Contents

1.0 Introduction ......................................................................................................................... 1

2.0 Key Tools for Project Managers........................................................................................... 2
2.1 Work Breakdown Structure, CPA, Grantt Chart .............................................................. 2
2.2 Earned Value Management ............................................................................................. 8
2.3 Evaluation of plans for project and key process of PRINCE 2............................................ 15
2.3.1 Evaluation of Plans for Project ................................................................................... 15
2.3.2 Seven Key Processes of PRINCE 2 .................................................................... 16
3.0 Summary............................................................................................................................ 19
4.0 References ......................................................................................................................... 21
5.0 Appendixes ........................................................................................................................ 22

1.0 Introduction

The topic that will be discussed in this report is the second topic in the
syllabus of operation and project management which is Key Tools for Project
Manager.
As already discussed in topic 1, project is something that is unique and has a
beginning and ending time which means there are time constraint for every
project. Besides that, project is also a special event which it will not exactly
same as another project and not repetitive. Thus, it is very important for every
project manager to properly manage the project no matter at which phase.
In this report, we will disclose what tools that can be used in order to help the
project manager to run the project more smoothly, forecasting the future of the
project (since project will meet uncertainty) and also identify the quality of the
project outcome whether it is desirable outcome or not.
Those tools that useful for manager including (i) grant chart, which can help
manager to property state the time phase for every task that have to be done
in the project, (ii) Critical Path Analysis (CPA), which is very important for the
project manager to identify which task in the project get the priority or is the
most important that cannot be delayed if not will drags the whole project, (iii)
Work Breakdown Structure (WBS), which clearly identify all the task that have
to be done in the project and together with Organization Breakdown Structure
(OBS) to assign the authority of each task to the person who will be
responsible to.
Besides these tools, Earned Value Management system is also a very
important system that can help the project manager throughout the whole
project. The 32 guidelines that breakdown into 5 section are very important for
the project manager to follow in working on a project. Earned Value
Management also provides many benefits to the project manager to evaluate
the project.

2.0 Key Tools for Project Managers

Deconstruction of a project
A project scope is everything about a projectwork content as well as
expected outcomes. Project scope consists of naming all activities to be
performed, the resources consumed, and the end products that result,
including quality standards. Scope includes a projects goals, constraints, and
limitation. Scope management is the function of controlling a project in terms
of its goals and objectives through the processes of conceptual development,
full definition, execution, and termination.
Scope statement is the heart of scope management which reflects a project
teams best efforts at creating the documentation and approval of all important
project parameter prior to proceeding to the development phase.
There are 4 key steps in the scope statement process which is:
1. Establishing the project goal criteria.
2. Developing the management plan for the project.
3. Establishing a Work Breakdown Structure (WBS).
4. Creating a scope baseline
2.1 Work Breakdown Structure, CPA, Grantt Chart

Work Breakdown Structure

WBS is a deliverable-oriented grouping of project elements which

organizes and defines the total scope of the project. Each descending
level represents an increasingly detailed definition of a project
component. Project components may be products or services. (PMBoK)

Used as most basic approach for the medium-to-large project

Known as chunking or unbundling

Role: to create a linked, hierarchical series of activities, which is

independent unit, but at the same time still part of the whole

WBS delineates the individual building blocks that will construct the
project. Visualize the WBS by imagining it as a method for breaking a
project up into bite-sized pieces, each representing a step necessary
to complete the overall project plan.

Purposes of the Work Breakdown Structure

1. It echoes project objectives
2. It is the organization chart for the project
3. It creates the logic for tracking costs, schedule, and performance
specifications for each elements in the project
4. It may be used to communicate project status
5. It may be used to improve overall project communication
6. It demonstrates how the project will be controlled

Partial Work Breakdown Structure

The logic across all identified tasks that need to be accomplished for
the project is similar.

Work packages is WBS elements of the project that are isolated for
assignment to work centers for accomplishment.

Level

WBS Term

Description

Level 1 (highest)

Project

The overall project under development

Level 2

Deliverable

The major project components

Level 3

Subdeliverable

Supporting deliverables

Level 4 (lowest)

Work Package

Individual project activities

Critical Path Analysis (CPA)

Constructing a time plan

Having the estimates of times and resources required is one part of

compiling the plans.

In modelling time, this need to be built into models of the likely project
system that will enable key variable such as project duration and then
the schedule established.

