Conflict due to lack of something.
There are no necessary resources for the transaction to proceed: time, human resources, financial, information resources. Or there are difficult obstacles to overcome to carry out the transaction at the moment, for example, they cannot find agreement in the client’s family. Or another situation when, perhaps, one party does not have the necessary rights to fulfill its duties (for example, a general power of attorney has not been issued) or the criteria by which the choice is made are not clear, etc.
Characteristic.
Usually the essence of such a conflict is that the problem at this moment has no solution, and disagreements arise between interested parties. They personally offer their (often proposed) solutions. It is around these options that the conflict flares up.
The responsibility for developing a solution in this situation falls on the agent.
Action algorithm
You can relieve tension by:
a) a clear definition of what the problem itself is
b) its translation into a regular problem that has one solution option.
c) development of solution stages
d) determining the duties of the parties and their responsibilities, allocating the necessary funds and resources.
Positional conflict
Characteristic
Opponents insist only on their decision, without recognizing compromises or concessions.
Action algorithm
a) it is necessary to find out the positions of both sides, that is, what they insist on
b) identify their intentions, goals, interests.
c) information about mutual concerns is needed.
d) find out what is common in the interests of the parties.
Mutual concessions
The solution to the problem through mutual concessions is as follows: each side agrees to concede something that is not very important for it, but is very important for the other side. Thus, each party satisfies that part of its demands that seems most important to it. They give what is not a pity, but is needed by the opponent, and they ask for what is necessary for themselves, but is useless for him.
If the positions are incompatible
a) look for a third option (position) that would suit both parties and satisfy their interests
b) one party should make a compromise, a concession, but at the same time it receives some additional benefits (compensation).
Compensation
To develop compensation you need to know:
a) what is of particular interest to opponents in this situation
b) how difficult it is for the opposing side to make the required concessions
c) what can act as a resource for compensation: specific material assets - money, things, real estate or intangible assets
Resource conflict
Characteristic
It arises in a situation where the principle of dividing the available resources of one of the parties seems unfair. Or when resources are limited and it is not clear how and where to find their additional source. At the same time, each side feels that it has been deprived.
Action algorithm
Resources can be goods and means, the availability of which determines either the outcome of the transaction or the well-being of the parties. This could be money, real estate, land, things, information, time, etc.
Equitable distribution of resources
a) distribution of resources based on fair criteria. The parties choose an objective criterion based on which the resource can be divided. Often such a criterion is the rule of law, court decisions, traditions, professional and ethical standards, moral standards, precedents, etc.
b) distribution of resources based on a fair choice procedure. Such a fair procedure can be considered: selection by lot, selection in turn, selection according to the principle “one divides, the other chooses,” selection made by a third independent party.
Increase in disputed resource
All parties make a joint decision to participate in the action to increase the resource.
Requirements conflict
Characteristic
Clashes arise due to claims, often mutual. Typically, the parties cannot resolve the conflict on their own.
Action algorithm
Such conflicts are usually not resolved without an “arbiter.” This judge is another agent, an agency lawyer, or any third party who is not interested. In the end, the ethics commission.
In the process of implementing project tasks, situations often arise when the interests of workers do not coincide. This can lead to conflicts, which is primarily a consequence of the inconsistency between the structure of the project and the division of labor, as well as the disunity of people with different value ideas. Therefore, the ability to manage conflicts becomes important.
The classic point of view on conflict in industry (Table 12.3.) was that it should not arise. But it is recognized that a certain degree of conflict is required in relationships.
Table 12.3. Concept of conflict
| Traditional look | Modern look |
| Caused by troublemakers | It is impossible to avoid in relationships between people |
| The occurrence of conflict is negative | Often profitable |
| Must be avoided | Natural result of change |
| Must be repaid | It is possible and necessary to manage it |
Conflict can be positive if it:
Ø is the basis for starting a discussion on a particular issue;
Ø resolving this or that issue;
Ø improves relationships between people;
Ø provides an opportunity to relieve tension;
Ø enables employees to fully realize their potential.
