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Project Managemen
t
Learning ObjectivesLearning Objectives
Discuss the behavioral aspects of projects in terms of project personnel and the project manager.
Discuss the nature and importance of a work breakdown structure in project management.
Give a general description of PERT/CPM techniques.
Construct simple network diagrams.
Learning ObjectivesLearning Objectives
List the kinds of information that a PERT or CPM analysis can provide.
Analyze networks with deterministic times. Analyze networks with probabilistic times. Describe activity “crashing” and solve
typical problems.
Unique, one-time operations designed to Unique, one-time operations designed to accomplish a specific set of objectives in a accomplish a specific set of objectives in a limited time frame.limited time frame.
Build A
A Done
Build B
B Done
Build C
C Done
Build D
Ship
JAN FEB MAR APR MAY JUN
On time!
ProjectsProjects
Project ManagementProject Management
What are the Key Metrics Time Cost Performance objectives
What are the Key Success Factors? Top-down commitment Having a capable project manager Having time to plan Careful tracking and control Good communications
Project ManagementProject Management
What are the Major Administrative Issues? Executive responsibilities
Project selection Project manager selection Organizational structure
Organizational alternatives Manage within functional unit Assign a coordinator Use a matrix organization with a project leader
Project ManagementProject Management
What are the tools? Work breakdown structure Network diagram Gantt charts Risk management
Planning and SchedulingPlanning and Scheduling
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new facilities
Interview staff
Hire and train staff
Select and order machine
Installation / Remodel
Move in/startup
Gantt Chart
Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be terminated
Key DecisionsKey Decisions
Project ManagerProject Manager
Responsible for:
Work QualityHuman Resources TimeCommunications Costs
Temptation to understate costs
Withhold information
Misleading status reports
Falsifying records
Comprising workers’ safety
Approving substandard work
Ethical IssuesEthical Issues
Project Life CycleProject Life Cycle
Concept
FeasibilityFeasibility
PlanningPlanning
ExecutionExecution
TerminationTermination
Man
agem
ent
Work Breakdown StructureWork Breakdown Structure
Project XProject X
Level 1
Level 2
Level 3
Level 4
PERT and CPMPERT and CPM
PERT: Program Evaluation and Review Technique
CPM: Critical Path Method
Graphically displays project activities Estimates how long the project will take Indicates most critical activities Show where delays will not affect project
The Network DiagramThe Network Diagram Network (precedence) diagram – diagram of
project activities that shows sequential relationships by the use of arrows and nodes.
Activity-on-arrow (AOA) – a network diagram convention in which arrows designate activities.
Activity-on-node (AON) – a network diagram convention in which nodes designate activities.
Activities – steps in the project that consume resources and/or time.
Events – the starting and finishing of activities, designated by nodes in the AOA convention.
The Network Diagram (cont’d)The Network Diagram (cont’d)
Path Sequence of activities that leads from the starting
node to the finishing node
Critical path The longest path; determines expected project
duration
Critical activities Activities on the critical path
Slack Allowable slippage for path; the difference the
length of path and the length of critical path
A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions
Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)
A comes before B, which comes before C
(a) A B CBA C
A and B must both be completed before C can start
(b)
A
CC
B
A
B
B and C cannot begin until A is completed
(c)
B
A
CA
B
C
A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions
Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)
C and D cannot begin until A and B have both been completed
(d)A
B
C
D B
A C
D
C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA
(e)CA
B D
Dummy activityA
B
C
D
A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions
Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)
B and C cannot begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA.
