Pakistan Air Force – Karachi Institute Economics & Technology

PROJECT
MANAGEMENT
CONCEPTS

PRODUCTION MANAGEMENT (PM)

Prepared by
Abid Abbas 51176

KAMRAN SARWAR 3557

TANVEER NABI ABBASI 3753

2010
 PROJECT MANAGEMENT
CONCEPTS

Submitted to:
Mr. Mohammad Ahmed Khan.
(Course Supervisor)

Submitted by:
Abid Abbas (MB-3-04-51176)

Kamran Sarwar (BB-03-06-3557)

Tanveer Nabi Abbasi (BB-02-07-3753)

Date of Submission:
24th Jul y 2010.
ACKNOWLEDGEMENTS
First of all we are very much thankful to Almighty Allah due to His blessing we are

able to complete this project paper named "PROJECT MANAGEMENT CONCEPTS".

Then we would like to thank all the people who helped and guided us for this project

and gave us their valuable suggestions.

Secondly I would like to thank our course supervisor Mr. Mohammad Ahmed Khan,

who not only provided us with information on course matter but also guided us all

the way through the completion of this project paper about every possible issue that

came about.

We also like to thank our classmates who were exceptionally cooperative to us and

provided us all information they could and also gave us their precious suggestions

and guidance for this project.

We are also extremely grateful to our Librarians for their cooperation, guidance and

support for the completion of this paper. These are the people without whom this

project paper would not even have been possible.

Last but not the least we want to thank our parents, family members, friends and

colleagues who continuously cooperated, supported and encouraged us and helped

us all the way to completion of this project.

i
CONTENTS
S.No. Description Page No.

- ACKNOWLEDGEMENTS i

(1). STRATEGIC IMPORTANCE OF PROJECT MANAGEMENT 01

(A). PROJECT 01

(B). PROJECT MANAGEMENT 01

(2). PROJECT PLANNING 03

(3). PROJECT SCHEDULING 05

(4). PROJECT CONTROLLING 07

(5). PROJECT MANAGEMENT TECHNIQUES 08

(6). CONCLUSIONS 13

REFERENCES 14
 Chapter No.1

STRATEGIC IMPORTANCE OF PROJECT MANAGEMENT

(A). PROJECT
A project is a temporary endeavor, having a defined beginning and end (usually constrained by
date, funding or efforts) undertaken to meet unique goals and objectives, usually to bring about
beneficial change or added value.

The temporary nature of projects stands in contrast to business as usual (or operations), which are
repetitive, permanent or semi-permanent functional work to produce products or services. In
practice, the management of these two systems is often found to be quite different, and as such
requires the development of distinct technical skills and the adoption of separate management.

COMMON PROJECT CHARACTERISTICS

Single Unit.
Many Related Activities.
Difficult Production Planning and Inventory Control.
General Purpose Equipment.
High Labor Skills.

Some Examples
Building Construction.
Research Project.

(B). PROJECT MANAGEMENT

Project management is the discipline of planning, organizing, and managing resources to bring
about the successful completion of specific project goals and objectives. It is sometimes confused
with program management, however technically a program is actually a higher level construct that
is a group of related and somehow interdependent projects.

MANAGEMENT OF LARGE PROJECTS

1) Planning – This phase includes goal setting, project definition and team organization.

2) Scheduling – This phase relates people, money, and supplies to specific activities and also
relates activities to one and other.

3) Controlling – This phase includes monitoring resources, costs, quality, and budgets. Also
revising plans and shifting resources to meet time and cost demands.

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The primary challenge of project management is to achieve all of the project goals and objectives
while honoring the preconceived project constraints. Typical constraints are scope, time, and
budget. The secondary—and more ambitious—challenge is to optimize the allocation and
integration of inputs necessary to meet pre-defined objectives.

 Page 2
 Chapter No.2

PROJECT PLANNING

Project Planning is part of project management, which relates to the use of schedules to plan and
subsequently report progress within the project environment.

