4 Project Mgt

8/13/2019 4 Project Mgt

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Project Management


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Managing Projects

Projects are usually large & infrequent or one-time.

No two projects are the same.

Projects are usually fairly long. Several months to many years

They Involve different people in different phases

Most people are only involved with a part of a project

Even though a project may be under the overallpurview of a single department or group, other

departments are often involved.


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Projects

The three main goals of projectmanagementare

1. Complete the project on time or earlier.

2. Complete the project on or under budget.

3. Meet the specifications to the satisfaction ofthe customer.


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Pro ject Structu res

Functional Structure: The team is housed in a

specific functional area.Assistance from other

areas must be negotiated.

Pure Project: Team members work exclusively for

the project manager. (Best for large projects.)

Matrix Structure:A compromise between the

functional and project structures. Members remain

in various functional areas and the project manager

coordinates across functional areas. Having two

bosses (dual authority) can cause problems.


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Project Management Techn iques

PERT CPM GERT

Program Evaluation and Review Technique PERT(Program Evaluation and Review Technique) is

utilized when activity times are uncertain (involved risk).

Critical Path Method CPM(Critical Path Method) is used when activity times

are known and certain.

Graphic Evaluation and Review Technique Rarely used, and then only in very complex projects.

It overcomes many of the limitations of PERT and CPM

Provides much more project flexibility.


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Project Management Steps

1. Describe the Project (Defining all the tasksthat must be completed, and in what sequence.)

2. Develop a Graph Model(diagram thenetwork showing task relationships)

3. Develop an activity Schedule (Determinethe time estimates for each task)

4. Analyzing cost-time trade-offs(Determine the cost of each task.)

5. Assess Risks (Probability analysis)


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Step 1

Desc r ibe the p ro ject

What is the project?

When does the project start and end?

What activities make up the project?

Activitiesare defined as the smallest units ofwork that a project manager is expected toschedule and control.

...a managers project description should reflect onlythe level of detail that he or she needs in order to

make scheduling and resource allocation decisions.

Task Ownership: Each activity must havean owner who is responsible for seeing thatthe work is accomplished.


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Relat ionships

between Act iv i t ies

A project is a sequence of activities. Large projects have interrelated sequences.

Except for the beginning activity/activities, every

activity in a project has one or more activities

that must be done immediately prior.

These are called Precedent (Pre-cee-ent)

activities

Theymust be defined before the project begins.

EG: In order to bury a body you must first dig a hole.


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Step 2

Develop a Network Model

A Network Diagramvisually displays theinterrelated activities using nodes (circles) andarcs (arrows) that depict the relationships between

activities. It is a graphical diagram.

For very large projects it may only be a numericalarrangement of activities rather than graphical.

Two types of Graphical Network Models Activity On Arc(AOA)

Activity On Node(AON) (We will use AON)


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Two Types

of Network Models

Activity-on-Arc (AOA)

Activity-on-Node (AON)Activity Activity

Link

We wil l

use th is!D E

Time Time

Activity E

Time

Activity D


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What AON Nodes look l ike.

The earliest you can completean activity--determined byadding the activity time(duration) to the early start time.

This is the latest you can finishan activity without delayingproject completion. It is thesame as the Late Start time of

the next activity. If there are twoor more subsequent activities,this time is the same as the

earliest of those Late Starttimes.

The is the earliest you can start anactivity. It is determined by the earlyfinish time of the precedent activity. Ifthere are two or more precedentactivities, this time is the same asprecedent activity with the latestEarly Finish time.

This is the Late-Finish time minusthe activity duration.

Slack

Slack (S) is the difference, if any,

between the early start (ES) and latestart times (LS) or the early finish(EF) and late finish (EF) times.

S = LS - ES or S = LF - EF

2013 Lew Hofmann

EarlyStart

EarlyFinish

Late

Finish

Late

Start

Activity

Name

ActivityDuration


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Example: This homework Ass ignment

EarlyStart

EarlyFinish

Late

Finish

Late

Start

Home-

work #2

1 hour

Slack

If it takes one hour, theearliest you can complete thisassignment is one hour afterclass ends.

One hour after your late starttime.

The earliest you can start thisassignment it is immediately afterthis class ends.

You can wait untilone hour before theclass in which it isdue to start it; inthis case one weekfrom now.

The slack in this case would be one

week, expressed in hours, since thatis the unit of time used for theactivities. It would be how long youcould delay doing the assignment.

