ENGR 281 Engineering Scholars Program Project Management Life

ENGR 281 Engineering Scholars Program Project Management Life Cycle Overview K. F. Reinschmidt J. L. Frank / Marathon Ashland Petroleum LLC Chair in Engineering Project Management [email protected] tamu. edu

Projects exist to add value • For your client or customer • For your firm. • For society. • For you. Project managers exist to maximize project value.

Three Basic Things You Will Find Useful to Know: • How your client or customer makes money. • How your firm makes money by adding value to your client or customer • How your project makes money by adding value to your firm and to your client or customer

Project Life Cycle Overview Identify an opportunity to provide a product, service, or capital project. v Define the project conceptually. v Form the initial project development team. v Write a business plan for the firm, project, product, or service. v Define the project Statement of Work (SOW). v Identify the required or estimated completion date. v Identify milestones and prepare managementlevel schedule with decision points. v

Project Life Cycle Overview Estimate project development costs – top-down, parametrically, by analogy, etc. v Forecast project benefits (tangible or intangible), revenues, etc. v Forecast project operating costs – labor, materials, other variable factors. v Develop a financial plan. v Forecast cash flows and cash requirements throughout the project life cycle. v Identify project risks – business, technological, regulatory, etc. v

Project Life Cycle Overview Assess risks qualitatively; identify potential showstoppers. v Identify methods to avoid or mitigate any showstoppers – or terminate the project. v Calculate project Internal Rate of Return or other measures of success. v Repeat above steps until the project is economically feasible – or terminate it. v Identify off-ramps – how to exit the project. v

Project Life Cycle Overview Identify sources of project funding – clients, personal equity, corporate, banks, venture capitalists, etc. v Obtain funding – or revise the project and the financial plan as necessary. v Form an Integrated Project Team for project execution. v Set up timely accounting and reporting methods to report costs and progress (earned value). v

Project Life Cycle Overview Update and refine the SOW. v Determine level of engineering, design, and other resources needed. v Revise the conceptual cost estimate. v Set cost and schedule contingencies (management reserves) based on risks. v Develop a sense of common purpose in the project team v

Project Life Cycle Overview Assemble the engineering – design team. v Define the Work Breakdown Structure (WBS) and WBS Dictionary. v Institute a change control (configuration management) process. v Prepare the project network schedules. v Determine the project critical path or paths. v Assess remaining risks quantitatively and identify major risks or common causes (Pareto chart). v

Project Life Cycle Overview Identify risk mitigation and risk management actions. Prepare the project Risk Management Plan. v Determine the project organizational structure (fully projectized, functional, matrix, etc. ) v Prepare the Project Execution Plan. v Identify available resources and resource constraints. v Set up the project Quality Assurance Program and issue the Quality Assurance Plan (QAP). v Establish metrics for quality control (Six Sigma). v

Project Life Cycle Overview Perform preliminary engineering design and bottom-up engineering estimate based on WBS. v Integrate the WBS cost estimate with the network schedules (resource load the networks). v Forecast the Budgeted Cost of Work Scheduled (BCWS) for the project duration. v Obtain quotes or bids from vendors, suppliers, and subcontractors. Perform make or buy calculations. v Identify delivery dates for significant equipment. v File for and obtain any necessary permits. v

Project Life Cycle Overview Pass periodic management decision points based on updated costs, benefits, and financials. v Assure that all project participants communicate. v Establish approved Budget at Completion (BAC) (plus management reserve or contingency). v Manage by walking around. v Review vendor drawings and specifications. v Assure that all supplier and subcontractor networks interface to master project network. v Revise networks to meet cash flow, equipment delivery, and other resource constraints. v

Project Life Cycle Overview Monthly or weekly during project life cycle: v Recompute critical path and floats. Follow up if there are negative floats. v Determine earned value and Budgeted Cost of Work Performed (BCWP), Schedule Variance (SV) or Schedule Performance Index. Follow up if SV < 0 or SPI < 1. v Determine accrued costs and Actual Cost of Work Performed (ACWP), Cost Variance (CV) or Cost Performance Index (CPI). Follow up if CV < 0 or CPI < 1. v

Project Life Cycle Overview Monthly or weekly during project life cycle: v Forecast Estimated Cost at Completion (ECAC). Follow up if ECAC > BAC + management reserve. v Conduct weekly or monthly project review meetings with the integrated project team (IPT), client, vendors, and subcontractors. v Daily during project life cycle: v Assure that all project members are communicating. v

Project Life Cycle Overview Perform detailed engineering design and revise engineering cost estimates. v Prepare bid packages for subcontractors and suppliers. v Review bids and select vendors. v Expedite vendors as required to meet the schedule. v Disperse funds (accounts payable). v Prepare startup plan and turnover schedule. v

Project Life Cycle Overview Prepare punch lists. v Start up facility and turn over to users/operators. v Complete project cost accounts. v Prepare as-built drawings and documents for turnover. v Conduct post mortem on lessons learned. v Collect final payment. v Close out project. v Celebrate. v Start new project. v

Any questions ? Project Life Cycle Overview K. F. Reinschmidt