1 Project Management Seminar Project Scheduling. 2 Importance of Project Management Three Components of Project Management Project Evaluation and Review.

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Project Management SeminarProject Management SeminarProject SchedulingProject Scheduling

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• Importance of Project Management

• Three Components of Project Management

• Project Evaluation and Review Technique (PERT) & Critical Path Method (CPM)

• Estimate the Probability of Project Completion

OutlineOutline

• Ford Redesign of Mustang Project:– 450 member project team– Cost $700-million– 25% faster, which leads to 30% cheaper than 25% faster, which leads to 30% cheaper than

comparable projects at Fordcomparable projects at Ford

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Strategic Importance of Project ManagementStrategic Importance of Project Management

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Strategic Importance of Project ManagementStrategic Importance of Project Management

• Microsoft Windows Vista:– thousands of programmers– millions of lines of code– three months late, missed 2006 holiday season, three months late, missed 2006 holiday season,

estimated loss of revenue: $384 million ~ $1.92 estimated loss of revenue: $384 million ~ $1.92 billionbillion (Business Software Alliance,

2007)

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Why Learn ProjectWhy Learn Project Management?Management?• Leadership opportunity

– Understanding Project Management can improve your effectiveness when working on projects

– Projects are a natural proving ground to help identify and develop leadership and managerial talent.

• Project Management is increasingly a key job skill.

(MSP) Monster 10/2001

Monster 10/2004

Monster 5/2011

Project related openings 500 1500 10k+

Related to project management

150 650 10k+

(MSP) Monster 10/2001

Monster 10/2004

Monster 5/2011

Project related openings 500 1500 10k+

Related to project management

150 650 10k+

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• Planning– Goal setting (time, cost, output)– Team organization

Three Components of Project ManagementThree Components of Project Management

On time On budget Quality output

• Scheduling –Schedule the sequence of activities and resources

• Controlling–Monitoring time, cost, and quality of output

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Project Scheduling QuestionsProject Scheduling Questions

• When will the entire project be completed?

• What are the critical activities that will delay the entire project if they are late?

• What are the non-critical activities – The ones that can run late without delaying the whole project’s completion?

• What is the probability that the project will be completed by a specific date?

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• Critical Path Method (CPM)

- developed by DuPont for chemical plants (1957)

• Program Evaluation & Review Technique (PERT)- developed by Booz, Allen &

Hamilton with the U.S. Navy, for Polaris missile (1958)

• Different terminology, similar objectives

Project Scheduling MethodsProject Scheduling Methods

© 1995 Corel Corp.

J F M A M J J

MonthActivity

Design

Build

Test

PERT

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How to Draw PERT & CPM: the Steps How to Draw PERT & CPM: the Steps

Identify relationships among the activities. (Decide which activities must precede and which must follow others.)

Draw the network connecting all of the activities

Assign time estimates to each activity

Compute the longest time path through the network. (critical path)

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Example Example Milwaukee General Hospital ProjectMilwaukee General Hospital Project

The environmental protection agency has recently given Milwaukee General Hospital 16 weeks to install a complex air filter system in its extensive laundry/cleaning operations facility.

Milwaukee General has identified eight activities that need to be performed in order for the project to be completed.

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Activities & Relationships Among the Activities Activities & Relationships Among the Activities

Activity Description

A Build internal components

B Modify roof and floor

C Construct collection stack

D Pour concrete and install frame

E Build high-temperature burner

F Install pollution control system

G Install air pollution device

H Inspect and test

Immediate Predecessors

-

-

A

A, B

C

C

D, E

F, G

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Activities & Relationships Among the Activities Activities & Relationships Among the Activities

Activity

A

B

C

D

E

F

G

H

Immediate Predecessors

-

-

A

A, B

C

C

D, E

F, G

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Activity Network Activity Network

B

A

D

C

G

F

HEStart

Arrows show

precedence

relationships

END

Activity Immediate Predecessors

A -

B -

C A

D A, B

E C

F C

G D, E

H F, G

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Time Estimates Time Estimates

Activity Description

A Build internal components

B Modify roof and floor

C Construct collection stack

D Pour concrete and install frame

E Build high-temperature burner

F Install pollution control system

G Install air pollution device

H Inspect and test

Total (weeks)

Time (Weeks)

2

3

2

4

4

3

5

2

25

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Assign Time Estimates to Each ActivityAssign Time Estimates to Each Activity

