Project management teaching

Project Management Concepts

Sudip R Chandra

Computer Science & Engg.

24th September 2013

1

PROJECT MANAGEMENT CONCEPTS

Project, Defined

A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources.

It has a well-defined objective stated in terms of scope, schedule, and costs.

Project s are “born” when a need is identified by the customer – the people or organization willing to provide funds to have the need satisfied.

It is the people (project manager and project team), not the procedures and techniques, that are critical to accomplishing the project objective.

Procedures and techniques are merely tools to help the people do their jobs.

Examples of Projects

Planning a wedding

Designing and implementing a computer system

Hosting a holiday party

Designing and producing a brochure

Executing an environmental clean-up of a contaminated site

Holding a high school reunion

Performing a series of surgeries on an accident victim

Phases of the Project Life Cycle 1 The first phase involves the identification of a

need, problem, or opportunity.

The need and requirements are usually written by the customer into a document called a request for proposal (RFP).

Phases of the Project Life Cycle 2 The second phase is the development of a

proposed solution to the need or problem.

This phase results in the submission of a proposal.

The customer and the winning contractor negotiate and sign a contract (agreement).

Phases of the Project Life Cycle 3 The third phase is performing the project.

Different types of resources are utilized

Results in the accomplishment of the project objective

Phases of the Project Life Cycle 4

The final phase is terminating the project.

Perform close-out activities

Evaluate performance

Invite customer feedback

The Project Management Process

The project management process means planning the work and then working the plan. 7 steps of planning

1. Clearly define the project objective. 2. Divide and subdivide the project scope into major “pieces”3. Define the specific activities for each piece (work package)4. Graphically portray the activities that need to be performed fro each work

package in order to accomplish the project objective – in the form of network diagram.

5. Make a time estimate for how long it will take to complete each activity – resources needed.

6. Make a cost estimate for each activity.7. Calculate a project schedule and budget to determine whether the project can

be completed within the required time, with the allotted founds, and with the available resources.

Project Control Process

Work Breakdown Structure (WBS) The second step is to determine what activities

need to be performed. A list of all the activities must be developed. The WBS is a hierarchical tree of end items to

be accomplished. A work item is one small piece of the project. A work package is the lowest-level item.

Microsoft Project WBS

1. Start new project Turn on the Project Guide

On the Tools menu, click Options, and then click the Interface tab.

In the Project Guide settings section, select the Display Project Guide check box.

Manually set up a new project

Project – Project Information…or View – Turn on project guide…

http://office.microsoft.com/en-us/project/HA102639631033.aspx

Tools - Options

2. Tasks There are four major types of tasks:

1. Summary tasks - contain subtasks and their related properties

2. Subtasks - are smaller tasks that are a part of a summary task

3. Recurring tasks - are tasks that occur at regular intervals

4. Milestones - are tasks that are set to zero duration and are like interim goals in the project

Add tasks

Insert new task

Outlining tasks

Tools – Options… - check “Show project summary task”

Predecessor

Tasks can be linked in four ways

Finish-Start FS Predecessor finishes and the other starts

Start-Finish S-F Task begins at the same time as its predecessor

Finish-Finish F-F Both tasks finish at the same time Start-Start S-S Start of the predecessor determines

when the other starts

Constraints Certain tasks need to be completed

within a certain date. Intermediate deadlines may need to be

specified. By assigning constraints to a task you

can account for scheduling problems. There are about 8 types of constraints

and they come under the flexible or inflexible category.

3. Managing task

Defining a Timeline

Find an optimistic value, D(o), a pessimistic value, D(p) and a realistic value, D(r) .

Then: Duration = ( D(o) + D(p) + 4 x D(r) ) / 6

The importance of tracking progress

Techniques to manage projects effectively: Critical Path Management (CPM) and Program Evaluation and Review Techniques (PERT). They are similar and you will now often find the technique referred to as:

CPM/PERT. The technique involves using network models to trace the links between tasks

and to identify the tasks which are critical to meeting the deadlines. Once you've identified the critical path, any delay on any part of the critical path will cause a delay in the whole project. It is where managers must concentrate their efforts.

In MS Project, you use the Tracking Gantt diagram to show the critical path in red and you can see the PERT diagram by looking at the Network view.

Gantt Chart View – critical path

A Gantt chart is a type of bar chart that illustrates a project schedule.

Critical path: View – More views… - Detail Gant

PERT diagram - Network view

Views Views allow you to examine your project from different

angles based on what information you want displayed at any given time.

You can use a combination of views in the same window at the same time.

Project Views are categorized into two types:

• Task Views (5 types)

• Resource Views (3 types)

Saving a baseline Baseline plan: The original project plans used to track

progress on a project. The baseline plan is a snapshot of your schedule at the

time that you save the baseline and includes information about tasks, resources, and assignments.

You can set a baseline for your project, enabling you to compare your progress with the original plan and any additional baselines you set at milestones throughout your project.

Saving a Baseline

Tools – Tracking – Save Baseline…

http://office.microsoft.com/home/video.aspx?assetid=ES102776241033&width=1024&height=768&startindex=0&CTT=11&Origin=HA102751251033&app=WINPROJ&ver=12

RESOURCES

Manage the project resources:

Resources are of three types: work resources, material resources and cost resources.

Work resources complete tasks by expending time on them. They are usually people and equipment that have been assigned to work on the project (you track their participation by the amount of time they spend).

Material resources are supplies and stocks that are needed to complete a project. You assign material resources by the quantity that you need: two tons of gravel or 300 gallons of diesel fuel, for instance. Because materials aren't measured by time, quantities usually affect only the cost of your project. Materials affect dates or duration only when you have to wait for those materials to become available.

Cost. Cost resources are the new kid on the Project 2007 block, and they're strictly cost; no time, no quantities—just dollars. Expenses, such as travel or fees, increase the project price tag, but they aren't associated with work or material resources.

You must start by identifying the resources available along with their costs.

Resource costs will be multiplied by duration to calculate project costs. You have to open the Resource sheet to specify the project resources

and costs.

• people • equipme

nt • supplies

Fields in the Resource Sheet may be blank or contain different types of information depending on the type of resource. For example, a work resource doesn't have a Material label, and costs are calculated initially as dollars per hour. Material resources have a cost per unit—per pound, gallon, or piece—and the Material label field defines the units. Cost resources receive a value only when you assign them to tasks.

Use the Detail Gantt view to find slack (float)

On the View menu, click More Views. In the Views list, click Detail Gantt, and then

click Apply. On the View menu, point to Table, and then

click Schedule. In the chart portion of the view, slack appears as thin bars to the right of tasks, with slack values adjoining the regular Gantt bars.

To shorten a project schedule

Reduce duration of activities on critical pathMore resourcesChange their scope

Technically Constrained Activity Sequence

Resource-Constrained Planning

Painting Project Showing Needed Resources

Create a budget for your project

Step 1: Create budget resources for your project

Step 2: Assign the budget resources to the project summary task

Step 3: Enter values for the budget resources Step 4: Categorize resource costs according t

o their budget type Step 5: Group resources to view how they co

mpare against the budget

Step 1: Create budget resources for your project

Create Budget-Travel and Budget-Labor on your resource sheet

View – Resource Sheet

Check the check box for Budget

Step 2: Assign the budget resources to the project summary task

Gent chart view – Tools – Options – View Tab – Show project summary task (check box)

Task is added to the top of the project list. Select this task.

