6. Planning for Success

Question 1

List who to consider in mapping stakeholders

Answer 1

. are positively and negatively affected by the project
• have the power to make it succeed (or fail)
• make the decisions about money
• are the suppliers and the end users
• have influence over other stakeholders
• could solve potential problems with the project
• are in charge of assigning or procuring resources or facilities
•have specialist skills which are crucial to the project

Question 2

Why is it important to manage stakeholders in relation to project effectiveness.

Answer 2

End project needs to meet primary stakeholder expectations, so need to know what these are to satisfy them - Reduces likelihood of changes to scope and acceptance.
To ensure the project gets the support in terms of resource and decision making - enables them to plan for the resources being required.
They will have expectations on comms so need to ensure they are aligned to these - ensures they are available for meetings as required.

Question 3

What is the purpose of the business case?

Answer 3

• provide information to enable the project to be authorised at the start
  • justify the investment and gain commitment from the host organisation in terms of funding
  • give stakeholders confidence that the project is worthwhile and aligns with overall strategy
  • provide a basis for decision making through the life of the project e.g. when project scope changes
  • provide a baseline against which the benefits will be measured

Question 4

Describe the typical aspects of a business case

Answer 4

• strategic case – the background of the project or programme and why it is needed
• options appraisal – what options have been considered and which has been chosen (not forgetting the ‘do nothing’ option)
• expected benefits – the benefits that will arise from the work and any unavoidable disbenefits
• commercial aspects – the costs, investment appraisal and funding arrangements
• risk – the major risks and their impact on the business case
• timescales – a summary of the delivery of outputs and realisation of benefits

Question 5

Describe the use and importance of the business case at the different stages of the lifecycle

Answer 5

Definition - Reflects more accurate costs, risks and timescales. Approved by management and owned by sponsor. Ensures project remains viable post PMP.
Act as a reference point of agreement of a baseline and confidence to stakeholders all are clear on what benefits should be achieved.
Deployment - Biz case frequently used as reference point notably at stage gates and check-ins. Review to plan to forecast highlights variances and whether to progress. Changes should be reviewed against base case as may make project un viable.
Project shopped be stopped if no longer valid.
Business case should be version controlled
Transition - Review and updated to reflect latest benefits.Benefits realisation plan should also be updated to become the baseline for tracking benefits.

Question 6

Why should a business case be reviewed at decision gates

Answer 6

• inform sponsor and senior management regarding a decision whether or not to approve progression to the next phase
• check that the project still aligns with organisational strategy
• check that the level of project risk is still acceptable
• ensure that there is still stakeholder confidence and support for the project

Question 7

What things does a business case typically include?

Answer 7

Strategic Case - Project background , why needed
Options appraisal - What options considered and which chosen
Expected benefits - benefits that will arise from the work and unavoidable dis benefits
Commercial aspects - the costs, investment appraisal and funding arrangements.
risk - major risks and impact on the business case
Timescales - outputs and realisation of benefits

Question 8

Describe the stages of benefits management

Answer 8

Identification - from project mandate and stakeholders
Definition - Defined in a way that can be qualified and measured.
Planning - capture baseline, then state timelines and milestones to realisation incl. dependencies and owners.
Tracking - Benefits happen when something changes. While implementing change should always opportunities to seek additional benefits.Measure benefits against benefits plan. Effective tracking should highlight potential variances early.
Realisation - Usually after transition as goes into BAU. Chance for new opportunities and addressing issues. Review lessons learnt to inform future decision making.

Question 9

Describe two investment appraisal techniques

Answer 9

Net Present Value - difference between present value of cash inflow and cash outflow. Judge value of investment at a particular discount rate. F/ (1+r) where F = future payment (cashflow) and r = discount rate.
Advantage NPV factors in future value of money but disadvantage of not knowing what discount rate is in advance.
IRR - Internal Rate of return - Determines profitability of potential investment. Use a discount rate to make NPV zero. Informs whether to make an investment or not. Informs whether to invest in a project or not.
Advantage if IRR exceeds cost of capital reject, so easy to visualise. Called internal as excludes external factors like inflation, cost of capital etc.

Question 10

What is the PMP used for;

Answer 10

• communicate project objectives
• Describe scope
• Show planned timescales and resource requirements
• Communicate project structure, roles and responsibilities.
• Communicate various delivery stages
• Provide a baseline to measure from
• A contract between project manage and sponsor
• Provides a base for continuity
  PMP should be a working document updated through the lifecycle.

Question 11

Describe the different elements of a PMP

Answer 11

Scope - the what - Unique - product specs, scope, acceptance criteria, constraints and assumptions. Policies - quality standards.
Organisation - The who - OBS, Responsibility Assignment Matrix, Levels of authority and delegation, roles and responsibilities. Policies - HR policy, DLA,
Schedules - Gantt charts - histograms. Policies - Resource management policy, HR policy
Plans - The how - Quality plan, procurement strategy, communications plan, risk management plan, HSE plan, Change Control, Config Mgmt, Info Mment. Policy - Quality, HSE, Risk and issues.
Budget (how much) - Budget, cashflow, cost management, tracking methods. Policy - Funding policy, cashflow rules.

