PROJECT MANAGEMENT

For this portion of the session, the learning objectives are:

Understand the variety of applications of Project Management.
Understand the history of Project Management.
Learn the quantitative techniques for Project Management.
Learn the qualitative concepts of Project Management.
Learn the basics of Microsoft Project.
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Project Management

Program Evaluation and Review Technique (PERT)

Critical Path Method (CPM)
Successful project management asks and answers the following questions:
1. What is an estimate of the projects duration?
2. Among the projects activities, which are likely to be critical activities in the sense that
they will directly affect the projects duration? (While the project is still in its planning
phase, the project manager may take actions that will speed up one or more critical
activities, thereby shortening the projects planned duration. Furthermore, once the
project begins, the project manager should closely monitor critical activities in order to
prevent delays that would otherwise increase the projects planned duration.)
3. For each of the projects activities, what should be the scheduled Start Time and Finish
Time?

4. What are the resource implications of the schedule for the activities?
5. Because a project never proceeds exactly as planned, how can the project manager
quickly recognize and react to a surprise that might otherwise unfavorably affect the
projects duration?
2

Some Applications of Project Management

Construction or renovation of a plant, an office complex, a residential housing
plan, a sports stadium, or a freeway.
Research and development associated with a new product.
Relocation of a major facility (e.g., a plant or a hospital).
Manufacture, maintenance, or repair, of a large item (e.g., an airplane or a
nuclear reactor).
Installation of a new information technology (e.g., a new accounting system or
a new supply chain management system).
Countdown for a launch of a rocket.
Making financial arrangements (e.g., an IPO or a revenue bond).
A fund raising campaign for a charity.

An advertising campaign.
A political campaign.
Performing a complex surgery.
Filming a major motion picture.

The History of PERT and CPM

In the late 1950s, two methodologies for managing projects emerged
concurrently but independently:
the Program Evaluation and Review Technique (PERT)
the Critical Path Method (CPM).
PERT was developed jointly by representatives of the United States Navy and
the management consulting firm of Booze, Allen, and Hamilton. Their motivation
was the research and development associated with one of the Navys new
products, the Polaris nuclear missile, designed to launch from a submarine
beneath the oceans surface.
CPM was developed jointly by representatives of Du Pont and Remington-Rand.
Their motivation was Du Ponts desire to improve the planning and execution of
both the construction of new production facilities and the maintenance
shutdowns of existing facilities.

Although developed independently, PERT and CPM have much in common.

Although traditionalists continue to distinguish between PERT and CPM, most
practitioners today use the acronyms interchangeably or, as we will, combine
them into the single acronym of PERT/CPM. In this session, we will learn the
elements of PERT and CPM that are common to both.

PROJECT MANAGEMENT:
THE 3 PHASES AND 10 STEPS

Phase I: Project Formulation

Step 1:
Step 2:
Step 3:
Step 4:

Project Decomposition
Specification of the Precedence Relationships
Estimation of the Activity Durations
Construction of the Project Network

Step 5:

Computation of Each Activitys Earliest Start

Time and Earliest Finish Time
Computation of Each Activitys Latest Start Time
and Latest Finish Time
Computation of Each Activitys Total Slack and
Identification of the Critical Path
Scheduling the Activities

Step 6:
Phase II: Planning & Scheduling
Step 7:
Step 8:
Phase III: Monitoring & Replanning

Step 9: Monitoring of the Projects Activities

Step 10: Replanning of the Remaining Portion of the
Project
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THE DESIGNER GENES PROJECT

Designer Genes, a rapidly expanding genetic engineering firm, is

relocating to a new office building. Jean Ettic, the project
manager, has already leased a vacant office building and
approved architectural plans for renovating it. To save money
and to gain more control over the project, Jean herself will act as
the general contractor for the renovation. Jean has already
selected the subcontractors that she will employ. The move to
the new building is complicated by the fact that Designer Genes'
current outsourcing of its computer needs is no longer viable.
Therefore, in moving to the new building, Designer Genes will
use this opportunity to purchase a new main-frame computer
and establish an in-house Computer Services Department.
6

Phase I: Project Formulation

Step 1: Project Decomposition
Step 2: Specification of the Precedence Relationships
Step 3: Estimation of the Activity Durations

Code
A
B
C
D
E
F
G
H
I
J
K
L
M
N

Description of Activity
Hiring of Manager of Computer Services Department
Structural Modifications
Enlarging and Resurfacing of Parking Lot
Hiring of Staff of Computer Services Department
Purchasing and Receipt of Computer
Electrical Modifications
Heating and Cooling Modifications
Plumbing Modifications
Exterior Painting and Installation of Exterior Fixtures
Installation of Computer
Sheetrocking of Walls and Ceiling
Training of Staff of Computer Services Department
Interior Painting and Interior Decorating
Landscaping

