Session3

Project Scheduling and Risk Planning

Dr. Vijaya Sunder M

Six Sigma Master Black Belt, Lean Master, ISO 9001 Lead Auditor, Agile Champion, PMP
Assistant Professor | Indian School of Business
 Visualizing a project
Project Activity Predecessor
Let us consider a project with six
A - activities – A, B, C, D, E and F
B A
• A predecessor is an activity that
C A precedes another activity – not in the
chronological sense but according to their
D B
dependency to each other.
E C • A successor activity is the descriptor to
define a task which occurs following a
F D,E predecessor activity.

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Network Diagram: Activity on Arrow representation

B
1 2 D
A
4
C
Start
E
3 F

End
Activity on Arrow (A-O-A) representation:
Network shows each activity as an arrow, and the
nodes represent the starting and ending points

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Network Diagram: Activity on Node representation

B D

A F

C E

Activity on Node (A-O-N) representation:

Network shows each activity as a node, and the arrows represent the immediate
predecessor activities
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 Network diagrams A C
Let us consider another example.
B D
A project has four activities – A, B,
C and D A-O-N representation

Project Activity Predecessor

C
A -
A
En
B - Sta
Dummy d
rt
C A, B
B D
D B
A-O-A representation

A dummy activity is added to a project schedule as a placeholder. A dummy activity is employed when a logical
relationship between two activities cannot be linked in A-O-A representation. It consumes zero duration 5
Estimating time and cost
1. Expert Judgement: Expertise should be considered from
individuals or groups with specialized knowledge or training in
Schedule development, management, and control, Expertise
in estimating; and Discipline or application knowledge

2. Analogous Estimating: A technique for estimating the

duration or cost of an activity or a project using historical data
from a similar activity or project. It is a gross value estimating
approach, sometimes adjusted for known differences in
project complexity. Analogous duration estimating is frequently
used to estimate project duration when there is a limited
amount of detailed information about the project.
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Estimating time and cost
3. Parametric Estimating: Parametric estimating uses a
statistical/mathematical relationship between historical data and other
possible variables to calculate an estimate for activity parameters,
such as cost, budget, and duration. This is one type of bottom-up
estimation technique. Durations can be quantitatively determined by
multiplying the quantity of work to be performed by the number of
labor hours per unit of work. This technique can produce higher levels
of accuracy depending on the sophistication and underlying data built
into the model.
• For example, duration on a design project is estimated by the number of drawings
multiplied by the number of labor hours per drawing, or on a cable installation, the
meters of cable multiplied by the number of labor hours per meter.

4. There is a fourth estimation method, which I will discuss later!

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Estimating entire project time: Forward Pass
Let us consider an example project.

Project Activity Predecessor Duration

A - 2
B A 3
C A 2
D B 2
E C 4
F D,E 1

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Estimating entire project time: Forward Pass
Early Early
start finish
activity
duration

2 5 5 7
B D
3 2
0 2 8 9
A F
2 1

2 4 4 8 For Forward Pass: When there are two

C E activities with different durations leading to a
common succession activity, pick the one
2 4 with maximum duration as the Early Start
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time for the succession activity.
 Gantt Chart
Time in days
Task ID Task Name Dur 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 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60
Problem Definition 5 1 2 3 4 5
1 Gather Data 3 1 2 3
2 Study Feasibility 4 1 2 3 4
3 Prepare Problem Definition Report 1 1
System Analysis 11 1 2 3 4 5 6 7 8 9 10 11
4 Interview Users 5 1 2 3 4 5
5 Study Existing System 8 1 2 3 4 5 6 7 8
6 Define User Requirements 5 1 2 3 4 5
7 Prepare System Analysis Report 1 1
System Design 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14
8 Input and Output 8 1 2 3 4 5 6 7 8
9 Processing and Database 10 1 2 3 4 5 6 7 8 9 10
10 Evaluation 2 1 2
11 Prepare System Design Report 2 1 2
System Development 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
12 Software 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
13 Hardware 10 1 2 3 4 5 6 7 8 9 10
14 Network 6 1 2 3 4 5 6
15 Prepare System Development Report 2 1 2
Testing 7 1 2 3 4 5 6 7
16 Software 6 1 2 3 4 5 6
17 Hardware 4 1 2 3 4
18 Network 4 1 2 3 4
19 Prepare Testing Report 1 1
Implementation 5 1 2 3 4 5
20 Training 4 1 2 3 4
21 System Conversion 2 1 2
22 Prepare Implementation Report 1 1

A Gantt chart is a project management tool assisting in the planning and scheduling of projects of all sizes,
although they are particularly useful for simplifying the visual representation of complex projects.