Click on Button “Assign Resources” Select the two budget resources you

created earlier and click “Assign”

Step 3: Enter values for the budget resources

View – Resource Usage view Add Budget Cost and Budget Work fields

(columns): Insert – Column – Budget Cost and Budget

WorkAdd values for travel and Labor cost

Add: 15,000 for Budget-Travel and 30,000 for Budget-Labor (Budget Work column)

Step 4: Categorize resource costs according to their budget type

Create custom filed (column) Open Resource Sheet view Tools – Customize – Fields Choose Resource text filed and rename:

Budget Type

Select Option Button: Roll down unless manually entered

Add field to the resource sheet view: Insert – column – choose Budget Type column ( you can now identify your resources as labor or travel

Step 5: Group resources to view how they compare against the budget

Resource Usage view Project – Group by: No Group –

Customize Group By… - Select the Budget Type field

Viewing Project Cost Information

Right click the Select All button and click Cost

Or View – Table: Entry – Cost

Reports

Cost Report: Reports - Reports – Costs – Cash Flow:Edit – Column list

Project Summary report: Reports – Overview – Project Summary

Resource Usage Report

Current Activity Reports

Scheduling

One of the most

important things you

can do is schedule. Also one of the first things you should do! Tools help

Microsoft ProjectOpenProj.org OpenWorkbench.org

Coming up: Planning

Planning The bad news: time flies The good news: you’re the pilot!

You must begin planning immediatelyGiven limited informationPlan anyway and then

revise

Coming up: Creating a plan: Things to know

Creating a plan: Things to know

Scope Context. How does the software to be built fit into a larger system,

product, or business context and what constraints are imposed as a result of the context?

Information objectives. What customer-visible data objects (Chapter 8) are produced as output from the software? What data objects are required for input?

Function and performance. What function does the software perform to transform input data into output? Are any special performance characteristics to be addressed?

Software project scope must be unambiguous and understandable at the management and technical levels.

Coming up: Creating a plan: Things to do

Creating a plan: Things to do

Problem Decomposition: Sometimes called partitioning or problem elaboration

Once scope is defined … It is decomposed into constituent functions It is decomposed into user-visible data objectsor It is decomposed into a set of problem classes

Decomposition process continues until all functions or problem classes have been defined (this won’t be far at the beginning of your project)

Coming up: Create a schedule

Schedule

List of tasksWith datesWith assigned resources (people)With durations With predecessors and successors

How do you get buy-in from the team for a schedule?History Increments

Coming up: Schedule Terms

Schedule Terms

Critical path Sequence of tasks that form the longest path to completion of the

project. Any delay on any of these will make the overall completion date move.

Slack Amount of time a task can be delayed without affecting the overall

completion date. Start slack - amount before task needs to start Finish slack - amount before task needs to finish

Milestone - An import date in the schedule Dependencies - relationship between tasks

Coming up: Schedule Dependencies

Schedule Dependencies FS - Finish to start (most common)

A FS B. B doesn’t start until A is finished Build wall FS Paint wall

FF - Finish to finish A FF B. B doesn’t finish before A is finished Write final chapter FF Complete Index

SS - Start to start A SS B. B doesn’t start until A has started Project funded SS project management activities begin

SF - Start to finish A SF B. B doesn’t finish before A has started Once A starts, B is allowed to finish B=Baby sit a child, A=parent comes home Coming up: Resource

Leveling

Resource Leveling

A process to examine a project for an unbalanced use of people and to resolve over-allocations or conflicts

Happens when multiple tasks are scheduled at the same time for the same person

Solution: Make tasks sequential by introducing “fake” dependencies Split resource usage among tasks (50% on task 1, 50%

on task 2)

Coming up: Auto Resource Leveling

Auto Resource Leveling

Some tools (not Open Project) provide auto resource leveling

Tool automatically ensures no person works over 100% of the time (automatically makes tasks sequential)

Advantageous because this does not introduce “fake” dependencies

Coming up: Gantt Chart

Gantt Chart

Coming up: Finding Critical Path

Finding Critical Path Draw a network diagram of the activities Determine the Early Start (ES) of each

node. Work from beginning node (ES=0) to final node

ES - earliest time the activity can start ES = Max(ESprevNode + DurationPrevNode)

Coming up: Finding Critical Path

A

C

B

ES: 4

ES: 2 10

7 ES: ??

Finding Critical Path Determine the Late Start (LS) of each

node. Work from the final node to the beginning node. The latest time the activity can start without

changing the end date of the projectLS = MIN(LSnext - DurationNode)For the last node LS = ES

Coming up: Example

A

C

B

LS: ?

LS: ? 10

7 LS: 12A

C

B

LS: ?

LS: 13

10

7 LS: 12

Example

Here's the example: Activity Description Predecessor DurationA Product design (None) 5 monthsB Market research (None) 1C Production analysis A 2D Product model A 3E Sales brochure A 2F Cost analysis C 3G Product testing D 4H Sales training B, E 2I Pricing H 1J Project report F, G, I 1Coming up: Example Node

Network

Example Node Network

A

E

D

C

I

G

F

J

B

H Here's the example: Activity Description Predecessor DurationA Product design (None) 5 monthsB Market research(None) 1C Production A 2D Product model A 3E Sales brochure A 2F Cost analysis C 3G Product testing D 4H Sales training B, E 2I Pricing H 1J Project report F, G, I 1

ES:0LS:

ES:5LS:

ES:0LS:

ES:5LS:

ES:5LS:

ES:7LS:

ES:9LS:

ES:8LS:

ES:7LS:

ES:12LS:

Coming up: Example Node Network

ES(H) ES(E)+dur(E) = 5 + 2 = 7 ES(B)+dur(B) = 0 + 1 = 1Maximum = 7 = ES(H)

ES(J) ES(F)+dur(F) = ? ES(G)+dur(G) = ? ES(I) + dur(I) = ?Maximum = ? = ES(J)


A

E

D

C

I

G

F

J

B


ES:0LS:0

ES:5LS:5

ES:0LS:8

ES:5LS:7

ES:5LS:7

ES:7LS:9

ES:9LS:11

ES:8LS:8

ES:7LS:9

ES:12LS:12

Coming up: Example Node Network

LS(F) LS(J)-dur(F) = 12 – 3 = 9

LS(A) = LS(C) – dur(A) = 7 – 5 = 2 LS(D) – dur(A) = 5 – 5 = 0 LS(E) – dur (A) = 7 – 5 = 2Minimum = 0 = LS(A)


A

E

D

C

I

G

F

J

B


ES:0LS:0

ES:5LS:5

ES:0LS:8

ES:5LS:7

ES:5LS:7

ES:7LS:9

ES:9LS:11

ES:8LS:8

ES:7LS:9

ES:12LS:12

Coming up: Game Development In-Class Exercise

Game Development In-Class Exercise

TASK DURATION (days) PREDECESSORs

A Graphics Engine 14

B Sound Engine 5 I

C Music Engine 5 J

D Input Engine 10 A

E Gameplay/general programming

31 B, C, D

F Physics 7 E

G 2D Artwork 14

H 3D Artwork 21 G

I Sound Effects 14

J Music 9

K Level Design 21 F, H

Find the critical path

Coming up: Review Questions

Schedule Example Lets try to schedule this work among our

three developers “John, Mary, Carl”

Coming up: Scheduling Steps

TASK DURATION (days) PREDECESSORs

A Graphics Engine 14

B Sound Engine 5 I

C Music Engine 5 J

D Input Engine 10 A

E Gameplay/general programming

31 B, C, D

F Physics 7 E

G 2D Artwork 14

H 3D Artwork 21 G

I Sound Effects 14

J Music 9

K Level Design 21 F, H

Scheduling Steps

Add in all the tasks (preferably in a hierarchy) Add in all the dependencies Break down large tasks into smaller tasks.

Optimally (in Dan Fleck’s opinion) you want to schedule so the duration of each smallest task is at most 3-5 days

Assign people (resources) to tasks Level your resources

Coming up: Classic Mistakes

Classic Mistakes

Overly optimistic schedule Failing to monitor schedule Failing to update schedule Adding people to a late project Failure to manage expectations of others Leaving out a task

Coming up: Scope Creep

Earned Value Management

How much work you planned to have accomplished by now (in dollars or hours) called the Planned Value

How much you have actually spent by now (in dollars or hours), called Actual Cost

The value, in terms of your baseline budget, of the work accomplished by now (in dollars or hours), called the Earned Value!

