copyright © 2014 by mcgraw-hill education (asia). all rights reserved. 17 project management
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Copyright © 2014 by McGraw-Hill Education (Asia). All rights reserved.
1717
Project Management
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Learning ObjectivesLearning Objectives
Discuss the behavioral aspects of projects in terms of project personnel and the project manager.
Discuss the nature and importance of a work breakdown structure in project management.
Give a general description of PERT/CPM techniques.
Construct simple network diagrams.
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Learning ObjectivesLearning Objectives
List the kinds of information that a PERT or CPM analysis can provide.
Analyze networks with deterministic times. Analyze networks with probabilistic times. Describe activity “crashing” and solve
typical problems.
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Unique, one-time operations designed to Unique, one-time operations designed to accomplish a specific set of objectives in a accomplish a specific set of objectives in a limited time frame.limited time frame.
Build A
A Done
Build B
B Done
Build C
C Done
Build D
Ship
JAN FEB MAR APR MAY JUN
On time!
ProjectsProjects
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Examples:Olympics GamesMoviesConstructing shopping complexMerging 2 companiesPutting on a playPolitical campaignNew productsAdvertising campaignsSoftware development…
ProjectsProjects
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Project ManagementProject Management
How is it different? Limited time frame Narrow focus, specific objectives Less bureaucratic
Why is it used? Special needs Pressures for new or improved products
or services
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Project ManagementProject Management
What are the Key Metrics Time Cost Performance objectives
What are the Key Success Factors? Top-down commitment Having a capable project manager Having time to plan Careful tracking and control Good communications
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Project ManagementProject Management
What are the Major Administrative Issues? Executive responsibilities
Project selection Project manager selection Organizational structure
Organizational alternatives Manage within functional unit Assign a coordinator Use a matrix organization with a project leader
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Project ManagementProject Management
What are the tools? Work breakdown structure Network diagram Gantt charts Risk management
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Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project resources
Deciding if and when a project should be terminated
Key DecisionsKey Decisions
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Project ManagerProject Manager
Responsible for:
Work QualityHuman Resources TimeCommunications Costs
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Temptation to understate costs
Withhold information
Misleading status reports
Falsifying records
Compromising workers’ safety
Approving substandard work
Ethical IssuesEthical Issues
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Project Life CycleProject Life Cycle
Concept
DefinitionDefinition
PlanningPlanning
ExecutionExecution
TerminationTermination
Man
agem
ent
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Work Breakdown Structure
Project XProject X
Level 1
Level 2
Level 3
Level 4
Figure 17.2
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Planning and SchedulingPlanning and Scheduling
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new facilities
Interview staff
Hire and train staff
Select and order furniture
Remodel and install phones
Move in/startup
Gantt Chart
Figure 17.3
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PERT and CPMPERT 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 Shows where delays will not affect project
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The Network DiagramThe 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.