(f)
A
C
DB A B
C
D
Dummy activity
Project Network – Activity on Project Network – Activity on ArrowArrow
1
2
3
4
5 6
Locatefacilities
Order
setup
InterviewHire andtrain
Remodel
Move in
AOA
Project Network – Activity on Project Network – Activity on NodeNode
1
2
3
5
6
Locatefacilities
Order
setup
Interview
RemodelMove in
4
Hire andtrain
7S
AON
Time EstimatesTime Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation
Network activities ES: earliest start EF: earliest finish LS: latest start LF: latest finish
Used to determine Expected project duration Slack time Critical path
Computing AlgorithmComputing Algorithm
Determining the Project ScheduleDetermining the Project Schedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
Table 3.2Table 3.2
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 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2
Total Time (weeks) 25
Earliest start (ES) =earliest time at which an activity can start, assuming all predecessors have been completed
Earliest finish (EF) =earliest time at which an activity can be finished
Latest start (LS) =latest time at which an activity can start so as to not delay the completion time of the entire project
Latest finish (LF) =latest time by which an activity has to be finished so as to not delay the completion time of the entire project
AON Example AON Example
Activity DescriptionImmediate
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
Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors
AON Network for Milwaukee AON Network for Milwaukee PaperPaper
A
Start
BStart Activity
Activity A(Build Internal Components)
Activity B(Modify Roof and Floor)
AON Network for Milwaukee AON Network for Milwaukee PaperPaper
C
D
A
Start
B
Activity A Precedes Activity C
Activities A and B Precede Activity D
AON Network for Milwaukee AON Network for Milwaukee PaperPaper
G
E
F
H
CA
Start
DB
Arrows Show Precedence Relationships
HH
(Inspect/ (Inspect/ Test)Test)
77Dummy Dummy ActivityActivity
AOA Network for Milwaukee AOA Network for Milwaukee PaperPaper
66
FF(Install
(Install
Controls)
Controls)EE
(Bu
ild B
urn
er)(B
ui ld
Bu
rner)
GG
(Insta
ll
(Insta
ll
Pollutio
n
Pollutio
n
Device)
Device)
55DD
(Pour (Pour Concrete/ Concrete/
Install Frame)Install Frame)
44CC
(Construct (Construct Stack)Stack)
11
33
22
BB(Modify
(Modify
Roof/Floor)
Roof/Floor)
AA(B
uild In
tern
al
(Build
Inte
rnal
Componen
ts)
Componen
ts)
Determining the Project ScheduleDetermining the Project Schedule
Perform a Critical Path AnalysisPerform a Critical Path AnalysisActivity 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 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2
Total Time (weeks) 25
Determining the Project ScheduleDetermining the Project Schedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
A
Activity Name or Symbol
Earliest Start ES
Earliest FinishEF
Latest Start
LS Latest Finish
LF
Activity Duration
2
ES/EF Network for Milwaukee ES/EF Network for Milwaukee Paper (Forward pass)Paper (Forward pass)
Start
0
0
ES
0
EF = ES + Activity time
ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper
Start0
0
0
A
2
2
EF of A = ES of A + 2
0
ESof A
B
3
ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper
Start0
0
0
A
2
20
3
EF of B = ES of B + 3
0
ESof B
C
2
2 4
ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper
B
3
0 3
Start0
0
0
A
2
20
C
2
2 4
ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper
B
3
0 3
Start0
0
0
A
2
20
D
4
73= Max (2, 3)
D
4
3 7
C
2
2 4
ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper
B
3
0 3
Start0
0
0
A
2
20
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
D
4
3 7
C
2
2 4
ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper
B
3
0 3
Start0
0
0
A
2
20
LS/LF Times for Milwaukee LS/LF Times for Milwaukee Paper (Backward pass)Paper (Backward pass)
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
Start0
0
0
A
2
20
LF = EF of Project
1513
LS = LF – Activity time
LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper
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
Start0
0
0
A
2
20
LF = Min(LS of following activity)
10 13
LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper
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
Start0
0
0
A
2
20
LF = Min(4, 10)
42
LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper
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
Start0
0
0
A
2
20
42
84
20
41
00
Computing Slack TimeComputing Slack Time
After computing the ES, EF, LS, and LF times After computing the ES, EF, LS, and LF times for all activities, compute the slack or free for all activities, compute the slack or free time for each activitytime for each activity