2013 Lew Hofmann


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Precedent

Relat ionshipsPrecedent relationshipsdetermine the sequencefor accomplishing activities. They specify that anygiven activity cannot start until its preceding activityor activities have been completed.

In our AON approach, thenodes (circles) representactivities, and the arcs

(arrows) represent thesequential relationshipsbetween them.

AON

S T U

Activity On Node approach

S precedes T which

precedes U

Nodes are simplified in the following examples.


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Act iv i ty Relat ionsh ips

S

T

U

V

U& Vcant begin until S& T

have been completed.

S

T

U

V

Ucannot begin until S& Thave

been completed. Vcannot begin

until Thas been completed.


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Act iv i ty Relat ionsh ips

S T V

U

T& Ucannot begin until Shas been

completed; Vcannot begin until both T&Uhave been completed.


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Logic Errors

C H

G

This is a logic error. C cannot be an

immediate predecessor of both G &H if

G is also an immediate predecessorofH.

Logic errors are hard to identify except on the

network diagrams. If you see a tr iangle, then it is a

logic error. Eliminate the short cut.


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St. Adolfs Hospital(A sample project)

Immediate

Activity Description Predecessor(s) Responsibility

A Select administrative and medical staff.

B Select site and do site survey.C Select equipment.

D Prepare final construction plans and layout.

E Bring utilities to the site.

F Interview applicants and fill positions in

nursing, support staff, maintenance,

and security.

G Purchase and take delivery of equipment.H Construct the hospital.

I Develop an information system.

J Install the equipment.

K Train nurses and support staff.


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A Select administrative and medical staff. 12

B Select site and do site survey. 9C Select equipment. A 10

D Prepare final construction plans & layout. B 10

E Bring utilities to the site. B 24

F Interview applicants and fill positions in A 10

nursing, support staff, maintenance,

and security.

G Purchase and take delivery of equipment. C 35H Construct the hospital. D 40

I Develop an information system. A 15

J Install the equipment. E,G,H 4

K Train nurses and support staff. F,I,J 6

St. Adolfs Hospital(A sample pro ject)

Immediate

Activity Description Predecessor(s) Activity Times

*We wont assigning Responsibility data, but it is important in project management.


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St. Adolfs HospitalDiagramm ing the Network

FinishStart

A

B

C

D

E

F

G

H

I

J

K

Immediate

Predecessors

A 12

B 9

C A 10

D B 10

E B 24

F A 10

G C 35

H D 40

I A 15

J E,G,H 4

K F,I,J 6

Act iv i ty

Times (wks)


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St. Adolfs Hospi ta lAct iv i ty Paths

FinishStart

A

B

C

D

E

F

G

H

I

J

K

Path Time (wks)

A-I-K 33

A-F-K 28A-C-G-J-K 67

B-D-H-J-K 69

B-E-J-K 43

Paths are sequences ofactivities between a

projects start and finish.


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St. Adolfs Crit ical Path

FinishStart

A

B

C

D

E

F

G

H

I

J

KPath Time (wks)

A-I-K 33

A-F-K 28

A-C-G-J-K 67

B-D-H-J-K 69

B-E-J-K 43

Project Expected

Time is 69 wks.

The longest path is the

critical path!


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PERTs

Three time-es t imates

OPTIMISTIC TIME: Best time if everything goes

perfectly when doing the activity.

REALISTIC TIME: Most likely time for the activity

PESSIMISTIC TIME:A worst-case situation

B + 4M + PExpected Time = -------------------

6In this example, the most likely time is given a weight of four, and the

other two times (pessimistic and optimistic) are each given weights of one.

Risky act iv i ty t imes make the pro ject length r isky, so there is a need

for r isk assessment based on the prob abi l ity distr ibu t ion of t imes.

(Standard deviation and variance are computed by the software.)


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Activity slackis the maximum length of time that anactivity can be delayed without delaying the entireproject.

It is the difference between the earliest time wecan start an activity and the latest time we can

start the activity without delaying the project.

The critical path activities have zero slack.

For the St. Adolfs Hospital project, 69 weeks is theproject length because 69 weeks is the longest path.

Project delays beyond the projected completion date

often involve penalties.

Act iv i ty Slack


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Earliest Start Time(ES) for an activity is the earliest finishtime of the immediately preceding activity.

Earliest Finish Time(EF) for an activity is its earliest starttime plus how long it takes to do it (activity time).

Latest Start Time(LS) is the latest you can finish the activityminus the activitys estimated duration.

