Dec 1998 PM217: Project Management (Question 1) Suggested Solutions

1.	(a)	Explain why the following five factors might lead to poor cost estimation:	[5]
		(i) inexperienced guessers
		(ii) bad technical guesses
		(iii) changes to the project
		(iv) psychological factors
		(v) lowballing
	Please do not award half marks. One mark is available for each satisfactory explanation (up to a maximum of five marks). Inexperienced guessers: A major cause of poor estimation is that the people responsible for the estimate might be optimistic about the job at hand, leave things out of the estimate, or fail to follow a consistent method in deriving the estimate. Bad technical guesses: Thorough planning and the employment of good quality management practices can avert many surprises. However, some are factors which cannot be anticipated. Therefore, estimators should assume the worst when making estimates. Changes to the project: The problem with change is that it typically causes some measure of cost and schedule overruns. Consequently, change can lead to failure of estimation. Cost and schedule estimators must factor the effects of change into their estimates. Psychological factors: The impact of unchecked optimism on cost and scheduling estimates can be enormous. For example, the new project may offer interesting technical and marketing challenges, or it may hold the promise of increased profitability. Unfortunately, such optimism can distort estimates in subtle ways that are not easy to detect. Lowballing: Lowballing occurs when the project organisation says that it will do a job for less money than it will actually cost, in the hope that the low bid will get the job and money can be made through follow-on business – the bid is a ‘loss leader’.		[5]
	(b) List the six rules associated with the structured walkthrough technique.		[6]
	1 mark should be awarded for each correctly named rule: The group being evaluated chooses the judge and the jury. The group being evaluated determines the rules of the evaluation effort. The group being evaluated runs the evaluation meetings. No upper-level managers should be present at the evaluation sessions. Customers should not be present at the evaluation sessions. Maintain good documentation throughout the whole evaluation process.		[6]
	(c) Describe the main characteristics of a self-managed team and explain why this team structure can sometime lead to dramatic improvements in team performance.		[5]
	In self-managed teams, team members themselves decide which approach will be used to undertake a particular project with all key personnel decisions being taken collectively (1 mark). This includes the assignment of work, recruitment decisions and performance appraisals, with higher-level management involvement in the project being kept to a minimum (1 mark). Dramatic improvements may result since the team members are empowered to carry out the job to the best of their ability whilst being responsible for their own decisions (1 mark). This can lead to greater commitment, improved motivation, and hence improved efficiency and effectiveness (1 mark). Since all key decisions are made by team members "at the coal-face", decisions are taken with a good sense of the needs of the job, rather than by some high level manager who is far-removed from the daily challenges of the project (1 mark).		[5]
	(d) A key aspect of maintaining customer satisfaction is determining what the customers’ expectations are. List four commonly occurring customer expectations.		[4]
	Customers expect that they will be able to use the product or service they receive (1 mark). Customers expect vendors to keep their promises (1 mark). Customers expect vendors to be competent and provide helpful, polite and efficient service (1 mark). Customers expect vendors to keep abreast of their needs and to meet those needs appropriately (1 mark).		[4]