Certified cost professional preparation training course, CCP/CCT-AACE

1. KSU- Riyadh- CCP/CCT Cost Engineering Training 1018 BTA -Dr. Moustafa Ismail 2018 LEC- IV 1
Cost Engineering Management
CCP/CCT Training Course:
Association for the Advancement of Cost Engineering
King Saud University
March 2018
LECTURE 08
Certified Cost Technician
‫وبركاته‬ ‫هللا‬ ‫ورحمة‬ ‫عليكن‬ ‫السالم‬
2018

2. KSU- Riyadh- CCP/CCT Cost Engineering Training 1018 BTA -Dr. Moustafa Ismail 2018 LEC-
IV
2
Contact details
moustafa1_ismail@yahoo.com
https://www.linkedin.com/in/moustafa-ismail-abu-dief-93798a16/
https://twitter.com/moustafaabudief
https://www.slideshare.net/moustafismail
00966508297971- 00966560074207-0096598922125
March 2018

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CCP Certificate Section 5 Project Management Ch. 16
Chapter 16 – Project Management Fundamentals
• Introduction
Introduce a proactive system of fundamentals that uses the time methodology and
culture to develop a balanced program for execution, analysis, and management.
• Learning Objectives
 Understand the role of the project manager in project planning.
 Understand the major factors effecting successful project execution.
 Understand the overall company projects life cycle.
 Understand the major phases of projects.
 What is a project?
 A project is an item of work that requires planning, organizing, dedication of
resources and expenditure of funds in order to produce a concept, a product, or a
plant. It is a temporary endeavor with a definite starting & ending point undertaken
to create a unique product or service.

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CCP Certificate Section 5 Project Management Ch. 16
Chapter 16 – Project Management Fundamentals
The changing role of managing projects
• Project execution, old vs. new
 The traditional program of sequential completion with the individual phases of
engineering, procurement, and construction, where construction management
rarely got involved until four weeks prior to starting the project, has been
replaced by the very challenging, but very efficient, fast track program.
 Fast tracking, Critical Path Method (CPM) scheduling, and the trapezoidal
technique program are the greatest advances in methodology.
• A Proactive role
 Construction management take a proactive role through the newly developed
programs of construction preplanning & constructability; resulting in a strong
construction involvement at the early stage of the project. To ensure recognizing the
requirements of an economic construction program.

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CCP Certificate Section 5 Project Management Ch. 16
The changing role of managing projects
• Project Performance Measurement—Company
 The development of a program to measure project performance and
personnel skills is essential for any quality program. The measurement
program needs to be simple, but effective, using existing information
and being directed by the project’s quality assurance team.

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CCP Certificate Section 5 Project Management Ch. 16
The changing role of managing projects

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CCP Certificate Section 5 Project Management Ch. 16
Key essentials of project management
Due to the difficulty in the business environment and competitive nature, it is vital that
the management of projects focuses on:
o Identifying risks
o Maximizing cost savings (do it from the 1st time).
o Minimizing time delays
o Improving economic return
Success factors
o These results can only be achieved through:
o Effective management of people
o Tough but fair project objectives
o Efficient business techniques
o Outstanding leadership skills
Integrity-Vision/Strategy-Communication-Relationships-Persuasion (Influence)- Adaptability-
Teamwork- Coaching and Development- Decision-making- Planning

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CCP Certificate Section 5 Project Management Ch. 16
Overall company project life cycle
Figure 16.3 shows the general steps common to all plant projects.
Engineering Request
Project development
Budgeting &
Management
1
2
3
4

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CCP Certificate Section 5 Project Management Ch. 16
Overall company project life cycle
• Typical Project Phases and Lifecycle
The time and interface relationship of major project phases is shown in Figure 16.7.
Assuming a fast track program, most of these phases will overlap, and the degree of
overlapping will depend on the work content of each phase and the efficiency of
decision making present in the project.