Question 12

Describe dynamic elements of the PMP

Answer 12

Risk Register
Change register
Quality lo
Gantt chart
Reports

Question 13

What is the difference between linear and iterative baselines

Answer 13

For a linear life cycle: the deployment baseline is developed with a focus on fully developed scope and quality. • For an iterative life cycle: the deployment baseline is developed based on the resources and schedule available to the project.

Question 14

What are some advantages to re estimating through the lifecycle?

Answer 14

Increased confidence among stakeholders that the estimate to complete are based on lessons learned in previous phases/stages and that plans are based on experience.
• Helps preparation of resources due to improved forecasts of labour hours and timescales. Allows resource providers to set aside the right amount of resource at the right time to support the project. Helps to avoid overuse/allocation of resources.
• Helps to ensure that cashflows and budgets are in line with the latest expectations. Allows those funding the project to ensure that money is available and the project manager/sponsor to ensure that payments do not cause unaffordable negative cashflow. Provides stakeholder confidence in project cost control and budgeting.
• Ensures risks reflect the current status of the project. Probability and impact of risk is estimated early on in the lifecycle and it is important that reassessment of risk updates the latest outlook so that responses can be efficient and effective. This also allows contingencies to reflect the actual uncertainty at any specific point in the project lifecycle.

Question 15

Describe 3 types of approaches to estimating

Answer 15

Analogous / comparative (top down) - Compares to other similar projects. Quick to do. relies on similar projects. ie an additional data centre.
Analytical (bottom up) - Adds detailed estimates for labour and non labour resources to complete activities in scope. Typically use WBS / PBS. Watch for multi contingency. Benefits from detailed view and accurate estimates. Good for one offs.
Delphi (analytical) - Generates costs through team consensus. Independent estimates to facilitator who consolidates views. Experts review. Benefits from expert consensus and anonymity enables free opinions, Can take time

Question 16

Why is organisation management important

Answer 16

• allows teams and stakeholders to use their time, resources and expertise effectively to make decisions needed to do their roles
  • ensures information is managed to provide an audit trail
  • provides a basis for lessons to be learned and easy future access
  • gives confidence to senior management and stakeholders
  • helps efficiency through a consistent approach across projects

Question 17

Provide examples of information management

Answer 17

Regulations • Timesheets • Progress reports • Stakeholder feedback • Technical documents such as designs and calculations • Quality results and statistics • Surveys • Financial reports • Procurement information • Audit results • Organisational processes

Question 18

Describe the stages of information management

Answer 18

Collection - cater for different formats. consider reliability of data. Consider format. Needs to be well organised.
Storage- Needs to be available. Consider safety and security. locked filing system, cloud storage.
Distribution - Record who has what for audit trail. Treat with suitable confidentiality.
Archiving - Must be able to store at end. Essential for audit trail. Need to be able to retrieve well.
Destruction - Decide how long to keep for. Policy and plans should determine this.
Above should be part of an information management plan.

Question 19

What should an information management contain/ what is purpose

Answer 19

• considers how all five aspects/components (discussed above) are to be managed • considers relevant organisational, legal and regulatory policies/standards • is documented within the project management plan (PMP) • should be kept as simple as possible for ease of use and should not be bureaucratic • documents the roles and responsibilities regarding information management • defines the information management scope, procedures, standards and guidelines • defines the types of information and documents and formats • states where supporting systems and tools are to be used

Question 20

What factors are typically reported in the deployment stage?

Answer 20

Progress against schedule - What achieved versus baseline. Enable realistic forecast to end. Actions plans where under /over performing. Can trigger a change in scope to ensure on time completion.
Spend - Actual vs. plan. - Stakeholders can see how performing versus plan. Enables more realistic forecasts over time.
Quality approvals - Stakeholders aware what approved against plan. Trends can be identified and actioned on.
Stakeholder Engagement - engagement and project support. Measure by meeting attendance, complaints, provision of resources. Feedback may necessitate action such as changing the method of communication.
Health and safety incidents - Allows actions to minimise future incidents.
Method documented in the information management plan.
Can use a RAG process.

Question 21

Why might a project manager use Earned Value Management

Answer 21

• Superior to separate tracking of spend or work as looks at efficiency of spend. Trends can then predict outcomes.
• Incentivised way of paying suppliers.
• Improves project control by using a structured approach to planning, cost collection and performance management. Costs established at a work package level to ensure budget monitored appropriately.

Question 22

Why might a PM update plans based on EVM?

Answer 22

Forecast of time and cost outcomes may indicate budget will overrun. Requires updating business case. Cases conflict but better in long run.
Resources added to get back on track.
May highlight project is ahead of plan.

