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Project Management by samee bhangu

Project Management by samee bhangu

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All about the project Management presentation includes the basic introduction,project types,project life cycle,project planning and process,project review techniques,pert/cpm,gannt chart,network diagrams,cost of project and financing with analysis.
All about the project Management presentation includes the basic introduction,project types,project life cycle,project planning and process,project review techniques,pert/cpm,gannt chart,network diagrams,cost of project and financing with analysis.

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11/04/2012

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text

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Presentation on

Samee Bhangu

2

 Presented

by Mr. Samee Bhangu MBSM 4th Sem

University of the Punjab Lahore, Pakistan.

College of Statistics & Actuarial Sciences

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A

project is a unique endeavor to produce a set of deliverables within clearly specified time, cost and quality constraints. Projects are different from standard business operational activities as they:
 Are unique in nature.  Have a defined timescale.  Have an approved budget.  Have limited resources.  Involve an element of risk.
 Achieve beneficial change.
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q q

q q

q q

A unique, one-time operational activity or effort Requires the completion of a large number of interrelated activities Established to achieve specific objective Resources, such as time and/or money, are limited Typically has its own management structure Need leadership

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 constructing houses, factories, shopping      

malls, athletic stadiums or arenas developing military weapons systems, aircrafts, new ships launching satellite systems constructing oil pipelines developing and implementing new computer systems planning concert, football games, or basketball tournaments introducing new products into market
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 Project

Management is the skills, tools and management processes required to undertake a project successfully. It incorporates:
 A set of skills.  A suite of tools.  A series of processes.

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President Human Factors Quality Control

Sales

Finance

Engineering

Production

Project 1

Project Manager Physiologist Project Manager Psychologist Propulsion Engineer Test Engineer Technician

Project 2

Structural Engineer

Inspection Technician

Technician

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Payne & Turner categorized into 4 types in 1999

Major Projects Large Projects Medium Projects 4. Small Projects
1. 2. 3.

= of capital of Organization =1/10 of capital of Organization =1/100 of capital of Organization =1/1000 of capital of Organization

16-11

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Type 2 projects
Product Development (Water)

Type 4 projects
Research and Organizational change (Air)

Type 1 Projects Type 3 Projects
Engineering (Earth) System development (Fire)

f r te s o a re nce s G a h ces C c Su

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   

Project planning Project scheduling Project control Project team  made up of individuals from various areas and departments within a company Matrix organization  a team structure with members from functional areas, depending on skills required Project Manager  most important member of project team

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 

Scope statement  a document that provides an understanding, justification, and expected result of a project Statement of work  written description of objectives of a project Organizational Breakdown Structure  a chart that shows which organizational units are responsible for work items Responsibility Assignment Matrix  shows who is responsible for work in a project

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Figure 5: Full circle and arrow diagram for the computer project we are using as an example

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Where one activity cannot start until another has been completed, we start the arrow for the dependent activity at the completion event circle of the previous activity. An example of this is shown below:

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A

different case is shown below

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Activity Description 1-2 1-3 3-4 2-4 3-5 4-5 Social work team to live in village Social research team to do survey Analyse results of survey Establish mother & child health program Establish rural credit programme Carry out immunization of under fives
4

Duration 5w 12w 5w 14w 15w 4w

2 1 3
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 Project Leader  The Team  Work Methods  Work Plan

and Procedures

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 Establishing objectives  Defining project  Creating work breakdown  Determining resources  Forming organization

structure

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 Resource

Availability and/or Limits

 Due date, late penalties, early completion

 Activity

incentives  Budget

Information

 Identify all required activities  Estimate the resources required (time) to

complete each activity  Immediate predecessor(s) to each activity needed to create interrelationships
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Gantt chart Critical Path Method (CPM) Program Evaluation & Review Technique (PERT)  Network Diagrams
  

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Gantt Chart
Graph or bar chart with a bar for each project activity that shows passage of time Provides visual display of project schedule

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 Critical

Path Method (CPM)

