Project Management

August 29, 2015

Strategic Importance of Project

Management
Terminologies:
Project

Is a series of related tasks directed

toward a major output. It has the
following characteristics.

Strategic Importance of Project

Management
CHARACTERISTICS

OF PROJECT:

Single Unit
Many related activaties
Difficult production planning and
inventory control
General purpose equipment
High labor skills

Project Organization
Is

a structure developed to make sure

existing programs continue to run
smoothly on a daily basis and new
projects are successfully completed.
Uses specialists from entire company.
Headed by a project manager.
Coordinates activities
Monitors schedule and costs

Project Organization
Project

Organization Works Best

When:
Work can be defined with a specific goal
and deadline.
The job is unique.
The work contains complex interrelated
tasks.
The project is temporary but critical.

Project Organization
When

a project organization occurs on

a permanent basis, this becomes a
Matrix Organization.
In matrix or project organization,
project team members report also to
the project manager aside from their
direct supervisor. The project manager
coordinates all the activities and
directly reports to top management.

A sample Project Organization

Chart

The Role of the Project Manager

Three Phases of Project

Management
Planning

I.

II.

III.

Planning
Planning

Objectives
Resources
Work break-down schedule
Organization

Scheduling
Project activities
Start and end times
Network

Controlling
Controlling

Controlling
Monitor, compare, revise, action

Scheduling
Scheduling

Work Breakdown Structure

(WBS)
Defines

a project by dividing it into

its major parts called modules, and
finally into a set of activities and
their related costs.
SCHEDULING
Relating people, money and supplies to
specific activities and activities to one
and other.

Project Scheduling
Is

determining the projects activities

and their sequence. During this
stage, manpower and other
resources at each activity sequence
are set, including the time it takes to
complete each of the activity. Some
firms developed a separate schedule
for manpower requirements by type
of skills.

Gantt Chart
A

common tool used in Project

Scheduling is the simple and visual
Gantt Chart. It helps managers
ensure that:
All activities are planned.
Their order or sequence of importance is
accounted for
Activity time estimates are recorded.
The overall project time is developed

Gantt Chart
(Disadvantage)
Not

easily updated
Dont show the interrelationship
between the activities and the
resources.

PERT/CPM
For

complex projects, it is better to

use the following techniques to show
the precedence relationship and the
interdependency of the activities.
Critical Path Method (CPM)
Program Evaluation and Review
Technique (PERT)

Purpose of Project
Scheduling
Shows

the relationship of each activity to

others and to the whole project.
Identifies the precedent relationship
among activities.
Encourages the setting of realistic time
and cost estimates for each activity.
Helps make better use of people, money,
and material resources by identifying
critical bottlenecks in the project.

Controlling
Monitoring

resources, costs, quality,

and budgets, revising plans and
shifting resources to meet time and
cost demands.
Project Controlling:
Quality
Costs
Resources
Budgets

PERT/CPM
Consider

precedence relationship and

interdependencies.
Each use a different estimate of activity time.
Questions Which May Be Addressed by PERT and
CPM
o Project Schedule
o Cost Budget
o Resources Availability
o If the project must be finished in less than the
scheduled amount of time, what is the way to
accomplish this at least costs?

Six Steps Common to PERT and

CPM
1.
2.

3.
4.
5.
6.

Work Breakdown Structure

Develop relationship among the
activities
Draw the network
Assign time and/or cost estimates
Compute the critical path
Use the network to help plan

PERT/CPM
CPM

was developed by DuPont for

chemical plants (1957) and PERT by
Booz, Allen and Hamilton with the
U.S Navy, for Polaris missile (1958).
PERt and CPM is similar from
framework to procedure, except that
PERT uses a different estimate of
activity times.

Activities, Events and

Networks
The

first step in PERT and CPM is to

come up with the WBS consisting of
activities and events.
An EVENT marks the start of completion
of a particular task or activity.
An ACTIVITY is a task or a subproject
that occurs between 2 events. It is the
smallest unit of work effort consuming
both time and resources.

There are 2 Ways to Draw

Networks
AOA (Activity-on-Arrow or Activity-on-Arc)
event-oriented.

I.

An event is the point at which one or more

activities are to be completed and one or more
other activities are to begin. An event
consumes neither time nor resources.

AON (Activity-on-node) activityoriented.

II.

The precedence relationship require that an

activity not begin until all preceding activities
have been completed.

Activities, Events and

Networks
Drawing

and diagramming project as

a network requires establishing the
precedence relationships between
activities.
A precedence relationship
determines a sequence for
undertaking activities. It specifies
that one activity cannot start unless
the preceding activity is completed.

Activities, Events and

Networks
Activity
Description
Immediate
Predecessors
A

Build Internal Components

Modify roof and floor

Construct Collection Stack

Pour concrete and Install

frame

Build high-temperature burner

Install Pollution Control

System

Install Air Pollution Device

D,E

Inspect and Test

F,G

A, B

Dummy Activities and

Events
If

one is going to use the AOA, he

should learn about dummy events
and activities to draw correctly and
accurately complex networks.
A dummy activity has a completion
time, t, of zero(0).

Critical Path Activities

The

objective of the critical path

analysis is to determine the values
for each activity:
Earliest (ES) and latest (LS) = start
Earliest finish (EF) = ES + t
Latest finish (LF) LS + t
Slack (S): Allowable Delay
S = LS ES = LF EF

Critical Path Analysis

Identifies

Critical Path

Longest path in network

Shortest time project can be completed.
Any delay on critical path activities delays
project
Critical path activities have 0 slack.

Critical Path Analysis: Earliest

Start and Finish Steps
Begin

at ending event and work

backward.
LF = Max. EF for ending activities
LS = LF Activity time
LF = Minimum LS of all successors
for non-ending activities.

Critical Path Analysis: Latest

Start and Finish Steps
Begin

at starting event and work

forward.
ES = 0 for starting activities
EF = ES + Activity time
ES = Max. EF of all predecessors for
non-starting activities.

PERT Activity Times

Expected

project time (T)

Sum of critical path activity times, t

Project

variance (V)

Sum of critical path activity variances, v

Used

to obtain probability of proje

Advantages and Limitations of

PERT/CPM
Useful

in scheduling and controlling large

projects.
Straightforward concept.
Graphical networks aid perception of
relationships among project activities.
Help pinpoint activities that need to be closely
watched.
Points out who is responsible for various
activities.
Applicable to a wide variety of projects.
Useful in monitoring schedules and costs.

Advantages and Limitations of

PERT/CPM
Assumes

clearly defined,
independent, and stable activities.
Specified precedence relationships
Activity times (PERT) follow beta
distribution.
Subjective time estimates
Over-emphasis on critical path

Project Crashing

Factors

to Consider when Crashing

The amount by which an activity is crashed is, in fact,

permissible.
Taken together, the shortened activity durations will enable
one to finish the project by the due date.
The total cost of crashing.

Steps in Project Crashing

Compute the crash cost per time period.
Find the critical path
Select the activity on this critical path that (a) can still be
crashed, and (b) has the smallest crash cost per period.
Update all activity times