Latest Finish Time(LF) is the latest start time plus the activitytime.

The latest finish time is the same as the latest start time of the activity activity

which follows it. (Latest start and finish times for each activity are computed

starting at the projects last activity completion time and working forward.)

Slackis the difference between the Earliest Start and Latest start

times for an activity (or earliest finish and latest finish times.)

Act iv i ty Start and Finish Times


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Earl iest Start and Earl iest Finish Times

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

I

15

FinishStart

A

12

F

10

0

Earliest start time

12

Earliest finish time

0 9

9 33

9 19 19 59

22 5712 22

59 63

12 27

12 22 63 69

2013 Lew Hofmann

E li t St t d E l i t Fi i h Ti


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Earl iest Start and Earl iest Finish Times

Crit ical Path

The Crit ical Path

takes 69 weeks

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

I

15

FinishStart

A

12

F

10

0 9

9 33

9 19 19 59

22 5712 22

59 63

12 27

12 22 63 690 12

Path Time (wks)

A-I-K 33

A-F-K 28

A-C-G-J-K 67

B-D-H-J-K 69

B-E-J-K 43

2013 Lew Hofmann

Latest Start and Latest Finish Times


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K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

I

15

FinishStart

A

12

F

10

0 9

9 33

9 19 19 59

22 5712 22

59 63

12 27

12 22 63 690 12

LatestStart and LatestFinish Times(You s tar t with the last act iv i ty and w ork toward th e f i rs t act iv i ty)

48 63

53 63

59 63

24 59

19 59

35 59

14 24

9 19

2 14

0 9

Latest

finish

time

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Latest

start

time

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Node Duration ES LS Slack


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Act iv i ty Slack

Analys is

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

I

15

FinishStart

A

12

F

10

0 9

9 33

9 19 19 59

22 5712 22

59 63

12 27

12 22 63 690 12

48 63

53 63

59 63

24 59

19 59

35 59

14 24

9 19

2 14

0 9

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Slack is the difference betweenLS and ES or EF and LFA 12 0 2 2

B 9 0 0 0

C 10 12 14 2

D 10 9 9 0

E 24 9 35 26

F 10 12 53 41

G 35 22 24 2

H 40 19 19 0

I 15 12 48 36

J 4 59 59 0

K 6 63 63 0

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Analyz ing

Cost-Time Trade-Offs .

There are always cost-time trade-offs in projectmanagement.

You can completing a project early by hiring more

workers or running extra shifts.There are often penalties if projects extends beyond

some specific date, and a bonus may be provided forearly completion.

Crashinga project means finishing the projectearly by expediting one or more activities.

Not all activities can be shortened.


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Pro ject Cos ts

Total Project Costs=

direct costs + indirect costs + penalty costs

Direct costsinclude labor, materials, and any other

costs directly related to project activities.

Indirect costsinclude administration, depreciation,financial, and other variable overhead costs.

These can be reduced by reducing total project time.

The shorter the duration of the project, the lower the indirectcosts will be.

Penalty costs are essentially late fees incurred forgoing over the projected due date.


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We do cost analysis to determine the projectschedule that minimizes total project costs.

When crashing an activity or project, extra money is

spent on direct costs, but money is saved on indirectcosts and possible penalties.

A minimum-cost scheduleis determined by startingwith the normal project time schedule and shorteningactivities along th e cr i t ical pathuntil the costs ofcrashing (direct costs) start to exceed the savings inindirect costs and penalty costs. New critical paths usually appears while doing this.

Minim izing Costs


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a. Determine the projects critical path(s).

b. Find the activity or activities on the critical path(s)with the lowest cost of crashing (shortening) per week.

c. Reduce the time for this activity until

a. it cannot be further reduced,

b. or another path becomes critical,

c. or the increase in direct costs exceed the savings that result

from lower indirect costs.

d. Repeat this process until the total project costs are nolonger decreasing.

Sophisticated project management software will do this.

St. Adolfs Hospital

Min imum Cost Schedu le

Of the five critical-path activities, the


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K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

I

15

FinishStart

A

12

F

10

0 9

9 33

9 19 19 59

22 5712 22

59 63

12 27

12 22 63 690 12

48 63

53 63

59 63

24 59

19 59

35 59

14 24

9 19

2 14

0 9

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p ,contractor says Dand Hcannot beshortened. Jis the least costly toshortenat $1000 a week. Contractorsays it can be shortened to 1 week.