Question 23

SPI / CPI

Answer 23

Summary of SPI, CPI, SV and CV CPI>1 = Forecast underspend, CPI<1 = Forecast overspend SPI>1 = Forecast early delivery, SPI<1 = Forecast late delivery SV>0 = Value to date more than scheduled, SV<0 = Value to date less than scheduled CV>0 = Value to date greater than actual cost, CV<0 = Value to date less than actual cost Sample responses to EVM data If a project has a CPI of over 1 and an SPI of under 1 then more money can be spent on resources to speed the project up. Conversely, if a project has a CPI of under 1 and an SPI of over 1 then resource can be potentially reduced to reduce cost and allow time to be extended. If both CPI and SPI are under 1 then there may be a number of viable options including reducing scope, increasing efficiency and applying for more resources. If both CPI and SPI are both over 1 then resources can be reduced to slow the project down.

Question 24

Benefits of using interpreted earned value data

Answer 24

Provides consistent reporting
supports better forecasting
Allows incentivised payments to be made to suppliers
Allows trends to be understood and outcomes predicted.

Question 25

Question part a) Explain three reasons how stakeholder analysis can assist in influencing and engaging stakeholders – 30 marks (10 marks each)

Answer 25

By Understanding their interest
- Stakeholders need to be adequately informed and consulted regarding area of interest.
- Stakeholders with high level of interest may require more info. Need to manage expectations
- May want to encourage from daily to weekly updates.
- May need to up the interest of some stakeholders by being more effective on comms.
-Understanding how interest changes over the lifecycle can optimise engagement levels.
Understand their influence / power
- Different stakeholders have different power with regards to the project.
- Need champions to be supporters not blockers.
- May need to find a way to reduce someone’s power where disruptive

By Understanding their attitude

• stakeholders can be blockers, supports or champions depending on level of power. Bu knowing this can devise strategies accordingly.
• Blockers can be removed by removing incorrect perceptions they may have or removing obstacles it may bring.
• Knowing how to change a blockers attitude will help know when, how and by whom to deliver the strategy.
• Supports can be kept positive with regular comms.

Question 26

Explain two reasons why it is important for the success of a project to manage stakeholder expectations – 20 marks (10 marks each)

Answer 26

To gain their support for the project.
• Stakeholders are likely to have many differing expectations from a project. For example, the final users of the project’s output are focused on getting a product that improves their ability to do their job while the project’s investors are focused on getting return for their money.
• A project’s end product or result should meet all of the important needs of the primary stakeholders. These needs should be carefully spelled out and agreed at the start of a project so that they understand what will be delivered. This will minimise changes to scope and increase likelihood of final product acceptance.
• Highly improbable that all their expectations can be met within the timescales and the budget available. It is therefore vital that once the stakeholder’s expectations are understood (e.g. through good requirements management), they are managed. • This will ensure that everyone understands what will be delivered from an early stage in the project and increases the chances of the project getting support and the outputs accepted at handover.

b)/2 To ensure that a project gets support it needs in terms of resources and decisions.
• Ensuring that resource providers know what to expect in resource demand will allow them to plan and release resources as required.
• Stakeholders also have expectations about their involvement in a project and what information they will receive by way of reports and updates.
• They may not realise how much time they are expected to contribute to a project (e.g. project board meetings, design review etc) and therefore may not be available when required. This would have a knock-on effect in terms of resources support etc.
• In addition, if they expect weekly updates and do not get them, they may take up a project manager’s valuable time asking questions and arranging meetings.

Question 27

Explain one reason why a business case in important in each of the following phases of a project lifecycle – 30 marks (10 marks each): • Concept phase • Definition phase • Deployment phase

Answer 27

Concept.
• An outline business case (BC) is created to justify investment and progression into the definition phase. • This ensures that only projects that are aligned with organisational strategy and have management support use planning resources.
• This will help get support from the business and increase the confidence of the stakeholders, particularly those who commit money and resources to the project.
• This will mean that the finances are allocated in principle before much effort has been expended.
• It will clarify the benefits, estimated costs, timescales and risks and ensure there is a foundation for the definition phase which will take the outline BC and refine it ready for approval into deployment.

a)/2 Definition.
• The outline BC is refined once more accurate costs, risks and timescales are known from planning of the project. This ensures the project is viable before the project is implemented.
• The definition phase provides the information to allow the BC to be baselined and as such it marks an important point of agreement and buy-in among the stakeholders. It also acts as a reference point against which benefits will be measured.
• The BC is used when developing the project management plan (PMP) to ensure the PMP’s strategy aligns with the project objectives documented in the BC.
• The BC acts as a basis for creating the benefits realisation plan which will be used to track the benefits once they start to be realised.
• This ensures there is a focus on the BC and the benefits during and beyond the project lifecycle.

a)/3 Deployment.
• The BC case should be regularly reviewed through this phase, including at the phase gates, to check on-going viability of the project.
• The forecast of benefits, costs and timescales compared to those planned will inform the sponsor and senior management and allow them to make a decision regarding continuation of the project.
• The likely impact of proposed changes to the project (e.g. both project scope and the external environment) should also be reviewed against the BC.
• A change request may have a major impact on the success criteria of a project which would make it unviable.
• This will allow a decision to be made regarding a response to the change or the continuation of the project.

