation Levels and Paths
Decision maker
Decision making process
Escalation paths
Steering Committee
Sponsor
Decides about changes with respect

to targets, costs, deadlines, claims,
etc.
Releases proposed solutions
Line Management
Decide within own responsibility
Project Management Office
Project Manager
Decides within own responsibility or

escalates
Selects decision maker
Prepares proposal for decision
Project Manager
Sub-Project Manager
Team Member
Decide within own responsibility or

escalation if threshold is reached
Prepare proposals for solutions resp.
resp
decisions
Project Management
04/2016
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Corporate Technology
Thank y
you for y
your
attention!
Dr. Ulrich Lwen
Siemens AG, Erlangen
CT RDA CES
+49 (9131) 7-32948
ulrich.loewen@siemens.com
Copyright Siemens AG 2016. All rights reserved.

03 - Project Management

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03 - Project Management

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Corporate Technology

Copyright Siemens AG 2016. All rights reserved.

Content and Objective

Introduction to Project Management

Understand principles of project

Explanation of interfaces between

Lwen, CT RDA CES

Do not distribute for personal use only

Lwen, CT RDA CES

Do not distribute for personal use only

Project and Project Management

Lwen, CT RDA CES

Do not distribute for personal use only

Elements of Project Management

Planning: Define what is targeted

Iterative process along entire project lifecycle

Lwen, CT RDA CES

Do not distribute for personal use only

Lwen, CT RDA CES

Do not distribute for personal use only

Order receipt Approval of

Material and Construction/

Release for Customer

Lwen, CT RDA CES

Do not distribute for personal use only

Interrelation of Engineering Reference Process

Project Management Process

Engineering Reference Process

Lwen, CT RDA CES

Do not distribute for personal use only

Project Management Phases

Lwen, CT RDA CES

Do not distribute for personal use only

Material & Construction/Release for

Lwen, CT RDA CES

Do not distribute for personal use only

Project Management Phases

In reality overlapping of phases, especially planning and controlling

Lwen, CT RDA CES

Do not distribute for personal use only

Interrelation of Project Phases and Project

Material & Construction/Release for

Lwen, CT RDA CES

Do not distribute for personal use only

Project Initialization and

Lwen, CT RDA CES

Do not distribute for personal use only

Project Idea and Project Targets

Concrete project targets

Define expected result (numbers,

Shaping of project idea is first project

Lwen, CT RDA CES

Do not distribute for personal use only

Success Factors in Early Phases

Order receipt clarified

Order position calculation

Early involvement of engineering (technical limits of authority)

Lwen, CT RDA CES

Do not distribute for personal use only

Lwen, CT RDA CES

Do not distribute for personal use only

Typical Roles in Acquisition and Realization

Realization project: core team

Realization project: extended team