1) Initially, the project scope is defined and the appropriate methods for completing the project
are determined.
2) Then the durations for the various tasks necessary to complete the work are listed and grouped
into a work breakdown structure. The logical dependencies between tasks are defined using an
activity network diagram that enables identification of the critical path. Float or slack time in
the schedule can be calculated using project management software.
3) Then the necessary resources can be estimated and costs for each activity can be allocated to
each resource, giving the total project cost. At this stage, the project plan may be optimized to
achieve the appropriate balance between resource usage and project duration to comply with
the project objectives.
Once established and agreed, the plan becomes what is known as the baseline. Progress will be
measured against the baseline throughout the life of the project. Analyzing progress compared to
the baseline is known as earned value management. The inputs of the project planning phase
include Project Charter and the Concept Proposal. The outputs of the Project Planning phase
include the Project Requirements, the Project Schedule, and the Project Management Plan.
COMMON PROJECT PLANNING ACTIVITIES
Establishing objectives
Defining project
Creating work breakdown structure
Determining resources
Forming organization

PROJECT ORGANIZATION
A Project Organization is developed to make sure that
the existing programs continue to run smoothly on a
day to day basis while new projects are completed
successfully. They are effective way to of pooling the
people and resources needed for a limited time to
complete a specific project. It is basically a temporary
organization structure designed to achieve results by
using specialists from throughout the firm. Project
Organization works best when:

 Page 3
 Work can be defined with a specific goal and deadline.
The job is unique or somewhat unfamiliar to the existing organization.
The work contains complex interrelated tasks requiring specialized skills.
The project is temporary but critical to the organization.

PROJECT MANAGERS
A project manager is a professional in the field of project management. Project managers can have
the responsibility of the planning, execution, and
closing of any project, typically relating to
construction industry, engineering, architecture,
computing, or telecommunications. Many other
fields in the production, design and service
industries also have project managers.
A project manager is the person accountable for
accomplishing the stated project objectives. Key
project management responsibilities include
creating clear and attainable project objectives,
building the project requirements, and managing
the triple constraint for projects, which is cost, time,
and scope. A project manager is often a client representative and has to determine and implement
the exact needs of the client, based on knowledge of the firm they are representing. The ability to
adapt to the various internal procedures of the contracting party, and to form close links with the
nominated representatives, is essential in ensuring that the key issues of cost, time, quality and
above all, client satisfaction, can be realized.

Work Breakdown Structure

The Work Breakdown Structure (WBS) is a tree structure, which shows a subdivision of effort
required to achieve an objective; for example a program, project, and contract. The WBS may be
hardware, product, service, or process oriented. A WBS can be developed by starting with the end
objective and successively subdividing it into manageable components in terms of size, duration,
and responsibility (e.g., systems, subsystems, components, tasks, subtasks, and work packages),
which include all steps necessary to achieve the objective.
The Work Breakdown Structure provides a common framework for the natural development of the
overall planning and control of a contract and is the basis for dividing work into definable
increments from which the statement of work can be developed and technical, schedule, cost, and
labor hour reporting can be established.
The work breakdown structure is typically decreases in size from top to bottom and is indented like
this:
1) Project.
2) Major tasks in the project.
3) Subtasks in the major tasks.
4) Activities (or work packages) to be completed.

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 Chapter No.3

PROJECT SCHEDULING

In project management, a schedule consists of a list of a project's terminal elements with intended
start and finish dates. Terminal elements are the lowest element in a schedule, which is not further
subdivided. Those items are often estimated in terms of resource requirements, budget and
duration, linked by dependencies and scheduled.

Before a project schedule can be created, a project manager should typically have a work
breakdown structure (WBS), an effort estimate for each task, and a resource list with
availability for each resource. If these are not yet available, it may be possible to create
something that looks like a schedule, but it will essentially be a work of fiction. They can be
created using a consensus-driven estimation method like Wideband Delphi. The reason for
this is that a schedule itself is an estimate: each date in the schedule is estimated, and if
those dates do not have the buy-in of the people who are going to do the work, the schedule
will be inaccurate.