Coming up: Earned Value Management

Idea is to link schedule and cost together to monitor both in the same “units” of value

Earned Value Management

Planned value (PV) - the value of all resources needed to meet the project’s objectives Each objective of a project has an associated

planned value Budgeted (cost) at completion (BAC) - The sum

of all the PVs Earned value (EV) - the amount of value

completed at any point during the project Actual Cost (AC) - actual amount of money you

have spent so far. In a perfect project AC and EV are the same.

Coming up: Earned Value Management Example

Earned Value Management Example We’ve budgeted $200 to buy, setup, network

and test a new system Our planned values (PVs) of each task are:

Buy - $50, Setup - $75, network - $50, test - $25 Our BAC is therefore $200

We’ve now completed phase one, and thus our earned value (EV) is now $50.

To do this we spent $60 (our actual cost (AC))

Coming up: Earned Value Management Example

Earned Value Management Example Schedule performance index (SPI)

EV / PV --> 50/50 = 1 (perfect). Our group is on schedule

Cost performance index (CPI) EV / AC --> 50/60 = 0.83 For every dollar spent, I get 83 cents worth of work.

Estimated cost at completion (EAC) BAC / CPI = 200 / 0.83 = $240.96

Schedule Variance (SV) : EV - PV Cost Variance (CV) : EV - AC

Coming up: EVM Example 2 from: http://www.hyperthot.com/pm_cscs.htm

Memorization Hint: Most equations begin with earned value

EVM Example 2 from: http://www.hyperthot.com/pm_cscs.htm

PLANNED VALUE (Budgeted cost of the work scheduled) = 18 + 10 + 16 + 6 = $50

EARNED VALUE (Budgeted cost of the work performed) = 18 + 8 + 14 + 0 = $40

ACTUAL COST (of the work performed) = $45 (Data from Acct. System)

Therefore: Schedule Variance = 40 - 50 = -$10 Schedule Performance Index = 40 / 50 = 0.8 Coming up: What is earned

value?

What is planned value at time X?

What is earned value at time X?

Line is at 16, blue bar ends at 14

Line is at 6

Earned – Planned. Perfect is?

What is earned value?

A. The amount of money you get upon completion of a task

B. The value of an activity C. The value of the work completed by

now in the schedule D. The value of all activities planned to be

completed by now in the schedule

Coming up: Why do you use earned value management?

Why do you use earned value management? A.It is required by my contract B. Measuring value give you more

information than measuring cost or time alone

C. I don’t use it D. It guarantees my project will be done on

time

Coming up: Scheduling Rules of Thumb

Scope Creep

The scope of your project is all the work you initially planned to do.

Scope creep is when your project gets new tasks throughout it’s lifetime without adding more resources to handle new tasks. The scope is “creeping” up…

Scope changes are OK, and really unavoidable… that’s fine. However you must update the resources (time, features or people accordingly)

Coming up: Why would scope changes occur?

Scope

BOO!

Why would scope changes occur? A. You get more money to do more things B. The customer asks you to do something

extra because “it is critical for success” C. A competing product has a feature that

you must have to be competitive D. All of these

Coming up: Which are causes of scope creep?

Scope Change versus Creep

Your company has a $1million dollar contract with a defined scope.

Scope change:

Customer: please add all these requirements, and I’ll increase the contract to $2million dollars

Manager: Certainly!

Scope creep:

Customer: please add all these requirements, and I’ll be really happy.

Manager: Certainly!

Change is good!

Which are causes of scope creep?

A. poor change control B. lack of proper initial identification of what

is required to satisfy project objectives C. a weak project manager D. all of these

Source: Wikipedia: Scope Creep

Coming up: Managing Scope

Managing Scope

How to deal with the inevitable “Scope creep”?

Joint Application Development and prototyping

Formal change approval Defer additional requirements as future

system enhancements

Scope

Coming up: Managing Risk

Managing Risk

Document your risks in a risk management plan1 Description of risk

2 Likelihood of occurrence (0-100%)

3 Impact - 1(low) 5 (high), or cost $20,000

4 Exposure = Impact * Likelihood

5 Mitigation strategy How to lessen the impact of the risk How to lessen the likelihood An action plan if risk occurs

Update and track your risks Communicate your risks to upper managementComing up: Projects get

into trouble when…

Coming up: Common-Sense Approach to Projects

Projects get into trouble when…

Software people don’t understand their customer’s needs. The product scope is poorly defined. Changes are managed poorly. The chosen technology changes. Business needs change [or are ill-defined]. Deadlines are unrealistic. Users are resistant. Sponsorship is lost [or was never properly obtained]. The project team lacks people with appropriate skills. Managers [and practitioners] avoid best practices and lessons

learned.

Coming up: References

Common-Sense Approach to Projects Start on the right foot. This is accomplished by working hard (very hard) to

understand the problem that is to be solved and then setting realistic objectives and expectations.

Maintain momentum. The project manager must provide incentives to keep turnover of personnel to an absolute minimum, the team should emphasize quality in every task it performs, and senior management should do everything possible to stay out of the team’s way.

Track progress. For a software project, progress is tracked as work products (e.g., models, source code, sets of test cases) are produced and approved (using formal technical reviews) as part of a quality assurance activity.

Make smart decisions. In essence, the decisions of the project manager and the software team should be to “keep it simple.”

Conduct a postmortem analysis. Establish a consistent mechanism for extracting lessons learned for each project.

References

www.projity.com Wikipedia: Project Management Pressman R., Software Engineering A Practical Approach, Ch 21 Pressman R., Software Engineering A Practical Approach, Slides for Ch 21 Kazman R., The CIO, People Issues, Project & Change Management,

kazman.shidler.hawaii.edu/619ch12.ppt Pratt M, Earned Value Management,

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=110065&intsrc=article_pots_bot

End of presentation

Next week

Review student essays (due in a week) Homework 6 due

Please submit sceenshots (in a word document or pdf) to blackboard

Testing

Analyzing Cost-Time Trade-Offs

There are always cost-time trade-offs in project management. You can completing a project early by hiring more

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

beyond some specific date, and a bonus may be provided for early completion.

Crashing a project means expediting some activities to reduce overall project completion time and total project costs.

Cost to Crash

To assess the benefit of crashing certain activities, either from a cost or a schedule perspective, the project manager needs to know the following times and costs.

Normal time (NT) is the time necessary to complete and activity under normal conditions.

Normal cost (NC) is the activity cost associated with the normal time.

Crash time (CT) is the shortest possible time to complete an activity.

Crash cost (CC) is the activity cost associated with the crash time.

Cost to Crash per Period

The Cost to Crash per Time Period =

CC − NC

NT − CT

Crash Cost − Normal Cost

Normal Time − Crash Time

Linear cost assumption

8000 —

7000 —

6000 —

5000 —

4000 —

3000 —

0 —

Dire

ct c

ost (

dolla

rs)

| | | | | |5 6 7 8 9 10 11

Time (weeks)

Crash cost (CC)

Normal cost (NC)

(Crash time) (Normal time)

Estimated costs for a 2-week reduction, from 10 weeks to 8 weeks

5200

Cost-Time Relationships in Cost Analysis

The objective of cost analysis is to determine the project schedule that minimizes total project costs.

A minimum-cost schedule is determined by starting with the normal time schedule and crashing activities along the critical path in such a way that the costs of crashing do not exceed the savings in indirect and penalty costs.

Minimizing CostsMinimizing Costs

Use these steps to determine the minimum cost schedule:

1. Determine the project’s critical path(s).2. Find the activity or activities on the critical path(s) with

the lowest cost of crashing per time unit.3. Reduce the time for this activity until…

a. It cannot be further reduced orb. Until another path becomes critical, orc. The increase in direct costs exceeds the savings that result

from shortening the project (which lowers indirect costs & penalties).

4. Repeat this procedure until the increase in direct costs is larger than the savings generated by shortening the project.

