Hotel Construction Projet Primavera XER File
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Primavera Sample Project Schedule XER Construction File
Primavera Sample Project Schedule XER Construction File
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Types of Contracts according to PMBOK® Guide – Sixth Edition
Types of Contracts according to PMBOK® Guide – Sixth Edition
The nature of the relationship between a buyer and seller in a procurement setting will be dictated by the type of contract that’s used.
Generally speaking, there are three main types of contracts that are common in procurement situations :
- Fixed price contracts
- Cost-reimbursable contracts
- Time & Material Contracts
1. Fixed price contracts
In a fixed price situation there is a precise price that’s paid for work and this price is predetermined before work on a project begins. You’ll find this price within the contract and it will agreed to by both the buyer and the seller from the outset.
The seller will be legally required to deliver procurement objectives at that set price. Conditional incentives can be incorporated into fixed price contracts.
So we can have bonuses for things like completing the project on time or meeting secondary objectives related to feature set or quality. However these incentives are just that. Bonuses that can be stacked on top of a set baseline that is meant to cover the vast majority of work within the contract.
When the scope changes for what procurement work is to be completed, cost can be revised and a new fixed price can then be set.
There are advantages and disadvantages for both customers and sellers when it comes to the fixed price model.
For the customer, the exact cost for the work has been pre-negotiated and the customer is shielded from any cost overrun liability that might emerge. Here we might even be willing to pay a slight premium over what we might be able to pay if we simply paid on a time and material or on some sort of other basis. But we know that we’ve locked in our cost and that that’s all we are going to be responsible for as a project team.
Some of the advantages for the seller are that they can receive some or all of the money upfront, depending on the terms of the contract they sign. In many cases you can even have terms as simple as receiving half upon signing of the contract, and half upon completion.
Furthermore the seller is in a position to financially plan for the entire project, which is more difficult in a time and material sort of setting where perhaps there are limits on a time rolling basis.
For example only being able to spend a certain amount each week or month without an idea of exactly how long it will take to complete all project work given those sort of limitations, especially if those limitations shift over time.
Disadvantages of this approach for the customer, include the fact that scope changes can be challenging to implement and that the seller may be more likely to default especially in cases where we’ve done a poor job of selecting our seller or in creating our contract.
Scope changes are challenging to handle because if we want additional work to be done, the seller has a legitimate right to both refuse and to object to this notion. They’re receiving a certain amount of money to complete a certain amount of work. If you want them to complete more work on a project, then well, you’d better expect to pay them more to do so.
Further because we have detached ourselves from any cost overrun liability, and placed it all on the seller, if things were to go wrong during procurement, or during their project from the seller’s point of view, they’re more likely to default rather than go additionally into debt or take additional losses, in order to complete project work.
This is especially true if we haven’t been upfront with all of the requirements or if we haven’t answered all of the seller’s questions, such that they can create an estimate that’s both fair to us as customers and reasonable for the amount of money they should expect it to cost to complete the procurements they’re agreeing to.
From a seller’s side, these disadvantages are clear. Scope changes can be challenging to handle because we end up disappointing our customers if we disagree with making additional changes without additional money.
In many cases you may have run into circumstances where a client has been disappointed or where you’ve received pushback from a vendor of your own, when it comes to accomplishing more work than was initially found within a contract plan.
It’s important to realize that sellers aren’t necessarily just being argumentative when they don’t agree to scope changes but instead simply looking out for their own organization’s best interest.
That’s especially the case since the seller inherits all liability for cost overruns on the procurement. If you go back and change the terms of the contract to pay the seller more, then they’ll certainly be more amenable to making any additional changes or expansions to scope.
Because of this, expect to make changes to your contract and to the amount paid if expansion and scope is to occur.
There are three main types of fixed price contracts that are often employed by organizations :
a) Firm Fixed Price Contract (FFP) :
This is the most common type of contract, where the seller is liable for all cost increases unless they’re related to changes in scope, that would require us to renegotiate our contractual terms. Here we are paying a set amount for a set solution. And it’s just that simple.
b) Fixed Price Incentive Fee Contract (FPIF) :
In a fixed price incentive fee contracts or FPIF, the price ceiling may include performance bonuses that are set during contracting. However a set floor is also already in place, guaranteeing that a minimum amount will be paid to the seller simply for completing project objectives.
The seller may earn bonuses on top of that initial floor, by meeting price, schedule, or other objectives that might arise so it can all be negotiated prior to the contract being signed.
c) Fixed Price with Economic Adjustment Contract (FP-EPAs) :
These contracts are used in long-term contracting situations most normally. They allow for payments to be adjusted based on inflation, commodity pricing, or other factors that can be objectively measured and tracked over time.