Question 28

Explain what is meant by each of the following benefits management steps – 20 marks (10 marks each): • Definition • Tracking

Answer 28

b)/1 Definition.
• Benefits need to be understood and articulated in ways that can be qualified and measured.
• For example, ‘increased production’ as a benefit statement is very subjective and would not be a good basis for an investment decision.
• In this example, a better statement would be, ’a 25% increase in production within 6 months’.
• Projects often fail to satisfy the stakeholder’s expectations because the benefits are not defined. This leads to conflict over whether the project is successful or not.
• Well defined and quantified benefits which can be measured when they are realised, allow confirmation of project success and gap analysis. This identifies any shortfalls in those realised against the BC.

b)/2 Tracking.
• This involves progressing and measuring the benefits against the metrics agreed in accordance with the benefits plan.
• The sponsor will monitor the benefit owners who are responsible for embedding the change to ensure they are being effective and that the changes are resulting in benefits.
• This tracking will highlight areas where action needs to be taken such as where early indications show that there is a forecast shortfall in the level of benefits that will be delivered.
• While implementing change, new opportunities for additional benefits should always be sought.
• Tracking the benefits will highlight these and drive actions to increase the benefits such as increased marketing or training staff to better use a new product.

Question 29

Explain three reasons why it is important to have a business case – 30 marks (10 marks each)

Answer 29

Project justification.
• A business case (BC) provides justification for undertaking a project. It evaluates the benefit, cost and risk of alternative options and provides a rationale for the preferred solution. It provides information to enable the project to be authorised at the start.
• This will ensure that only viable projects are authorised, increasing their chance of support and success. It also stops unviable projects from consuming valuable resources.
• This gives the stakeholders confidence and supports their commitment and the associated investment in terms of resourcing and funding.
• The BC is also used to give ongoing justification at the gates. The project is reviewed against the BC for the likelihood of the benefits being realised and the costs involved. This ensures that projects continue to contribute to the business and that actions including realignment and termination can be considered.

a)/2 To inform decision making regarding changes.
• The likely impact of proposed changes to the project (i.e. both project scope and the external environment) should be reviewed against the business case.
• A change request (CR) may have a major impact on the success criteria of a project which would make the project unviable. This would either lead to the CR being rejected or the project being terminated.
• A CR should be assessed for its impact on the budget, timescales, risks and benefits (all key elements of a BC). If the change increases the costs and the risk but does but increase the benefits expected, then it is questionable whether it should be approved.
• Alternatively, a CR’s impact on the BC may be very positive and justify approval.
• Using the BC as a key reference baseline should ensure that only value for money changes are approved.

a)/3 It provides a baseline against which the benefits will be measured.
• As the benefits start to accrue (usually following transition) they will be tracked and compared to those documented in the baselined BC.
• If the product is used to deliver all the benefits in the BC, the project will be successful as the organisation will have received the expected return on its investment.
• The BC is also used as a basis for developing a benefits realisation plan which is used to determine how the benefits will be tracked.
• The BC will also be used when carrying out lessons learned on the investment. This will inform future decision making and improve the development of BC’s by the organisation.

Question 30

Explain how these investment appraisal techniques can be used to assess the validity of a project – 20 marks (10 marks each): • Internal Rate of Return (IRR) • Net Present Value (NPV)

Answer 30

b)/1 Internal Rate of Return (IRR)
• Used to determine the profitability of a potential investment and informs the decision of whether to invest in a project or not.
• The term internal refers to the fact that the calculation excludes external factors, such as inflation, the cost of capital, or various financial risks which need to be factored in rather than relying on IRR alone.
• It is the discount rate that makes the NPV zero therefore if the IRR exceeds the cost of capital, then the project should be a good investment.
• The most attractive thing about this method is that it is very simple to interpret after the IRR is calculated. This is very easy to visualise for managers.

b)/2 Net Present Value (NPV)
• Used to understand the profitability of an investment over the life of as asset alongside considerations of affordability and strategic fit.
• NPV is the difference between the present value of cash inflow and the present outflow of cash over a period of time. It is the monetary value used to judge the value of an investment at a particular discount rate. (i.e. the rate at which the value on money changes over time)
• It calculates the present value of cash flows associated with an investment and uses a discount rate to show how the value of money decreases with time.
• It allows different discount rates to be modelled (based on different future financial scenarios). This will allow best and worst-case scenarios to be applied to a project to understand whether to invest.