A conflict can be negative if it:
Ø distracts people from solving important issues;
Ø causes a feeling of dissatisfaction in the team;
Ø leads to personal or group isolation, and also counteracts mutual understanding.
Conflict situations with positive results must be supported in the organization.
Conflicts are usually divided into psychological and social.
Psychological conflict is associated with the psychological problems of one individual (the presence of competing desires, the desire to avoid negative results, etc.).
Social conflict is a conflict that arises between individuals, their groups, as well as systems and subsystems. The structure of the conflict is presented in Fig. 12.2.
Rice. 12.2. Classification of conflicts
The identification of the main sources of conflict is discussed in Table 12.4.
Table 12.4. Sources of conflict during the project implementation period
| № p/p | Sources of conflict | Determining the content of the conflict |
| Conflict over project priorities | The position of project participants on the consequences of work and tasks differs significantly. |
|
| Conflict over administrative procedures | Managerial and administrative conflicts about how to manage the project. |
|
| Conflict over difference views on technical issues, unwillingness to “compromise” | Disagreement on technical issues and compromises. |
|
| Conflict through human resources | Conflict regarding the recruitment of personnel to the project team from other departments. |
|
| Conflict over cost | Conflict regarding the formation of estimates. |
|
| Conflict over the Kalen-shock plan | Inconsistency in terms, sequence, and scheduling of project tasks. |
|
| Flared interpersonal | It arises through different character traits, different levels of knowledge, qualification parameters, level of intelligence, etc. |
The manager's task comes down to the ability to manage conflicts, since they can be constructive(joint search for a solution to the conflict with benefits for both parties) and destructive(when each participant in the conflict remains unconvinced) form. Constructive conflicts are associated with disagreements and struggle over fundamental problems of the scientific, technical and social policy of the organization. They help prevent stagnation and serve as a source of ideas that accompany the formation of new scientific directions. Therefore, such conflicts should not be avoided, but used fruitfully by satisfying the objective demands of the conflicting parties. To do this, the manager must be able to distinguish the immediate cause of the conflict from its cause, which can be covered by the conflicting parties. It is important to establish how the subject of disagreement concerns production problems, and to what extent - the characteristics of the business and personal relationships of the parties to the conflict. It is also necessary to find out the motives for the conflict between workers and the direction of the actions of the parties to the conflict.
To this end, you should listen to all participants in the conflict, do not rush to conclusions and generalizations, and avoid showing personal sympathy. The main thing is to achieve mutual understanding between the parties to the conflict, which determines the following possible cases of conflict resolution:
Ø mutual reconciliation on an objective basis;
Ø a compromise based on partial satisfaction of the desires of both parties.
In any case, the basis for reconciliation should be the objects of satisfying the demands of both parties, exposing the inconsistency of false claims, and carrying out preventive and educational work.
Destructive conflicts can arise against the background of a sharp divergence of views and interests of people as a result of an incorrect understanding of the surrounding production reality. Such conflicts are characterized by the firmness of the participants’ positions and illicit methods of satisfying their demands. In such conflicts, in addition to the resolution methods discussed above, it is worth showing firmness, up to the use of organizational measures - disbanding the group or dismissing the initiators of the conflict.
The following factors are possible that would help prevent destructive conflicts:
Ø having clear goals;
Ø the ability to avoid unnecessary disputes;
Ø the ability to listen to others;
Ø the ability to avoid categorical statements;
Ø involvement of all stakeholders;
Ø approaching the interests of the parties, motivation;
Ø avoiding personal assessments;
Ø ability to reach compromise and make decisions unanimously.
There are a large number of conflict management methods. Collectively, they can be presented in the form of several groups:
Ø intrapersonal method (method of influencing an individual);
Ø structural methods (elimination of organizational conflicts);
Ø interpersonal methods or styles of behavior in conflict;
Ø negotiations;
Ø reverse aggressive actions.
