Professional Documents
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PROJECT
MANAGEMENT
2 of 85 8.1 Forms of project organization
2. Divisional organization
4 Is a separate division with its own functional departments is set
up to implement a project.
The project manager has full line authority and total formal
control over the project.
Facilitates planning and control, brings about better integration
of efforts, and strengthens commitment of project personnel.
But it may entail inefficient use of resources-unnecessary
duplication of specialists.
3. Matrix organization
5 Designed to achieve efficient use of resources and effective
realization of project objectives
Project personnel are responsible to their functional supervisor
and project manager (dual responsibility)
Violates the unity of command rule
Implies greater organizational complexity and creates inherent
conflicts
Why a plan?
6 Used as a basis for organizing project activities and allocating
responsibilities to individuals
A means of communication and coordination between all those
involved in the project
Encourages people to look ahead
Instills a sense of urgency and time consciousness
Establishes the basis for monitoring and control
What do we plan?
7 The work
Manpower and organization
Financial resources
Information system
Project objectives
Must help in answering the following questions
What are the technical and performance objectives?
What are the time and cost goals?
To what extent should project work be sub-contracted? How many
contractors? Theand
Project Financing terms of contract?
Management-Project
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Management
8 of 85 8.2 Project Planning
Tools of planning
8Bar chart (Gantt chart)
Tools of planning
9Bar chart
Tools of planning
Network Techniques
10
Why control?
ensures regular monitoring of performance
11
Method of analysis…
16 Actual Cost of Work Performed(ACWP)
Budgeted Cost for Total Work (BCTW). Total budgeted cost for the
entire project
Additional Cost for Completion (ACC)
Given the above terms performance is evaluated as follows:
Cost Variance= BCWP-ACWP
Schedule Variance in Cost Terms = BCWP-BCWS
Cost Performance Index= BCWP/ACWP
Schedule Performance Index= BCWP/BCWS
Estimated Cost Performance Index = BCTW/(ACWP+ACC)
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Management
17 of 85 8.3 Project Control
Authority
20
to exercise leadership and influence, a PM has to
explain logic and rationale for activities rather
than giving orders
entertain the views and suggestions by others
avoid unilateral imposition of decisions
eschew dogmatic posture
Authority…
21
His authority stems from his:
ability to develop a rapport with project personnel
skill in resolving conflicts
professional reputation and
skills in communication and persuasion
Orientation
22 Strengthen managerial orientation of the project
rather than an engineering orientation.
Motivation
The project manager should understand that
humans are motivated by varieties of needs
pressure is counterproductive
people are motivated more when the goals are
challenging but attainable
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23 of 85 8.4 Human aspects of Project Management
Motivation…
23 expectation of reward rather than fear of
Group functioning
a project may comprise a vertical, horizontal,
or mixed groups
Group functioning…
an effective group can be established through
24
Example…
26
3. Administer entrance exam
4. Announce the result
5. Registration
Announ
ce r esult
a tion 3
tifi c Registr
no 4 a tion
Se nd
er
Administ 5
1 exam
Set en
trance
exam 2
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27 of 85 8.5 Network scheduling
X
28 No looping!
1 2
3 Dummy
Activity
1 2
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29 of 85
Time estimation
32
Three times values are obtained
Optimistic time-time if no complications arise
Most likely time-takes into account normal
delays
Pessimistic time-time required if unusual
complications arise
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33 of 85 8.5 Network scheduling
Average Time
33
Example: Project A
34 2 5 8
3 7
1
4 6
Event to tm tp Average
35 1-2 5 12 17 12
1-3 8 10 13 10
1-4 9 11 12 11
2-3 5 8 9 8
2-5 9 11 13 11
4-6 14 18 22 18
3-7 21 25 30 25
6-7 8 13 17 13
5-8 14 17 21 17
7-8 6 9 12 9
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36 of 85 8.5 Network scheduling
Example: Project A
5
17
36 2 8
11
8
12
9
10 3 7
1
25
11 13
4 18 6
9
10 3 7
1
20 25
45
11 13
4 18 6
11 29
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39 of 85 8.5 Network scheduling
9
10 3 7
1
25
20 45
0 11 13
4 18 6
14
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41 of 85 8.5 Network scheduling
9
10 3 7
1
20 20 25
45 45
0 0
11 13
4 18 6
11 29
14
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43 of 85 8.5 Network scheduling
Slack
Event LOT EOT (LOT-EOT)
43
1 0 0 0
2 12 12 0
3 20 20 0
4 14 11 3
5 37 23 14
6 32 29 3
7 45 45 0
8 54 54 0
Critical Path
5
17
44 2 8
12 12 11 23 37 54 54
8
12
9
10 3 7
1
20 20 25
45 45
0 0
11 13
4 18 6
11 29
14
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45 of 85 8.5 Network scheduling
47 Event to tp σ σ
2
1-2 5 17 2 4
2-3 5 9 0.67 0.44
3-7 21 30 1.5 2.25
7-8 6 12 1 1
Sum 7.69
Example
A small project consisting of eight activities has the following characteristics:
50
Required:
Draw the PERT network for the project.
