Project Management

Introduction What – Project Management Where – Where the success or

failure of a project will have major consequences for the company

Why – At some point every company takes on large and complicated projects – opening a new store, building a plant, developing a product

Project Management What is at stake? Large projects, outside of normal

production Cost overruns Late completion – penalties Early completion – bonuses

 Project Planning Project organization Project manager

Project Planning Planning Task Work Breakdown Structure Determines gross requirements for

people, supplies and equipment

Work Breakdown Structure Level 1 Project 2 Major tasks 3 Subtasks 4 Activities

Example Level 1 Open a new Retail Outlet 2 Select Location 2 Refurbish Location 3 Signage 4 Install new sign 3 Displays 4 Install racks 4 Install Mannequins

Project Scheduling Sequence project activities Allotting time

Gantt Chart

Project Controlling Monitor resources, costs, quality,

and budgets Use feedback to revise project plan

PERT and CPM Program Evaluation and Review

Technique Critical Path Method Schedule, monitor and control

large projects

PERT and CPM Framework Define project Develop relationships among activities Draw network connecting activities Assign time / cost estimates to each

activity Compute longest time path through

network – the critical path Use network to plan, schedule, monitor,

control project

Difference Between PERT and CPM CPM – one estimate of time PERT three estimates with

probabilities

PERT Symbols

224 Years4 Years

Activity (Arrow)Activity (Arrow)

RegisterRegister Receive diplomaReceive diploma

Project: Obtain a college degree (B.S.)Project: Obtain a college degree (B.S.)

Event (Node)Event (Node)

Attend class, Attend class, study etc.study etc.

11

Event (Node)Event (Node)

PERT Symbols

11AA

BBA & B can occur A & B can occur concurrentlyconcurrently

22

33

PERT Symbols

11 44

22

33

AA

BB

CC

A must be done before A must be done before C & D can beginC & D can begin DD

PERT Symbols

11 44

22

33

AA

BB EE

CC

B & C must be done B & C must be done before E can beginbefore E can begin

DD

Activity Time Estimates Optimistic Time (a) Most Likely Time (m) Pessimistic Time (b) Beta distribution Expected Time t = (a + 4m + b) /

6 Variance v = [(b – a)/6]2

Critical Path Analysis ES – Earliest Start Time LS – Latest Start Time EF – Earliest Finish LF – Latest Finish S – Slack Time – LS – ES Critical Path – Group of activities in the

project that have a slack time of zero T – total project completion time V – total variance of activities on the critical

path

Project Crashing Crashing – shorten activity time by

adding resources Can be expensive – may be less

expensive than cost penalties

PERT Advantages Useful at several stages, especially

scheduling and control Not mathematically complex Graphical display show relationships Critical path pinpoints activities to closely

monitor Documents who is responsible for each

activity Applicable to a wide range of industries Monitors schedules and costs

PERT Limitations Project activities clearly defined,

independent, stable in their relationships

Precedence relationships must be specified in advance

Time estimates are subjective Danger of too much emphasis on

critical path