1 Introduction and Road Map to Project Management 1

1.1 Some Definitions 2
1.1.1 Project 2
1.1.2 Project Management 2
1.1.3 Construction Project Management 2
1.1.4 Construction Management 2
1.2 Book Organization 2
1.3 Strategic Sequence for Project Management 3
1.4 Sequence of Processes in the Project Life Cycle 4
1.4.1 The Five Essential Functions in Project Management 6
1.4.2 General and Useful Points to Take into Account 6
1.5 Chapter Structure 8
1.6 Tables for Performing Actioas in the Different Groups 8
1.6.1 First Group: Initiation 8
1.6.2 Second Group: Planning 31
1.6.3 Third Group: Execution and Overseeing 33
1.6.4 Fourth Group: Monitoring and Control 34
1.6.5 Fifth Group: Closing 35
1.7 Project Charter 35
1.8 Project Management Plan 35
1.9 Organizational Process Assets 36
1.10 Statement of Work (SOW) 36
1.11 Conclusion of This Chapter 36
References 36

2 Project Innovation and Design 37

2.1 Definition 37
2.2 Projects Origins 38
2.3 Innovation and Project Management 39
2.4 CASE STUDY: Development of a Tool for Decision-Making 39
2.4.1 Background Information 39
2.4.2 Research 40
2.4.3 Fundamentals 41
2.4.4 The Next Market 41
2.5 Conclusion of This Chapter 42
References 42
3 Leadership and Negotiation for Project Management 43
3.1 Part One: Leadership 43
3.1.1 Project Manager Attributes 43
3.2 Part Two: Negotiation in Projects 45
3.2.1 Introduction 45
3.2.2 The Negotiation Process 48
3.2.3 CASE STUDY: Identifying the Problem 51
3.2.4 Conclusion of This Chapter 53
References 53

4 Project Strategic Planning 55

4.1 Introduction 55
4.2 Tools for Strategic Planning 56
4.3 Elements of Strategic Planning 56
4.4 CASE STUDY: Commercialization and Distribution of an Imported Food Product into the USA Market 57
4.4.1 Background Information 57
4.4.2 SWOT Analysis 57
4.4.3 Analysis of This Case 61
4.5 Conclusion 61
4.6 Suggested Procedure for Strategic Planning 61
4.6.1 State the Goal and Analyze Factors and Potential Risks 61
4.6.2 Consider Other Strategies 62
4.6.3 Perform a Market Study and Analyze Potential Variations 62
4.6.4 Study Custom Laws and Taxes 63
4.6.5 Think About Facilities 63
4.6.6 Operations 63
4.6.7 Monitoring and Control 63
4.6.8 Final Comments 63
4.7 Strategic Planning in Remedial Work 64
4.8 Conclusion of This Chapter 64
References 64

5 Project Impact on the Environment 65

5.1 The Environment Importance in Projects 65
5.2 Detection of Impacts Produced by a Project 66
5.3 Impact Identification 66
5.4 CASE STUDY: Construction of a Dam for a Hydro Electric Project 69
5.5 Projects Designed to Protect the Environment 70
5.6 CASE STUDY: The Hidden Contamination in Manufacturing 71
5.6.1 Background Information 71
5.6.2 Life Cycle Computation 71
5.6.3 Analysis 71
5.7 Closing a Project 72
5.8 Conclusion of This Chapter 72
References 73

6 Project Risk Management 75

6.1 The Importance of Coasidering Risk in Projects 75
6.2 The Purpose of This Chapter 75
6.3 Definition of Project Risk 76
6.3.1 Risk Classification 76
6.4 Risk Components 77
6.4.1 Different Threats in Projects or Risk Factors 77
6.4.2 Assets Under Threat 77
6.4.3 Probability of Occurrence 77
6.4.4 Outcomes and Impacts 79
6.4.5 Measuring the Risk 80
6.4.6 Safeguards 81
6.5 Project Risk Management 82
6.5.1 Risk Assessment 83
6.5.2 Risk Identification 83
6.5.3 Risk Analysis 84
6.5.4 Risk Evaluation 84
6.5.5 Risk Treatment 84
6.5.6 Risk Monitoring and Controlling 85
6.6 International Risk Standard 85
6.7 CASE STUDY: Software Development Project 85
6.8 Conclusion of This Chapter 88
References 89

