BUSINESS PLANNING AND PROJECT MANAGEMENT NETWORK TECHNIQUES

PRESENTED TO: PROF.MRS.YAMINI MATHUR

PRESENTED BY: Pranjal Dugad TYBBA A ROLL NO:26

INTRODUCTION:

Project management is the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific project goals and objectives. It is sometimes conflated with program management, however technically that is actually a higher level construction: a group of related and somehow interdependent engineering projects. A project is a temporary endeavor, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables), undertaken to meet unique goals and objectives, usually to bring about beneficial change or added value. The temporary nature of projects stands in contrast to business as usual (or operations), which are repetitive, permanent or semipermanent functional work to produce products or services. In practice, the management of these two systems is often found to be quite different, and as such requires the development of distinct technical skills and the adoption of separate management. The primary challenge of project management is to achieve all of the engineering project goals and objectives while honoring the preconceived project constraints. Typical constraints are scope, time, and budget. The secondary and more ambitious challenge is to optimize the allocation and integration of inputs necessary to meet pre-defined objectives. Project management has been practiced since early civilization. Until 1900 civil engineering projects were generally managed by creative architects and engineers themselves, among those for example Vitruvius (1st century BC), Christopher Wren (1632 1723), Thomas Telford (1757 1834) and Isambard Kingdom Brunel (1806 1859). It was in the 1950s that organizations started to systematically apply project management tools and techniques to complex engineering projects. As a discipline, Project Management developed from several fields of application including civil construction, engineering, and heavy defense activity. Two forefathers of project management are Henry Gantt, called the father of planning and control techniques, which are famous for his use of the Gantt chart as a project management tool; and Henri Fayol for his creation of the 5 management functions which form the foundation of the body of knowledge associated with project and program management. Both Gantt and Fayol were students of Frederick Winslow Taylor's theories of scientific management. His work is the forerunner to modern project management tools including work breakdown structure (WBS) and resource allocation.

NETWORK ANALYSIS:

Indian management is continually seeking view, better control techniques to cope with the complex mass of data, high technology and, tight deadlines, that are characteristic of the intense competitive commercial field today. Project managers are compelled to look for dependable dynamic planning, scheduling, control and monitoring devices. Network techniques are primarily used in project management, particularly in dealing with non-repetitive operations. They are improvements of the earlier Gantt charts with an attempt to study the effect of inter-relations. Network Techniques provide the help a manager needs, when he is defining the complex relationship that exists in sequencing and time between many jobs and planned elements of work. Network analysis enables the project manager to determine the importance of the deviations by taking the most cost-effective measures after adequate monitoring, evaluation and control. NETWORK CONCEPT: A network is an arrow diagram, which is a graphic representation of the project plan. It depicts the logical sequence of the various elements for work, in relation to each other, that must be accomplished before a project can be completed. Any network consists of events and activities. For this purpose, it is necessary to divide the project into clearly defined major components, and to recognize the events that mark the start and completion of each activity. This is called work break structure , which enables to achieve project completion at different levels. A network is an arrangement of all activities (or events) in a project arrayed in their logical sequence and represented by arcs and nodes. This arrangement (network) defines the project and the activity precedence relationship. Networks are usually drawn starting on the left and proceeding to the right. Arrow heads placed on the arcs are used to indicate the direction of flow i.e. to show the proper precedence s. Before an event can be realized i.e. achieved all activities that immediately precede it must be completed. These are called its (predecessors). Thus, an event represents an instant in time when each and every predecessor activity has been finished. It shows the sequential relationships among activities using nodes and arrows. y y 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.

Network analysis is the general name given to certain specific techniques which can be used for the planning, management and control of projects. One definition of a project (from the Project Management Institute) is: A project is a temporary endeavor undertaken to create a "unique" product or service This definition serves to highlight some essential features of a project
y y

it is temporary - it has a beginning and an end it is "unique" in some way

The use of the word unique indicates "non-repetitive" or "non-routine", e.g. building the very first Boeing Jumbo jet was a project - building them now is a repetitive/routine manufacturing process, not a project. We can think of many projects in real-life, e.g. building the Channel tunnel, building the London Eye, developing a new drug, etc Typically all projects can be broken down into:
y y

separate activities (tasks/jobs) - where each activity has an associated duration or completion time (i.e. the time from the start of the activity to its finish) Precedence relationships - which govern the order in which we may perform the activities and the problem is to bring all these activities together in a coherent fashion to complete the project.

Two different techniques for network analysis were developed independently in the late 1950's - these were:
y y

PERT (for Program Evaluation and Review Technique); and CPM (for Critical Path Management).

PERT was developed to aid the US Navy in the planning and control of its Polaris missile program . This was a project to build a strategic weapons system, namely the first submarine launched intercontinental ballistic missile, at the time of the Cold War between the USA and Russia. Military doctrine at that time emphasized 'MAD - mutually assured destruction', namely if the other side struck first then sufficient nuclear weapons would remain to obliterate their homeland. That way peace was preserved. By the late 1950s the USA believed (or more importantly believed that the Russians believed) that American land based missiles and nuclear bombers were vulnerable to a first strike. Hence there was a strategic emphasis on completing the Polaris project as quickly as possible, cost was not an issue. However no one had ever built a submarine launched intercontinental ballistic missile before, so dealing with uncertainty was a key issue. PERT has the ability to cope with uncertain activity completion times (e.g. for a

particular activity the most likely completion time is 4 weeks but it could be any time between 3 weeks and 8 weeks). CPM was developed in the 1950's as a result of a joint effort by the DuPont Company and Remington Rand Univac. As these were commercial companies cost was an issue, unlike the Polaris project. In CPM the emphasis is on the trade-off between the cost of the project and its overall completion time (e.g. for certain activities it may be possible to decrease their completion times by spending more money - how does this affect the overall completion time of the project?) Network analysis is a vital technique used in project management. It enables us to take a systematic quantitative structured approach to the problem of managing a project to successful completion.