Minimum Cost ScheduleMinimum Cost Schedule

Regular & Crash Times & Cost to Crash

Activity Regular Time Crash TimeTotal Costto Crash

Cost Per Unit of Crash Time

$ A* 2 1 $1,000

$ B* 4 2 $ 500

$ C* 2 2 C

$ D* 1 1 C

$ E 3 1 $ 200

$ F* 2 2 C

$ G* 1 1 C

$ H* 12 8 $ 800

$ I* 8 5 $1,200

$ J 6 6 C

$ K 5 3 $ 600

$ L*TOTAL

* Activities on critical path

3 3 C$4,300

START A2

B4

C2

D1

F2

G1

H12

J6

I8

K5

L3

ENDE3

Network for a Software Purchasing Project using Normal Times

IF ALL ACTIVITIES ARE CRASHED

START

A1

B2

C2

D1

F2

G1

H8

J6

I5

K3

L3

ENDE1

(1,5,4)

(8,8,0)(6,6,0)(5,5,0)(0,0,0) (1,1,0) (3,3,0)

(26)

(23,23,0)

(17,18,1)

(17,17,0)

(9,20,11)

(9,9,0)

*What is the minimum amount of time to complete the project?*What is the additional cost involved in achieving this reduction in time?

START

A2

B4

C2

D1

F2

G1

H12

J6

I8

K5

L3

END

E3

What is the minimum cost to achieve minimum time schedule for project


Cost Per Unit of Crash

Time

$ A 2 1 $1,000 $1,000

$ B 4 2 $ 500 $ 250

$ C 2 2 C C

$ D 1 1 C C

$ E 3 1 $ 200 $ 100

$ F 2 2 C C

$ G 1 1 C C

$ H 12 8 $ 800 $ 200

$ I 8 5 $1,200 $ 400

$ J 6 6 C C

$ K 5 3 $ 600 $ 300

$ L 3 3 C$4,300

C

START

A2

B4

C2

D1

F2

G1

H12

J6

I8

K5

L3

ENDE3

What is the minimum cost to achieve minimum time schedule for project



Time

$ A 2 1 $1,000 $1,000

$ B 4 2 $ 500 $ 250

$ C 2 2 C C

1 1 C C

$ E 3 1 $ 200 $ 100

$ F 2 2 C C

$ G 1 1 C C

$ H 12 8 $ 800 $ 200

$ I 8 5 $1,200 $ 400

$ J 6 6 C C

$ K 5 3 $ 600 $ 300

$ L 3 3 C$4,300

C

START

A2

B4

C2

D1

F2

G1

H12

J6

I8

K5

L3

ENDE3

What is the minimum cost to reduce project time to 30 months



Time

$ A 2 1 $1,000 $1,000

$ B 4 2 $ 500 $ 250

$ C 2 2 C C

1 1 C C

$ E 3 1 $ 200 $ 100

$ F 2 2 C C

$ G 1 1 C C

$ H 12 8 $ 800 $ 200

$ I 8 5 $1,200 $ 400

$ J 6 6 C C

$ K 5 3 $ 600 $ 300

$ L 3 3 C$4,300

C

START

A2

B4

C2

D1

F2

G1

H12

J6

I8

K5

L3

ENDE3

What is the optimal schedule if I incur a penalty of $280 for each month above the absolute minimum project time of 26 months?



Time

$ A 2 1 $1,000 $1,000

$ B 4 2 $ 500 $ 250

$ C 2 2 C C

1 1 C C

$ E 3 1 $ 200 $ 100

$ F 2 2 C C

$ G 1 1 C C

$ H 12 8 $ 800 $ 200

$ I 8 5 $1,200 $ 400

$ J 6 6 C C

$ K 5 3 $ 600 $ 300

$ L 3 3 C$4,300

C

© 2007 Pearson Education

Calculating total CostCalculating total Cost Adding Adding Direct, Penalty & Overhead CostsDirect, Penalty & Overhead Costs

The overhead (indirect) costs are $200 per dayThere is a penalty of $100/day for completing project in more than 12 days

Network Diagram


Total Cost ProblemTotal Cost Problem

Assessing Risks

Risk is a measure of the probability and consequence of not reaching a defined project goal.

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

A Risk-Management Plan identifies the key risks to a project’s success and prescribes ways to circumvent them.

Probabilistic Probabilistic Time EstimatesTime Estimates

MeanMeanmmaa bb TimeTime

Pro

babi

lity

Pro

babi

lity

Beta Distribution

PessimisticOptimistic

TimeTime

Pro

babi

lity

Pro

babi

lity

Normal Normal DistributionDistribution

MeanMeanaa bbmm

33 33

Area under Area under curve curve between a between a and b is and b is 99.74%99.74%

Probabilistic Probabilistic Time EstimatesTime Estimates

te = a + 4m + b

6

Mean

22 = = ( )

bb – – aa

66

22

VarianceVariance

Probabilistic Time EstimatesProbabilistic Time Estimates

Calculating Means and Variances for a Beta Distribution

Where:

a is the Optimistic estimate

b is the pessimistic estimate

m is the most likely estimate

Optimistic Likely PessimisticActivity (a) (m) (b)

Time Estimates (wk)

A 11 12 13

B 7 8 15

C 5 10 15

D 8 9 16

E 14 25 30

F 6 9 18

G 25 36 41

H 35 40 45

I 10 13 28

J 1 2 15

K 5 6 7

St. John’s HospitalSt. John’s HospitalProbabilistic Time EstimatesProbabilistic Time Estimates

A F

I

C G Finish

D

E

HB J

K

Start

Activity BMost

Optimistic Likely Pessimistic(a) (m) (b)7 8 15

A F

I

C G Finish

D

E

HB J

K

Start


te = = 9 weeks7 + 4(8) + 15

62 = = 1.78( )15 - 7

6

2

Calculating Means and Variances

Optimistic Likely Pessimistic Expected VarianceActivity (a) (m) (b) Time (te ) (2 )

Time Estimates (wk) Activity Statistics

A 11 12 13 12 0.11B 7 8 15 9 1.78C 5 10 15 10 2.78D 8 9 16 10 1.78E 14 25 30 24 7.11F 6 9 18 10 4.00G 25 36 41 35 7.11H 35 40 45 40 2.78I 10 13 28 15 9.00J 1 2 15 4 5.44K 5 6 7 6 0.11



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

63 69

Earliest start time Earliest finish time

Latest start time Latest finish time

2 = (variances of activities) z = T – TE

2

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

z =72 – 69

11.89

What is the Probability of finishing the project in 72 weeks?Given that: Critical Path = B - D - H - J - K

T = 72 Weeks TE = 69 Weeks

St. John’s HospitalSt. John’s HospitalAnalyzing ProbabilitiesAnalyzing Probabilities

