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Chapter 11: Project Management 1

Chapter 11: Project


Management
Chapter 11: Project Management 2
Introduction
Chapter 11: Project Management 3
Previous Examples of Projects
Transporting Olympic Flame (Chapter 1)
Mercedes-Benz facility location (Chapter 5)
Chapter 11: Project Management 4
Viper Development Project
Project team given 3 years to go from
concept to roadster.
Needed to develop new 8.0-litter V-10
aluminum engine and new high
performance six-speed transmission.
Comparable projects usually require five
years at Chrysler.
Chapter 11: Project Management 5
Viper Development Project cont
Project team members hand-picked.
Artemis Prestige selected to help
manage project
ability to track several projects
concurrently
interactive use
provide broad picture of entire project
help identify the impact of each activity on
the ultimate completion of the project
Chapter 11: Project Management 6
Viper Development Project: An
Overwhelming Success
First test engine required less than a
year to develop.
Transmission developed in 1.5 years
compared to the usual 5 to 6 years.
Many important innovations in the
frame, body, and brakes were
incorporated .
Chapter 11: Project Management 7
Zeneca Pharmaceuticals
Mission is the development of new
drugs for the medical community.
The development of a new drug is a
complex project with typical durations
of 10 years.
Chapter 11: Project Management 8
Zeneca Pharmaceuticals: Major Steps
in Drug Development
Preclinical Testing
Investigational New Drug
Human Clinical Testing
three separate phases
New Drug Application
Approval

Chapter 11: Project Management 9
Differences Between Pharmaceutical
R&D Projects and Other Industries
Final product is information rather than
a physical product.
Long duration, extreme costs, and high
chances for failure.
Chapter 11: Project Management 10
Background
Project management concerned with
managing organizational activities.
Often used to integrate and coordinate
diverse activities.
Projects are special types of
processes.
Chapter 11: Project Management 11
Defining a Project
Projects are processes that are
performed infrequently and ad hoc,
with a clear specification of the desired
objective.

Chapter 11: Project Management 12
Examples of Projects
Constructing highways,
bridges, tunnels and dams
Erecting skyscrapers, steel
mills, and homes
Organizing conferences
and conventions
Managing R&D projects
Running political
campaigns, war
operations, and advertising
campaigns
Chapter 11: Project Management 13
Reasons for Growth in Project
Operations
More Sophisticated
Technology
Better-Educated
Citizens
More Leisure Time
Increased
Accountability
Higher Productivity
Faster Response to
Customers
Greater customization
for customers
Chapter 11: Project Management 14
Planning the Project
Chapter 11: Project Management 15
Life Cycle of a Project (Stretched-S) &
(Exponential)
Chapter 11: Project Management 16
Organizing the Project Team
Ad Hoc Project Form
Weak Functional Matrix
Strong Project Matrix

Chapter 11: Project Management 17
Types of Project Team Members
Those having a long-term relationship
with the project.
Those that the PM will need to
communicate with closely.
Those with rare skills necessary to
project success.
Chapter 11: Project Management 18
Project Plans
Chapter 11: Project Management 19
Work Breakdown Structure
Chapter 11: Project Management 20
Project Master Schedule
Chapter 11: Project Management 21
Complexity of Scheduling Project
Activities
Large number of activities
Precedence relationships
Limited time of the project
Chapter 11: Project Management 22
Planning and Scheduling Projects
Planning. Determining what must be
done and which tasks must precede
others.
Scheduling. Determining when the
tasks must be completed; when they
can and when they must be started;
which tasks are critical to the timely
completion of the project; and which
tasks have slack and how much.
Chapter 11: Project Management 23
Scheduling the Project: PERT
and CPM
Chapter 11: Project Management 24
Terminology
Activity
Event
Network
Path
Critical Path
Critical Activities

Chapter 11: Project Management 25
Project Planning When Activity Times
are Known
Inputs
list of the activities that must be completed
activity completion times
activity precedence relationships
Chapter 11: Project Management 26
Project Planning When Activity Times
are Known continued
Outputs
graphical representation of project
time to complete project
identification of critical path(s) and activities
activity and path slack
earliest and latest time each activity can be
started
earliest and latest time each activity can be
completed
Chapter 11: Project Management 27
Example
Activity Time Preceded By
A 10 --
B 7 --
C 5 A
D 13 A
E 4 B,C
F 12 D
G 14 E
Chapter 11: Project Management 28
Network Diagram
Chapter 11: Project Management 29
Early Start and Finish Times

Chapter 11: Project Management 30
Latest Start and Finish Times
Chapter 11: Project Management 31
Activity Slack Time
T
ES
= earliest start time for activity
T
LS
= latest start time for activity
T
EF
= earliest finish time for activity
T
LF
= latest finish time for activity

Activity Slack = T
LS
- T
ES
= T
LF
- T
EF

Chapter 11: Project Management 32
Path Slack


Duration of Critical Path
- Path Duration
Path Slack
Chapter 11: Project Management 33
Activity Slack Times
Activity ES EF LS LF Slack
A 0 10 0 10 0
B 0 7 10 17 10
C 10 15 12 17 2
D 10 23 10 23 0
E 15 19 17 21 2
F 23 35 23 35 0
G 19 33 21 35 2