For example, we might’ve agreed to a long-term shipping contract with a procurement source. But as part of this we agree to not only pay a set fee, but also a fuel surcharge based on a common published commodity pricing source that gives us an idea of how much oil or another sort of fuel index might rise or fall over the course of the project.
2. Cost reimbursable contracts :
In this case the seller is paid for all eligible costs that they incur and they are also paid a fee, which represents the seller’s margin for the project work. Conditional incentives can be incorporated in these kinds of contracts as well.
Cost reimbursable contracts are often favored because they allow for more flexibility and changes to scope than would be possible within the fixed price model. Looking at advantages for the customer, this is one of the primary ones.
There’s more flexibility on the scope and objectives of what needs to be completed. So in cases where we may not go in from the beginning knowing exactly what we want the seller to accomplish, we often will turn to cost reimbursable contracts.
Furthermore the transparency related to how these costs are accounted for allows for greater cost control. Potentially leading to additional savings versus what would be possible in the relatively black box environment of a fixed price contract, where we don’t necessarily have the right to know how much it costs the seller to accomplish their work.
From a seller’s point of view, there’s a guaranteed level of profit built into the contract either at a percentage or at a set dollar level, depending on when the project work will be completed.
The seller is also shielded from cost overruns because if the project continues to cost more than anticipated, the customer simply has to pay this difference based on the terms of the contract.
That’s one of the key disadvantages from a customer standpoint. Cost may and almost certainly will rise beyond the initial expectations for many different reasons. There can be delays in work, changes in scope, additional objectives laid into our contract, or more over time all making it more difficult to estimate how much we’ll end up spending in this relationship.
From a seller’s point of view, the disadvantages primarily that there may be a need to adapt the changes and project scope more often. We may be compensated for this but it may be against some of our own strategic objectives as a seller, when these sort of changes have to occur.
As was the case with fixed price contracts, there are three main types of cost reimbursable contracts as well.
a) Cost plus fixed fee contract or CPFF :
Here all allowed costs are reimbursed from the buyer to the seller. In addition a flat fee is paid on completion to the seller, either in the form of a set dollar amount or a percentage of total cost incurred.
This fee will represent a percent of the initial budgetary estimate so there’s still some incentive built in for the seller to complete work as originally scheduled, as their profit won’t be set to increase even if additional cost rise.
b) Cost plus incentive fee contract or CPIF :
In this case all allowed costs are again reimbursed from the buyer to the seller, and performance bonuses are awarded when certain objectives are met. Typically these relate to completing project work at a certain time, under a certain cost threshold, or with a certain level of quality.
A common example of this type of contract is when cost-savings are shared in between the buyer and the seller. For example the buyer may wish to further incentivize the seller to find ways to save money on the project by offering them a 50/50 split of any money that’s saved, that allows the project to be completed below the initial budget.
c) Cost Plus Award Fee contracts, or CPAF :
These are a little bit different in that all allowable costs are once again reimbursed, but an award fee is granted based on performance. This is different than the flat fee that might be paid in a CPFF standpoint, or the incentive fees that might be paid with CPIF structure.
The criteria for this sort of award fee to be paid, is typically more subjective in nature, and often times is exclusively up to the discretion of the buyer. So the buyer gets to determine whether or not this award has been earned based on the work completed by the seller.
3. Time and Material contracts:
This is a hybrid of the fixed and cost reimbursable contract types. Often times time and material contracts are used for external staffing such as when working with consultants.
The scope of work to be completed is typically not fully known at the outset of work or when we put in an agreement into action. As such we can either use more or less of our procurement sources time based on what work we determine must be completed.
Most of the time, time and material contracts will include limits that help to protect the buyer from cost upsides. For example, once we hit a certain rate of funding for a certain month, we may simply have hired that team or that consultant on a full-time basis and use all of their time and not be liable for any additional hours they have to work beyond that maximum that’s been set.
There are some advantages and disadvantages to this approach as well. From a customer standpoint it allows for more flexibility and scope and objectives to be completed, just like with our previous cost reimbursable contract structure.
The transparency also allows cost control to take place. We know how many hours we’re being billed for and we can make certain that work is being completed at a rate we find satisfying for that time.
From a seller perspective, it’s very clear that the seller is compensated based on the amount of work performed. If I work four hours as a seller, I will receive four hours pay and so on and so forth.
From a customer standpoint cost may rise beyond initial expectations for many different reasons. Especially if work takes longer than initially expected, or requires more materials than we’ve accounted for.
