Project Management. Learning Objectives Discuss the behavioral aspects of projects in terms of project personnel and the project manager. Discuss.

Project Managemen

t

Learning ObjectivesLearning Objectives

Discuss the behavioral aspects of projects in terms of project personnel and the project manager.

Discuss the nature and importance of a work breakdown structure in project management.

Give a general description of PERT/CPM techniques.

Construct simple network diagrams.

Learning ObjectivesLearning Objectives

List the kinds of information that a PERT or CPM analysis can provide.

Analyze networks with deterministic times. Analyze networks with probabilistic times. Describe activity “crashing” and solve

typical problems.

Unique, one-time operations designed to Unique, one-time operations designed to accomplish a specific set of objectives in a accomplish a specific set of objectives in a limited time frame.limited time frame.

Build A

A Done

Build B

B Done

Build C

C Done

Build D

Ship

JAN FEB MAR APR MAY JUN

On time!

ProjectsProjects

Project ManagementProject Management

What are the Key Metrics Time Cost Performance objectives

What are the Key Success Factors? Top-down commitment Having a capable project manager Having time to plan Careful tracking and control Good communications


What are the Major Administrative Issues? Executive responsibilities

Project selection Project manager selection Organizational structure

Organizational alternatives Manage within functional unit Assign a coordinator Use a matrix organization with a project leader


What are the tools? Work breakdown structure Network diagram Gantt charts Risk management

Planning and SchedulingPlanning and Scheduling

MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Locate new facilities

Interview staff

Hire and train staff

Select and order machine

Installation / Remodel

Move in/startup

Gantt Chart

Deciding which projects to implement

Selecting a project manager

Selecting a project team

Planning and designing the project

Managing and controlling project resources

Deciding if and when a project should be terminated

Key DecisionsKey Decisions

Project ManagerProject Manager

Responsible for:

Work QualityHuman Resources TimeCommunications Costs

Temptation to understate costs

Withhold information

Misleading status reports

Falsifying records

Comprising workers’ safety

Approving substandard work

Ethical IssuesEthical Issues

Project Life CycleProject Life Cycle

Concept

FeasibilityFeasibility

PlanningPlanning

ExecutionExecution

TerminationTermination

Man

agem

ent

Work Breakdown StructureWork Breakdown Structure

Project XProject X

Level 1

Level 2

Level 3

Level 4

PERT and CPMPERT and CPM

PERT: Program Evaluation and Review Technique

CPM: Critical Path Method

Graphically displays project activities Estimates how long the project will take Indicates most critical activities Show where delays will not affect project

The Network DiagramThe Network Diagram Network (precedence) diagram – diagram of

project activities that shows sequential relationships by the use of arrows and nodes.

Activity-on-arrow (AOA) – a network diagram convention in which arrows designate activities.

Activity-on-node (AON) – a network diagram convention in which nodes designate activities.

Activities – steps in the project that consume resources and/or time.

Events – the starting and finishing of activities, designated by nodes in the AOA convention.

The Network Diagram (cont’d)The Network Diagram (cont’d)

Path Sequence of activities that leads from the starting

node to the finishing node

Critical path The longest path; determines expected project

duration

Critical activities Activities on the critical path

Slack Allowable slippage for path; the difference the

length of path and the length of critical path

A Comparison of AON and A Comparison of AON and AOA Network ConventionsAOA Network Conventions

Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)

A comes before B, which comes before C

(a) A B CBA C

A and B must both be completed before C can start

(b)

A

CC

B

A

B

B and C cannot begin until A is completed

(c)

B

A

CA

B

C



C and D cannot begin until A and B have both been completed

(d)A

B

C

D B

A C

D

C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA

(e)CA

B D

Dummy activityA

B

C

D



B and C cannot begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA.

(f)

A

C

DB A B

C

D

Dummy activity

Project Network – Activity on Project Network – Activity on ArrowArrow

1

2

3

4

5 6

Locatefacilities

Order

setup

InterviewHire andtrain

Remodel

Move in

AOA

Project Network – Activity on Project Network – Activity on NodeNode

1

2

3

5

6

Locatefacilities

Order

setup

Interview

RemodelMove in

4

Hire andtrain

7S

AON

Time EstimatesTime Estimates

Deterministic

Time estimates that are fairly certain

Probabilistic

Estimates of times that allow for variation

Network activities ES: earliest start EF: earliest finish LS: latest start LF: latest finish