From Normal Distribution appendix Pz = .8078 .81

= .87

.00 .01 .02 .03 .04 .05 .06 .07 .08 .09

.0 .5000 .5040 .5080 .5120 .5160 .5199 .5239 .5279 .5319 .5359

.1 .5398 .5438 .5478 .5517 .5557 .5596 .5636 .5675 .5714 .5753

.2 .5793 .5832 .5871 .5910 .5948 .5987 .6026 .6064 .6103 .6141

.3 .6179 .6217 .6255 .6293 .6331 .6368 .6406 .6443 .6480 .6517

.4 .6554 .6591 .6628 .6664 .6700 .6736 .6772 .6808 .6844 .6879

.5 .6915 .6950 .6985 .7019 .7054 .7088 .7123 .7157 .7190 .7224

.6 .7257 .7291 .7324 .7357 .7389 .7422 .7454 .7486 .7517 .7549

.7 .7580 .7611 .7642 .7673 .7704 .7734 .7764 .7794 .7823 .7852

.8 .7881 .7910 .7939 .7967 .7995 .8023 .8051 .8078 .8106 .8133

.9 .8159 .8186 .8212 .8238 .8264 .8289 .8315 .8340 .8365 .8389

1.0 .8413 .8438 .8461 .8485 .8508 .8531 .8554 .8577 .8599 .8621

1.1 .8643 .8665 .8686 .8708 .8729 .8749 .8770 .8790 .8810 .8830

1.2 .8849 .8869 .8888 .8907 .8925 .8944 .8962 .8980 .8997 .9015

1.3 .9032 .9049 .9066 .9082 .9099 .9115 .9131 .9147 .9162 .9177

1.4 .9192 .9207 .9222 .9236 .9251 .9265 .9279 .9292 .9306 .9319

1.5 .9332 .9345 .9357 .9370 .9382 .9394 .9406 .9418 .9429 .9441

1.6 .9452 .9463 .9474 .9484 .9495 .9505 .9515 .9525 .9535 .9545

1.7 .9554 .9564 .9573 .9582 .9591 .9599 .9608 .9616 .9625 .9633

1.8 .9641 .9649 .9656 .9664 .9671 .9678 .9686 .9693 .9699 .9706

1.9 .9713 .9719 .9726 .9732 .9738 .9744 .9750 .9756 .9761 .9767

2.0 .9772 .9778 .9783 .9788 .9793 .9798 .9803 .9808 .9812 .9817

2.1 .9821 .9826 .9830 .9834 .9838 .9842 .9846 .9850 .9854 .9857

2.2 .9861 .9864 .9868 .9871 .9875 .9878 .9881 .9884 .9887 .9890

2.3 .9893 .9896 .9898 .9901 .9904 .9906 .9909 .9911 .9913 .9916

2.4 .9918 .9920 .9922 .9925 .9927 .9929 .9931 .9932 .9934 .9936

2.5 .9938 .9940 .9941 .9943 .9945 .9946 .9948 .9949 .9951 .9952

2.6 .9953 .9955 .9956 .9957 .9959 .9960 .9961 .9962 .9963 .9964

2.7 .9965 .9966 .9967 .9968 .9969 .9970 .9971 .9972 .9973 .9974

2.8 .9974 .9975 .9976 .9977 .9977 .9978 .9979 .9979 .9980 .9981

2.9 .9981 .9982 .9982 .9983 .9984 .9984 .9985 .9985 .9986 .9986

3.0 .9987 .9987 .9987 .9988 .9988 .9989 .9989 .9989 .9990 .9990

3.1 .9990 .9991 .9991 .9991 .9992 .9992 .9992 .9992 .9993 .9993

3.2 .9993 .9993 .9994 .9994 .9994 .9994 .9994 .9995 .9995 .9995

3.3 .9995 .9995 .9995 .9996 .9996 .9996 .9996 .9996 .9996 .9997

3.4 .9997 .9997 .9997 .9997 .9997 .9997 .9997 .9997 .9997 .9998

NORMAL DISTRIBUTION TABLE

z0 Ğ

Project duration (weeks)Project duration (weeks)6969 7272

Normal Normal distribution: distribution: Mean = 69 Mean = 69 weeks; weeks; = 3.45 weeks = 3.45 weeks Probability Probability

of of exceeding exceeding 72 weeks is 72 weeks is 0.1922 0.1922

St. John’s HospitalSt. John’s HospitalProbability of Completing Project On TimeProbability of Completing Project On Time

Probability Probability of meeting of meeting the the schedule schedule is 0.8078is 0.8078

Length of Length of critical critical pathpath

Optimistic Likely Pessimistic Expected VarianceActivity (a) (m) (b) Time (te ) (2 )

Time Estimates (Months) Activity Statistics

A 1 2 3B 3 4 6C 2 2 2D 1 1 1E 1 3 5F 1 2 3G 1 1 1H 8 12 14I 7 8 10J 5 6 7K 4 5 6L 2 3 6

Software Purchasing ProjectSoftware Purchasing ProjectProbabilistic Time EstimatesProbabilistic Time Estimates

START A2

B 4.17

C2

D1

F2

G1

H11.67

J6

I8.17

K5

L3.33

ENDE3

Network for a Software Purchasing Project using the Mean Times

Critical Path: A—B—C—D—F—G—H—I—LExpected Time to complete the project:

2+4.17+2+1+2+1+11.67+8.17+3.33 = 35.33

What is the probability in finishing in less than 37 months?

What is the probability in finishing in less than 31 months?

Copyright 2009 John Wiley & Sons, Inc. 9-133

Lecture Outline

Project Planning Project Scheduling Project Control CPM/PERT Probabilistic Activity Times Project Crashing and Time-Cost

Trade-off


What is a Project? Project

unique, one-time operational activity or effort Examples

constructing houses, factories, shopping malls, athletic stadiums or arenas

developing military weapons systems, aircrafts, new ships launching satellite systems constructing oil pipelines developing and implementing new computer systems planning concert, football games, or basketball tournaments introducing new products into market


Project Elements

Objective Scope Contract requirements Schedules Resources Personnel Control Risk and problem analysis


Project Management Process

Project planning Project scheduling Project control Project team

made up of individuals from various areas and departments within a company

Matrix organization a team structure with members from functional areas,

depending on skills required Project Manager

most important member of project team


Project Scope

Scope statementa document that provides an understanding,

justification, and expected result of a project Statement of work

written description of objectives of a project Work breakdown structure

breaks down a project into components, subcomponents, activities, and tasks


Work Breakdown Structure for Computer Order Processing System ProjectWork Breakdown Structure for Computer Order Processing System Project


Organizational Breakdown Structure a chart that shows which organizational units are

responsible for work items Responsibility Assignment Matrix

shows who is responsible for work in a project


Project Scheduling

StepsDefine activitiesSequence activitiesEstimate timeDevelop schedule

TechniquesGantt chartCPMPERTMicrosoft Project


Gantt Chart

Graph or bar chart with a bar for each project activity that shows passage of time

Provides visual display of project schedule

Slack amount of time an activity can be delayed

without delaying the project


| | | | |Activity

Design house and obtain financing

Lay foundation

Order and receive materials

Build house

Select paint

Select carpet

Finish work

00 22 44 66 88 1010MonthMonth

MonthMonth11 33 55 77 99

Example of Gantt Chart


Project Control

Time management Cost management Quality management Performance management

Earned Value Analysis a standard procedure for numerically measuring a

project’s progress, forecasting its completion date and cost and measuring schedule and budget variation

Communication Enterprise project management


CPM/PERT

Critical Path Method (CPM) DuPont & Remington-Rand (1956) Deterministic task times Activity-on-node network construction

Project Evaluation and Review Technique (PERT) US Navy, Booz, Allen & Hamilton Multiple task time estimates Activity-on-arrow network construction


Project Network

Activity-on-node (AON) nodes represent activities,

and arrows show precedence relationships

Activity-on-arrow (AOA) arrows represent activities

and nodes are events for points in time

Event completion or beginning of

an activity in a project

1 32

BranchBranch

NodeNode


AOA Project Network for a House

3322 00

11

33

11 1111

1 2 4 6 7

3

5

Lay Lay foundationfoundation

Design house Design house and obtain and obtain financingfinancing

Order and Order and receive receive materialsmaterials

DummyDummy

Finish Finish workwork

Select Select carpetcarpet

Select Select paintpaint

Build Build househouse


Concurrent ActivitiesConcurrent Activities

2 3

Lay foundationLay foundation

Order materialOrder material

(a)(a) Incorrect precedence Incorrect precedence relationshiprelationship

(b)(b) Correct precedence Correct precedence relationshiprelationship

3

42

DummyDummyLay Lay foundationfoundation

Order materialOrder material

11

22 00


AON Network for House Building Project

13

22

43

31 5

1

61

71Start


Order and receive materials Select paint

Select carpet

Lay foundations Build house

Finish work


13

22

43

31 5

1

61

71Start

Critical Path

Critical pathCritical path Longest path Longest path

through a networkthrough a network Minimum project Minimum project

completion timecompletion time

A:A: 1-2-4-71-2-4-73 + 2 + 3 + 1 = 9 months 3 + 2 + 3 + 1 = 9 months

B:B: 1-2-5-6-71-2-5-6-73 + 2 + 1 + 1 + 1 = 8 months3 + 2 + 1 + 1 + 1 = 8 months

C:C: 1-3-4-71-3-4-73 + 1 + 3 + 1 = 8 months3 + 1 + 3 + 1 = 8 months

D:D: 1-3-5-6-71-3-5-6-73 + 1 + 1 + 1 + 1 = 7 months3 + 1 + 1 + 1 + 1 = 7 months


Activity Start Times

13

22

43

31 5

1

61

71Start

Start at 3 monthsStart at 6 months

Start at 5 months

Finish at 9 months

Finish


Mode Configuration

1 0 3

3 0 3

Activity number

Activity duration

Earliest start

Latest start

Earliest finish

Latest finish


Forward Pass

Start at the beginning of CPM/PERT network to determine the earliest activity times