Estimated
Duration
(days)
10
19
13
8
14
4
1
3
5
4
6
8
9
7

Predecessors
None
None
None
A
A
B
B
B
B
E, F, G
F, G, H
D, J
K
C, I

Responsibility

Special
Requirements

Coarse versus Fine Decomposition

Hard versus Soft Activities
Redundant Predecessor Relationship
Cyclic Predecessor Relationships

D (8)
A (10)
E (14)

START

L (8)

F (4)

J (4)

G (1)

K (6)

B (19)

M (9)

FINISH

H (3)

I (5)
N (7)
C (13)

Phase II: Planning & Scheduling

Step 5: Computation of Each Activity's EST & EFT
An activity's Earliest Start Time (EST) is the earliest possible time at which the activity can start.
An activity's Earliest Finish Time (EFT) is the earliest possible time at which the activity can finish.
Step 6: Computation of Each Activity's LST & LFT
An activity's Latest Start Time (LST) is the earliest possible time at which the activity can start without causing the project
to finish after its earliest finish time.

An activity's Latest Finish Time (LFT) is the earliest possible time at which the activity can finish without causing the
project to finish after its earliest finish time.
Step 7: Computation of Each Activitys TS and Identification of the Critical Path
An activity's Total Slack (TS) is the maximum possible increase in the activity's duration that will not increase the project's
earliest finish time (assuming that all other durations remain the same).

A critical activity has a Total Slack of 0. The critical path consists of the critical activities. (It is possible to
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have more than one critical path.)

SHORTENING THE PROJECTS DURATION

Suppose it is desired to shorten the project's duration by one day. Then, the
project manager should proceed as follows:

NOTE: If you need to shorten the project duration by more than one day, then
repeat the above procedure one day at a time.
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Phase II: Planning & Scheduling

Step 8: Scheduling the Activities

The Gantt Chart (Stripped Down Version)

NOTE: Temporarily ignore the [bracketed numbers] after the activity codes.

EARLIEST START TIME (EST) GANTT CHART

D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
TIME

11

GANTT CHARTS: EST versus LST

EARLIEST START TIME (EST) GANTT CHART
D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
TIME

LATEST START TIME (LST) GANTT CHART

D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

12

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
TIME

HYBRID GANTT CHART

D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
TIME
= EST
= LST
= In Between EST & LST
13

GANTT CHARTS: EST versus LST versus Hybrid

EARLIEST START TIME (EST) GANTT CHART
D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

35

36

37

38

35

36

LATEST START TIME (LST) GANTT CHART

D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

HYBRID GANTT CHART

D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

2
= EST

7
= LST

10

11

12

13

14

15

16

17

= In Between EST & LST

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

14

37

38

ADDING A RESOURCE TO THE DESIGNER GENES PROJECT

In the Designer Genes project, assume (unrealistically) that the same type of
laborers perform all activities.
More specifically, assume that the table below displays the size of the daily
workforce of these laborers required to perform each activity, where an activitys
daily requirement remains constant during the activitys duration.
For example, for each day of activity Cs duration, 4 laborers are required.

ACTIVITY
REQUIRED SIZE OF
DAILY WORKFORCE
(laborers)

A B C D E F G H

J K L M N

Note: In the preceding Gantt Charts, the above numbers were the [bracketed
numbers] that appeared after the activity codes.
15

FROM EST GANTT CHART TO EST RESOURCE LOADING DIAGRAM

EARLIEST START TIME (EST) GANTT CHART
D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
TIME

EARLIEST START TIME (EST) RESOURCE LOADING DIAGRAM

20
19
18
17
16
15
14

13

13

LABORERS

12

11

11
10

9
8

7
6

6
5

2
1
0
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

16

38

FROM LST GANTT CHART TO LST RESOURCE LOADING DIAGRAM

LATEST START TIME (LST) GANTT CHART
D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
TIME

LATEST START TIME (LST) RESOURCE LOADING DIAGRAM

20
19

18

18
17

16

16

15

15
14
13

12

LABORERS

12

11

11

10

10

9
8

7
6

5
4

3
2

1
0
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

17

38

FROM HYBRID GANTT CHART TO HYBRID RESOURCE LOADING DIAGRAM

HYBRID GANTT CHART
D [4]
L [1]
A [4]
E [2]
J [2]
B [1]

F [3]

K [2]

M [3]