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CCP Certificate Section 5 Project Management Ch. 17
Chapter 17―Project Organization Structure
Learning Objectives
Describe a project organization structure.
• Understand how to establish objectives.
• Define matrix structures.
• Use communication and information effectively.
• Identify a variety of contracting arrangements.
• Identify pre-contract activities for contractor evaluation.
 Ensuring a good project start can be e following constituents:
1. Organization structure
The Matrix Structure
Over the past 30 years, the most widely used organization structur

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CCP Certificate Section 5 Project Management Ch. 17
Chapter 17―Project Organization Structure
 Ensuring a good project start can be Through some constituents:
Organization structure
 The Matrix Structure
• Used in most projects ” where multiple projects are executed by many
departments carrying out the work at the same time.
• PM is having inadequate decision-making authority.
• The “matrix organization” is the most complex form of organization structure.
• Staff is deployed on many projects at the same time.
• It provides effective information exchange & enables efficient management
coordination of all projects.
• Staff is simultaneously accountable to PM and the departmental manager DM.
• PM & DM have authority and responsibility over the work.
• The DM is responsible for the technical content and working resources
• PM decides on the cost and time baselines.

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CCP Certificate Section 5 Project Management Ch. 17
The Matrix Structure- continue
• The person involved in a matrix, doing work reports to DM &PM, it causes:
 two bosses, leads to divisions of responsibility, problems of loyalty, and
differences over priorities, poor communications, and lack of single and
direct “line authority.”
 The management of personnel & departmental interfaces is a demanding
task, and in the “matrix,” is often referred to as “conflict management.”
 It requires the project execution plan PEP to be clearly defined, to gain
buy in of all members, commitment.
 There would be unanimous support from all working to the same “plan.”
 Anticipation was to be effective, but “matrix” failed initially, the
alternative was a new approach, called quality management.by Dr.
Edward Deming. working in Japan in the 1960s and 1970s.

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CCP Certificate Section 5 Project Management Ch. 17
Demingism and Total Quality management
• TQM, a version of Demingism, has been implemented in the manufacturing
industries since the late 1980s, and in the engineering/construction in 1990s.
• Dr. Deming developed 14-key sets of criteria for QM program “Demingism”
1. Client Satisfaction—For the services provided or for the product sold.
2. Understanding and Reducing Variation—Every management process,
practice, procedure, policy must be evaluated for its effectiveness in allowing
the company’s individuals to work at maximum effectiveness.
3. “Top-Down” Management Leadership & Commitment—Improvement is not
merely from mid managers & workers “try harder” must be full understanding
of, & commitment to, necessary systematic change, improvements
4. Change and Improvement Must Be Continuous—It must be all-
encompassing, involving every “process,” individual and outside services and
suppliers.

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CCP Certificate Section 5 Project Management Ch. 17
Demingism - continue
5. Ongoing Training & Education is essential for all employees and of a high
technical quality so high standards of skills can be implemented by all personnel.
6. A Culture of Personnel Pride and Job Satisfaction—is required at all levels.
This requires leadership, program champions.
7. Adopt and institute leadership
8. Drive out fear
9. Remove barriers bet Employees areas
10. Eliminate slogans and requesting for zero defects
11. Eliminate targets by numbers and quota/ sharing ratios of workers.
12. Remove barriers that deprive the staff pride of the achievement.
13. Establishing a training program and self education motivations.
14. Every Body to work for the overall change (transformation).

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CCP Certificate Section 5 Project Management Ch. 17
General
• People in single, medium, or large size groups who design and build projects,
• People + required skills+ positive working environment success is possible.
Therefore, there must
• be a consistent and long term interest in people needs, their development and
their training. When there is little interest, or the
• TQM program is built around the needs & development of people, there is
unanimous acceptance by industry that TQM is the key to success.
• In essence, develop the people, and in turn, the people will develop the profits.
Is Owner qualified to be PM
• A very fundamental consideration in today’s world of company reengineering
is the question of an owner functioning as his or her own project manager.
• It is a matter of previous experience of the specific project (skills and
numbers) staff members.

