Project Procurement Management

What is Project Procurement Management?

In almost every project there will come a time when obtaining services and/or goods outside your company will be necessary. This is called procurement. There is much to say about the topic of procurement, otherwise known as "outsourcing"- some positive and some negative. The positives can be cost, and valuable time saved. The downside could possibly be the loss of contracts to local businesses because they just can't compete with prices and deadlines. The project team could also be surrendering some of their control to the contractor and could get too comfortable always depending on particular suppliers. Many projects also contain confidential information that could be harmful to there business or revenues if put in the wrong hands.

There are 6 helpful processes to project procurement management. They are:

1. Planning Purchases and Acquisitions - involves determining what to procure, when and how.
2. Planning Contracting - describing requirements for the products or services desired and the potential sources/sellers.
3. Requesting Seller Responses - obtaining information, quotes, bids, offers or proposals.
4. Selecting Sellers - is evaluating potential suppliers and negotiating a contract.
5. Administering a contract - managing the relationship with your selected seller.
6. Closing the contract - completing and settling each individual contract.

When assessing a project it's important for the project team to identify which project needs can be best met by using products or services outside the organization. By asking the following questions in relation to procurement it will help to decide whether to make-or-buy.

• Whether to procure
• How to procure
• What to procure
• How much to procure
• When to procure

It is important to understand why a company would want to procure products or services and what information is needed to plan the purchases and acquisitions. It could be as simple as hiring a skilled labourer or consultant who can perform specific tasks that no one within your team is qualified to do. Sometimes it makes more sense to outsource a service for a short period of time rather than hiring them on permanently within your company.

The 3 different tools and techniques that will assist you in that decision are:

1. Make-or-buy Analysis
2. Expert Judgement
3. Contract Types

Reflection

For a period of 12 years I worked in an outsourcing factory that supplied several major automotive manufacturers. When visiting different factories where products were made in-house and in conversations with our own plant manager I came to see the cost savings that are often involved with outsourcing, as well as the improvement in quality.

While visiting the other factories I observed that only 1 person ran 1 machine while earning approximately double the money I was bringing home at the time. In comparison, at my place of employment most people ran 2 machines simultaneously. This would account for approximately ¼ of the cost for manufacturing the same part.

When introducing a new project to us the contract stated that there must be a cost reduction over the following 3 years of approximately 4% per year. This meant we had to increase production and decrease product defects (scrap) by these figures to keep up with our profit margin. Part of the contract also stated that if they had to shut down a production line because of poor quality parts or orders not being filled we would be responsible for any monies that they lost while we were holding up their production line. As a result, quality and shipping schedules became a major concern to the stakeholders and top management. Contracts like this give the responsibility to the outsourcing manufacturer while protecting the buyer.

One other benefit that I can see for outsourcing is “on time delivery”. Parts are delivered as they need them removing the need for storage of stock. This not only saves the need for a storage facility or taking up space inside the manufacturing building, but also saves man hours for moving the stock in and out of the storage space.

One of the downsides I have seen in the practice of outsourcing is; if 1 person can do the job of 2 for less money the result will be the loss of jobs. This is negative for the employees who lose their jobs, but a positive for company profits.

Project Risk Management

What is Project Risk Management?

There is an art and science relation to determining risk management. By identifying, analyzing and responding to risk throughout the life of a project it will be in the best interest to the objective of the project. It is an often overlooked element of project management but if implemented it can often result in significant improvements leading to a successful outcome. When risk management is working at its finest it should assist the project by decreasing potential problems, or assisting to overcome the problems that already exist.

When speaking in terms of risk, most people tend to think negative, however; there can also be a positive aspect to taking risks. Negative risk management is undertaken to lessen the potential impact of adverse effects. It is best to think of positive risk management as in investment into possible opportunities. It is essential to maintain a balance so that risk won't exceed the potential benefits. A developed risk management plan will assist you in managing risk throughout a project.

Knowing your stakeholders and their tolerance for risk is an important element for keeping the project moving along without doubtfulness and unwarranted stress on the stakeholders. There are 3 gauges for determining the amount of risk individuals can tolerate.