Earliest Start Time (ES) earliest time an activity can start ES = maximum EF of immediate predecessors

Earliest finish time (EF) earliest time an activity can finish earliest start time plus activity time

EF= ES + t


Earliest Activity Start and Finish Times

1 0 3

1

2 3 5

2

3 3 4

1 5 5 6

1

4 5 8

3

6 6 7

1

7 8 9

1

Start


Select pain

Lay foundations

Select carpet

Build house

Finish work



Backward Pass

Determines latest activity times by starting at the end of CPM/PERT network and working forward

Latest Start Time (LS) Latest time an activity can start without delaying

critical path time

LS= LF - t Latest finish time (LF)

latest time an activity can be completed without delaying critical path time

LS = minimum LS of immediate predecessors


Latest Activity Start and Finish Times

1 0 3

1 0 3

2 3 5

2 3 5

3 3 4

1 4 5 5 5 6

1 6 7

4 5 8

3 5 8

6 6 7

1 7 8

7 8 9

1 8 9

Start


Select pain

Lay foundations

Select carpet

Build house

Finish work



* Critical Path* Critical Path

00009999999988888888*7*7*7*7

111177778888666677776666

111166667777555566665555

00008888888855555555*4*4*4*4

111144445555333344443333

00005555555533333333*2*2*2*2

00003333333300000000*1*1*1*1

Slack SSlack SEFEFLFLFESESLSLSActivityActivity

Activity Slack


Probabilistic Time Estimates

Beta distribution a probability distribution traditionally used in

CPM/PERT

aa = optimistic estimate = optimistic estimatemm = most likely time estimate = most likely time estimateb b = pessimistic time estimate= pessimistic time estimate

wherewhere

Mean (expected time):Mean (expected time): tt = =aa + 4 + 4mm + + bb66

Variance:Variance: 22 = =bb - - aa66

22


Examples of Beta DistributionsExamples of Beta Distributions

PP(t

ime)

(tim

e)

PP(t

ime)

(tim

e)

PP(t

ime)

(tim

e)

TimeTimeaa mmtt bbaa mm tt bb

m m = = tt

TimeTime

TimeTimebbaa


Project Network with Probabilistic Time Estimates: Example

Start Finish23,6,9

31,3,5

16,8,10

52,3,4

63,4,5

42,4,12

72,2,2

83,7,11

92,4,6

10

1,4,7

11

1,10,13

Equipment installation

System development

Position recruiting

Equipment testing and modification

Manual testing

Job Training

Orientation

System training

System testing

Final debugging

System changeover


Activity Time EstimatesActivity Time Estimates

1 1 66 88 1010 88 0.440.44 22 33 66 99 66 1.001.00 33 11 33 55 33 0.440.44 44 22 44 1212 55 2.782.78 55 22 33 44 33 0.110.11 66 33 44 55 44 0.110.11 77 22 22 22 22 0.000.00 88 33 77 1111 77 1.781.78 99 22 44 66 44 0.440.441010 11 44 77 44 1.001.001111 11 1010 1313 99 4.004.00

TIME ESTIMATES (WKS)TIME ESTIMATES (WKS) MEAN TIMEMEAN TIME VARIANCEVARIANCE

ACTIVITYACTIVITY aa mm bb tt бб22


Activity Early, Late Times, Activity Early, Late Times, and Slackand Slack

ACTIVITYACTIVITY tt бб ESES EFEF LSLS LFLF SS

11 88 0.440.44 00 88 11 99 11 22 66 1.001.00 00 66 00 66 00 33 33 0.440.44 00 33 22 55 22 4 4 55 2.782.78 88 1313 1616 2121 88 5 5 33 0.110.11 66 99 66 99 00 66 44 0.110.11 33 77 55 99 22 77 22 0.000.00 33 55 1414 1616 1111 88 77 1.781.78 99 1616 99 1616 00 99 44 0.440.44 99 1313 1212 1616 331010 44 1.001.00 1313 1717 2121 2525 881111 99 4.004.00 1616 2525 1616 2525 00


Start Finish

1 0 8

8 1 9

3 0 3

3 2 5

4 8 13

5 16 21

6 3 7

4 5 9

7 3 5

2 14 16

9 9 13

4 12 16

10 13 17

1 0 3

2 0 6

6 0 6 5 6 9

3 6 9

8 9 16

7 9 16

11 16 25

9 16 25

Critical Path

Earliest, Latest, and Slack


2 = б22 + б5

2 + б82 + б11

2

= 1.00 + 0.11 + 1.78 + 4.00

= 6.89 weeks

Total project variance


Probabilistic Network Analysis

Determine probability that project is Determine probability that project is completed within specified timecompleted within specified time

wherewhere == ttpp = project mean time = project mean time

== project standard deviationproject standard deviationx =x = proposed project timeproposed project timeZ =Z = number of standard deviations xnumber of standard deviations x

is from meanis from mean

ZZ = =xx - -


Normal Distribution Of Project Time

= = ttpp TimeTimexx

Z

ProbabilityProbability


Southern Textile Example

What is the probability that the project is completed What is the probability that the project is completed within 30 weeks?within 30 weeks?

22 = 6.89 weeks= 6.89 weeks

= 6.89= 6.89

= 2.62 weeks= 2.62 weeks

ZZ ==

==

= 1.91= 1.91

xx - - 30 - 2530 - 252.622.62

From Table A.1, (appendix A) a From Table A.1, (appendix A) a ZZ score of 1.91 corresponds to a score of 1.91 corresponds to a probability of 0.4719. Thus probability of 0.4719. Thus PP(30) = 0.4719 + 0.5000 = 0.9719(30) = 0.4719 + 0.5000 = 0.9719

= 25= 25 Time (weeks)Time (weeks)xx = 30 = 30

PP((xx 30 weeks) 30 weeks)


Southern Textile Example

= 25= 25 Time Time (weeks)(weeks)

xx = 22 = 22

PP((xx 22 weeks) 22 weeks)

What is the probability that the project is completed What is the probability that the project is completed within 22 weeks?within 22 weeks?

22 = 6.89 weeks= 6.89 weeks

= 6.89= 6.89

= 2.62 weeks= 2.62 weeks

ZZ ==

==

= -1.14= -1.14

xx - - 22 - 2522 - 252.622.62

From Table A.1 (appendix A) a From Table A.1 (appendix A) a ZZ score of -1.14 corresponds to a score of -1.14 corresponds to a probability of 0.3729. Thus probability of 0.3729. Thus PP(22) = 0.5000 - 0.3729 = 0.1271(22) = 0.5000 - 0.3729 = 0.1271


Project Crashing Crashing

reducing project time by expending additional resources

Crash time an amount of time an activity is reduced

Crash cost cost of reducing activity time

Goal reduce project duration at minimum cost


112

28

412

34 5

4

64

74

Project Crashing: Example


Project Crashing: Example (cont.)$7,000 –

$6,000 –

$5,000 –

$4,000 –

$3,000 –

$2,000 –

$1,000 –

–| | | | | | |

0 2 4 6 8 10 12 14 Weeks

Normal activity

Normal time

Normal cost

Crash time

Crashed activity

Crash cost

Slope = crash cost per week


Normal Activity and Crash Data

TOTALTOTALNORMALNORMAL CRASHCRASH ALLOWABLEALLOWABLE CRASHCRASH

TIMETIME TIMETIME NORMALNORMAL CRASHCRASH CRASH TIMECRASH TIME COST PERCOST PERACTIVITYACTIVITY (WEEKS)(WEEKS) (WEEKS)(WEEKS) COSTCOST COSTCOST (WEEKS)(WEEKS) WEEKWEEK