 E I Du Pont de Nemours & Co. (1957) for construction

 Project

of new chemical plant and maintenance shut-down  Deterministic task times  Activity-on-node network construction  Repetitive nature of jobs

(PERT)
   

Evaluation and Review Technique

U S Navy (1958) for the POLARIS missile program Multiple task time estimates (probabilistic nature) Activity-on-arrow network construction Non-repetitive jobs (R & D work)
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 PERT-Program

Evaluation and Review Technique, for planning and coordinating large projects and is concern about scheduling of activities  CPM-Critical Path Method, for planning and coordinating large projects and is concern about importance of activities

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Learning Objectives  Aware and Understand the Concepts and Principles of PERT/CPM  Analyze Business Problem and Relate to the Applicability Of the Use of  PERT/CPM  Identify Business Problems and Use PERT/CPM in its solution  Solve Business Problems Using PERT/CPM

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 Path
 A connected sequence of activities leading

from the starting event to the ending event
 Critical

Path Activities

 The longest path (time); determines the

 Critical

project duration

 All of the activities that make up the critical

path

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Earliest Start Time (ES)  earliest time an activity can start  ES = maximum EF of immediate predecessors Earliest finish time (EF)  earliest time an activity can finish  earliest start time plus activity time

Backward Pass
Latest Start Time (LS) LS= LF - t Latest finish time (LF)

EF= ES + t

Latest time an activity can start without delaying critical path time

latest time an activity can be completed without delaying critical path time LS = minimum LS of immediate predecessors
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  

Draw the CPM network Analyze the paths through the network Determine the float for each activity  Compute the activity’s float float = LS - ES = LF - EF  Float is the maximum amount of time that this activity can be delay in its completion before it becomes a critical activity, i.e., delays completion of the project Find the critical path is that the sequence of activities and events where there is no “slack” i.e.. Zero slack  Longest path through a network Find the project duration is minimum project completion time

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CPM Network
f, 15 f, 15 g, 17 g, 17 i, 6 i, 6 b, 8 d, 13 d, 13 c, 5 c, 5 e, 9 e, 9 j, 12 j, h, 9

a, 6

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PERT is based on the assumption that an activity’s duration follows a probability distribution instead of being a single value Three time estimates are required to compute the parameters of an activity’s duration distribution:  pessimistic time (tp ) - the time the activity would take if things did not go well  most likely time (tm ) - the consensus best estimate of the activity’s duration  optimistic time (to ) - the time the activity would take if things did go well

Mean (expected time):

te =

tp + 4 tm + to
6
2

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Variance: Vt =σ

=

tp - to
6

2
34

Expected project time Used to obtain probability of (T) project completion!  Sum of critical path
activity times, t

Project variance (V)
 Sum of critical path

activity variances, v

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You’re a project planner for General Dynamics. A submarine project has an expected completion time of 40 weeks, with a standard deviation of 5 weeks. What is the probability of finishing the sub in 50 weeks or less?

© 1995 Corel Corp.

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Samee Bhangu

X - T = 50 - 40 = Z= 2.0 s 5
Normal Distribution Standardized Normal Distribution

s=5

sZ = 1

T = 40 50

X

m = 0 2.0 z

Z
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  

Draw the network. Analyze the paths through the network and find the critical path. The length of the critical path is the mean of the project duration probability distribution which is assumed to be normal The standard deviation of the project duration probability distribution is computed by adding the variances of the critical activities (all of the activities that make up the critical path) and taking the square root of that sum Probability computations can now be made using the normal distribution table.

