Project life cycles - ERP Tools

Too many project managers believe that the phases of a project are:

  1. Wild enthusiasm
  2. Mass disillusionment
  3. Search for the guilty
  4. Punish the innocent
  5. Promote the uninvolved

This belief has evolved from the personal experience of many project managers as they have been striving to do a good job managing the project. Effective project management requires effective management skills and techniques supported by appropriate technological tools. Unlike some projects where the overall statement of work can be descoped to bring the project in on schedule and on budget and declare accomplishment, the project manager for a manufacturing company cannot usually descope the final product to be shipped and still declare victory. The product must still meet all the requirements set by the customer. This is a very difficult industry for a project manager.

According to David I. Cleland and William Richard King, the phases of effective project management include:

  1. Conceptual phase
  2. Definition phase
  3. Production phase
  4. Operational phase
  5. Divestment phase

Conceptual Phase

The conceptual phase is when the design team is working with the customer to determine the overall requirements for the product and potential deficiencies of the existing processes and products. The initial feasibility of the technical, environmental and economic reality is also examined during this phase. One example would be the recent development of super fast ERP/Supply Chain Management systems. Conceptually these systems were conceived many years ago, but only recently have become a reality. The reason is that the available technology could not support them. Now that computers have multiple gigabyte memory available, these calculations can be completed directly in the active memory core without incurring the slowdown of reading and writing to the hard drives.
In the conceptual phase the project team provides the answers to the following:

  1. What will the product cost?
  2. When will the product be available?
  3. What will the product do?
  4. How can the product be integrated into the existing systems?

The overall design and production approach is determined during this phase, and an initial statement of work is prepared for further detail in the definition phase.

Definition Phase

The definition phase is when the detailed plan is prepared. This determines the realistic cost, schedule, performance requirements, and the quantity and timing required for human and other critical resources. A good project manager will also identify those areas that are risky or cause for concern. These areas are then further detailed for recovery and contingency plans. This is very different from the traditional ERP environment where the master schedule is entered, supported by a bill of material (BOM) and routings. In the traditional ERP environment the assumption is that everything will work exactly as planned.

Any variability or unexpected events are typically covered with safety stock inventory or available surge capacity. In the project manufacturing industry the likelihood of the same inventory being used again is very small. Capacity must be carefully scheduled to provide optimal cost performance.

In the definition phase a detailed statement of work is developed and broken down to the necessary level for control purposes. An effective statement of work(SOW) should clearly define the objective for the project and how success will be measured. The SOW should include cost, schedule targets, and quality targets and usually becomes the contractual statement of work. Since revenue is directly related to the progress against the statement of work, it is very important to have an agreement with the customer on the definition of key words. For example, a customer may desire to have a product tested in water. Your intent is to test the product in a local lake. The customer assumed water to mean the Pacific Ocean. The cost implication can be significant. Even establishing the documentation format for the product manuals can be important since manuals and drawings created using new versions of software may not be readable by previous versions. The project manufacturer may also be paid at certain points in the completion of the product, so having measurable completion criteria is essential for each significant step in the work breakdown structure.

Once the statement of work has been defined and approved, the work begins on the work breakdown structure. A graphical representation of the work breakdown structure looks like a BOM that has been laid on one side. The duration of each task and the relationship of one task to another can be clearly visualized in this structure as shown in Figure below.

Graphical representation of the work breakdown structure.

Graphical representation of the work breakdown structure.

This breakdown of activities allows scheduling materials and capacity based on the timing that is required. When this work breakdown structure is phased against a time line the timing for each task can be calculated. Project management tools such as Microsoft Project or Primavera can be used to manage this work breakdown structure and the impact on schedule and resources. Figure below shows how these tasks can be displayed in a tabular format with the predecessors and required resources identified. When using an integrated project planning system, the data do not need to be entered twice. Different graphical representations are available with single data entry.

Tabular work breakdown structure.

Tabular work breakdown structure.Tabular work breakdown structure.

Production Phase

The production phase of a project begins with the verification of the product production specifications and the beginning of unit production. The final preparation and dissemination of documents is incorporated in this phase, including the development of technical and service manuals and other traceability that is required for the product. Most companies have moved to releasing this information on CD-ROM due to the cost of preparing and maintaining this essential document in a paper format. The product is tested to ensure that the specifications defined in the definition phase have been achieved. ERP can be used to bridge the transition from the planning to the production phase by supporting the project with detailed capacity and material planning. Timely status feedback is essential during this phase to provide an early warning of any part of the project that may not support the required completion date.

Operational Phase

The operational phase of the project is when the product has been delivered to the customer. This can be a time when the field service personnel may be intimately involved to aid in the installation or training for the product. During the operational phase, the realized costs are compared to the quoted costs to determine whether or not the product has been delivered at a profit. The actual cost of the product should not be a surprise at the very end of the project. Effective project management tools provide running feedback on completion status through a process called earned value analysis or CS2. This compares cost and schedule through a series of measures such as:

  1. Budgeted cost of work scheduled (BCWS)
  2. Actual cost of work scheduled (ACWS)
  3. Budgeted cost of work performed (BCWP)
  4. Actual cost of work performed (ACWP)
  5. Schedule variance (SV) = BCWP × BCWS or expressed as a percentage(SVP) = SV/BCWS
  6. Cost variance (CV) = BCWP × ACWP or expressed as a percentage(CVP) = CV/BCWP

No matter what measures are used, it is critically important to evaluate the overall performance of the project to learn what worked well and what could be improved for the next product. Without this postmortem on a project, the lessons learned on one project are likely to be learned over and over. The team can learn from things that have gone wrong and should be avoided in the future. In addition, learning what went well helps the team determine how to repeat the success. Identifying what could be improved provides the opportunity to possibly avoid that situation in the future.

Divestment Phase

The divestment phase of a project manufacturer is the phase where the project team is transitioned from one project to the next. Some companies will dedicate personnel 100% of the time to a particular project. When this project has been completed it is essential to recognize the organizational and cost implications of having another project ready to start. If the project team does not see another product for development available on the horizon, there could be a tendency to stretch the current project as long as possible. This can contribute to cost overruns on the current project and adversely impact the profits for this product. The divestment phase is a critical time that must be managed effectively so the organization can take from the lessons learned on the previous product and apply them to the next product. Unfortunately many people experience poor overall project management. As a result, the following proverbs have been developed through the years.

Proverbs for Project Management 1

  1. You can con a sucker into committing to an unreasonable deadline, but you cannot bully him into meeting it.
  2. The more ridiculous the deadline, the more it costs to try to meet it.
  3. The more desperate the situation, the more optimistic the situatee.
  4. Too few people on a project cannot solve the problem—too many create more problems than they solve.
  5. You can freeze the user’s specs but he will not stop expecting.
  6. Frozen specs and the abominable snowman are alike: they are both myths, and they both melt when sufficient heat is applied.
  7. What you do not know hurts you.
  8. A user will tell you anything you ask about—nothing more..
  9. What is not on paper has not been said.
  10. Projects progress quickly until they become 90% complete, then they remain at 90% complete forever.
  11. No major system is ever completely debugged; attempts to debug a system inevitably introduce new bugs that are even harder to find.
  12. Project teams detest progress reporting because it vividly demonstrates their lack of progress.

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