Project Management

Chapter 11: Project
Management
Chapter 11: Project Management
Introduction
Previous Examples of Projects
Transporting Olympic Flame (Chapter 1)

Mercedes-Benz facility location (Chapter 5)
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.
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
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 .
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.
Zeneca Pharmaceuticals: Major

Steps in Drug Development
Preclinical Testing
Investigational New Drug
Human Clinical Testing
three separate phases
New Drug Application

Approval
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.
Background
Project management concerned with

managing organizational activities.
Often used to integrate and coordinate
diverse activities.
Projects are special types of
processes.
10
Defining a Project
Projects are processes that are

performed infrequently and ad hoc,
with a clear specification of the desired
objective.
11
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
12
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
13
Planning the Project
14
Life Cycle of a Project (Stretched-S) &

(Exponential)
15
Organizing the Project Team
Ad Hoc Project Form

Weak Functional Matrix
Strong Project Matrix
16
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.
17
Project Plans
18
Work Breakdown Structure
19
Project Master Schedule
20
Complexity of Scheduling Project

Activities
Large number of activities

Precedence relationships
Limited time of the project
21
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.
22
Scheduling the Project: PERT

and CPM
23
Terminology
Activity
Event
Network
Path
Critical Path
Critical Activities
24
Project Planning When Activity Times

are Known
Inputs
list of the activities that must be completed

activity completion times
activity precedence relationships
25
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
26
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
27
Network Diagram
28
Early Start and Finish Times
29
Latest Start and Finish Times
30
Activity Slack Time

TES = earliest start time for activity
TLS = latest start time for activity
TEF = earliest finish time for activity
TLF = latest finish time for activity
Activity Slack = TLS - TES = TLF - TEF
31
Path Slack
Duration of Critical Path

- Path Duration
Path Slack
32
Activity Slack Times
33
Project Planning When Activity

Times are Uncertain
Inputs
Optimistic (to), most likely (tm), and pessimistic (tp)

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
34
Expected Activity Time and Variance

of Activity Time
te
t o 4t m t p
6
t p to

35
Example
36
Network Diagram with Expected

Activity Times and Variances
[5.5,
0.694]
1
[7.0,
0.444]
A
B
2 [10, 0.0]
[11.5, 0.913]
C [4.83,
0.250]
6
E
G
[4.33, 1.0]
[4.0,
0.111]
37
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
38
Path Expected Times and Variances
Path
Expected
Standard
Time
Variance 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
39
Probabilities of Completion
desired completion time - expected completion time

z
V
40
Probability of Project Being Completed

on or Before Time 25
Only path A-D-F has reasonable
chance of taking 25 or more:
25 27
z
157
.
1.27
From standard normal table in Appendix A,
there is a 5.82% chance of completing
project on or before time 25.
41
Probability of Path A-D-F being

Completed on or Before Time 25
5.82%
42
Plan E Project Operations Network
43
Proper Use of Dummy Activities
44
Activity Expected Times and Variances
45
Simulating Project Completion Times

with Spreadsheets
C
A
46
Simulating Project Completion Times
Activity
A
Mean (days)
32.1
Standard
Deviation
1.2
24.6
3.1
22.2
2.2
26.1
5.2
34.4
6.2
34.5
4.1
47
Activity Activity Activity Activity Activity

A
B
C
D
E
Activity
F
Minimum
Maximum
Path1 Path 2
(A-C-F) (B-D-F)
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Chapter 11: Project
Path 3
(B-E)
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Project
Finish Time
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48
Chapter 11: Project
49
Project Management Software

Capabilities
50
Microsoft Projects Gantt Chart
51
Pert Chart Generated by Microsoft

Project
52
Calendar of Activities Created by

Microsoft Project
53
Controlling the Project: Cost

and Performance
54
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.
55
Cost-Schedule Reconciliation Charts
56
Earned Value Chart
57
Goldratts Critical Chain
58
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?
59
Three Project Scenarios
60
Project Completion Time Statistics
61
Observations
Average Completion Times

Implications of Assuming Known
Activity Times
Shape of the Distribution
Worker Time Estimates
Impact of Inflated Time Estimates
Student Syndrome
62
Multitasking
63
Alternative Gantt Charts for Projects A and B
64
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
65
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
66
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
67
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
68
The Critical Chain
Longest chain of consecutively

dependent events
considers both precedence relationships

and resource dependencies
Project Buffer
Feeding Buffer
69
Sample Network Diagram
70
Project and Feeder Buffers
71
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72

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Chapter 11: Project

Chapter 11: Project Management

Chapter 11: Project Management

Previous Examples of Projects

Transporting Olympic Flame (Chapter 1)

Chapter 11: Project Management

Viper Development Project

Project team given 3 years to go from

Needed to develop new 8.0-litter V-10

Chapter 11: Project Management

Viper Development Project cont

Project team members hand-picked.

ability to track several projects concurrently

Viper Development Project: An

First test engine required less than a

Mission is the development of new

Chapter 11: Project Management

Zeneca Pharmaceuticals: Major

three separate phases

New Drug Application

Differences Between Pharmaceutical

Final product is information rather than

Chapter 11: Project Management