Project ManagementAugust 29, 2015

Terminologies:Project Is a series of related tasks directed

toward a major output. It has the following characteristics.

Strategic Importance of Project Management

CHARACTERISTICS OF PROJECT:Single UnitMany related activatiesDifficult production planning and inventory control

General purpose equipmentHigh labor skills

Strategic Importance of Project Management

Is a structure developed to make sure existing programs continue to run smoothly on a daily basis and new projects are successfully completed.Uses specialists from entire company. Headed by a project manager.Coordinates activitiesMonitors schedule and costs

Project Organization

Project Organization Works Best When:◦Work can be defined with a specific goal

and deadline.◦The job is unique.◦The work contains complex interrelated

tasks.◦The project is temporary but critical.

Project Organization

When a project organization occurs on a permanent basis, this becomes a Matrix Organization.

In matrix or project organization, project team members report also to the project manager aside from their direct supervisor. The project manager coordinates all the activities and directly reports to top management.

Project Organization

A sample Project Organization Chart

The Role of the Project Manager

I. Planning Objectives Resources Work break-down schedule Organization

II. Scheduling Project activities Start and end times Network

III. Controlling Monitor, compare, revise, action

Three Phases of Project Management

Planning

SchedulingControlling

Defines a project by dividing it into its major parts called modules, and finally into a set of activities and their related costs.

SCHEDULING◦Relating people, money and supplies to

specific activities and activities to one and other.

Work Breakdown Structure (WBS)

Is determining the project’s activities and their sequence. During this stage, manpower and other resources at each activity sequence are set, including the time it takes to complete each of the activity. Some firms developed a separate schedule for manpower requirements by type of skills.

Project Scheduling

A common tool used in Project Scheduling is the simple and visual Gantt Chart. It helps managers ensure that:◦All activities are planned.◦Their order or sequence of importance is

accounted for◦Activity time estimates are recorded.◦The overall project time is developed

Gantt Chart

Not easily updated Don’t show the interrelationship between the activities and the resources.

Gantt Chart (Disadvantage)

For complex projects, it is better to use the following techniques to show the precedence relationship and the interdependency of the activities.◦Critical Path Method (CPM)◦Program Evaluation and Review

Technique (PERT)

PERT/CPM

Shows the relationship of each activity to others and to the whole project.

Identifies the precedent relationship among activities.

Encourages the setting of realistic time and cost estimates for each activity.

Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project.

Purpose of Project Scheduling

Monitoring resources, costs, quality, and budgets, revising plans and shifting resources to meet time and cost demands.

Project Controlling:◦Quality◦Costs◦Resources◦Budgets

Controlling

Consider precedence relationship and interdependencies.

Each use a different estimate of activity time.Questions Which May Be Addressed by PERT

and CPMo Project Scheduleo Cost Budgeto Resources Availabilityo If the project must be finished in less than the

scheduled amount of time, what is the way to accomplish this at least costs?

PERT/CPM

1. Work Breakdown Structure2. Develop relationship among the

activities3. Draw the network4. Assign time and/or cost estimates5. Compute the critical path6. Use the network to help plan

Six Steps Common to PERT and CPM

CPM was developed by DuPont for chemical plants (1957) and PERT by Booz, Allen and Hamilton with the U.S Navy, for Polaris missile (1958).

PERt and CPM is similar from framework to procedure, except that PERT uses a different estimate of activity times.

PERT/CPM

The first step in PERT and CPM is to come up with the WBS consisting of activities and events.

An EVENT marks the start of completion of a particular task or activity.

An ACTIVITY is a task or a subproject that occurs between 2 events. It is the smallest unit of work effort consuming both time and resources.

Activities, Events and Networks

I. AOA (Activity-on-Arrow or Activity-on-Arc) – event-oriented.

◦An event is the point at which one or more activities are to be completed and one or more other activities are to begin. An event consumes neither time nor resources.

II. AON (Activity-on-node) – activity-oriented.

o The precedence relationship require that an activity not begin until all preceding activities have been completed.

There are 2 Ways to Draw Networks

Drawing and diagramming project as a network requires establishing the precedence relationships between activities.

A precedence relationship determines a sequence for undertaking activities. It specifies that one activity cannot start unless the preceding activity is completed.

Activities, Events and Networks

Activities, Events and NetworksActivity Description Immediate

Predecessors

A Build Internal Components -

B Modify roof and floor -

C Construct Collection Stack A

D Pour concrete and Install frame

A, B

E Build high-temperature burner C

F Install Pollution Control System

C

G Install Air Pollution Device D,E

H Inspect and Test F,G

If one is going to use the AOA, he should learn about dummy events and activities to draw correctly and accurately complex networks.

A dummy activity has a completion time, t, of zero(0).

Dummy Activities and Events

The objective of the critical path analysis is to determine the values for each activity:Earliest (ES) and latest (LS) = startEarliest finish (EF) = ES + tLatest finish (LF) LS + tSlack (S): Allowable Delay

S = LS – ES = LF –EF

Critical Path Activities

Identifies Critical PathLongest path in networkShortest time project can be completed.Any delay on critical path activities delays

projectCritical path activities have 0 slack.

Critical Path Analysis

Begin at ending event and work backward.

LF = Max. EF for ending activities LS = LF – Activity time LF = Minimum LS of all successors for non-ending activities.

Critical Path Analysis: Earliest Start and Finish Steps

Begin at starting event and work forward.

ES = 0 for starting activities EF = ES + Activity time ES = Max. EF of all predecessors for non-starting activities.

Critical Path Analysis: Latest Start and Finish Steps

Expected project time (T)◦Sum of critical path activity times, t

Project variance (V)◦Sum of critical path activity variances, v

Used to obtain probability of proje

PERT Activity Times

Useful in scheduling and controlling large projects.

Straightforward concept. Graphical networks aid perception of

relationships among project activities. Help pinpoint activities that need to be closely

watched. Points out who is responsible for various

activities. Applicable to a wide variety of projects. Useful in monitoring schedules and costs.

Advantages and Limitations of PERT/CPM

Assumes clearly defined, independent, and stable activities.

Specified precedence relationships Activity times (PERT) follow beta distribution.

Subjective time estimates Over-emphasis on critical path

Advantages and Limitations of PERT/CPM

Factors to Consider when Crashing◦ The amount by which an activity is crashed is, in fact,

permissible.◦ Taken together, the shortened activity durations will

enable one to finish the project by the due date.◦ The total cost of crashing.

Steps in Project Crashing◦ Compute the crash cost per time period.

◦ Find the critical path◦ Select the activity on this critical path that (a) can still be

crashed, and (b) has the smallest crash cost per period.◦ Update all activity times

Project Crashing