Project Management Chapter 17. Learning Objectives Describe the project life cycle Give a general description of the critical path method Construct simple.

Project Management

Chapter 17

Learning Objectives

• Describe the project life cycle• Give a general description of the critical path

method• Construct simple network diagrams• Describe activity “crashing” and solve typical

problems

• [YouTube] Introduction to Project Management

What is Project Management?

https://www.youtube.com/watch?v=BOU1YP5NZVA

Projects

• Project– Unique, one-time operations designed to accomplish a

specific set of objectives in a limited time frame– Examples:

• Tucson Streetcar• Producing a movie• Product development

• Operations– work done to sustain the business

The Nature of Projects• Projects go through a series of stages – a life cycle

1. Initiating2. Planning3. Executing4. Monitoring and Controlling5. Closing

• Projects bring together people with a diversity of knowledge and skills, most of whom remain associated with the project for less than its full life– From project to project– “on loan”– Consulting firms

• Organizational structure affects how projects are managed– Matrix organization: functional and project managers share workers and facilities.

Matrix management (Wikipedia)

MIS 373: Basic Operations Management

7

Project Manager• Project managers work with the project team and other

people involved in a project to meet project goals• The project manager is ultimately responsible for the success

or failure of the project• The project manager is responsible for:

– Work– Human resources– Communications– Quality– Time– Costs– Scope


8

Project Management

• Project management is “the application of knowledge, skills, tools and techniques to project activities to meet project requirements” (PMBOK® Guide, Fourth Edition, 2008)– Involves continual trade-offs– Manager’s job - manage these trade-offs.

• Project management knowledge draws on ten areas:

Integration Scope Time

Cost Quality Procurement

Human resources Communications Risk management

Stakeholder management


9

Integration Develop Project Charter Develop Project Management

Plan Direct and Manage Project Work Monitor and Control Project

Work Perform Integrated Change

Control Close Project or Phase

Scope Plan Scope Management Collect Requirements Define Scope Create Work Breakdown

Structure Verify Scope Control Scope

Time Plan Schedule Management Define Activities Sequence Activities Estimate Activity Resources Estimate Activity Durations Develop Schedule Control Schedule

Cost Plan Cost Management Estimate Costs Determine Budget Control Costs

Quality Plan Quality Perform Quality Assurance Perform Quality Control

Human Resources Plan Human Resource

Management Acquire Project Team Develop Human Resource Plan Manage Project Team

Communication Plan Communications

Management Manage Communications Control Communications

Risk Management Plan Risk Management Identify Risks Perform Qualitative Risk

Analysis Perform Quantitative Risk

Analysis Plan Risk Responses Control Risks

Procurement Plan Procurement Management Conduct Procurements Administer Procurements Close Procurements

Stakeholder Management Identify Stakeholders Plan Stakeholder Management Manage Stakeholder

Engagement Control Stakeholder Engagement

Source: PMBOK® Guide


10

The Project Management Triangle

• Project’s Triple Constraints (Key Metrics)

Quality

Performance Objectives(Scope)

TimeCo

st


12

Tools in Project Management

• Key tools:– Work Breakdown Structure– Gantt charts– Network diagram– Critical path method– Crashing


13

Work Breakdown Structure (WBS)

• A hierarchical listing of what must be done during a project– Establishes a logical framework for identifying the required

activities for the project1. Identify the major elements of the project2. Identify the major supporting activities for each of the major elements3. Break down each major supporting activity into a list of the activities

that will be needed to accomplish it Project

Level 1

Level 2

Level 3

Level 4


14

Gantt Chart

# Task Duration(weeks)

Immediate Predecessor

Weeks after start 2 4 6 8 10 12 14 16 18 20

1 Locate facility 8 -3 Interview 4 -

4 Hire & Train 9 3

2 Order furniture 6 15 Remodel 11 16 Furniture setup 3 2

7 Move in 1 4,5,6

start

Network Diagram

• Network diagram– (precedence) Diagram of project activities that

shows sequential relationships by use of arrows and nodes

• Activity on arrow (AOA)– Network diagram convention in which arrows designate

activities

• Activity on node (AON)– Network convention in which nodes designate activities


16

Network Conventions (AON)

a

b

c a

b

c

e

a

b

c

d

a

b

c

(dummy) StartNode


17

Network Conventions (AOA)

a

b

c ab

c

a

b

c

d

a

b

c

dummyActivity


18

Precedence Diagram



1 Locate facility 8 -

2 Order furniture 6 1

3 Interview 4 -

4 Hire & Train 9 3

5 Remodel 11 1

6 Furniture setup 3 2

7 Move in 1 4,5,6


19

Project Network – Activity on Node (AON)