• Risk-averse - having a low tolerance for risk


• Risk-neutral - a balance between risk and payoff


• Risk-seeking - having a high tolerance for risk

There are 6 major processes involved in risk management, they are:

1. Risk Management Planning
2. Risk Identification
3. Qualitative Risk Analysis
4. Quantitative Risk Analysis
5. Risk Response Planning
6. Risk Monitoring & Control

Creating charts, tables and graphs to assist in determining the level of risk and how to maneuver around and within those risks are a great aid to all projects. An example of a risk breakdown structure is seen below. It is based on a hierarchy of potential risk categories for a project.

Applying risk management to the other elements of project management is essential for all projects. It can relate to the scope, time, cost & quality of the project. The table below shows how each of these elements ties into the risk management sector.

In project management it is always best to go in prepared. Developing a risk response plan prior to a potential crisis is a principal best followed. Brainstorming, graphs, charting, as well as the basic response strategies for negative and positive risks will all help to reinforce a strong & thriving project.

Reflection

Personally, I’m not much of a risk taker. I do have some smaller financial investments in world markets, North American markets and Canadian markets but I prefer the stability of GIC investments. There isn't much of a return on the investment, but there is no chance of losing my money. I think the older I get the more I tend to be the risk-averse type. I don’t like to lose money and at this point in my life, if I do, I feel that I may be too old to make it back. I prefer the stability of GIC's because I want to retire when I’m still healthy and able to enjoy it.

One example of when I took a risk is when I invested in a board game. At the time it seemed like a sure thing, with orders pending from Canada, the USA & Europe. However, due to a conflict that was not resolved between the 2 major shareholders production ceased and I lost all monies invested. Since then I have been leery of investments because the fear of losing what I currently have outweighs the risk of making money.

Project Communications Management

What is Project Communications Management?

Another pivotal element in project management is communication. Many experts have agreed that failing to communicate can be the degeneration of a project. It must be made a priority, especially when dealing with key stakeholders, such as top management. Most people have different communication needs, some based on preference and some on convenience. Getting project information to the right people at the right time and in a useful format is just as important as developing the information in the first place.


In today's world we have several ways of keeping people informed. Whether it be by phone or hard copy or using the latest technology; e-mail, instant messaging, websites, blogs or video messaging.

Some things to keep in mind when creating a communications plan are:

• Who needs what information?
• When will they need it?
• How will the information be given to them?

The 4 Main Processes in Project Communication Management are:

1. Communications Planning - is determining the information and communication needs of the stakeholders.


2. Information Distribution - making needed information available to project stakeholders in a timely manner, as well as keeping all other elements of the project up-to-date with any changes made through these communications.


3. Performance Reporting - is collecting and distributing the performance information obtained by providing status reports, progress measurement and forecasting.


4. Managing Stakeholders - involves managing communications to satisfy the needs and expectations of project stakeholders, as well as resolving issues.

Having a well defined communications management plan will assist and guide a project to successful completion. The plan should address the following items:

• Stakeholder communications requirements
• Information to be communicated and in what format
• Who is receiving the information and who is producing it
• Suggested ways of delivering the information
• Frequency of communication
• Escalation procedures for resolving issues
• A glossary of common terminology

Being consistent and providing the requested information at normal intervals entails creating a chart or list of who and what information has to be given, and the frequency. The chart below is an example of how to breakdown the information so it is convenient and useful.

Assessing the needs of each team member and how they function best in regards to communication is an ongoing challenge. Most people are extroverts and enjoy the comradery of having a face-to-face discussion in an informal setting, Oral communication helps to build stronger relationships among project personnel and stakeholders. Because people can make or break a project it is essential to nurture relationships so that communication can provide a true feeling for how a project is progressing, or what areas need extra focus.

Determining how well the different types of media are suited to different communication needs should be assessed on an individual project basis and the needs of the organization. As previously mentioned, people have different personalities and that affects their communication preferences. However, it is always imperative to provide many methods of communication; especially when there is a large number of people involved in the project. An environment that promotes open dialogue should be encouraged. The table below gives an example of how and when the different forms of communication should be utilized.


