Pay Back Period:

For uniform cash flows;

Io
PBP=
Ct
 PBP cont’d
For non-uniform cash flows;
PBP=t+bal/Io
Where;
t is the time of recovery (not full)
Bal is outstanding bal in the next
period
Io is initial outlay
DO NOT COPY FORMULA;
 PBP: EXAMPLE 2:
Period 0 1 2 3 4 5
(Years)
Cash flows
(30,000,000 10,000,000 12,000,000 20,000,0 25,450,5 10,000,00
Payback period
) lies between year 2 and year003 i.e. the
00 30m/=
0
invested will be recovered by the end of the third year. The total
sum to be recovered by end of second year will be
= 22m, i.e. (10m + 12m)
And the remaining sum of money to be realized by end of 3rd
year in order to cover the entire Initial outlay will be;
=30m-22m = 8m
8m/=
Thus PBP= 2+ years
30m/=

= 2.3 years
 Profitability Index:
Present
PresentValue
Valueof
ofInflows
Inflows
PI=
Present Value of outflows

Where PV is the NPV of Cash

flows excluding Io
The formula above PI= (NPV/Io)

Note: NPV computation excludes the initial outlay

If you fail to plan, PLAN TO FAIL

PROJECT
M ANAGEMENT
BBC II
CIA

DEPARTMENT BIZ COMPUTING

By Kituyi Mayoka
 Objectives
• Understand the difference between a
project and project management
• Know how to Plan, Implement & Manage a
project for success
• Use Project Mgt tools i.e. Network
Diagram and Ghant chart
• Use Ms Project to plan & manage projects

If you fail to plan, PLAN TO FAIL

 Expectations:

Participatory audience
Ask questions, criticize &
Contribute.
Try it out. It works!
What is a Project?
A project is a sequence of unique,
complex, and connected activities
having one goal or purpose and that
must be completed by a specific time,
within the budget, and according to
specifications.

If you fail to plan, PLAN TO FAIL

 Important
Terms:
Project

If you fail to plan, PLAN TO FAIL

 What is Project Management?
• Project management is a set of principles and
tools for
– Defining
– Planning
– Executing
– Controlling . . . and
– Completing a PROJECT

If you fail to plan, PLAN TO FAIL

Why is Project Management Important?
• Organize your approach
• Generate a credible schedule
• Track progress and control your project
• Identify where to focus your efforts
• Identify problems early – prevent them
• Saves you TIME….MONEY

If you fail to plan, PLAN TO FAIL

Five Phases of Project Management
Define the
project
Develop the
Plan
Execute the
Plan
Monitor &
Control
Close the
Project
Adapted from Weiss, J.W., and Wysocki, R.K. 1992. 5-Phase Project Management:
A Practical Planning and Implementation Guide. Reading, MA: Addison Wesley.

If you fail to plan, PLAN TO FAIL

 Developing The Plan

Identify Project
Tasks (WBS)
Estimate Task
Duration

Determine Resource
Requirements
Construct/Analyze
Project Network
Prepare the
Project Proposal

If you fail to plan, PLAN TO FAIL

 Planning the Project:
Work Breakdown Structure (WBS)
• A WBS is the functional decomposition of a
project
• Breaks the project into small and
manageable tasks to help plan and schedule

If you fail to plan, PLAN TO FAIL

 WBS Example:
To build a house;
The Activities:
• Consultancy
• Clear site
• Lay foundation
• Transport cement
• Build wall
• Transport timber
• Roofing
• Finishing

If you fail to plan, PLAN TO FAIL

 Developing a WBS
Activity Description Duration Predecessor Resource
(weeks) (s)

A Consultancy 3 None Consultant

B Transport 2 A Driver, Fuso
cement
C Transport 1 B Driver, Fuso
timber
D Clearing site 2 None Eng., etc
E Lay foundation 3 A Eng, Porter

F Build wall 1 A&B Cement, Eng

If you fail to plan, PLAN TO FAIL

G Roofing 4 A, B & C 2 Eng. &
 Schedule activities on Ghant Chart
Why?

• Visual scheduling tool

• Graphical representation of information in WBS
• Show dependencies between tasks
• Track progress towards completion

If you fail to plan, PLAN TO FAIL

Schedule activities on Ghant Chart
How?
• List all tasks and milestones from the WBS
along the vertical axis
• List time frame along the horizontal axis
Activity 1
Activity 2
Milestone

Time Frame: day 1 day 2 day3

If you fail to plan, PLAN TO FAIL

Activity
Our Ghant Chart
A
B Project duration is 10
C weeks
D
E
F
G
H

0 1 2 3 4 5 6 7 8 9 10 Time (weeks)

If you fail to plan, PLAN TO FAIL

 Dependencies
• Linkage between and among activities/tasks
• Dependencies create the backbone of the
project network

If you fail to plan, PLAN TO FAIL

 Dependencies
• Finish to start

• Predecessor Task: A A B
• Successor Task: B

• Arrow head indicates dependency relationship:

Task B cannot begin until Task A is complete

If you fail to plan, PLAN TO FAIL

 Types of dependencies/relationships between activities:
Task Dependency Example Description
A Task A must finish before task B can
Finish-to-Start (FS) B start

A
Start-to-Start (SS) Task A & B must start at the same
B time, irrespective of when they finish

Finish-to-Finish (FF) A Task A & B must finish at the same

time, irrespective of when they start
B

A
Start-to-Finish (SF)
B Task B can’t finish until A starts.

05/27/10 Project Management-BBC II-2009 23

 The Network Diagram
Why?

• Know the project duration

• Know the critical path of the project
• Know the most crucial activities
• Reduce duration thru resource re-allocation

If you fail to plan, PLAN TO FAIL

 Building a Network Diagram
How?
• Draw from START to END
• Represent activity duration by an arrow
• Follow predecessor-successor rule
2 weeks
1 week A C

START END
2 weeks

The longest rout is the critical path

If you fail to plan, PLAN TO FAIL

 Our Network Diagram
1 wk 4 wks
B C
2 wks G
1 wk 10 weeks
A
3 wks F
3 wks 6 weeks
E
STA 6 weeks END
RT
2 wks

D 2 wks 4 weeks
H

The most crucial activities are A, B, C & G

This is also the critical path

If you fail to plan, PLAN TO FAIL

 How do you reduce project duration?
Utilize Network Diagram!!!
Pick resources, especially work resources
from none critical activities and deploy
them on critical path activities e.g. Eng
4 weeks
1 week A C

START END
2 weeks

If you fail to plan, PLAN TO FAIL

PROJECT
MANAGEMENT
End of Session 1
Start Ms Project

DEPARTMENT OBIZ COMPUTING

If you fail to plan, PLAN TO FAIL