The following five styles of behavior in conflict situations are well known:
1.Evasion;
2. Devices;
3.Compromise;
4.Forcing;
5. Solving the problem (see Table 12.5.).
Table 12.5. Five Conflict Management Models
| Model | Result |
| Evasion | Temporary result, does not solve the problem |
| Adaptations |
|
| Compromise | Provides conflict resolution |
| Forcing |
|
| Solution |
Evasion method. It is based on the fact that a person tries to get away from conflict, to avoid a situation that provokes contradictions and to avoid discussing an issue, which leads to conflict.
Adaptation method. This style is characterized by a natural reluctance to avoid conflict, that is, it is necessary to stimulate a sense of community in the team.
Compromise method. It is characterized by accepting the other side's point of view, but to a certain extent. The project manager can use it effectively in formal contract negotiations and in informal negotiations with project participants.
Forcing method . Compulsion to accept one point of view. This style is effective when the leader has great power over subordinates.
Problem solving method. This is the recognition of differences of opinion and the willingness to get acquainted with other points of view in order to better understand the cause of the conflict and find a solution acceptable to everyone. Problem solving is a synthesis of all conflict management methods and is used when there is enough time and there is trust between the conflicting parties.
Conflict resolution is the elimination, in whole or in part, of the causes that provoke a conflict situation. Successful conflict resolution involves:
1. Providing subordinates with specific documents about their responsibilities, setting a task, formulating a goal and clarifying the line of staff behavior to achieve it;
2. Carefully identifying the reasons for people’s behavior;
3. Refusal of moral instructions and threats;
4.Applying punishment if the employee deserves it;
5.Searching for a way out of stuck situations, rather than sorting things out;
6. Do not allow others to unbalance you;
7. Avoid fighting and digestion among subordinates;
8. Constantly work on the correct presentation of thoughts;
9.Learn to listen carefully.
Once the work breakdown structure is constructed, each lower-level element must be assigned the appropriate resources. Assignment involves determining exactly what resources are needed to complete a given job and agreeing that they will be provided when the job begins. At the concept stage, resources are provisionally assigned without a specific guarantee of their provision, but with an understanding of their parameters and location. It is very important to realize that resources actually exist and can be provided under certain conditions. When preparing the baseline, resources should already be guaranteed. One of the options for such confirmation of the appointment of personnel is the signature of the functional manager and the direct executor. A signature signifies a person's commitment to do the work, but it is not a 100% guarantee. It is also important to agree on what obligations the employee undertakes when signing a work assignment in the project.
When parallel jobs running at the same time require the same resource and it cannot be allocated, resource conflict occurs. Let's assume that on the schedule for the construction of a house there are two parallel works - the delivery of materials and the leveling of the territory. In Fig. Figure 4.8 shows a fragment of the schedule created in the “MS Project 2003” file. To carry out this work, a truck with a driver and two workers (1 and 2) are involved. Resources are available for 8 hours every day. When formally assigning worker 1 to both parallel jobs, a problem arises, since he must work at 200%, as shown in Fig. 4.8. Thus, his working day should be 16 hours. There is a conflict in the assignment of this resource - worker 1. The project manager is faced with possible alternatives for resolving this conflict.
Option one: increase the availability calendar of worker 1 for the duration of these works, agreeing with him on a certain additional payment (but not overtime). In this case, payment may be based on his base rate plus bonus. For calculations, let's take a base rate of 50 rubles. for 8 hours. In this case, additional costs will be 50 rubles. x 3 days = 150 rub. Adding a bonus at the rate of 20% of the base rate, we get 180 rubles. - the cost of resolving this conflict.
Option two: do not change the resource use calendar for the duration of these works, having agreed with worker 1 on overtime work and corresponding additional overtime pay. In this case, pay may be based on his base rate plus overtime. For calculations, let's take a base rate of 50 rubles. for 8 hours. Overtime - 90 rub. for the same time. In this case, additional costs will be 90 rubles. x 3 days = 270 rub. Overtime is the cost of resolving a given conflict.
