Learning Objectives:

1. To be able to define Project Management;

2. To understand the purpose and usage of
Project Management; and
3. To understand the Basic Principles of
Project Management
What is Project Management?

Project management is a composite

activity with multiple dimensions. Depending
on the type and class of project, this
management activity can be very complex. In
a nutshell, project management is the
discipline of planning, organizing, securing,
managing, leading, and controlling
resources to achieve specific goals.
What is Project Management?
(Continuation)
The very basics of project management are
as follows: a project is a temporary
endeavour with a defined beginning and end
(usually time-constrained, and often
constrained by funding or deliverables) that
an organization takes to meet unique goals
and objectives, typically to bring about
beneficial change or add value.
What are the three phases of
Project Management?
1. Planning – This phase includes goal setting,
defining the project, and team organizations.
2. Scheduling – This phase relates people,
money, and supplies to specific activities and
related activities to each other.
3. Controlling – Here, the firm monitors
resources, costs, quality, and budgets. It also
revises changes in plans and shifts resources
to meet time and cost demands.
Project Manager
Responsible for:

Work Quality
Human Resources Time
Communications Costs

17-6
What are the challenges in Project
management?
The primary challenge of project
management is to achieve all of the project
goals and objectives while honoring the pre-
defined constraints. The primary constraints
are scope, time, quality, and budget. The
secondary challenge is to optimize the
allocation of necessary inputs and integrate
them to meet pre-defined objectives.
How does a Project Manager achieve
successful Project Management?
For a successful project, the following
project management principles are
necessary:
1. Project Structure
2. Definition Phase
3. Clear Goals
4. Transparency about Project Status
How to achieve successful Project
Management? (Continuation)
5. Risk Recognition
6. Managing Project Disturbances
7. Responsibility of Project Manager
8. Project Success
1. Project Structure

Project management typically revolves

around three parameters
1. Quality
2. Resources
3. Time
(Continuation)

A project structure can usually be successfully created by

considering:
1. Project Goal
An answer to the question “What has to be done?” is
usually a good starting point when setting a project goal.
This question leads to the project structure plan. This plan
consists of work packages which represent enclosed work
units that can be assigned to a personnel resource. These
work packages and their special relationships represent the
project structure.
(Continuation)
2. Project Timeline and Order
A flowchart is a powerful tool to visualize the starting
point, the endpoint, and the order of work packages in a
single chart.
3. Project Milestones
Milestones define certain phases of your project and the
corresponding costs and results. Milestones represent
decisive steps during the project. They are set after a
certain number of work packages that belong together. This
series of work packages leads to the achievement of a sub-
goal.
2. Definition Phase

The definition phase is where many

projects go wrong. This can happen when no
clear definition, or when the definition is
muddled due to the involvement of too
many stakeholders. Successful definition
must involve the entire team at every step to
facilitate acceptance and commitment to the
project.
3. Clear Goals
The project manager is responsible for the
achievement of all project goals. These goals
should always be defined using the SMART
paradigm (specific, measurable, ambitious,
realistic, time-bound). With nebulous goals, a
project manager can be faced with a daily
grind of keeping everything organized. It will
work decidedly to your advantage to clearly
define goals before the project begins.
4. Transparency About the Project
Status
Your flowcharts, structure plan, and
milestone plan are useful tools to help you
stay on track. As project manager, you should
be able to present a brief report about the
status of the project to your principal or
stakeholders at each stage of the project.
At such meetings, you should be able to give
overviews about the costs, the timeline,
and the achieved milestones.
5. Risk Recognition
It’s the duty of the project manager to
evaluate risks regularly. You should come into
every project with the knowledge that all
projects come with a variety of risks. This is
normal. Always keep in mind that your
project is a unique endeavour with strict
goals concerning costs, appointments, and
performance. The sooner you identify these
risks, the sooner you can address negative
developments.
6. Managing Project Disturbances
It’s not very likely that you have enough
personal capacity to identify each single risk
that may occur. Instead, work to identify the
big risks and develop specific strategies to
avoid them. Even if you’re no visionary, you
should rely on your skillset, knowledge, and
instincts in order to react quickly and
productively when something goes wrong.
(Continuation)
Project managers of all projects must possess the
following attributes along with the other project related
responsibilities:
 Knowledge of technology in relation to project products
 Understanding Management concepts
 Interpersonal skills for clear communications that help get
things done
 Ability to see the project as an open system and
understand the external-internal interactions
8. Project Success
Project success is a multi-dimensional construct that can mean
different things to different people. It is best expressed at the beginning
of a project in terms of key and measurable criteria upon which the
relative success or failure of the project may be judged.