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The Network DiagramThe Network Diagram
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
between the length of path and the length of critical path
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Project Network: Activity on ArrowProject Network: Activity on Arrow
1
2
3
4
5 6
Locatefacilities
Orderfurniture
Furnituresetup
InterviewHire andtrain
Remodel
Move in
Figure 17.4
AOA
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Project Network: Activity on NodeProject Network: Activity on Node
Move in
Figure 17.4
1
2
3
5
6
Locatefacilities
Orderfurniture
Furnituresetup
Interview
Remodel
4
Hire andtrain
7S
AON
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Network ConventionsNetwork Conventions
a
b
c ab
c
a
b
c
d
a
b
c
Dummyactivity
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Time EstimatesTime Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation
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Example 1Example 1
1
2
3
4
5 6
8 weeks
6 weeks
3 weeks
4 weeks9 weeks
11 weeks
1 week
Locate
facilities
Order
furniture Fu
rnitu
re
setup
InterviewHire
and train
RemodelMove in
DeterministicDeterministictime estimatestime estimates
Figure 17.5
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Example 1 SolutionExample 1 Solution
P a t h L e n g t h( w e e k s )
S l a c k
1 - 2 - 3 - 4 - 5 - 61 - 2 - 5 - 61 - 3 - 5 - 6
1 82 01 4
206
Critical PathCritical Path
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Network activities ES: early start EF: early finish LS: late start LF: late finish
Used to determine Expected project duration Slack time Critical path
Computing AlgorithmComputing Algorithm
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Probabilistic Time EstimatesProbabilistic Time Estimates
Optimistic time Time required under optimal conditions
Pessimistic time Time required under worst conditions
Most likely time Most probable length of time that will be
required
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Probabilistic EstimatesProbabilistic Estimates
Activitystart
Optimistictime
Most likelytime (mode)
Pessimistictime
to tptm te
Figure 17.8
Beta Distribution
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Expected TimeExpected Time
te = to + 4tm +tp
6
te = expected timeto = optimistic timetm = most likely timetp = pessimistic time
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VarianceVariance
(tp – to)2
36
= varianceto = optimistic timetp = pessimistic time
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Example 5Example 5
1-3-4a
3-4-5d
3-5-7e
5-7-9f
2-4-6b
4-6-8h
2-3-6g 3-4-6
i
2-3-5c
Optimistictime
Most likelytime
Pessimistictime
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Example 5: Time EstimatesExample 5: Time Estimates
2.83a
4.00d
5.0e
7.0f
4.00b
6.0h
3.33g 4.17
i
3.17c
Tabc = 10.0Tdef = 16.0Tghi = 13.50
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Path ProbabilitiesPath Probabilities
Z = Specified time – Path meanPath standard deviation
Z indicates how many standard deviationsof the path distribution the specified timeis beyond the expected path duration.
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17Weeks
Weeks
Weeks
Weeks
10.0
16.0
13.5
1.00
1.00
a-b-c
d-e-f
g-h-i
Example 6Example 6
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Time-Cost Trade-Offs: CrashingTime-Cost Trade-Offs: Crashing
Crash: shortening activity duration
Procedure for crashing Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum of crashing the least expensive activity on each critical path
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Time-Cost Trade-Offs: CrashingTime-Cost Trade-Offs: Crashing
TotalcostTotalcost
ShortenShorten
ShortenShorten
Cumulativecost of crashing
Cumulativecost of crashing
Expected indirect costsExpected indirect costs
Optimum
CRASHCRASH
Figure 17.11
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6a
4d
5c
10b
9 e
2f
Example 7Example 7
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Advantages of PERTAdvantages of PERT
Forces managers to organize
Provides graphic display of activities
Identifies Critical activities
Slack activities1
2
3
4
5 6
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Limitations of PERTLimitations of PERT
Important activities may be omitted
Precedence relationships may not be correct
Estimates may include a fudge factor
May focus solelyon critical path
1
2
3
4
5 6
142 weeks
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Goldratt’s Critical ChainGoldratt’s Critical Chain
Goldratt’s insight on project management Time estimates are often pessimistic Activities finished ahead of schedule often go
unreported With multiple projects, resources needed for one
project may be in use for another
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Computer aided design (CAD) Groupware (Lotus Notes) CA Super Project Harvard Total Manager MS Project Sure Track Project Manager Time Line
Project Management SoftwareProject Management Software
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Imposes a methodology
Provides logical planning structure
Enhances team communication
Flags constraint violations
Automatic report formats
Multiple levels of reports
Enables what-if scenarios
Generates various chart types
Advantages of PM SoftwareAdvantages of PM Software
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Risk: occurrence of events that have undesirable consequences Delays
Increased costs
Inability to meet specifications
Project termination
Project Risk ManagementProject Risk Management
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Identify potential risks
Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans
Risk ManagementRisk Management
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SummarySummary
Projects are a unique set of activities
Projects go through life cycles
PERT and CPM are two common techniques
Network diagrams
Project management software available