Slack is the length of time an activity can be delayed without delaying the entire project
Slack = LS – ES or Slack = LF – EF
Computing Slack TimeComputing Slack Time
Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical
Activity ES EF LS LF LS – ES Path
A 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes
Critical Path for Critical Path for Milwaukee PaperMilwaukee Paper
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
Start0
0
0
A
2
20
42
84
20
41
00
ES – EF Gantt ChartES – EF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper
AA Build internal Build internal componentscomponents
BB Modify roof and floorModify roof and floor
CC Construct collection Construct collection stackstack
DD Pour concrete and Pour concrete and install frameinstall frame
EE Build high-Build high-temperature burnertemperature burner
FF Install pollution Install pollution control systemcontrol system
GG Install air pollution Install air pollution devicedevice
HH Inspect and testInspect and test
11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616
LS – LF Gantt ChartLS – LF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper
AA Build internal Build internal componentscomponents
BB Modify roof and floorModify roof and floor
CC Construct collection Construct collection stackstack
DD Pour concrete and Pour concrete and install frameinstall frame
EE Build high-Build high-temperature burnertemperature burner
FF Install pollution Install pollution control systemcontrol system
GG Install air pollution Install air pollution devicedevice
HH Inspect and testInspect and test
11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616
Critical Path ExampleCritical Path Example
Perform a Critical Path AnalysisPerform a Critical Path AnalysisActivity Immediate Predecessors Time (weeks)
A - 6B - 7C A 3D A 2E B 4F B 6G C, E 10H D, F 7
H
7
13 20
14 21F
6
7 13
8 14
G
10
11 21
11 21
E
4
7 11
7 11
C
3
6 9
118
D
2
6 8
1412
A
6
60
82
B
7
0 7
0 7
Start0
0
0
00
End21
0
21
2121
Computing Slack TimeComputing Slack Time
Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical
Activity ES EF LS LF LS – ES Path
A 0 6 2 8 2 NoB 0 7 0 7 0 YesC 6 9 8 11 2 NoD 6 8 12 14 6 NoE 7 11 7 11 0 YesF 7 13 8 14 1 NoG 11 21 11 21 0 YesH 13 20 14 21 1 No
Probabilistic Time EstimatesProbabilistic Time Estimates
Optimistic time
Time required under optimal conditions
Pessimistic time
Time required under worst conditions
Most likely time
Most probable length of time that will be required
Probabilistic EstimatesProbabilistic Estimates
Activitystart
Optimistictime
Most likelytime (mode)
Pessimistictime
to tptm te
Beta Distribution
Expected TimeExpected Time
te = to + 4tm +tp
6
te = expected timeto = optimistic timetm = most likely timetp = pessimistic time
VarianceVariance
(tp – to)2
36
= varianceto = optimistic timetp = pessimistic time
Computing VarianceComputing Variance
Most ExpectedOptimistic 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 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11
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
22 = Project variance = Project variance
= = ((variances of activities variances of activities on critical pathon critical path))
p
Probability of Project Probability of Project CompletionCompletion
Project variance is computed by summing Project variance is computed by summing the variances of critical activitiesthe variances of critical activities
Project variance
2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11
Project standard deviation
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:
Total project completion times follow a Total project completion times follow a normal probability distributionnormal probability distribution
Activity times are statistically Activity times are statistically independentindependent
Probability of Project Probability of Project CompletionCompletion
Standard deviation = 1.76 weeks
15 Weeks
(Expected Completion Time)
Probability of Project Probability of Project CompletionCompletion
What is the probability this project can What is the probability this project can be completed on or before the be completed on or before the 1616 week week deadline?deadline?
ZZ == –– //pp
= = ((1616 wkswks –– 15 15 wkswks)/1.76)/1.76
= = 0.570.57
duedue expected dateexpected datedatedate of completionof completion
Where Z is the number of standard deviations the due
date lies from the mean
Probability of Project Probability of Project CompletionCompletion
What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?