MEANING OF VARIOUS TERMS USED IN A NETWORK DIAGRAM:

1. ARROW

An arrow leads from tail to head directionally and it indicates activity. An arrow refers to any directional symbol that offers guidance as to the path one should follow. In the project management, an arrow refers to the presentation of a schedule activity in a graphical format through use of a logical relationship between schedule activities in the precedence diagramming method or the arrow diagramming method.
2. ACTIVITY

An activity represents a clearly defined project element, work, job or task, which forms an integral part of a project and needs time and resources for carrying out. It is accepted conventionally, that an activity is any function that takes place between events, whether work is involved or not, e.g., awaiting approval of a loan, setting and hardening of concrete, etc. These represent periods of idleness and involve only the passage of time with no actual work being carried out; but, nonetheless, these are activities. An activity is a task or a certain amount of work required in the project. It requires time to complete. It is represented by an arrow. The tail of the arrow is its start, and the head is its completion. It always lies between two events. It is an element of work performed during the course of a project. An activity normally has an expected duration, an expected cost and expected resource requirements. Activities are normally subdivided into tasks. Examples of activity are compilation of detailed project report, auditing of accounts, docking a space-ship, waiting for the approval of a loan, conducting a wedding, digging a bore-well.
3. PATH

A path is a set of sequentially connected activities in a project network diagram. It is the series of connected activities (intermediate events) between any two events in a network.
4. CRITICAL

Activities, events or paths which, if delayed will delay the completion of the project. A project s critical path is understood to mean that sequence of critical activities (events) that connects the projects start event to its finished event and which cannot be delayed without delaying the project. It is the longest path through a project and leads to minimum project completion time. 5. NODES A node is represented by a circle and it indicates an event. In the context of project management, the term node refers to any one of a number of miscellaneous defining points that exist as part of the project s schedule network. These specific definition points in most cases have been pre-determined by the project management team and or the project management team leader and typically will represent significant moments or occurrences that may take place during the course of the project. To transform a project plan in to a network, one must know what activities comprise the project and for each activity, what are its predecessors. An activity can be in any of these conditions: 1. It may have predecessor(s) but no successor(s). 2. It may have predecessor(s) and successor(s). 3. It may have both predecessor(s) and successor(s).

PRECEDENCE DIAGRAM METHOD:

Activities are represented by rectangles (one form of what in a network are called nodes ) with arrows to show precedence relationship. This is called as Activity-on-Node (AON). One of the two methods of representing project as networks, in which the activities are represented by nodes and the relationships between them by arrows. PDM is a visual representation technique that depicts the activities involved in a project. Precedence Diagrams are also known as Project Network Diagrams.

PDM helps one to: 1. Communicate: The visual representation make it easier for you to communicate the flow of project execution or the project activity flow. 2. Identify missing activities: When an activity is not identified, it ll never be done. By visually representing the activities, there is a greater chance for your team to identify missing activities. 3. Identify dependencies: Each activity is dependent on some other activity. When a dependency is not identified, the project will be delayed until such a time that identification occurs. For example, if there is a critical component that is being produced by a third-party vendor, the final product is dependent on the vendor. So, even if you complete all other activities, the project will not be complete until the vendor supplies the critical component. 4. Identify critical activities: Certain activities have a greater impact on project schedule than others. By using PDMs, you can determine the activities critical to the project schedule. This is known as the Critical Path Method (CPM). 5. Create a project schedule: The final goal of PDM is to create a practical and robust project schedule.

Types of Dependencies There are four types of dependencies that one needs to be aware of before creating a Precedence Diagram. y Finish-Start: In this dependency, an activity cannot start before a previous activity has ended. For example, one cannot cook a stew before gathering all the ingredients. Therefore, the activity Gather Ingredients needs to finish, before the activity Cook Stew can begin. This is the most commonly used dependency. Start-Start: In this dependency, there is a defined relationship between the start of activities. Finish-Finish: In this dependency, there is a defined relationship between the end dates of activities. Start-Finish: In this dependency, there is a defined relationship between the start of one activity and the end date of a successor activity. This dependency is rarely used.

y y

Precedence diagram:

Features:

Events: The Start and End oval shapes signify events. An event is a point in time having no duration, which is also known as a milestone. A Precedence Diagram will always have a Start and an End event. Activity: There are four activities (Activity 1, 2, 3, and 4), each activity is represented by a node.

Dependencies: Each node (Activities and Events) is connected by using unidirectional arrows. This signifies the relationship between activities. The relationship between activities can either be predecessor or successor. For example in the image, Activity 1 has no dependency, Activities 2 and 3 are dependent on Activity 1, while Activity 4 is dependent on Activities 2 and 3.

A Network Diagram will always have the Start and End events. They may also have other events called milestones. For example, kill-points are milestones. In a Network Diagram, the start of an activity must be linked to the end of another activity.

ARROW DIAGRAM METHOD:

Arrow Diagramming Method (ADM) is a network diagramming technique in which activities are represented by arrows. It is used for scheduling activities in a project plan. The precedence relation between activities is represented by circles connecting to one or more arrows. The tail of the arrow represents the start and head represents the finish of the activity. The length of the arrow represents the duration of the relevant activity. Sometimes a "dummy task" is added, to represent a dependency between tasks, which does not represent any activity. The tail of the arrow represents the start and head represents the finish of the activity. The Arrow Diagramming Method is also known as the Activity-on-Arrow (AOA) method, it only show Finish to start relationship

Types of Dependencies There are four types of dependencies that one needs to be aware of before creating a Precedence Diagram. y Finish-Start: In this dependency, an activity cannot start before a previous activity has ended. Start-Start: In this dependency, there is a defined relationship between the start of activities. Finish-Finish: In this dependency, there is a defined relationship between the end dates of activities. Start-Finish: In this dependency, there is a defined relationship between the start of one activity and the end date of a successor activity. This dependency is rarely used.

ADM network drawing technique the start and end of each node or event is connected to an arrow. The start of the arrow comes out of a node while the tip of the arrow goes into a node. Between the two nodes lies an arrow that represents the activity. The event represented by the circular node consumes neither time nor resources.
y y y

A node is a specific, definable achievement in the project. It has zero duration and consumes nil resources. All activities that lead into a node must be completed before the activity lies following this node can start.