Used to determine Expected project duration Slack time Critical path

Computing AlgorithmComputing Algorithm

Determining the Project ScheduleDetermining the Project Schedule

Perform a Critical Path AnalysisPerform a Critical Path Analysis

Table 3.2Table 3.2

Activity Description Time (weeks)A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25

Earliest start (ES) =earliest time at which an activity can start, assuming all predecessors have been completed

Earliest finish (EF) =earliest time at which an activity can be finished

Latest start (LS) =latest time at which an activity can start so as to not delay the completion time of the entire project

Latest finish (LF) =latest time by which an activity has to be finished so as to not delay the completion time of the entire project

AON Example AON Example

Activity DescriptionImmediate

Predecessors

A Build internal components —

B Modify roof and floor —

C Construct collection stack A

D Pour concrete and install frame A, B

E Build high-temperature burner C

F Install pollution control system C

G Install air pollution device D, E

H Inspect and test F, G

Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors

AON Network for Milwaukee AON Network for Milwaukee PaperPaper

A

Start

BStart Activity

Activity A(Build Internal Components)

Activity B(Modify Roof and Floor)


C

D

A

Start

B

Activity A Precedes Activity C

Activities A and B Precede Activity D


G

E

F

H

CA

Start

DB

Arrows Show Precedence Relationships

HH

(Inspect/ (Inspect/ Test)Test)

77Dummy Dummy ActivityActivity

AOA Network for Milwaukee AOA Network for Milwaukee PaperPaper

66

FF(Install

(Install

Controls)

Controls)EE

(Bu

ild B

urn

er)(B

ui ld

Bu

rner)

GG

(Insta

ll

(Insta

ll

Pollutio

n

Pollutio

n

Device)

Device)

55DD

(Pour (Pour Concrete/ Concrete/

Install Frame)Install Frame)

44CC

(Construct (Construct Stack)Stack)

11

33

22

BB(Modify

(Modify

Roof/Floor)

Roof/Floor)

AA(B

uild In

tern

al

(Build

Inte

rnal

Componen

ts)

Componen

ts)


Perform a Critical Path AnalysisPerform a Critical Path AnalysisActivity Description Time (weeks)

A Build internal components 2B Modify roof and floor 3C Construct collection stack 2D Pour concrete and install frame 4E Build high-temperature burner 4F Install pollution control system 3G Install air pollution device 5H Inspect and test 2

Total Time (weeks) 25


Perform a Critical Path AnalysisPerform a Critical Path Analysis

A

Activity Name or Symbol

Earliest Start ES

Earliest FinishEF

Latest Start

LS Latest Finish

LF

Activity Duration

2

ES/EF Network for Milwaukee ES/EF Network for Milwaukee Paper (Forward pass)Paper (Forward pass)

Start

0

0

ES

0

EF = ES + Activity time

ES/EF Network for Milwaukee ES/EF Network for Milwaukee PaperPaper

Start0

0

0

A

2

2

EF of A = ES of A + 2

0

ESof A

B

3


Start0

0

0

A

2

20

3

EF of B = ES of B + 3

0

ESof B

C

2

2 4


B

3

0 3

Start0

0

0

A

2

20

C

2

2 4


B

3

0 3

Start0

0

0

A

2

20

D

4

73= Max (2, 3)

D

4

3 7

C

2

2 4


B

3

0 3

Start0

0

0

A

2

20

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4


B

3

0 3

Start0

0

0

A

2

20

LS/LF Times for Milwaukee LS/LF Times for Milwaukee Paper (Backward pass)Paper (Backward pass)

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = EF of Project

1513

LS = LF – Activity time

LS/LF Times for LS/LF Times for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = Min(LS of following activity)

10 13


E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

LF = Min(4, 10)

42


E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

Computing Slack TimeComputing Slack Time

After computing the ES, EF, LS, and LF times After computing the ES, EF, LS, and LF times for all activities, compute the slack or free for all activities, compute the slack or free time for each activitytime for each activity

Slack is the length of time an activity can be delayed without delaying the entire project

Slack = LS – ES or Slack = LF – EF


Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical

Activity ES EF LS LF LS – ES Path

A 0 2 0 2 0 YesB 0 3 1 4 1 NoC 2 4 2 4 0 YesD 3 7 4 8 1 NoE 4 8 4 8 0 YesF 4 7 10 13 6 NoG 8 13 8 13 0 YesH 13 15 13 15 0 Yes

Critical Path for Critical Path for Milwaukee PaperMilwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