In many industries, such as engineering and construction, the development and

maintenance of the project schedule is the responsibility of a full time scheduler or team of
schedulers, depending on the size of the project. And though the techniques of scheduling
are well developed, they are inconsistently applied throughout industry.

Standardization and promotion of scheduling best practices are being pursued by the
Association for the Advancement of Cost Engineering (AACE), the Project Management
Institute (PMI). In some large corporations, scheduling, as well as cost, estimating, and risk
management are organized under the department of project controls.

Many project scheduling software products exist which can do much of the tedious work of
calculating the schedule automatically, and plenty of books and tutorials dedicated to
teaching people how to use them. However, before a project manager can use these tools,
he or she should understand the concepts behind the WBS, dependencies, resource
allocation, critical paths, Gantt charts and earned value. These are the real keys to planning
a successful project.

Gantt chart
A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the
start and finish dates of the terminal elements and summary elements of a project. Terminal

 Page 5
elements and summary elements comprise the work breakdown structure of the project. Some
Gantt charts also show the dependency (i.e. precedence network) relationships between activities.
Gantt charts can be used to show current schedule status using percent-complete shadings and a
vertical "TODAY" line as shown here.

Although now regarded as a common charting technique, Gantt charts were considered
revolutionary when they were introduced. This chart is used also in Information Technology to
represent data that have been collected.

To summarize, whatever approach taken the by the project manager, the project scheduling serves
several purposes:

1) Shows the relationship of each activity to others and to the whole project.

2) Identifies the precedence relationships among activities.

3) Encourages the setting of realistic time and cost estimates for each activity.

4) Helps make better use of people, money, and material resources by identifying critical
bottlenecks in the project.

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Chapter No.4

PROJECT CONTROLLING

Project Monitoring and Controlling consists of those processes

performed to observe project execution so that potential problems
can be identified in a timely manner and corrective action can be
taken, when necessary, to control the execution of the project. The
key benefit is that project performance is observed and measured
regularly to identify variances from the project management plan.

Monitoring and Controlling activities include:

Measuring the ongoing project activities ('where we are');

Monitoring the project variables (cost, effort, scope, etc.) against the project management plan
and the project performance baseline (where we should be);
Identify corrective actions to address issues and risks properly (How can we get on track again);
Influencing the factors that could circumvent integrated change control so only approved
changes are implemented.

In multi-phase projects, the monitoring and controlling process also provides feedback between
project phases, in order to implement corrective or preventive actions to bring the project into
compliance with the project management plan. Over the course of any project, the work scope may
change. Change is a normal and expected part of the creation process. Beyond executing the change
in the field, the change normally needs to be documented to show what was actually constructed.
This is referred to as Change Management. Hence, the owner usually requires a final record to show
all changes or, more specifically, any change that modifies the tangible portions of the finished
work. When changes are introduced to the project, the viability of the project has to be re-assessed.
It is important not to lose sight of the initial goals and targets of the projects. When the changes
accumulate, the forecasted result may not justify the original proposed investment in the project.

Project Control Reports

The controlling activity creates and utilizes several reports which include:
Detailed cost breakdowns for each task
Total program labor curves
Cost distribution tables
Functional cost and hour summaries
Raw materials and expenditure forecasts
Variance reports
Time analysis reports
Work status reports

 Page 7
 Chapter No.5

PROJECT MANAGEMENT TECHNIQUES

Introduction to PERT and CPM

The Program (or Project) Evaluation and Review Technique, commonly abbreviated PERT, is a
model for project management designed to analyze and represent the tasks involved in completing
a given project. It is commonly used in conjunction with the critical path method or CPM. The
critical path method (CPM) is a mathematically based algorithm for scheduling a set of project
activities. It is an important tool for effective project management.