GANTT CHART:
Henry Laurence Gantt (1861-1919) was a mechanical engineer, management consultant and industry advisor. He developed Gantt charts in the second decade of the 20th century as a visual tool to show scheduled and actual progress of projects. Accepted as a common-place project management tool today, it was quite a radical concept and an innovation of world-wide importance in the 1920s. Gantt charts were first used on large construction projects like the Hoover Dam, started in 1931 and the interstate highway network which started in 1956. A Gantt chart is a horizontal bar chart. Frequently used in project management, a Gantt chart provides a graphical illustration of a schedule that helps to plan, coordinate, and track specific tasks in a project. Gantt charts may be simple versions created on graph paper or more complex automated versions created using project management applications such as Microsoft Project or Excel. A Gantt chart is constructed with a horizontal axis representing the total time span of the project, broken down into increments (for example, days, weeks, or months) and a vertical axis representing the tasks that make up the project. For example, if the project is- outfitting your computer with new software, the major tasks involved might be: conduct research, choose software, and install software. Horizontal bars of varying lengths represent the sequences, timing, and time span for each task. Using the same example, you would put "conduct research" at the top of the vertical axis and draw a bar on the graph that represents the amount of time you expect to spend on the research, and then enter the other tasks below the first one and representative bars at the points in time when you expect to undertake them. The bar spans may overlap, as, for example, you may conduct research and choose software during the same time span. As the project progresses, secondary bars, arrowheads, or darkened bars may be added to indicate completed tasks, or the portions of tasks that have been completed. A vertical line is used to represent the report date. Gantt charts give a clear illustration of project status, but one problem with them is that they don't indicate task dependencies - you cannot tell how one task falling behind schedule affects other tasks.

Advantages: y y y They do require frequent updating (as does any scheduling/control device). They are easy to maintain as long as task requirements are not changed or measure alterations of the schedule are not made. Gantt charts provide a picture of the current state of a project.

Limitations: y A common error made by those who equate Gantt chart design with project design is that they attempt to define the project work breakdown structure at the same time that they define schedule activities. This practice makes it very difficult to follow the 100% Rule. Instead the WBS should be fully defined to follow the 100% Rule, and then the project schedule can be designed. Although a Gantt chart is useful and valuable for small projects that fit on a single sheet or screen, they can become quite unwieldy for projects with more than about 30 activities. Larger Gantt charts may not be suitable for most computer displays. A related criticism is that Gantt charts communicate relatively little information per unit area of display. That is, projects are often considerably more complex than can be communicated effectively with a Gantt chart. Gantt charts only represent part of the triple constraints (cost, time and scope) of projects, because they focus primarily on schedule management. Moreover, Gantt charts do not represent the size of a project or the relative size of work elements, therefore the magnitude of a behind-schedule condition is easily miscommunicated. If two projects are the same number of days behind schedule, the larger project has a larger impact on resource utilization, yet the Gantt does not represent this difference. Although project management software can show schedule dependencies as lines between activities, displaying a large number of dependencies may result in a cluttered or unreadable chart. Because the horizontal bars of a Gantt chart have a fixed height, they can misrepresent the time-phased workload (resource requirements) of a project, which may cause confusion especially in large projects. In the example shown in this article, Activities E and G appear to be the same size, but in reality they may be orders of magnitude different. A related criticism is that all activities of a Gantt chart show planned workload as constant. In practice, many activities (especially summary elements) have frontloaded or back-loaded work plans, so a Gantt chart with percent-complete shading may actually miscommunicate the true schedule performance status.

CRITICAL PATH METHOD:

The Critical Path Method (CPM) is a project modeling technique developed in the late 1950s by Morgan R. Walker of DuPont and James E. Kelley, Jr. of Remington Rand. Kelley and Walker related their memories of the development of CPM in 1989. Kelley attributed the term "critical path" to the developers of the Program Evaluation and Review Technique which was developed at about the same time by Booz Allen Hamilton and the US Navy. The precursors of what came to be known as Critical Path were developed and put into practice by DuPont between 1940 and 1943 and contributed to the success of the Manhattan Project. CPM is commonly used with all forms of projects, including construction, aerospace and defense, software development, research projects, product development, engineering, and plant maintenance, among others. Any project with interdependent activities can apply this method of mathematical analysis. Although the original CPM program and approach is no longer used, the term is generally applied to any approach used to analyze a project network logic diagram. The Critical Path Method (CPM) is a network diagram based project planning and monitoring method. A network diagram depicts the activities of the project pictorially. All the activities are embedded and connected together between the start event and the end event of the project.

Features of CPM y CPM helps us to identify the critical activities of the project and thereby the duration of the project. We carry out the forward-pass and the backward-pass to compute the project duration. In forward-pass we begin at the start event of the project and add the duration needed by each activity to the date on which the start event would begin. Thus, we reach the end event. Now the date on which the end event is reached is the expected project completion date. In backward-pass we begin at the end event of the project subtracting the duration needed by each activity from the project completion date progressively till we reach the start event. The date of the start event arrived at this manner is the date the project should begin in order to deliver the project on time. Now, each activity on the network has two sets of dates one arrived at through forward-pass and the other through backward-pass. The dates of activities arrived through forward-pass are known as earliest times earliest start and earliest finish for each activity. The dates of activities arrived through backward-pass are known as the latest times: - latest start and latest finish for each activity. The earliest start date

denotes the date on which the activity can be started and the latest start denotes the date on which the activity must start in order not to delay the project. Similarly, the earliest finish date of an activity denotes the earliest date by which the activity can be finished and the latest date denotes the date by which the activity must finish in order not to delay the project. The difference between latest and earliest (earliest & latest start or earliest & latest finish) dates of an activity is called the slack for that activity. The activities for which the slack is zero are referred to as the critical activities . The path of activities from the start event to the end event is called the critical path for the project when the slack of all activities on that path is zero. The sum of durations of the activities on the critical path is the duration of the project.