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Identifying Critical activities: Backward Pass
Early Early
start finish
Forward Pass
activity
Late Durat Late
start ion finish

2 5 5 7
B D
3 3 6 6 2 8
0 2 8 9
A F
0 2 2 8 1 9

2 4 4 8 For Backward Pass: When there are two

C E activities with different durations leading
from a common predecessor activity, pick
2 2 4 4 4 8 the one with minimum duration as the Late
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Finish time for the predecessor activity.
 Early Float Early
Critical Path Method start finish
activity

A-C-E-F Late
start
Durat
ion
Late
finish
2 1 5 5 1 7
B D
3 3 6 6 2 8
0 0 2 8 0 9
A F
0 2 2 8 1 9

2 0 4 4 0 8
C E
2 2 4 4 4 8

Total Float = Late Finish – Early Finish (or) Late Start – Early Start

Critical Activity: Activities with total float of zero

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Handling uncertainty in estimating the activity
durations

Three-Point Estimation Technique or Program Evaluation and Review

Technique (PERT)

• Record the optimistic time (a): This represents the minimum reasonable
period of time during which the activity can be completed.
• Record the most likely time (m): This is the time required to complete an
activity based on typical conditions and historical information.
• Record the pessimistic time (b): This is the maximum reasonable period
of time the activity would need to be completed.

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Understanding PERT graphically
Mean =

Variance =

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 Recollect Central Limit Theorem
• If you keep drawing larger and larger samples and taking their sums,
the sums form their own normal distribution (the sampling distribution),
which approaches a normal distribution as the sample size increases.
• Mean of the resulting normal distribution will be the sum of individual
means
• Variance of the resulting normal distribution will be the sum of individual
variances

A B C D E Overall distribution of sum

+ + + + of project activities

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EXAMPLE : Let us consider a Technology Infrastructure Project
Best case Most likely Worst case Critical Weighted Variance of
ID Activity (Te) of Critical Variance =
duration (Tp) duration (Tm) duration (Tp) Activity? Activity Critical
Activities [(Tp-To)/6]2
estimate (Te) Activities
1 Gather data 1 3 5 No 3 0
2 Study Feasibility 2 4 5 Yes 4 4 0 0
Prepare Problem Definition
3 1 1 2 Yes 1 1 0 0
Report
4 Interview Users 3 5 10 Yes 6 6 1 1
5 Study Existing System 5 8 12 No 8 1
6 Define User requirements 3 5 8 Yes 5 5 1 1
7 Prepare System Analysis Report 1 1 2 Yes 1 1 0 0
8 Input and Output 5 8 12 No 8 1
9 Processing and Database 7 10 14 Yes 10 10 1 1
10 Evaluation 1 2 5 Yes 2 2 0 0
11 Prepare System Design report 2 2 5 Yes 3 3 0 0
12 Software development 10 15 20 Yes 15 15 3 3
13 Hardware development 3 10 24 No 11 12
14 Network development 6 6 12 No 7 1
Prepare System development
15 2 2 8 Yes
report 3 3 1 1
16 Software testing 5 6 10 Yes 7 7 1 1
17 Hardware testing 3 4 6 No 4 0
18 Network testing 2 4 5 No 4 0
19 Prepare Testing Report 1 1 4 Yes 2 2 0 0
20 Training 2 4 8 Yes 4 4 1 1
21 System Conversion 1 2 2 No 2 0
22 Prepare Implementation Report 1 1 2 Yes 1 1 0 0
63 9
Std. Dev 3

Estimated Project Duration = Mean TE = 63 days; with a Std. Dev of 3 days

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 Estimating the probability of completion of
project before its estimated time
Apply Central Limit
Theorem

Mean = TE = ∑te (critical activities)

Std. Dev = (critical activities)

Area under curve =

TS = Scheduled Project duration
TE = Critical Path duration (Mean of the project probability
distribution)
Probability = NORMSDIST (Z,1)
= Standard deviation of the total distribution of activities on
the longest path (most-time consuming path or critical path)

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EXAMPLE:
Estimated Project Duration = Mean TE = 63 days; with a Std. Dev of 3
days. What is the probability that project will be completed before 65
days?

TE (63 days) Ts (65 days)

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What is the probability that project will be completed
before 65 days?

Z = (65 – 63.3) / 3.1

Z = 0.55

Probability = EXCEL {NORMSDIST (Z)} Probability that project will be

completed in 65 days =
NORMSDIST (0.55) = 71%

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 Risk Planning
Project risk is defined as, "an uncertain event or condition that, if it occurs, has a positive or
negative effect on a project’s objectives. Project risk is something that Project manager should be
able to anticipate, and manage, as part of Project Risk Management.

Project Risk Planning

Management
Project Risk

Monitor &
Identify Perform Risk Plan Risk control
Risks Analysis Responses Risks

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 Identify Risks
Some Sources for Risk Identification:
• Stakeholder Register
• Project team members
• Enterprise Environmental Factors
• Organizational Process Assets
• Schedule estimates
• Cost estimates
• Scope Baseline
• Assumptions Log
• Lessons learned Register
• Business requirements document
• Agreements or Procurement
documents
• Resource Management Plan

Risk Breakdown Structure 21

 Perform Qualitative Risk Analysis

Some Tools to perform

Qualitative Risk Analysis:

• Risk prioritization using Multi-

criteria screening methods
• Criteria could include
urgency, manageability,
controllability, detectability,
etc.