For example, some generally used success criteria include:

 Meeting key project objectives such as the business objectives of the
sponsoring organization, owner or user
 Eliciting satisfaction with the project management process, i.e., the
deliverable is complete, up to standard, is on time and within budget
 Reflecting general acceptance and satisfaction with the project’s
deliverable on the part of the project’s customer and the majority of
the project’s community at some time in the future.
What are some Project
Management Techniques?
Program Evaluation and Review Technique (PERT) and
Critical path Method (CPM) was both developed in the
1950’s to help managers schedule, monitor, and control large
and complex projects. CPM arrived first in 1957, as a tool
developed by J.E. Kelly of Remington Rant and R. Walker of
duPoint to assist in the building and maintenance of
chemical plants at duPoint. Independently, PERT was
developed in 1958 by Booz, Allen, and Hamilton for the U.S.
Navy.
What is Program Evaluation and
Review Technique (PERT)?
A project management technique that employs three time
estimates for each activity. In PERT, a probability
distribution is employed based on three estimates for each
activity
Optimistic Time (a) = time an activity will take if everything
goes as planned. In estimating this value, there should be
only a small probability (say, 1/100) that the activity time
will be < a.
 The “best” activity completion time that could be
obtained in a PERT network.
What is PERT ? (Continuation)

Pessimistic Time (b) = time an activity will take assuming

very unfavourable conditions. In estimating this value, there
should also be only small probability (also, 1/100) that the
activity time will be > b.
 The “worst” activity time that could be expected in a
PERT network.
What is PERT ? (Continuation)
Most Likely Time (m) = most realistic estimate of the time
required to complete an activity.
 The most probable time to complete an activity in a PERT
network.
Beta Probability Distribution is often appropriate for
determining the expected value and variance for activity
completion times.
Expected activity Time t = (a + 4m + b)/6
Note: MS Project does not perform the PERT probability
calculations however it allows to view Optimistic, Pessimistic
times for each activity . Gantt charts can be viewed for the
each activity.
Probabilistic Estimates
Beta Distribution

to tm te tp

Activity Optimistic Most likely Pessimistic

start time time (mode) time
Advantages of PERT
 Forces managers to organize
 Provides graphic display of activities
 Identifies
 Critical activities
4
 Slack activities 2

1 5 6

3
Limitations of PERT
 Important activities may be omitted
 Precedence relationships may not be correct
 Estimates may include
a fudge factor 4
 May focus solely
2
on critical path

1 5 6

142 weeks

3
Expected Time
te = t o + 4tm +t p
6
te = expected time
to = optimistic time
tm = most likely time
tp = pessimistic time
Variance

2 (t
= p o– t ) 2

36

2 = variance
to = optimistic time
tp = pessimistic time
 Precedence and Project Activity Times
Immediate Optimistic Most Likely Pessimistic EXP Var S.Dev
Activity Predecessor Time Time Time TE V 

a - 10 22 22 20 4 2
b - 20 20 20 20 0 0
c - 4 10 16 10 4 2
d a 2 14 32 15 25 5
e b,c 8 8 20 10 4 2
f b,c 8 14 20 14 4 2
g b,c 4 4 4 4 0 0
h c 2 12 16 11 5.4 2.32
I g,h 6 16 38 18 28.4 5.33
j d,e 2 8 14 8 4 2
Scheduling, PERT, Critical Path Analysis
What is Critical Path Method
(CPM)?
A project management technique that uses only one time
factor per activity.

