project management - college of...

Project Management

Dr. Ron Lembke Operations Management

What’s a Project?

• Changing something from the way it is to the desired state

• Never done one exactly like this • Many related activities • Focus on the outcome • Regular teamwork focuses on the

work process

Examples of Projects

• Building construction • New product introduction • Software implementation • Training seminar • Research project

Why are projects hard? • Resources-

– People, materials • Planning

– What needs to be done? – How long will it take? – What sequence? – Keeping track of who is supposedly doing

what, and getting them to do it

IT Projects

• Half finish late and over budget • Nearly a third are abandoned before

completion – The Standish Group, in Infoworld

• Get & keep users involved & informed • Watch for scope creep / feature creep

Pinion Pine Power Plant • DOE Clean Coal

– Air-blown Integrated Gasification Combined Cycle

– Kellogg/Rust/Westinghouse gasifier

– GE Frame 6FA combustion turbine

– $335.9m, half DOE, half SPP

Coal Gasification

• Coal Gasification (new) – Coal into Low Heat

Value (LHV) gas 130 btus/standard foot

– Crushed coal and limestone absorbs sulfur

– Hot gas desulfirized – Particulate removal

• Gas Fed into turbine – Tested fine on nat gas

Technology Development • Ash created in gasification, collected • Hot-gas cleanup (new technology)

– SO2 in collected in calcium sulfate – Hot-gas filter, then to combustion turbine – Fines combustor burns particles bottom of filter

• Main problem was filter-fines removal • Never operated more than 24 hrs. • Tried 24 times to start it. Eventually

mothballed

Project Scheduling

• Establishing objectives • Determining available resources • Sequencing activities • Identifying precedence relationships • Determining activity times & costs • Estimating material & worker

requirements • Determining critical activities

Work Breakdown Structure –Fig 17.2 • Hierarchy of what needs to be done, in

what order • For me, the hardest part

– I’ve never done this before. How do I know what I’ll do when and how long it’ll take?

– I think in phases – The farther ahead in time, the less detailed – Figure out the tricky issues, the rest is details – A lot will happen between now and then – It works not badly with no deadline

Mudroom

Mudroom Remodel

• Big-picture sequence easy: – Demolition – Framing – Plumbing – Electrical – Drywall, tape & texture – Slate flooring – Cabinets, lights, paint

• Hard: can a sink fit?

D

W

D W

Before:

After:

Project Scheduling Techniques

• Gantt chart • Critical Path Method (CPM) • Program Evaluation &

Review Technique (PERT)

Gantt Chart

J F M A M J JTime Period

Activity

Design

Build

Test

J F M A M J JTime Period

Activity

Design

Build

Test

ACTIVITY9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29

permit applicationpermit in handfoundationroll floor joistunder floor - plumbunder floor - hvacunder floor - insulationframing roughdoors-exteriorroof joist - deliverroof joist - installroof penetrations - plumbroofingHVAC rough

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29

plumb roughelectric roughshinglinginsulation drywall installdrywall tape & texturefinish carpentrypaint interiorlinoliumcabinetsHVAC finishelectric finishplumb finish

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29

carpetcleaningstuccopaint exteriorrain guttersdecksstair padstairsconcrete utiliity mainsasphaltutilities tie-intemp c of o

9 10 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 30 31 1 2 3 4 6 7 8 9 10 11 13 14 15 16 17 18 20 21 22 23 24 25 27 28 29 30 31 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29

JULY AUGUST SEPTEMBERBUILDING 19 -- BUILDING SCHEDULE

PERT & CPM • Network techniques • Developed in 1950’s

• CPM by DuPont for chemical plants • PERT by U.S. Navy for Polaris

missile • Consider precedence relationships

& interdependencies • Each uses a different estimate of

activity times

• Completion date? • On schedule? Within budget? • Probability of completing by ...? • Critical activities? • Enough resources available? • How can the project be finished early at

the least cost?

Questions Answered by PERT & CPM

PERT & CPM Steps

• Identify activities • Determine sequence • Create network • Determine activity times • Find critical path

• Earliest & latest start times • Earliest & latest finish times • Slack

Activity on Node (AoN)

2 4? Years

Enroll Receive diploma

Project: Obtain a college degree (B.S.)

1 month

Attend class, study etc.