The critical path method helps to identify the most important activities, which can impact the project schedule. As such, this method is useful in creating project schedules and managing high-risk activities on the critical path Advantages: y y y y y Makes dependencies visible between the project activities; this is done by constructing project network diagrams or precedence diagrams Organizes large and complex projects, hence allowing a more systematic approach to project planning and scheduling, project execution, and risk management activity. The float tells exactly how long an activity can come in late without it impacting the project schedule. Encourages the Project Manager to reduce the project duration by optimizing the critical path and using compression techniques as applicable Increases visibility of impact of schedule revisions, which are usually necessary when major milestones have been missed or when the risk of missing a major milestone looms large Enables the Project Manager to optimize efficiency by allocating resources appropriately, consequently the overall cost can be reduced Provides opportunities to respond to the negative risk going over-schedule by identifying the activities that are most critical

y y

Limitations:
y

For large and complex projects, there ll be thousands of activities and dependency relationships. Without software it can be mighty difficult managing this. To make matters worse, if the plan changes during project execution then the precedence diagram will have to be redrawn. Fortunately, we do have relatively cheap software that can handle this with ease. One of the advantages of drawing a project precedence diagram is that you can print and stick in the project area. The precedence diagram enables the team to stay focused

on project activities. Project team members are always cognizant of the critical path since it is visible every day. However, for large projects with thousands of activities, it may be difficult to print the project network diagram. One would most definitely need a plotter. Steps involved in CPM planning: 1. Specify the individual activitiesAll the activities in the project are listed. This list can be used as the basis for adding sequence and duration information in later steps. 2. Determine the sequence of those activitiesSome activities are dependent on the completion of other activities. A list of the immediate predecessors of each activity is useful for constructing the CPM network diagram.

3. Draw a network diagramOnce the activities and their sequences have been defined, the CPM diagram can be drawn. CPM originally was developed as an activity on node network. 4. Estimate the completion time for each activityThe time required to complete each activity can be estimated using past experience. CPM does not take into account variation in the completion time. 5. Identify the critical path( longest path through the network )The critical path is the longest-duration path through the network. The significance of the critical path is that the activities that lie on it cannot be delayed without delaying the project. The critical path can be identified by determining the following four parameter for each activity: y ES- Earliest Start Time- The earliest time at which the activity can start given that its precedent activities must be completed. y EF- earliest Finish Time- It is equal to the earliest start time for the activity plus the time required for completing the activity. y LF- Latest Finish Time- The latest time at which the activity can be completed without delaying the project. y LS- Latest Start Time- It is equal to the latest finish time minus the time required to complete the activity. The slack time for an activity is the time between its earliest and latest start time, or between its earliest and latest finish time. Slack is the amount of time that an activity can be delayed past its earliest start or earliest finish without delaying the project. The critical path is the path through the project network in which none of the activities have slack, that is, the path for which ES=LS and EF=LF for all activities in the path. A delay in the critical path delays the

project. Similarly, to accelerate the project it is necessary to reduce the total time required for the activities in the critical path.

6. Update the CPM diagram as the project progressesAs the project progresses, the actual task completion time will be known and the network diagram can be updated to include this information. A new critical path may emerge, and structural changes may be made in the network if project requirements change. CPM Diagram:

PROGRAM EVALUATION AND REVIEW TECHNIQUE (PERT):

The advancing technological revolution of space age has brought an explosive growth of a new family of planning and controlling techniques. Much of the development work has been done in the defense sector, but construction, chemical and other industries have also played a crucial role. These techniques are network based planning and control procedures. These are known by different names, such as (a) PERT- Program Evaluation and Review Technique, (b) PERT/Cost, (c) PERT/Time, (d) CPM- Critical Path Method, (e) CPA- Critical Path Analysis, (f) CPS- Critical Path Scheduling, (g) GERT- Graphical Evaluation and Review Technique, etc. perhaps the best known of all these new techniques is PERT. The special project office of the US, concerned with performance trends on large military development programs introduced PERT on its Polaris weapon system in 1958, after the technique was developed with the aid of a consulting firm in the US. Since that time, PERT has spread rapidly throughout the defense forces in all countries as well as to large industrial projects. In our country, large public sector organizations like Fertilizer Corporation of India, Indian Oil Corporation, Engineers India Ltd, as well as several private companies like Larsen & Toubro, Reliance Industries, TISCO, and etc. claim to use PERT successfully for new projects, diversification, replacement, and even for maintenance. The Program Evaluation and Review Technique (PERT) is a network model that allows for randomness in activity completion time. The milestones generally are numbered so that the ending node of an activity has a higher number than the beginning node. Incrementing the numbers by 10 allows for new ones to be inserted without modifying the numbering of the entire diagram. PERT Diagram:

PERT chart for a project with five milestones (10 through 50) and six activities (A through F). The project has two critical paths: activities B and C, or A, D, and F giving a minimum project time of 7 months with fast tracking. Activity E is sub-critical, and has a float of 2 months Steps in the PERT planning process: PERT planning involves the following steps1. Identify activities and milestones: The activities are the tasks required to complete the project the milestones are the events marking the beginning and end of one or more activities. 2. Determine activity sequence: This step may be combined with the activity identification step since the activity sequence is known for some tasks. Other tasks may require more analysis to determine the exact order in which they must be performed. 3. Construct the network diagram: Using the activity sequence information, a network diagram can be drawn showing the sequence of the serial and parallel activities. 4. Estimate activity times: Weeks are a commonly used unit of time for activity completion, but any consistent unit of time can be used. A distinguishing feature of PERT is its ability to deal with uncertainty in activity completion times. For each activity, the model usually includes three time estimatesy Optimistic Time (OT)Generally the shortest time in which the activity can be completed. y Most Likely Time (MT)The completion time having the highest probability. This is different from expected time. Pessimistic time (PT)The longest time that an activity might require.