Option three: resolve the conflict by increasing the non-critical work “Delivering materials” by three days. Technologically, this can be organized as follows (Fig. 4.9). The truck spends the already scheduled five days delivering materials, for example, unloading them without sorting them and covering them from possible rain. During the first three days, worker 1 works on “leveling the territory” together with worker 2, and after three days he goes to work “delivery of materials,” where, after unloading, he sorts and stacks the material. Initially it was assumed that unloading and storage would be carried out simultaneously. At the same time, the costs of using a worker do not change. Work on the delivery of materials is carried out in the same mode. There may be additional costs involved (e.g., securing materials, using closure material, etc.), but most likely it will be more profitable.
If resource leveling occurs at the expense of a critical task, the duration of the entire project may increase. This may not suit the customer, or lead to large fines, or increase invoices. Then it may be cheaper to pay a bonus or overtime to the worker.
Rice. 4.8. Resource conflict illustration
Project estimate
The cost structure of a project in its most general form consists of five main parts:
Direct and overhead costs for each work from the WBS (I would like to remind you of the importance of taking into account all the work of the project, otherwise the “forgotten” work will have to be financed from your own pocket or not done at all);
Overhead costs for the entire project (in some cases, these are office expenses, contributions to the administration of the parent company, supporting services - security, transport, marketing costs for the entire project, representative and consulting expenses allocated for the project, planned taxes and deductions, etc.);
Costs for the staff incentive reserve (that small part of additional funding that is managed by the manager and team members during the project and is not included in the wage fund);
Reserve for managing “known risks” (expenses for possible fines, contract insurance, premiums for contractors for fixed contract prices, expenses for preventive measures - security, training, formation of alternative sources of raw materials, etc.; this will be discussed in more detail in Chapter 8 );
Reserve for managing “unknown risks” (usually from 1% to 10% of the project budget).
Rice. 4.9. Resolving resource conflict
In the case of an external customer, these costs, taking into account the profit for the project, constitute its price.
After calculating the estimate, its components are analyzed in relation to the calendar schedule, for example, costs for the first, second and subsequent weeks or months. The cumulative curve created is called the project budget, or S-curve, or cost baseline. It is obvious that the S-curve of costs should theoretically not exceed the S-curve of cash receipts to finance the project. In practice, possible deviations are compensated by credit mechanisms, company reserves or project portfolio.
Approaches to budgeting. Cost plan
The more ridiculous the deadlines, the more it costs to try.
fulfill them.
G. Kerzner
There are many reasons to carefully plan project costs. To begin with, if you overestimate costs, you may lose your job before you even begin the project because you will not be competitive in your proposal. Otherwise, the cost of the project may exceed the allocated budget, and the project will not be launched at all. Some inaccuracies in the estimate are inevitable, but they should not be the result of insufficient planning. The estimate should be as realistic as possible. As a rule, at the project initiation phase, the estimate has an error of 30% to 50%, the concept phase allows it to be refined to 10-20%, the preparation of a basic plan has an error of 5-10%, and detailed work planning - 3-5%.
The initial data for cost items are: project cost schedule, project schedule, resource tree with their characteristics, information on the cost of overhead costs, motivation principles used, policies and reserves for risk management.
In order to develop an estimate, you need to assess the impact of inflation, regulations and prices used in different industries and types of business. In many areas, cost estimation methods are well codified. On the walls of purchasing departments there is information posted about what materials, services, and equipment are available for sale, where and at what prices. Also - reference books of material and labor standards for performing specific work. The most important cost item is usually labor resources. It would be appropriate to mention a typical situation that often occurs when internal projects are “reviewed.” By default, it is assumed that company personnel participating in the project already receive salaries and bonuses, so the costs of using them in the project are minimal or equal to zero.
With these approaches, the estimate takes into account only external costs, such as consultants and equipment.
From practice
The estimate for a large implementation project at a mining enterprise included the cost of purchasing expensive software, consultants, necessary travel and training. The participation in the project of several dozen highly paid employees of the enterprise was not assessed for almost three years, since they all received salaries and bonuses related to the main mining business of the enterprise. An inaccurate indirect assessment of their cost of participation, carried out by the author, showed approximately the same order of costs as the included budget items. That is, with real accounting, the project estimate would be at least twice as high. It is possible that this indicator could influence the decision to implement or modify the technology of this implementation.