G [4]
H [1]
I [3]
N [3]
C [4]
0

= EST

10 11

12 13 14 15 16 17 18 19 20
TIME
= In Between EST & LST

= LST

21 22 23 24 25 26 27 28 29

30 31 32 33 34 35 36 37 38

HYBRID RESOURCE LOADING DIAGRAM

20
19
18
17
16
15
14
13

LABORERS

12

11

11
10

9
8

7
6

4
3
2
1
0
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

18

38

RESOURE LOADING DIAGRAMS: EST versus LST versus HYBRID

EARLIEST START TIME (EST) RESOURCE LOADING DIAGRAM
14

13

13
12

11

11
10

LABORERS

9
8

7
6

6
5

2
1
0
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

35

36

37

38

37

38

LATEST START TIME (LST) RESOURCE LOADING DIAGRAM

19

18

18
17

16

16

15

15
14
13

12

LABORERS

12

11

11

10

10

9
8

7
6

5
4

3
2

1
0
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

HYBRID RESOURCE LOADING DIAGRAM

12

11

11
10

9
8

LABORERS

7
6

4
3

19

2
1
0
0

10

11

12

13

14

15

16

17

18

19
20
TIME

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

Desirable Characteristics of a Resource Loading Diagram

1.

2.

In fact, from among all possible Hybrid Schedules, there is one that has a
peak resource usage of 10 laborers.
What happens when there is more than one resource?

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Phase III: Monitoring & Replanning

Step 9: Monitoring of the Projects Activities
Step 10: Replanning of the Remaining Portion of the Project
Thus far, Phases I & II have provided a plan for how the project should go. However, once the project
begins, this plan must undergo periodic revision. A revision should occur in one of the following two
ways:
On a periodic basis at the end of every week, 2 weeks, or month whichever is most appropriate.
Whenever there is a big surprise.

Step 9: Monitoring of the Projects Activities

As the project progresses, the project manager must closely monitor the projects activities, comparing
the planned progress to the actual progress. Such monitoring will enable the project manager to quickly
recognize and react to an unforeseen event that significantly affects one or more activity durations.

Step 10: Replanning of the Remaining Portion of the Project

When its time for a periodic review (e.g., an end-of-the-week review), or when an unforeseen event
occurs that significantly affects one or more activity durations, the project manager should proceed as
follows:
1.

2.

Considering the most up-to-date information, the project manager should revise the estimate of all activity durations.
(At the time of revision, there is no uncertainty about the durations of the activities that have already finished.
However, for those activities either in-progress or not-yet-started, the most up-to-date information should lead to
more accurate estimates of the durations.)
Using these revised estimates of the activity durations, the project manager should determine a revised plan by
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repeating Phase IIs planning and scheduling.

PROJECT MANAGEMENT: QUALITATIVE CONCEPTS

1. Post the project network, schedule, and other data prominently (e.g., on a wall or on a
website).
2. Form a Planning & Monitoring Committee consisting of the Project Manager and the
persons responsible for the major activities. Have this Planning & Monitoring
Committee meet regularly to review any new information and to anticipate potential
problems. For each potential problem, formulate a plan that will either resolve or
mitigate the problem.
3. Create a culture that fosters timely and honest communication. There should be no
punishment for conveying bad news. The punishment should be for delaying or
concealing bad news.
4. Learn from prior similar projects (e.g., Boeing with its 707, 727, 737, 747).
5. Create a Change Order Board to review each change order, assess the change
orders impact on both schedule and budget, and decide for each change order which
is more important schedule or budget.
6. Leave as little as possible to chance. Before the project begins, anticipate what might
go wrong and prepare a contingency plan (e.g., Boeings approach to the
transportation of the 767s body sections from Japan to Seattle).
7. Create a policy that a project is never done until it has been reviewed in a timely
manner by asking and answering the following three questions:
What did we do well that must been sustained in the future when performing similar projects?
What did we do poorly that must be improved in the future when performing similar projects?
Have we transferred the knowledge gained to the corporate level, so that the entire organization
can benefit?
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Project Monitoring
Earned Value Analysis (EVA)

23

Monitoring Progress
Compare actual expenditure by week with
planned budget
Compare actual vs budget spent by
milestone
Earned Value Analysis

24

Earned Value Analysis

Objective
Measuring the progress of a project
Forecasting completion date & cost
Providing budget and schedule variance
during the project

In EVA -the work being credited to the

project or earned as it is completed

25

Earned Value Analysis

BCWS- Budgeted Cost Of Work
Scheduled; planned value or base value
ACWP-Actual Cost Of Work Performed;
how much did it actually cost to do what
you have done so far ?
BCWP-Budgeted Cost Of Work Performed
;how much it should have cost to do what
you have done so far ? This
26

Earned Value Analysis

Schedule variance=BCWP BCWS
Cost Variance
=BCWP ACWP
Schedule Performance Indicator
SPI=BCWP / BCWS
Cost Performance IndicatorCPI=BCWP/ ACWP

27

Earned Value Analysis

28

Earned Value Analysis

60
50
40
BCWS
PLANNED COST

30

20
10

0
1

11

13

15

17

19

21
29