Question 31

Explain two ways in a linear lifecycle how developing a project management plan helps establish a deployment baseline – 20 marks (10 marks each)

Answer 31

Establishes the processes that will be followed.
• To ensure consistency and efficiency through the lifecycle, it is important that the processes are agreed and baselined before project deployment.
• These processes include change control, monitoring and reporting and risk management and documenting these in the PMP will provide clarity for the team and avoid ad-hoc management.
• Tailoring organisational processes to reflect individual projects will ensure that they can be applied efficiently (e.g. in a timely manner) and that individuals will not bypass them.
• Agreeing these will give the sponsor confidence that there are adequate controls in place as well as a basis for auditing how well they are being applied.

b)/2 Establishes the scope of a project.
• the deployment baseline is developed with a focus on fully developed scope and quality as developed and documented in the PMP.
• This works on the principle that all the work can be defined, estimated, scheduled, risked, resourced and costed at an appropriate level of detail.
• By involving the project’s stakeholders in the development of the PMP (e.g. by gathering their requirements), their expectations and needs can be developed into costed plans.
• An agreed baseline ensures that expectations are set with the stakeholders making them more likely to support the project and accept its outputs.

Question 32

Explain three reasons for producing a project management plan – 30 marks (10 marks each)

Answer 32

Improves chances of project success.
• A good Project Management Plan (PMP) will do this by ensuring that there is a clear understanding of the project and how it will be delivered.
• Having a consolidated plan is a key governance principle ensuring projects do not proceed without a full understanding of the resource commitments required and the level of risk exposure.
• It will clarify and communicate the aims of the project (e.g. deliverables, timescales, costs) and the strategy of the project (e.g. procurement methods and quality processes). This improves the chances of everyone working to agreed standards and goals.
• When there is conflict or uncertainty, teams can refer to the PMP for clarity and direction enabling the project to proceed without extended delays.
• This will align the team and stakeholders, gain their buy-in, set their expectations and provide a means of assessing progress.

a)/2 Provides a baseline for the project.
• As such it marks a ‘starting point’ for the delivery of the project documenting its scope, costs and timescales ensuring clarity with the team and the stakeholders including senior management.
• The baselined and approved PMP marks a point of agreement among the stakeholders including the users of what the project will deliver. This increases their buy-in and support and makes it more likely that the final deliverables will be accepted during handover. • It also reduces the number of requested changes because the PMP is not baselined until the key stakeholders are agreed regarding scope, cost and timescales.
• The progress of the project and the number of changes can be assessed against the baselined PMP. It allows stakeholders to understand how the project is performing against the original agreed plan. This will allow action to be taken where necessary such as adding additional resources or de-scoping the project.

a)/3 A form of ‘contract’ between the project manager and the sponsor.
• The PMP documents the obligations of each role ensuring that there is clarity and agreement before its implementation.
• The PMP will document what the project manager must achieve in terms of success criteria (e.g. time, cost and quality) and the strategy they will implement. This will ensure the project manager is held to account but also has a sponsor who understands what they will do.
• The PMP will document the decisions needed by the sponsor at key points in the project such as gateways, resource commitments (including funding arrangement and budget release) and actions regarding escalated issues, risks and change requests.
• This sets the expectations of the sponsor so that they can plan in time to conduct these activities. It also ensures that there is no confusion over who is responsible for aspects such as transition and benefits realisation.

Question 33

In an iterative life cycle, explain two components of the project management plan that need to be considered when arriving at the deployment baseline – 20 marks (10 marks each)

Answer 33

Time/resources. • The deployment baseline is developed based on the resources and schedule available to the project. These are agreed upfront with the stakeholders to ensure that they are available and acceptable.
• The resources and schedule are determined, but the scope and quality will be adjusted to meet these. This ensures the project meets the end users’ deadlines (e.g. a new website is needed for the new school term (even if it does not have all the feature originally asked for).
• Should the agreed number of iterations be used up and the solution developed to a minimum level without the ‘should have’ requirements being addressed, the team may have to raise a change request to the sponsor to vary the scope or ask for more time and resource.
• Contingency should be considered when deriving the baseline to ensure expectations of the stakeholders are managed and the amount of additional time and resource is available should it be required.

b)/2 Requirements.
• These constitute the scope of the project at the planning stage and needs to be agreed before committing resources to a project.
• These user/stakeholder needs (e.g. the required functionality of the final product) need to be prioritised to allow a minimum set or scope to be agreed as acceptable by the stakeholders before they are baselined.
• Prioritising the requirements will allow the project to be delivered on time and within the resources available by adjusting the requirements. In other words, lower priority items can be sacrificed at the expense of a higher priority one that gives greater value to the user.
• An example is that the conference will provide lunch but could provide evening dinner if there is enough resource to provide by the deadline.

