Project Management

Lecture Outline
Project Planning Project Scheduling Project Control CPM/PERT Probabilistic Activity Times Project Crashing and Time-Cost Trade-off

9-2

Project Management Process

Project
unique, one-time operational activity or effort

9-3

Project Management Process

9-4

Project Management Process

9-5

Project Elements
Objective Scope Contract requirements Schedules Resources Personnel Control Risk and problem analysis

9-6

Project Team and Project Manager

Project team
made up of individuals from various areas and departments within a company

Matrix organization
a team structure with members from functional areas, depending on skills required

Project manager
most important member of project team

9-7

Scope Statement
Scope statement a document that provides an understanding, justification, and expected result of a project Statement of work written description of objectives of a project

9-8

Work Breakdown Structure

Work breakdown structure (WBS) Breaks a project into components, subcomponents, activities, and tasks

9-9

Work Breakdown Structure for Computer Order Processing System Project

9-10

Responsibility Assignment Matrix

Organizational Breakdown Structure (OBS)
a chart that shows which organizational units are responsible for work items

Responsibility Assignment Matrix (RAM)

shows who is responsible for work in a project

9-11

Responsibility Assignment Matrix

9-12

Global and Diversity Issues in Project Management

Global project teams are formed from different genders, cultures, ethnicities, etc. Diversity among team members can add an extra dimension to project planning Cultural research and communication are important elements in the planning process

Project Scheduling
Steps
Define activities Sequence activities Estimate time Develop schedule

Techniques
Gantt chart CPM/PERT

Software
Microsoft Project

9-14

Gantt Chart
Graph or bar chart Bars represent the time for each task Bars also indicate status of tasks Provides visual display of project schedule

Slack
amount of time an activity can be delayed without delaying the project

9-15

Example of Gantt Chart

0
Activity Design house and obtain financing Lay foundation

Month 4

10

Order and receive materials

Build house Select paint Select carpet Finish work

3 Month

9
9-16

Project Control
Time management Cost management Quality management Communication Performance management
Earned Value Analysis standard procedure to numerically measure a projects progress forecast its completion date and cost measure schedule and budget variation

9-17

CPM/PERT
Critical Path Method (CPM)
DuPont & Remington-Rand Deterministic task times Activity-on-node network construction

Project Evaluation and Review Technique (PERT)

US Navy and Booz, Allen & Hamilton Probabilistic task time estimates Activity-on-arrow network construction

9-18

Project Network
Activity-on-node (AON)
nodes represent activities arrows show precedence relationships
Branch
1 2

Node
3

Activity-on-arrow (AOA)
arrows represent activities nodes are events for points in time

Event
completion or beginning of an activity in a project
9-19

AOA Project Network for a House

3
2 0 1 Order and receive materials

Lay foundation

Dummy Build house Finish work

3 Design house and obtain financing

4
Select paint 1

3
1

6
Select carpet

9-20

Concurrent Activities
Dummy
two or more activities cannot share same start and end nodes
Lay foundation

3
Lay foundation Dummy 2 1 0

2
Order material

3
2

Order material
(b) Correct precedence relationship

(a) Incorrect precedence relationship

9-21

AON Network for House Building Project

Lay foundation Build house Activity Number Activity Time

2 2

4 3

Start

1 3
Design house and obtain financing

7 1 3 1
Order &receive materials

5 1
Select paint

6 1
Select carpet

Finish work

9-22

Critical Path
2 2 Start 4 3

1 3
3 1 5 1 6 1

7 1

A: B: C: D:

1-2-4-7 3 + 2 + 3 + 1 = 9 months 1-2-5-6-7 3 + 2 + 1 + 1 + 1 = 8 months 1-3-4-7 3 + 1 + 3 + 1 = 8 months 1-3-5-6-7 3 + 1 + 1 + 1 + 1 = 7 months

Critical path

Longest path through a network Minimum project completion time

9-23

Activity Start Times

Start at 5 months

2 2 Start 1 3 3 1
Start at 3 months

4 3

Finish at 9 months

7 1 5 1 6 1
Start at 6 months

Finish

9-24

Node Configuration
Activity number Earliest start Earliest finish

1
3

0
0

3
3

Activity duration

Latest start

Latest finish

9-25

Activity Scheduling
Earliest start time (ES)
earliest time an activity can start ES = maximum EF of immediate predecessors

Forward pass
starts at beginning of CPM/PERT network to determine earliest activity times

Earliest finish time (EF)

earliest time an activity can finish earliest start time plus activity time EF= ES + t

9-26

Earliest Activity Start and Finish Times

Lay foundation Build house

2 2 1
Start

5 4 5 8
Finish work

3
0 3

7 1 6 3 1 3 4 5 1
Select paint

3 6 7

Design house and obtain financing

1 5 6
Select carpet

Order and receive materials

9-27

Activity Scheduling
Latest start time (LS)
Latest time an activity can start without delaying critical path time LS= LF - t

Latest finish time (LF)

latest time an activity can be completed without delaying critical path time LF = minimum LS of immediate following activities

Backward pass
Determines latest activity times by starting at the end of CPM/PERT network and working forward

9-28

Latest Activity Start and Finish Times

Lay foundation Build house

2 2 1
Start

5 5

8 8
Finish work

0 0

3 3 6 3 1 3 4 4 5 5 1 5 6 1 6 7 7 8

7 1

8 8

9 9

Design house and obtain financing

Order and receive materials

Select carpet

Select paint

9-29

Activity Slack
Activity
*1 *2 3 *4

LS
0 3 4 5

ES
0 3 3 5

LF
3 5 5 8

EF
3 5 4 8

Slack S
0 0 1 0

5
6 *7 * Critical Path

6
7 8

5
6 8

7
8 9

6
7 9

1
1 0

9-30

Probabilistic Time Estimates

Beta distribution
probability distribution traditionally used in CPM/PERT a + 4m + b t= 6