The company's management, thanks to its position, can have an important positive influence on the process of understanding the use of resources in the project. It can help ensure that resource planning has been done wisely before the project begins, and encourage the development of additional scenarios to allow for catch-up, taking into account what is possible and what is not. Some foreign reports estimate that projects completed on time but over budget are 140% more profitable than if they were on budget but 6 months late.
There are the following approaches to planning the costs of the entire project.
Passive- based on calculation of the project cost based on similar projects; according to the scope of work and standards; based on estimated resource requirements and regulatory framework. With this approach, it is believed that projects and work are of the same type, the efficiency of resources does not change, and technologies do not improve. This option is used when budgeting standard projects or in conditions of strict industry regulation.
From practice
It’s funny that the construction industry uses collections of all-Russian estimated norms and standards in prices of 1984 (SNiR-84), 1991 (SNiR-91) or 2001 (GESN-2001), although 2007 has already arrived. One can only guess how different these norms are from real life and modern technologies.
Active - is based on minimizing the cost of the project by varying variables (different financial schemes, intensity of work, deadlines, methods of implementation, etc.). An important place here is occupied by: methods of functional-cost analysis of the costs and profits of a project, methods of determining the economic efficiency of a project taking into account operating costs. Planning is always carried out anew; it is believed that resources do not have stable characteristics and can be optimized. This option is used when budgeting business projects when costs should be minimal.
Bottom-up budgeting. This option begins with an assessment by the performers themselves of the resources necessary to complete the work. In this case, a work breakdown structure is used, information about their completion time and costs is collected. The assessment is made using such resources as cost per unit of time and cost per unit of material. Once the components are identified, a cost table is created for the entire project. When converting estimated indicators into monetary units using organizational norms and standards, it is necessary to take into account the overhead costs of this work (Table 4.5).
Table 4.5. Bottom-up budgeting logic
This type of budgeting is usually more accurate. Performers have more accurate information about the required resources than senior management. Here, the so-called direct involvement of lower-level managers in the preparation of estimates is carried out, which increases the likelihood that they will accept the resulting estimate without problems and negative evaluation. Involvement is also a good way to learn, giving lower managers the opportunity to gain experience in budgeting where it is important to take all elements into account when estimating individual jobs.
Sometimes a situation arises when performers overestimate the required resources, because they believe that senior management will still reduce the final estimate by some percentage. This behavior of senior managers may be due to the fact that they consider the bottom-up budgeting method risky, since they do not trust their subordinates too much. The estimate is the most important tool for controlling project participants. Top management is reluctant to hand over this control to subordinates whose background and motivations are unclear.
Top-down budgeting. With this approach, budgeting begins with an assessment by top management of the resources required to implement the project, funding restrictions and its final cost (Table 4.6).
Table 4.6. Top-down budgeting logic
This strategy is based on collecting opinions and expert assessments of senior and middle managers. These assessments from above are passed down to lower-level managers and further for adjustment and discussion. The estimate is broken down into smaller and smaller details. It is a priori assumed that lower-level managers will request more funds than senior management intends to allocate, and this method seems to take this into account. However, this assumption is very often incorrect, and preliminary estimates remain unchanged. When senior managers insist on past experiences, lower managers feel they must accept those suggestions even if they disagree. Experience shows that often lower-level managers view the entire budgeting process as a zero-sum game in which one person gets more at the expense of another. Therefore, there is often very intense competition between lower-level managers.
The main difficulties of this approach include the inability in some cases to use past experience. And also the fact that during a long-term project, resources change, new materials and personnel appear (with different rates of training), inflation has an impact, individual cost items change, other losses arise, etc. The advantage of this approach is fairly accurate budgeting, because it takes into account past experience. Another advantage is the low cost and speed of such assessments.