The expected time for each activity can be approximated using the following weighted average: Expected time= (OT+4*MT+PT)/6 This expected time might be displayed on the network diagram. Variance for each activity is given by:

[(PT-OT)/6]2 5. Determine the critical path: The critical path is determined by adding the times for the activities in each sequence and determining the longest path the longest path in the project. The critical path determines the total time required for the project. If activities outside the critical path speed up or slow down (within limits), the total project time does not change. The amount of time that a non-critical path activity can be delayed without delaying the project is referred to as slack time. If the critical path is not immediately obvious, it may be helpful to determine the following four quantities for each activityy ES- Earliest Start Time y EF- Earliest Finish Time y LF- Latest Finish Time y LS- Latest Start Time These times are calculated using the expected time for the relevant activities. The ES and EF of each activity are determined by working forward through the network and determining the earliest at which an activity can start and finish considering its predecessor activities. The latest start and finish times are the latest times that an activity can start and finish without delaying the project. LS and LF are found by working backward through the network. The difference in the latest and earliest finish of each activity is that activity s slack. The critical path then is the path through the network in which none of the activities have slack. The variance in the project completion time can be calculated by summing the variances in the completion times of the activities in the critical path. Given this variance, one can calculate the probability that the project will be completed by a certain date. Since the critical path determines the completion date of the project, the project can be accelerated by adding the resources required to decrease the time for the activities in the critical path. Such a shortening of the project sometimes is referred to as project crashing. 6. Update as project progresses: Adjustments are made in the PERT chart as the project progresses. As the project unfolds, the estimated times can be replaced with actual times. In cases where there are delays, additional resources may be needed to stay on schedule and the PERT chart may be modified to reflect the new situation. Advantages:
y y y

PERT chart explicitly defines and makes visible dependencies (precedence relationships) between the WBS elements PERT facilitates identification of the critical path and makes this visible PERT facilitates identification of early start, late start, and slack for each activity,

y y

PERT provides for potentially reduced project duration due to better understanding of dependencies leading to improved overlapping of activities and tasks where feasible. The large amount of project data can be organized & presented in diagram for use in decision making.

Disadvantages:
y y y y

There can be potentially hundreds or thousands of activities and individual dependency relationships The network charts tend to be large and unwieldy requiring several pages to print and requiring special size paper The lack of a timeframe on most PERT/CPM charts makes it harder to show status although colours can help (e.g., specific colour for completed nodes) When the PERT/CPM charts become unwieldy, they are no longer used to manage the project.

CRYSTAL BALL 2000:

Crystal Ball 2000 Standard is an easy-to-use simulation program that helps one to analyze the risks and uncertainties associated with the Excel spreadsheet models. Crystal Ball is for anyone who uses spreadsheets and needs to forecast uncertain results. Geologists, reservoir engineers, geophysicists, and managers for upstream and downstream divisions all rely on Crystal Ball to improve the quality of their decision making processes. As a fully integrated add-in program with its own toolbar and menus, Crystal Ball picks up where spreadsheets end by letting one perform Monte Carlo analysis (a technique for simulating real-world situations involving elements of uncertainty). One of the methods for managing uncertainties is to perform risk analysis on such data that has been involved in managerial decisions. This requires us to make assumptions about the probability distributions of the variables and parameters affecting the decisions. The assumptions allow assuming Monte Carlo simulation modeled mathematically. Individual values for each variable in the model are selected at random from the probability distributions and the outcome of the model is calculated. Definition of Monte Carlo AnalysisA scheduled risk assessment technique that performs a project simulation, many times in order to calculate a distribution of likely results. Crystal ball 2000 (CB) is software that is used to simulate a decision process that measured whether or not the project was above the organizations hurdle rate of return. Using several time the same kind of simulation might be used to manage the uncertainty involved in deciding at what level to budget a project. Its use can be examined in scheduling projects. After entering the data in XL and CB, one can label the columns, first one for such activity and then one for each path through the network and finally one for the completion time . The most difficult job one faces is identifying all the paths to be evaluated.

CRITICAL PATH METHOD- CRASHING A PROJECT:

Generally, the overall completion time for a project is established by the top management. In case the expected time t(e) for the terminal event is greater than the directed time of its completion and, consequently, there exists a negative slack, it will be necessary to re-examine the network to determine whether the network plan could be adjusted to reduce the time required to complete the project on the directed date. The time cost trade-off problem, or crashing the network, is directed to the cost of determining a schedule of project activities which considers adequately the indirect as well as the direct costs. A close scrutiny of the network indicates that the total time can be reduced by crashing, compressing or completing the critical activities in less time. Obviously this will involve a higher cost than would be incurred when performing at the original rate. Aspects of time cost trade-offsThe network may be compressed in one or more of the following ways: y y y y y Closer examination of the time estimates t(e) of the critical path activities Planning the network by introducing greater paralleling-i.e. more concurrent activities and/or changing or lowering performance requirements of certain activities. Dropping off, as a last resort, low priority activities. Transfer or reallocation of slack resources, to the extent possible, from non-critical activities to activities on the critical path. Addition of more resources to the critical path, and crashing other activities. It is an established fact that the time and cost are inversely related.

Duration compression is a special case of mathematical analysis that looks for ways to shorten the project schedule without changing the project scope. Duration compression includes techniques such as crashing- in which cost schedule trade-off is analyzed to determine how to obtain the greatest amount of compression for the least incremental cost. Crashing does not always produce viable alternative and often results in increased cost. In other words crashing a project is taking action to decrease the total project duration after analyzing a number of alternatives to determine how to get the maximum duration compression for the least cost. Concept of Crashing:

The degree of accuracy required in drawing up cost effective plans, is necessarily conditioned by the seriousness of the delay that might occur. Anything that delays project completion will also delay the start of manufacturing, rental of a building etc., and hence delay the return on investment. Crashing the network, or shortening the duration by replanning, comes in handy in such cases. This can be achieved by more money, more risk, and more intelligence. Normal cost and normal time are obtained when working at normal rate. Crash time and crash costs are obtained as a result of increased resource availability at an increased cost. In any project, there will be an overhead cost incurred at any stage to which the project has progressed. Then there is the direct cost associated with the performance of a particular activity. As long as the direct cost per day is greater than the overhead cost per day, it is not rational to reduce the duration of the project. The critical path is the longest path determining the project duration. Therefore, if the project duration has to be shortened, activities on the critical path have to be completed quicker. This can be achieved by buying time on the activities on the critical path. In actual practice, when such a situation arises the project manager would have to go back to the people responsible for various activities and obtain from them what would be the practical minimum duration for performing each activity and what would be the associated increase in cost. This shortest time and cost are referred to as crash duration and crash cost . With the help of crash duration, crash cost, normal time and normal cost, one can obtain the rate of increase in cost for a unit decrease in time through expediting activities. SLOPE= crash cost per week To compute a cost/week slope for each activity that can be expedited (crashed), slope is defined as follows: slope= crash cost- normal cost/ crash time-normal time i.e., the cost per duration of crashing a project. The slope is negative, indicating that as the time required for a project or task is decreased, the cost is increased. Time-cost relationship: y y y 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.

