c09

Chapter 9

Project Management

Copyright 2011 John Wiley & Sons, Inc.

Lecture Outline

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

9-2


Project Management Process

• Project• unique, one-time operational activity or effort

9-3



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

Work Breakdown Structure for Computer Order Processing System Project


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


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

9-13


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

9-16

| | | | |Activity

Design house and obtain financing

Lay foundation

Order and receive materials

Build house

Select paint

Select carpet

Finish work

0 2 4 6 8 10Month

Month1 3 5 7 9


Project Control

• Time management• Cost management• Performance management

• Earned Value Analysis – standard procedure to• numerically measure a project’s progress• forecast its completion date and cost • measure schedule and budget variation

9-17


Project Control

• Quality management• Communication• Enterprise project management

9-18


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

9-19


Project Network

• Activity-on-node (AON)• nodes represent activities• arrows show precedence

relationships

• Activity-on-arrow (AOA)• arrows represent activities• nodes are events for

points in time

• Event• completion or beginning

of an activity in a project

9-20

1 32

Branch Node


AOA Project Network for a House

9-21

3

2 0

1

3

1 1

11 2 4 6 7

3

5

Lay foundation



Dummy

Finish work

Select carpet

Select paint

Build house


Concurrent Activities

• Dummy• two or more activities cannot share same start and

end nodes

9-22

2 3

Lay foundation

Order material

(a) Incorrect precedence relationship

(b) Correct precedence relationship

3

42

DummyLay foundation

Order material

1

2 0


AON Network for House Building Project

9-23

13

22

43

31

51

61

71

Start


Order &receive materials

Select paint

Select carpet

Lay foundation

Build house

Finish work

Activity Number

Activity Time

Critical Path


Critical path Longest path through a

network Minimum project

completion time

A: 1-2-4-73 + 2 + 3 + 1 = 9 months

B: 1-2-5-6-73 + 2 + 1 + 1 + 1 = 8 months

C: 1-3-4-73 + 1 + 3 + 1 = 8 months

D: 1-3-5-6-73 + 1 + 1 + 1 + 1 = 7 months

13

22

43

31

51

61

71

Start


Activity Start Times

9-25

13

22

43

31

51

61

71

Start

Start at 3 months Start at 6 months

Start at 5 months

Finish at 9 months

Finish


Node Configuration

9-26

1 0 3

3 0 3

Activityduration

Activitynumber

Earlieststart

Lateststart

Latest finish

Earliestfinish


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

9-27


Earliest Activity Start and Finish Times

9-28

1 0 3

1

2 3 5

2

3 3 4

1 5 5 6

1

4 5 8

3

6 6 7

1

7 8 9

1Start


Select paint

Lay foundation

Select carpet

Build house

Finish work



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 predecessors

• Backward pass• Determines latest activity times by starting at the end of

CPM/PERT network and working forward

9-29


Latest Activity Start and Finish Times

9-30

0 3

1 0 3

1

3 5

2 3 5

2

4 5

3 3 4

1

6 7

5 5 6

1

5 8

4 5 8

3

6 7

6 6 7

1

8 9

7 8 9

1Start


Select paint

Lay foundation

Select carpet

Build house

Finish work


Activity Slack


* Critical Path

09988*7

178676

167565

08855*4

145343

05533*2

03300*1

Slack SEFLFESLSActivity


Probabilistic Time Estimates

• Beta distribution• probability distribution traditionally used in CPM/PERT

9-32

a = optimistic estimatem = most likely time estimateb = pessimistic time estimate

where

Mean (expected time): t =a + 4m + b

6

Variance: 2 =

2b - a

6


Examples of Beta Distributions

9-33

P(t

ime)

P(t

ime)

P(t

ime)

Timea mt ba m t b

m = t

Time

Timeba


Project with Probabilistic Time Estimates

9-34

Finish23,6,9

31,3,5

16,8,10

52,3,4

63,4,5

42,4,12

72,2,2

83,7,11

92,4,6

10

1,4,7

11

1,10,13

Equipment installation

System development

Position recruiting

Equipment testing and modification

Manual testing

Job Training

Orientation

System training

System testing

Final debugging

System changeover

Start


Activity Time Estimates

9-35

1 6 8 10 8 0.44 2 3 6 9 6 1.00 3 1 3 5 3 0.44 4 2 4 12 5 2.78 5 2 3 4 3 0.11 6 3 4 5 4 0.11 7 2 2 2 2 0.00 8 3 7 11 7 1.78 9 2 4 6 4 0.4410 1 4 7 4 1.0011 1 10 13 9 4.00