Most commonly used technique activity-on-node

Activity-on-node diagrams and critical path analysis (CPA)

Use A-o-N, the construction plan combines the WBS to identify all the
constituent activities, the sequences in which they need to be
performed, ant the estimated duration for each activity.

The visual clarity of denoting activities as boxes and linking them

together is appealing.

However, for any two activities, A then B, there are 4 ways in which
they can link :

Logical Activity Linkage

The arrows represent a potential time lag in the logic.

Analysing the network Critical Path Analysis (CPA)

earliest start time (EST) determined by the activities preceding the

event and is the earliest time at which the activity on this node can start;

latest start time (LST) is the same or later than the EST and is the
latest time at which all the previous activities need to have been
completed to prevent the whole

project being held up;

total oat the difference between the LST and the EST.

Critical path the longest sequence of dependent activities that need

to be completed in order for the project as a whole to finish

Forward pass first stage of the analysis

Reverse pass the subsequent calculation to determine the critical

path

Activity notation

Activity network and the critical path

Scheduling
Provide the answers of when will activities need to be carried out?
Process that converts the plan into a specific set of dates for individual
activities to be started and finished

Schedule development process

Referring to the figure;
o The arrows for the inputs of the scheduling process are two
ways.
o The network provides the logic for the order in which activities
need to be carried out
o When completed, input of time estimates may show that the
time requires for completion is longer than is available
o Network and time estimated will be reconsider

o Resources capability set of task that the resources available to

the project manager can reasonably undertake
o Resources pool resources available in resources capability
o Resource capacity depends on the volume of resources
available and issues such as the resources calendar
Gantt Charts
Time-scaled graphical planning tool, which gives a static representation
of the relationship between activities and their duration.
Purposes to illustrate the relationship between the activities and time
To move from WBS to Gantt Chart,
o A level of logic established
o Conventions used (time left to right, activities top to bottom)
Two critical activities in Gantt Chart :
o Forward schedule started the activities at a given date and
followed them forwards in time to determine the end date
o Backward schedule looked at the time by which the project
needed to be completed and worked the logic of activities
backwards
If any insufficient time, activities have been shortened.
Any excess time (slack) is used to lengthen activities.
Benefits;
o Simple to draw and read
o Good for static environments
o Useful for providing overview of the project activities
o Very widely used
o The basis of the graphical interface for most project software
Limitations;
o Difficult to update manually where there are many changes
charts can quickly become obsolete and therefore discredited.
o Does not equate time with cost
o Does not help in optimizing resources allocation
o Can lead to false sense of certainty about the project

2.2 Earned Value Management

What is earned value? It is something that gained through some effort and in
project management, this value earned when the activities completed.
Besides that, earned value also is a measure of progression. The reason to
use Earned Value in project management:
(i)

It provides a uniform unit of measure for total project progress or any

sub-part of a project
For example: the working hours and dollars which are also the
traditional units used. Both will be used in a different type of situation
depends on whether the project is labor intensive or not. If labor
intensive, working hours is adequate while for project that controlled by
the project control system then using dollars as the unit measure will
be adequate.

(ii)

It is a consistent method in order to analyze the project performance

and progression
Using Earned Value to establish a specific method to determine what
is the plan to date and what the progress that actually achieved.

(iii)

It is a basis for analysis of cost performance of a project

Earned Value provides information in order to compare the planned
cost of the completed work and also the actual cost of a project and
helping manager to analyze the cost performance of the project.

Earned Value Management (EVM) become a basic approach in program

management in 1966 when it was used with other planning and controlling
requirements in the United States Air Force programs. In that time, EVMs
requirement is the Cost/Schedule Planning Control Specification (C/SPCS).
Over times, the concept of EVM and its requirements basically remain
unchanged, but there are many others concepts had been updates to its titles
which includes: (i) Cost/Schedule Control System Criteria (C/SCSC), Earned
value Systems Criteria (EVMSC), and also the currently updated of 32
guidelines for the Earned Value Management System (EVMS).

