Chapter 03 Project Management[1]

8/8/2019 Chapter 03 Project Management[1]

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OPERATIONS & PRODUCTION OPERATIONS & PRODUCTION MANAGEMENT MANAGEMENT

Chapter: 03

PROJECTMANAGEMENT



Chapter Layout:Chapter Layout:Defining Project & 3‐Phases of Project.

Project Management

Project Planning

Work Break Structure.

Project Scheduling

Gantt Chart.

Project Controlling

( PERT & CPM ).





Chapter Layout Chapter Layout ……Cont.Cont.

Calculating Slack Time and Identifying the Critical Paths.

Numerical

Variability in Activity Times

Three Time Estimates in PERT

Probability of Project Completion





PROJECT MANAGEMENT

Chapter: 03

DEFINITIONS



WHAT IS PROJECT ?????WHAT IS PROJECT ?????DEFINITION

Project is an unique activity, with specific objective has to completed in a determined time frame and incurred cost.

CHARACTERISTICS OF PROJECT1.

UNIQUENESS2.OBJECTIVITY 3.TIME FRAME4.COST



DEFINING PROJECT MANAGEMENTDEFINING PROJECT MANAGEMENT:

1st Definition“ Project management is the process of planning and directing a project from itsinception to its completion at a giventime and at a given cost for a given endproduct.” .

PROBLEM IN‐FLEXIBILITY



2nd Definition“ PROJECT MANAGEMENT PLANS AND

DIRECT THE PROCESS OF COMPLETION OF A

PROJECT TO ENABLE IT TO REACH THE

BEST POSSIBLE WAY, THE BEST POSSIBLE

RESULTS AND THE INTENDED OBJECTIVE OF

THE PROJECT. ”

DEFINING PROJECT MANAGEMENTDEFINING PROJECT MANAGEMENT:



PROJECT MANAGEMENT

Chapter: 03

PROJECT

PRIORITIES



PROJECT PRIORITIESPROJECT PROJECT

PRIORITIESPRIORITIES



PROJECT SCOPE:PROJECT SCOPE:Terms and Definitions

SCOPE STATEMENTSAlso called statements of work (SOW)

1. To clearly define the deliverables for the end user.

2. To focus the project on successful completion of its goals.

PROJECT CREEPThe tendency for the project scope to expand

over time due to changing requirements, specifications, and priorities.



PROJECT MANAGEMENT

Chapter: 03

PHASES OF PROJECT

MANAGEMENT



Planning Planning ObjectivesObjectives

ResourcesResources

Work break Work break - - downdownschedulescheduleOrganizationOrganization

Scheduling Scheduling Project activitiesProject activities

Start & end timesStart & end times

Network Network

Controlling Controlling Monitor, compare, revise, actionMonitor, compare, revise, action

33‐‐PHASES OF PROJECT MGT.PHASES OF PROJECT MGT.



PROJECT PLANNING, SCHEDULING, PROJECT PLANNING, SCHEDULING, AND CONTROLLING.AND CONTROLLING.

BeforeBefore Start of p roject Start of project During During project project TimelineTimeline project project



PROJECT PLANNINGPROJECT PLANNINGWork Breakdown Structure (WBS)

An hierarchical outline (map) that identifies the

products and work elements involved in a project.

Defines the relationship of the final deliverable (the

project) to its sub deliverables, and in turn, their

relationships to work packages.



HIERARCHICAL BREAKDOWN OF THE WBS

HIERARCHICAL HIERARCHICAL BREAKDOWN BREAKDOWN

OF THE WBSOF THE WBS





WORK PACKAGESWORK PACKAGESA work package is the lowest level of the WBS.

It is output ‐oriented :1. Defines work (what).2. Identifies time to complete a work package (how

long)3. Identifies a time ‐phased budget to complete a work package (cost).

4. Identifies resources needed to complete a work package (how much).5. Identifies a single person responsible for units of work

(who).6. Identifies monitoring points (milestones) for



BeforeBefore Start of project Start of project During During project project TimelineTimeline project project

PROJECT PLANNING,

SCHEDULING,

PROJECT PLANNING, SCHEDULING, AND CONTROLLING.AND CONTROLLING.




PROJECT PLANNING,

SCHEDULING,

PROJECT PLANNING, SCHEDULING, AND CONTROLLING.AND CONTROLLING.




PROJECT PLANNING, SCHEDULING, PROJECT PLANNING, SCHEDULING, AND CONTROLLING.AND CONTROLLING.