TIME ESTIMATES (WKS) MEAN TIME VARIANCE

ACTIVITY a m b t б2


Activity Early, Late Times & Slack

9-36

ACTIVITY t б ES EF LS LF S

1 8 0.44 0 8 1 9 1 2 6 1.00 0 6 0 6 0 3 3 0.44 0 3 2 5 2 4 5 2.78 8 13 16 21 8 5 3 0.11 6 9 6 9 0 6 4 0.11 3 7 5 9 2 7 2 0.00 3 5 14 16 11 8 7 1.78 9 16 9 16 0 9 4 0.44 9 13 12 16 310 4 1.00 13 17 21 25 811 9 4.00 16 25 16 25 0


Earliest, Latest, and Slack

9-37

1 0 8

8 1 9

3 0 3

3 2 5

4 8 13

5 16 21

6 3 7

4 5 9

7 3 5

2 14 16

9 9 13

4 12 16

10 13 17

1 0 3

2 0 6

6 0 6 5 6 9

3 6 9

8 9 16

7 9 16

11 16 25

9 16 25

Critical Path 2-5-8-11

FinishStart


Total Project Variance

9-38

s 2 = б22 + б5

2 + б82 + б11

2

s = 1.00 + 0.11 + 1.78 + 4.00

= 6.89 weeks


CPM/PERT With OM Tools

9-39


Probabilistic Network Analysis

9-40

Determine probability that project is completed within specified time

where = tp = project mean time = project standard deviationx = proposed project timeZ = number of standard deviations that

x is from the mean

Z =x -


Normal Distribution of Project Time

9-41

= tp Timex

Z

Probability


Southern Textile

9-42

What is probability that project is completed within 30 weeks?

2 = 6.89 weeks

= 6.89

= 2.62 weeks

Z =

=

= 1.91

x -

30 - 252.62

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

= 25 Time (weeks)x = 30

P(x 30 weeks)


Southern Textile

9-43

What is probability that project is completed within 22 weeks?

2 = 6.89 weeks

= 6.89

= 2.62 weeks

Z =

=

= -1.14

x -

22 - 252.62

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

= 25 Time (weeks)x = 22

P(x 22 weeks)= 0.1271

0.3729


Microsoft Project

• Popular software package for project management and CPM/PERT analysis

• Relatively easy to use

9-44


Microsoft Project

9-45

Click on “Tasks”

First step; Start Date


Microsoft Project

9-46

Precedencerelationships

Click on “Format” then ”Timescale”to scale Gantt chart.

Gantt chart; click on “View”

to activateCreate precedencerelationships;

click on predecessoractivity, then

holding “Ctrl” Key,click on successor

activity.


Microsoft Project

9-47

Click on “View” then Network Diagram

Critical pathin red


Microsoft Project – Zoom View

9-48


Microsoft Project – Task Information

9-49

Enter % completion


Microsoft Project – Degree of Completion

9-50

Activities 1, 2 and 3100% complete

Black bars showdegree of completion


PERT Analysis with Microsoft Project

9-51

Click on PERT EntrySheet to enter 3time estimates

Click on PERT calculator to compute

activity duration



9-52



9-53


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

9-54

Project Network – Building a House


112

28

412

34

54

64

74


Normal Time and Costvs. Crash Time and Cost

9-56

$7,000 –

$6,000 –

$5,000 –

$4,000 –

$3,000 –

$2,000 –

$1,000 –

–| | | | | | |

0 2 4 6 8 10 12 14 Weeks

Normal activity

Normal time

Normal cost

Crash time

Crashed activity

Crash cost

Slope = crash cost per week


Project Crashing

9-57

TOTALNORMAL CRASH ALLOWABLE CRASH

TIME TIME NORMAL CRASH CRASH TIME COST PERACTIVITY (WEEKS) (WEEKS) COST COST (WEEKS) WEEK

1 12 7 $3,000 $5,000 5 $400

2 8 5 2,000 3,500 3 500

3 4 3 4,000 7,000 1 3,000

4 12 9 50,000 71,000 3 7,000

5 4 1 500 1,100 3 200

6 4 1 500 1,100 3 200

7 4 3 15,000 22,000 1 7,000

$75,000 $110,700


Project Duration:36 weeks

112

28

34 5

4

64

74

$400

$500

$3000

$7000

$200$200

$700012

4 FROM …

17

28

34 5

4

64

74

$400

$500

$3000

$7000

$200$200

$700012

4

Project Duration:31 weeks

Additional Cost:$2000

TO…


Time-Cost Relationship

9-59

• 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


Time-Cost Tradeoff

9-60

Cos

t ($)

Project duration

Crashing Time

Minimum cost = optimal project timeTotal project cost

Indirect cost

Direct cost


Copyright 2011 John Wiley & Sons, Inc.All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.

c09

Technology

john wiley sons

project manager project

project intocomponents

project network activity

aoa project network

months minimum project

relationships activity

activities nodes