Apply the concepts of the tools described in the Project Planner's Toolkit.Refer to the Excel Template as an example.After studying and evaluating the components included in the Project Manager's Tool

Appendix

The Project Planner’s Toolkit

Flowcharts, Gantt Charts, & Break-Even Analysis

Project planning may begin (in the definition stage) as a back-of-the-envelope kind of process, but the client will expect a good deal more for the time and money being invested. Fortunately, there are various planning and monitoring tools that give the planning and execution of projects more precision. Three tools in the planner’s tool-kit are (1) flowcharts, (2) Gantt charts, and break-even analysis.

Tool #1: Flowcharts—for Showing Event Sequences & Alternate Decision Scenarios

A flowchart is a useful graphical tool for representing the sequence of events required to complete a project and for laying out “what-if” scenarios. Flowcharts have been used for decades by computer programmers and systems analysts to make a graphical “road map,” as it were, of the flow of tasks required. These professionals use their own special symbols (indicating “input/output,” “magnetic disk,” and the like), but there is no need for you to make the process complicated. Generally, only three symbols are needed: (1) an oval for the “beginning” and “end,” (2) a box for a major activity, and (3) a diamond for a “yes or no” decision. (See Figure A.1, next page.)

Computer programs such as iGrafx’s ABC FlowCharter are available for constructing flowcharts. You can also use the drawing program in word processing programs such as Microsoft Word.

Page A2FIGURE A.1 Flowchart: website, print, or television?

Example of a flowchart for improving a company’s advertising

Benefits Flowcharts have two benefits:

   Planning straightforward activities. A flowchart can be quite helpful for planning ordinary activities—figuring out the best way to buy textbooks or a car, for example. It is also a straightforward way of indicating the sequence of events in, say, thinking out a new enterprise that you would then turn into a business plan.

Page A3   Depicting alternate scenarios. A flowchart is also useful for laying out “what-if” scenarios—as in if you answer “yes” to a decision question you should follow Plan A, if you answer “no” you should follow Plan B.

Limitations Flowcharts have two limitations:

   No time indication. They don’t show the amounts of time required to accomplish the various activities in a project. In building a house, the foundation might take only a couple of days, but the rough carpentry might take weeks. These time differences can’t be represented graphically on a flowchart (although you could make a notation).

   Not good for complex projects. They aren’t useful for showing projects consisting of several activities that must all be worked on at the same time. An example would be getting ready for football season’s opening game, by which time the players have to be trained, the field readied, the programs printed, the band rehearsed, the ticket sellers recruited, and so on. These separate activities might each be represented on their own flowcharts, of course. But to try to express them all together all at once would produce a flowchart that would be unwieldy, even unworkable.

Tool #2: Gantt Charts—Visual Time Schedules for Work Tasks

We have mentioned how important deadlines are to making a project happen. Unlike a flowchart, a Gantt chart can graphically indicate deadlines.

The Gantt chart was developed by Henry L. Gantt, a member of the school of scientific management (discussed in Chapter 2). A Gantt chart is a kind of time schedule—a specialized bar chart that shows the relationship between the kind of work tasks planned and their scheduled completion dates. (See Figure A.2, below.)

A number of software packages can help you create and modify Gantt charts on your computer. Examples are CA-SuperProject, Microsoft Project, Primavera SureTrak Project Manager, and TurboProject Professional.

FIGURE A.2 Gantt chart for designing a website

This shows the tasks accomplished and the time planned for remaining tasks to build a company website.

Page A4Benefits There are three benefits to using a Gantt chart:

   Express time lines visually. Unlike flowcharts, Gantt charts allow you to indicate visually the time to be spent on each activity.

   Compare proposed and actual progress. A Gantt chart may be used to compare planned time to complete a task with actual time taken to complete it, so that you can see how far ahead or behind schedule you are for the entire project. This enables you to make adjustments so as to hold to the final target dates.

   Simplicity. There is nothing difficult about creating a Gantt chart. You express the time across the top and the tasks down along the left side. As Figure A.2 shows, you can make use of this device while still in college to help schedule and monitor the work you need to do to meet course requirements and deadlines (for papers, projects, tests).

Limitations Gantt charts have two limitations:

   Not useful for large, complex projects. Although a Gantt chart can express the interrelations among the activities of relatively small projects, it becomes cumbersome and unwieldy when used for large, complex projects. More sophisticated management planning tools may be needed, such as PERT networks.

   Time assumptions are subjective. The time assumptions expressed may be purely subjective; there is no range between “optimistic” and “pessimistic” of the time needed to accomplish a given task.

Tool #3: Break-Even Analysis—How Many Items Must You Sell to Turn a Profit?

Break-even analysis is a way of identifying how much revenue is needed to cover the total costs of developing and selling a product. Let’s walk through the computation of a break-even analysis, referring to the illustration. (See Figure A.3.) We assume you are an apparel manufacturer making shirts or blouses. Start in the lower-right corner of the diagram on the previous page and follow the circled numbers as you read the descriptions below.

FIGURE A.3 Break-even analysis

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Benefits Break-even analysis has two benefits:

   For doing future “what-if” alternate scenarios of costs, prices, and sales. This tool allows you to vary the different possible costs, prices, and sales quantities to do rough “what-if” scenarios to determine possible pricing and sales goals. Since the numbers are interrelated, if you change one, the others will change also.

   For analyzing the profitability of past projects. While break-even analysis is usually used as a tool for future projects, it can also be used retroactively to find out whether the goal of profitability was really achieved, since costs may well have changed during the course of the project. In addition, you can use it to determine the impact of cutting costs once profits flow.

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 EXAMPLE

Break-Even Analysis: Why Do Airfares Vary So Much?

Why do some airlines charge four times more than others for a flight of the same distance?

There are several reasons, but break-even analysis enters into it.

United Airlines’ average cost for flying a passenger 1 mile in a recent year was 11.7 cents, whereas Southwest’s was 7.7 cents. Those are the break-even costs. What they charged beyond that was their profit.

Why the difference? One reason, according to a study by the U.S. Department of Transportation, is that Southwest’s expenses are lower. United flies more long routes than short ones, so its costs are stretched out over more miles, making its costs for flying shorter routes higher than Southwest’s.

Another factor affecting airfares is the type of passengers flying a particular route—whether they are high-fare-paying business travelers or more price-conscious leisure travelers. Business travelers often don’t mind paying a lot (they are reimbursed by their companies), and those routes (such as Chicago to Cincinnati) tend to have more first-class seats, which drives up the average price. Flights to vacation spots (such as Las Vegas) usually have more low-price seats because people aren’t willing to pay a lot for pleasure travel. Also, nonstop flight fares often cost more than flights with connections.

Limitations Break-even analysis is not a cure-all.

   It oversimplifies. In the real world, things don’t happen as neatly as this model implies. For instance, fixed and variable costs are not always so readily distinguishable. Or fixed costs may change as the number of sales units goes up. And not all customers may pay the same price (some may get discounts).

   The assumptions may be faulty. On paper, the formula may work perfectly for identifying a product’s profitability. But what if customers find the prices too high? Or what if sales figures are outrageously optimistic? In the marketplace, your price and sales forecasts may really be only good guesses.