Question 34

Explain three reasons for re-estimating through the project lifecycle – 30 marks (10 marks each)

Answer 34

)/1 Maintains stakeholders’ expectations. • This gives them increased confidence in project’s ongoing forecast costs. • Initial estimates are based on incomplete understanding of the scope of work and the resources required and will need to be updated/refined as greater knowledge accumulates over time. • This gives the stakeholders confidence that updated estimates are based on lessons learned in previous phases/stages and that plans are based on experience not the original estimates. • This increases their support and ensures that the finances and decisions required by the project are supplied in a timely manner.

a) /2 Improves resource management • Helps in the preparation of resources due to improved forecasts of materials needed and labour hours required. • This will allow resource providers to set aside the right amount of resource at the right time to support the project. • This helps to avoid under or over allocation of resources. This in turn minimises delays or additional costs to the project. • Where resource requirements are forecast to be lower, valuable resources can be released to benefits other projects and business as usual. • Line managers and suppliers will need to plan these resources well in advance and accurate forecasts will help them to acquire and schedule the right skills and quantities to meet the project’s needs.
a) /3 Helps manage the budget • Helps to ensure that cashflows and budgets are in line with the latest expectations. • This allows those funding the project to ensure that money is available to the project at the times needed (e.g. the gates and milestone payments). • Helps the project manager and sponsor to avoid unaffordable negative cashflow or increased cost of borrowing especially where costs are likely to rise disproportionately against income. • Provides stakeholder confidence in reports on project progress and spend as they see forward planning informed by actual spend and efficiencies. • Allows contingencies to reflect the actual uncertainty at any specific point in the project life cycle

Question 35

Explain how two of the following are used to produce estimates – 20 marks (10 marks each): • Parametric • Analogous • Delphi

Answer 35

)/1 Analogous is a comparative method.
• This makes a comparison with another similar completed project and adjusts certain factors accordingly.
• These factors can include inflation, complexity and location.
• Example: a project to build a new data centre. The organisation was able to look at the actual costs and timescales from similar previous successful projects. These values were taken and adjusted for inflation and price of materials and local labour rates.
• This method can be performed early on the lifecycle but relies on having access to the data, being able to compare like with like, then understanding and making adjustments for any differences.
• It is quick to do and is based on a real completed project and can be used to give quick quotes to stakeholders.

b)/2 Delphi generates an estimate through team consensus.
• A group of experts exchange views, and each independently gives estimates and assumptions to a facilitator who reviews the data and issues a summary report.
• The group members then discuss and review the summary report, and give updated forecasts to the facilitator, who again reviews the material and issues a second report. This process continues until all participants reach a consensus.
• The experts at each round have a full record of what forecasts other experts have made, but they do not know who made which forecast. This avoids bias.
• The anonymity allows the experts to express their opinions freely, encourages openness and avoids admitting errors by revising earlier forecasts.

Question 36

Explain three reasons for contingency planning in projects – 30 marks (10 marks each)

Answer 36

To provide a back-up plan.
• It is a backup plan in place for when things go differently than originally planned. It is a defined, actionable plan that is to be enacted if an identified risk becomes a reality.
• In addition to contingency for known risks, many organisations hold a contingency/management reserve for unidentified risks (the “unknown unknowns”) or for those risks that have a very low probability of occurring but would have a very high impact if they did occur.
• This will allow the costed and resourced back-up plan to be used when the ‘trigger’ conditions arise avoiding the need to request additional funds from senior management or go into panic mode.
• An example is having another supplier ready to step in to maintain a critical supply chain.

a)/2 Increased stakeholder confidence.
• Contingency will give the stakeholders confidence that the project has identified and assessed uncertainty and made provision for it in the plans.
• This may be in the provision of additional time or resources (e.g. additional capacity in skills and facilities). • This will allow them to fully commit to the project knowing that there should be no nasty surprises such as unexpected resource demands.
• It will also give the project manager and the team confidence when implementing the project knowing that there is provision set aside for the risks that they identified and are trying to manage.
a)/3 Contingency will allow for accurate budgeting to be done.
• A provision to cover estimated risk will be added to allow a justifiable baselined budget to be created.
• This will allow funding for the project to be arranged with the confidence that it will cover the cost of the project.
• Calculating the amount of contingency for each area of risk exposure will allow it to be allocated to these areas allowing a targeted approach.
• This allows the use of contingency to be monitored and not used for inappropriate purposes (e.g. product enhancement).

Question 37

Explain two ways a project manager would use earned value management outputs to update project plans – 20 marks (10 marks each)

Answer 37

b)/1 By forecasting time and cost outcomes.
• They would do this by calculating the performance indexes (i.e. cost performance index and schedule performance index) and apply these ‘efficiency’ factors to the planned budget and scheduled end date.
• This may indicate that the project is facing either an over or under spend and either early or late completion.
• This may entail updating the budget and the schedule to inform stakeholders of the likely outcome and prepare them accordingly. While this may cause initial conflict, it will help to manage their expectations.
• They may have to add more resources to the plan to bring the project back on schedule. The resource schedule will be updated in this case and assist in forward planning.

b)/2 By calculating percentage complete
• By looking at the ratio between the planned budget (i.e. the maximum that can be earned) and the earned value to date the percentage complete can be used to update the schedule and the budget in the project management plan.
• This can be used to understand the status of individual work packages and the project as a whole.
• Where this shows that the project is likely to finish outside its upper tolerances the requirements, scope and quality may need to be adjusted to allow the project to be recovered.
• Where the project is forecasting early delivery, handover/transition plans will need to be adjusted. This may affect aspects such product storage, re-scheduled operational activities and payments.

