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3Project
Management
PowerPoint presentati
on to accompanyPowerPoint presentation to accompany
Heizer and RenderHeizer and Render
Operations Management, 10eOperations Management, 10e
Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
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Single unit
Many related activities
Difficult production planning andinventory control
General purpose equipment
High labor skills
Project CharacteristicsProject Characteristics
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Management of ProjectsManagement of Projects
1. Planning - goal setting, defining theproject, team organization
2. Scheduling - relates people, money,and supplies to specific activitiesand activities to each other
3. Controlling - monitors resources,
costs, quality, and budgets; revisesplans and shifts resources to meettime and cost demands
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Project Planning,Project Planning,
Scheduling, and ControllingScheduling, and Controlling
Figure 3.1
Before Start of project During
project Timeline project
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Project Planning,Project Planning,
Scheduling, and ControllingScheduling, and Controlling
Figure 3.1
Before Start of project During
project Timeline project
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Project Planning,Project Planning,
Scheduling, and ControllingScheduling, and Controlling
Figure 3.1
Before Start of project During
project Timeline project
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Project Planning,Project Planning,
Scheduling, and ControllingScheduling, and Controlling
Figure 3.1
Before Start of project During
project Timeline project
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Project Planning,Project Planning,
Scheduling, and ControllingScheduling, and Controlling
Figure 3.1
Before Start of project During
project Timeline project
Budgets
Delayed activities reportSlack activities report
Time/cost estimates
Budgets
Engineering diagrams
Cash flow charts
Material availability details
CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules
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Project Organization
Often temporary structure
Uses specialists from entire company
Headed by project manager
Matrix Organization
Types of ProjectTypes of ProjectOrganizationsOrganizations
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The Role ofThe Role of
the Project Managerthe Project ManagerHighly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:
1. All necessary activities are finished in orderand on time
2. The project comes in within budget
3. The project meets quality goals
4. The people assigned to the project receivemotivation, direction, and information
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The Role ofThe Role of
the Project Managerthe Project ManagerHighly visibleHighly visibleResponsible for making sure that:Responsible for making sure that:
1. All necessary activities are finished in orderand on time
2. The project comes in within budget
3. The project meets quality goals
4. The people assigned to the project receivemotivation, direction, and information
Project managers should be:
Good coaches
Good communicators
Able to organize activities
from a variety of disciplines
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Ethical IssuesEthical Issues
1. Offers of gifts from contractors
2. Pressure to alter status reports to mask delays
3. False reports for charges of time and expenses
4. Pressure to compromise quality to meetschedules
Project managers face many ethicaldecisions on a daily basis
The Project Management Institute has
established an ethical code to deal withproblems such as:
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Work Breakdown StructureWork Breakdown Structure
Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or work packages)to be completed
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Level 4Compatible with
Windows ME
Compatible withWindows Vista
Compatible withWindows XP 1.1.2.3
1.1.2.2
1.1.2.1
(Work packages)
Level 3Develop
GUIsPlanning
ModuleTesting
Ensure Compatibilitywith Earlier Versions
Cost/ScheduleManagement
DefectTesting
1.1.1
1.2.2 1.3.2
1.3.11.2.1
1.1.2
Work Breakdown StructureWork Breakdown Structure
Figure 3.3
Level 2SoftwareDesign
ProjectManagement
SystemTesting1.1 1.2 1.3
Level 1
Develop Windows 7
Operating System 1.0
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Project SchedulingProject Scheduling
Identifying precedencerelationships
Sequencing activities
Determining activitytimes & costs
Estimating material &
worker requirements Determining critical
activities
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Gantt chart
Critical Path Method(CPM)
Program Evaluationand Review
Technique (PERT)
Project ManagementProject ManagementTechniquesTechniques
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A Simple Gantt ChartA Simple Gantt Chart
TimeJ F M A M J J A S
Design
Prototype
Test
Revise
Production
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Service For a Delta JetService For a Delta Jet
Figure 3.4
Passengers
Baggage
Fueling
Cargo and mail
Galley servicingLavatory servicingDrinking water
Cabin cleaning
Cargo and mail
Flight servicesOperating crew
Baggage
Passengers
DeplaningBaggage claim
Container offload
Pumping
Engine injection water
Container offload
Main cabin door
Aft cabin doorAft, center, forward
Loading
First-class section
Economy section
Container/bulk loading
Galley/cabin check
Receive passengersAircraft check
Loading
Boarding
0 10 20 30 40Time, Minutes
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Network techniques
Developed in 1950s
CPM by DuPont for chemical plants (1957)
PERT by Booz, Allen & Hamilton with theU.S. Navy, for Polaris missile (1958)
Consider precedence relationships andinterdependencies
Each uses a different estimate ofactivity times
PERT and CPMPERT and CPM
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Six Steps PERT & CPMSix Steps PERT & CPM
1. Define the project and prepare thework breakdown structure
2. Develop relationships among theactivities - decide which activitiesmust precede and which mustfollow others
3. Draw the network connecting all ofthe activities
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Six Steps PERT & CPMSix Steps PERT & CPM
4. Assign time and/or cost estimatesto each activity
5. Compute the longest time paththrough the network this is calledthe critical path
6. Use the network to help plan,schedule, monitor, and control theproject
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1. When will the entire project becompleted?