Program Evaluation and Review Technique (PERT)

PERT is a method to analyze the involved tasks in completing a given project, especially the time
needed to complete each task, and identifying the minimum time needed to complete the total
project. PERT was developed primarily to simplify the planning and scheduling of large and
complex projects. It was developed by Bill Pocock of Booz Allen Hamilton and Gordon Perhson of
the U.S. Navy Special Projects Office in 1957 to support the U.S. Navy's Polaris nuclear submarine
project. It was able to incorporate uncertainty by making it possible to schedule a project while not
knowing precisely the details and durations of all the activities. It is more of an event-oriented
technique rather than start- and completion-oriented, and is used more in projects where time,
rather than cost, is the major factor. It is applied to very large-scale, one-time, complex, non-routine
infrastructure and Research and Development projects. This project model was the first of its kind,
a revival for scientific management, founded by Frederick Taylor (Taylorism) and later refined by
Henry Ford (Fordism). DuPont Corporation’s critical path method was invented at roughly the
same time as PERT.

 Page 8
Critical Path Method (CPM)
The Critical Path Method (CPM) is a project modeling technique developed in the late 1950s by
Morgan R. Walker of DuPont and James E. Kelley, Jr. of Remington Rand. Kelley and Walker related
their memories of the development of CPM in 1989. At about the same time, Booz Allen Hamilton
and the US Navy were developing the Program Evaluation and Review Technique. CPM is
commonly used with all forms of projects, including construction, aerospace and defense, software
development, research projects, product development, engineering, and plant maintenance, among
others. Any project with interdependent activities can apply this method of mathematical analysis.
Although the original CPM program and approach is no longer used, the term is generally applied to
any approach used to analyze a project network logic diagram.

Questions which may be addressed by PERT & CPM

PERT and CPM are important as they answer the questions such as the following about the projects
with thousands of activities:

1) When will the project be completed?

2) What are the critical activities or tasks in the project?
3) Which are the noncritical activities?
4) What is the probability that the project will be completed by a specific date?
5) Is the project on schedule, ahead of schedule, or behind schedule?
6) Is the project over or under the budgeted amount?
7) Are there enough resources available to finish the project on time?
8) If the project must be finished in less than the scheduled amount of time, what is the best way to
accomplish this at least cost?
The Framework of PERT & CPM
Six Steps are Common to both PERT and CPM. The procedure is as follows:

1) Define the project and all significant activities/tasks.

2) Develop relationships among the activities. Identify precedence relationships.
3) Draw the network.
4) Assign time and/or cost estimates to each activity.
5) Compute the longest time path (critical path) through the network.
6) Use the network to help plan, schedule, monitor, and control the project.
Conventions of PERT
1) A PERT chart is a tool that facilitates decision making; the first draft of a PERT chart will
number its events sequentially in 10s (10, 20, 30, etc.) to allow the later insertion of additional
events.
2) Two consecutive events in a PERT chart are linked by activities, which are conventionally
represented as arrows (see the diagram above).
3) The events are presented in a logical sequence and no activity can commence until its
immediately preceding event is completed.
4) The planner decides which milestones should be PERT events and also decides their “proper”
sequence.

 Page 9
5) A PERT chart may have multiple pages with many sub-tasks.
6) PERT is valuable to manage where multiple tasks are going simultaneously to reduce the
redundancy.
Terminologies used in PERT
Event - A point that marks the start or completion of one or more activities. It consumes no
time, and uses no resources. When it marks the completion of one or more tasks, it is not
“reached” (does not occur) until all of the activities leading to that event have been completed.
Predecessor Event - An event that immediately precedes some other event without any other
events intervening. An event can have multiple predecessor events and can be the predecessor
of multiple events.
Successor Event - An event that immediately follows some other event without any other
intervening events. An event can have multiple successor events and can be the successor of
multiple events.
Activity - The actual performance of a task which consumes time and requires resources (such
as labor, materials, space, machinery). It can be understood as representing the time, effort, and
resources required to move from one event to another. A PERT activity cannot be performed
until the predecessor event has occurred.
Optimistic time (O) - The minimum possible time required to accomplish a task, assuming
everything proceeds better than is normally expected
Pessimistic time (P) - The maximum possible time required accomplishing a task, assuming
everything goes wrong (but excluding major catastrophes).
Most likely time (M) - The best estimate of the time required to accomplish a task, assuming
everything proceeds as normal.
Expected time (TE) - The best estimate of the time required to accomplish a task, assuming
everything proceeds as normal (the implication being that the expected time is the average time
the task would require if the task were repeated on a number of occasions over an extended
period of time).