ZZ == −− //pp
= = (16 (16 wkswks −− 15 15 wkswks)/1.76)/1.76
= = 0.570.57
due expected datedate of completion
Where Z is the number of standard deviations the due
date lies from the mean
.00 .01 .07 .08
.1 .50000 .50399 .52790 .53188
.2 .53983 .54380 .56749 .57142
.5 .69146 .69497 .71566 .71904
.6 .72575 .72907 .74857 .75175
Probability of Project Probability of Project CompletionCompletion
Time
Probability(T ≤ 16 weeks)is 71.57%
0.57 Standard deviations
15 16Weeks Weeks
Determining Project Determining Project Completion TimeCompletion Time
Probability of 0.01
Z Z = 2.33
Probability of 0.99
2.33 Standard deviations
0 2.33
Due date = 15 + 2.33 x 1.76 = 19.1 weeks
PERT ExamplePERT ExampleMost Expected
Optimistic Likely Pessimistic Time VarianceActivity a m b t = (a + 4m + b)/6 [(b – a)/6]2
A 3 6 8 5.83 0.69B 2 4 4 3.67 0.11C 1 2 3 2.00 0.11D 6 7 8 7.00 0.11E 2 4 6 4.00 0.44F 6 10 14 10.00 1.78
G 1 2 4 2.17 0.25H 3 6 9 6.00 1.00I 10 11 12 11.00 0.11 J 14 16 20 16.33 1.00K 2 8 10 7.33 1.78
Immediate Predecessors
---C
B,DA,EA,EFGC
H,I
Time-cost Trade-offs: CrashingTime-cost Trade-offs: Crashing
Crash – shortening activity duration
Procedure for crashing Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum of crashing the least expensive activity on each critical path
Crashing The ProjectCrashing The Project
Time (Wks) Cost ($) Crash Cost CriticalActivity Normal Crash Normal Crash Per Wk ($) 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 YesF 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
308,000
Crash and Normal Times and Crash and Normal Times and Costs for Activity BCosts for Activity B
| | |11 22 33 Time (Weeks)Time (Weeks)
$34,000 $34,000 —
$33,000 $33,000 —
$32,000 $32,000 —
$31,000 $31,000 —
$30,000 $30,000 —
—
Activity Activity CostCost
CrashCrash
NormalNormal
Crash TimeCrash Time Normal TimeNormal Time
Crash Crash CostCost
Normal Normal CostCost
Crash Cost/WkCrash Cost/Wk = = Crash Cost – Normal CostCrash Cost – Normal CostNormal Time – Crash TimeNormal Time – Crash Time
==$34,000 $34,000 –– $30,000 $30,000
3 3 –– 1 1
= = $2,000/Wk= = $2,000/Wk$4,000$4,0002 Wks2 Wks
Critical Path And Slack Times Critical Path And Slack Times For Milwaukee PaperFor Milwaukee Paper
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
Start0
0
0
A
2
20
42
84
20
41
00
SlackSlack = 1 = 1 SlackSlack = 1 = 1
SlackSlack = 0 = 0 SlackSlack = 6 = 6
SlackSlack = 0 = 0
SlackSlack = 0 = 0
SlackSlack = 0 = 0
SlackSlack = 0 = 0
Advantages of PERTAdvantages of PERT
Forces managers to organize
Provides graphic display of activities
Identifies Critical activities
Slack activities1
2
3
4
5 6
Limitations of PERTLimitations of PERT
Important activities may be omitted
Precedence relationships may not be correct
Estimates may include a fudge factor
May focus solelyon critical path
1
2
3
4
5 6
142 weeks
Goldratt’s Critical ChainGoldratt’s Critical Chain
Goldratt’s insight on project management Time estimates are often pessimistic Activities finished ahead of schedule often go
unreported With multiple projects, resources needed for one
project may be in use on another
Computer aided design (CAD) Groupware (Lotus Notes) CA Super Project Harvard Total Manager MS Project Sure Track Project Manager Time Line
Project Management SoftwareProject Management Software
Risk: occurrence of events that have undesirable consequences
Delays
Increased costs
Inability to meet specifications
Project termination
Project Risk ManagementProject Risk Management
Identify potential risks
Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans
Risk ManagementRisk Management
SummarySummary
Projects are a unique set of activities
Projects go through life cycles
PERT and CPM are two common techniques
Network diagrams
Project management software available