Earned Value Management (EVM) is more than just a unique project

management process or technique since the 32 guidelines will define the
requirements that a project management system must meet.
Objective of the EVMS are:
1. Relate the time phased budgets to specific tasks or/and statements of
work;
2. Provide basis to gain information about the work progress assessment
against the baseline plan;
3. Relate technical, schedule, and cost performance;
4. Provide the proactive management action with timely, valid, and
auditable data/information;
5. Supply managers with an applicable level of summarization for
effective decision making.
Once the EVMS is designed and implemented on the project, it will benefit the
project manager in term of increasing visibility and control to quickly and
actively respond to the projects issues. In this case, it will be easier for project
manager to meet project cost, schedule, and technical objective. Besides that,
it will also benefit the customer of the project including the customer will have
more confidence in the project managers ability to manage the project,
identify problems in a timely manner, and provide objective contrast cost and
schedule status.
New terms in Earned Value Management where the project managers
internal system must provide:
1. Budgeted cost for work scheduled (BCWS), also called the planned
value (PV)
-

It represents the budget of the activities that are scheduled or

planned to be completed.

Formula: PV = BAC * % of planned work

One of the three major components in EVMS

2. Budgeted cost for work performed (BCWP) or earned value (EV)

-

It represents the scheduled or planned cost of the activities that

were completed.

Difference between BCWS and BCWP is BCWS represent the

budget for the activities that are scheduled/planned to be completed
but BCWP is the budget for the activities that are actually
completed.

Formula : EV = BAC * % of Actual work

One of the three major components in EVMS

3. Actual cost of work performed (ACWP)

-

Represent the actual cost of the activities that were completed.

One of the three major components in EVMS

4. Budget at completion (BAC)

-

Sum of all budgets established for work in the project (total planned
value for the project)

5. Estimate at completion (EAC)

-

Represent the accumulated actual cost of work performed plus the

estimated cost to complete the remaining work

6. Cost Variance (CV)

-

Formula: BCWP ACWP

If result greater than 0 (favorable-underrun), result less than 0

(unfavorable- overrun)

7. Schedule Variance (SV)

-

Formula: BCWP BCWS

If result greater than 0 (favorable- ahead of schedule), result less

than 0 (unfavorable-behind schedule)

8. Variance at completion (VAC)

-

Formula: BAC EAC

IF result greater than 0 (favorable), result less than 0 (unfavorable)

10

As discussed early, Earned Value Management Systems are updated with the
32 guidelines in the ASNI-748 Standard. These guidelines can be divided into
five sections which are:
1. Organization
2. Planning, Scheduling and budgeting
3. Accounting Considerations
4. Analysis and Management Reports
5. Revisions and Data Maintenance
Organization
This section will focus on organizing the work in the project using 5 guidelines.
The most important among these 5 guidelines in organization is that a project
manager must establish a work breakdown structure (WBS) that will describe
the tasks that will be performed and their relationship to the end product that
the project is aiming for. Besides that, the organization breakdown structure
(OBS) which identifies the people who is responsible to the work that has
been defined in the WBS should also prepared by the project manager.
From here we can see, Work Breakdown Structure (WBS) define the tasks
that have to perform to get the desirable end product and the Organization
Breakdown Structure (OBS) will defines who is going to perform the task. The
intersection between WBS and OBS will define a control accounts which is
also a key management control point. The individual who is responsible for
the task in the control account (scope, schedule and budget) is the control
account manager (CAM). CAM will be responsible for planning, coordination
and achievement of all work within the control account and give a single
authority for all these scope, technical and cost issue for the control account.

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Planning, Scheduling, and Budgeting

This is the second section which will includes 10 guidelines that cover basic
requirements for planning, scheduling, and establishing the time phased
budgets for each of the tasks. In order to meet the project objectives, an
integrated master schedule will be the projects road map. This schedule must
be loaded with the resources required in order to determine the budget for the
work stated in the schedule. This resources loaded schedule will become the
basis for the monthly budget (BCWS) for each of the tasks and in order word
the whole project. The time phased budgets will become the performance
measurement baseline (PMB) and the total budget for each task, control
account, or the entire project is defined as the budget at complete (BAC).
As discussed earlier in topic 1, a project involved some level of uncertainty. A
project manager will normally set aside a part of the total project value as
Management Reserve (MR). MR added with BAC will equals to the total
project budgeted value which also defined as the Contract Budget Base
(CBB). All of the budgets on any projects should be logged in order to have a
successful baseline control. Sometime, there will be tasks in the project that
may be temporarily held in absence and not authorized to the project
manager yet while this cause the manager have not assign the tasks and
budgets to the CAMs such as not yet negotiated for the additional works, the
tasks and budgets can be categorized in undistributed budget (UB). These
kinds of budget assignments, WBS, and the functional organizational identity
of the managers can be captured in the budget summary matrix.
Besides that, another very important aspect in this section is to determine how
BWCP will be assessed. This will start with classifying the work tasks as one
among these three types: (i) discrete (ii) apportioned effort (iii) level of effort.
From this classification, each task which falls into discrete types, CAM will
select an earned value techniques for it. It is also important to know that a
formal work authorization to proceed is needed so that the work can begins.
This requirement is an approach used to clearly define work, schedule and
budget of the project before the work commences and actual cost incurred.