11 1212 77 $3,000$3,000 $5,000$5,000 55 $400$400

22 88 55 2,0002,000 3,5003,500 33 500500

33 44 33 4,0004,000 7,0007,000 11 3,0003,000

44 1212 99 50,00050,000 71,00071,000 33 7,0007,000

55 44 11 500500 1,1001,100 33 200200

66 44 11 500500 1,1001,100 33 200200

77 44 33 15,00015,000 22,00022,000 11 7,0007,000

$75,000$75,000 $110,700$110,700


112

28

34 5

4

64

74

$400

$500

$3000

$7000

$200$200

$70012

4Project Duration:36 weeks

FROM …

17

28

34 5

4

64

74

$400

$500

$3000

$7000

$200$200

$70012

4

Project Duration:31 weeksAdditional Cost:$2000

TO…


Crashing costs increase as project Crashing costs increase as project duration decreasesduration decreases

Indirect costs increase as project Indirect costs increase as project duration increasesduration increases

Reduce project length as long as Reduce project length as long as crashing costs are less than indirect crashing costs are less than indirect costscosts

Time-Cost Relationship


Time-Cost TradeoffC

ost

($)

Co

st (

$)

Project durationProject duration

CrashingCrashing TimeTime

Minimum cost = optimal project timeMinimum cost = optimal project timeTotal project costTotal project cost

Indirect costIndirect cost

Direct costDirect cost

■ The Elements of Project Management

■ CPM/PERT Networks

■ Probabilistic Activity Times

■ Microsoft Project

■ Project Crashing and Time-Cost Trade-Off

■ Formulating the CPM/PERT Network as a Linear Programming Model

Chapter Topics

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

■ Network representation is useful for project analysis.

■ Networks show how project activities are organized and are used to determine time duration of projects.

■ Network techniques used are:

▪ CPM (Critical Path Method)

▪ PERT (Project Evaluation and Review Technique)

■ Developed independently during late 1950’s.

Overview


Elements of Project Management

■ Management is generally perceived as concerned with planning, organizing, and control of an ongoing process or activity.

■ Project Management is concerned with control of an activity for a relatively short period of time after which management effort ends.

■ Primary elements of Project Management to be discussed: Project Planning Project Team Project Control


Elements of Project ManagementProject Planning

■ Objectives

■ Project Scope

■ Contract Requirements

■ Schedules

■ Resources

■ Personnel

■ Control

■ Risk and Problem AnalysisCopyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

■ Project team typically consists of a group of individuals from various areas in an organization and often includes outside consultants.

■ Members of engineering staff often assigned to project work.

■ Project team may include workers.

■ Most important member of project team is the project manager.

■ Project manager is often under great pressure because of uncertainty inherent in project activities and possibility of failure. Potential rewards, however, can be substantial.

■ Project manager must be able to coordinate various skills of team members into a single focused effort.

Elements of Project ManagementThe Project Team


Figure 8.1 The project management process

The Project Management Process


Elements of Project ManagementScope Statement

■ Document providing common understanding of project.

■ Justification describing the factors giving rise to need for project.

■ Expected results and what constitutes success.

■ List of necessary documents and planning reports.

■ Statement of work (SOW) - a planning document for individuals, team members, groups, departments, subcontractors and suppliers, describing what are required for successful completion on time.


Elements of Project ManagementWork Breakdown Structure (WBS) (1 of 2)

■ WBS breaks down project into major components (modules).

■ Modules are further broken down into activities and, finally, into individual tasks.

■ Identifies activities, tasks, resource requirements and relationships between modules and activities.

■ Helps avoid duplication of effort.

■ Basis for project development, management , schedule, resources and modifications.

■ Approaches for WBS development:1. Top down process 2. Brainstorm entire projectCopyright © 2010 Pearson Education,

Inc. Publishing as Prentice Hall

Figure 8.2 WBS for Computer Order-processing System Project

Elements of Project ManagementWork Breakdown Structure (2 of 2)


Elements of Project ManagementResponsibility Assignment Matrix (1 of 2)

■ Project manager assigns work elements to organizational units, departments, groups, individuals or subcontractors.

■ Uses an organizational breakdown structure (OBS).

■ OBS is a table or a chart showing which organizational units are responsible for work items.

■ OBS leads to the responsibility assignment matrix (RAM)

■ RAM shows who is responsible for doing the necessary work in the project


Elements of Project ManagementResponsibility Assignment Matrix (2 of 2)

Figure 8.3 A responsibility assignment matrix


Elements of Project ManagementProject Scheduling■ Project Schedule evolves from planning documents,

with focus on timely completion.

■ Critical element in project management – source of most conflicts and problems.

■ Schedule development steps:1. Define activities, 2. Sequence

activities,3. Estimate activity times, 4. Construct

schedule.

■ Gantt chart and CPM/PERT techniques can be useful.

■ Computer software packages available, e.g. Microsoft Project.


Elements of Project ManagementGantt Chart (1 of 2)

■ Popular, traditional technique, also known as a bar chart -developed by Henry Gantt (1914).

■ Direct precursor of CPM/PERT for monitoring work progress.

■ A visual display of project schedule showing activity start and finish times and where extra time is available.

■ Suitable for projects with few activities and precedence relationships.

■ Drawback: precedence relationships are not always discernible.


Elements of Project ManagementGantt Chart (2 of 2)

Figure 8.4 A Gantt chart


Elements of Project ManagementProject Control■ Process of ensuring progress toward successful

completion.

■ Monitoring project to minimize deviations from project plan and schedule.

■ Corrective actions necessary if deviations occur.

■ Key elements of project control Time management Cost management Performance management Earned value analysis.Copyright © 2010 Pearson Education,



■ A branch reflects an activity of a project.

■ A node represents the beginning and end of activities, referred to as events.

■ Branches in the network indicate precedence relationships.

■ When an activity is completed at a node, it has been realized.

The Project NetworkCPM/PERT

Figure 8.5 Nodes and Branches

Activity-on-Arc (AOA) Network


■ Network aids in planning and scheduling.

■ Time duration of activities shown on branches.

■ Activities can occur at the same time (concurrently).

■ A dummy activity shows a precedence relationship but reflects no passage of time.

■ Two or more activities cannot share the same start and end nodes.

The Project NetworkConcurrent Activities

Figure 8. 7 A Dummy Activity

The Project NetworkHouse Building Project Data

No. Activity Activity Predecessor Duration (Months)

1. Design house and - 3 obtain financing

2. Lay foundation 1 2

3. Order Materials 1 1

4. Build house 2, 3 3

5. Select paint 2, 3 1

6. Select carpet 5 1

7. Finish work 4, 6 1Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Project NetworkAOA Network for House Building Project

Figure 8.6 Expanded Network for Building a House Showing Concurrent Activities


The Project NetworkAON Network for House Building ProjectActivity-on-Node (AON) Network A node represents an activity, with its label and time shown on the node The branches show the precedence relationships Convention used in Microsoft Project software


Figure 8.8

The Project NetworkPaths Through a Network

Table 8.1Paths Through the House-Building

NetworkCopyright © 2010 Pearson Education,


Path Events

A 1247

B 12567

C 1347

D 13567

The critical path is the longest path through the network; the minimum time the network can be completed. From Figure 8.8:

Path A: 1 2 4 7 3 + 2 + 3 + 1 = 9 months

Path B: 1 2 5 6 7 3 + 2 + 1 + 1 + 1= 8

months

Path C: 1 3 4 7 3 + 1 + 3 + 1 = 8 months

Path D: 1 3 5 6 7 3 + 1 + 1 + 1 + 1 = 7

months

The Project NetworkThe Critical Path



The Project NetworkActivity Start Times

Figure 8.9 Activity start time

The Project NetworkActivity-on-Node Configuration

Figure 8.10 Activity-on-Node Configuration



■ ES is the earliest time an activity can start: ES = Maximum (EF)

■ EF is the earliest start time plus the activity time: EF = ES + t

The Project NetworkActivity Scheduling : Earliest Times

Figure 8.11 Earliest activity start and finish times


■ LS is the latest time an activity can start without delaying critical path time: LS = LF - t

■ LF is the latest finish time. LF = Minimum (LS)

The Project NetworkActivity Scheduling : Latest Times

Figure 8.12 Latest activity start and finish times


Slack is the amount of time an activity can be delayed without delaying the project: S = LS – ES = LF - EF

Slack Time exists for those activities not on the critical path for which the earliest and latest start times are not equal.

