Abstract The final chapter focuses on what it means to be managing at the frontier by describing the uncertainty surrounding decision making. The case was made that managers can use the decision guides developed in chapter 1 as well as current and future stakeholders to serve as guidelines to help manage at the frontier. The management principles from this chapter were designed to help managers when usual management approaches seem inadequate or inapplicable to a situation. The understanding of related risks and uncertainties surrounding new frontiers due to globalization or mass commercialization were a focus of this chapter.
Privacy and ownership guidelines were developed in this chapter as a matter of foundational concepts. http://www. softwareresearch. net/fileadmin/src/docs/teaching/SS05/PM/PMBOK9. PDF 1. How is critical path determined? Should the critical path activities be managed differently from noncritical path activities and if so, why? To determine the critical path of a project three major factors are required: A full list of activities required to complete the project. The duration of each work item. Work item dependencies.
The critical path is then determined by calculating the longest path of planned activities to the end of the project, meaning, the earliest and latest that each activity can start and finish without lengthening the project. A project can have several, parallel, near critical paths. An additional parallel path through the network with the total durations shorter than the critical path is called a sub-critical or non-critical path. The non-critical path(s) are a series of activities (paths) that can be slipped to a certain degree without threatening the completion date of the overall project.
In other words, they have slack, whereas the critical path doesn’t. Yes, critical path activities should managed differently as they are directly effects project schedule and its success. The Critical Path requires specific prioritization of the task and assignments to be completed within a specific time frame. Feedback between the Project Manager & the groups being managed is important so that sub-deadlines are properly met to achieve the main objective of meeting the critical main deadline with deliverables in place.
Non-Critical Path requires that the tasks are met however the priority is more flexible and the assigned task can be distributed accordingly. The procedure is not as important as in the Critical Path where the margin for error is little to none and flexibility limited. 2. Describe the budgeting process for your selected project. Was bottom-up, top-down, or program budgeting used? Who was involved in the budgeting process? How were costs estimated? What steps are in place to control costs? What steps can be taken to make controlling costs easier?
In our organization, the Controller and IT director makes final decisions on what is included in the budget and what funding levels will be. But before these choices can be made based size and past project experience, information, recommendations, and preferences are provided to these decision-makers by a wide range of groups like functional managers, IT manager and outside consultant; who have an interest the project. The project was Top-down budgeting. It begins by estimating the costs of higher level tasks, and then the estimates will constrain the estimates for costs of lower level tasks.
So the entire process of coming up with a budget begin with upper-level management and an overall estimate of the entire project. Then the overall budget is divided among the first level of tasks, and then the budget is divided among lower level tasks and then lower level tasks. This continues until funding has been given to all of the tasks necessary for a project. The project cost is estimated by estimating the costs of the major tasks and near major task. In order to control cost of the project some of the measures are in place like, Monitor project costs through status reports to detect variances from the cost baseline.
Avoid making inappropriate or unauthorized changes in the cost baseline and Acquire authorization for changes in the cost baseline To control the cost easier, along with the above measures, some additional actions like Record the changes made in the cost baseline. Inform project stakeholders of any changes in the cost baseline. A project’s cost change control procedure/system should be designed to outline the actions for changing the project’s cost baseline. In addition, a cost change control system helps the project team provide frequent feedback to project stakeholders about the actual project costs as compared to estimated project costs.
Page188 It is important to realize that although a specific change control system can be set up for project costs, the time, costs, and performance of the project are all interrelated. Therefore, changes made to one of these variables will usually affect the other two. The bottom-up approach involves estimating the cost of individual activities or work packages and then summarizing or rolling up the individual estimates to get a project total. This approach typically results in greater accuracy in the detailed tasks, but there is a risk that some tasks may be overlooked.
Costs means the overall estimated cost for a particular program alternative over the time period corresponding to the life of the program, including direct and indirect initial costs plus any periodic or continuing costs of operation and maintenance. ct managers use requirements identification, needs analysis, goals, and other factors to forecast the resources their project will require. Resources include personnel, materials, money, services, and other expenses required to achieve project goals.
Cost estimating is based on the available information related to costs and on the experience of those involved in the estimating process. Project budgets are dependent on accurate figures, knowledge of the environment, availability of resources, and other factors that may or may not be within the project manager’s control. One aspect of risk analysis and management is allowing for differences between the proposed world and the actual world of the project. The top-down approach to budgeting is based on experience with similar, past projects.
The overall project cost is estimated by estimating the costs of the major tasks. With this approach, overall budget costs can be estimated quite accurately, but individual estimates may be in substantial error. The bottom-up approach involves estimating the cost of individual activities or work packages and then summarizing or rolling up the individual estimates to get a project total. This approach typically results in greater accuracy in the detailed tasks, but there is a risk that some tasks may be overlooked. 3. Contrast the advantages of top-down budgeting and bottom-up budgeting. http://books. oogle. com/books? id=vol37b8_lLEC&pg=PA391&lpg=PA391&dq=Contrast+the+advantages+of+top-down+budgeting&source=bl&ots=crD6ytoxGg&sig=0kEMpvSfgG3eC1Ncy6NilieJbhs&hl=en&ei=f2w3TuayJcSusALUhoQZ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBgQ6AEwADgK#v=onepage&q=Contrast%20the%20advantages%20of%20top-down%20budgeting&f=false Bottom-up budgeting If you are bottom-up budgeting, you begin by identifying all of the different tasks and steps that are involved in a particular project. Then go through and write down all of the different resources and all of the money that will be needed for each step.