12

Accounting consideration
Include in this section is a very long standing and straightforward project
management set which consists of 6 guidelines in order to capture the actual
cost related to the project work effort. These actual costs must be consistently
collected with the way the tasks of the project is planned and budgeted. This
section stated the needs to select the appropriate time to schedule an
important project resource, material, and to accrue performance data correctly.
Besides that, it also form a common sense practice to incurred the cost for the
material in the same month which the BCWP was taken in order to avoid
misleading cost variance (booking lag).
Analysis and Management Reports
There are 6 guidelines in this section which is very important, as it requires
attention to cost and schedule variances, documenting cause, impact, and
correction action, and also determining a new estimate at complete (EAC).
Calculation of variance is normally done at the control account level and will
provides the ability to summarize the data though the Work Breakdown
Structure or/and the Organization Breakdown Structure. Thus, when it is
needed by CAM or any others, they can drill down from the control account
level into more detail data in order to identity the causes of the variance,
determine the impact of the variance to the future tasks in the project, and
identify possible correction actions.
With the use of Earned Value Management data analysis, managers can
consider their past performance with their future performance to complete the
project within the approved Estimate at Cost (EAC) and Estimate Completion
Date (ECD). With the combined cost and schedule performance, estimate and
the variance trends can be done and will help project management to carefully
review during each reporting cycle. This estimate is a valuable validity test to
the estimate at completion.

13

Revisions and Data Maintenance

This is the final section and is containing 5 baseline control guidelines that
emphasize disciplined and timely incorporation of customer directed changes
which might include stop project orders. This is important because lack of
baseline control can ruin a project. Thus, establishing and maintaining a
schedule and budget baseline is important in order to be able to assess work
accomplished for each reporting period. Besides that, this section is
compulsory for proactive, meaningful EVM when there is a constantly
changing baseline.

14

2.3 Evaluation of plans for project and key process of PRINCE 2

2.3.1 Evaluation of Plans for Project
Before we implement the project, we need to have an evaluation process
to the plans for project. There are a few elements that we need to evaluate
before the plans for the project to be approved.
Firstly, we need to make sure that the resources that needed to
implement the whole project is affordable by the company and not more than
the amount of the budget that given by the company. It is very crucial because
a plan of project cannot be implemented if there is no enough resources
although the project is very good. The manager may ask for extra resources.
This is because the team of project will be a lot of comfortable if there are
some contingency resources.
Furthermore, the project manager should ensure that the objectives of the
project are aligned with the goals of corporation. This is because the projects
that do not align with the companys goal are hard to success. Those projects
focus on their own personal interest or focus on their own department.
Therefore, those projects will not get full management support from the
company.
On the other hand, the project manager should evaluate the risk of that
plans of project and make sure that the level of risk is in a tolerance range.
Project manager should able to deal with the issues and risk. It is important to
produce a risk log with an action plan for those expected risks that the project
may face. The project manager needs to make sure that all members of
project team are aware of the risk log. So, the team can quickly resolve the
issue with the management plan that has already been set in place. This will
give the team confidence when facing project risks and help the company feel
comfortable with the projects progression.
Last but not least, the project manager should evaluate the schedule of
the activities of projects. It will be better if there is a Gantt chart which plots all
of those works that the team have worked out and also the period of time
needed. Besides, the project manager should ensure that the total period of
time that needed is in the range of suggested time for that project.
15

