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Conducting a Management Project - Research Paper Example

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The present case study "Conducting a Management Project " gives a thorough outlook on project management in the construction and operation of a restaurant. It is stated that Project Management is nowadays getting more popular since it is able to give a solution to today’s competitive environment…
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Conducting a Management Project
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Conducting a management Project unit 5006 Outline: Introduction Project management overview Contents as per unit 5006 Conclusion Introduction: Project Management is nowadays getting more popularity since it is able to give solution to today's competitive environment. The organization needs to introduce new innovations in product and service management more quickly due to the increased competition, changing customer taste, etc. in order to sustain in the market. Project management helps the organization in this regard to find out the solution for these problems in a scientific manner. The timely finish of successful projects requires an understanding of both the technical and human resource components of project management. The technical component is necessary to recognize the critical activities that influence the total length of time a project takes to finish. The human resource elements deal with the issues of headship and worker inspiration within a group or team atmosphere. Project Management overview: A project is an organized activity to accomplish an objective. It can be defined as a series of related tasks that are directed towards a common output which will be completed during a period of time. It is the planning, directing and controlling resources (people, equipment, material) to meet the technical, cost and time constraints of the project. Features of the Project Management: A project is a completely new task; thus there are no repetitive activities. It will be operated for the first time and the challenge cannot be predicted which may incur in future. The team members have to be conscious about their work and should monitor whether they can achieve the desired objective. Thus there will be continuous evaluation, monitoring, controlling till the project is completed. In short, we can say that the project management has taken place during the overall life of the project. New project team will be formed and after accomplishing its objective, it will be dispersed. Thus there will be more time required for the team members to perform effectively and there should be a conscious effort to ensure the participation of the team members by way of effective communication and motivation. Responsibilities of the project manager: Project managers characteristically have a distinctive role within the conventional organisation structure. Most project management squads are multidisciplinary in character, concerning a wide variety of abilities and organisational units. Frequently these teams consist of people from engineering, operations and marketing, and from support services that include risk management, systems operations, auditing, and legal groups. Accordingly, today's project managers have to often cross conventional functional lines to achieve the support necessary for the completion of a project. In most occasions, this support is requested without formal authority. Therefore, the project manager must make a combined culture that relies a lot on social skills as well as practical expertise. Without the authority of a traditional functional manager and the allied system of rewards and penalties, project managers have to make their authority by building trust, respect, and credibility among project members, as well as by representing sound decision making - all within an exciting work situation. High-performance project teams: In today's multifaceted and hi-tech sophisticated environment, the cluster has remerged in significance in the structure of project teams, the qualities of a project team and its vital performance relied on many aspects that involve both people and structural matters. Even though each organisation has its own methods of performance, there is common agreement among project managers on which aspects are separated into the following four categories: 1. Task-associated variables are direct measures of task performance, such as the skill to generate standard results on time and within budget, inventive performance, and the skill to change. 2. People-associated variables influence the inner working of the group and include excellent communications, high participation, and capacity to decide conflict, and mutual trust and commitment to project objectives. 3. Leadership variables are related with the different leadership positions within the project side. These positions can be shaped formally, such as the selection of project managers and task leaders, or emerge energetically within the job process as a result of independently developed power bases such as expertise, faith, respect, credibility, companionship and empathy. Typical leadership qualities consist of the ability to arrange and direct tasks, smooth the process of group decision making, motivate, assist in quarrel and problem resolutions and promote the work surroundings that satisfies the professional and personal requirements of the individual group members. 