Main budget problems
In general, the following main budgeting problems can be cited:
Failure to take into account the impact of inflation on the budget in the case of long-term projects;
Changes in exchange rates when international projects are implemented or imported components are purchased;
Deliberate failure to take into account all project costs (an attempt to “forget” the costs on the company’s budget, and thereby make the project budget more attractive);
Inability to obtain commitments to firm prices from suppliers and contractors;
Budget inaccuracy caused by poorly prepared work breakdown structure;
“fictitious additional cost factors” inherent in estimates performed by different internal support groups;
Estimates based on different units of measurement in the calculation, such as adding hours of employment to dollars.
4.10. Project Baseline
In general, the project baseline includes management plans for all nine project areas described in Section 1. 1.6. Let us give its typical composition.
I. Brief summary of the project and its status.(This is mainly intended for management who would not like to study the entire project. This same
part is often stored in the project management service as a project file for that phase.)
II. Main part.
1. Introduction. History of the project idea. Development of the situation up to the present moment.
The hierarchical resource structure (resource pool) is a global structure. The same resource can be assigned to several activities of the same project, as well as to activities of different projects. A resource can work on a project calendar or on its own resource calendar. In this regard, it is necessary to constantly monitor the loading of resources and eliminate conflict situations that may arise when using them. Particular attention should be paid to those resources that are assigned to parallel work on one or more projects. In this case, the amount of resource used within one calendar day may exceed the maximum permissible intensity of use of this resource.
Analysis of resource loading is performed in the Works section. You need to execute the menu command View - Show below - Resource Usage Profile. Project information will be displayed in four areas of the section: work table, resource table, line graph and resource graph (Fig. 6.2-44).
Rice. 6.2-44. Resource usage profile.
To display in the resource table only those resources that are assigned to the work of the current project, click the .£ button on the options panel and select the Filter - Current Project Resources command from the menu (Fig. 6.2-45.)
Rice. 6.2-45. Resource table in resource usage profile.
To display the loading of only the resources of the current project on the resource graph, click the 3 button on the options panel and uncheck the All projects checkbox (Fig. 6.2-46).
Rice. 6.2-46. Resource graph in resource usage profile.
If you select the Resource checkbox in the resource table, then the work table will display only those jobs to which the allocated resource is assigned (Fig. 6.2-48). The resource load graph will also display data only for the allocated resource.
Assigning Resources consists of determining the needs of each job for different types of resources.
Resource assignment and leveling techniques allow the manager to analyze the network plan built using the critical path method in order to ensure the availability and use of certain resources throughout the duration of the project.
Resource Leveling TechniquesAs a rule, they are software-implemented heuristic planning algorithms with limited resources. These tools help the manager create a realistic project schedule, taking into account the project's resource requirements and the resources actually available at a given time.
Resource histogram- a histogram displaying the project's needs for one or another type of resource at each point in time.
Resource scheduling- planning the start of work with limited available resources. Checking the resource feasibility of the schedule requires a comparison of the availability functions and the resource requirements of the project as a whole. By shifting non-critical work until its later start (finish) date, you can modify the resource profile, ensuring optimal use of resources.
Information obtained as a result of resource analysis of the project helps to focus the attention of the manager and team members on those aspects of the work where effective resource management will be a key success factor.
Project feasibility analysis- the concept of realizability has a number of its varieties: logical realizability (taking into account logical restrictions on the possible order of execution of work in time); time analysis (calculation and analysis of time characteristics of work: early/late start/end date of work, full, free time reserve and others); physical (resource) feasibility (taking into account the limited availability of available or available resources at each moment in time of the project); financial feasibility (ensuring a positive balance of funds as a special type of resource). Original plan- a project work plan containing initial information about the main time and cost parameters of the work, which is accepted for execution. The initial plan usually records the scope of work, the planned start and end dates of project tasks, the duration of tasks, and the estimated costs of tasks.
Resource histograms and resource smoothing. When assigning base or current target dates, resource constraints must be taken into account. If the resource requirements for all project activities are known and start and end dates have been established, then a demand change function in for each project resource can be calculated, which represents a table of resource levels or a resource histogram.