1 1 day

3

Activity on Arc (AoA)

4,5 ? Years

Enroll Receive diploma


1 month

Attend class, study,

etc. 1

1 day 2 3 4

AoA Nodes have meaning

GraduatingSenior Applicant


1

Alum

2 3 4

Student

Network Example

You’re a project manager for Bechtel. Construct the network. Activity Predecessors A -- B A C A D B E B F C G D H E, F

Network Example - AON

A

C

E

F

B D

G

H

Z

Network Example - AOA

2

4

5 1

3 6 8

7 9 A

C F

E B D

H

G

AOA Diagrams

2 3 1 A

C

B D

A precedes B and C, B and C precede D

2 4 1 A C

B

D

3

5

4

Add a phantom arc for clarity.

Critical Path Analysis • Provides activity information

• Earliest (ES) & latest (LS) start • Earliest (EF) & latest (LF) finish • Slack (S): Allowable delay

• Identifies critical path • Longest path in network • Shortest time project can be

completed • Any delay on activities delays project • Activities have 0 slack

Critical Path Analysis Example

Event ID Pred. Description Time

(Wks) A None Prepare Site 1 B A Pour fdn. & frame 6 C A Buy shrubs etc. 3 D B Roof 2 E D Do interior work 3 F C Landscape 4 G E,F Move In 1

Network Solution

A

E D B

C F

G

1

6 2 3

1

4 3

Earliest Start & Finish Steps

• Begin at starting event & work forward • ES = 0 for starting activities

• ES is earliest start • EF = ES + Activity time

• EF is earliest finish • ES = Maximum EF of all predecessors for

non-starting activities

Activity ES EF LS LF SlackA 0 1BCDEF

Activity A Earliest Start Solution

For starting activities, ES = 0.

A E D B

C F

G 1

6 2 3 1

4 3

Activity ES EF LS LF Slack A 0 1 B 1 7 C 1 4 D 7 9 E 9 12 F 4 8 G 12 13

Earliest Start Solution

A E D B

C F

G 1

6 2 3 1

4 3

Latest Start & Finish Steps

• Begin at ending event & work backward • LF = Maximum EF for ending activities

• LF is latest finish; EF is earliest finish • LS = LF - Activity time

• LS is latest start • LF = Minimum LS of all successors for

non-ending activities

Activity ES EF LS LF SlackA 0 1B 1 7C 1 4D 7 9E 9 12F 4 8G 12 13 13

Earliest Start Solution

A E D B

C F G

1 6 2 3

1

4 3

Activity ES EF LS LF Slack A 0 1 0 1 B 1 7 1 7 C 1 4 5 8 D 7 9 7 9 E 9 12 9 12 F 4 8 8 12 G 12 13 12 13

Latest Finish Solution

A E D B

C F

G

1

6 2 3 1

4 3

Activity ES EF LS LF Slack A 0 1 0 1 0 B 1 7 1 7 0 C 1 4 5 8 4 D 7 9 7 9 0 E 9 12 9 12 0 F 4 8 8 12 4 G 12 13 12 13 0

Compute Slack

Critical Path

A

E D B

C F

G

1

6 2 3

1

4 3

New notation

• Compute ES, EF for each activity, Left to Right

• Compute, LF, LS, Right to Left

C 7 LS LF

ES EF

Example #2

A 21

E 5 D 2 B 4

C 7 F 7

G 2

21 28 28 35

35 37

28 33 25 27 21 25

0 21

Example #2

A 21

E 5 D 2 B 4

C 7 F 7

G 2

21 28 28 35

35 37

28 33 25 27 21 25

0 21

F cannot start until C and D are done. G cannot start until both E and F are done.

Example #2

A 21

E 5 D 2 B 4

C 7 F 7

G 2

22 26

0 21

26 28 30 35

35 37

21 28 28 35

21 28 28 35

35 37

28 33 25 27 21 25

0 21

E just has to be done in time for G to start at 35, so it has slack. D has to be done in time for F to go at 28, so it has no slack.

Gantt Chart - ES

0 5 10 15 20 25 30 35 40

A

B

C

D

E

F

G

Solved Problem 1

A 1

B 4

C 3

D 7

E 6

F 2

H 9

I 4

G 7

Solved Problem 1

A 1 0 1

0 1

B 4 1 5

1 5

C 3 6 9

1 4

D 7 2 9

1 8

E 6 5 11

5 11

F 2 9 11

8 10

H 9 9 18

8 17

I 4 18 22

18 22

G 7 11 18

11 18

Can We Go Faster?

