Thursday 17 February 2022

How to conduct a new project?



Any individual entrepreneur in one way or another encounters in his activities with such a concept as a project. At the same time, the project can be the creation of your own business, the construction of a new building for your company, the manufacture of a new product, etc. However, today the share of failed projects, as well as projects that have not fully achieved their goals, is quite a lot. The reason lies not in their excessive ambition and unrealism of implementation, but in poor organization without preliminary planning and subsequent strict control of implementation. On how to plan the project and how to further monitor its progress, read the article.

How do I get started?

Individual entrepreneur John decided to move to a new office. This decision was due to the fact that in the building where he worked today, a large corporation bought the offices of numerous small companies that were located there, offering a fairly large amount for the purchase. Ivan decided to move to a cheaper office, and use the funds received from the corporation partly to repair the new office, and partly to use it to develop his small business.

However, everything turned out to be more complicated than Ivan thought, since it was necessary to do a lot of operations to equip the new office. In addition, Ivan had a tight deadline: he had to leave his old office in 2 months, when the corporation moved into it. The question arose – where to start?
Before you can plan a project timeline, you must first determine the scope of the work on the project or WBS (Work Breakdown Structure). The scope of work can be classified according to several parameters:

  • By product (according to the intermediate results that are obtained during the project, for example, a prepared new office, completed documentation)
  • By functions (by types of work that will be performed during the project, for example, choosing an office, carrying out repairs, transporting things to the office, etc.)
  • By performers (e.g. John, construction crew, Ivan's friend, etc.)
  • On the basis of the life cycle (that is, according to the order of implementation of certain operations on the project, for example, the choice of a new office, paperwork, repairs, transportation of things)
  • The choice of classification depends on each specific project. So, if there is a lot of work in the project, but only 3 products, you can classify the work depending on the belonging to a particular product. Generally speaking, the structure of the work on a project should help you manage that project, which means seeing the scope of the work, roughly representing the relationship between them. Therefore, the choice of a classifier is still partly subjective. chose the most common variant of structuring works – by functions, and received the following scheme

Installation of things in the new office

Once the structure of the project work is clear, the deadline for each work should be estimated. At the same time, it is necessary to be guided not by the maximum possible period, but by an average, acceptable for normal conditions. Ivan assumed the approximate duration and cost, as well as those responsible for the implementation of each of the works and thus developed an estimate for the project

Thus, the implementation of the project, according to Ivan's calculations, will take 45 days. Add another number of days off in 2 months (8 days off) - and we get the duration of the project of 53 days, which is still less than 60 days, that is, the maximum possible duration of the project. If you perform some work in parallel, the duration of the project will be reduced. For example, you can start searching for a transport agency during the construction of repairs in a new office.

After the duration and cost of work is determined, you can make a Gantt chart, which will allow you to reflect the timing of each work. Note that some work can be performed in parallel, some - sequentially, which should be reflected in the diagram. A fragment of the diagram is shown in Diagram 1:

This chart allows you to further manage the progress of the project by tracking backlogs. It is desirable to make a diagram with a margin so that any negative factors could not prevent the project from being completed on time, and it is also necessary to reflect non-working days (holidays, weekends, if the project is not being implemented at this time). That is why, when compiling the full version of the Gantt chart, Ivan laid the deadlines based on the total projected duration of the project in 53 days instead of 2 months, leaving a weekend and 1 week for unforeseen circumstances.

After the Gantt chart was developed, Ivan calculated the budget for the project . The budget for the project is drawn up as follows: based on the Gantt chart and the estimate, the amount that will be spent each week of the project is calculated. for example, in the first week of the project, Ivan will have the following expenses:

Petrol costs associated with the trip to select the area of the new office (completely)
Petrol costs associated with travel to the new area and building selection (partial). Since Ivan expects to choose a new building within 3 days, and the third day of travel falls on the second week, for the first week Ivan will spend 2/3 of the planned resource (gasoline) and 2/3 of the amount planned for gasoline, that is, 2/3 * 102 dollars = 68 dollars. The rest of the amount will be taken into account in the second week.

At the end of the table, all expenses for each week are summed up so that you can have an idea of when what expenses are coming. The last drain – the cumulative amount – is needed in order to get the total value of the project costs at the very end.

Having received the budget of the project and its duration, Ivan began to implement his plans. Of course, in order not to miss the critical lag in the project or significant fluctuations in cost, Ivan needed to control the course of the project.

Monitoring the progress of the project

Monitoring the implementation of the project is most often carried out by timing and cost, although there are other additional control options, such as quality control, risk control, etc.
To analyze the progress of the project, it is convenient to use the earned value method. This method uses the following parameters:

  • BCWS is the base cost of planned work, which shows how much money according to the plan should be spent at the time of the analysis.
  • ACWP - the actual cost of the work performed, which shows how much is actually spent at the time of analysis.
  • BCWP - the basic cost of the work performed (mastered volume), which shows how much the amount of work that was actually performed was supposed to cost according to the plan.
  • Consider the application of this method on the example under consideration with the project to move to another office.

Suppose that John conducted an analysis of the implementation of work on the project every week on Sunday (although in fact, control can be performed less often). During the first week, Ivan accumulated a lot of current issues that needed to be solved urgently, so in the first week he only managed to choose the location of the new office, and he postponed the choice of buildings to the next week. In addition, one day Ivan was driven by car by his friend, and therefore one day of the trip cost Ivan nothing. For 2 days of driving around the city on his car, Ivan will spend 2/3 of the planned resource (gasoline) and 2/3 of the amount planned for gasoline, that is, 2/3 * 102 dollars = 68 dollars.
In this case, John received the following values for the cost of work:

BCWS = 170 dollars (see Table 3, last line for the first week)

ACWP = 68 dollars (gasoline for 2 days of travel around the city). In this case, we get the actual cost of doing the work on the selection of the area of the new office, since Ivan did not have time to do anything more in the first week. However, the actual cost will be only 68 dollars instead of the prescribed 102, since one day Ivan traveled at the expense of a friend.

BCWP = 102 dollars (gasoline for 3 days). The basic cost of the work performed to choose the area of the new office was planned as 102 dollars, since Ivan did not count on his friend's car.
Having received the values of these parameters, John conducted an analysis of the project. To find out if he was behind in time, he carried out the following action. Time lag (SV) = BCWP - BCWS = - 68 dollars. A negative value indicates a time lag. The meaning of this expression is to calculate the difference between the volume that the plan needed to master at the time of analysis and the actual mastered volume.

To assess budget overruns, Ivan conducted another operation. Budget overrun (CV) = BCWP – ACWP = 34 dollars. A positive value indicates that less money has been spent than planned. The meaning of this operation is to calculate the difference between the actual cost of the earned volume and the planned cost of the same amount of work.

Thus, Ivan came to the following conclusions:

It is necessary to hurry up with the choice of office
To speed up the process, you can attract the saved 34 dollars.

Key control parameters

There was little work in the project in question that needed to be done. However, often a project consists of dozens and sometimes hundreds of works. In this case, the planning procedures will be the same as those described in this article, but they can be supplemented with the planning of anti-risk measures, as well as security measures during the implementation of the project, etc.
At the same time, the monitoring of the implementation of the project will most likely not be carried out as often as described in the article. The longer the project is implemented, the greater the gaps between the control points.

It should also be added that it is not always necessary to react to a slight lag in the project from the plan, or budget overruns, since their impact on the project may not be critical.

It is very convenient for the purpose of planning and analyzing the implementation of the project to use special computer programs that will help to avoid difficulties in calculations.

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