TE = (O + 4M + P) ÷ 6

Float or Slack is the amount of time that a task in a project network can be delayed without
causing a delay - Subsequent tasks – (free float) or Project Completion – (total float)
Critical Path is the longest possible continuous pathway taken from the initial event to the
terminal event. It determines the total calendar time required for the project; and, therefore,
any time delays along the critical path will delay the reaching of the terminal event by at least
the same amount.
Critical Activity is an activity that has total float equal to zero. Activity with zero float does not
mean it is on the critical path.
Lead time is the time by which a predecessor event must be completed in order to allow
sufficient time for the activities that must elapse before a specific PERT event reaches
completion.
Lag time is the earliest time by which a successor event can follow a specific PERT event.

 Page 10
 Slack - The slack of an event is a measure of the excess time and resources available in
achieving this event. Positive slack would indicate ahead of schedule; negative slack would
indicate behind schedule; and zero slack would indicate on schedule.
Fast tracking is performing more critical activities in parallel.
Crashing Critical Path means shortening duration of critical activities.
Dummy Activity is the activity that has no time, inserted into the network to maintain the logic
of the network.

Implementation
The first step to scheduling the project is to determine the tasks that the project requires and the
order in which they must be completed. The order may be easy to record for some tasks (e.g. When
building a house, the land must be graded before the foundation can be laid) while difficult for
others (There are two areas that need to be graded, but there are only enough bulldozers to do
one). Additionally, the time estimates usually reflect the normal, non-rushed time. Many times, the
time required to execute the task can be reduced for an additional cost or a reduction in the quality.
In the following example there are seven tasks, labeled A through G. Some tasks can be done
concurrently (A and B) while others cannot be done until their predecessor task is complete (C
cannot begin until A is complete). Additionally, each task has three time estimates: the optimistic
time estimate (O), the most likely or normal time estimate (M), and the pessimistic time estimate
(P). The expected time (TE) is computed using the formula (O + 4M + P) ÷ 6.

Activity Predecessor
Opt. (O) Normal (M) Pess. (P)
A —
B —
C A
D A
E B, C
F D
G E
Time estimates
Expected time
2 4 6 4
3 5 9 5.33
4 5 7 5.17
4 6 10 6.33
4 5 7 5.17
3 4 8 4.5
3 5 8 5.17

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Once this step is complete, one can draw a Gantt chart or a network diagram. A network diagram
can be created by hand or by using diagram software. There are two types of network diagrams,
Activity-On-Arrow (AOA) and Activity-On-Node (AON). Activity on node diagrams are generally
easier to create and interpret. To create an AON diagram, it is recommended (but not required) to
start with a node named start. This "activity" has duration of zero (0). Then you draw each activity
that does not have a predecessor activity (A and B in this example) and connect them with an arrow
from start to each node. Next, since both C and D list a as a predecessor activity, their nodes are
drawn with arrows coming from A. Activity E is listed with B and C as predecessor activities, so
node E is drawn with arrows coming from both B and C, signifying that E cannot begin until both B
and C have been completed. Activity F has d as a predecessor activity, so an arrow is drawn
connecting the activities. Likewise, an arrow is drawn from E to G. Since there are no activities that
come after F or G, it is recommended (but again not required) to connect them to a node labeled
finish.

