Project

Management
Technique
Class
Exercises:
MPM-PMT

K.Povenesan
List of Project Management activities by priority:

ranking (myself)
Column 1b:
Column 1a:

Column 2:
Student B
Student A

Combine
Ranking
Activity

ranking
Description
1. Develop linear responsibility chart 17 6 6
2. Negotiate for qualified functional personnel 16 17 16
3. Develop specifications 1 1 2
4. Determine means for measuring progress 20 20 20
5. Prepare final report 26 26 26
6. Authorize departments to begin work 22 22 22
7. Develop work breakdown structure 4 2 4
8. Close out functional work orders 25 25 25
9. Develop scope statement and set objectives 5 2 3
10. Develop gross schedule 2 3 1
11. Develop priorities for each project element 11 11 13
12. Develop alternative courses of action 10 12 12
13. Develop PERT network 18 18 18
14. Develop detailed schedules 19 19 19
15. Establish functional personnel qualifications 15 16 17
16. Coordinate ongoing activities 23 23 23
17. Determine resource requirements 14 10 15
18. Measure progress 24 24 24
19. Decide upon a basic course of action 9 13 11
20. Establish costs for each WBS element 7 7 7
21. Review WBS costs with each functional manager 8 9 9
22. Establish a project plan 21 21 21
23. Establish cost variances for base case elements 12 14 14
24. Price out WBS 6 8 8
25. Establish logic network with checkpoints 3 5 5
26. Review "base case" costs with director 13 15 10

All the yellow-highlighted steps in project planning which differences are been found between
my member and me. Then we came to a conclusion after discussions.

We found the Activity 3, 9, 10, 7 is the most important documents required for project
definition in the early project planning stage.
[Activity 10] this is the summary or milestone schedule needed at project initiation in
order to define the scope, objectives, specification, WBS for the project. Milestones will
flag all the important points along the way which will act as checkpoints, especially
milestones that represent “begin” or “complete”. In a way, this will encourage functional
managers to examine their activity schedule.
[Activity 3, 7, 9] can be done simultaneously as it is important to state the overall
project purposes ( i.e., “to do this or that”) and the end results (what will be delivered
on completion & inclusive of quality grades). Projects will come with time constraint &
overall budget allowances.
Normally, if to be followed textbook theory, objectives needed to be stated first and
then talk about all the work has to be done to achieve those objectives. However, most
of the time it is difficult to get a clear idea of objectives (outputs or deliverable) to start
with, and time is wasted just to trying to get the idea what is to be accomplished.
In any case people find it easier to “work the problem” by thinking of all the things that
have to be done. Typically, every team members can think of pieces or parts of the
work need to be done. This gets people warmed up, and we can a better definition of
the project objectives. (This happens during our class exercises as well)
Personally, I believe WBS shall come as 2nd activity.

[Activity 25] Is often used as the basis for developing both the WBS and later
PERT/CPM network.
[Activity 1] we can allocate the functional department with related task; it’ll be easier to
make decision for the selection of qualified personnel for each task at later stage.
[Activity 24] to start with method studies or cost evaluations, all work items will
eventually have to be estimated, but it is important to ask what significant calculations
need to be done in relation to each work items.

[Activity 26] We found that it is important to review the base costs on WBS earlier to
the stakeholders for approval to begin detail planning. A common problem discovered
at this point is when a project has an imposed delivery deadline from the sponsor that
is not realistic based on our estimates.
[Activity 19] With the rough estimation for each WBS element, basic course of action
need to be determined so that team can think of alternatives that shall be considered
as part of the chosen work.
[Activity 12] This will help when PM comes to examine risks involved and how these
could be reduced (mitigated).
[Activity 11] We came aware that activity 12 might generate additional major work
items, and then the priorities will differs again. This only to be done before detailed
schedule generated.
[Activity 17] Initially, we thought this need to be done 1st, but it is tough without
approval of estimated base case cost as it surfaces the detail planning including HR for
further development of the project.
[Activity 2 & 15] This can be done at the same sequence as PM begins the detail
planning, qualified personnel for each task requirements and their function in the
project can be determined.
Project Network Diagram
Project Network Diagram above done using Mean Times:
a) The activities on the critical path?
Ans: A1→A4→A10→A11→A15

b) The time of critical path?

Ans: 14 days

c) For Activity A12, the early start time?

Ans: 7th day

d) The float on Activity A13?

Ans: 4 days

e) For Activity A10, the ES, LS, EF, LF?

Ans: (i)ES: 5 (ii) LS: 5 (iii) EF: 8 (iv) LF: 8

f) How could you reduce the total project time?