Resource allocation problemA short coming of the scheduling procedures is that they do not address the issues of resource utilization and availability. The focus is on time rather than physical resources. Individual types

of labour, specific facilities, kinds of materials, individual pieces of equipment and other discrete inputs that are relevant to an individual project but are limited in availability must be referred. Time itself is always a critical resource in project management, one that is unique because it can neither be inventoried nor renewed. Schedules should be evaluated not merely in terms of meeting the project milestones, but also in terms of the timing and use of scarce resources. A fundamental measure of the project manager s success in the project management is the continuous process of cost benefit analysis. Occasionally, it is possible that some additional (useful) resources can be added at little or no cost to the project during a crisis period. At other times, some resources in abundant supply may be traded for scarce resources. The project must be finished by a certain time, using as few resources as possible. But it is time, not resource usage that is critical. Resource limitedThe project must be finished as soon as possible, but without exceeding some specific level of resource usage or some general resource constraint. It may be that one or more tasks in a project are system constrained. A system constrain task requires a fixed amount of time and known quantities of resource. Resource loadingResource loading describes the amounts of individual resources and existing schedule requirements during specific time periods. Therefore, it is irrelevant whether a single work unit or several projects are considered. The loads (requirements) of each resource type are simply listed as a function of time period. Resource loading gives a general understanding of the demands of a project or set of projects on firm s resources. Regardless of the specific techniques used to reduce the demands it is also a first step in attempting to reduce excessive demands on certain resources. If resources of a project are increased by 10%, the output of the project usually does not increase by 10% and the time required for the project does not decrease by same amount. The output and the time may not change at all or may change by an amount seemingly not related to 10%. Due to disruptions, emergencies, maintenance requirements, personnel issues and simple inefficiency of any resource that is scheduled for full production over an extended time period etc. there can be unexpected delays for multiple reasons, hence the admonition to never schedule for more than 85-90% of its capacity. Resource leveling-

Resource leveling aims to minimize the period by period variations in resource loading by shifting tasks within their slack allowances. The purpose is to create a smoother distribution of resource usage. Any form of network analysis in which scheduling decisions start and finish dates are driven by resource management concerns (e.g. limited resource availability or difficult to manage changes in resource levels). Resource leveling often results in project duration that is longer than the preliminary schedule. The technique is sometimes called as resource based method especially when implemented with computerized optimization. Resource leveling may have a significant impact on the preliminary estimates of resource requirements. Resource Constrain SchedulingResource constrain scheduling is a special case of resource leveling where requirements involved are limitations on the quantity of resources available. Thus, resource leveling is creating project schedule based on the resource availability. It is usually applied to the project where the CPM is already been applied.

THE PLANNING, MONITORING AND CONTROLLING CYCLE:

The purpose of project monitoring and controlling is to provide an understanding of and communicate the project s progress, thus identifying when the project s performance deviates significantly from the plan so that appropriate corrective actions and preventive actions are taken. Project activity monitoring is an aspect of project management that is performed throughout the project. Controlling is the aspect wherein corrective and preventive actions are taken. It is the Project Manager who must ensure that the monitor and control process is effectively executed. Effective execution of the project monitoring and controlling process leads to successful project delivery. The key things to be planned, monitored and controlled are time (schedule), cost (budget) and

performance (specifications). These encompass the fundamental objectives of the project. The planning (budgeting and scheduling) methods significantly reduce the extent and cost of poor performance and time/cost overruns. It does not guarantee a trouble free project, but merely declines in the risk of failure. It is useful to perceive the control process as a closed loop system, with revise plans and schedules (if warranted) following corrective actions. It is also useful to construct this process as an internal part of the organizational structure of the project, not something external and imposed on it or worst, in conflict with it. Although project monitoring & control in project management are the focus of this article, there are actually five primary process groups in project management: Initiating, Planning, Executing, Monitoring and Controlling and Closing. There is an integrative nature, referred to as plan-do-act-check, that underlies these processes. The Planning process corresponds to the plan component. The Executing process corresponds to the do component. The Monitoring and Controlling process corresponds to the check-act component. The Initiating process starts the plan-do-act-check cycles. The Closing process ends them. It is the integrative nature of project management which requires that the Monitoring and Controlling process interact with every aspect of the other process groups. Designing Monitoring SystemThe first step in setting up any monitoring system is to identify the key factors to be controlled. Project manager should define precisely which specific characteristics of performance cost and time should be controlled and then establish exact boundaries within which control should be maintained. Best sources of items to be monitored are the project action plan and the risk management plan. The action plan describes what is being done, when and the planned level of resource usage for each task, work package and work element in the project. Monitoring the risks found in the risk management plan keeps the project manager and project teak alert to specific risks. Collection of Data A large proportion of all data collected takes one of the following forms, each of which is suitable for some types of measures. y Frequency counts A simple tally of the occurrence of an event. This type of measure is often used for complaints , number of times a project report is late, days without accident , bugs in a computer program and similar items. The data are usually easy to collect and are often reported as events per unit time or events as a percentage of a standard number. Raw Numbers

Dates, currency, hours, physical amounts of resources used and specification are usually reported in this way. These numbers are reported in a wide variety of ways, but often as direct comparisons with an expected or standard number. Also, variance are commonly reported either as the difference between actual and standard or as the ratio of actual to standard. Differences or ratios can also be plotted as a time series to show changes in system performance. When collecting raw project data, it is important to make sure that all data are collected from sources that operate on the same time intervals and with the same rules for data collection. Subjective Numeric Rating These numbers are subjective estimates, usually of quality, made by a knowledgeable individuals or groups. They can be reported in most of the same ways that objective raw numbers are; but care should be taken to make sure that the numbers are not manipulated in ways only suitable for quantitative measures. Indicators When the project manager is not able to measure some aspect of system performance directly, it may be possible to find an indirect measure or indicator. The speed with which change orders are processed and changes are incorporated into the project is often a good measure of team efficiency. Response to change may also be an indicator of the quality of communications on the project team. When using indicators to measure performance, the project manager must make sure that the link between the indicator and the desired performance measure is as direct as possible.

