1. 2 PROJECT MANAGEMENT TECHNIQUES Basic Systems (Historically) 4 GANNT Charts Circa 1917 –Graphically represents activities across a time scale 4 PERT.

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2

PROJECT MANAGEMENT TECHNIQUES

Basic Systems (Historically) GANNT Charts Circa 1917

– Graphically represents activities across a time scale PERT Circa 1957 (Program Evaluation and Review

Technique

– Considers uncertainty and uses probabilistic time estimates for activities

CPM Circa 1956 (Critical Path Method)

– Assumes that project activity times can be estimated accurately and do not vary

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NEED FOR & USE OF PERT/CPM

When on-time success for large projects is essential

When projects are not performed frequently, or perhaps only once

When several people/parties need to be involved to complete the project

When one needs to estimate the chance of completing a project by a scheduled date

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TYPICAL APPLICATIONS OF PERT/CPM

Facilities expansion and construction New equipment installation and use Major layout changes New systems and procedures Major organizational changes Research and development projects

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EXAMPLES OF PERT/CPM

BAY COMMUNITY HOSPITAL The staff of the Bay Community Hospital had committed itself to

introduce a new diagnostic procedure in the clinic. This procedure required the acquisition, installation, and introduction of a new medical instrument. Dr. Ed Windsor was assigned the responsibility for assuring that the introduction be performed as quickly and smoothly as possible.

Source: W. E. Sasser, R.P. Olsen, D.D. Wyckoff, Management Service Operations, Boston: Allyn and Bacon, 1978, PP. 97-98.

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KEY QUESTIONS

What are the activities that must be done? What is the sequence of these activities? What are the times required to do each activity? Who will do the activity? What is the shortest time period to complete the

project? What activities require the most attention? What happens if the work isn’t completed on time? What is the chance of getting the project done by a

given scheduled date?

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PHASES OF PERT/CPM

Planning the project & creating a schedule

Communicating project information

Managing changes in the schedule (track, adjust)

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SOME DEFINITIONS

PROJECT– Interrelated set of activities that have a definite starting and ending

point and that results in an intended final outcome

ACTIVITY– A time consuming element in a project; representative of work or

descriptive of a relationship between two events– Represented on a network by a line segment (arrow) connecting

one event to the next event.

tp, tm, to

A

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SOME DEFINITIONS Continued

PESSIMISTIC TIME (tp)– Maximum time (estimated in weeks and tenths of weeks)

to complete an activity if unusually bad luck is experienced or if the activity proves more difficult to solve than anticipated

– No more than one chance in 100 of being realized

MOST LIKELY TIME (tm)– The probable time to complete an activity assuming no

unexpected problems will develop

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SOME DEFINITIONS Continued

OPTIMISTIC TIME (to)

– The minimum time to complete an activity if everything goes better than expected. It has not more than one chance in 100 of being realized

–

EXPECTED ACTIVITY TIME (te)

– The statistical average time to complete an activity. Defined as:

te = 1/6 (to + 4tm + tp)

Time Duration of Activities

Beta Distribution

0t mt et pt

Prob

abil

ity

Den

sity

100

1

100

1

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SOME DEFINITIONS Continued

ACTIVITY VARIANCE– A measure of uncertainty of the three time estimates. 2te = (1/6 (tp - to))2

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SOME DEFINITIONS Continued

EVENT– A milestone of progress or accomplishment in the program plan

depicting the start or completion of an activity or activities which precede or succeed it

– Represented on a network by a circle

– Is not time consuming

11 22

A

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DEFINITIONS Continued

EXPECTED EVENT TIME (TE)– The earliest or expected time in which an event will be completed;

– An accumulation of the expected activity time (te) along the longest path to that event

LATEST ALLLOWABLE EVENT TIME (TL)– The latest time an event can be completed without causing the expected

time of the objective event to exceed the scheduled time assigned to it

EVENT SLACK TIME (SE)– The maximum time that an event may be delayed before it delays the

over-all project completion date, defined as:

(SE=TL-TE)

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BASIC STEPS IN PERT/CPM

Assemble the right team

Define all activities required to complete the project, along with the precedence relationships

Get estimates of the activity times (to tm tp)

Calculate the activity and event times (Note: computers should do this).

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BASIC STEPS IN PERT/CPM

Analyze the network model, determining those activities with slack and the critical path of activities

Develop a feasible project plan considering availability of resources

Use the model to communicate and manage the project (team approach)

Periodically assess the progress/status of the project and update the plan if necessary (steps 2-8) based upon team consensus

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PERT DIAGRAMMING(DUMMY ACTIVITIES)

Uses

Dummy

BA

DCB

A

D

C

OK

1. Clarify Precedence

OK, but different meaning

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PERT DIAGRAMMING(DUMMY ACTIVITIES)

Uses

DummyB

A

B

A

C

Not correct,OK in concept

2. Clarify Event Numbers

C

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PERT DIAGRAMMING(DUMMY ACTIVITIES)

Uses

C starts afterA is done

BA

C

3. Existence of Competing Resource, Equipment

Rule 1. Each activity is represented by one and only one arrow in the network.

Rule 2. No two activities can be identified by the same head and tail events.