PROJECT MANAGEMENT

Chapter: 03

PROJECTNETWORKING

TECHNIQUES.



Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

A comes beforeB, which comesbefore C

(a) A B C B A C

A and B must bothbe completed before C can start

(b) A

C C

B

A

B



Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

B and C cannot

begin until A iscompleted (c)

B

AC

A BC



PERTPERT AND AND CPM CPM TECHNIQUES.TECHNIQUES.Network techniques

Developed in

1950’s

1. CPM by DuPont for chemical plants (1957)

2. PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)

Consider precedence relationships and interdependencies

Each uses a different estimate of activity times.



S.NO PERT CPM1 TIME FOCUS TIME & COST FOCUS

2 FIRST TIMEPROJECT

REPEATED PROJECT

3 ASK TOKNOWLEDGEABLE PERSON

TRACK RECORD ORPAST HISTORY.

4 3 – TIMEESTIMATES

ONE TIMEESTIMATE.

A COMPARISON

OF

A

COMPARISON

OF

PERTPERT AND

AND

CPM CPM TECHNIQUES.TECHNIQUES.



PROJECT MANAGEMENT

Chapter: 03

PRACTICAL

PROJECT

MANAGEMENT



AON Example

AON

Example

Activity DescriptionImmediate

Predecessors A Build internal components —

B Modify roof and floor —

C Construct collection stack A

DPour

concrete

and

install

frame

A, B

E Build high ‐temperature burner C

F Install pollution control system C

G Install air pollution device D, EH Inspect and test F, G

PAKISTAN PAPERSACK CORPORATION LTD.PAKISTAN PAPERSACK CORPORATION LTD.BalochistanBalochistan

Activities and Predecessors Activities and Predecessors



A

Start

BStart Activity

Activity A(Build Internal Components)

Activity B(Modify Roof and Floor)



C

D

A

Start

B

Activity A Precedes Activity C

Activities A and BPrecede Activity D



G

E

F

H

C A

Start

DB

Arrows Show PrecedenceRelationships



Variability in Activity TimesVariability in Activity Times

CPM assumes we know a fixed time estimate for each activity and there

is no variability in activity timesPERT uses a probability

distribution for activity times to allow for variability






Expected time:Expected time:

Variance of times:Variance of times:

t =t = ((a +a + 44mm ++ bb )/6)/6

v =v = [([(bb – – aa )/6])/6] 22



Variability in Activity TimesVariability in Activity TimesMost Expected

Optimistic Likely Pessimistic Time Activity a m b t = (a + 4m + b )/6

A 1 2 3 2B 2 3 4 3C 1 2 3 2D 2 4 6 4E 1 4 7 4F 1 2 9 3G 3 4 11 5

H 1 2 3 2



Determining the Project ScheduleDetermining the

Project

Schedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

Activity Description Time (weeks) A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4

F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25



Table 3.2Table 3.2

Perform a Critical Path AnalysisPerform a Critical Path AnalysisDETERMINING THE PROJECT SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

Activity Description Time (weeks) A Build internal components 2 B Modify roof and floor 3C Construct collection stack 2 D Pour concrete and install frame 4E Build high-temperature burner 4

F Install pollution control system 3G Install air pollution device 5 H Inspect and test 2

Total Time (weeks) 25

Earliest start (ES) =earliest time at which an activity canstart, assuming all predecessors havebeen completed

Earliest finish (EF) = earliest time at which an activity canbe finished

Latest start (LS) = latest time at which an activity canstart so as to not delay the completiontime of the entire project

Latest finish (LF) = latest time by which an activity has tobe finished so as to not delay the

completion time of the entire project

PROJECT



PROJECT MANAGEMENT

Chapter: 03

DESIGNING

PROJECT

NETWORK



Perform a Critical Path AnalysisPerform a Critical Path AnalysisDETERMINING THE PROJECT SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

A

Activity Nameor Symbol

Earliest Start ES Earliest FinishEF

Latest Start

LS Latest Finish

LF

Activity Duration

2





Perform a Critical Path AnalysisPerform a Critical Path AnalysisDETERMINING

THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

B

3

Start 0

0

0

A

2

20

3

EF of B =ES of B + 3

0

ES of B






THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

D

4

73

= Max (2, 3)