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CCP Certificate Section 5 Project Management Ch. 17
Is Owner qualified to be PM
• Many companies confuse the issue as a result of technical/engineering
considerations. Having competent engineering personnel, they take on the
project management responsibility, but without adequate project experience or
project resources.
• It needs to be emphasized that engineering design competence does not
necessarily translate into project capability.
Does the Organization Structure Properly fit Contracting Arrangements?
• Different skills and different staff numbers are directly related to contracting
arrangements; i.e., lump sum, reimbursable, etc.
• From an owner’s perspective, reimbursable contracts can require three times
as many owner people as a lump sum contract, and would require personnel
with extensive analytical skills.
• L S, a good design & strong project discipline (no/little changes) are essential.
• Suitable No. of peaople and apropriate skilles ensures propper deliverables.

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CCP Certificate Section 5 Project Management Ch. 17
Is the Project Manager (the Person) Qualified?- PM qualifications
• This should address technical expertise, project experience, business
capability, leadership ability, facilitating & people skills&including mentoring
• Consider project, business, and people expertise for large project, while on
smaller projects and feasibility studies, technical skills is more important.
Does the Owner Project Manager Report to the Client or Projects?
• In contractor groups, it is not a problem for the owner PM to report .
• In owner organizations, it is often a problem as the PM reports to both groups.
• An accepted practice is to report to internal company client, so as to follow
financial responsibility, & report to projects/engineering for technical subjects.
Should the Project Task Force (PTF) Approach be Used?
• Project task force is more efficient for larger projects. It allows more efficient
communication channels & a more efficient decision-making process.
• The organization structure should follow the current trend for larger projects,
which has added the new function of a business manager.

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CCP Certificate Section 5 Project Management Ch. 17
Is Business Management Must Receive the Correct Emphasis
• On economically important projects, emphasis is for business considerations.
• Establish a “balance” of technical versus business (estimating, cost control,
schedule, contract, construction M), with emphasis on business considerations.
Efficiency and Effectiveness of the Project Team
• On large projects, a common mistake of over-substitution of labors numbers
to satisfy lack of skill.
• Project manpower plan should be prepared within early stages, it supports the
proper planning & scheduling of resources, including the mobilization and
demobilization timing of all key managers and supervisors.

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CCP Certificate Section 5 Project Management Ch. 17
Project Organization Structure—Owner Team (Reimbursable Contract)
• On a reimbursable project, the owner should direct the contractor and to avoid
inflation of cost and inefficient project execution.
• An Equal Partner Relationship (EPR) is an essential requirement and to be
inserted into agreement with appropriate contract clause( risk sharing clause).
• Contractor's personnel competencies should be evaluated prior approval.
Pre-Contract Activities for Contractor Evaluation
• The contractor’s proposal should be weighted and evaluated through pre
planned effective proposal evaluation program, with individual criteria for
technical, Project M, commercial/pricing, P control, contract, & construction.
• For large, important P. , interviews should be carried out with key personnel.
• Ensure correct contracting arrangement/conditions are in contractor’s proposal
• Evaluate the contractor’s proposal program/execution plan and key interfaces
with local, corporate, and government entities.

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CCP Certificate Section 5 Project Management Ch. 17
Project Organization Charts
• POC is a dynamic document, regularly updated, identifies owner and
contractor positions. I is agreed in pre contract meeting.
• POC should be recognized and the organization understood by all project team
• The use of formal job descriptions and duties is recommended.
Project Manager Authority
• Full authority to make both design and cost decisions, as per company policy.
• On reimbursable project, PM authority is sufficient to manage daily operations
• Project Control Function Reports Directly to Project or Business Manager
• A concept of the cost control to be be an audit function of the project, hence
report to higher/senior management. AACE does not support that concept,
since it can lead to adversarial relationship and dilute trust & cooperation.
• There are always independent, periodic cost reviews by senior home office
personnel that should be more than adequate for a management audit.

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CCP Certificate Section 5 Project Management Ch. 17
End of lecture 7 A Chapter 17
Next lecture: 7 B chapter 18