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PERT (Program Evaluation and Review Technique)  PERT is a variation on Critical Path Analysis that takes a slightly more skeptical view of time estimates made for each project stage.  Use the formula below to calculate the time to use for each project stage:

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Probability

µ = tp

x

Time

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Immed. Optimistic Most Likely Pessimistic Activity Predec. Time (Hr.) Time (Hr.) Time (Hr.) A -4 6 8 B -1 4.5 5 C A 3 3 3 D A 4 5 6 E A 0.5 1 1.5 F B,C 3 4 5 G B,C 1 1.5 5 H E,F 5 6 7 I E,F 2 5 8 J D,H 2.5 2.75 4.5 K G,I 3 5 7

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PERT Network
D

A

E

H

J

C B F G I K

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A 5

Activity
0 C D E G

ES
6 B

EF
0 6 6 6

0

LS

6 4

LF

Slack
6 20 13 18 14 13 20 23

0 *critical 5 9 9 9 20 18 23 0* 9 6 13 7 0*

0*

F H I J K 9

9

9 11 7 11 13 13 19 23

15 12 13 16 19 18 22 18

18

1 0* 1

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Vpath = VA + VC + VF + VI + VK = 4/9 + 0 + 1/9 + 1 + 4/9 = 2 σ path = 1.414 z = (24 - 23)/σ = (24-23)/1.414 = .71 From the Standard Normal Distribution table: P(z < .71) = .5 + .2612 = .7612

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Œ 

Ž   ‘

Define the project and all of its significant activities or tasks 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 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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Useful at many stages of project management  Mathematically simple  Uses graphical displays  Gives critical path & slack time  Provides project documentation  Useful in monitoring costs

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Assumes clearly defined, independent, & stable activities  Specified precedence relationships  Activity times (PERT) follow beta distribution  Subjective time estimates  Over-emphasis on critical path

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• Network analysis is the general name given to certain specific techniques which can be used for the planning, management and control of projects

Use of nodes and arrows Arrows ² An arrow leads from tail to head directionally  Indicate ACTIVITY, a time consuming effort that is required to perform a part of the work. Nodes  A node is represented by a circle - Indicate EVENT, a point in time where one or more activities start and/or finish. Activity – A task or a certain amount of work required in the project – Requires time to complete – Represented by an arrow Dummy Activity – Indicates only precedence relationships – Does not require any time of effort
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 1. 2.

Main features of PERT/CPM is the use of a network or precedence diagram to depict major project activities and their sequential relationships Two conventions in network construction; Activities on Arrow- arrows designate activities. Activities on node- nodes designate activities
Samee Bhangu 49

Project Network

Event  Signals the beginning or ending of an activity  Designates a point in time  Represented by a circle (node) Network  Shows the sequential relationships among activities using nodes and arrows

Activity-on-node (AON) nodes represent activities, and arrows show precedence relationships Activity-on-arrow (AOA) arrows represent activities and nodes are events for points in time
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Lay foundation

3
2 1 0

Dummy Build house 3 1 1 Finish work 1

1

3 Design house and obtain financing

2

Order and receive materials

4
Select paint

6
Select carpet

7

5

AON Project Network for House
Lay foundations Build house

2 2 Start 1 3
Design house and obtain financing

4 3

Finish work

7 1 5 1
Select paint

3 1
Order and receive Sameematerials Bhangu

6 1
Select carpet
51

A

B A must finish before either B or C can start C

A C B A B A C D B Dummy C D Samee Bhangu
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both A and B must finish before C can start

both A and C must finish before either of B or D can start

A must finish before B can start both A and C must finish before D can start

Lay foundation

Lay foundation

3
Dummy 2 1 0

2

3 2

Order material

4

Order material (b) Correct precedence relationship

(a) Incorrect precedence relationship

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Illustration of network analysis of a minor redesign of a product and its associated packaging. The key question is: How long will it take to complete this project ?

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For clarity, this list is kept to a minimum by specifying only immediate relationships, that is relationships involving activities that "occur near to each other in time".

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    

Is this a Start Activity? Is this a Finish Activity? What Activity Precedes this? What Activity Follows this? What Activity is Concurrent with this?