FORWARD PASS

FORWARD FORWARD PASSPASS




THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

FORWARD

PASS

FORWARD FORWARD

PASSPASS




THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

FORWARD PASS

FORWARD FORWARD PASSPASS




THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

LF = EF of Project

1513

LS = LF – Activity time

BACKWARD PASS

BACKWARD BACKWARD PASSPASS




THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

LF = Min(LS of

following activity)

10 13

BACKWARD PASS

BACKWARD BACKWARD

PASSPASS






THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

42

84

20

41

00

BACKWARD

PASS

BACKWARD BACKWARD PASSPASS



Critical Path And Slack TimesCritical Path And Slack Times Analysis AnalysisDETERMINING

THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

42

84

20

41

00

Slack Slack = 1= 1 Slack Slack = 1= 1

Slack Slack = 0= 0 Slack Slack = 6= 6

Slack Slack = 0= 0

Slack Slack = 0= 0

Slack Slack = 0= 0

Slack Slack = 0= 0




THE

PROJECT

SCHEDULEDETERMINING

THE

PROJECT

SCHEDULE

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start 0

0

0

A

2

20

42

84

20

41

00

PROJECT Chapter: 03



PROJECTMANAGEMENT

Chapter: 03

DESIGNINGPROJECT GANTT

CHART.

GANTTCHART



GANTT CHART

GANTT CHART

AA Build internalBuild internalcomponentscomponents

BB Modify roof and floorModify roof and floor

CC Construct collectionConstruct collectionstackstack

DD Pour concrete andPour concrete andinstall frameinstall frame

EE Build highBuild high --temperaturetemperatureburnerburner

FF Install pollution controlInstall pollution controlsystemsystem

GG Install air pollutionInstall air pollutiondevicedevice

HH Inspect and testInspect and test

11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616

PAKISTAN PAPERSACK CORPORATION PAKISTAN PAPERSACK CORPORATION LTD. BalochistanLTD. Balochistan

GANTTCHARTGANTTCHART



GANTT CHARTGANTT CHART

AA Build internalBuild internalcomponentscomponents

BB Modify roof and floorModify roof and floor

CC Construct collectionConstruct collectionstackstack

DD Pour concrete andPour concrete andinstall frameinstall frame

EE Build highBuild high --temperaturetemperatureburnerburner

FF Install pollution controlInstall pollution controlsystemsystem

GG Install air pollutionInstall air pollutiondevicedevice

HH Inspect and testInspect and test

11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616

PAKISTAN PAPERSACK CORPORATION PAKISTAN PAPERSACK CORPORATION LTD. BalochistanLTD. Balochistan

PROJECT Chapter: 03



PROJECTMANAGEMENT

Chapter: 03

PROBABILITY OFCOMPLETION



PROBABILITY OF COMPLETION PROBABILITY OF COMPLETION

Expected time:Expected time:

Variance of times:Variance of times:

t =t = ((a +a + 44mm ++ bb )/6)/6

v =v = [([(bb – – aa )/6])/6] 22





Optimistic Likely Pessimistic Time Activity a m b t = (a + 4m + b )/6

A 1 2 3 2B 2 3 4 3C 1 2 3 2D 2 4 6 4

E 1 4 7 4F 1 2 9 3G 3 4 11 5

H 1 2 3 2




Optimistic Likely Pessimistic Time Variance Activity a m b t = (a + 4m + b )/6 [(b – a)/6] 2

A 1 2 3 2 .11B 2 3 4 3C 1 2 3 2 .11D 2 4 6 4

E 1 4 7 4 1.00F 1 2 9 3G 3 4 11 5 1.78

H 1 2 3 2 .11

Computing VarianceComputing Variance



PROBABILITY OF PROJECT PROBABILITY OF PROJECT COMPLETIONCOMPLETION

Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivities

σ22

= Project variance= Project variance== ∑ ((variances of activitiesvariances of activities

on critical pathon critical path ))

p

PROBABILITYOF PROJECTPROBABILITYOF PROJECT




Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivities

Project varianceσ 2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

σ p = Project variance= 3.11 = 1.76 weeks

p



PROBABILITY OF

PROJECT

PROBABILITY

OF

PROJECT

COMPLETIONCOMPLETION

PERT makes two more assumptions:PERT makes two more assumptions:

Activity times are statistically Activity times are statistically independent independent Total project completion timesTotal project completion timesfollow a normal probability follow a normal probability distributiondistribution

PROBABILITYOF PROJECTPROBABILITYOF PROJECT



Standard deviation = 1.76 weeks

15 Weeks

(Expected Completion Time)Figure 3.13


PROBABILITYOF PROJECTPROBABILITY OF PROJECT



What is the probability this project canWhat is the probability this project canbe completed on or before thebe completed on or before the 1616 week week deadline? deadline?