Then, to determine the budget for the entire project, the funding needed for each step is added together. To come up with a budget for the level above individual projects, all of the projects are added together. All of the steps are added together higher and higher until you come up with a complete budget for either the entire project or the entire company. When you are determining costs for lower-level tasks, it is usually done by the normal method of cost estimation. If estimates are made in terms of materials or man hours, then they must be converted to cash.
Costs negotiations will be required between those who are in charge of each task and the project manager, or the business owner. Advantages of bottom-up budgeting One of the major advantages of bottom-up budgeting is that the budget can be quite accurate for individual tasks. As long as no tasks have been forgotten, then this can work quite well. Also, bottom-up budgeting involves all members of a particular project, which can be a benefit in terms of company morale and involvement. Disadvantages of bottom-up budgeting Difficult to control aggregate spending Sectoral allocations may not be optimal
Hard to keep multi-year perspective Inefficient formulation process One of the primary disadvantages of bottom-up budgeting is that it can lead those who are in charge of tasks and also project managers to ask for more funding than will actually be needed. This is done in order to ensure that enough money is procured for each task to be accomplished, since most people assume that they will not be given all of the money that they request. This situation can lead to a waste of money and also a situation of distrust between various members of projects and different managers.
Another drawback to bottom-up budgeting is that it is difficult to actually draw up a complete and thorough list of every step and task that will be necessary for the completion of a project. It is easy to overlook a step of a project or a task, a problem that will lead to major issues in the overall budget. Top-down budgeting Top-down budgeting works the opposite direction of bottom-up budgeting. Top-down budgeting begins by estimating the costs of higher level tasks, and then those estimates will constrain the estimates for costs of lower level tasks.
So the entire process of coming up with a budget will begin with upper-level management and an overall estimate of the entire project. Then the overall budget is divided among the first level of tasks, and then the budget is divided among lower level tasks and then lower level tasks. This continues until funding has been given to all of the tasks necessary for a project. Advantage top-down budget shifts the budgeting process by ensuring that all decisions reflect the most pressing fiscal priorities, as determined by key decision makers. The advantages of the top down approach are as follows: . It is straightforward and easy to develop. 2. It is based on a reasonable rationale that voters can understand. 3. It provides a dollar value and a rationale that the voters can endorse and rally around. 4. It works with the budget bottom line and, thus, avoids the potentially divisive discussions over specific line items. 5. It requires officials to develop efficiencies and set priorities. 6. It provides early guidance to officials so that they can tailor their budgets to a level that voters will support, thereby avoiding need for significant cuts. 7.
It prevents disruptions to planning produced when budgets are rejected at the 11th hour at referenda. 8. It can save money by avoiding multiple referenda. Ceilings (aggregate numbers) Decide total spending & deficit levels (agg. ceiling) Inter-sectoral allocation among major policy areas (sectoral ceilings: about 30) Ministries formulate their own budgets But must follow rules ?Effective for fiscal consolidation ?Easier to integrate with MTEF (MTBF) (ceilings are usually multi-year limits) ?Ensures spending is aligned with priorities ?Efficient in time and effort ?Utilizes ministries’ expertise Disadvantage Good monitoring system to compensate for delegation of authority to ministries •Performance & program reviews •Information system to monitor execution ?Policy capacity + Behavioral change •Budget Office: better forecasts & projections, need to defend fiscal rules aggressively, but work better together with line ministries •Ministries: need to learn internal allocation decision-making ? Strong PM & Finance Minister •Must be able to enforce ceilings ?Commitment to rule-based budgeting •Remove arbitrariness in budgeting decisions, but leave room for flexibility and judicious discretion/autonomy ? Support from the legislature sadvantages of Bottom-Up Budgeting ?The disadvantages to bottom-up budgeting are that you may end up asking for more money than you actually need. This is only a problem if you are unable to give the money back, which is common in many companies. However, the alternative problem to this type of budgeting is that you may under calculate what you need and then not have enough. ?Advantages of Bottom-Up Budgeting ?The advantage of using this type of budgeting is that you are free to procure all that you need as long as you ask for the right amount of money. Just remember that it’s better to overestimate than underestimate. The Alternative: Top-Down Budgeting ?The alternative to bottom-up budgeting is top-down budgeting, which is getting a budgeting and working within it. This means you may not be able to get everything you need but it does keep you from overspending. ? Read more: http://www. brighthub. com/money/personal-finance/articles/32354. aspx#ixzz1RCGYVgRX It is important that those managers who are in charge of determining the overall budget for a project have enough experience that they will be able to come up with an adequate and accurate budget that will give enough money to each level of tasks, yet will not ask for too much money. Bottom-up • Top-down – Ministry by ministry analysis that – Aggregate fiscal analysis that largely ignores economic forecasts takes into account economic forecasts – Annual – Multi-year – Time consuming – Delegated authority – Ownership of proposals is more – Creates joint ownership of agency- specific proposals – Reactive – Proactive 4.
Distinguish among highly probable risks, extremely serious risks, and highly vulnerable areas in risk identification. n project management, a risk is some future event that happens with some probability and results in a change, either positive or negative, to the project. A highly probable risk is one that is very likely to happen. A highly probably risk does not pay attention to how major or minor the risk is – just how likely it is to happen. An extremely serious risk is one that will have major impact if it does happen. An extremely serious risk does not pay attention to how likely the risk will happen.
The ultimate outcome is that Cost, Time, and Scope is effected and the project may be deemed unacceptable or useless to the project sponsor and/or stakeholders. ac 5. Develop a schedule for your selected project using Microsoft Project®. Did you select the PERT/CPM or Gantt chart schedule technique? Why did you select this form? project’s chance of success. Stakeholder’s analysis generally follows the steps described below: Reference http://www. businessknowledgesource. com/finance/a_comparison_of_topdown_to_bottomup_budgeting_024713. html