Operations

Management
Project Management
Concepts
Presented By
Abid Abbas
Kamran Sarwar
Tanveer Nabi Abbasi
 Outline
• THE IMPORTANCE OF PROJECT MANAGEMENT
• PROJECT PLANNING
– The Project Manager
– Work Breakdown Structure

• PROJECT SCHEDULING
• PROJECT CONTROLLING

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 Outline - Continued
• PROJECT MANAGEMENT TECHNIQUES: PERT
AND CPM

– The Framework of PERT and CPM

– Terminologies used in PERT/CPM

– Three Time Estimates in PERT

– Network Diagrams and Approaches

• A Critique of PERT and CPM

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 Learning Objectives
When you complete this chapter, you should be able to :

Describe or Explain:

– The role of the Project Manager

– Program evaluation and review technique (PERT)

– Critical path method (CPM)

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Learning Objectives - Continued
When you complete this chapter, you should be able to :

Identify or Define:

– Work breakdown structure

– Critical path

– AOA and AON Networks

– Variability in Activity Times

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 STRATEGIC IMPORTANCE OF
PROJECT MANAGEMENT
• PROJECT
A project is a temporary endeavor, having a defined
beginning and end (usually constrained by date,
funding or efforts) undertaken to meet unique goals
and objectives, usually to bring about beneficial change
or added value.

• PROJECT MANAGEMENT
Project management is the discipline of planning,
organizing, and managing resources to bring about
the successful completion of specific project goals and
objectives.

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COMMON CHARACTERISTICS OF
PROJECTS
• Single unit
• Many related activities
• Difficult production planning and
inventory control
• General purpose equipment
• High labor skills

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 AN EXAMPLE

• BUILDING CONSTRUCTION





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 AN EXAMPLE

• RESEARCH PROJECT

© 1995
Corel Corp.
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MANAGEMENT OF LARGE PROJECTS

• Planning - goal setting, project definition,

team organization
• Scheduling - relating people, money, and
supplies to specific activities and activities
to one and other
• Controlling - monitoring resources, costs,
quality, and budgets; revising plans and
shifting resources to meet time and cost
demands

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 PROJECT MANAGEMENT ACTIVITIES
PLANNING SCHEDULING
 Objectives  Project Activities

 Resources  Start & End Times

 Work Break-down Schedule  Network

 Organization

CONTROLLING
Monitor, Compare, Revise, Action

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PROJECT MANAGEMENT TIMELINE

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 ACTIVITIES AND TOOLS
Tools
Project Planning
1) Setting goals Time/cost estimates
2) Defining the project Budgets
3) Work Breakdown Structure Personnel
4) Tying needs into timed project Cash flow charts
activities Material availability
5) Organizing the team
details

Project Scheduling
CPM/PERT
1) Tying resources to specific activities
2) Relating activities to each other Gantt charts
3) Updating and revising on a regular Milestone charts
basis Cash flow schedules

Project Controlling Reports

1) Monitoring resources, costs, quality, and • budgets
budgets • delayed activities
2) Revising and changing plans
• slack activities
3) Shifting resources to meet demands
Time line

Before Project During Project

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Start of Project
 PROJECT PLANNING
• Establishing Objectives

• Defining Project

• Creating Work
Breakdown Structure

• Determining Resources

• Forming Organization
© 1995 Corel Corp.

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 PROJECT ORGANIZATION
 A Project Organization is developed to make sure
that the existing programs continue to run
smoothly on a day to day basis while new
projects are completed successfully.
 They are effective way to of pooling the people
and resources needed for a limited time to
complete a specific project.
 It is basically a temporary organization
structure designed to achieve results by using
specialists from throughout the firm.

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 PROJECT ORGANIZATION
• Often temporary structure
• Uses specialists from entire company
• Headed by Project Manager
– Coordinates activities
– Monitors schedule
& costs Eng. Eng.
• Permanent Acct.
Mkt.
structure called
‘Matrix Organization’
Mgr.