2. What are the critical activities or tasks inthe project?
3. Which are the noncritical activities?
4. What is the probability the project will becompleted by a specific date?
Questions PERT & CPMQuestions PERT & CPM
Can AnswerCan Answer
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5. Is the project on schedule, behindschedule, or ahead of schedule?
6. Is the money spent equal to, less than, orgreater than the budget?
7. Are there enough resources available tofinish the project on time?
8. If the project must be finished in a shortertime, what is the way to accomplish thisat least cost?
Questions PERT & CPMQuestions PERT & CPM
Can AnswerCan Answer
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A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network Conventions
Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)
A comes before
B, which comesbefore C.(a) A B C BA C
A and B must bothbe completedbefore C can start.
(b)
A
C
CB
A
B
B and C cannotbegin until A iscompleted.
(c)
B
A
C
AB
CFigure 3.5
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A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network Conventions
Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)
C and D cannot
begin until bothA and B arecompleted.
(d)A
B
C
D B
A C
D
C cannot beginuntil both A and Bare completed; Dcannot begin untilB is completed. Adummy activity isintroduced in AOA.
(e)CA
B D
Dummy activity
A
B
C
D
Figure 3.5
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A Comparison of AON andA Comparison of AON andAOA Network ConventionsAOA Network Conventions
Activity on Activity Activity onNode (AON) Meaning Arrow (AOA)
B and C cannotbegin until A iscompleted. Dcannot beginuntil both B andC are completed.A dummyactivity is againintroduced inAOA.
(f)
A
C
DB A B
C
D
Dummy
activity
Figure 3.5
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AON ExampleAON Example
Activity Description ImmediatePredecessors
A Build internal components
B Modify roof and floor C Construct collection stack A
D Pour concrete and install frame A, B
E Build high-temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G
Milwaukee Paper Manufacturing'sMilwaukee Paper Manufacturing'sActivities and PredecessorsActivities and Predecessors
Table 3.1
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AON Network forAON Network for
Milwaukee PaperMilwaukee Paper
A
Start
BStartActivity
Activity A
(Build Internal Components)
Activity B(Modify Roof and Floor)
Figure 3.6
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AON Network forAON Network for
Milwaukee PaperMilwaukee Paper
Arrows Show PrecedenceRelationships Figure 3.8
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Determining the ProjectDetermining the ProjectScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
The critical path is the longest path
through the network The critical path is the shortest time in
which the project can be completed
Any delay in critical path activitiesdelays the project
Critical path activities have no slacktime
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Determining the ProjectDetermining the ProjectScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
Table 3.2
Activity Description Time (weeks)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25
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Determining the ProjectDetermining the ProjectScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
Table 3.2
Activity Description Time (weeks)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25
Earliest start (ES) = earliest time atwhich an activity can start, assumingall predecessors have been completed
Earliest finish (EF) = earliest time atwhich an activity can be finished
Latest start (LS) = latest time atwhich an activity can start so as to notdelay the completion time of the entireproject
Latest finish (LF) = latest time bywhich an activity has to be finished soas to not delay the completion time of
the entire project
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Determining the ProjectDetermining the ProjectScheduleSchedule
Perform a Critical Path AnalysisPerform a Critical Path Analysis
Figure 3.10
A
Activity Nameor Symbol
EarliestStart
ESEarliestFinishEF
LatestStart
LS LatestFinish
LF
Activity Duration
2
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Forward PassForward Pass
Begin at starting event and work forwardBegin at starting event and work forward
Earliest Start Time Rule:
If an activity has only a single immediatepredecessor, its ES equals the EF of thepredecessor
If an activity has multiple immediatepredecessors, its ES is the maximum ofall the EF values of its predecessors
ES = Max {EF of all immediate predecessors}
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ES/EF Network forES/EF Network for
Milwaukee PaperMilwaukee PaperA
2
2
EF of A =ES of A + 2
0
ESof A
EF = ES + Activity time
ES = Max {EF of all immediate predecessors}
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Backward PassBackward Pass
Begin with the last event and work backwardsBegin with the last event and work backwards
Latest Finish Time Rule:
If an activity is an immediate predecessorfor just a single activity, its LF equals theLS of the activity that immediately followsit
If an activity is an immediate predecessorto more than one activity, its LF is theminimum of all LS values of all activitiesthat immediately follow it