1 Locate facility 8 -2 Order furniture 6 13 Interview 4 -4 Hire & Train 9 35 Remodel 11 16 Furniture setup 3 27 Move in 1 4,5,6 1

S

3

2

5

6

Locatefacilities

Orderfurniture

Furnituresetup

Interview

RemodelMove in

4

Hire & train

7


20

Project Network – Activity on Arrow (AOA)



1 Locate facility 8 -2 Order furniture 6 13 Interview 4 -4 Hire & Train 9 35 Remodel 11 16 Furniture setup 3 27 Move in 1 4,5,6

Locatefacilities

Orderfurniture

Furnituresetup

InterviewHire andtrain

Remodel

Move in

Critical Path Method (CPM)

• An analytical tool that provides a schedule that completes the project in minimum time subject to the precedence constraints.

• In addition, CPM provides:– Starting and ending times for each activity– Identification of the critical activities (i.e., the ones whose

delay necessarily delay the project). – Identification of the non-critical activities, and the amount

of slack time available when scheduling these activities.


• 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


• CPM can assist in:1. Estimating project length2. Identifying which activities are most critical to timely

project completion3. Indicating of how long any activity can be delayed

without delaying the project


24

Project Network – Activity on Node (AON)



1 Locate facility 8 -2 Order furniture 6 13 Interview 4 -4 Hire & Train 9 35 Remodel 11 16 Furniture setup 3 27 Move in 1 4,5,6 1

S

3

2

5

6

Locatefacilities

Orderfurniture

Furnituresetup

Interview

RemodelMove in

4

Hire & train

7

Critical Path ?


25

Critical Path • Critical path: the longest path



1 Locate facility 8 -2 Order furniture 6 13 Interview 4 -4 Hire & Train 9 35 Remodel 11 16 Furniture setup 3 27 Move in 1 4,5,6

1

S

3

2

5

6

Locatefacilities

Orderfurniture

Furnituresetup

Interview

RemodelMove in

4

Hire & train

7

8

6

3

111

49Length of

Path (1, 2, 6, 7) = 8+6+3+1 = 18Path (1, 5, 7) = 8+11+1 = 20Path (3, 4, 7) = 4+9+1 = 14

Critical path & expected finish time


26

Gantt Chart



Weeks after start 2 4 6 8 10 12 14 16 18 20

1 Locate facility 8 -3 Interview 4 -

4 Hire & Train 9 3

2 Order furniture 6 15 Remodel 11 16 Furniture setup 3 2

7 Move in 1 4,5,6

startCritical Path

Forward Pass

http://www.codeproject.com

Forward & Backward Pass

http://www.codeproject.com

Early Start, Early FinishEarly start (ES)

The earliest time an activity can startAssumes all preceding activities start as early as possible

• For nodes with one entering arrow– ES = EF of the entering arrow

• For activities leaving nodes with multiple entering arrows– ES = the largest of the entering EF

Early finish (EF)The earliest time an activity can finish

• EF = ES + t

Finding ES (Early Start) and EF (Early Finish) involves a forward pass through the network diagram

Example – Forward pass (ES, EF)

B

A

E

C

F

GS

0

8 14

0 4

20D

80 0

8

4

6 3

11

9

10

8

14 17

19

4 13

19

Late Start, Late FinishLate Finish (LF)

The latest time the activity can finish and not delay the project• For nodes with one leaving arrow, LF for nodes entering that node equals the LS of

the leaving arrow• For nodes with multiple leaving arrows, LF for arrows entering node equals the

smallest of the leaving arrows

Late Start (LS)The latest time the activity can start and not delay the project

• The latest starting time for each activity is equal to its latest finishing time minus its expected duration:– LS = LF - t

• Finding LS and LF involves a backward pass through the network diagram

Example – Backward pass (LS, LF)