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  

Crashing  reducing project time by expending additional resources Crash time  an amount of time an activity is reduced Crash cost  cost of reducing activity time Goal  reduce project duration at minimum cost

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Crash cost

Crashing activity Slope = crash cost per unit time

Activity cost

Normal cost

Normal Activity

Normal time Crash time
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Activity time
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  

Crashing costs increase as project duration decreases Indirect costs increase as project duration increases Reduce project length as long as crashing costs are less than indirect costs

Time-Cost Tradeoff
Min total cost = optimal project time Total project cost Indirect cost

cost

Direct cost

time
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2 8 1
12

4
12

7 4 3 4 6 4

5 4

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Activity Normal Normal Crash Crash Allowable slope time cost Rs time cost Rs crash time 1 2 3 4 5 6 7 12 8 4 12 4 4 4 3000 2000 4000 50000 500 500 1500 75000 7 5 3 9 1 1 3 5000 3500 7000 71000 1100 1100 22000 110700 5 3 1 3 3 3 1 400 500 3000 7000 200 200 7000

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Crash Action  You may find that you need to complete a project earlier than your Critical Path Analysis says is possible. In this case you need to take action to reduce the length of time spent on project stages.

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 As

with Gantt Charts, in practice project managers tend to use software tools like Microsoft Project to create CPA Charts. Not only do these ease make them easier to draw, they also make modification of plans easier and provide facilities for monitoring progress against plans. Microsoft Project is reviewed at the top of our left hand title bar.

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Learning Objectives  Be Familiar and Understand the Concepts and Principles of Project Financing and Budgeting  Know and understand how project cost is analysed and identify sources of financing  Identify and Analyze Project Costs and Benefits  Compute for the Financial and Economic Viability of Projects
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 How

much will the project cost

 To develop  To operate  To maintain

 Can

we sustain project operations and maintenance?

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 

  

How much is needed to operate and maintain the project in usable form? If we can charge user fees, how much should it be? How much more is needed to collect the fees (administrative cost of collecting the fees)? Given the fees, what is the projected number of users? If we do not collect the fees, what is the projected number of users? If the project cannot be expected to pay for itself, will the provincial government be willing to subsidize its operations and maintenance? By how much?
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If operations and maintenance of the project cannot be sustained, either from project revenues or subsidies from the province, the project investment should not be undertaken.

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 Equity  Loan

(Owner’s Investment)

(Banks and other sources)

 Grant

(Government and other Sources)

 Co-Financing

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Budget Accountability

Budget Preparation

Budget Execution Budget Review
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Budget Authorization

71

?
 What

is the output of the project? the output

 Output, not outcomes

 Characterize

 Public, private, mixed  Tradeable, nontradeable, partly

tradeable

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 Financial

considerations are often an important consideration in selecting projects  Three primary methods for determining the projected financial value of projects:
 Net present value (NPV) analysis  Return on investment (ROI)  Payback analysis

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 Net

present value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time  Projects with a positive NPV should be considered if financial value is a key criterion  The higher the NPV, the better
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Uses Excel’s npv function

Note that totals are equal, but NPVs are not.

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Multiply by the discount rate each year, then take cum. benefits – costs to get NPV

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 Determine

estimated costs and benefits for the life of the project and the products it produces  Determine the discount rate (check with your organization on what to use)  Calculate the NPV (see text for details)  Notes: Some organizations consider the investment year as year 0, while others start in year 1. Some people enter costs as negative numbers, while others do not. Check with your organization for their preferences.

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 Determine

estimated costs and benefits for the life of the project and the products it produces  Determine the discount rate (check with your organization on what to use)  Calculate the NPV (see text for details)  Notes: Some organizations consider the investment year as year 0, while others start in year 1. Some people enter costs as negative numbers, while others do not. Check with your organization for their preferences.
Samee Bhangu 78

 Project

Sponsorship at executive

level  Good project charter  Strong project management  The right mix of team players  Good decision making structure  Good communication  Team members are working toward common goals
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 Failure

to align project with organizational objectives  Poor scope  Unrealistic expectations  Lack of executive sponsorship  Lack of project management  Inability to move beyond individual and personality conflicts  Politics
Samee Bhangu 80

 Microsoft Project (Microsoft Corp.)  MacProject (Claris Corp.)  PowerProject (ASTA Development Inc.)  Primavera Project Planner (Primavera)  Project Scheduler (Scitor Corp.)  Project Workbench (ABT Corp.)

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