Time-Cost Models

1. Identify the critical path 2. Find cost per day to expedite each node on

critical path. 3. For cheapest node to expedite, reduce it as

much as possible, or until critical path changes.

4. Repeat 1-3 until no feasible savings exist.

Time-Cost Example

• ABC is critical path=30

Crash cost Crash per week wks avail A 500 2 B 800 3 C 5,000 2 D 1,100 2

C 10 B 10 A 10

D 8

Cheapest way to gain 1 Week is to cut A

Time-Cost Example



C 10 B 10 A 9

D 8

Cheapest way to gain 1 wk Still is to cut A

Wks Incremental Total Gained Crash $ Crash $ 1 500 500

Time-Cost Example



C 10 B 10 A 8

D 8

Cheapest way to gain 1 wk is to cut B

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000

Time-Cost Example



C 10 B 9 A 8

D 8

Cheapest way to gain 1 wk Still is to cut B

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000 3 800 1,800

Time-Cost Example

• Critical paths=26 ADC & ABC


C 10 B 8 A 8

D 8

To gain 1 wk, cut B and D, Or cut C Cut B&D = $1,900 Cut C = $5,000 So cut B&D

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000 3 800 1,800 4 800 2,600

Time-Cost Example



C 10 B 7 A 8

D 7

Can’t cut B any more. Only way is to cut C

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000 3 800 1,800 4 800 2,600 5 1,900 4,500

Time-Cost Example



C 9 B 7 A 8

D 7

Only way is to cut C

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000 3 800 1,800 4 800 2,600 5 1,900 4,500 6 5,000 9,500

Time-Cost Example



C 8 B 7 A 8

D 7

No remaining possibilities to reduce project length

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000 3 800 1,800 4 800 2,600 5 1,900 4,500 6 5,000 9,500 7 5,000 14,500

Time-Cost Example

C 8 B 7 A 8

D 7

No remaining possibilities to reduce project length

Wks Incremental Total Gained Crash $ Crash $ 1 500 500 2 500 1,000 3 800 1,800 4 800 2,600 5 1,900 4,500 6 5,000 9,500 7 5,000 14,500

• Now we know how much it costs us to save any number of weeks

• Customer says he will pay $2,000 per week saved.

• Only reduce 5 weeks. • We get $10,000 from

customer, but pay $4,500 in expediting costs

• Increased profits = $5,500

What about Uncertainty?

PERT Activity Times

• 3 time estimates • Optimistic times (a) • Most-likely time (m) • Pessimistic time (b)

• Follow beta distribution • Expected time: t = (a + 4m + b)/6 • Variance of times: v = (b - a)2/36

Example Activity

• a = 2, m = 4, b = 6 • E[T] = (2 + 4*4 + 6)/6 = 24/6 = 4.0 • σ2 = (6 – 2)2 / 36 = 16/36 = 0.444

Example

Activity a m b E[T] variance A 2 4 8 4.33 1 B 3 6.1 11.5 6.48 2 C 4 8 10 7.67 1 Project 18.5 4 Complete in 18.5 days, with a variance

of 4.

C B A 4.33 6.48 7.67

Sum of 3 Normal Random Numbers

1520

2 =

=

σ

X

3530

2 =

=

σ

X

1010

2 =

=

σ

X

10 20 30 40 50 60

6060

2 =

=

σ

X

Average value of the sum is equal to the sum of the averages Variance of the sum is equal to the sum of the variances Notice curve of sum is more spread out because it has large variance

Back to the Example: Probability of <= 21 wks

18.5 21

Average time = 18.5, st. dev = 2 21 is how many standard deviations above the mean? 21-18.5 = 2.5. St. Dev = 2, so 21 is 2.5/2 = 1.25 standard deviations above the mean Book Table says area between Z=1.25 and –infinity is 0.8944 Probability <= 21 wks = 0.8944 = 89.44%

Benefits of PERT/CPM

• Useful at many stages of project management

• Mathematically simple • Use graphical displays • Give critical path & slack time • Provide project documentation • Useful in monitoring costs

Limitations of PERT/CPM

• Clearly defined, independent, & stable activities

• Specified precedence relationships

• Activity times (PERT) follow beta distribution

• Subjective time estimates • Over emphasis on critical path

Conclusion

• Explained what a project is • Summarized the 3 main project

management activities • Drew project networks • Compared PERT & CPM • Determined slack & critical path • Found profit-maximizing crash decision • Computed project probabilities

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