ES – EF Gantt ChartES – EF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

AA Build internal Build internal componentscomponents

BB Modify roof and floorModify roof and floor

CC Construct collection Construct collection stackstack

DD Pour concrete and Pour concrete and install frameinstall frame

EE Build high-Build high-temperature burnertemperature burner

FF Install pollution Install pollution control systemcontrol system

GG Install air pollution Install air pollution devicedevice

HH Inspect and testInspect and test

11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616

LS – LF Gantt ChartLS – LF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper

AA Build internal Build internal componentscomponents

BB Modify roof and floorModify roof and floor

CC Construct collection Construct collection stackstack

DD Pour concrete and Pour concrete and install frameinstall frame

EE Build high-Build high-temperature burnertemperature burner

FF Install pollution Install pollution control systemcontrol system

GG Install air pollution Install air pollution devicedevice

HH Inspect and testInspect and test

11 22 33 44 55 66 77 88 99 1010 1111 1212 1313 1414 1515 1616

Critical Path ExampleCritical Path Example

Perform a Critical Path AnalysisPerform a Critical Path AnalysisActivity Immediate Predecessors Time (weeks)

A - 6B - 7C A 3D A 2E B 4F B 6G C, E 10H D, F 7

H

7

13 20

14 21F

6

7 13

8 14

G

10

11 21

11 21

E

4

7 11

7 11

C

3

6 9

118

D

2

6 8

1412

A

6

60

82

B

7

0 7

0 7

Start0

0

0

00

End21

0

21

2121


Earliest Earliest Latest Latest OnStart Finish Start Finish Slack Critical

Activity ES EF LS LF LS – ES Path

A 0 6 2 8 2 NoB 0 7 0 7 0 YesC 6 9 8 11 2 NoD 6 8 12 14 6 NoE 7 11 7 11 0 YesF 7 13 8 14 1 NoG 11 21 11 21 0 YesH 13 20 14 21 1 No

Probabilistic Time EstimatesProbabilistic Time Estimates

Optimistic time

Time required under optimal conditions

Pessimistic time

Time required under worst conditions

Most likely time

Most probable length of time that will be required

Probabilistic EstimatesProbabilistic Estimates

Activitystart

Optimistictime

Most likelytime (mode)

Pessimistictime

to tptm te

Beta Distribution

Expected TimeExpected Time

te = to + 4tm +tp

6

te = expected timeto = optimistic timetm = most likely timetp = pessimistic time

VarianceVariance

(tp – to)2

36

= varianceto = optimistic timetp = pessimistic time

Computing VarianceComputing Variance

Most ExpectedOptimistic Likely Pessimistic Time Variance

Activity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 1 2 3 2 .11B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11

Probability of Project Probability of Project CompletionCompletion

Project variance is computed by Project variance is computed by summing the variances of critical summing the variances of critical activitiesactivities

22 = Project variance = Project variance

= = ((variances of activities variances of activities on critical pathon critical path))

p


Project variance is computed by summing Project variance is computed by summing the variances of critical activitiesthe variances of critical activities

Project variance

2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11

Project standard deviation

p = Project variance

= 3.11 = 1.76 weeks

p


PERT makes two more assumptions:PERT makes two more assumptions:

Total project completion times follow a Total project completion times follow a normal probability distributionnormal probability distribution

Activity times are statistically Activity times are statistically independentindependent


Standard deviation = 1.76 weeks

15 Weeks

(Expected Completion Time)


What is the probability this project can What is the probability this project can be completed on or before the be completed on or before the 1616 week week deadline?deadline?

ZZ == –– //pp

= = ((1616 wkswks –– 15 15 wkswks)/1.76)/1.76

= = 0.570.57

duedue expected dateexpected datedatedate of completionof completion

Where Z is the number of standard deviations the due

date lies from the mean


What is the probability this project can What is the probability this project can be completed on or before the 16 week be completed on or before the 16 week deadline?deadline?

