Project Management

1
Project Management

• Chapter 3

2
Project Planning and Control

• Definition of Project Management
• Work Breakdown Structure
• Project Control
• Organizational Structures
• Critical Path Scheduling
• CPM with a Single Time
• CPM with Three Activity Time Estimates

3
Project Management

• Project
• series of related jobs usually directed toward
  some major output and requiring a significant
  period of time to perform.
• Project Management
• planning, directing, and controlling resources
  (people, equipment, material) to meet the
  technical, cost, and time constraints of the
  project.
• Project or Program?

4
Work Breakdown Structure
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5
Work Breakdown Structure

• Allow the elements to be worked on independently
• Make them manageable in size
• Give authority to carry out the program
• Monitor and measure the program
• Provide the required resources

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Project Control Gantt Chart
A Gantt Chart is a widely used scheduling chart,
with horizontal rows representing jobs,
operations, or resources, and vertical rows
representing time periods.
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Organizational StructurePure Project--Advantages

• The project manager has full authority over the
  project
• Team members report to one boss
• Shortened communication lines
• Team pride, motivation, and commitment are high

8
Organizational StructurePure Project--Disadvantag
es

• Duplication of resources
• Organizational goals and policies are ignored
• Lack of technology transfer
• Team members have no functional area "home"

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Functional Project
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Organizational StructureFunctional
Project--Advantages

• A team member can work on several projects
• Technical expertise is maintained within the
  functional area
• The functional area is a home after the project
  is completed
• Critical mass of specialized knowledge

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Organizational StructureFunctional
Project--Disadvantages

• Aspects of the project that are not directly
  related to the functional area get short-changed
• Motivation of team members is often weak
• Needs of the client are secondary and are
  responded to slowly

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Matrix Project
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Organizational StructureMatrix--Advantages

• Enhanced inter-functional communications
• Pinpointed responsibility
• Duplication of resources is minimized
• Functional home for team members
• Policies of the parent organization are followed
  

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Organizational StructureMatrix--Disadvantages

• Two bosses
• Depends on PMs negotiating skills
• Potential for sub-optimization

15
PERT and CPM

• PERT (program evaluation and review technique)
• U.S. Navy Special Projects Office (1958)
• Polaris missile project
• CPM (critical path method)
• J. E. Kelly of Remington-Rand and M. R. Walker of
  Du Pont (1957)
• Scheduling maintenance shutdowns of chemical
  processing plants

16
Critical Path Scheduling

• A project must have
• well-defined jobs or tasks whose
  completion marks the end of the project
• independent jobs or tasks
• and tasks that follow a given sequence.

17
Terminology

• Task Lists
• listing of necessary "tasks" to complete an
  element or activity
• Network Segments
• once the tasks are arranged and connected in a
  logical sequence, the tasks form a "network
  segment"
• Whole Networks
• the complete node and arc (arrow) diagram for the
  entire project.

18
Terminology

• Precedence relationship
• relationship of tasks or network segment showing
  which items need to be finished prior to other
  tasks or segments beginning
• Networking conventions
• one destination
• event completion
• a network "event" stands for the completion of
  all activities leading into it.

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Networking Errors
A. More-than-one-end error
End
Start
End
B. Looping error
Loop
20
CPM with Single Time Estimate
Consider the following consulting project
Develop a critical path diagram and determine
the duration of the critical path and slack times
for all activities
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First draw the network
C, 1
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Activity times

• Time required to complete a given task
• Estimation can come from historical data (past
  experience with similar tasks)
• most likely, optimistic, and pessimistic time
  estimates may be determined and used as a basis
  for the expected value.

23
Path analysis

• Examines all different possible paths from start
  to finish of project.
• The critical path is the one that requires the
  most amount of time.

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Determine early start and early finish times
ES4 EF6
ES14 EF15
?
ES0 EF2
ES2 EF3
ES3 EF4
C, 1
ES4 EF9
When the next activity can start depends on when
its predecessors finish
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Determine late starts and late finish times
ES4 EF6
Latest Start 7
ES0 EF2
ES2 EF3
ES3 EF4
LS7 LF9
C, 1
ES4 EF9
LS14 LF15
LS9 LF14
? ? ?
LS4 LF9
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Critical Path Slack
ES4 EF6
D, 2
ES0 EF2
ES2 EF3
ES3 EF4
LS7 LF9
C, 1
ES4 EF9
LS14 LF15
LS9 LF14
E, 5
LS4 LF9
Duration 15 weeks
Critical Path is A-B-C-E-F-G
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Activity slack

• Occurs on non-critical paths..
• since some activities are done in parallel, some
  sub-networks may be completed earlier than others.

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Use of a Dummy Activity
Install finishplumbing
Install finishplumbing
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12
10
10
Install kitchenequipment
Install kitchenequipment
11
11
11
Install finishplumbing
12
10
Install kitchenequipment
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Example 2. CPM with Three Activity Time Estimates
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Calculating activity times

• Optimistic 3
• Most Likely 6
• Pessimistic 15

Optimistic 4 x Most Likely Pessimistic 6
3 (4)(6) 15 7 6
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Example 2. Expected Time Calculations
ET(A) 34(6)15 6
ET(A)42/67
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Duration 54 Days
E, 11
E, 11
C, 14
C, 14
H, 4
H, 4
A, 7
A, 7
F, 7
D, 5
I, 18
I, 18
Start
Start
B 5.333
G, 11
Critical Path?
A - C - E - H - I
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Example 2. Probability Exercise
What is the probability of finishing this project
in less than 53 days?

