opman- chapter 18

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PRODUCT MANAGEMENT

CHAPTER 18



Chapter 18 Project Management

A project is a temporary and often customized

initiative that consists of many smaller tasks and activities that must be coordinated and completed to finish the entire initiative on time and within budget.

Project management involves all activities associated with planning, scheduling, and controlling projects.

Olympic games provide a good example of theimportance of project management and obtaininggood time and cost estimates to meet due dates.



The Scope of Project Management

1. Define: clearly understand the goal of theproject, responsibilities, deliverables, and whatmust be accomplished.

2. Plan: determine the steps needed to executethe project, delegate tasks, and identify startand completion dates.

3. Organize: coordinating the resources toexecute the plan cost-effectively.




The Scope of Project Management

4. Control: collecting and assessing status reportsand managing changes to baselines.

5. Close: compiling statistics, reassigning people,and preparing a “lessons learned” list.




• All project management decisions involve three factors:

time, resources, and cost.

• Key steps to help plan, schedule, and control projects are:

1. Project definition: identifying the activities thatmust be completed and the sequence to performthem.

2. Resource planning: determining resource needs foreach activity.

3. Project scheduling: specifying a time schedule forthe completion of each activity.

4. Project control: establishing controls fordetermining progress and responding to problems.




Exhibit 18.3

Project Definition

The first step is to define project objectives and deliverables. Next, list thespecific activities required to complete the project and sequence in whichthey must be performed, as shown below.

Project Activities and Precedence Relationships



Exhibit 18.4

The activities and sequences of a project are representedgraphically below using a project network , which consists of nodes (circles) representing activities and arcs (arrows) which define the precedence relationships between activities.

Project Network for the Software Integration Project



Resource Planning & CPM

• Resource planning includes developing timeestimates for each activity and allocating resourcesthat will be required.

• Cost control is a vital part of project management,and resource planning aids in good budgeting.

• Bottom-up budgeting starts with lowest-level

tasks, converting labor and material estimates intodollar figures and aggregating them into higher-level activities, until a total project budget isdeveloped.




Exhibit 18.5

The chart below represents the cost estimates

for each activity of the project.

Project Work Activities and Costs



Critical Path Method (CPM)

• CPM is an approach to scheduling and controlling projectactivities.

• The critical path is the sequence of activities that takes the longest time and defines the total project completion time.

• Rule 1: EF = ES + T

• Rule 2: the ES time for an activity equals the largest EF

time of all immediate predecessors.• Rule 3: LS = LF – T

• Rule 4: the LF time for an activity is the smallest LS of all immediate successors.




Exhibit 18.6

The terms below help to define the variables used in

computing the critical path. Nodes in the projectnetwork are replaced with boxes that provide thefollowing information:

Activity-on-Node Format and Definitions



Exhibit 18.7 Activity-on-Node Project Network



Project Control

• Because of uncertainty of task times, unavoidabledelays, or other problems, projects rarely progresson schedule.

• Gantt charts graphically depict the project scheduleso that a project manager knows exactly whatactivities should be performed at a given time.

• Project management software can assist inallocating limited resources, such as labor andequipment that are shared among all the activities.




Exhibit 18.9 Early Start Schedule Gantt Chart



• Crashing a project refers to reducing the total

time to complete the project to meet a revised due date.

• Crash time is the shortest possible time the activity can realistically be completed.

• Crash cost is the total additional cost associated with completing an activity in its crash time rather than in its normal time.

Crash cost per unit of time =

Crash Cost – Normal CostNormal Time – Crash Time [18.1]




Exhibit 18.11 Pert Data Including Crash Times and Costs



Draw the project network to determine the earliest

completion time for the project.

Activity ImmediatePredecessor

NormalDuration

A None 6 weeks

B A 4 weeks

C A 4 weeks

D B, C 7 weeks

E C 6 weeks

F D, E 2 weeks

Chapter 18 Solved Problem CPM Time/Cost



A

B D

EC

F

What is the critical path? Solution: there are 2 critical paths: Path A-B-D-F

Path A-C-D-F

Both paths take 19 weeks to complete. Onlyactivity E has a slack time of 1 week.

Chapter 18 Solved Problem CPM Time/Cost



Uncertainty in Project Management

• PERT (project evaluation and review technique)is another approach to project management.

• PERT was developed to handle uncertainties inactivity completion times.

• In contrast, CPM assumes that activity times areconstant (no uncertainty or probability

distributions here).




Uncertainty in Project Management

Three PERT estimates are obtained for eachactivity:

1. Optimistic time (a ): activity time under idealconditions,

2. Most probable time (m ): most likely activitytime under normal conditions,

3. Pessimistic time (b ): activity time if breakdowns or serious delays occur.




Uncertainty in Project Management – PERT

Expected Time = (a + 4m + b )/6 [18.2]

Variance = (b – a )2 /36 [18.3]

where:a is the optimistic time estimate,m is most likely or probable,

b is the pessimistic time estimate, andassumes a beta probability distribution .




Exhibit 18.16 Activity Time Estimates for Pert



Uncertainty in Project Management – PERT

PERT allows the flexibility to answer many “what if” type questions, such as:

Although they expect completion in 22 weeks, theproject manager wants to know the probability thatthey will meet the 25-week deadline?

What is the probability that we could finish theproject early? In 20 weeks? In 18 weeks?




Exhibit 18.17Probability of Completing a Project

within 25 Weeks

opman- chapter 18

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