CHAPTER 8- RESOURCE ALLOCATION
Project Crashing: Shortening(expediting) some
activities within a project to reduce overall project
completion time
Project Costs:
Direct Costs: Labor, materials, other costs related to
activities
Indirect Costs: administration, depreciation,
financial, other overhead costs that can be avoided
by reducing total project time
Penalty Costs: if project extends beyond some
specific date
Cost to Crash
Normal Time (NT): time necessary to complete an
activity under normal conditions
Normal Cost (NC): activity cost associated w/
normal time
Crash Time (CT): shortest time to complete an
activity
Crash Cost (CC): activity cost associated with the
crash
Resource Leveling
-When the project is large and contains many
resource over-allocations, resource leveling must be
accomplished:
-A technique in which start and finish dates are
adjusted based on resource constraints with the
goal of balancing demand for resources with the
available supply
-Purpose: create a smoother distribution of
resource usage
-Resource leveling aims to min. the period-by-
period variations in resource loading by shifting
tasks within their slack allowances
-Leveling is done by delaying or splitting tasks until
the resources assigned to them are no longer over-
allocated
Allocating Scare Resources to Several Projects
When the allocating scarce resources is extending
to where several projects are being carried out
concurrently, the size and complexity of the
problem increase
With several projects, we can link them together
with pseudoactivites
-Pseudoactivities have duration but require no
resources
-The use of pseudoactivites allows a set of projects
to be linked and dealt with as though it were a
single project
-Individual projects are interrelated by
specifying predecessor/successor
relationships, appear to be parts of 1 project
-Problem a PM faces: choosing between
different outcomes that result from diff.
priority rules, and leveling rule
Criteria of Priority Rules
There are many measurable criteria to help select a
priority rule
1.Schedule Slippage: Amount project or set of
projects delayed by application of a leveling rule &
The PM must trade off penalty cost or displeasure
of clients against the cost of adding resources
2.Resource utilization: extent to which resources
are over or underworked
3.In-process inventory: amount of unfinished work
in the system
-The minimum slack rule is probably the best
overall priority rule according to research.
-It gives best combination of minimum project
slippage, minimum resource idle time, and
minimum in process inventory.
Problems with Traditional Project Management
-When planning, estimates for task durations are
required.
-To increase the probability and high confidence
that the task completing on time consider
additional safety time beyond work content time
required to be embedded within the task duration
-The more safety in a task the more there is a
tendency to behave in the following ways:
-Not starting the task until the last moment
(Student Syndrome)
-Delaying (or pacing) completion of the task
(Parkinson’s Law)
As a result, the safety which was included at the
planning stage is wasted and tasks over run
Goldratt’s Critical Chain
-CPM was created by Eli Goldratt in response to by
poor performance manifested in:
Longer than expected durations, frequently
missed deadlines, Increased costs more than
budget, substantially less deliverables than
originally promised
-Goldratt’s focus in the Critical Chain is on a single
project with multiple demands on a scarce resource
-The logic extends to the multiproject case without
alteration
CHAPTER 9- PROJECT RISK MANAGEMENT
Project Risk: uncertain event, has a
positive/negative effect on 1 project objective
Risk Management(RM) in Sub-processes
Risk Management Planning: plan for RM activities
Risk Identification: finding those risks that will affect
project
Qualitative Risk Analysis: evaluating the seriousness
of risk& likelihood it will affect project
Risk Response Planning; ways to reduce negative
impact
Risk Monitoring&Control: maintaining records
&evaluating sub-processes to improve RM
Risk Management Planning
-Method to carry out step 2-5
-Ensure necessary resources can be applied in
timely/organized manner
-Continuous Process: factors that cause uncertainty
change over time
-Organizational Problem: planning on dealing
w/uncertainty
Risk Identification- Failure Mode&Effect Analysis
(FEMA)
-Structured to help identify, prioritize & manage risk
6 Steps:
1.List ways project might fail
2.List consequences and evaluate its severity
3.List cause and likelihood
4.Estimate the ability to detect each failure
5. Calculate the Risk Priority # (RPN)
6.Sort potential failures by their risk priority #
Delphi Technique
-Group decision process about the likelihood that
certain events will occur
-Goal: obtain reliable response to problem from
experts
-Don’t interact with each other, responses are
anonymous
-Questionnaires result in median answer, process
guides the group to a consensus
RISK SCORE= Probability x Impact
Risk Response Strategies- Threats
Avoid:
-Eliminate a specific threat, usually by eliminating
its causes
-Change project plan to eliminate the risk condition
or protect project objectives from the impact
Example: remove new technology from the project
scope
Transfer:
Transfer: the impact of a risk and ownership of its
response to a third party
-Gives another party responsibility, but doesn’t
eliminate it
-Use of insurance, performance bonds, warranties,
guarantees
-Use of a contract
Mitigate
-Reduce the consequences of a risk event by
reducing its probability and/or its impact to an
acceptable threshold
-Taking early action is more effective than repair
the consequences if risk occurred Example: add 2
weeks to schedule to allow for permit approval
Accept Perceived Quality
-Do nothing due to below threshold or cost of is the quality attributed to a good or service
response based on in direct
-If risk occur use backup plans or contingency measures.