Critical Path is the computed longest time path(s) through a

network
Example 1 Solution
Critical Path

Path Length Slack

(weeks)
1-2-3-4-5-6 18 2
1-2-5-6 20 0
1-3-5-6 14 6

17-31
Path Probabilities
Specified time – Path mean
Z =
Path standard deviation

Z indicates how many standard deviations

of the path distribution the specified tine
is beyond the expected path duration.
The Framework of PERT and CPM
PERT and CPM follows six basic steps:
1. Define the project and prepare the work breakdown
structure
2. Develop the relationships among activities. Decide which
activities must precede which must follow others
3. Draw the network connecting all of the activities
4. Assign time and/or cost estimates to each activity
5. Compute the longest time path through network. This is
called the critical path.
6. Use the network to help plan, schedule, monitor, and
control the project.
Comparison Between CPM and PERT
CPM PERT
1 Uses network, calculate float or slack,
identify critical path and activities, Same as CPM
guides to monitor and controlling
project
2 Uses one value of activity time Requires 3 estimates of activity time
Calculates mean and variance of time

3 Used where times can be estimated Used where times cannot be estimated
with confidence, familiar activities with confidence.
Unfamiliar or new activities

4 Minimizing cost is more important Meeting time target or estimating

percent completion is more important

5 Example: construction projects, Example: Involving new activities or

building one off machines, ships, etc products, research and development
etc

Scheduling, PERT, Critical Path Analysis

Chapter 8
Summary of PERT 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
Why is PERT and CPM important?
PERT and CPM are important because they can help answer questions about
projects with thousands of activities:
1. When will the entire project be completed?
2. What are the critical activities or tasks in the project?
3. Which are the non-critical activities – the ones that can run late without
delaying the whole project’s completion?
4. What is the probability that the project will be completed by a specific date?
5. At any particular date, is the project on schedule, behind schedule, or ahead
of schedule?
6. On any given date, is the money spent equal, less than, or greater than the
budgeted amount??
7. Are there enough resources available to finish the project on time?
8. If the project is to be finished in a shorter amount of time, what is the best
way to accomplish this goal at the least cost?
 Modified PERT/CPM diagram from
network
a d
1 2 6 7 Legend
e  Scheduled Start
3  Scheduled Finish
 Actual Progress
f  Unavailable
3
 Current Date
b  Milestone
1 3 5 Scheduled
 Milestone
Achieved

c dummy
1 4

h
4

0 5 10 15 20 25 30 35 40 45
Days

Scheduling, PERT, Critical Path Analysis

Probability Analysis of a Project Network
CPM/PERT Analysis with QM for Windows
The 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 (Continuation)
 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
Project Network – Activity on Arrow
Order
AOA furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move
in
Interview
Hire and
train
3
Project Network – Activity on Node
Order
furniture
Locate Furniture
2 setup
facilities
AON
1 6
Move
Remodel
in

S 5 7

Hire and
Interview
train

3 4
Gantt
Chart
Projects
JAN FEB MAR APR MAY JUN
Build A

A Done

Build B

B Done

Build C

C Done
On time!
Build D

Ship

Unique, one-time operations designed to

accomplish a specific set of objectives in a
limited time frame.
Work Breakdown Structure
Project X

Level 1

Level 2

Level 3

Level 4

17-45
References:
Heizer, J. (n.d.). General Principles in Operations
Management. Pearson
Stevenson, W.J. (2007). Operations Management. Project
Management. Chapter 17. Mc Graw-Hill Companies, Inc.
Stevenson, W.J. (2012). Operations Management. Project
Management. Chapter 17. 11TH Edition. Mc Graw-Hill
Companies, Inc.