© 1995
Corel Corp.

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 PROJECT ORGANIZATION
WORKS BEST WHEN

• Work can be defined with a specific goal and

deadline
• The job is unique or somewhat unfamiliar to
the existing organization
• The work contains complex interrelated
tasks requiring specialized skills
• The project is temporary but critical to the
organization

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 A SAMPLE PROJECT ORGANIZATION
President

Human Quality
Sales Finance Engineering Production
Resources Control

Project 1 Project
Manager
Propulsion Test
Physiologist Technician
Engineer Engineer

Project 2 Project
Manager
Structural Inspection
Psychologist Technician
Engineer Technician

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A SAMPLE PROJECT ORGANIZATION
President

Human Quality
Sales Finance Engineering Production
Resources Control

Project 1 Project
Manager
Propulsion Test
Technician
Engineer Engineer

Project 2 Project
Manager
Structural Inspection
Technician
Engineer Technician

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 MATRIX ORGANIZATION

MKT OPER ENG FIN

Project 1  
Project 2    
Project 3  
Project 4   
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THE ROLE OF PROJECT MANAGER
Project Plan
and Schedule

Revisions and
Updates

Project Project
Manager Team
Information
regarding times,
Performance
costs, problems,
Reports
delays
Feedback Loop

Top
Resources
Management
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 WORK BREAKDOWN STRUCTURE
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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 PROJECT SCHEDULING
• Identifying Precedence
Relationships
• Sequencing Activities
• Determining Activity
Times & Costs
• Estimating Material &
Worker Requirements
• Determining Critical
Activities

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PROJECT MANAGEMENT TECHNIQUES

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

© 1984-1994 T/Maker Co.

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 GANTT CHART

Time Period
Activity
J F M A M J J
Design
Build
Test

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GANTT CHART

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GANTT CHART

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PURPOSES OF PROJECT SCHEDULING
• Shows the relationship of each activity to
others and to the whole project.
• Identifies the precedence relationships
among activities.
• Encourages the setting of realistic time and
cost estimates for each activity.
• Helps make better use of people, money, and
material resources by identifying critical
bottlenecks in the project.

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 PROJECT CONTROLING
1) Measuring the ongoing project activities ('where we are');

2) Monitoring the project variables (cost, effort, scope, etc.)

against the project management plan and the project
performance baseline (where we should be);

3) Identify corrective actions to address issues and risks

properly (How can we get on track again); Influencing the
factors that could circumvent integrated change control so
only approved changes are implemented.

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PROJECT CONTROLING ACTIVITIES

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PROJECT CONTROL REPORTS
1) Detailed cost breakdowns for each task

2) Total program labor curves

3) Cost distribution tables

4) Functional cost and hour summaries

5) Raw materials and expenditure forecasts

6) Variance reports

7) Time analysis reports

8) Work status reports

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 PERT & CPM
• Network Techniques
• Developed in 1950’s
– CPM by DuPont for chemical plants (1957)
– PERT by Booz, Allen & Hamilton with the
U.S. Navy, for Polaris missile (1958)
• Consider precedence relationships and
interdependencies
• Each uses a different estimate of Activity Times

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PERT & CPM

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The Six Steps Common to PERT & CPM
 Define the project and prepare the work
breakdown structure,
 Develop relationships among the activities.
(Decide which activities must precede and which
must follow others.)
 Draw the network connecting all of the activities
 Assign time and/or cost estimates to each activity
 Compute the longest time path through the
network. This is called the critical path
 Use the network to help plan, schedule, monitor,
and control the project

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 QUESTIONS WHICH MAY BE
ADDRESSED BY PERT & CPM

1) When will the project be completed?

2) What are the critical activities or tasks in the

project?

3) Which are the noncritical activities?

