Stevenson
17
Project
Management
Learning Objectives
Discuss the behavioral aspects of projects
in terms of project personnel and the
project manager.
Discuss the nature and importance of a
work breakdown structure in project
management.
Give a general description of PERT/CPM
techniques.
Construct simple network diagrams.
17-2
Learning Objectives
List the kinds of information that a PERT or
CPM analysis can provide.
Activity Scheduling
Analyze networks with deterministic times.
Analyze networks with probabilistic times.
Describe activity “crashing.
17-3
Projects
JAN FEB MAR APR MAY JUN
Build A
A Done
Build B
B Done
Build C
C Done
On time!
Build D
Ship
Unique, one-time operations designed to
accomplish a specific set of objectives in a
limited time frame.
17-4
Project Management
How is it different?
Limited time frame
Narrow focus, specific objectives
Less bureaucratic
Why is it used?
Special needs
Pressures for new or improves products or
services
17-5
Project Management
What are the Key Metrics
Time
Cost
Performance objectives
What are the Key Success Factors?
Top-down commitment
Having a capable project manager
Having time to plan
Careful tracking and control
Good communications
17-6
Project Life Cycle
17-7
Project Management
What are the Major Administrative Issues?
Executive responsibilities
Project selection
Project manager selection
Organizational structure
Organizational alternatives
Manage within functional unit
Assign a coordinator
Use a matrix organization with a project leader
17-8
Key Decisions
Deciding which projects to implement
Selecting a project manager
Selecting a project team
Planning and designing the project
Managing and controlling project
resources
Deciding if and when a project should be
terminated
17-9
Project Manager
Responsible for:
Work Quality
Human Resources Time
Communications Costs
17-10
Project Management
What are the tools?
Work breakdown structure
Gantt charts
Network diagram
Risk management
17-11
Work Breakdown Structure
A hierarchical listing of what must be done during a project.
Level 1: The Project
Level 2: Identify the major elements of the Project
Level 3: Identify the major supporting activities for each of
the major elements
Level 4: Each major supporting activity is broken down into
a list of the activities that will be needed to accomplish it
17-12
Work Breakdown Structure
17-13
Gantt Chart
A popular tool for planning and scheduling simple
projects, and for initial planning for more complex
projects
Graph or bar chart
Bars represent the time for each task
Bars also indicate status of tasks
Provides visual display of project schedule
Closely associated with PERT
Slack
amount of time an activity can be delayed without delaying
the project
17-14
Planning and Scheduling
Gantt Chart MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Locate new
facilities
Interview staff
Hire and train staff
Select and order
furniture
Remodel and install
phones
Move in/startup
17-15
Precedence Relationship
Activity Activity Activity
Activity Legend Predecessor Duration
Design house and obtain financing 1 - 3
Lay foundation 2 1 2
Order and receive material 3 1 1
Build house 4 2,3 3
Select Paint 5 2,3 1
Select Carpet 6 5 1
Finish work 7 4,6 1
17-16
Example of Gantt Chart
Month
0 | 2 | 4 | 6 | 8 | 10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials
Build house
Select paint
Select carpet
Finish work
1 3 5 7 9
Month
9-17
PERT and CPM
PERT: Program Evaluation and
Review Technique
CPM: Critical Path Method
Graphically displays project activities
Estimates how long the project will take
Indicates most critical activities
Show where delays will not affect project
17-18
The Network Diagram
Network (precedence) diagram – diagram of
project activities that shows sequential
relationships by the use of arrows and nodes.
Activity-on-arrow (AOA) – a network diagram
convention in which arrows designate activities.
Activity-on-node (AON) – a network diagram
convention in which nodes designate activities.
Activities – steps in the project that consume
resources and/or time.
Events – the starting and finishing of activities,
designated by nodes in the AOA convention. 17-19
The Network Diagram
(cont’d)
Path
Sequence of activities that leads from the starting
node to the finishing node
Critical path
The longest path; determines expected project
duration
Critical activities
Activities on the critical path
Slack
Allowable slippage for path; the difference the
length of path and the length of critical path
17-20
Project Network – Activity on
Arrow
Order
AOA furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move
in
Interview
Hire and
train
3
17-21
Project Network – Activity on
Node
Order
furniture
Locate Furniture
2 setup
facilities
AON
1 6
Move
Remodel
in
S 5 7
Hire and
Interview
train
3 4
17-22
AON Network for House
Building Project
Lay Build
foundation house
Activity Number
2 4
Activity Time
2 3
Start 1 7
3 1
Finish work
Design house 3 5 6
and obtain
1 1 1
financing
Order &receive Select Select
materials paint carpet
23
Critical Path
Activity Network (Scheduling) Diagrams are used to determine Critical Path.
2 4
2 3
Start 1 7
3 1
3 5 6
1 1 1
A: 1-2-4-7
3 + 2 + 3 + 1 = 9 months Critical path
B: 1-2-5-6-7 Longest path through a
3 + 2 + 1 + 1 + 1 = 8 months network
C: 1-3-4-7
3 + 1 + 3 + 1 = 8 months Minimum project
D: 1-3-5-6-7 completion time
3 + 1 + 1 + 1 + 1 = 7 months
24
Activity Start Times
Starts at 5 months
2 4
Starts at 8 months
2 3
Finishes at 9 months
Starts at 0
month
1 7
Start
Finish
3 1
3 5 6
1 1 1
Starts at 3 months Starts at 6 months
Why does Activity six start at 6 months?