Opportunities:
Exploit:
-Eliminate uncertainty that may hinder
opportunity to be realized
Accept:
-Do nothing due to below threshold or
cost of response
-If risks occurs use backup plans or
contingency
Share:
-Team up w. 3rd party who’s able to
realize an opportunity and reap the
benefit
Enhance
-Increase probability and/or impact by
identifying and maximizing key drivers
of the risk to ensure it occurs
Crystal Ball
Forecast Cells: cells that contain
outcomes we are interested in
-a cell that contains a parameter we
make assumptions about is NOT
called a forecast cell
-Simulation: circumvent the
assumption of statistical
independence by including the activity
or path
CHAPTER 10- PROJECT QUALITY
MANAGEMENT
What is Quality?
Conformance to requirements:
The project’s processes and products
meet written specifications
Fitness for use:
A product can be used as it was
intended. Fitness may be determined by
the client, users or other key
stakeholders.
Eight Dimensions of Product Quality
Performance: refers to a product's
primary operating characteristics. This
dimension of quality involves measurable
attributes. Example: A car’s fuel
economy, acceleration rate, top speed,
interior volume, seating capacity,
etc. Example: Having the opinion that cars made in
Features Germany or Japan have higher quality
are additional characteristics that enhance the Quality Concepts:
appeal of the product or service to the user. 1.Zero Defects: is a management tool
Example: Availability of heated steering, AC,
aimed at the reduction of defects through
power brakes,
alloy wheels, GPS mapping, etc. prevention. Directed at motivating people
to prevent mistakes by developing a
Reliability constant and conscious desire to do their
is the likelihood that a product will not fail within job right the first time.
a specific time period. This is a key element for
Zero Defects= no tolerance for errors
users who need the product to work without fail.
within system
Example: The reliability of cars is often
6 Sigma: data driven
measured by how many problems the owner
approach&methodlogy for eliminating
has with
a particular product and how severe the defects
problems are. 2.Quality Throughout impact in- Product,
Conformance process, and organization. Requires TQM,
is the precision with which the product or
which all members participate in improving
service meets the
the process, product, service, culture
specified standards. Example: Emission control
in Canada is a predetermined standard that Quality Planning
needs to be implemented regardless of where -Process for identifying quality standards and
the car was manufactured and bough requirements for overall project and for tracking,
Durability monitoring and managing the expectations of
measures the length of a product’s life.
When the product can be
repaired, estimating durability is more
complicated.
Example: Durability of tires in terms of
kilometres until they require replacement
Serviceability
is the speed with which the product can
be put into service when it breaks down,
as well as the competence and the
behavior of the service person.
Example: How accessible are battery,
spark plugs, and other easily
maintainable parts
Aesthetics planned quality.
is the subjective dimension indicating the kind -Inputs for quality planning include:
of response a user has to a product. It ISO 9000- fundamentals of quality management
represents the individual’s personal preference. systems
Example: Style and look of the exterior and ISO 9002- model for quality assurance in
interior of cars; overall image production, installation and servicing
ISO 9003- for quality assurance in final inspection
& testing
ISO 9004- emphasis quality assurance
Scope document, requirement from stakeholders,
risk register, project schedule
Quality Planning- Tools and Techniques
Cost of Quality: total cost of all efforts to achieve
product quality
Bad Costs: Cost of Internal & External Failure
-Cost incurred by project before a product or
service reaches client
-Cost of repairs, rework, investigation, planning
-Costs incurred to rectify product or service after it
has reached or is used by client/customer
-Replacement/repair costs, warranty claims and
cost, cost of lost customers/opportunity, legal costs
Good Costs: Cost of Appraisal
-Costs associated w/ investigative effort to asses
and uncover quality issues related to the product
Cost of internal;/external audits, investigations,
inspections, testing & test equip., models,
prototypes, mock-ups etc.
Good Costs: Cost of Prevention
-Cost associated with proactive measures to ensure
conformance w/quality standards:
-Cost of quality consultants, cost of quality
management systems, cost of validation of design
and planning, training costs, maintenance
Quality Assurance: process used to evaluate
project performance periodically and ensure that
project will satisfy quality standards
-Inputs for quality assurance are quality planning,
work performance info, quality control
measurements and quality metrics
-Outputs of the process are change requests,
project management plan updates, project
document updates
CHAPTER 11- PROCUREMENT & CONTRACTS
Outsourcing Pros vs. Cons
Pros:
-Delivery failure or poor service by existing source
-Allow client organization to focus on its core
business
-Gain access to world class capabilities
-Reduced capital requirements and staff costs
-Pressure to reduce costs
Cons:
-Long term commitment
-Communication with suppliers
-Dependence on suppliers
-Lack of control over supplier & quality of work
Procurement: act of finding, acquiring, buying
goods, services or works from an external source,
often via a tendering or competitive bidding
process.