17-32

B

A

E

C

F

GS

0 8 8

8 6 1416

0 4 44 9 13

19

D

8 11 190 0 0

019 1 20

14 3 17

8

10

10

6

0

0

8

10

16

19

19

20

19

Slack and the Critical Path• Slack can be computed one of two ways:

• Slack = LS – ES• Slack = LF – EF

• Critical path• The critical path is indicated by the activities with

zero slack

17-33

Example – Slack (LS-ES,LF-EF)

17-34

B

A

E

C

F

GS

0 80 8 8

10 168 6 14

16 1914 3 17

6 10 0 4 4 10 19

4 9 13

19 20

D

8 198 11 19

0 0 00 0

19 1 200

0

2 2

0

66

0

Example – Critical Path Slack (LS-ES;LF-EF)=0

17-35

B

A

E

C

F

GS

0

2 2

6 6

0D

00

Example Solution

17-36

Path Length (weeks) Slack

S-A-B-C-G 18 2

S-A-D-G 20 0

S-E-F-G 14 6

Critical Path

Time-Cost Trade-Offs: Crashing

• Crashing– Shortening activity durations

• Typically, involves the use of additional funds to support additional personnel or more efficient equipment (and the relaxing of some work specifications)

– The project duration may be shortened by increasing direct expenses (e.g., additional personnel, more efficient equipment), thereby realizing savings in indirect project costs (e.g., facilities, supervision, incentives)

Crashing Activities

17-40

• I-10 Widening: Prince Road to 29th Street

• Started on January 2007. Originally expected to be complete in three years, but completed by August 2009, approximately eight months ahead of schedule.

• The contractor (Kiewit/Sundt Joint Venture) got a $920,000 bonus for finishing early. The bonus was based on a $23,000-per-day incentive (for finishing up to 40 days early).

Crashing Decisions

• To make decisions concerning crashing requires information about:– Time:

• Regular time and crash time estimates for each activity

– Cost: • Regular cost and crash cost estimates for each activity

– A list of activities that are on the critical path• Critical path activities are potential candidates for crashing• Crashing non-critical path activities would not have an impact on

overall project duration

Crashing: Procedure

• General procedure:1. Crash the project one period at a time

2. Crash only activities on the critical path/s

3. Crash the least expensive activity (that is on the critical path)

4. When there are multiple critical paths, find the sum of crashing the least expensive activity on each critical path

• If two or more critical paths share common activities, compare the least expensive cost of crashing a common activity shared by critical paths with the sum for the separate critical paths


44

Indirect costs: $1,000 / day(that is, the entire project saves $1000 if it finishes one day earlier, $2000 if it finishes two day earlier,and so on.)

Activity Normal time[days]

Crash (min) time

[days]

Available time(crash-normal)

[days]

Cost to Crash [$/day]

a 6 6 - -b 10 8 2 500c 5 4 1 300d 4 1 3 700e 9 7 2 600f 2 1 1 800

6a

4d

5c

10b

9 e

2f


45

1. Determine Critical Path

Path Lengtha-b-f 18c-d-e-f 20 (critical path)

2. Rank activities on CP in order of lowest crashing cost

Activity Cost per day to crash Available daysc 300 1e 600 2d 700 3f 800 1

Activity Normal time

[days]

Crash (min) time

[days]

Available time(crash-

normal)[days]

Cost to Crash

[$/day]

a 6 6 - -

b 10 8 2 500

c 5 4 1 300

d 4 1 3 700

e 9 7 2 600

f 2 1 1 800

6a

4d

5c

10b

9 e

2f


46

Crash activity c by 1 day: cost $300 < $1,000 (CP=19 days)(cannot crash c anymore)

6a

4d

5c

10b

9 e

2f

4


Activity Cost per day to crash Available daysc 300 1e 600 2d 700 3f 800 1


47

Crash activity e by 1 day: cost $600 < $1,000 (CP=18 days)(may crash activity e by 1 more day)

• Both paths are now critical. • Have to crash both in order to shorten project.

6a

4d

5c

10b

e2f

4

9


Activity Cost per day to crashAvailable daysc 300 1e 600 2d 700 3f 800 1

8


48

Both paths are now critical. Have to crash both in order to shorten project.