• Probability & Impact Matrix

Probability & Impact Matrix

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 Risk Register
A log of identified risks along with their root causes, likelihood of occurrence (probability), consequences (impact)
and risk responses is called Risk Register

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 Plan Risk Responses *Scope Creep: uncontrolled changes in
scope
**Gold plating: Adding extra features at
no additional cost to the client or without
RISK RESPONSE client’s approval
STRATEGIES

AVOID EXPLOIT TRANSFER/SHARE MITIGATE/ENHANCE ACCEPT

• Adopt this strategy where the
level of overall project risk is
significantly high and
negative.
• This involves taking focused
action to eliminate the
negative effect of uncertainty
on the project as a whole and
bring the project back within
the thresholds
Example: Removal of high-risk
elements of scope from the
project through a formal change
request
• Adopt this strategy where risk
is significantly positive and
outside the agreed-upon risk
thresholds for the project.
• This involves taking focused
action to capture the positive
effect of uncertainty on the
project as a whole
• NOT TO BE CONFUSED
WITH SCOPE CREEP* OR
GOLD PLATING**!
Example: Modifying project
scope through formal change
requests to accommodate
inclusion of high-benefit
elements to stakeholders
• If the level of risk is high and
firm is unable to address it
effectively, a third party may
be involved to manage the
risk on behalf of the firm.
• In case of negative high risk,
this may involve payment of a
risk premium.
• In the case of positive high
risk, ownership may be
shared in order to reap the
associated benefits.
Examples: Purchasing an
insurance, launching a joint
venture or special-purpose
company, or subcontracting key
elements of the project
• This strategy attempts to
reduce the probability of
occurrence and/or impact of a
threat
• This strategy attempts to
enhance the probability of
occurrence and/or impact of
an opportunity
Examples: Replanning the
project, Adjusting schedules,
modifying project priority,
changing resource allocations
through formal change requests
• Where no proactive risk
response strategy is possible
to address overall project
risk, the organization may
choose to continue with the
project as currently defined,
even if overall project risk is
outside the agreed upon
thresholds.
• Acceptance can be either
active or passive
Examples:
For active acceptance – include
contingency reserves
For passive acceptance –
Periodic reviews 24
Appendix

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Summary of Session3
• Project visualization using network diagrams
• Estimation methods (expert judgement, analogous estimation,
parametric estimation, bottom-up method)
• Critical Path method: Forward Pass, Backward pass, Float
• What is PERT and how is it different from Critical Path Method
(CPM)?
• What is risk planning, stages, associated tools and artifacts?

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Dummy activity in A-O-A example

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Define Scope
• The preparation of a detailed project scope statement builds upon
the major deliverables, assumptions, and constraints that are
documented during project initiation.
• During project planning, the project scope is defined and described
with greater specificity as more information about the project is
known.
• Existing risks, assumptions, and constraints are analyzed for
completeness and added or updated as necessary.
• Defining Scope can be highly iterative. In iterative life cycle projects,
a high-level vision will be developed for the overall project, but the
detailed scope is determined one iteration at a time, and the detailed
planning for the next iteration is carried out as work progresses on
the current project scope and deliverables.

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Importance of Work Packages
• A work package is the smallest unit of a Work Breakdown
Structure
• They cannot be broken down further (decomposed) into another
smaller deliverables
• Project cost and schedule estimations are performed at work
package level, aggregating upwards in WBS
• A work package gives a sense of achievement to project team
and satisfy stakeholder(s) with some tangible value
• Work packages help in performance tracking of the project
using a commonly used technique – earned value management

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Rules to follow: A-O-A network representations
1.No single activity can be represented more than once in a
network. The length of an arrow has no significance.
2.Before an activity can be undertaken, all activities preceding it
must be completed. That is, the activities must follow a logical
sequence (or – interrelationship) between activities.
3.In assigning numbers to events, there should not be any
duplication of event numbers in a network.
4.Dummy activities must be used only if it is necessary to reduce
the complexity of a network.
5.A network should have only one start event and one end event.

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Critical Path Method
• The critical path method is used to estimate the minimum project duration
and determine the amount of schedule flexibility on the logical network
paths within the schedule model
• The critical path is the sequence of activities that represents the longest
path through a project, which determines the shortest possible project
duration
• The total float or schedule flexibility is measured by the amount of time that
a schedule activity can be delayed or extended from its early start date
without delaying the project finish date or violating a schedule constraint.
• Total Float = Late Finish – Early Finish (or) Late Start – Early Start
• Free float is how long an activity can be delayed, without delaying the
Early Start of its successor activity.
• Free Float = Early Start date of the next activity - Early Finish date of the activity
• A critical path is normally characterized by zero total float on the critical
path.
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