2.3.2 Seven Key Processes of PRINCE 2

1. Starting-up a project
This process is designed to make sure that all prerequisites are in place in
order to make an informed decision about commencing a project. The time
spent in this process is very short. There are 3 important elements that need
to focus. Firstly, we should ensure that the information required for the project
team is available. Secondly, a project management team should be formed.
Lastly, Initiation Stage Plan and Project Brief are the key output for this
process.
2. The Initiating a Project
This process establishes a stable management basis on which to proceed.
This is because the project manager can create a suite of management
products that control, define and plan the scope of the work that required.
Project Board will use the information provided in initiating process to decide
whether want to authorize its continuation or not. The project will be approved
if the objectives of the project are aligned with corporation. The initiating
process activities that will be performed by the project manager include
preparing the strategies for managing risks, quality and communications and
setting up the projects controls. A Project Initiation Document (PID) will be
produced in this phrase. Project manager need to ensure that the investment
of time and effort required by the project is made wisely, taking account of the
risks to the project.
3. Directing a Project
After getting the request from Starting up a Project, we just can initiate the
project. The project board will exercise overall project control and make
important decision. The project board manages and monitors via reports and
controls through a number of decision points. Project manager will receive
direction and guidance from project board. Project manager will ensure that
every process comes complete with recommended activities, products and
the related responsibilities for which subordinates.
16

4. Controlling a stage
The project manager is responsible to handle daily management project work.
The project manager has to monitor and review the progress of the work to
make sure that those authorized works had been done by the subordinates at
the expected standard. If there is any unexpected changes happed, project
manager has to take some necessary corrective action to make sure that
those works had been corrected. Besides, project manager should always
deal with the issues and risks. Those expected events should be recorded in
order to prevent other subordinates repeat the same mistake. A completed
work package will be received in the end of this process. Specialist products
for the management stage are delivered, verified and accepted and the next
stage is planned for and approved for all stages except the last stage of the
project.
5. Managing Product Delivery
The purpose of this process is to manage the acceptance, execution and
delivery of project work. Managing product delivery (MP) controls the link
between the Project Manager and the Team Managers and makes sure that
the work products are delivered to expectations and within tolerance. This
process ensures that the team is working on products that are authorized and
obtains the approval for completed products. These products must be clearly
specified,

understood

and

delivered

to

expectations

and

within

tolerance.

Team Managers provide the Project Manager with regular

progress reports about the teams work. Teams may be internal or external to
the organization. MP is triggered by receipt of one or more authorized Work
Packages from the Project Manager to the Team Manager. When a work
package is completed, it is handed back to the Project Manager.

17

6. Managing Stage Boundaries

The activities of stage boundaries happen at or near the end of a stage or
when the current stage has exceeded tolerance and is in exception. The
board manager will make a important decision in this stage to decide that
whether this project want to be continued or not. Besides, the other decisions
such as approving the next stage plan, reviewing and updated project plan,
requesting an exception plan and confirming the continued business will be
made by the board manager with the sufficient information that provided by
project manager. After assessing the continuing ability of the project, project
manager will record lessons and measurements that can assist later stages of
this project or other projects.
7. Closing a Project
Closing a project is a process covers the Project Managers work to wrap up
the project either at its end or at premature close. During this process, the
project manager needs to check whether the objectives and the aims set out
in the project initiation document have been met or not. The input will be
prepared to the project board to obtain the confirmation that the project will be
closed. On the other hand, the project manager should make sure that the
outcomes or deliverable of this project are satisfy and accepted by the
customers.

18

3.0 Summary
Network diagram
Critical Path
Analysis (CPA)

Work Breakdown
Structure (WBS)

Key Tools for Project manager

Grant Charts

1.0
Organization

Earned Value
management (EVM)
2.0
Planning,
Scheduling &
budgeting

5.0
Revisions and
Data
Maintenance

3.0
Accounting
Consideration

4.0
Analysis and
Management
Reports

19

1
Evaluation of Plans for Project
-Ensure resources needed is affordable
& not exceed the budget
-Ensure objective is same with the goal
-Evaluate the risk & make sure it is in
the range of tolerable level
-Evaluate
Schedule

the

1.0
Starting up a
project

project

activities

7 key processes of
PRINCE 2

2.0
Initiating a
project

3.0
Directing a
project
7.0
Closing a project
4.0
Controlling a
stage

6.0
Managing stage
boundaries

5.0
Managing
product delivery

20

4.0 References

1. Harvey Maylor (2010). Project Management. Italy: Prentice Hall

2. Jeffrey K. Pinto (2013). Project Management. Pearson Education

3. Tammo T. Wilkens (1999). Earned Value, Clear and Simple

4. Kay Wais. How to Implement Earned Value. Retrieved from:
http://www.projectsmart.co.uk/earned-value-management.php

21

5.0 Appendixes

Figure 1: Work Breakdown Structure

Figure 2: Critical Path Analysis

22

Figure 3: Earned Value Management

Figure 4: Intersection between WBS & OBS and CA established

23