Mean (expected time): Variance: where

b-a = 6

a = optimistic estimate m = most likely time estimate b = pessimistic time estimate

9-31

Examples of Beta Distributions

P(time) P(time)

t
Time

a
Time

P(time)

m=t
Time

9-32

Project with Probabilistic Time Estimates

Equipment installation Equipment testing and modification

1
6,8,10 System development

4
2,4,12

System training

Final debugging 10 1,4,7 11

8
Manual testing 3,7,11

Start

2
3,6,9 Position recruiting

Finish

5
2,3,4 Job Training

9
2,4,6 System testing

1,10,13 System changeover

3
1,3,5

6
3,4,5 Orientation

7
2,2,2
9-33

Activity Time Estimates

TIME ESTIMATES (WKS) ACTIVITY MEAN TIME VARIANCE

a 6 3 1 2 2 3 2 3 2 1 1

m 8 6 3 4 3 4 2 7 4 4 10

b 10 9 5 12 4 5 2 11 6 7 13

t 8 6 3 5 3 4 2 7 4 4 9

2 0.44 1.00 0.44 2.78 0.11 0.11 0.00 1.78 0.44 1.00 4.00

1 2 3 4 5 6 7 8 9 10 11

9-34

Activity Early, Late Times & Slack

ACTIVITY

t 8 6 3 5 3 4 2 7 4 4 9

0.44 1.00 0.44 2.78 0.11 0.11 0.00 1.78 0.44 1.00 4.00

ES

EF

LS

LF

1 2 3 4 5 6 7 8 9 10 11

0 0 0 8 6 3 3 9 9 13 16

8 6 3 13 9 7 5 16 13 17 25

1 0 2 16 6 5 14 9 12 21 16

9 6 5 21 9 9 16 16 16 25 25

1 0 2 8 0 2 11 0 3 8 0

9-35

Earliest, Latest, and Slack

1 0 8 1
8

4 8 13 5 16 21 8 9 7 9 5 6 3 6 6 3 4 5
9 16

Critical Path 2-5-8-11

10 13 17

21

25

Start

2 0 6 0

16
11 16 25

Finish

9
7

3 0 3 2

9 9 13 4 12 16

9 16 25

7 3 5 2 14 16

9-36

Total Project Variance

2 = 22 + 52 + 82 + 112

= 1.00 + 0.11 + 1.78 + 4.00

= 6.89 weeks

9-37

Probabilistic Network Analysis

Determine probability that project is completed within specified time

Z= where = = x= Z=

x-

tp = project mean time project standard deviation proposed project time number of standard deviations that x is from the mean

9-38

Normal Distribution of Project Time

Probability

= tp

Time

9-39

Southern Textile
What is probability that project is completed within 30 weeks?
P(x 30 weeks)

= 6.89 weeks
2

Z= =

x-

6.89

= 2.62 weeks
= 25 x = 30
Time (weeks)

30 - 25 2.62

= 1.91
From Table A.1, (appendix A) a Z score of 1.91 corresponds to a probability of 0.4719. Thus P(30) = 0.4719 + 0.5000 = 0.9719

9-40

Southern Textile
What is probability that project is completed within 22 weeks?
P(x 22 weeks) = 0.1271 0.3729

= 6.89 weeks
2

Z=
=

x-

6.89

= 2.62 weeks
x = 22 = 25 Time (weeks)

22 - 25 2.62

= -1.14
From Table A.1, (appendix A) a Z score of 1.14 corresponds to a probability of 0.3729. Thus P(22) = 0.5000 - 0.3729 = 0.1271

9-41

Project Crashing
Crashing
reducing project time by expending additional resources

Crash time
an amount of time an activity is reduced

Crash cost
cost of reducing activity time

Goal
reduce project duration at minimum cost

9-42

Project Network Building a House

2 8 1
12

4
12

7 4 3 4 5 4 6 4

9-43

Normal Time and Cost vs. Crash Time and Cost

$7,000 $6,000
Crash cost

$5,000 $4,000

Crashed activity Slope = crash cost per week

$3,000
$2,000 $1,000
Crash time

Normal activity

Normal cost

Normal time

| 2

| 4

| 6

| 8

| 10

| 12

| 14

Weeks
9-44

Project Crashing
NORMAL TIME (WEEKS) CRASH TIME (WEEKS) NORMAL COST CRASH COST TOTAL ALLOWABLE CRASH TIME (WEEKS) CRASH COST PER WEEK

ACTIVITY

1 2 3 4 5 6 7

12 8 4 12 4 4 4

7 5 3 9 1 1 3

$3,000 2,000 4,000 50,000 500 500 15,000 $75,000

$5,000 3,500 7,000 71,000 1,100 1,100 22,000 $110,700

5 3 1 3 3 3 1

$400 500 3,000 7,000 200 200 7,000

9-45

$500 2 8 1
12

$7000 4
12

$7000 7 4 6 4 $200

FROM
Project Duration: 36 weeks

$400

3 4 $3000

5 4 $200

$500

$7000 4
12

TO
Project Duration: 31 weeks Additional Cost: $2000
1
7

2 8

$7000

7 4
6 4 $200
9-46

$400

3 4

5 4 $200

$3000

Time-Cost Relationship
Crashing costs increase as project duration decreases Indirect costs increase as project duration increases Reduce project length as long as crashing costs are less than indirect costs

9-47

Time-Cost Tradeoff
Minimum cost = optimal project time
Total project cost Indirect cost Cost ($)

Direct cost Crashing Project duration

9-48

Time