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EXAMPLE: ST. ADOLF’S HOSPITAL PROJECT

_______________________________

Activity Description Immediate Preceding Activity

_______________________________ A Select administrative & medical staff. -- B Select site and do site survey. -- C Select equipment. A D Prepare final construction plans and layout. B E Bring utilities to the site. B F Interview applicants and fill positions in nursing, A

support staff, maintenance, and security.

Source: L.J. Krajewski & L.P. Ritzman, Operations Management, Addison-Wesley, 1990, pp. 681-691

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ST. ADOLF’S HOSPITAL PROJECT Continued

_______________________________

Activity Description Immediate Preceding Activity

_______________________________

G Purchase and take delivery of the equipment.C H Construct the hospital D I Develop an information system. A J Install the equipment. E,G,H K Train the nurses and staff. F,I,J

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NETWORK DIAGRAM: ST. ADOLF’S

11

3

7

61

5

8

109

4

2

A

B

D

E

H

G

C

F

I

K

J

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TIME ESTIMATES AND ACTIVITY STATISTICS FOR THE St. ADOLF’S HOSPITAL PROJECT

Time Estimates Activity Statistics

Activity Most Optimistic(a)

Most Likely(m)

Most Pessimistic(b)

Expected Time(te)

Variance(2)

ABCDEFGHIJK

1175814625351015

12810925936401326

131515163018414528157

1291010241035401546

0.111.782.781.787.114.007.112.789.005.440.11

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ACTIVITY SLACKS FOR THE ST. ADOLPH’S HOSPITAL PROJECT

Start Finish

Activity Duration Earliest Latest Earliest Latest Slack Critical Path

ABCDEFGHIJK

129

1010241035401546

00

1299

122219125963

20

149

35532419485963

129

221933225759276369

149

241959635959636369

2020

264120

3600

NoYesNoYesNoNoNoYesNoYesYes

Si = Lsi - Esi or Si = Lfi - Efi

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Critical Path___

Near Critical Path - - -

11

3

7

61

5

8

109

4

2

A

B

D

E

H

G

C

F

I

K

J

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Network Paths for the St. Adolf’s Hospital Project

Path Expected Time (wk)

A-F-KA-I-K

A-C-G-J-KB-D-H-J-K

B-E-J-K

283367

69 (Critical)43

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PROBABILITY OF MEETING THE PROJECT DUE DATE

The central limit theorem allows us to use the normal probability distribution to find the probability of achieving a particular due date for the project. We can use the z-transformation formula as follows:

Where T’ = due date for the project TE = earliest expected completion date for the project 2

cp = sum of the variances on the critical path

Z =

2cp

T’ - TE

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85756555 69 72

Length of Critical Path

Probability of exceeding 72 weeks=0.20

Project Duration (Weeks)

Example: What is the probability that the hospitalwill become operational in 72 weeks?

87.045.3

3

9.11

6972

z

Normal Distribution:

weeks45.3

weeks69

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EXAMPLE

1

4 6

8

3

2

5

7G

J

I

F

E

HD

C

B

A6 – 8 – 10

10 – 12 – 14 4 – 5 – 6

4 – 5 – 6

8 – 10 – 12

2 – 3 – 4

5 – 6 – 7

7 – 9 – 11

5 – 6 – 7

7 – 7 – 7

to tm tp

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PERT Table

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PERT Table

7

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ALTERNATIVE NETWORK ANALYSIS

1

4 6

8

3

2

5

7G,12

J,5

I,6

F,3

E,6

H,9D,7

C,10

B,8

A,5

11

10

11

6

Start Finish

Early Late

For Activity “B”

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ALTERNATIVE NETWORK ANALYSIS

1

4 6

8

3

2

5

7G,12

J,5

I,6

F,3

E,6

H,9D,7

C,10

B,8

A,5

8 18 20 30

0 6 8 14

0 0 5 5

5 5 15 15

15 15 21 21

15 26 18 29

18 29 24 35

30 30 35 3521 21 30 30

8 14 15 21

11

10

11

6

Start Finish

Early Late

For Activity “B”

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ADVANTAGES OF PERT/CPM

Shows relationship of project activities

Facilitates more effective planning

Pinpoints problem areas early

Improve communications and understanding of roles/responsibilities

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ADVANTAGES OF PERT/CPM continued

Determines best allocations of personnel, equipment, and other resources

Identifies alternate courses of action

Focuses attention on those activities that control the overall completion time

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CRITICISMS OF PERT/CPM

TIME ESTIMATES Task Times (t0,, tm, tp) are unknown (imperfect data).

Not all activity times follow a Beta distribution (arbitrary choice).

Pessimistic time estimates are often inflated.

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CRITICISMS OF PERT/CPM

NETWORK DIAGRAMS All precedences are not really hard requirements

– Some are “soft precedence relationships” or good ideas. (Like course prerequisites.)

– Some activities can be overlapped and worked on simultaneously.

– Some precedence relationships cannot be specified, but depend on the results of previous activities.

Project content changes require updated input data & analysis.

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REQUIREMENTS OF PERT/CPM

PERT/CPM itself only furnishes information. It takes prompt, effective action by people to keep the project on schedule and to compensate for changes and delays.

PERT/CPM is not a substitute for thinking or planning. To be successful, it requires precise planning, and demands that every step of the project be thought out most carefully.

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REQUIREMENTS OF PERT/CPM

PERT/CPM also requires the whole hearted support of management and the people who will direct the work.

PERT/CPM also requires a focus of “near-critical” path activities to ensure on-time project completions.