Because Activity 5 must be completed
before activity 6, and activity 2 must be
completed before activity 5. 25
Node Configuration
Activity Earliest Earliest
number start (ES) finish (EF)
1 0 3
3 0 3
Activity Latest Latest
duration start (LS) finish (LF)
26
Activity Scheduling
Earliest start time (ES)
earliest time an activity can start
ES = maximum EF of immediate predecessors
Forward pass
starts at beginning of CPM/PERT network to
determine earliest activity times
Earliest finish time (EF)
earliest time an activity can finish
earliest start time plus activity duration
EF= ES + t
27
Earliest Activity Start and Finish Times
Lay
foundation Build
house
2 3 5
4 5 8 Finish
2
3 work
1 0 3 7 8 9
Start
3 1
Design
house and 6 6 7
obtain 3 3 4
1
financing 1 5 5 6
Select
Order and 1 carpet
receive
materials Select paint
28
Activity Scheduling
Latest start time (LS)
Latest time an activity can start without delaying
critical path time
LS= LF - t
Latest finish time (LF)
latest time an activity can be completed without
delaying critical path time
LF = minimum LS of immediate predecessors
Backward pass
Determines latest activity times by starting at the end
of CPM/PERT network and working forward
29
Latest Activity Start and Finish Times
Lay
foundation Build
house
2 3 5
4 5 8 Finish
2 3 5
3 work
5 8
1 0 3 7 8 9
Start
3 0 3 1 8 9
Design
house and 6 6 7
obtain 3 3 4
1 7 8
financing 1 4 5 5 5 6
Select
Order and 1 6 7 carpet
receive
materials Select paint
Question: Why is Activity 3’s LF 5?
30
Activity Scheduling
17-31
Activity Slack
Activity LS ES LF EF Slack
*1 0 0 3 3 0
*2 3 3 5 5 0
3 4 3 5 4 1
*4 5 5 8 8 0
5 6 5 7 6 1
6 7 6 8 7 1
*7 8 8 9 9 0
* Critical Path
Slack = LS – ES
or
Slack = LF – EF
Critical Path Items contain zero slack
32
Time Estimates
Deterministic
Time estimates that are fairly certain
Probabilistic
Estimates of times that allow for variation
17-33
Example 1
6 weeks
Deterministic 4
time estimates
3 weeks
8 weeks 2
11 weeks Move
in
1 5 6
1 week
4 weeks
9 weeks
17-34
Example 1 Solution: Deterministic
Critical Path
Path Length Slack
(weeks)
1-2-3-4-5-6 18 2
1-2-5-6 20 0
1-3-5-6 14 6
17-35
Probabilistic Time Estimates
Optimistic time
Time required under optimal conditions
Pessimistic time
Time required under worst conditions
Most likely time
Most probable length of time that will be
required
17-36
Time-cost Trade-offs: Crashing
Crash – shortening activity duration
Procedure for crashing
Crash the project one period at a time
Only an activity on the critical path
Crash the least expensive activity
Multiple critical paths: find the sum of
crashing the least expensive activity on
each critical path
17-37
Time-Cost Trade-Offs: Crashing
17-38
Project Crashing Example
Project costs are
$1000/day
2
f
4
d
17-39
Project Crashing Solution
1. Find the critical path:
2. Rank the critical path activities in order of
lowest crashing cost, and determine the
number of days that can be crashed
Normal time
– crash time
17-40
Project Crashing Solution
3. Crash the project, one day at a time. After
each crash, re-check the critical path.
a. Crash activity c one day for $300. Length of
critical path in now 19 days.
b. Activity c cannot be crashed any more (only had
1 day available for crashing).
c. Crash activity e one day for $600. Length of
critical path is now 18 days – same as path a-b-
f.
d. Both paths are now critical. We must shorten
both paths for further improvement
17-41
Project Crashing Solution
4. Remaining activities for crashing and costs:
5. Analysis:
a) Should we crash f? f is on both paths, and
crashing cost is $800 per day.
b) Alternatively, we may crash b ($500/day) and e
($600/day) to reduce 1 day. But the combined
cost is $1100.
17-42
Project Crashing Solution
6. Crash f. Project duration is now 17 days.
7. Analysis: can we crash any more activities?
Cost is crash b is $500 and cost to crash e
is $600, added together ($1100) exceeds
the project daily cost of $1000.
8. Conclusion: no more crashing is feasible.
9. Summary:
17-43
Advantages of PERT
Forces managers to organize
Provides graphic display of activities
Identifies
4
Critical activities 2
Slack activities 1 5 6
17-44
Limitations of PERT
Important activities may be omitted
Precedence relationships may not be
correct
4
Estimates may include 2
a fudge factor
May focus solely 1 5 6
on critical path
142 weeks
17-45
Project Management Software
Computer aided design (CAD)
Groupware (Lotus Notes)
CA Super Project
Harvard Total Manager
MS Project
Sure Track Project Manager
Time Line
17-46
Project Risk Management
Risk: occurrence of events that have
undesirable consequences
Delays
Increased costs
Inability to meet specifications
Project termination
17-47
Risk Management
Identify potential risks
Analyze and assess risks
Work to minimize occurrence of risk
Establish contingency plans
17-48
Summary
Projects are a unique set of activities
Projects go through life cycles
PERT and CPM are two common
techniques
Network diagrams
Project management software available
17-49