• 54
• .50 (50/50 chance)

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What is the probability of finishing this project
in less than 53 days?
36
(Sum the variance along the critical path.)
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(Appendix D)
p area under normal curve from 0 to z
z 0 (.50)
For z -.156 ? .16 p .0636
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p(Z lt -.16) .5 - .0636 .436, or 43.6
There is a 43.6 probability that this project
will be completed in less than 53 weeks.
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Example 2. Additional Probability Exercise

• What is the probability that the project duration
  will exceed 56 days?

54 56 (.50)
41
(Sum the variance along the critical path.)
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Exercise Solution
p(Z gt .312) .5 - .1217 .378, or 37.8
43
(Appendix D)
p, area under normal curve
from 0 to z
0 z
For z -.312 ? .31 p .1217
44
Time-Cost Models

• Basic Assumption Relationship between activity
  completion time and project costTime Cost
  Models Determine the optimum point in time-cost
  tradeoffs
• Activity direct costs
• Project indirect costs
• Activity completion times

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Crashing andTime-Cost trade-offs

• After a project plan has been established, it is
  sometimes necessary to reduce ("crash") the time
  in order to meet deadlines.
• How can this be done?
• overtime
• extra workers
• subcontracting

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What trade-offs occur?

• Cost of additional workers, overtime, etc.
  versus overdue (late charges)

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Crash Costs and Penalties

• If the penalty cost is 100.00 per day for every
  day over six on the following
• project, what is the best way (lowest cost) to
  accomplish the project?

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Network and Time-Cost Data
Critical Path ?
B - D - E
2
Ct 2
At 3
1
4
Dt 5
Et 2
t 1B
t 5F
5
3
Normal
Crash
Costper Day
Time
Cost
Activity
Time
5040401007090390
101312
312525
ABCDEF
25--40309070
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Network and Time-Cost Data
At 3
2
Ct 2
1
4
Et 2
Dt 5
t 1B
t 5F
5
3
(Critical path is B-D-E at 8 days)
Crash
Normal
Costper Day
Time
Cost
Activity
Time
5040401007090390
101312
312525
ABCDEF
25--40309070
200 590
50
Critical Path ?
2
Ct 2
At 3
B - D - E
1
4
A - C - E
Dt 4
Et 2
t 1B
t 5F
5
3
Normal
Crash
Costper Day
Time
Cost
Activity
Time
25--40309070
101212
504040 7090
312425
ABCDEF
130
420
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Example 3. Solution
2
Ct 2
At 3
4
1
Dt 5
Et 2
t 1B
Crash
Normal
t 5F
Costper Day
Cost
Activity
Time
Time
5
3
5040401007090390
101312
312525
ABCDEF
25--40309070
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Project characteristics necessary for critical
path scheduling to be applicable are

• Well-defined jobs whose completion marks the end
  of the project.
• The jobs or tasks are independent. They may be
  started, stopped, and conducted separately within
  a give sequence.
• The jobs or tasks are ordered such that they must
  follow each other in a given sequence.
• An activity once started is allowed to continue
  without interruption until it is completed.

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Problems with project scheduling

• uncertainties inherent in the activities
  comprising the network of any project.
• maintaining accurate time and cost estimates is
  often difficult and frustrating.
• managing this evolving process requires a
  discipline that is not always available.

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Project Management

• Final Stage
• once project has started all activities must be
  controlled
• delays
• early finishes

55
Cautions on PERT and CPM

• Project activities can be identified as
  independent events
• Project activity sequence relationships can be
  specified and networked
• Project control should focus on the critical path
• Activity times follow the beta distribution

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CPM Assumptions/Limitations

• Project activities can be identified as entities.
  (There is a clear beginning and ending point for
  each activity.)
• Project activity sequence relationships can be
  specified and networked.
• Project control should focus on the critical
  path.
• The activity times follow the beta distribution,
  with the variance of the project assumed to equal
  the sum of the variances along the critical path.
  Project control should focus on the critical
  path.

58
Network and Time-Cost Data
D, 2
B, 3
G, 2
G, 2
E, 5
E, 5
A, 2
A, 2
H, 3
H, 3
F, 5
C, 1
C, 1
Crash
Normal
Costper Day
Time
Cost
Activity
Time
Cost
-- 25--40309070 --
50 1004080160160300 50
2 111312 3
50 5040401007090 50490
2 312525 3
ABCDEF G H
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Network and Time-Cost Data
Critical Path ?
D, 2
B, 3
G, 2
G, 2
E, 5
E, 5
A, 2
A, 2
H, 3
H, 3
F, 5
C, 1
C, 1
Crash
Normal
Costper Day
Time
Cost
Activity
Time
Cost
-- 25--40309070 --
50 1004080160160300 50
2 111312 3
50 5040401007090 50490
2 312525 3
ABCDEF G H
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Critical Path ?
A-C-E-G-H
A-B-D-G-H
D, 2
D, 2
B, 3
B, 3
G, 2
G, 2
G, 2
E, 5
E, 4
E, 4
A, 2
A, 2
A, 2
H, 3
H, 3
H, 3
F, 5
C, 1
C, 1
Crash
Normal
Costper Day
Time
Cost
Activity
Time
Cost
-- 25--40309070 --
50 1004080160160300 50
2 111312 3
50 5040401307090 50520
2 312425 3
ABCDEF G H
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D, 2
D, 2
B, 3
B, 3
G, 2
G, 2
G, 2
E, 5
E, 4
E, 4
A, 2
A, 2
A, 2
H, 3
H, 3
H, 3
F, 5
C, 1
C, 1
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C, 7
E, 4
H, 4
H, 4
A, 3
A, 3
D, 6
F, 3
I, 5
I, 5
B, 6
B, 6
G, 8
G, 8
Time
Possible Paths A - C - E - H - I A - D - F - H
- I A - B - F - H - I A -B - G - H - I A - B - G
- I
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21
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