Project Procurement Management: process
required to acquire g&s, attain project scope, from
outside the performing organization
-Project Procurement Management is typically
discussed from the perspective of the project
team as the buyer in the buyer-seller relationship,
project team could also be selling project
deliverables to an external client
Tendering: make a formal written offer for a fixed
price
Procurement Categories: not all projects are
created equal, some are big or small, carry high/low
risks
Major Complexity Procurement
Major (high risk) complexity procurement:
purchasing something which doesn’t exist, tailored
to projects unique specifications.
-Represent high risks, to projects technical, quality,
costs, schedule
-Require creation of something new by seller
Minor Complexity Procurement
Minor (low risk) complexity procurements:
represent large monetary values, but the
commodities exit and will conform to existing
sellers
Early Identification: of items is important to
properly schedule lead-times for each item and
budget necessary funds for it. EXAMPLE: purchased
labor, services, raw materials, supplies equip,
services.
Procurement Risks:
1.Risks associated with technical, quality, or
performance
-Possibility that the item being developed or
procured will not perform to the levels needed by
the project
2.Risks with Schedule Performance
-Possibility that critical item needed by project
will not be available in the time-frame needed
-Technical risks may also cause adverse impact on
project schedule
3.Risks with cost performance
-Possibility that the costs of the critical items will
exceed that which had been estimated at budgeted
Project Procurement Management Processes
1.Procurement Planning- what to procure & when
2. Solicitation Planning: documenting project
requirements & identifying potential sources
3. Solicitation: obtaining quotations, bids, offers, or
proposals
4. Source Selection: choosing from among potential
sellers
5. Contract Administration: managing relationship
w/ seller
6. Contract Close-out: Completion and settlement
of the contract
Inputs to Procurement Planning
THE CONTRACT
Contract= Offer + Acceptance+ Consideration
Include: technical/management/commercial
requirements, specific description of
technical/management programs,
proposed prices
Contract Type Selection
1.Firm Fixed Price (FFP)
Fixed Price Incentive Fee (FPIF)
Fixed Price w/ Economic Price Adjustment (FP-
EPA)
2. Cost Plus Fixed Fee (CPFF)
Cost Plus Incentive Fee (CPIF)
3. Time & Materials Contracts
4. Guaranteed Maximum Price (GMP)
Guaranteed Maximum Price (GMP) Incentive Fee
CHAPTER 12: EVALUATING THE PROJECT &
TERMINATION
Evaluation Criteria
-There are many different measures that may be
applied in a project
evaluation:
1.Criteria set by senior management for future
planning and decisions
2.Original criteria for selecting and funding project
such as
-Profitability
-Acquiring new competencies for the organization
-Getting a foothold in a new market segment
-Any special reasons for selection should also play a
role:
-Was this project someone’s sacred cow?
-Did a scoring model identify quantitative and
qualitative reasons to select this project?
3.Success to date: evaluating four important
dimensions of project success
a. Efficiency in meeting the budget and schedule
b. Customer impact/satisfaction
c. Business/direct success
-The level of commercial success for external
projects
-Reduced throughput time for internal projects
d. Future Potential
-More difficult to assess
-Potential to develop a new technology, or
presence in a new market
4.Project’s contribution to the organization’s goals
and objectives
5.Project’s contribution to the objectives of project
team members
Project Auditing
-Special type of evaluation is a formal audit
-Requires thorough examination of management of
a project: methodology and procedures, records,
properties, inventories, budgets, expenditures and
progress
Timing and Value of Project Audits
-Timing of audits depends on its purpose
-Project State: feasibility study->very useful, esp. in
technical audit
-Project State: initiation->very useful, takes place
early
-Project State: Preliminary plan/schedule budget
-Project State: Master schedule->less useful,
flexibility limited
-Evaluation of date by project team: marginally
used, monitor/control
-Post State: Post-Project-> more/ less useful,
depends on applicability
Audit Report
1.Intro, 2. Current Status, 3. Future Project Status,
4. Critical Management Issues, 5. Risk Analysis and
Risk Management, 6. Final comments
Project Termination
-Referred to as Project Closure by PMBOK
-Project Closure Phase- last phase of Project Life
cycle, completion of all Project objectives and
acceptance of end product by client
-Project closure ensures that: outcomes match
stated goals of project, client is happy w/results,
critical knowledge captured, team feel completion,
project resources are released for new projects
When to Terminate a Project
-Project met goals, customer satisfaction and use,
contributing to firm’s future, inefficient support
from senior manager (failure factor)
Types of Project Termination:
1.Project Extinction, 2. Termination-by addition,
Termination by integration, Termination by
starvation
Project Final Report: history of project & lessons
learned
1.Project performance, 2. Administrative
performance, 3. Organizational Structure, 4. Project
Teamwork, 5. Project Management Technique