From a seller’s point of view, the scope of the work and the extent of financial opportunity is typically uncertain.
Think about entering a project as a consultant without much understanding of whether there’s one, three, six months or years worth of work to be completed. Because the buyer doesn’t really know what it is they’re looking for exactly at the outset.
Without that in mind we often see that consultants might have higher hourly rates given that they’re not certain to continue working on a long-term and stable basis, and instead must plow more of their time into developing additional relationships and finding additional work opportunity
Organizational Structures & Influences according to PMBOK® Guide – Sixth Edition
Organizational Structures & Influences according to PMBOK® Guide – Sixth Edition
Even when working with the most independent project team, it’s important to remember that projects still take place within larger organizations and structures. Our project work needs to align with an organization’s goals, their expectations, policies they may have, as well as any practices that they may maintain in the ways that they go about doing their work.
It should be expected that our project team and its work will largely conform to the values of our organization as a whole. If, for example, our organization is not very tolerant of risk, then we should expect risk management to be an area of emphasis for us in our project planning purposes. Similarly, if we pride ourselves on the quality of the products that we develop, then we should expect quality management to take a prominent role within our project planning, as well.
Three different organizational components that can influence the way we go about managing our project’s work include an organization’s culture, the style, and the way that it goes about its work, as well as the organization’s formal structure.
This includes, but is not limited to the organization’s project management style, which may differ somewhat, and is separate from the organization’s overall style or structure. Whether your organization uses project management offices, program management, portfolio management, or some combination thereof, in order to better manage its many different projects, we also need to consider an organization’s culture and structure at large as part of the way we go about designing our project’s work.
External factors can also make an impact on the way we go about our projects. Our relationships with any clients, joint venture partners we may be working with, or other types of partnerships might necessitate us conforming to different structures in the way we approach our project than we might otherwise do.
For example, if we’re completing work for a client, we may ideally prefer to not have a certain component of our project’s work completed until later in the schedule, because we find it to be more efficient. We believe that it might be in the project’s best interests and so on.
But what really matters is what the client thinks in this regard. And so, if having a certain component complete is necessary for us to pass a vital milestone as part of our agreement with the client, we need to structure our project’s work accordingly.
Organizational structures can affect how projects develop and progress, how our resources are allocated, as well as how resources are made available for project work to take place.
Generally speaking, organizational structures can be found on a continuum, ranging from purely functional to purely projectized in nature. The farther we go on this spectrum from left to right, the greater a project manager’s authority and level of autonomy will be in their decision making.
In a purely functional organization, the organizational chart will likely look something like this, with a CEO with number of direct reports, each looking over a functional area of the company, be it finance, engineering, legal, and so on. Underneath each of these top line lieutenants, we would have a variety of other staff.
Of course, additional levels of complexity could exist here, as well, but we would find an organizational chart generally conforming to this structure. In this case, project coordination would typically take place at a functional manager level, where the functional managers serve as the conduit between various staff that have different talents to offer to the project team.
In a functional organization structure, project managers tend to have little to no formal authority, and their control over resources is also rather minimal. From a budget control standpoint, the functional managers are the ones that would hold the keys. In this case, the project manager may act more like a coordinator working to rally resources together, but without the formal authority necessary to actively direct work.
In a projectized organization, this is different. We see that underneath the CEO, there are a variety of different project managers focused on accomplishing specific tasks for the organization. Each of their staffs may have all of the talent necessary in order to complete their objectives. As such, project coordination would take place within each of these different project team cells, rather than across the top line board of several different key executives.
In the fully projectized organization, the level of authority that a project manager has to bring to bear is high to total in nature. Their control over resources similarly is extremely high. And they are directly responsible for the control of both budget, as well as schedule, and other components, rather than answering to a functional manager of some sort. It’s rare to find organizations that purely conform to either a functional or a projectized nature.
Rather, most organizations fall into what we call a matrix blend, where functional and projectized structures come together at some level. The precise structure will vary based on the relative influence of project managers and of project initiatives in general, versus that of functional managers within the organization, across the same sort of spectrum we saw earlier.
There are three different types of matrix structures we refer to, weak matrix, balanced matrix, and strong matrix.
In the case of weak matrix organizations, project managers hold little power over personnel. Although, they may have more than any purely functional organization. Still, their work is more akin to that of an expeditor or coordinator, rather than a manager who can lead and direct their team explicitly.
Weak matrix organizations are situations where project managers will find themselves unable to make or enforce many project decisions individually. And as such, it’s of particular importance for project managers to work with others, negotiate, and to help them see how the project can be a benefit to them and their division within the company.