4. Organisational variables consist of the total organisational climate, regulations, economic conditions, policies, provincial cultures, and command control-authority structure. Obstructions to high team performance: as a functioning group, the project squad is subject to group dynamics. In addition, because it is generally a highly visible and purposeful work squad, the project squad regularly takes on special importance and is accorded high status with adequate expectations of performance. Even though a project squad carries significant energy to a task, the possibility of the cluster malfunctioning is very important. This happens because there are several obstructions to high performance that can exist in a project squad. These include (a) job conflicts, (b) power struggles, and (c) different points of analysis. Each of these obstructions must be conquered if the squad is to effectively complete its assigned project Activities in project management: The first activity in the project management is the Statement of Work (SOW). It is a description about the type of work to be done, objectives, proposed schedule including the starting and completion date of the project. It will also include the related matters such as budgeting, mile stones (specific objectives at a point of time) and the reports to be submitted. Work Breakdown Structure (WBS) Work breakdown structure breaks the total project into smaller units for the successful achievement of the objectives. The format of WBS is as follows Level 1 Program Level 2 project Level 3 Task Level 4 Subtask Level 5 Work package In the highest level, program is carried out which is the integration of several projects. Program is undertaken when the proposed work is very large. A program happens when the work takes more years to complete, having higher complexity, and when there are inter-related projects by different organizations. Project is done by an organizational undertaking as a whole. It will cover all the departments, people in the organization. A project can be further divided into tasks (activity). Usually tasks will be completed within months. A subtask is the further division in the task into smaller units. A work package is undertaken by a single department or organizational unit. The unit will be asked to perform a specific task which should be completed within the time, should attain the objective, and performance will be measured against the standard. There are two aspects in the project management; the first one is organization and behavior of people and the second aspect is the technology of method. For successful project management, a project manager has to focus on three main components; they are Time: The time period of the project from staring to finishing Performance: Examine whether the project meets the desired quality Cost: Type of cost incurred, direct and indirect, whether the cost is under the limit of budget. Methodology: The methodology chosen for conducting the project management -unit 5006 is described below: 1.1determine a management area for investigation that has an implication for a work related area 1.2 identify the aim, scope and objective of the project 1.3 justify the aim and objective of the project 2.1 identify sources of data and information for the project 2.2 analyze the data and information for options or alternatives that meet the project aim 2.3 determine an option or alternative that meets the project aim 3.1 evaluate the research to make conclusions 3.2 recommend a course of action to meet the project aim 3.3 assess the impact of the project recommendations 4.1 determine the medium to be used to show the results of the project 4.2 produce the results of the project 4.3 discuss the impact of the project on the work related area As the writer is already working in a restaurant, it is decided to choose project management in restaurant as a research work. It is closely related to the work specialization of the writer. Hence the first requirement of unit 5006 is fulfilled in letter and spirit. Our next priority is to choose a suitable topic for the management investigation. 1. Management area for investigation: The project undertaken is the opening a new restaurant in the city. There are two options -either leasing or purchasing land and constructing the building in it. Here, we opt leasing method which is very common and simple. When a new restaurant is being opened some initial capital is required and it cannot be recouped. Even though the cost cannot be recouped, it can be reduced to a minimum extent. Here the budget is fixed at $200,000. The management is asking whether this budgeted cost can be reduced. The allotted time to open the restaurant is 42 weeks. We have to investigate whether the project can be completed within the stipulated time and at a reduced cost. In any project the three factors that have to be controlled are 1) Time 2) Cost 3) Performance. Time and cost are interrelated. In order to speed up the execution time, certain activities have to be crashed incurring additional cost in terms of over time, extra manpower, and additional machinery/resources. The management investigation will centre around the financial aspect of the project namely to check whether the project is completed within the budgeted cost and whether the revenue is as per the projections. 1.2. Aim, Scope and objective of the project: Restaurant management falls within the broad spectrum of hospitality management. As the cost of living is rocketing, both husband and wife are forced to work and restaurant plays a complementary role in alleviating the workload of the working women. At the same time the restaurant should charge reasonably to attract the middle class clients. The three pillars of cost leadership, product differentiation, and market segmentation should be equally strong in order to sustain in the market. The objective of the investigation is to keep the cost of the project under check and boost the resources through a suitable market strategy. As the writer is already in the field of hospitality, the finding of the investigation report will give him greater courage and strength to become an entrepreneur instead of confining himself as an employee. Management objectives: Management objective is to complete the project in 42 weeks at a budget cost of $ 200,000. The