Generally, it may be possible to reduce the time to 2 days at a certain cost (maybe
assuming 1 day unit rate at $1000) additional of $2000. This can be done by (i) putting
in more resources, (ii) allowing overtime-premium and (iii) introducing incentives to
increase productivity.
If we want to reduce the duration, we would have to consider three aspects:
a. Time can only be reduced if we reduce any duration of any activity on the
critical path. For example, if we reduce A10 by 2 days, the total time will be
reduced to 12 days.
b. In this scenario, both A10 & A11 can be crashed as both are in the critical path.
We should crash the activity which is cheaper. Incremental cost for crashing
A10 is $1250 (difference in Costs divided by difference in time). The same cost
in case of A11 would be $500 per day. Obviously, we would prefer to reduce
A11 by permissible time of 2 days.
c. After crashing any activities, we would re-draw the network and re-assess the
scenario. There are many paths in network. When we crash activities on the
critical path, another path may become critical. Example, a glance at the
revised network would reveal the total time under the path
A1→A4→A10→A11→A15 reduced to 12 but A3→A8→A10→A12→A15 has time
duration of 13 days. As critical path is the longest path, the total time duration
has only reduced to 11. Since our crash time is 12 days, we would now reduce
A8 by two day.
Assuming for technological reasons, it is not possible to shorten the duration
below the crash limit of 12 days even by spending more money or resources.
But, we can review the situation and reduce the crash cost to some extent. This
is done through uncrashing. If we can increase any activity by one day, we
would still be under the permissible limit of 12 days. As a rule, an activity with
the highest-per-day cost should be uncrushed. By doing so, we would make
the both paths as critical paths.
Project Network Diagram above done using Maximum Times:
a) The activities on the critical path?
Ans: A3→A8→A12→A15 or A2→A5→A10→A11→A15

b) The time of critical path?

Ans: 23 days

c) For Activity A12, the early start time?

Ans: 14th day

d) The float on Activity A13?

Ans: 7 days

e) For Activity A10, the ES, LS, EF, LF?

Ans: (i)ES: 8 (ii) LS: 8 (iii) EF: 13 (iv) LF: 13

f) How could you reduce the total project time?

Going back to the network, we notice that there are two longest paths
A3→A8→A12→A15 or A2→A5→A10→A11→A15 with 23 days duration. Naturally, if we
reduce any activity in this path, our project time will be reduced. Assuming of all CPM
activities, the cheapest are A11 and A8 with per day cost of $500. We can crash it by 2
days to make the duration to 21 days. Then, we also can reduce A12 to 1 day to make
the duration to 20 days leaving A3→A8→A12→A15 as the critical path. Similarly, we
would crash the activities in the path till we reach the crash time (assuming) 18 days
in this case.
Sometimes we are faced with conflicting situation like two critical paths with the same
crashing costs per period. Then we use priority rule such as;
I. If there is more than one CPM, crash one which contains cheapest activity.
II. In case, reduction time is also the same, crash one with higher ID.

Some effective methods to reduce project duration:

Adding Resources: This is popular method to reduce project’s time by assigning
additional staff and equipment to activities.
Outsourcing Project work: A common method for shortening the project time is to
subcontract an activity. The subcontract may have access to superior technology or
expertise that will accelerate the completion of the activity.
Scheduling Overtime: The easiest way to add more labor to a project is not to add
more people,but to schedule overtime.
Other methods such as: Establish a core project team, Do it Twice-Fast and Correctly,
Fast-Tracking, Critical-Chain, Reducing Project Scope, Compromise Quality.

Project Cost: the total cost for each duration is the sum of the indirect and direct
costs. Indirect costs continue for life of the project, any reduction in project duration
means a reduction in direct costs. Direct costs reduce from the project original planed
duration; the sum of the costs of all the work packages or activities represents the
total direct costs for the project.

Application: Depend on the situation of the company (resources available) and the
industry, the project manager have decision to manage his project. The project
duration can be extended or reduced base on the profit and the costs according to
that project.
Crashing may be taken as a war against time. It may fire back. Inducting new workers
may result in classic conflict between old and new. Moreover, the new workers may
not be well oriented with job and the environment. In a worst scenario, this may
lengthen the project schedule instead of reducing it.
As a thumb rule, more you crash, more you spend. In some cases, this would not pass
the traditional cost & benefit test. Unless there are clear cut advantages, a manager
should not resort to crashing as some important aspects may be ignored in haste.
The project manager flexible to make decision to get the optimal profits with the
lowest costs in the limit times.
 PV/EV