Without a doubt, there will be times when you must use your communication skills to manage conflict. Understanding that conflict sometimes has an up-side and learning from the important results can often lead to new ideas, better alternatives and motivation to work harder.

There are 5 basic modes to help in handling conflicts. They are:

1. Confrontation - is considered to be the problem-solving approach and is most widely used to solve the problem. Allowing the affected parties to work through their disagreements.
2. Compromise - is the give-and-take approach, where bargaining and searching for solutions bring some degree of satisfaction to everyone.
3. Smoothing - is used to de-emphasize or avoid areas of difference, while emphasizing on the areas of agreement.
4. Forcing - is a win-lose approach, the project manager would listen to the issue and give their viewpoint at the potential expense of another viewpoint.
5. Withdrawal - is the method of retreating from a conflict or potential disagreement, but is the least desirable method.

Learning how to communicate effectively and efficiently doesn't come natural to everyone and will be an ongoing learning process for many project managers. With the world getting smaller and smaller with the invention of new technology it might become necessary to communicate effectively with other cultures and people of diverse backgrounds. Becoming knowledgeable through training opportunities to educate yourself and/or team members in cultural awareness and international business may be an essential venture in today's global market.

As you get experience under your belt when dealing with clients and team members it should become easier to resolve issues that arise and determine how to run a more effective meeting, and when and when-not to use the different forms of media that are now widely available.

Reflection

Consider my college education as a project and my instructors are the project managers:

Communication is the most important part of my learning experience. Throughout the year lessons need to be taught and learned. This would be a difficult process without different forms of communication.

• Face to face is the most reliable form of communication for me, because it allows an individual to read body language as well as hearing what has been said and the way it is being said. During this type of conversation a person can ask questions and get answers immediately, which is especially helpful if an object (textbook or computer) must be used to explain the answer. For example, if I need to know how a piece of hardware fits into a computer. Being taught in a "hands-on" fashion, while being shown with an explanation, how it fits is the most effective way that I learn.
• E-mail is used extensively to communicate between the staff and students. Projects are often given out and handed in using e-mail . Communication between students is usually done via e-mail or instant messaging when not in class.
• Telephone-since attending school I believe I’ve only once used the phone on a couple occasions to call somebody to ask a school related question. Most of my communications with or about school have been through e-mail, face-to-face conversations or the occasional use of MSN Messenger.

While some projects and assignments take more time to finish, they are given to the students with enough notice to get the project done by the due date. This doesn’t always happen because sometimes life tends to get in the way. In some cases an extension might be required to get an assignment completed. Being able to communicate ones circumstances and needs to the Instructor can often result in a favorable time extension to get the project completed.
(You must be able to communicate what the issue is or nothing can be done!)

Performance reporting seems to be an ongoing process. Throughout the semester information is provided to the student about their performance, be it individually or as a group.

Confrontation is inevitable in any environment and college isn't much different. I have yet to be involved in any serious confrontation. There have been some minor instances that have been resolved through face to face communication. Using many skills I have learned in life I have resolved several problems that have arisen while in college. Sometimes only resolving my side of the conflict, but usually for both parties involved. Not all conflicts can be resolved for everyone. Through life I’ve been involved in situations where I didn’t like the results but you must learn to be persistent and keep trying to change it or accept it the way it is.

Project Human Resource Management

What is Project Human Resource Management?

Human Resource Management depends upon several structured processes mixed with interpersonal skills, including. It basically means utilizing all the people involved in your project to the best of their ability. Being able to effectively manage all the different personalities and the skills that they offer so that the project has the ability to succeed. There are several different aspects to acquiring a functioning project team. They are:

1. Human Resource Planning - by identifying and documenting the project roles, responsibilities and reporting relationships you will be able to bring different aspects of a project into smaller focused groups.
2. Acquiring the Project Team - involves getting the needed personnel assigned to & working on the project. A project would be dead in the water if there were no one qualified to perform the tasks entailed for the project.
3. Developing the Project Team - by building individual and group skills to enhance the project performance overall is an indispensable necessity. This can often be a challenge when building a project team.
4. Managing the Project Team - keeping track of team members performance, while encouraging them and keeping them motivated is fundamental. Being able to resolve issues and conflicts quickly and effectively is a requirement of a project manager.