Arrows show

precedence

relationships

3

Start

A

B

C

D

E

F

G

H

2

3

2

4

4

5

2END

Paths fromPaths from Start Start toto End EndPath Time (Weeks)

1 ACFH 9

2 ACEGH 15

3 ADGH 13

4 BDGH 14

3

Start

A

B

C

D

E

F

G

H

2

3

2

4

4

5

2END

Activity Network Activity Network

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• Identify critical path– critical path is the path with the longest time– critical path is the Shortest time a project can be completed– Any delay on critical path activities delays project

Critical Path AnalysisCritical Path Analysis

Path Time (Weeks)

1 ACFH 92 ACEGH 153 ADGH 134 BDGH 14

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The Critical Path The Critical Path

Start

A

B

C

D

E

F

G

H

Arrows show

precedence

relationships

END

2

3

2

4

4

3

5

2

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• Three estimates for each activity– Earliest Possible Time (a)– Most-likely Time (m)– Latest Possible Time (b)

Estimate Activity TimesEstimate Activity Times

• Assumption: Follow BETA distribution• Expected time: t = (a + 4m + b)/6• Variance of time: v = [(b - a) /6]2

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Milwaukee General Hospital ProjectMilwaukee General Hospital ProjectActivity Earliest

Possible

(a)

Most Likely

(m)

Latest Possible

(b)

A 1 2 3

B 2 3 4

C 1 2 3

D 2 4 6

E 1 4 7

F 1 2 9

G 3 4 11

H 1 2 3

[(3-1)/6]2 = 0.11

3 0.11

2 0.11

4 0.44

4 1.00

3 1.78

5 1.78

2 0.11

Expected Timet= (a+4m+b)/6

Variance

[(b - a) /6]2

(1+4*2+3)/6 = 2

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Used to obtain probability of project completion!

Project TimesProject Times

• Expected project time (T)– Sum of critical path

activity times, t

• Project variance (V)

–Sum of critical path activity variances, v

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Critical Path

Activity

Earliest Possible

(a)

Most Likely

(m)

Latest Possible

(b)

Expected Time

t= (a+4m+b)/6

Variance

[(b - a) /6]2

A 1 2 3 2 0.11

C 1 2 3 2 0.11

E 1 4 7 4 1.00

G 3 4 11 5 1.78

H 1 2 3 2 0.11

Expected project time T = 2 + 2 + 4 + 5 + 2 = 15Project variance V = 0.11+0.11+1.00+1.78+0.11= 3.11Project Standard Deviation S = square root of variance = 3.11**0.5 = 1.76

Expected Project Time and VarianceExpected Project Time and Variance

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Application - 1Application - 1 The deadline for Milwaukee General Hospital is 16 weeks. What is the chance that the project can be finished on or before the deadline?

Formula:

Z = (due date – expected completion date) / Std. Dev.

Z is a normal score

Apply the formula to Milwaukee hospital Project:

Z = (16 weeks – 15 weeks) /1.76 = 0.57

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Z0.57

Z .00 …

0.0 .5000 …

: : : :

0.5 .6915 … .7157

Standardized Normal Probability Table (Portion)Standardized Normal Probability Table (Portion)

Probabilities in bodyProbabilities in body

Obtaining the ProbabilityObtaining the Probability

.007

.5279

.7157

There is a 71.57% chance that the project can be There is a 71.57% chance that the project can be put in place in 16 weeks.put in place in 16 weeks.

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Application - 2 Application - 2

What’s the date that Milwaukee Hospital Project can be finished with a 99% chance?Formula:

date = expected completion date + Z (0.99) * Std. Dev.

Z (0.99): normal score corresponding to probability 0.99

Z (0.99) = 2.33Apply the formula to Milwaukee hospital project:

date = 15 weeks + 2.33 * 1.76 = 19.1 weeks

Conclusion: we are 99% sure that the project can Conclusion: we are 99% sure that the project can be finished within 19.1 weeksbe finished within 19.1 weeks

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Advantages & Disadvantages of PERT/CPMAdvantages & Disadvantages of PERT/CPM

• Straightforward (visual) and easy to use;• Unique strength in managing complex projects;• Pinpoint activities that need to be closely watched;• Provides quantitative results that facilitate planning,

communication, and negotiation (for due date and additional resources)

• Need to clearly define activities and relationships among activities;

• Assume activity times follow a BETA distribution.

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Thank you!Thank you!