Activity Link

Critical Path

SCHEDULE INFORMATION BASELINE BUDGET

Planned Time Period
Activity ID ES LF TF PV
Duration 1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 2 0 2 0 20 10 10
2 3 2 5 0 12 4 4 4
3 2 2 5 1 10 5 5
4 1 2 5 2 5 5
5 4 5 9 0 16 4 4 4 4
6 4 4 9 1 24 6 6 6 6
7 3 9 12 0 9 3 3 3
Total PV by Period 10 10 14 9 10 10 10 10 4 3 3 3
Cumulative PV by Period 10 20 34 43 53 63 73 83 87 90 93 96
Table 1c.1: Project Baseline
 SCHEDULE INFORMATION EV REVISED COST ESTIMATES TO COMPLETE
Planned Revised Progress AC TIME PERIOD
Activity ID Status PV
Duration Duration 1 2 3 4 5 Progress Total 6 7 8 9 10 11 12 13 14 15 ETC EAC
1 Completed 2 2 20 10 10 20
0 30
10 20 30
2 Completed 3 1 12 12 12
0 12
12 12
3 80% 2 2 10 4 4 8
3 3 15
6 6 12
4 20% 1 1 5 1 1
2 2 2 6 8
2 2
5 Not Started 4 4 16 2 2 2 2 8 8
6 Not Started 4 4 24 4 4 4 4 16 16
7 Not Started 3 3 9 3 3 3 9 9
Cumulative EV by Period 10 20 20 24 41 41 7 4 4 6 4 4 7 3 3
Cumulative AC by Period 10 30 30 36 56 56 63 67 71 77 81 85 92 95 98 42 98
Table 1c.2: At End of Period 5
Chart 1: Project Cost-Schedule Status
1. In the table above, the total budget for the project is $96,000. As of period 5, project
should have spent $53000, but the actual cost is $56,000 and the EV on the project is
$41,000.
a. Schedule Variance: EV-PV = $41,000 - $ 53,000 = -$12,000
SV in percentage: (EV/PV) – 1 = - 22.64%
b. Cost Variance: EV-AC = $41,000 - $ 56,000 = -$15,000
CV in Percentage: (EV/PV) – 1 = -26.79%
In total, the SV is $-12,000, which means, in total, the project is behind schedule,
while the CV is $-15,000 or over budget.
SV is in dollars and is not an accurate measure of time; however, it is a fairly good
indicator of the status of whole project (after 40% completed) in terms of being behind
schedule. As a glance at the graph suggest that, at the end of period 5, project cost
performance looks unfavorable. The expected performance for the remainder of the
project should give the customer and project manager slight concern.
There are two additional tools that earned value provides that help projects reforecast
the project cost. They are cost performance index (CPI) and schedule performance
index (SPI).
c. Cost Performance Index (CPI): EV / AC = 41 / 56 = 0.73
Basically this means that for every dollar spent, you received $0.73 worth of
cost performance. This is an indication of a cost issue on the project.
d. Schedule Performance Index (SPI): EV / PV = 41 / 53 = 0.77
This also means that for every dollar spent you are only receiving $0.77 worth
of schedule performance. A SPI less than one is an indication of a schedule
issue in the project.
e. Percent Completion Index (PCI): AC/EAC = 56 / 98 = 57%
PCI = EV / BAC = 41 / 96 = 43%
f. Cost Summary
Activity Cost Over / Cost Over /
BCWP ACWP
ID Under Run BCWS EAC Under Run
1 20 30 -10 20 30 -10
2 12 12 0 12 12 0
3 10 12 -2 10 15 -5
4 5 2 3 5 8 -3
5 16 8 8
6 24 16 8
7 9 9 0
47 56 -9 96 98 -2
 g. Project Cost graph

150

100
BAC
50 EAC
ACWP
0
1 3 5 7 9 11 13

2. Forecasted original completion date is 12 months. New estimated completion date is

14 months.
3. Estimate at Completion (EAC) : BAC / CPI = $96,000 / 0.73 = $131,506.85 . This will
be the manager’s projection of total cost of the project at completion.
Estimate To Complete (ETC) : EAC - AC = $98,000 - $56,000 = $42,000.
4. Graphs refer above.

5. Assumptions: Each unit cost has been calculated as $1000.

( BAC  EV ) (96  41)
To Complete Performance Index: = = 1.31.
( EAC  AC ) (98  56)
TCPI indicates the future required cost efficiency needed to achieve a target EAC
(Estimate At Complete). Any significant difference between TCPI and the CPI needed
to meet the EAC should be accounted for by management in their forecast of the final
cost. We are going at CPI of 0.73, but we need to go at a CPI of 1.31 for the
remaining work of project; and still meet the revised cost estimate.
If this project undergo a drastic change, due to changes to the project scope, false
assumptions, or new demands from the customer, it may be necessary to rebase line
the project cost. Possible causes of this situation are numerous: poor estimating, poor
definition of scope, poor quality leading to rework, lack of appropriate resources. The
causes for such variances must be identified so that decisions can be made to bring
the project back on course.
Given the revised cost estimates and schedules, the finished project will not come in
time or on budget unless corrective action can alter future trends.
6. Update Gantt Chart