There are several motivation theories that have been developed over a number of years and used with substantial success. The 2 most common ways of motivating people are with intrinsic motivation, when people participate in an activity for their own enjoyment. An extrinsic motivation causes people to do something for a reward or to avoid a penalty.

Some of the most acclaimed theories for motivating people break down the idea behind how humans function. Knowing how we operate on a human level, and understanding what motivates people to do the things they do is paramount in human resource management. Let's face it- there are several types of personalities that we all deal with in our lives. Some we like, some we don't. Learning how to build a rapport with the different types of people and the personalities that all come together in a team will be a major element to project management, as well as the ability to perform empathic listening skills. Knowing each team members personal goals and needs will help to provide appropriate motivation and maximize the teams performance. A few of the defined theories that can be implemented into project human resources are:

1. Maslow's Hierarchy of Needs - people's behaviours are motivated by a sequence of needs. Knowing what motivates each individual in a team is crucial. (See chart below)
   
2. McClelland's Acquired-Needs Theory - is based on people's individual need for achievement, affiliation & power.
3. Thamhain and Wilemon's Influence and Power - power is the potential ability to influence behaviour to get people to do things they wouldn't otherwise do. Some different examples of types of power are: coercive, legitimate, expert, reward and referent.
4. Covey's 7 Habits to Improve Effectiveness - is a concept where 7 steps are followed to produce synergy: the concept that the whole is equal to more than the sum of all its parts. The 7 steps are:

• Be Proactive
• Begin With The End In Mind
• Put First Things First
• Think Win/Win
• Seek First To Understand, then to be Understood.
• Synergize
• Sharpen The Saw

Being able to keep the project organized and timely will require you to keep track of people and their functions using different charting methods. An organizational breakdown structure for larger projects will be of great value for the team. Knowing who is responsible for what and who to report to is vital in project management. Communication is foremost and the chart below can help you and your team stay on track by keeping the appropriate people informed as to the progress of the project.

Another way to help keep the project moving along while steering around the different personalities in a project is to formulate a RACI chart. RACI stands for:

• Responsibilty
• Accountablity
• Consultation
• Informed

Team development is critical to help people work together more effectively to improve project performance. There are many team building activities that can enhance your projects productivity. Social outlets, monetary rewards and recognition systems can all lead to positive results in the project overall. Being able to communicate effectively with all people involved in a project will be of utmost importance. The 2 crucial skills of a good project manager are team development and team management.

Reflection

This reflection is going to be quite negative because the company that I worked for had no Human Relations Department and knew little about dealing with people. It is the example that sticks out most in my mind.

In Project Management, it seems to me, the project user is one of the main sources of information about what the job needs to run smoothly and efficiently. The company I worked for seemed to have no desire to include the user in any changes.

Case in point; both my machines were being moved to a new location within the building. I was not consulted on either move and ended up running one machine while standing in the isle way. This may not seem like a big problem but the tow motors used this isle to deliver 10 foot bars of steel to the machines opposite me. They used an electric tow motor for this job which could not be heard over the noise of the machinery. There were a few occasions that I was almost struck by the tow motor while running my machine. Their answer was to install a flashing light and beeper on the machine so I would know when it was behind me. Although this safety feature should have been installed anyway, management made sure I knew they were dissatisfied with the situation, including my concerns.

The other machine was being relocated to another unsafe location and when I tried to let them know I was concerned for my safety, I was ignored. Once set in place I refused to run the machine and the plant manager was informed. I showed him that a person going up the platform to load the machine was in danger of injury from the overhead crane. It was at this point they asked for my input on machine placement.

Another example is when the same company was mandated to implement QS9000 into their system. Teams were developed to do certain jobs, such as, developing report forms and documentation procedures as well as building storage containers to hold the log books that were to be updated every day along with various other tasks. During a plant meeting we were all told how we were all a part of the team and each and everyone of us was just as important as the next. Once we received our certification there was a large sum of money allocated for bonuses. The distribution of this money was done in the worst fashion possible. Those who were friends of management received a $500.00 bonus and those who weren’t got nothing. Needless to say this made the morale with this particular employer as low as I’ve ever seen to this date.