Question 38

Explain three of the following steps in an information management process – 30 marks (10 marks each): • Collection • Storage • Dissemination • Archiving

Answer 38

Collection. • Information must be collected into an organisation’s system and it is important that this is done in a planned and controlled manner. • If this is not done, it may not be possible to know what information is available and where it is. • An organised collection system must cater for the different types, different formats and various sources of the information. Examples of this are scanning paper documents into electronic format and documenting their date of arrival. • Where collection is electronic, security (e.g. virus checking) measures must be implemented to protect the integrity of data. • Clear roles and responsibilities need to be agreed and allocated for collection to ensure that the process is carried out in an organised and efficient manner. Reliability of the information and its source should be considered.

a) /2 Storage. • Information needs to be available and it is therefore vital that it can be found and accessed by those allowed to do so. • Aspects of storage include information security and robust back-up to ensure its continued availability to the project. • Examples of this are locked and controlled filing cabinets for different levels of national and commercial security, fire and smoke-proof storage, cloud-based storage for electronic data and strict criteria on who can have access to information. • An agreed and well-structured filing system will support efficient management ensuring that people can find information in a timely manner. This will minimise delays and also ensure that evidence is available in contractual conflict situations.
a) /3 Dissemination. • It is important that information is controlled regarding its withdrawal and distribution therefore the process should ensure that there is a record of who has been sent information, when it was sent and the version or variant that was sent. • This will provide an audit trail as well as ensure that the implications of changes to information are understood (e.g. who should receive an updated version). • Without this knowledge, time and effort will be wasted and a degree of confusion will result. • Distributors should also ensure that the information is treated with the appropriate level of confidentiality or security, by the recipients. • Dissemination is informed by the project communication plan and organisational policy to ensure that the right people get the right information in the right way.

Question 39

Explain two different types of contingency in a project – 20 marks (10 marks each)

Answer 39

Time. • Additional time is set aside to deal with risk events that threaten the agreed timescales of a project. • This can nominally be calculated by multiplying the probability of the risk happening by the estimated time impact. • This will allow this provision to be used when the risk occurs without having to apply for addition time to senior management. • In critical chain scheduling, contingency is removed from individual activities and used as a buffer at the end of the schedule. This will help the project manager to monitor contingency erosion and take action as necessary (e.g. de-scoping the project).

b)/2 Money. • Additional money is set aside to deal with risks that threaten the project budget. It is calculated in the similar way as time contingency, but with the impact on budget. • It should form part of the overall budget and can be categorised as contingency (known unknowns) and management reserve (unknown unknowns). The former may be held by the sponsor or project manager while the latter may be held by corporate. • Examples of financial contingency include money to pay for re-work, additional resources and reapplication of planning permission. • Having this provision will mean that the project is not held up waiting for additional funds as they have already been set aside.

Question 40

Explain three aspects of a project that would typically be reported on – 30 marks (10 marks each)

Answer 40

Progress against the schedule. • This allows the stakeholders to understand how much the project is achieving and how this compares to the baseline plan. • This actual progress enables a realistic forecast of final completion of a phase and a project to be produced. • This information is used to produce action plans where a project is under or over performing (e.g. adding additional resources to improve progress). • Can trigger a change in project scope to enable completion on time or additional resources to deliver full scope within time constraints.
a)/2 Quality approvals. • This allows the sponsor and the stakeholders to understand how many products have been approved against those planned and how many remain unapproved. • This enables trends to be identified and action to be taken accordingly. • An example is a high number of non-conforming items found during testing. This may be due to the deficient skill of the producers which can be remedied through training or finding a better supplier. • The report may also propose remedial measures and highlight areas where support and decisions are required by the sponsor (e.g. additional resources for testing and a change to original acceptance criteria).

a)/3 Stakeholder status. • This will indicate the level of their engagement and support for the project. It is important to monitor their actual behaviour against what was expected. • This might be measured by meeting attendance, provision of resources or complaints (e.g. lack of meeting attendance may indicate that stakeholders do not understand the importance of the project). • The baseline for reporting is the communication management plan and the results of stakeholder analysis. Feedback may necessitate action such as changing the method of communication, the sender or the content. • The report may also propose additional measures to engagement stakeholders and request help from the sponsor to add their weight to communication.