2012 Lew Hofmann

The project manager must nowcompare the cost of shortening J by 3weeks ($3,000 in additional directcosts) with savings in indirect costs,to see if the total cost is lower.

Shorten from 4

weeks to 1 week


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Assess ing Risks

Riskis a measure of the probability (andconsequences) of not completing a projecton time.

A major responsibility of the project managerat the start of a project is to develop a risk-management plan.

A Risk-Management Planidentifies the keyrisks to a projects success and prescribesways to circumvent them.


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Causes o f Pro ject Risk

1. Service/Product Risks: If the project involves a

new service or product, several risks can arise.

Market riskcomes from competition.

Technological riskcan arise from technology advancesmade once the project has started, rendering obsolete the

technology chosen for service or product.

Legal riskfrom liability suits or other legal action.

2. Project Team Problems: Poor member selections

and inexperience, lack of cooperation, etc.

3. Operations Risk: Information inaccuracy, miss-

communications, bad project timing, weather


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ANALYZING PROBABIL ITIES

What is the probability that our sample project

will finish in 69 weeks as scheduled?

100% (Why?)

Because we used CPM!

(This means we were certainof all of our activity times.)

If we werent certain, we should have used PERT

You only do risk analysis if you use PERT


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PERT and PROBABIL ITIES

With PERTs three time-estimates, we get a mean

(average) time and a var ianceforeach activityand

each path.

We also get a projectmean time and variance.

In order to compute probabilities (assuming a

normal distribution) we need the activity means andvariances.

Most computer packages calculate this for you.


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Probabi l i ty

of Project Complet ion

The probability of a project being completed by a givendate is a function of the mean activity times andvariances along the critical path(s).

The probability of a specific act iv i ty being completed bya given date is a function of the mean activity times andvariances along the longest path leading up to thatactivity.

If you have more than one critical path, focus on the pathwith the greatest variance.

A near-critical path may also be a problem,

depending on the mean and variance of its activities.


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Dist r ibut ions & Probabi l ity

A Beta distribution is often used for the three

estimates of each act iv i ty

This allows skewed distributions.

Optimistic------Most likely-----------------------Pessimistic

(3------------- 5---------------------------------- 11)

Normal distributions are needed for probabilities.

A distribution of act iv i ty-meansis a normal

distribution, even though each activity time may be

a beta distribution.


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Beta Distr ibut ion

Mean

ma b Time

Probabilit

y

PessimisticOptimistic

Each activity may have its three time

estimates skewed (Beta Distribution), but the

path along which this activities lie has a

normal distribution and thus a mean and

variance.


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Figu r ing Probab i li t ies

Assume a PERT project critical path takes 40 days, and that the

variance of the critical path is 2.147

You wish to know the probability of the project going over 42 days.

Compute the standard deviation of the critical path. The square root of the variance of 2.147 = Std. Dev. = 1.465

POM/QM software gives you the variance of the critical path.

Compute the Z value: Z = (absolute time difference) / Std. Dev.

In this example, Z= (42 days - 40 days) / 1.465= 1.365

Look up the Zvalue of 1.365in a Normal Distribution table to get

the probability of the project taking 42 days.

Subtract it from 100% to get the probability of going over 42.


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Look up the Z value (1.365)in the table of normal distribution.

(In this case you need to interpolate between the Z values of .9313 and .9147)

.9139 or 91.39%is the probability of the project taking 42 days.

Thus the probability of going over 42 days is 100 - 91.39 = 8.61%

.9139


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St Ad lf H it l


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2= (variances of activities along critical path) z=TC

2

2= 1.78 + 1.78 + 2.78 + 5.44 + 0.11 = 11.89

z= 726911.89

What is the Probability of it taking 72 weeks?

Critical Path = B - D - H - JK = 69 weeks

T=72 weeks C= 69weeks

St. Adolfs HospitalA 69-week Project

Look up Z value in normal distribution tableZ = 0.870

CriticalPathVariance

z=3

3.44818


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Look up the Z value (0.870) in the table of normal distribution.

.8078 or 80.78%is the probability of the project taking 72 wks.Going over 72 weeks would be 10080.78 = 19.22%


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Project duration (weeks)

69 72

Probability of

taking 72 weeks

is 0.8078 or

80.78%

Length of

critical path is

69 weeks

Normal distribution:

Mean = 69 weeks;

= 3.45 weeks

Probability of

exceeding 72

weeks is 0.1922

or 19.22%

St. Adolfs HospitalProbability of Completing Project On Time


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Path Mergersoccur when two or more activitypaths combine at a particular node. Both paths mustbe completed up to this point, which will eliminate any

built-up slack. Multitaskingis the performance of multiple project

activities at the same time. Work on some activities isoften delayed for other work.