Chapter 11: Project Management 34
Project Planning When Activity
Times are Uncertain
Inputs
Optimistic (t
o
), most likely (t
m
), and pessimistic
(t
p
) time estimate for each activity
activity precedence relationships
Outputs
graphical representation of project
expected activity and path completion times
variance of activity and path completion times
probability that project completed by specified
time
Chapter 11: Project Management 35
Expected Activity Time and Variance
of Activity Time
t
t t t
t t
e
o m p
p o
=
+ +
=

|
\

|
.
|
4
6
6
2
2
o
Chapter 11: Project Management 36
Example
Activity Preceded By t
o
t
m
t
p
t
e

o
2

A -- 2 6 7 5.50 .694
B -- 5 7 9 7.00 .444
C A 3 5 6 4.83 .250
D A 10 10 10 10.0 0.000
E B,C 3 4 5 4.0 .111
F D 8 12 13 11.5 .694
G E 2 4 8 4.33 1.000


Chapter 11: Project Management 37
Network Diagram with Expected
Activity Times and Variances
1
2
3
4
5
6
[5.5,
0.694]
[7.0,
0.444]
[4.83,
0.250]
[10, 0.0]
[4.0,
0.111]
[4.33, 1.0]
[11.5, 0.913]
A
B
C
D
E
F
G
Chapter 11: Project Management 38
Expected Completion Time and
Variance of Path A-D-F

Expected completion time = 5.5 + 10 + 11.5=27


Path Variance = 0.694 + 0 + 0.913 = 1.607
Chapter 11: Project Management 39
Path Expected Times and Variances
Path
Expected
Time Variance
Standard
Deviation
A-D-F 27 1.607 1.27
A-C-E-G 14.66 2.055 1.43
B-E-G 15.33 1.555 1.25
Chapter 11: Project Management 40
Probabilities of Completion
V
time completion expected - time completion desired
= z
Chapter 11: Project Management 41
Probability of Project Being Completed
on or Before Time 25
z =

=
25 27
127
157
.
.
Only path A-D-F has reasonable
chance of taking 25 or more:
From standard normal table in Appendix A,
there is a 5.82% chance of completing
project on or before time 25.
Chapter 11: Project Management 42
Probability of Path A-D-F being
Completed on or Before Time 25
5.82%
Chapter 11: Project Management 43
Plan E Project Operations Network
Chapter 11: Project Management 44
Proper Use of Dummy Activities
Chapter 11: Project Management 45
Activity Expected Times and Variances
Chapter 11: Project Management 46
Simulating Project Completion Times
with Spreadsheets


A
B
C
D
E
F
Chapter 11: Project Management 47
Simulating Project Completion Times
Activity Mean (days)
Standard
Deviation
A 32.1 1.2
B 24.6 3.1
C 22.2 2.2
D 26.1 5.2
E 34.4 6.2
F 34.5 4.1
Chapter 11: Project Management 48
Activity Activity Activity Activity Activity Activity Path1 Path 2 Path 3 Project
A B C D E F (A-C-F) (B-D-F) (B-E) Finish Time
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
Minimum 0.00 0.00 0.00 0.00
Maximum 0.00 0.00 0.00 0.00
Chapter 11: Project Management 49
Chapter 11: Project Management 50
Project Management Software
Capabilities
Chapter 11: Project Management 51
Microsoft Projects Gantt Chart
Chapter 11: Project Management 52
Pert Chart Generated by Microsoft
Project
Chapter 11: Project Management 53
Calendar of Activities Created by
Microsoft Project
Chapter 11: Project Management 54
Controlling the Project: Cost
and Performance
Chapter 11: Project Management 55
Variance Report
Cost standard determined using engineering
estimates or analysis of past performance
Actual cost monitored and compared with
cost standard
Project manager can exert control if
difference between standard and actual
(called a variance) is considered significant.
Chapter 11: Project Management 56
Cost-Schedule Reconciliation Charts
Chapter 11: Project Management 57
Earned Value Chart
Chapter 11: Project Management 58
Goldratts Critical Chain
Chapter 11: Project Management 59
Introduction
Similar issues that trouble people about
working on projects regardless of type of
project
unrealistic due dates
too many changes
resources and data not available
unrealistic budget
These issues/problems related to need to make
trade-offs
To what extent are these problems caused by
human decisions and practices?
Chapter 11: Project Management 60
Three Project Scenarios
Chapter 11: Project Management 61
Project Completion Time Statistics
Chapter 11: Project Management 62
Observations
Average Completion Times
Implications of Assuming Known
Activity Times
Shape of the Distribution
Worker Time Estimates
Impact of Inflated Time Estimates
Student Syndrome
Chapter 11: Project Management 63
Multitasking
Chapter 11: Project Management 64
Alternative Gantt Charts for Projects A and B
Chapter 11: Project Management 65
Common Chain of Events
Underestimate time needed to
complete project
assumption of known activity times and
independent paths
Project team members inflate time
estimates
Work fills available time
student syndrome
early completions not reported
Chapter 11: Project Management 66
Common Chain of Events continued
Safety time misused
Misused safety time results in missed
deadlines
Hidden safety time complicates task of
prioritizing project activities
Lack of clear priorities results in poor
multitasking
Chapter 11: Project Management 67
Common Chain of Events concluded
Poor multitasking increases task
durations
Uneven demand on resources also
results due to poor multitasking
More projects undertaken to ensure all
resources fully utilized
More projects further increases poor
multitasking
Chapter 11: Project Management 68
Reversing the Cycle
Reduce number of projects assigned to
each individual
Schedule start of new projects based on
availability of bottleneck resources
Reduce amount of safety time added to
individual tasks and then add some fraction
back as project buffer
activity durations set so that there is a high
probability the task will not be finished on time
Chapter 11: Project Management 69
The Critical Chain
Longest chain of consecutively
dependent events
considers both precedence relationships
and resource dependencies
Project Buffer
Feeding Buffer
Chapter 11: Project Management 70
Sample Network Diagram
Chapter 11: Project Management 71
Project and Feeder Buffers
Chapter 11: Project Management 72
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