Question 41

Interpret the Earned Value information provided below for a project. Given the likely schedule impact and cost estimation at completion, propose two practical responses the project manager could take and a justification for each (20 marks):

A project has a budget at completion of £120,000 and is planned to be completed in 10 months. The table below shows the project’s progress at the end of month 5:

Task Planned budget Actual cost Earned value Total at month 5 £60,000 £40,000 £50,000

SPI = 0.83 CPI = 1.25 EAC = £96k Planned time/SPI = 12 months

Answer 41

Adjust resources. • Because the project is not earning value quickly enough the project manager can apply additional resources (e.g. labour) to reduce the overrun by 2 months.
• This would bring the project in on time but will have the effect of increasing costs which are currently forecasting an underspend of £24k).
• This may not have the desired effect if the remaining work efficiency does not follow the trend so far (e.g. different activities which would not benefit from more resources due to space limitations or health and safety regulations).
• Alternately the project manager could improve the skills available (e.g. training the team) to do the remaining work faster. This may reduce the duration and have less impact on costs than bringing in additional resources.

b)/2 Adjust scope/requirements.
• If time is a key driver for the project and it is not possible to remedy the situation with additional resources, the project manager can reduce the scope/quality/requirements of the project to those must-haves and should-haves.
• This will result in reduced effort and reduced scope to be delivered on time.
• The project manager would need to get this change approved and the overall value of the project re-baselined as earned value management is based on an approved and protected baseline.
• Plans would then need to be issued to implement the new scope.
• This option will provide an opportunity to save actual costs while providing acceptable value to the stakeholders.

Question 42

Explain three benefits of using the interpretation of earned value data – 30 marks (10 marks each)

Answer 42

Supports better forecasting against time and budget. • By using and correctly interpreting earned value data including actual costs, planned costs and earned value, forecasts are based on objective analysis rather than a subjective approach (e.g. an individual view).
• By using actual data (based on evidence of progress) and the efficiency of work in progress (using cost performance index and schedule performance index), likely outcomes can be visually plotted graphically. This assists with reporting and helping stakeholders to understand likely outcomes.
• This will help manage their expectations and increase their confidence in forecasts.

a)/2 Incentivises suppliers.
• Allows incentivised payments to be made to suppliers based on what they have achieved rather than on costs alone.
• This is measured in terms of their earned value (e.g. percentage complete x budget at completion) rather than just milestone payments.
• Additional payment can be achieved when the supplier completes additional work over and above that planned to meet the milestone.
• This in turn incentives them to overachieve and improve their cash flow.

a)/3 Allows trends to be understood.
• It provides opportunities to look at efficiency of spend (through the cost performance indicator) and productivity (through the schedule performance indicator).
• By progressively monitoring these, trends can be used to drive actions where there is under/over performance.
• By monitoring performance in different areas of the project, trends related to specific teams can be understood allowing targeted action.
• The impact of actions (e.g. applying additional resources) can be monitored by looking at the trends (usually in graphical format such as CPI and SPI based bullseye diagrams). This will show whether actions are being effective.

Question 43

Explain two reasons for contingency planning in a project – 20 marks (10 marks each)

Answer 43

To provide a back-up plan.
• It is a backup plan in place for when things go differently than originally planned. It is a defined, actionable plan that is to be enacted if an identified risk becomes a reality.
• In addition to contingency for known risks, many organisations hold a contingency/management reserve for unidentified risks (the “unknown unknowns”) or for those risks that have a very low probability of occurring but would have a very high impact if they did occur.
• This will allow the costed and resourced back-up plan to be used when the ‘trigger’ conditions arise avoiding the need to request additional funds from senior management or go into panic mode.
• An example is having another supplier ready to step in to maintain a critical supply chain.

b)/2 Increased stakeholder confidence.
• Contingency will give the stakeholders confidence that the project has identified and assessed uncertainty and made provision for it in the plans.
• This may be in the provision of additional time or resources (e.g. additional capacity in skills and facilities). • This will allow them to fully commit to the project knowing that there should be no nasty surprises such as unexpected resource demands.
• It will also give the project manager and the team confidence when implementing the project knowing that there is provision set aside for the risks that they identified and are trying to manage.

Question 44

Parametric

Answer 44

Parametric estimating uses a statistical relationship between historical data and other variables (e.g. units of floor area in construction) to calculate an estimate for activity parameters, such as cost, budget, and duration. It can be used to estimate a whole project or tasks within a project and will often be combined with other estimating techniques.
Benefits: It can be useful for a quick estimate against a high level scope and can be extremely accurate if the database is kept up to date and the correct parameters are used.
Because statistical data is used, parametric estimating removes human bias. Estimates are justified by facts – actual outcomes from previous tasks and projects. This technique can produce higher levels of accuracy depending upon the sophistication and underlying data built into the model. There are ‘black box’ commercial tools available, but it is often preferable for experts to build bespoke models. Uses defined parameters by which work can be measured and uses the results to predict values in the current work.