Remaining activitiesPath Activity Cost per day to crash Available daysa-b-f a - -

b 500 2f 800 1

c-d-e-f c - -e 600 1d 700 3f 800 1

Crash activity f (is on both paths) by 1 day: cost = $800 < $1,000 (CP=17 days)

6a

4d

4c

10b

8 e

2f


49

Crash activity f (is on both paths) by 1 day: cost $800 < $1,000 (CP=17 days)

6a

4d

4c

10b

8 e1f

2

Remaining activitiesPath Activity Cost per day to crashAvailable daysa-b-f a - -

b 500 2f 800 1

c-d-e-f c - -e 600 1d 700 3f 800 1


50

Crash activity b by 1 day: cost $500 ANDCrash activity e by 1 day: cost $600Total cost: $1,100>$1,000 (indirect costs) =>DONE!

Both paths are still critical. Have to crash both in order to shorten project.

Remaining activitiesPath Activity Cost per day to crash Available daysa-b-f a - -

b 500 2f - -

c-d-e-f c - -e 600 1d 700 3f - -

6a

4d

4c

10b

8 e

1f


51

Length after crashingPath\crash n=0 1 2 3 a-b-f 18 18 18 17c-d-e-f 20 19 18 17

Activity Crashed c e fCost 0 ($300) ($600) ($800)Savings 0 $1,000 $1,000 $1,000Total 0 $700 +$400 +$200 = $1,300

• Costs for a project are $12,000 per week for as long as the project lasts. The project manager has supplied the cost and time information shown. Use the information to

a) Determine an optimum crashing plan.b) Summarize the total costs for the plan.

Exercise

a) Determine an optimum crashing plan.Step 1: Compute path lengths and identify the critical path:

Step 2: Rank critical activities according to crash costs:Activity b should be shortened one week since it has the lower crashing cost. This would reduce indirect costs by $12,000 at a cost of $3,000, for a net savings of $9,000.

2

13

Solution

a) Determine an optimum crashing plan.

Step 3: Rank activities by crashing costs on the two critical paths: At this point, paths a-b and e-f would both have a length of 23 weeks, so both would be critical.

Choose one activity (the least costly) on each path to crash: b on a-b and f on e-f, for a total cost of $4,000 + $2,000 = $6,000 and a net savings of $12,000 − $6,000 = $6,000.

2

13

1

12

7

0

Solution


Step 4: Check to see which path(s) might be critical:

Step 5: Rank activities on the critical paths: Crash b on path a-b and e on e-f for a cost of $4,000 + $6,000 = $10,000, for a net savings of $12,000 − $10,000 = $2,000.

a-b and e-f would be 22 weeks in length, and c-d would still be 19 weeks.

2

13

1

12

7

0

0

2

11

14

Solution


Step 7: At this point, no further improvement is possible: Paths a-b and e-f would be 21 weeks in length, and one activity from each path would have to be shortened. This would mean activity a at $11,000 and e at $6,000 for a total of $17,000, which exceeds the $12,000 potential savings in costs.

Step 6: Check to see which path(s) might be critical:Paths a-b and e-f would be 21 weeks in length, and c-d would still be 19 weeks.

2

13

1

12

7

0

0

2

11

14

Solution

b) Summarize the total costs for the plan.The following table summarizes the results, showing the length of the project after crashing n weeks:

A summary of costs for the preceding schedule would look like this:

Crash: bCrash: b, fCrash: b, e

No crash

* Total Cost = Cumulative Crashing Cost + Indirect Cost

Solution


58

Project Management Software

• Project management software– Specialized software used to help manage projects

• Assign resources• Evaluate changes• Track performance/schedule

– Advantages• Imposes a methodology• Provides logical planning structure• Enhances team communication• Flag constraint violations• Generates reports• Enables what-if scenarios• Generates various chart types

So far over 150 software are listed on Wikipedia “Comparison of

project management software” page.


60

Risk Management

• Risks are an inherent part of project management– Risks relate to occurrence of events that have

undesirable consequences such as• Delays• Increased costs• Inability to meet technical specifications

• Good risk management involves– Identifying as many risks as possible– Analyzing and assessing those risks– Working to minimize the probability of their occurrence– Establishing contingency plans and budgets for dealing with any

that do occur

Recap

Project Management Chapter 17. Learning Objectives Describe the project life cycle Give a general description of the critical path method Construct simple.

Documents

project management plan

project management knowledge

project management chapter

project activities

project managementintroduction

project charter

project goals

control project work