[MUSIC] As you know, there are five phases to managing a project and thus far we've gone into detail on initiation. This is because many many people skip focusing in on the project goal to ensure they can meet quality cost and time parameters. Many also skip the second stage planning and they jump right into execution. Their boss gives them a project or they come up with an idea and boom they're off. Latur, they can't figure out how to monitor, control the project which ends up out of spec late or over budget over the next few videos. We will learn about project, deadline planning, budgeting basics, the various tools available for planning and risk assessment. It is in this phase, the planning phase when the project manager and team map out how they will get the project done when they will do each aspect of it, what it will cost and what could go wrong in meeting the deadline, the budget and the deliverable. To plan a project 1st get everyone whose work might influence its implementation to list their tasks. The duration of those tasks, the costs that may be associated with those tasks, any dependencies they have on others to complete the tasks and any risks to the task. For very complex projects. You might ask each department or team member to input their milestones. Instead, they've completed a task list for themselves. But you as the project manager may not need to see that level of granularity. A milestone summarizes the completion of an important set of tasks or the completion of an important event in a project. Such as a sub project for a pilot test, you might have been given a deadline by top management or by a client where you might determine the deadline based on how long each task takes, factoring in tasks that can be completed concurrently and those that must be sequential. If you're handed a deadline, you're going to work backwards from that date to determine when each task must be complete either way, you will need everyone involved to give you their durations, pay attention to how people were things. When someone says I can get that to you in two weeks, does that mean from whatever date you give them the go ahead to begin? It will take two weeks to get the job done or does it mean given their schedule right now? They could get it to you in two weeks but in two months when you actually need them to work on your project, they have other commitments. So how much time do they need along with the task take given normal operations and what might influence their timelines? Don't forget things like vacations, holidays, obtaining approvals and inefficiencies inherent in task hand offs. If you have no authority over those from whom you need work, you might need to negotiate with their supervisors. Now you have an idea of how long the project should take. Can you get it done by the deadline? We will discuss what to do in the video, executing and monitoring controlling the project. If not, a project budget represents the total projected costs needed to complete it. Some companies use top down budgeting, others use bottom up budgeting. Top down means the company tells the project manager here is how much money you have. The manager then creates a task or milestone budget that allocates the amount provided across tasks or milestones. Bottom up budgeting means that the total project budget will be the sum of the estimates given by each task or milestone manager. And usually this amount requires approval by top managers and the project manager may need to negotiate it regardless. All budgets are estimates even when they come from the top. All projects are unique and so it can be challenging to know precisely how much will be needed yet. Once approved, the company will expect actual costs to match budget. Therefore, I recommend that even if you are given a budget, you do your own estimates as well to see where you're likely to get constrained. Possibly this will enable you to negotiate for more or to mitigate those constraints in some other way and you'll need the task or milestone expected expenses to monitor and control the project anyway. This is called activity based budgeting and in theory it should be the most accurate method. Everyone involved in the project provides estimates but their portion of the work. Usually there are some tasks in your project that have been done before or there's a very similar projects that might have been implemented previously and that enables the use of historical costs in the budgeting estimates. This is called incremental budgeting check for underlying cost drivers to ensure they have not changed. For example, the company may have changed vendors resulting in cost changes, find experts or those with related experience to advise on costs for never done before tasks. When obtaining budgets from others, make sure they include labor and for multi year projects at an estimate for raises that might be above inflation. If you suspect some promotions and major salary jumps maybe in the future include them. Labor is highly related to the deadline delayed projects cost more because people are paid for longer than expected time. Consider whether the project will need temporary help or outside contractors. Be very clear with any outside vendors about the scope of their work in highly innovative environments. This can be extremely difficult. You may not know what you need until you see what a contractor can produce. You might want to ask them to estimate maximum expenses as well as expected expenses. Overhead is a tricky one. It refers to ongoing business expenses not directly attributed to the project. Every company has its own method for calculating overhead costs, but rest assured. Once they have calculated them, they will charge your project. I have seen project ideas never get off the ground because the team that defined the project goals and initially calculated the budget. Never imagined any other expenses beyond those directly related to completing the tasks and their projects. Once overhead costs were included, the return on the project investment was too low to implement. Include any expenses for purchasing or renting material supplies, equipment, space, etc. For multi year projects include expected inflation and for international projects. Research expectations for currency exchange rates. Have you ever heard of the fudge factor now? Not this kind of fudge. The fudge factor is what we call the quote. Just in case money added after estimating expected needs, we might say, just in case we hit a snag, let's add 10% to the budget. As the manager. You want some fudge. All projects hit snags, you don't want to go over budget. However, if everyone on the project team added 10% to their budget and you did not know it, you would roll all those budgets up and add your own fudge factor. The total resulting in a much higher budget than needed and your project might not get approved because it looks too expensive and it sends a message to those above you that you did not consider the value of each expenditure. Remember that the value of anything. Time energy expense is relative to the strategy form the types of relationships with your peers and colleagues in other areas, so that when they give you cost estimates, you can ask candidly whether they included a fudge factor. You will not be able to estimate a budget for a project requiring extensive innovation that aligns perfectly with real expenses. Innovation, by its nature is filled with trial and error failures, restarts and redefined project goals, deadlines and dollars will be hard to predict. Do the best you can to ensure you can get access to funds should you need them by having a champion at a high level of the organization.