7 Project Economic and Financial Evaluation 91

7.1 The Investment Cycle 91
7.1.1 Financing the Project Through Bank Loaas 92
7.1.2 Applications of Funds 92
7.1.3 Preparation of the Investment During the Construction Period 92
7.1.4 Depreciation and Taxes 93
7.1.5 Reinvestment 94
7.1.6 Operating Costs 94
7.1.7 Working Capital (WC 94
7.1.8 Difference Between Fixed Assets and Working Capital %
7.1.9 Project Manager Involvement %
7.2 The Investment Cycle in Statements %
7.2.1 The Balance Sheet 97
7.2.2 Cash Flow Statement 97
7.2.3 Income Statement 97
7.2.4 Project Analysis 97
7.3 Sensitivity Analysis 98
7.4 Sequence to Prepare an Economic and Financial Analysis for a Project 98
7.5 CASE STUDY: Construction of a Copper Concentration Plant 98
7.5.1 Background Information 99
7.5.2 Investment During Construction 99
7.5.3 Taxes During the Construction Period 99
7.5.4 Financing 99
7.5.5 General Specifications 100
7.5.6 Operating Costs 101
7.5.7 Working Capital 101
7.5.8 Statement of Project Analysis 101
7.5.9 Sensitivity Financial Analysis 102
7.5.10 Final Remarks on This Example 103
7.6 Breakeven Point Diagram 103
7.7 Conclusion of This Chapter 104
References 104

8 Project Selection and Decision-Making 105

8.1 What Is the Decision-Making Activity in Project Management 105
8.2 The Decision-Making Process in Projects 107
8.2.1 Rio Colorado Basin Study, Argentina 109
8.2.2 Scheduling Bridge Repairs, Canada 110
8.2.3 Selection of a Manageable Set of Urban or Regional Indicators to Measure the State of the Environment 110
8.3 Different Methods 110
8.4 The Simus Method for Decision-Making 110
8.5 CASE STUDY: Construction of a Gas 111
8.5.1 Background Infonnation Ill
8.5.2 Establishing the Mathematical Model 112
8.5.3 Sensitivity Analysis 114
8.5.4 Projects with Several Objectives 115
8.6 Vendor Selection 116
8.7 Conclusion of This Chapter 116
References 116