Z Z == – – / / σ p p

== (16(16 wkswks – – 1515 wkswks )/1.76)/1.76

== 0.570.57

duedue

expected dateexpected date

datedate of completionof completion

Where Z is the number of standard deviations the duedate or target date lies from

the mean or expected date

PROBABILITY OF PROJECT PROBABILITYOF PROJECTCOMPLETIONCOMPLETION

PROBABILITYOF PROJECTPROBABILITY OF PROJECT



PROBABILITY OF PROJECT PROBABILITYOF PROJECTCOMPLETIONCOMPLETIONWhat is the probability this project canWhat is the probability this project can

be completed on or before the 16 week be completed on or before the 16 week deadline? deadline?

Z Z ==−

−

/ / σ p p

== (16(16 wkswks −− 1515 wkswks )/1.76)/1.76

== 0.570.57

due expected datedate of completion

Where Z is the number of standard deviations the duedate or target date lies from

the mean or expected date

.00 .01 .07 .08

.1 .50000 .50399 .52790 .53188

.2 .53983 .54380 .56749 .57142

.5 .69146 .69497 .71566 .71904

.6 .72575 .72907 .74857 .75175

From Appendix I

PROBABILITY OF PROJECT PROBABILITY OF PROJECT



Time

Probability (T ≤ 16 weeks)is 71.57%

Figure 3.14

0.57 Standard deviation s

15 16 Weeks Weeks

PROBABILITYOF PROJECTPROBABILITYOF PROJECTCOMPLETIONCOMPLETION





PROJECT CRASHING

1. Compute the crash cost per time period. If

crash costs are linear over time :

Crash cost Crash cost

per period per period ==

(Crash cost (Crash cost – – Normal cost)Normal cost)

(Normal time(Normal time – – Crash time)Crash time)

2. Using current activity times, find the critical path and identify the critical activities



Time (Wks) Cost ($) Activity Normal Crash Normal Crash

A 2 1 22,000 22,750B 3 1 30,000 34,000

C 2 1 26,000 27,000D 4 2 48,000 49,000E 4 2 56,000 58,000

F 3 2 30,000 30,500G 5 2 80,000 84,500H 2 1 16,000 19,000

PROJECT CRASHING

TOTAL PROJECT COST = 308,000



Time (Wks) Cost ($) Crash Cost Activity Normal Crash Normal Crash Per Wk ($)

A 2 1 22,000 22,750 750

B 3 1 30,000 34,000 2,000C 2 1 26,000 27,000 1,000D 4 2 48,000 49,000 1,000E 4 2 56,000 58,000 1,000F 3 2 30,000 30,500 500G 5 2 80,000 84,500 1,500H 2 1 16,000 19,000 3,000

PROJECT CRASHING

OTAL PROJECT COST = 308,000



Time (Wks) Cost ($) Crash Cost Critical Activity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 Yes

F 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes

PROJECT CRASHING



| | |

11 2 2 Time (Weeks)Time (Weeks)

$22,750$22,750 —

—

$22,375$22,375 —

—

$22,000$22,000 —

—

Activity Activity Cost Cost CrashCrash

Normal Normal

Crash TimeCrash Time Normal TimeNormal Time

CrashCrash

Cost Cost

Normal Normal Cost Cost

Crash Cost/Wk Crash Cost/Wk == Crash Cost Crash Cost – – Normal Cost Normal Cost Normal TimeNormal Time – – Crash TimeCrash Time

== $22,750$22,750 – – $22,000$22,000

22 – – 11= = $750/Wk= = $750/Wk$750$750

1 Wks1 Wks



Time (Wks) Cost ($) Activity Normal Crash Normal Crash

A 2 1 22,000 22,750B 3 1 30,000 34,000C 2 1 26,000 27,000D 4 2 48,000 49,000E 4 2 56,000 58,000F 3 2 30,000 30,500G 5 2 80,000 84,500H 2 1 16,000 19,000

PROJECTCRASHING

TOTAL PROJECT COST = 308,000 + 750 = 308,750 $

TOTAL PROJECT DURATION = 15 + 01 = 16 Wks

PROJECT Chapter: 03



MANAGEMENT

THE END

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Chapter 03 Project Management[1]