Prepare the activity schedule for the project.
Determine the critical path.
If a 30- week deadline is imposed, what is the probability
that the project will be finished within the time limit?
If the project manager wants to 99% sure that the project
is completed on the schedule date, how many weeks
before that date should he start the project work?
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52 of 85
Solution:
The earliest time and variance of each activity is
computed by using the formula.
te= and =
The critical path of the project is 1-2-4-5 -6, critical activities being
A, D, G and H. The expected project length is the sum of duration
of each critical activity. Expected project length = 5 + 15 + 4 + 5 = 29
Sunday, April 21, 2024
Project Financing and Management-Project Management
weeks.
55 of 85
= 0.5 +
= 0.5 + 0.1591
= 0.6591
At (i.e., at 29 weeks) the score is 0.5, and the calculated value
of z is 0.41.
Go to the Z-table and find the score of 0.41. It is 0.6591.
0.6591 – 0.5 gives 0.1591
OR
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= 0.41
See the value of 0.41 on the Z-table. It is 0.6591.
If the project starts T weeks before the due date, the X will
represent the ordinate under normal curve to the left of
which 99% of area lies.
The area between n and X- being 99-50 or 49% and Z – value
corresponding to this is 2.33 (see the closest value of 99% on
Z- table).
The formula is:
2.33 =
2.33 =
T = 29 Weeks + (2.33X )
T = 34.7 Weeks
Project Financing and Management-Project Management Sunday, April 21, 2024
59 of 85
risky.
focuses on variations in activity times as a result
of resource assignment.
the variations are planned and are within the
control of the project manager
it aims at finding a schedule that minimizes total
cost
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64 of 85 8.5 Network scheduling
CPM…
64
Assumptions
1. Costs associated with the project are divided into
two categories as Direct costs and Indirect costs.
2. Activities can be expedited by crashing using
more resources
3. Crashing reduces time but increases direct costs
4. Indirect costs increase with project duration.
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65 of 85 8.5 Network scheduling
STEPS
65
1. Obtain the critical path in the normal network and
determine project duration and direct cost
2. Examine cost-time slope of activities on the critical
path and crash activities with the smallest slope
3. Construct a new critical path, and determine
project duration and cost
4. Repeat steps (2) and (3) till activities on the critical
path are
Project crashed
Financing and Management-Project
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Management
66 of 85 8.5 Network scheduling
Assume
Project the indirect
Financing costs of the project are
and Management-Project
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Br 1,000 a week.