In the case of balanced matrix organizations, authority is, well, balanced between the project and functional managers. Project managers typically focus on the project full-time, but their resources often will not. Split up across several different projects, or perhaps lending a few hours here and there to project work while continuing to exercise day-to-day operational duties.
In a strong matrix organization, the project manager holds most control and has budgetary authority. And further, they may select staff directly or in conjunction with functional managers. In a strong matrix, projects managers have broad authority over resources and utilization, but it may not be complete.
For example, an organization where a project manager has the authority to decide the number of staff that they need, but the authority to assign specific staff still lies with the functional manager, would still be considered a strong matrix organization.
As detailed above said, few organizations are purely functional or projectized in nature. And organizational structure may even appear to vary at different levels of the organization.
There are plenty of stories of large companies where a small skunkworks team working under the radar was able to accomplish great things in part because they were outside of the typical norms and structure of that organization.
However, if we were to look higher up within that same organization, we might find it more difficult for work to continue. Just the same, within some organizations, we might find that only at that higher level do we have the discretion and authority necessary to do things differently than might happen elsewhere in the organization.
Some of the key factors to keep in mind when it comes to a project and organizational structure are the strategic importance of the project to the business overall.
The more important the project is, the more likely the project manager is to be infused with the authority to make changes, or to buck the norms as we see them within the organization or company.
The ability of stakeholders to influence the project is also important. If key stakeholders outside of the project sponsor still have the ability to control resources, that diminishes the authority and purview of the project manager.
The degree of organizational project management maturity is also important. In some companies, you may have project management offices, program management initiatives, or even portfolio management taking place where there are some strict guidelines in place about how projects are managed within the organization.
In other more organic or newer companies, we might find that there simply is no precedent for the project we’re undertaking in the company’s past work. As such, we may very well be the project team that helps to generate some of those assets, those policies and procedures that could then later guide future project work.
The project management systems that we have to rely upon can also have an impact here, depending on the sophistication both from a tool standpoint and from a policy standpoint of what project management systems we have in place.
Additionally, organizational communication tools and techniques can also come into play. Additional factors include a project manager’s level of formal authority, as explicitly listed by either the project sponsor, project management office, or other key executives within the organization who have the ability to define this role.
Resource availability and accountability can matter here, as well. If, for example, a project manager might require certain resources but they simply don’t exist within the organization, their power to actually do something about this is relatively low unless they also have the power to hire from the outside.
Similarly, if the project manager is unable to remove members who are unproductive from the project team, then they lack the ability to hold project team members accountable to a full extent within the project.
Control of project budget might reside with the project manager directly, with the project sponsor, or be directly overseen by a project management office. Depending on where this buck stops, project managers may have more or less authority when it comes to budget related issues.
The overall role of the project manager should also be considered, as should the composition of the team and allocation of project resources.
Regardless of what your organization chart might formally say, understanding where strategic resource and budgetary authority lie is key to your role as a project manager, and how you can best meet project objectives.
Project Management Offices according to PMBOK® Guide – Sixth Edition
Project Management Offices according to PMBOK® Guide – Sixth Edition
The PMBOK Guide defines project management offices as an organizational structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques.
Simply put, PMOs are in place to help project teams succeed by providing some best practices and unified standards that help to comply with the organization’s needs and by helping to direct and flow project work in a variety of ways that can benefit both the project team and the organization.
Generally speaking, there are three types of PMOs that we most often see. These include supporting, controlling, and directing project management offices.
In the case of supporting project management offices, we see a relatively low level of control at the PMO level; rather, the project teams remain largely autonomous in nature. The project management office in these sorts of organizations supplies best practices, training, information, data, and templates that can help the project team to succeed, and also acts as a repository for project information, which is important, given the fact that our project team will disband once we’ve met our objective successfully or have decided to move on from the project for other reasons.
A controlling project management office, on the other hand, institutes a moderate level of control over the project teams that work through it. This includes required compliance to methodologies, frameworks, or governance styles that might exist within the organization rather than simply providing templates that serve as an option but still leaves management within those boundaries to the project manager.
Third is a directing project management office, which assumes a higher level of control than the other two within each project team. There’s a high degree of direct control over each project’s management.
This could include directly assigning project managers to each individual project as well as controlling the resources available to those project managers and setting the tone and direction for how those project managers should manage their work. Regardless of which type of PMO most closely fits the one you might be familiar with in your organization, project management offices work to facilitate project success.
They may assign project managers to projects directly and certainly serve as a resource for project teams. Among the various functions that project management offices offer include maintaining standards and practices for project teams as well as curating tools and templates that can be used by them, archiving documents are artifacts for future use by either this project team or others in the organization, as well as developing key performance indicators and metrics that can be used to understand project performance and control.