management also wishes to study the option of completing the project in 30 weeks by spending an additional expenditure of $100,000 by crashing various activities. The management is confident of meeting this additional expenditure from the revenue generated during the earlier completion period of 12 weeks. Scope of the study: Restaurant industry has become highly competitive. Due to the emergence of retailing giants tremendous changes took place in the restaurant industry. The industry combines both the customer taste and business values. Since the industry is highly dynamic in nature, which changes as per the taste of the customer, a business which values the customer, can only sustain in the market. Here the project aim is opening a new restaurant at a minimum cost. The project manager has to determine the location, product and service offering, distribution channels, marketing strategies etc. If the cost associated with all these activities can be reduced, the total cost can also be reduced. Thus the project manager has to decide the strategy which will yield maximum result at the minimum cost. The balanced cost strategy will help the firm to work efficiently and effectively in the long run. It will also help for formulating a superior cost strategy. The idea will also be helpful in the financial planning. 1.3. Justification to the aim and objective of the project: Since cost reduction will enhance the efficient working of the firm, the proposed project has a wide scope beyond cost reduction. 2.1 Data, information and project aim: Data and information for the project were collected from the website and marketing journals. The information collected by the existing restaurant owners during the past three years was also reckoned. The starting point for any project is market survey. Since the taste of the public change quite often, it was necessary to conduct a fresh market survey instead of depending on old data. Market survey was conducted through the website and through questionnaire distributed among various educational institutions and industry undertakings in the neighbourhood. Our main source of data was Baja Burrito Restaurant, which recently started a Mexican restaurant. (Chapter 5 project scheduling models 2002). The data relating to the restaurant marketing environment, trends, issues and challenges etc. will be got from the industrial analysis, competitor analysis, various trade channels, websites etc. Feasibility study of economic viability, commercial feasibility, technological accessibility, market feasibility etc. should be studied separately in order to find out whether the proposed project will yield the desired result. 2.2. Analysis of data and information: In order to analyze the data, the proposed project is approached in the work breakdown structure method which is shown below: Work breakdown structure of opening a new restaurant Level 1.0 Open a new restaurant 1.1 Recruit workers 1.1.1 Determine worker requirements 1.1.2 Recruit workers 1.1.2.1 Place advertisement 1.1.2.2 Screen applicants 1.1.2.2.1 Conduct interviews 1.1.2.2.2 Check reference 1.1.3 Hire and train workers 1.2 Purchase and install kitchen equipments 1.2.1 Design menu 1.2.1.1 Develop recipe 1.2.1.2 Determine equipment requirements 1.2.2 Purchase equipments 1.2.2.1 Obtain quotes 1.2.2.2 Select Vendor 1.2.3 Install equipments 1.2.3.1 Connect electrical 1.2.3.2 Connect Plumbing A sale to investment ratio is a tool to analyze the success of the business. It is the ratio between the expected sales from the proposed restaurant and invested capital which is required to open and operate the restaurant A firm having highest sales investment ratio will be among the top performers in the industry. When the sale of the new restaurant increases, the profit will also increase and it will ensure the long term sustainability of the firm. Here we are adopting the leasing method to open the new restaurant. Thus, in order to find out the sales-investment ratio, we have to calculate the cost for lease hold method. It includes cost of leasehold improvements, furniture, fixtures and equipments, utility deposits, soft cost such as architectural, interior design, legal, accounting and start up cost like labor training and inventory collection. The additional cost for contingencies, pre-opening costs, working capital reserve etc. should also be foreseen. The total cost of this entire asset will be the investment part in the sales investment ratio. The next step is to calculate the expected sales from the proposed restaurant. It is determined based on the days in which restaurant will be opened and the table turns or number of customers expected to arrive. The expected customer volume can be decided by observing other restaurants and their customers. We can estimate the busiest meal period, busiest days, waiting time of the customers etc. through this observation. Based on the observation we can prepare a chart showing the number of customers who arrives in each day (Sunday to Saturday) in each meal time (dinner and lunch). Also find out the average number of customers in each meal period and each day. We can find out the annual sales, by calculating the sales of 52 weeks. From the data, sales investment ratio can be found out. (Laube). Critical Path method: The main activities for the project were identified by the project team and the sequence of the activities finalized through mutual discussion. Gantt Chart showing critical activities CPM CHART The distinct paths A-C-F-G 32weeks (8+4+12+8) A-C-E-G 36 weeks (8+4+16+8) A-B-D-E-G 42 weeks (8+4+6+16+8) A-B-D-F-G 38 weeks (8+4+6+12+8) Critical path is A-B-D-E-G since it is the longest duration path. 2.3. Option or alternative that meet the project aim: Here the project aim is to maximize the return on investment by increasing the sales volume and decreasing the investment. Hence the management has two options in investment: 1) to complete the project within 42 weeks at $200,000 or complete the project within 32 weeks at $300,000. Because of the economic meltdown, number of tourists will be less and hence we will not be able to recover the additional investment through increased sales. Hence it will be prudent to complete the project in the normal time, instead of crashing the activities and speeding up the project incurring higher cost. 2) The management has two options either to purchase the land or go for leasing of the building. Because of the uncertain market conditions, in the wake of economic recession, it was decided to go for leasing to minimize the investment. 