Verbal Measures Measures for such performance characteristics as quality of team member cooperation , moral of team members , or quality of interaction with the client , frequently take the form of verbal characteristics. As long as the set of characteristics is limited and the means of the individual terms consistently understood by all, these data serves the purpose reasonably. After data collection has been completed, reports on project progress should be generated. These include project status reports, time/cost reports and variance reports among others. Causes and effects should be identified and trends noted. Plans, charts and tables should be updated on a timely basis.

Information needs and Reporting ProcessEveryone concerned with the project should be appropriately tied into the project reporting system. The monitoring system ought to be constructed so that it addresses every level of

managements, but reports need not be of the same depth or at the same frequency for each level. Report should contain data that is relevant to the control of specific tasks that are being carried out according to a specific schedule. The nature of the monitoring reports should be consistent with the logic of planning, budgeting and scheduling systems. The primary purpose is to ensure achievement of the project plan through control. There are many benefits of the detailed timely reports delivered to the proper people. Some of the benefits are listed below: y y y y y y y y y Understanding of goals of the project by all stakeholders. Awareness of the progress of the parallel activities, problems and constraints associated with co-ordination among activities. Realistic planning for the needs of all groups and individuals working on the project. Understanding the relationships of individual task to one another and to the overall project. Early warning signals of potential problems and delays in the project. Minimizing the confusion associated with change by reducing delays in communicating the change. Faster management action in response to unacceptable or in appropriate work. Higher visibility to top management, including attention directed to the immediate needs of the project. Keeping the client and other interested, outside parties up-to-date on project status, particularly regarding project cost, milestones and deliverables.

Earned Value Analysis Current performance is the best indicator of future performance, and therefore using trend data, it is possible to forecast cost or schedule overruns at an early stage in a project. The most comprehensive trend analysis technique is the Earned Value method. In a nutshell, Earned Value is an approach where you monitor the project plan, actual work, and work-completed value to see if a project is on track. Earned Value shows how much of the budget and time should have been spent, with regard to the amount of work done so far. Earned Value differs from the usual budget verses actual costs incurred model, in that it requires the cost of work in progress to be quantified. This allows the project manager to compare how much work has been completed, against how much he expected to be completed at a given point. The project manager needs to agree the project scope, create a Work Breakdown Structure (WBS) and assign budget to each work package , the lowest level of the WBS. Next he or she will create a schedule showing the calendar time it will take to complete the work. This overall plan is base lined (this is the planned value) and used to measure performance throughout the

project. As each work package is completed (earned) it is compared with planned value, showing the work achieved against plan. A variance to the plan is recorded as a time or schedule deviation. It is necessary to get the actual costs incurred for the project from the organization s accounting system. This cost is compared with the earned value to show an overrun or under run. Earned Value provides the project manager with an objective way of measuring performance and predicting future outcomes. This can enable him or her to report progress with greater confidence and highlight any overrun earlier. This in turn, enables the management team to make cost and time allocation decisions earlier than would otherwise be the case. It is true that past performance is a good indicator of future performance. Earned Value is a useful tool for predicting the outcome of projects in terms of time to completion, cost to completion and expected final costs. Earned Value is also known as Performance Measurement, Management by Objectives, Budgeted Cost of Work Performed and Cost Schedule Control Systems. Earned Value Analysis leverages the Earned Value Fundamental Formulae (BAC, Actual Cost, Planned Value, and Earned Value) to determine the project performance indices pertaining to project cost and schedule. Earned value is part of the Control Costs process group in Project Cost Management. Earned Value Performance formulae consist of:
y

Cost Performance Index (CPI index): Represents the amount of work is being completed on a project for every unit of cost spent. CPI is computed by EV / AC. A value of above 1 means that the project is doing well against the budget. Schedule Performance Index (SPI index): Represents how close actual work is being completed compared to the schedule. SPI is computed by EV / PV. A value of above one means that the project is doing well against the schedule.

Example Suppose one has a budgeted cost of a project at $900,000. The project is to be completed in 9 months. After a month, one has completed 10 % of the project at a total expense of $100,000. The planned completion should have been 15 %. Now, let s see how healthy the project is by computing the CPI index and SPI index. From the scenario, you can extract the following:
y y

BAC = $900,000 AC = $100,000

The Planned Value (PV) and Earned Value (EV) can then be computed as follows:
y y

Planned Value = Planned Completion (%) * BAC = 15 % * $ 900,000 = $ 135,000 Earned Value = Actual Completion (%) * BAC = 10 % * $ 900,000 = $ 90,000

Compute the earned value variances:

y y

Cost Performance Index (CPI index) = EV / AC = $90,000 / $100,000 = 0.90. This means for every $1 spent, the project is producing only 90 cents in work. Schedule Performance Index (SPI index) = EV / PV = $90,000 / $135,000 = 0.67. This means for every estimated hour of work, the project team is completing only 0.67 hours (approximately 40 minutes).