Coupled with the attitude of management and their extrinsic way of running things it was not an enjoyable place to work and I was glad to be able to leave there. I’m sure that they were happy when I left as well; lack of respect breeds lack of respect.

Project Quality Management

What Is Project Quality Management?

In general, quality is what we all want. Not many approach a business and want the lowest quality product they offer. We will often settle for less than what we initially wanted if the price is right and the result is close to what our expectations are. Managing the quality of all the variables that go into a project is a massive undertaking. Cutting corners and costs are sometimes a necessity when working within a tight budget or deadlines. The term "quality" is hard to define only because it can be applied to so many different aspects of a project. The standard definition through ISO is "the degree to which a set of inherent characteristics fulfills requirements". That being said, it is most ideal if the products and processes used within a project conform to the requirements; that would equal a quality project. But in the end, the customer is responsible for defining their expectations of quality.

The purpose of project quality management is to ensure that the project will satisfy the needs of the client.

There are 3 main processes that are performed for project quality management, they are:

1. Quality Planning - is identifying which quality standards are the most relevant to the project and how to deliver those standards.


2. Quality Assurance - involves periodically assessing the overall project performance to ensure quality standards are being met.


3. Quality Control - will monitor the specific project results to maintain relevant quality standards while seeking ways to improve the overall quality.

Comparison is always a factor in quality management. You must have an attainable quality standard to use as a benchmark for your current project. There are also several techniques to assist in quality control.

The 7 Basic Tools of Quality are:

Cause & Effect Diagrams

Control Charts

Run Chart

Scatter Diagram

Histogram

Pareto Chart

Flowcharts

A flexible system that is used widely for tracking and determining quality is the Six Sigma way. It was originally implemented by Motorola. The objective is to identify anything that could lead to customer dissatisfaction and to correct it. There are principles and processes that the system is based on, one being the DMAIC.

• Define - the problem


• Measure - the data and compile for display


• Analyze - and scrutinize the data seeking ways for improvement


• Improve - by generating practical solutions and improvements


• Control - by tracking and verifying the stability of the implemented solutions
  

Reflection

Working in the automotive parts manufacturing business for about twenty years of my life I’ve been involved with Quality Control as a machine operator as well as working in a Quality Control Department.

In one factory where we produced frames for light trucks I worked as one of two inspectors at the end of the production line. Every frame was checked for inconsistencies of hole dimensions and rivet seating. A 100% check was necessary because the cost of repairing a frame on a completed truck would be high. If a number of completed trucks had the same problem then a recall would be issued and the cost to the company would be astronomical, so it was cheaper in the long run to check every frame.

In another factory where we made smaller transmission parts a series of quality checks were performed by different people. The machine operator would check 5 parts every 10 minutes. As long as the machine was operating properly the dimensions would still be in spec and the machine could be adjusted to bring the size back to the mean. If the part was out of spec then the parts in that container would be sorted and the good parts returned to go to the next operation or to be prepared for shipping. Not only did the operator check dimensions on a regular basis but an inspector from Quality Control would take ten parts, in a row, every hour and check all dimensions to be recorded on a graph. This would tell if there was any fluctuation in part size. If there was it meant a problem with the machine had occurred in that time frame and all boxes of the parts produced needed to be checked, in house.

All boxes of parts were ticketed with what are called travellers. This document was particular to a specific box of parts and travelled with it from the first process to the last, being filled in at each station with a run number, time, date and operator. This was necessary in case there were problems with the parts, they could implement a sorting procedure, starting with that particular box and the one manufactured before and after. If too many faulty parts were found they could pull the whole run to have it sorted. All sorting is also documented on the traveller with the same information as with each process. The parts are shipped, and a task force was implemented to discover the reason for the faulty parts, be it machine or operator error.

This system seemed to work well as we received a letter from our customer stating that they had received “58 Million” parts over a 10 year period without “1” defect.