9 Project Planning and Scheduling 119

9.1 Planning the Work Related with a Project. 119
9.1.1 Requesting Information About Tasks and Activities 119
9.1.2 Planning for Manufacturing Projects 120
9.1.3 CASE STUDY: The Critical Path Method (CPM) - Planning a Water Supply System to Create a Water Park 120
9.2 Scheduling the Job 123
9.2.1 Constructing the S-curve 123
9.2.2 Working in Parallel 123
9.2.3 Shortening the Duration of a Project 124
9.3 The Master Schedule 124
9.3.1 Merging Networks 124
9.3.2 Preparing the Master Schedule with All Subprojects Merged 126
9.4 CASE STUDY: Developing the Basic Engineering for an Automobile Plant 126
9.4.1 Project Background Information 128
9.4.2 Bidding for Consultancy Services to Develop Mechanical
Basic Engineering 128
9.4.3 Teamic Organization for This Project 128
9.4.4 Determining Scope of Work 128
9.4.5 Establishing the Work Breakdown Structure (WBS 131
9.4.6 Establishing Consultants’Responsibilities 131
9.4.7 Integration and Linkages Between Intervening Project Consultants 133
9.4.8 Relationship and Communication with Owner 133
9.4.9 Acquiring Project Team - Determining Type and Qualification of Staff Needed 133
9.4.10 Team Rcspoasibility Matrix 134
9.4.11 Preparing Schedule of Meetings for the Project Team and Suppliers 134
9.4.12 Planning and Scheduling TEAMIC’s Own Work 134
9.4.13 Preparing the Master Schedule Including Merging Programs from Different Contractors 135
9.4.14 The S-curvc 140
9.4.15 Budget Preparation and Schedule of Funds Needed 140
9.5 Data Needed When Using Dedicated Computer Software for Planning, Scheduling and Budgeting 140
9.6 Shortening the Duration of a Project 141
9.7 Updating the Progress of Work 141
9.8 Finishing the Project 142
9.9 Closing This Project 142
9.10 Managing Uncertainty - The PERT 144
9.10.1 The Workings of the Pert Method 144
9.10.2 CASE STUDY: Uncertainty in the Valley Remediation Project 144
9.11 Crashing the Schedule 146
9.11.1 CASE STUDY: Accelerating Launching of an Industrial Product 147
9.12 Critical Chain Project Management (CCPM 149
9.13 Conclusion of This Chapter 150
References 150

10 Project Materials Management 151

10.1 Determining Materials and Equipment Needs 151
10.2 Delivery at Job Site 152
10.3 Manufacturing Projects 152
10.4 Steps in the Procurement Process 153
10.4.1 E-procurement 153
10.5 Equipment Delivery Status Report 153
10.5.1 CASE STUDY: Controlling Equipment Delivery for a Mall Construction 153
10.5.2 Inspection 157
10.5.3 Materials Deliveries for the Project 158
10.6 The Gozinto Diagram for Manufacturing 158
10.7 CASE STUDY: Contractors Selection for Construction of a Copper Refinery 158
10.7.1 Background Information - General Objective 158
10.7.2 Selection Criteria 158
10.8 Conclusion of This Chapter 158
References 160

11 Project Communications and Enterprise Resource Planning (ERP 161

11.1 Reporting Advance and Development of Project 161
11.1.1 The Weekly Progress Report 161
11.2 Meetings 164
11.3 Additional Communication Means 165
11.4 CASE STUDY: Diagnosis in an Enterprise and Proposal to Install an ERP System 166
11.4.1 Background Information 166
11.4.2 Areas Involved in the Industrial Process 166
11.4.3 Structural Organization 166
11.4.4 Industrial Processes 166
11.4.5 Necessary Inputs 167
11.5 Procedure to Install and ERP System 167
11.5.1 Road Map for a Purchase Order from a Client 168
11.5.2 Symptoms and Problems Detected During the Examination of the Existent System 168
11.5.3 Analysis of the Situation 170
11.5.4 Diagnosis of the Situation 170
11.5.5 Selecting the ERP Program to Implement 171
11.6 Conclusions of This Case and Recommendations 171
11.7 Conclusion of This Chapter 171
References 172

12 Project Cost and Budgeting 173

12.1 Some Definitions 173
12.1.1 The Three Aspects of Cost Management 173
12.1.2 Benefits 177
12.1.3 Sensitivity Analysis for Costs 178
12.1.4 Work Breakdown Structure and Dictionary 178
12.1.5 Quantities Takeoff 178
12.1.6 Aspects to Take into Account When Developing a Cost Estimate 178
12.1.7 Methods for Cost Estimating 179
12.2 CASE STUDY: Estimating Costs for a Retaining Wall 181
12.2.1 Examination of Cost Estimates 181
12.3 Budgeting 182
12.4 CASE STUDY: Budget Determination for Construction of a Dwellings Complex 182
12.4.1 The Two Extreme Budget Curves 182
12.5 Conclusion of This Chapter 185
References 185