LF = Min {LS of all immediate following activities}
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Backward PassBackward Pass
Begin with the last event and work backwardsBegin with the last event and work backwards
Latest Start Time Rule:
The latest start time (LS) of an activity isthe difference of its latest finish time (LF)and its activity time
LS = LF Activity time
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Computing Slack TimeComputing Slack Time
After computing the ES, EF, LS, and LF timesfor all activities, compute the slack or freetime for each activity
Slack is the length of time an activity canbe delayed without delaying the entireproject
Slack = LS ES or Slack = LF EF
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Critical Path forCritical Path for
Milwaukee PaperMilwaukee Paper
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
10 13
8 13
4 8
D
4
3 7
C
2
2 4
B
3
0 3
Start
0
0
0
A
2
20
42
84
20
41
00
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ES EF Gantt ChartES EF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper
A Build internalcomponents
B Modify roof and floor
C Construct collectionstack
D Pour concrete andinstall frame
E Build high-temperature burner
F Install pollutioncontrol system
G Install air pollutiondevice
H Inspect and test
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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LS LF Gantt ChartLS LF Gantt Chartfor Milwaukee Paperfor Milwaukee Paper
A Build internalcomponents
B Modify roof and floor
C Construct collectionstack
D Pour concrete andinstall frame
E Build high-temperature burner
F Install pollutioncontrol system
G Install air pollutiondevice
H Inspect and test
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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CPM assumes we know a fixed timeestimate for each activity and there
is no variability in activity times PERT uses a probability distribution
for activity times to allow forvariability
Variability in Activity TimesVariability in Activity Times
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Three time estimates are required
Optimistic time (a) if everything
goes according to plan Pessimistic time (b) assuming very
unfavorable conditions
Most likely time (m) most realisticestimate
Variability in Activity TimesVariability in Activity Times
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Estimate follows beta distributionEstimate follows beta distribution
Variability in Activity TimesVariability in Activity Times
Expected time:
Variance of times:t = (a + 4m + b)/6
v= [(b a)/6]2
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Estimate follows beta distributionEstimate follows beta distribution
Variability in Activity TimesVariability in Activity Times
Expected time:Expected time:
Variance of times:Variance of times:t =t = ((a +a + 44mm ++ bb)/6)/6
v =v = [([(bb aa)/6]2)/6]2Probabilityof 1 in 100 of> b occurring
Probability of1 in 100 of< a occurring
Pro
ba
bilit
y
OptimisticTime (a)
Most LikelyTime (m)
PessimisticTime (b)
ActivityTime
Figure 3.12
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Computing VarianceComputing Variance
Table 3.4
Most ExpectedOptimistic Likely Pessimistic Time Variance
Activity a m b t = (a + 4m + b)/6 [(b a)/6]2
A 1 2 3 2 .11
B 2 3 4 3 .11C 1 2 3 2 .11D 2 4 6 4 .44E 1 4 7 4 1.00
F 1 2 9 3 1.78G 3 4 11 5 1.78H 1 2 3 2 .11
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Probability of ProjectProbability of ProjectCompletionCompletion
Project variance is computed byProject variance is computed bysumming the variances of criticalsumming the variances of criticalactivitiesactivities
2 = Project variance= (variances of activities
on critical path)
p
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Probability of ProjectProbability of ProjectCompletionCompletion
Project variance is computed byProject variance is computed bysumming the variances of criticalsumming the variances of criticalactivitiesactivitiesProject variance
2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11
Project standard deviation
p = Project variance= 3.11 = 1.76 weeks
p
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Probability of ProjectProbability of ProjectCompletionCompletion
PERT makes two more assumptions:PERT makes two more assumptions:
Total project completion times follow anormal probability distribution
Activity times are statisticallyindependent
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Probability of ProjectProbability of ProjectCompletionCompletion
Standard deviation = 1.76 weeks
15 Weeks
(Expected Completion Time)Figure 3.13
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Probability of ProjectProbability of ProjectCompletionCompletion
What is the probability this project canWhat is the probability this project canbe completed on or before the 16 weekbe completed on or before the 16 weekdeadline?deadline?
Z= / p= (16 wks 15 wks)/1.76
= 0.57
due expected datedate of completion
Where Zis the number ofstandard deviations the duedate or target date lies fromthe mean or expected date
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Probability of ProjectProbability of ProjectCompletionCompletion
What is the probability this project canWhat is the probability this project canbe completed on or before the 16 weekbe completed on or before the 16 weekdeadline?deadline?