3.1 Evaluation of research to make conclusion: The research deals with the establishment of project management model for a restaurant. The purpose of the research is to act as a guide to new entrepreneur who desires of entering the hospitality and restaurant business. The emphasis is on launching a new project with the latest technique in market analysis, project planning, project scheduling, budgeting and project control using network techniques like PERT and CPM. The research went into depth about the pros and cons of completing the project in the normal time, crash time with normal cost and crash cost. The research also deals with the present economic scenario in which the restaurant industry is facing a recession. The research also deals with marketing strategy of cost leadership, product differentiation and market segmentation. 3.2 Course of action: The course of action for the project management is described below: 1. Conducting a scientific market survey 2. Choosing the location 3. Leasing the business outlets 4. Sequencing of the activities 5. Preparing vendor list for equipments 6. Preparing vendor list for consumables 7. Finalizing contract for interior design and decoration 8. Finalizing wiring and plumbing 3.3 Impact of the project recommendation: Here we are adopting leasing method which gives a high return on investment. To assure reasonable sales volume, location should be selected based on the detailed market survey. Because of the crisis in the banking sector, lending rules have become stricter and hence it is necessary to limit the bank loan both for capital expenditure and working capital. It is one of the reasons why we have refrained from crashing the activities and expediting the project at a higher cost. "Even if the sales to investment ratio look good make sure that the annual lease payments do not exceed 6% of your expected sales volume. Some landlords have been known to give generous build-out allowances (which lowers the startup investment) to entice restaurant tenants, only to jack up the rent to an excessive amount. Another rule of thumb: Don't sign a lease where your monthly building rent is in excess of 6% of your expected sales volume. Once rent starts to exceed 6% - 7% of gross sales it begins to seriously erode your chances of making an adequate profit." (Laube). 4. Project Results and control: Gantt chart and network techniques like PERT and CPM are used to control the project schedule and results. While the Gantt chart is able to relate activities to time in a visually usable fashion for very small projects, the interrelationship of activities, when displayed in this format, becomes extremely difficult to visualize and to work with for projects with more than 25 or 30 activities. Moreover, the Gantt chart provides no direct procedure for determining the critical path, which, despite its theoretical shortcomings, is of great practical value. The U.S. Department of Defence was one of the first large consumers of project management and had published a mixture of useful standard forms. Many are used straight or have been modified by firms engaged in project management since those early days, however, graphics software has been written for most computers, so management, the customer, and the project manager have a wide choice to present data. Critical path scheduling: Critical path scheduling refers to a set of graphic techniques used in planning and controlling projects. In any given project, the three factors of concern are time, costs, and resource availability. Here, time refers to the total elapsed time from the beginning of the project until its completion; costs are defined as all of those expenses directly related to the project, including material and labour; resources include the labour available to work on the project, as well as equipment and facilities that can be assigned to the project. Critical path techniques have been developed to deal with each of these, individually and in combination. PERT (program evaluation and review technique) and CPM (critical path method), the two best known techniques, were both developed in the late 1950s. PERT was developed under the sponsorship of the U.S. Navy Special Projects Office in 1958 as a management tool for scheduling and controlling the Polaris missile project. CPM was developed in 1957 by J.E. Kelly of Remington-Rand and M. R. Walker of Du Pont to aid in scheduling maintenance shutdowns of chemical processing plants. Critical path scheduling techniques display a project as a network of nodes and arrows and relate its individual tasks in a way that focuses attention on those tasks that are critical to the project's completion. For critical path scheduling techniques to be most applicable, a project must have the following characteristics: 1. It must have well-defined jobs or tasks whose completion marks the end of the project. 2. The jobs or tasks are independent; they may be started, stopped, and conducted separately within a given sequence. 