ZZ == −− //pp

= = (16 (16 wkswks −− 15 15 wkswks)/1.76)/1.76

= = 0.570.57

due expected datedate of completion

Where Z is the number of standard deviations the due

date lies from the mean

.00 .01 .07 .08

.1 .50000 .50399 .52790 .53188

.2 .53983 .54380 .56749 .57142

.5 .69146 .69497 .71566 .71904

.6 .72575 .72907 .74857 .75175


Time

Probability(T ≤ 16 weeks)is 71.57%

0.57 Standard deviations

15 16Weeks Weeks

Determining Project Determining Project Completion TimeCompletion Time

Probability of 0.01

Z Z = 2.33

Probability of 0.99

2.33 Standard deviations

0 2.33

Due date = 15 + 2.33 x 1.76 = 19.1 weeks

PERT ExamplePERT ExampleMost Expected

Optimistic Likely Pessimistic Time VarianceActivity a m b t = (a + 4m + b)/6 [(b – a)/6]2

A 3 6 8 5.83 0.69B 2 4 4 3.67 0.11C 1 2 3 2.00 0.11D 6 7 8 7.00 0.11E 2 4 6 4.00 0.44F 6 10 14 10.00 1.78

G 1 2 4 2.17 0.25H 3 6 9 6.00 1.00I 10 11 12 11.00 0.11 J 14 16 20 16.33 1.00K 2 8 10 7.33 1.78

Immediate Predecessors

---C

B,DA,EA,EFGC

H,I

Time-cost Trade-offs: CrashingTime-cost Trade-offs: Crashing

Crash – shortening activity duration

Procedure for crashing Crash the project one period at a time

Only an activity on the critical path

Crash the least expensive activity

Multiple critical paths: find the sum of crashing the least expensive activity on each critical path

Crashing The ProjectCrashing The Project

Time (Wks) Cost ($) Crash Cost CriticalActivity Normal Crash Normal Crash Per Wk ($) Path?

A 2 1 22,000 22,750 750 YesB 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes

308,000

Crash and Normal Times and Crash and Normal Times and Costs for Activity BCosts for Activity B

| | |11 22 33 Time (Weeks)Time (Weeks)

$34,000 $34,000 —

$33,000 $33,000 —

$32,000 $32,000 —

$31,000 $31,000 —

$30,000 $30,000 —

—

Activity Activity CostCost

CrashCrash

NormalNormal

Crash TimeCrash Time Normal TimeNormal Time

Crash Crash CostCost

Normal Normal CostCost

Crash Cost/WkCrash Cost/Wk = = Crash Cost – Normal CostCrash Cost – Normal CostNormal Time – Crash TimeNormal Time – Crash Time

==$34,000 $34,000 –– $30,000 $30,000

3 3 –– 1 1

= = $2,000/Wk= = $2,000/Wk$4,000$4,0002 Wks2 Wks

Critical Path And Slack Times Critical Path And Slack Times For Milwaukee PaperFor Milwaukee Paper

E

4

F

3

G

5

H

2

4 8 13 15

4

8 13

7

13 15

10 13

8 13

4 8

D

4

3 7

C

2

2 4

B

3

0 3

Start0

0

0

A

2

20

42

84

20

41

00

SlackSlack = 1 = 1 SlackSlack = 1 = 1

SlackSlack = 0 = 0 SlackSlack = 6 = 6

SlackSlack = 0 = 0

SlackSlack = 0 = 0

SlackSlack = 0 = 0

SlackSlack = 0 = 0

Advantages of PERTAdvantages of PERT

Forces managers to organize

Provides graphic display of activities

Identifies Critical activities

Slack activities1

2

3

4

5 6

Limitations of PERTLimitations of PERT

Important activities may be omitted

Precedence relationships may not be correct

Estimates may include a fudge factor

May focus solelyon critical path

1

2

3

4

5 6

142 weeks

Goldratt’s Critical ChainGoldratt’s Critical Chain

Goldratt’s insight on project management Time estimates are often pessimistic Activities finished ahead of schedule often go

unreported With multiple projects, resources needed for one

project may be in use on another

Computer aided design (CAD) Groupware (Lotus Notes) CA Super Project Harvard Total Manager MS Project Sure Track Project Manager Time Line

Project Management SoftwareProject Management Software

Risk: occurrence of events that have undesirable consequences

Delays

Increased costs

Inability to meet specifications

Project termination

Project Risk ManagementProject Risk Management

Identify potential risks

Analyze and assess risks

Work to minimize occurrence of risk

Establish contingency plans

Risk ManagementRisk Management

SummarySummary

Projects are a unique set of activities

Projects go through life cycles

PERT and CPM are two common techniques

Network diagrams

Project management software available

Project Management. Learning Objectives Discuss the behavioral aspects of projects in terms of project personnel and the project manager. Discuss.

Documents

project activitiesestimates

project teamplanning

project managerselecting

project resourcesdeciding

terms of project personnel

network diagram convention

aoa convention

activities steps