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67 of 85 8.5 Network scheduling
Illustration…
Time Cost
67 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
1-3 4 2 1,000 2,000 500
3-4 7 4 4,000 8,000 1,333
4-7 9 5 6,000 9,200 800
3-5 12 3 16,000 19,600 400
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
5-9 12 7 4,000 8,500 900
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Illustration
68
6 9 26
2
4 7
5 7 6 34
7 10
1
6 9 34
4 12
28
3
5
12
26
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69 of 85 8.5 Network scheduling
Illustration…
Time Cost
69 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
1-3 4 2 1,000 2,000 500
3-4 7 4 4,000 8,000 1,333
4-7 9 5 6,000 9,200 800
3-5 12 3 16,000 19,600 400
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
5-9 12 7 4,000 8,500 900
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Illustration…
70
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 34weeks Br 35,000
Illustration…
Time Cost
71 CP2 Cost to
Activity Normal Crash Normal Crash expedite
1-3 4 2 1,000 2,000 500
3-4 7 4 4,000 8,000 1,333
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 34weeks Br 27,000
Illustration
72
6 9 26
2
4 7
5 4 6 31
7 10
1
6 9 31
4 12
28
3
5
12
26
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73 of 85 8.5 Network scheduling
Illustration…
73
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 31weeks Br 35,900
Illustration…
Time Cost
74 CP2 Cost to
Activity Normal Crash Normal Crash expedite
1-3 4 2 1,000 2,000 500
3-4 7 4 4,000 8,000 1,333
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 31weeks Br 27,900
Illustration
75
6 9 26
2
4 7
5 4 6 31
7 10
1
6 9 29
2 12
26
3
5
12
24
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Illustration…
76
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 31weeks Br 35,900
Illustration…
Cost and duration after crashing Activity 7-9
77
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 29weeks Br 37,100
Illustration
78
6 9 24
2
4 7
5 4 4 29
7 10
1
6 9 27
2 12
26
3
5
12
22
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79 of 85 8.5 Network scheduling
Illustration…
Cost and duration after crashing Activity 7-9
79
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 29weeks Br 37,100
Illustration…
Cost and duration after crashing Activity 7-9
80
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 25weeks Br 40,100
Illustration
81
6 9 24
2
4 7
5 4 4 25
7 6
1
6 9 23
2 12
26
3
5
12
22
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82 of 85 8.5 Network scheduling
Illustration…
Time Cost
82 CP’ Cost to
Activity Normal Crash Normal Crash expedite
1-3 4 2 1,000 2,000 500
3-5 12 3 16,000 19,600 400
5-9 12 7 4,000 8,500 900
Total 26 weeks Br 22,000
Illustration…
Time Cost
83 CP’ Cost to
Activity Normal Crash Normal Crash expedite
1-3 4 2 1,000 2,000 500
3-5 12 3 16,000 19,600 400
5-9 12 7 4,000 8,500 900
Total 17 weeks Br 25,600
Illustration
84
6 9 24
2
4 7
5 4 4 25
7 6
1
6 9 23
2 12
17
3
5
3
22
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Illustration…
85
Time Cost
CP1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 25weeks Br 40,100
Illustration…
Cost and duration after crashing Activity 2-4
86
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 22weeks Br 43,100
Illustration
87
3 9 21
2
4 7
5 4 4 22
7 6
1
6 9 23
2 12
17
3
5
3
22
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88 of 85 8.5 Network scheduling
Illustration…
88
Time Cost
CP2 Cost to
Activity Normal Crash Normal Crash expedite
1-3 4 2 1,000 2,000 500
3-4 7 4 4,000 8,000 1,333
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 23weeks Br 33,100
Illustration…
Cost and duration after crashing Activity 3-4
89
Time Cost
CP2 Cost to
Activity Normal Crash Normal Crash expedite
1-3 4 2 1,000 2,000 500
3-4 7 4 4,000 8,000 1,333
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 20 weeks Br 37,100
Illustration
90
3 9 21
2
4 7
5 4 4 22
4 6
1
6 9 20
2 12
17
3
5
3
19
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91 of 85 8.5 Network scheduling
Illustration…
91
Time Cost
CP1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 22weeks Br 40,100
Illustration…
Cost and duration after crashing Activity 1-2
92
Time Cost
CP 1 Cost to
Activity Normal Crash Normal Crash expedite
1-2 5 2 Br 6,000 Br 9,000 Br 1,000
2-4 6 3 7,000 10,000 1,000
4-6 10 6 15,000 18,000 750
6-7 7 4 4,000 4,900 300
7-9 6 4 3,000 4,200 600
Total 19 weeks Br 46,100
Illustration
93
3 9 18
2
4 7
2 4 4 19
4 6
1
6 9 20
2 12
17
3
5
3
19
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Illustration…
94 Project cost and duration
CP2 Time Direct Cost Indirect
Activity (Crash) (Crash) cost Total cost
1-3 2 2,000
3-4 4 8,000
4-6 6 18,000 (20weeks x
6-7 4 4,900 Br 1,000
7-9 4 4,200 per week)
Administrative closure
95
the process of documenting the results of a
project work to ensure that all of the
requirements and specifications have been met
administrative closure should be performed at
completion of each phase of a project
Issues to be addressed…
97
Preparation of a final project report that summarizes
history of the project.
100
END OF CHAPTER 8