3. The jobs or tasks are ordered; certain ones must follow others in a given sequence. The construction, aerospace, and shipbuilding industries commonly meet these criteria, and critical path techniques find wide application within them. We previously noted also that the applications of project management and critical path techniques are becoming much more common within firms in rapidly changing industries. Project management techniques are also booming more common in health care, with the objective of reducing a patient's overall stay in a hospital. Here, each patient is viewed as a project and the various procedures he or she undergoes are considered to be the tasks in that project. Time- oriented techniques The basic forms of PERT and CPM focus on identifying the longest time-consuming path through a network of tasks as a basis for planning and controlling a project. Both PERT and CPM are using nodes and arrows for display. Originally the basic difference between PERT and CPM was that PERT used the arrow to represent an activity and CPM used the node. The other original difference between these two techniques was that PERT used three estimates --- optimistic, pessimistic, and most likely - of an activity's required time, whereas CPM used just a single, best time estimate. This distinction reflects PERT's origin in scheduling advanced scientific projects that are characterized by uncertainty and CPM's origin in the scheduling of the fairly routine activity of plant maintenance. Thus, PERT was often used when the primary variable of interest was cost. As years passed, these two features no longer distinguished PERT from CPM. This is because CPM users started to use three time estimates and PERT users often placed activities on the nodes. We believe activity on the node is much easier to follow logically than the activity on the arrow. However, the three estimates are often very valuable in obtaining a measure of the probability of completion time. Therefore, we use the activity on the node and either a single estimate for activity time or three time estimates, depending on our objective. We use the terms CPM and PERT interchangeably and mean the same thing, although we tend to use the term CPM more frequently. In a sense, both techniques owe their development to their widely used predecessor, the Gantt chart. Maintaining ongoing project schedules is important to keep a project schedule accurate and current. The schedule tracks the progress of the project and identifies problems as they occur while time to correct the situation may still be available. In some situations, it may be necessary to shift limited resources, be it labour, equipment, or facilities, from non critical activities without slack times that are on the critical path. The schedule also monitors the progress of the costs and is often the basis for partial payments. Perhaps the most important reason for this happening is that managers are not committed to the technique to insist that the schedules be kept up to date. The resulting poor schedules consequently give project scheduling a bad name. Experience in project scheduling technique is important and this job should not be carelessly relegated to the closest warm body. The project manager must support the schedule and see to it that it is maintained. Time- cost trade-off models: In practice project managers are as much concerned with the cost to complete a project as they are with the time to complete the project. For this reason, time-cost trade-off models have been devised. These models, which are extension of PERT and CPM, attempt to develop a minimum-cost schedule for the entire project and to control budgetary expenditures during the project. Minimum- cost scheduling: The basic assumption in minimum-cost scheduling is that there is a relationship between activity completion time and the cost of a project. On the one hand, it costs money to expedite an activity; on the other, it costs money to sustain the project. The costs associated with expediting activities to shorten their completion times are termed activity direct costs and add to the project's direct costs. These additional costs that are included when an activity is accelerated are also referred to as crash costs. Worker-related crash costs include overtime payment to reduce the overall completion time. The costs associated with sustaining the project are termed project indirect costs; overhead, facilities, and resource opportunity costs, and under certain contractual situations, penalty costs or lost incentive payments. Since the activity direct costs and project indirect costs are opposing costs depending on time, the scheduling problem is essentially one of finding that project duration that minimizes their sum or, in other words, finding the optimum point in a time-cost- trade off. Conclusion: The research paper is based on project management in the construction and operation of a restaurant. Various activities associated with the project work identified and interrelation exhibited in the medium of Gantt chart and PERT chart. The normal cost and crashing cost associated with each activity was identified and trade-off arrived at in balancing the cost and time. In the present context of economic recession, it is advised not to go for crashing. In the market survey, a decline in the tourist traffic was indicated. And hence, it is decided to go for leasing. The opening of restaurant will be a boon to the student community and working women. It will be also a place for social gathering. The aim of restaurant will be to cater to the different taste of the different customers from various countries. Reference Chapter 5 project scheduling models 2002, John Wiley & Sons, viewed 21 April 2009, http://web.ntpu.edu.tw/juang/ms/CH05.ppt#512,94 Laube, Jim, Reduce the risk of opening a new restaurant, RRG Restaurant Resource group, viewed 21 April 2009, http://www.rrgconsulting.com/reduce_the_risk.htm Laube, Jim, Reduce the risk of opening a new restaurant: leasehold example, RRG Restaurant Resource group, viewed 21 April 2009, http://www.rrgconsulting.com/reduce_the_risk.htm Read More
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