Interpretation: Since both Cost Performance Index (CPI index) and Schedule Performance Index (SPI index) are less than 1, it means that the project is over-budget and behind schedule. This indicates that the project is in major trouble and corrective action needs to be taken. Risks management needs to kick-in. Types of control

Control is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. Purposes of Control y There are two fundamental objectives of control: The regulation of results through the alteration of activities The stewardship of organizational assets The project manager needs to be equally attentive to both regulation and conservation. The project manager must guard the physical assets of the organization, its human resources, and its financial resources. Control is the last element in the implementation cycle of planningmonitoring-controlling. Control is focused on three elements of a project y y y Performance Cost Time

Physical Assets Control It requires control of the use of physical assets. It is concerned with asset maintenance, whether preventive or corrective. Also the timing of maintenance or replacement as well as the quality of maintenance. Setting up maintenance schedules in such a way as to keep the equipment in operating condition while minimizing interference to ongoing work. Physical inventory whether equipment or material must also be controlled.

Human Resource Control Stewardship of human resources requires controlling and maintaining the growth and development of people. Projects provide fertile ground for cultivating people, because projects are unique, it is possible for people working on projects to gain a wide range of experience in a reasonably short period of time

Financial Resource Control The techniques of financial control, both conservation and regulation, are well known: Current asset controls, Project budgets, Capital investment controls. These controls are exercised through a series of analyses and audits conducted by the accounting/controller function. Representation of the accounting/controlling function on the project team is mandatory. The parent organization is responsible for the conservation and proper use of resources owned by the client or charged to the client. Due diligence requires that the organization proposing a project conduct a reasonable investigation, verification, and disclosure of all material facts relevant to the firm s ability to conduct the project

Basic System RequirementsThe project manager/controller is aware of the system s full capabilities. For complex systems, particularly those containing a human element, is next to impossible. Thus, a strategy to aid the project manager in developing the control system is needed. An example of such strategy is to use cost/benefit approach to control those aspects of the system for which the expected benefits of control are greater than the expected cost. An examination of the WBS or the details of an action plan will reveal which of the project s tasks are largely mechanical and represent continuous types of systems. If such systems exist and if they operate across a sufficient time period to justify the initial expense of creating an automatic control, then monitoring the process by its course method is useful. y y y The project manager must define precisely what characteristics of an output (interim output or final output) are to be controlled. Standards must be set for each characteristic. Sensor must be acquired that will measure those characteristics at the desired level of precision.

y y y

These measurements must be transformed into a signal that can be compared to a standard signal. The difference between the two is sent to the decision maker, which detects it, if it is sufficiently large. It transmits a signal to the effecter that causes the system to react in a way that will counter act the deviation from standard. If the control system is designed to allow the effecter to allow one or more of several actions and additional piece of information is needed. There must be built-in criteria that instruct the effecter on which actions to take.

Knowledge of monitoring the process by its course is important because all control systems are merely variants, extensions or non automatic modifications of such controls. Three Types of Control Processes No matter what the purpose in controlling a project there are three basic types of control mechanisms that can be used: y y y Monitoring the process by its course Go/no-go control Post control mechanism

Monitoring the process by its course/cybernetic controlMonitoring the process by its course or steering control is by far the most common type of control system. The key feature of the cybernetic control is its automatic operation. This system acts to reduce deviations from standard, which is called a negative feedback loop. If the system output moves away from standard in one direction, the control mechanism acts to move it in the opposite direction. The speed or force with which the control operates is in general, proportional to the size of the deviation from standard. This control is available in three types or orders differing in the sophistication with which standards are set: y The first order control systemIn this system the standard is set and there is no provision made for altering it except external intervention. y The second order control systemThese devices can alter the system standards according to some predetermined set of rules or programs. The complexity of second order systems can vary widely. As interactive computer program may alter its responses according to a complex set of preprogrammed instructions, however, it still is a second order system

The third order control systemThis system can change its goals without specific pre-programming. Based on the system performance and outcome of the process, it can take decision to act in ways that are not contained in its instructions. This system therefore requires human intervention. An advantage of third order controllers is that they can deal with the unforeseen and unexpected situations. A disadvantage is that, because they contain human elements, they may lack predictability and reliability

Go/no-go controlThis control takes the form of testing to see if some specific precondition has been met. Most of the control in project management falls into this category. This type of control can be used on almost every aspect of a project. Must exercise judgment in the use of go/no-go controls. Go/no-go controls operate only when and if the controller uses them. Information Requirements: y y y The project proposal, plans specifications, schedules and budgets contain all the information needed to apply go/no-go controls to the project Milestones are the key events that serve as a focus for ongoing control activity These milestones are the project s deliverables in the form of in-process output or final output

Unless deviation from plan is discovered it cannot be corrected. Rather than waiting until the project is completed and then finding out that it doesn t achieve the objectives of the organization, the phase gate process controls the project at various points throughout its life cycle to make sure it remains on course and of value to the organization. This process is most commonly used for new product or service development projects where it is important to constantly evaluate the match between the changing, dynamic market and changing nature of the new product or service under development. Response to go/no-go controls tends to be neutral or negative. Barely good enough results are just as acceptable as perfect results. The system makes it difficult for the worker to take pride in high quality work because the system does not recognize gradations of quality. The fact that this kind of control emphasizes good enough performance is no excuse for the nonchalant application of careless standards Post controls Also known as post performance reviews which are applied after the fact. These are directed towards improving the chances for future projects to meet their goals. It is applied through a relatively formal document that contains four distinct sections: y The project objectives-

Post control report will contain a description of the objectives of the project. Usually this description is taken from the project proposal, and the entire proposal often appears as an appendix to the post control report. Project objectives include the effects of all change orders issued and approved during the project. y Milestones, checkpoints, and budgetsThis section of the post control document starts with a full report of project performance against the planned schedule and budget. This can be prepared by combining and editing the various project status reports, made during the projects life cycle. Significant deviations from the actual schedule and budget schedule should be highlighted. y The final report on projectWhen significant variations of actual from planned performance are indicated no distinction is made between favorable or unfavorable variations. y Recommendations for performance and process improvementThe culmination of the post control report is a set of recommendations covering the ways that future projects can be improved. Post controls can have a considerable impact on the way projects are run. Post controls are seen as much the same as a report card. They may serve as the basis for reward or punishment, but they are received too late to change current performance. Because post controls are placed on the process of conducting a project, they may be applied to such areas as: communication, cooperation, quality of project management, and the nature of interaction with the client