A histogram of resource demands can be compared to the available quantity of each type of resource, and if the demand for a certain quantity of a resource exceeds the available quantity of that resource, then the time in the schedule may have to be adjusted to reduce this demand. This can be done by using slack time for activities that are not on the critical path, or the project duration can be increased.
After determining the resources required to complete each job and their initial purpose, it is necessary to get rid of resource conflicts, that is, from assigning more work to resources than possible.
There are three main types of dependence of the need for resources on the progress of work (duration):
1. Constant - throughout the entire work, the load (work front) of the resource does not change.
2. Stepped - during operation, resource loading changes abruptly (in steps).
When assigning a resource to several jobs, it is necessary to take into account its load on each job to avoid conflicts.
Planning tasks There are usually two types of productions:
1. Taking into account the needs for certain types of resources and smoothing them out.
2. Resource distribution.
The task of accounting for demand comes down to constructing histograms of the total demand for resources for a given schedule option. Such histograms show the distribution of resource requirements for a given schedule option. Such histograms show the distribution of resource requirements over time, allow one to compare this need with the possibilities of timely provision of resources for the corresponding project, and serve to assess the quality and feasibility of the schedule option.
Resource allocation problems occur in extremely diverse settings. Depending on the adopted optimality criterion and the nature of the restrictions, the following groups can be distinguished:
· tasks of minimizing deviations from given deadlines or minimizing the timing of target events while observing resource restrictions;
· the problem of optimizing a certain indicator of the quality of resource use for a given time frame for completing a set of works.
Project feasibility analysis. The schedule obtained as a result of calculating the network model is checked, clarified, detailed if necessary, and when there is complete confidence that all work is included in the plan, there is complete information about the available and required resources, we move on to feasibility analysis.
There are four types of feasibility assessments: integral, reliability assessment, resource, economic and financial. If the plan passes through these “sieves,” then the project to which it corresponds is provided with all the required resources and its implementation according to this plan is more economical than according to any other.
Resource Feasibility Analysis carried out in two stages. At the first stage, the availability of resources for all work is analyzed. At the second stage, the resource use diagram is smoothed. A leveled labor utilization pattern results in lower cost and more efficient operation.
If not all resources can be obtained from internal sources, then some resources must be purchased, rented or hired. It may be necessary to contract with subcontractors for some work. Data on the minimum quantities of required resources established by the resource allocation procedure can be used at subsequent stages in verifying the adequacy of the contractor's resources to complete the project.
Economic and financial feasibility. Economic and financial feasibility are interconnected, so that at the planning stage they can be considered together, since there are sufficiently accurate estimates of the work under consideration, which is a necessary condition for performing a feasibility analysis.
So now the cost estimate is known for each operation; To analyze economic feasibility, it is essential to have a set of costs depending on the duration of each operation. Costs may also depend on how the project is implemented. Alternative methods can be considered, evaluated, and the information obtained used to conduct a feasibility study.
Economic feasibility is necessary to determine the project duration that corresponds to the minimum cost. It is possible that the feasibility study will be conducted under certain resource constraints. Quite often the level of resources used or the duration are limited from above. Although the procedures for testing resource, economic and financial feasibility are similar, different restrictions determine the area in which studies of various project durations and costs are conducted differently.
If the project will use only your own labor resources, you can schedule their use to determine whether the project can be completed in this way. Similarly, a cost schedule can be created to ensure that planned purchases can be made and that materials will be delivered on time.
Once a completion duration corresponding to the minimum cost has been selected, a final check of financial feasibility should be carried out. The project manager conducts cash flow analysis to define a project with a specified total cost and a selected project duration. The output of cash flow analysis is planning by reporting periods (quarterly, monthly, semi-annual) of all financial transactions and their final effect.
Optimization. It should be noted that the optimization process does not lead to further progress compared to the sequence of the described procedures for analyzing the feasibility of a project. Let us remind you that iterations are a necessary part of any creative process, and project planning is no exception.