13 Human Resources Planning in Projects 187

13.1 Introduction 187
13.2 Working with People 187
13.2.1 The Worker as an Individual Human Being 187
13.2.2 Worker Integration in a Team 188
13.2.3 Job Location 188
13.2.4 Summary 189
13.3 Diagnosing Existing Problems 190
13.4 CASE STUDY: Analyzing Existent Personnel Problems in an Organization 190
13.4.1 Background Information 190
13.4.2 Process Sectors 190
13.4.3 Comments on This Case 193
13.5 Conclusion of This Chapter 193
References 193

14 Project Safety Management 195

14.1 Safety in Projects 195
14.2 Accidents Prevention 195
14.3 Hazards Identification
14.4 Evaluate Safety Risks
14.5 Safety Control
14.6 Reporting Accidents 200
14.7 Conclusion for This Chapter 200
References 200

15 Project Quality Management 201

15.1 What Is Quality 201
15.2 Goal for Quality and Its with Diverse Areas of the Project 201
15.3 Quality Assurance 202
15.4 Something About the Norms 202
15.5 The ISO/DIS 21500 - Guidance Project Management 203
15.6 Example of Quality Controls for a Consulting Company 203
15.7 Quality in Manufacturing 204
15.8 The Kano Model 204
15.9 The Quality Factor Deployment Model (QFD) 205
15.10 CASE STUDY: Launching a New Portable Music Player 205
15.11 Cost of Qual ity (COQ) 207
15.12 Total Quality Management (TQM) 207
15.13 Conclusion of This Chapter 207
References 208

16 Project Monitoring and Project Control 209

16.1 Monitoring the Work - Time, Costs and Performance 209
16.1.1 Comparison of Curves 210
16.1.2 CASE STUDY: Planning, Scheduling Control for an Underpass Construction Project 211
16.1.3 CASE STUDY: Contractor’s Cost Report in an Underground Stormwater Storage Project 216
16.1.4 Computer Updating 217
16.2 Monitoring Installations 218
16.2.1 Change Orders and Claims 218
16.3 Controlling Time and Costs - Finding Possible Causes for Deviations and Proposing Solutions 221
16.3.1 Graphical Information of Work Done 222
16.3.2 Learning Curve 222
16.4 Controlling Manpower (MP) and Man-Hours (MH 225
16.4.1 Initial Conditions 225
16.4.2 CASE STUDY: Man-Power Control in the Construction of a Chemical Plant 225
16.4.3 Man-Power and Man-Hours 227
16.5 Combined Labor Progress and Man-Hours Performance Report in an Ore Treatment Plant Project 229
16.6 Cost Estimate at Completion 230
16.6.1 CASE STUDY: Estimate at Completion Report in a Textile Mill Expansion Project 232
16.7 Controlling Work Certificates 232
16.8 Controlling Aggregates and Other Inputs 233
16.8.1 CASE STUDY: Construction of an Urban Park 233
16.9 Controlling Compliance of Strategic Planning 234
16.10 Controlling Equipment Status 234
16.11 Controlling Drawings Production 234
16.12 Controlling the Issue of Technical Reports 235
16.13 Factors Affecting Production 236
16.13.1 CASE STUDY: Determining Factors Affecting Production in Hand Tools Manufacturing 236
16.14 Forecasting Techniques 237
16.14.1 CASE STUDY: Forecasting Average Daily Advance and Prediction for a Mountain Road Project 237
16.14.2 Prediction 239
16.15 Production of As-Built Drawings 240
16.16 Controlling Quality 240
16.17 Controlling Environmental Protection 240
16.18 Controlling Risk 241
16.19 Controlling Compliance of Safety Regulations 241
16.20 Conclusion of This Chapter 241
References 241

17 Project Closing 243

17.1 The Importance of Proper Closing of a Project 243
17.2 Closing the Project with Suppliers 245
17.3 Closing the Projects with Hired Personnel 245
17.4 Conclusion of This Chapter 245

Reference 245
Index 247