Z = / p= (16 wks 15 wks)/1.76
= 0.57
due expected datedate of completion
Where Zis the number ofstandard deviations the duedate or target date lies fromthe mean or expected date
.00 .01 .07 .08
.1 .50000 .50399 .52790 .53188
.2 .53983 .54380 .56749 .57142
.5 .69146 .69497 .71566 .71904
.6 .72575 .72907 .74857 .75175
From Appendix I
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Probability of ProjectProbability of ProjectCompletionCompletion
Time
Probability(T 16 weeks)
is 71.57%
Figure 3.14
0.57 Standard deviations
15 16Weeks Weeks
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Determining ProjectDetermining ProjectCompletion TimeCompletion Time
Probabilityof 0.01
Z
Figure 3.15
From Appendix I
Probabilityof 0.99
2.33 Standarddeviations
0 2.33
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Variability of CompletionVariability of Completion
Time for Noncritical PathsTime for Noncritical Paths Variability of times for activities
on noncritical paths must be
considered when finding theprobability of finishing in aspecified time
Variation in noncritical activitymay cause change in critical path
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Trade-Offs and ProjectTrade-Offs and Project
CrashingCrashing
The project is behind schedule The completion time has been
moved forward
It is not uncommon to face theIt is not uncommon to face thefollowing situations:following situations:
Shortening the duration of theproject is called project crashing
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Factors to Consider WhenFactors to Consider When
Crashing a ProjectCrashing a Project The amount by which an activity is
crashed is, in fact, permissible
Taken together, the shortenedactivity durations will enable us tofinish the project by the due date
The total cost of crashing is assmall as possible
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Steps in Project CrashingSteps in Project Crashing
3. If there is only one critical path, thenselect the activity on this critical paththat (a) can still be crashed, and (b) hasthe smallest crash cost per period. If
there is more than one critical path, thenselect one activity from each critical pathsuch that (a) each selected activity canstill be crashed, and (b) the total crash
cost of all selected activities is thesmallest. Note that the same activity maybe common to more than one criticalpath.
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Steps in Project CrashingSteps in Project Crashing
4. Update all activity times. If the desireddue date has been reached, stop. If not,return to Step 2.
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Crashing The ProjectCrashing The Project
Table 3.5
Time (Wks) Cost ($)Crash Cost Critical
Activity Normal Crash Normal Crash Per Wk ($) Path?
A 2 1 22,000 22,750 750 Yes
B 3 1 30,000 34,000 2,000 NoC 2 1 26,000 27,000 1,000 YesD 4 2 48,000 49,000 1,000 NoE 4 2 56,000 58,000 1,000 YesF 3 2 30,000 30,500 500 NoG 5 2 80,000 84,500 1,500 YesH 2 1 16,000 19,000 3,000 Yes
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Crash and Normal TimesCrash and Normal Timesand Costs for Activity Band Costs for Activity B
| | |1 2 3 Time (Weeks)
$34,000
$33,000
$32,000
$31,000
$30,000
ActivityCost
Crash
Normal
Crash Time Normal Time
CrashCost
NormalCost
Crash Cost/Wk =Crash Cost Normal CostNormal Time Crash Time
= $34,000 $30,0003 1
= = $2,000/Wk$4,0002 Wks
Figure 3.16
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Critical Path and Slack TimesCritical Path and Slack Timesfor Milwaukee Paperfor Milwaukee Paper
Figure 3.17
E
4
F
3
G
5
H
2
4 8 13 15
4
8 13
7
13 15
10 13
8 13
4 8
D
4
3 7
C
2
2 4
B
3
0 3
Start
0
0
0
A
2
20
42
84
20
41
00
Slack = 1 Slack = 1
Slack = 0 Slack = 6
Slack = 0
Slack = 0
Slack = 0
Slack = 0
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Advantages of PERT/CPMAdvantages of PERT/CPM
1. Especially useful when scheduling andcontrolling large projects
2. Straightforward concept and not
mathematically complex3. Graphical networks help highlight
relationships among project activities
4. Critical path and slack time analyses help
pinpoint activities that need to be closelywatched
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Advantages of PERT/CPMAdvantages of PERT/CPM
5. Project documentation and graphicspoint out who is responsible for variousactivities
6. Applicable to a wide variety of projects7. Useful in monitoring not only schedules
but costs as well
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1. Project activities have to be clearlydefined, independent, and stable in theirrelationships
2. Precedence relationships must bespecified and networked together
3. Time estimates tend to be subjective andare subject to fudging by managers
4. There is an inherent danger of too muchemphasis being placed on the longest, orcritical, path
Limitations of PERT/CPMLimitations of PERT/CPM
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Project Management SoftwareProject Management Software
There are several popular packagesfor managing projects
Primavera
MacProject
Pertmaster
VisiSchedule
Time Line Microsoft Project
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