Shared Slack is slack available for a sequence of activities.

The Project NetworkActivity Slack Time (1 of 2)

Table 8.2

*Critical path

Activity

LS ES LF EF Slack, S

*1 0 0 3 3 0

*2 3 3 5 5 0

3 4 3 5 4 1

*4 5 5 8 8 0

5 6 5 7 6 1

6 7 6 8 7 1

*7 8 8 9 9 0


The Project NetworkActivity Slack Time (2 of 2)

Figure 8.13 Activity slack

■ Activity time estimates usually cannot be made with certainty.

■ PERT used for probabilistic activity times.

■ In PERT, three time estimates are used: most likely time (m), the optimistic time (a), and the pessimistic time (b).

■ These provide an estimate of the mean and variance of a beta distribution:

variance:

mean (expected time):

6b 4m a t

2

6a - b

v

Probabilistic Activity Times



Probabilistic Activity TimesExample (1 of 3)

Figure 8.14 Network for Installation Order Processing System



Table 8.3 Activity Time Estimates for Figure 8.14



Figure 8.15 Earliest and Latest Activity Times


■ Expected project time is the sum of the expected times of the critical path activities.

■ Project variance is the sum of the critical path activities’ variances

■ The expected project time is assumed to be normally distributed (based on central limit theorem).

■ In example, expected project time (tp) and variance (vp) interpreted as the mean () and variance (2) of a normal distribution: = 25 weeks

2 = 62/9

= 6.9 (weeks)2

Probabilistic Activity TimesExpected Project Time and Variance

■ Using the normal distribution, probabilities are determined by computing the number of standard deviations (Z) a value is from the mean.

■ The Z value is used to find corresponding probability in Table A.1, Appendix A.

Probability Analysis of a Project Network (1 of 2)


Probability Analysis of a Project Network (2 of 2)

Figure 8.16 Normal Distribution of Network Duration


What is the probability that the new order processing system will be ready by 30 weeks?

µ = 25 weeks

2 = 6.9 = 2.63 weeksZ = (x-)/ = (30 -25)/2.63 = 1.90

Z value of 1.90 corresponds to probability of .4713 in Table A.1, Appendix A. Probability of completing project in 30 weeks or less: (.5000 + .4713) = .9713.

Probability Analysis of a Project NetworkExample 1 (1 of 2)



Figure 8.17 Probability the Network Will Be Completed in 30 Weeks or Less


■ A customer will trade elsewhere if the new ordering system is not working within 22 weeks. What is the probability that she will be retained?

Z = (22 - 25)/2.63 = -1.14

■ Z value of 1.14 (ignore negative) corresponds to probability of .3729 in Table A.1, appendix A.

■ Probability that customer will be retained is .1271




Figure 8.18 Probability the Network Will Be Completed in 22 Weeks or Less


CPM/PERT Analysis with QM for Windows & Excel QM (1 of 2)



Exhibit 8.2

CPM/PERT Analysis with QM for Windows & Excel QM (2 of 2)


Microsoft Project handles only AON networks.

Analysis with Microsoft Project (1 of 13)

Exhibit 8.3



Exhibit 8.4



Exhibit 8.5

Exhibit 8.6Copyright © 2010 Pearson Education,



Figure 8.7Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall




Figure 8.8






Exhibit 8.10

Exhibit 8.11Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall


Figure 8.12Copyright © 2010 Pearson Education,





Figure 8.13




Exhibit 8.15Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall


■ Project duration can be reduced by assigning more resources to project activities.

■ However, doing this increases project cost.

■ Decision is based on analysis of trade-off between time and cost.

■ Project crashing is a method for shortening project duration by reducing one or more critical activities to a time less than normal activity time.

Project Crashing and Time-Cost Trade-Off Overview



Project Crashing and Time-Cost Trade-Off Example Problem (1 of 5)

Figure 8.19 The Project Network for Building a House


Figure 8.20


Crash cost & crash time have a linear relationship:

$2000

5 $400 /

Total Crash Cost

Total Crash Time weekswk


Table 8.4



Figure 8.21 Network with Normal Activity Times and Weekly Crashing Costs



Figure 8.22Revised Network with Activity 1 Crashed


As activities are crashed, the critical path may change and several paths may become critical.

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Exhibit

8.16

Project Crashing and Time-Cost Trade-Off Project Crashing with QM for Windows

Project Crashing and Time-Cost Trade-Off General Relationship of Time and Cost (1 of 2)

■ Project crashing costs and indirect costs have an inverse relationship.

■ Crashing costs are highest when the project is shortened.

■ Indirect costs increase as the project duration increases.

■ Optimal project time is at minimum point on the total cost curve.


Project Crashing and Time-Cost Trade-Off General Relationship of Time and Cost (2 of 2)

Figure 8.23The Time-Cost Trade-Off


General linear programming model with AOA convention:

Minimize Z = xi

subject to: xj - xi tij for all activities i j xi, xj 0

Where: xi = earliest event time of node ixj = earliest event time of node jtij = time of activity i j

The objective is to minimize the project duration (critical path time).

The CPM/PERT Network Formulating as a Linear Programming Model

i


The CPM/PERT Network Example Problem Formulation and Data (1 of 2)

Figure 8.24Copyright © 2010 Pearson Education,


Minimize Z = x1 + x2 + x3 + x4 + x5 + x6 + x7

subject to:

x2 - x1 12x3 - x2 8x4 - x2 4x4 - x3 0x5 - x4 4x6 - x4 12x6 - x5 4x7 - x6 4xi, xj 0

The CPM/PERT Network Example Problem Formulation and Data (2 of 2)


Exhibit 8.17

The CPM/PERT Network Example Problem Solution with Excel (1 of 4)

B6:B12


Exhibit 8.18



Exhibit 8.19



Exhibit 8.20



Minimize Z = $400y12 + 500y23 + 3000y24 + 200y45 + 7000y46 + 200y56 + 7000y67

subject to:y12 5 y12 + x2 - x1 12 x7 30 y23 3 y23 + x3 - x2 8 xi, yij ≥ 0y24 1 y24 + x4 - x2 4y34 0 y34 + x4 - x3 0y45 3 y45 + x5 - x4 4y46 3 y46 + x6 - x4 12y56 3 y56 + x6 - x5 4y67 1 x67 + x7 - x6 4

xi = earliest event time of node Ixj = earliest event time of node jyij = amount of time by which activity i j is crashed

Project Crashing with Linear ProgrammingExample Problem – Model Formulation


Objective is to minimize the cost of crashing

Project Crashing with Linear ProgrammingExcel Solution (1 of 3)

Exhibit 8.21



Exhibit 8.22



Exhibit 8.23



Given this network and the data on the following slide, determine the expected project completion time and variance, and the probability that the project will be completed in 28 days or less.

Example Problem Problem Statement and Data (1 of 2)


Example ProblemProblem Statement and Data (2 of 2)


6b 4m a t

2

6a - b

v

Example Problem Solution (1 of 4)

Step 1: Compute the expected activity times and variances.



Step 2: Determine the earliest and latest activity times & slacks


Step 3: Identify the critical path and compute expected completion time and variance.

Critical path (activities with no slack): 1 3 5 7

Expected project completion time: tp = 9+5+6+4 = 24 days

Variance: vp = 4 + 4/9 + 4/9 + 1/9 = 5 (days)2



Step 4: Determine the Probability That the Project Will be Completed in 28 days or less (µ = 24, = 5)

Z = (x - )/ = (28 -24)/5 = 1.79

Corresponding probability from Table A.1, Appendix A, is .4633 and P(x 28) = .4633 + .5 = .9633.



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