In addition, project management offices can define governance policies for each project team as well as coordinate overall resources within the organization. Project management offices may also establish deliverables, especially if they serve as the project sponsor.
Finally, measuring the aggregate performance of projects is also an important role of PMOs, helping to rank how well projects are doing and to understand where additional attention by the organization might be necessary, either in the form of better leadership or an increased level of resources to help that project team meet their goals.
One thing project management offices don’t do is manage projects directly. That, of course, is the purview of the project manager, who focuses on completing specified objectives, while the project management office is more concerned with major changes in scope and direction that may take place as the result of shifting priorities, different changes in the product environment and so forth.
From a control perspective, the project manager has some level of a direct authority over the resources that have been assigned to their project, while the project management office focuses on dispensation and optimization of these resources between a variety of project teams.
As far as management goes, the project manager focuses on managing their project constraints: time, cost, quality, resources, scope, and so forth, while the project management office, on the other hand, focuses on creating the tools and methodologies that can be used to help project managers achieve those goals, establishing the standards that might be in place for the organization, understanding risks that impact the project and the organization at large, and the interdependencies that we may see between various projects.
Sample Project Cost Estimate Spreadsheet
How to avoid Gold Plating?
How to avoid Gold Plating?
The goal behind Gold plating is to achieve the happiness of the customer, something that “the users are just going to love.” it doesn’t lead to reaching your business target.
The solution to this problem is the team manager of the project because he has to track every requirement back to its source. The team project manager has to avoid building elements nobody will use.
To avoid Gold plating, first, the management team should avoid adding anything outside the requirements and the scope baseline. Second, we have to see the scope of the project from an outside view. An outside auditor or inspector can easily discover gold plating by comparing the deliverables with the scope baseline of the project.
The inspector can create several checklists to be sure there is no defect on the deliverable.
What happens if the auditor or inspector discovers gold planting of the project scope in the executive phase of the project? We can deal with the gold plating action as a defect on the product or deliverable.
According to the size and kind of defects, the project managers have to choose either reworking the product to fix the defects or going to reject it to the scrap.
What is scope creep in project management?
What is scope creep in project management?
Changes in the scope of a project are normal, and there is nothing to worry about if the project manager analyzes the effect on schedule, quality, and budget, and obtains an informal verification to do these change.
Unfortunately, the project failure basically comes from a weak scope definition or changes to elements of the scope without approval. The scope creep also affects the schedule and budget of the project, it gives the perception that the project isout of control. As a result, firms miss customer satisfaction and business needs because of scope creep.
To prevent scope creep, the project management team has to use the Work Break Structure (WBS) dictionary. WBS dictionary shows the link between elements. It produces details for each element of the WBS units.
Scope creep happens for three reasons :
- a misunderstanding of the project requirements and the definition of the priorities of these requirements.
- adding additional features to the project’s scope when the project is already in progress.
- poor communication between project managers and the
Scope Creep is viewed as negative for the undertaking or wellbeing of the company and it must maintain a strategic distance from it in all cases.
Here, you roll out a few improvements with no legitimate survey, and in later stages it might cause numerous issues. Afterward, you will need to actualize numerous different switches just to conceal the progressions made in earlier stages.
Keeping mind that if the degree is changed or calendar, and spending plan are likewise modified to mirror the adjustment in extension, it can’t be called scope creep.
Scope creep happens when the extent of the item is changed, and the tasks’ spending plan and timetable stay unaltered. Results of extension jerk may incorporate postponed timetables and cost invasion.
In the event that you don’t control extension creep, then you may have issues with effectively finishing your undertaking, or in extreme cases, it may be cancelled.
Gold Plating Versus Scope Creep
Gold Plating Versus Scope Creep
Scope Creep, mostly will happen as a result of the client, partner’s requests for new things, changes e.g.
In any product venture if the client requests more segments in the report which is really requiring process level differences in database table structures.
This will likewise require changes in the coding, improvement of inquiries for reports. It will likewise prompt changes in the configuration of the report. So Project Manager or Project Team is creating doing uncontrolled changes which are influencing time, expense and asset.
Gold Plating, without Stakeholders or clients requesting anything, is when venture group or Project Managers are accepting changes, however it has not been inquired.
A report has been created according to a particular Project Scope record. In any case, the venture group is doing additional endeavors in giving remarkable visuals for this report which is not planned, not asked for but rather the client maylike or dislike it.
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Scope Creep and its impact on project delivery