4) What is the probability that the project will be

completed by a specific date?
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 QUESTIONS WHICH MAY BE
ADDRESSED BY PERT & CPM
5) Is the project on schedule, ahead of schedule,
or behind schedule?
6) Is the project over or under the budgeted
amount?
7) Are there enough resources available to finish
the project on time?
8) If the project must be finished in less than the
scheduled amount of time, what is the best
way to accomplish this at least cost?
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TERMINOLOGIES USED IN PERT
 Event - A point that marks the start or
completion of one or more activities. It
consumes no time, and uses no resources.
When it marks the completion of one or more
tasks, it is not “reached” (does not occur) until
all of the activities leading to that event have
been completed.
 Predecessor Event - An event that
immediately precedes some other event
without any other events intervening. An event
can have multiple predecessor events and can
be the predecessor of multiple events.
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TERMINOLOGIES USED IN PERT
 Successor Event - An event that immediately
follows some other event without any other
intervening events. An event can have multiple
successor events and can be the successor of
multiple events.
 Activity - The actual performance of a task which
consumes time and requires resources (such as
labor, materials, space, machinery). It can be
understood as representing the time, effort, and
resources required to move from one event to
another. A PERT activity cannot be performed
until the predecessor event has occurred.
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TERMINOLOGIES USED IN PERT
 Float or Slack is the amount of time that a task in a
project network can be delayed without causing a delay
– Subsequent tasks – (free float) or Project Completion –
(total float)
 Critical Path is the longest possible continuous pathway
taken from the initial event to the terminal event. It
determines the total calendar time required for the
project; and, therefore, any time delays along the critical
path will delay the reaching of the terminal event by at
least the same amount.
 Critical Activity is an activity that has total float equal to
zero. Activity with zero float does not mean it is on the
critical path.
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TERMINOLOGIES USED IN PERT
 Lead time is the time by which a predecessor event
must be completed in order to allow sufficient time for
the activities that must elapse before a specific PERT
event reaches completion.
 Lag time is the earliest time by which a successor event
can follow a specific PERT event.
 Slack - The slack of an event is a measure of the excess
time and resources available in achieving this event.
Positive slack would indicate ahead of schedule;
negative slack would indicate behind schedule; and
zero slack would indicate on schedule.

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TERMINOLOGIES USED IN PERT
 Fast tracking is performing more critical
activities in parallel.
 Crashing Critical Path means shortening
duration of critical activities.
 Dummy Activity is the activity that has
no time, inserted into the network to
maintain the logic of the network.

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42
A COMPARISON OF AON AND AOA
NETWORK CONVENTIONS

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 AON NETWORK DIAGRAM
F

A C

F
Start H

B D G

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 AOA NETWORK (WITH
DUMMY ACTIVITIES)
C
2 4
Construct
stack
Dummy
Activity
H
1 6 7
Inspect/Test

D
3 5
Pour concrete/
Install frame

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 AON NETWORK (INCLUDES
CRITICAL PATH)
A C FF
0 2 2 4 4 7
H H H
0 A 2 2 C4 10 13
2 2 3
E H
Slack=0 Slack=0 4 8 Slack=6
0 0 H
F 13 15
HStart H
4 8 13 15
0 0 4
0 2
Slack=0
Start B D G
0 B 3 3 D7 8 G 13 Slack=0
H H H
1 4 4 8 8 13
3 4 5
Slack=1 Slack=1 Slack=0

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 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)2/6

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ADVANTAGES OF PERT/CPM
1) Especially useful when scheduling and controlling
large projects.
2) Straightforward concept and not mathematically
complex.
3) Graphical networks aid perception of relationships
among project activities.
4) Critical path & slack time analyses help pinpoint
activities that need to be closely watched.
5) Project documentation and graphics point out who is
responsible for various activities.
6) Applicable to a wide variety of projects.
7) Useful in monitoring schedules and costs.
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 LIMITATIONS OF PERT/CPM
1) Assumes Clearly Defined, Independent,
& Stable Activities
2) Specified Precedence Relationships
3) Activity Times (PERT) Follow
Beta Distribution
4) Subjective Time Estimates
5) Over-emphasis On Critical Path

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