A Comparison of AON and AOA Network Conventions

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 Chapter No.6

CONCLUSIONS

During project execution, however, a real-life project will never execute exactly as it was planned
due to uncertainty. It can be ambiguity resulting from subjective estimates that are prone to human
errors or it can be variability arising from unexpected events or risks. And Project Evaluation and
Review Technique (PERT) may provide inaccurate information about the project completion time
for main reason uncertainty. This inaccuracy is large enough to render such estimates as not
helpful.
One possibility to maximize solution robustness is to include safety in the baseline schedule in
order to absorb the anticipated disruptions. This is called proactive scheduling. A pure proactive
scheduling is an ideal; incorporating safety in a baseline schedule that allows coping with every
possible disruption would lead to a baseline schedule with a very large make-span. A second
approach, reactive scheduling, consists of defining a procedure to react to disruptions that cannot
be absorbed by the baseline schedule.

Advantages of PERT/CPM
1) Useful at several stages of project management.
2) Straightforward in concept, not mathematically complex.
3) Uses graphical displays employing networks to help user perceive relationships among project
activities.
4) Critical path and slack time analyses help pinpoint activities that need to be closely watched.
5) Networks generated provide valuable project documentation and graphically point out who is
responsible for various project activities.
6) Applicable to a wide variety of projects and industries.
7) Useful in monitoring not only schedules, but costs as well.

Limitations of PERT/CPM
1) Project activities must be clearly defined, independent, and stable in their relationships.
2) Precedence relationships must be specified and networked together.
3) Time activities in PERT are assumed to follow the beta probability distribution -- must be
verified.
4) Time estimates tend to be subjective, and are subject to fudging by managers.
5) There is inherent danger in too much emphasis being placed on the critical path.

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 REFERENCES

 David I. Cleland, Roland Gareis (2006). Global project management handbook. "Chapter
1: "The evolution of project management". McGraw-Hill Professional, 2006.

 H.L. Gantt, Work, Wages and Profit, published by The Engineering Magazine, New York,
1910; republished as Work, Wages and Profits, Easton, Pennsylvania, Hive Publishing
Company, 1974, ISBN 0879600489.

 Kerzner, Harold (2003). Project Management: A Systems Approach to Planning,

Scheduling, and Controlling (8th Ed. ed.). Wiley. ISBN 0-471-22577-0.

 Klastorin, Ted (2003). Project Management: Tools and Trade-offs (3rd ed. ed.). Wiley.
ISBN 978-0471413844.

 Martin Stevens (2002). Project Management Pathways. Association for Project

Management. APM Publishing Limited, 2002 ISBN 1-903494-01-X p.xxii

 Milosevic, Dragan Z. (2003). Project Management Tool Box: Tools and Techniques for the
Practicing Project Manager. Wiley. ISBN 978-0471208228.

 Morgen Witzel (2003). Fifty key figures in management. Routledge, 2003. ISBN 0-415-
36977-0. p. 96-101.

 Paul C. Dinsmore et al (2005) The right projects done right! John Wiley and Sons, 2005.
ISBN 0-7879-7113-8. p.35 and further.

 Peter W. G. Morris, The Management of Projects, Thomas Telford, 1994, ISBN

0727725939, Google Print, p.18

 Project Management Institute (2003). A Guide to the Project Management Body of

Knowledge (3rd ed. ed.). Project Management Institute. ISBN 1-930699-45-X.

 Raturi, Amitabh S., and James R. Evans. Principles of Operations Management. Mason, OH:
Thomson South-Western, 2005.

 Stevenson, William J. Production and Operations Management. 8th ed. Boston:

Irwin/McGraw-Hill, 2005.

 The Definitive Guide to Project Management. Nokes, Sebastian. 2nd Ed.n. London
(Financial Times / Prentice Hall): 2007. ISBN 978 0 273 71097 4

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