Loss of Focusby a manager can happen if thecritical path changes frequently.

Failure to have all the needed resources on time.

Resource-Related Prob lems


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PERT / CPM

ADVANTAGES

Enables Resource Management & Allocation

You can move slack resources to critical points

Focuses on your critical activities

Visualize relationships (The big picture)

Enables Cost analysis


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PERT / CPM PITFALLS

Can be complex to setup relationships in

large project

Time estimatesare often biased.

Near critical paths are easily overlooked.


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GERT(Graphical Evaluation and Review Technique)

Gives more flexibilityto project planning than PERT/CPM

Allows any individual activity to either be

completed or not completed (Succeed or fail)

PERT & CPM both require all activities be successfully

completed. GERT does not require this.

GERT Allows looping back (redoing an activity) orskipping an activity entirely.

There are computerized GERT packages.


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Solved Problem

What is the probabi l i ty of

complet ing the pro ject in

23 weeks?

2013 Lew Hofmann

S l d P bl


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Solved Problem

2013 Lew Hofmann


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Solved Problem

Finish

Start

A

4.0

0.0

4.0

4.0

8.0

D

12.0

4.0

8.0

16.0

20.0

E

6.5

9.0

9.0

15.5

15.5

G

4.5

15.5

15.5

20.0

20.0

C

3.5

5.5

5.5

9.0

9.0

F

9.0

5.5

6.5

14.5

15.5

B

5.5

0.0

0.0

5.5

5.5

2013 Lew Hofmann


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Homework #2


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Homework #2

Due next week

Problem 1 is on the next slide. Draw thenetwork and solve it manuallyusing the

AON method. No credit if you use thecomputer.

Problems 2and 3are on the following

slides. Use the POM/QM software for these last two

problems.

Problem 1


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Problem 1Do manually (no computer)

A project has the following precedence relationships and activitytimes. Draw the netwo rk diagram and calculate the total slackfor each act iv i ty . Which act iv i t ies are on the cr i t ical path?

Activity Activity Time (wks)

Immediate

Predecessor(s)

A 4

B 9

C 5 A

D 15 B,CE 12 B

F 4 D

G 8 E

H 7 F,G

PROBLEM 2 (Use POM/QM)1 There are logic errors in the data You will have to run the program in order


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Activities for Problem #2 Time Precedents

A Demolition of present structures 3 None

B Excavation and filling of site 2 A

C Forming & pouring of concrete 2 BD Construction of steel skeleton 3 C

E Construction of concrete structure 2 C

F Construction of exterior skin 1 D,E

G Installation of plumbing 3 E

H Installation of electrical 3 D,E

I Installation of heating & cooling 3 D,E,F

J Construction of interior flooring 3 I

K Lighting fixtures and finish work 2 J

1. There are logic errorsin the data. You will have to run the program in orderto find them. Then make the appropriate corrections and re-run the problemto get the correct solution. Identify the critical path and its length.

2. Include 4 printouts:Input screen, PERT/CPM results table, Precedencegraph and the Gantt chart of early & late times.

2013 Lew Hofmann


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Problem #3


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Activity Precedent Optimistic Most Likely Pessimistic

A - 6 7 8

B A 4 4 4

C A 5 6 8

D B 8 10 10

E B 7 10 15F C 9 9 13

G C 7 7 7

H D 4 6 8I E, F 6 9 11

J G 8 9 10

K H, I, J 3 5 6

Problem #3

2013 Lew Hofmann


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Sample POM/QM


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Sample POM/QM

Input Tab le Prin tou t

Note that this is CPM since there is only one time estimate foreach activity. You will need to change the method for PERT.

S l POM/QM


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Sample POM/QM

Solut ion Tab le pr intou t


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POM/QM Print ing Hin t

Avoid using the print screen button on the bottom left

of the screen or in the file menu.

Screen prints are small and very hard to read.

Select the File pull-down menu and use the Printoption.

You can then indicate which items you wish to print

and get a much better output.

OPTION: Download the free program Jing. It is

available for Mac and PC, and what I use for the

printouts on my PPT slides.

htt // t h ith /ji ht l
http://www.techsmith.com/jing.htmlhttp://www.techsmith.com/jing.html

Documents

4 Project Mgt