TECHNIQUES FOR PLANNING & MANAGING PROJECTS

PROJECT MANAGEMENT TECHNIQUES Basic Systems (Historically) GANNT Charts Circa 1917 Graphically represents activities across a time scale PERT Circa 1957 (Program Evaluation and Review Technique Considers uncertainty and uses probabilistic time estimates for activities CPM Circa 1956 (Critical Path Method) Assumes that project activity times can be estimated accurately and do not vary

NEED FOR & USE OF PERT/CPM When on-time success for large projects is essential When projects are not performed frequently, or perhaps only once When several people/parties need to be involved to complete the project When one needs to estimate the chance of completing a project by a scheduled date

TYPICAL APPLICATIONS OF PERT/CPM Facilities expansion and construction New equipment installation and use Major layout changes New systems and procedures Major organizational changes Research and development projects

EXAMPLES OF PERT/CPM BAY COMMUNITY HOSPITAL The staff of the Bay Community Hospital had committed itself to introduce a new diagnostic procedure in the clinic. This procedure required the acquisition, installation, and introduction of a new medical instrument. Dr. Ed Windsor was assigned the responsibility for assuring that the introduction be performed as quickly and smoothly as possible. Source: W. E. Sasser, R.P. Olsen, D.D. Wyckoff, Management Service Operations, Boston: Allyn and Bacon, 1978, PP. 97-98.

KEY QUESTIONS What are the activities that must be done? What is the sequence of these activities? What are the times required to do each activity? Who will do the activity? What is the shortest time period to complete the project? What activities require the most attention? What happens if the work isn’t completed on time? What is the chance of getting the project done by a given scheduled date?

PHASES OF PERT/CPM Planning the project & creating a schedule Communicating project information Managing changes in the schedule (track, adjust)

SOME DEFINITIONS PROJECT ACTIVITY tp, tm, to A Interrelated set of activities that have a definite starting and ending point and that results in an intended final outcome ACTIVITY A time consuming element in a project; representative of work or descriptive of a relationship between two events Represented on a network by a line segment (arrow) connecting one event to the next event. tp, tm, to A

SOME DEFINITIONS Continued PESSIMISTIC TIME (tp) Maximum time (estimated in weeks and tenths of weeks) to complete an activity if unusually bad luck is experienced or if the activity proves more difficult to solve than anticipated No more than one chance in 100 of being realized MOST LIKELY TIME (tm) The probable time to complete an activity assuming no unexpected problems will develop

SOME DEFINITIONS Continued OPTIMISTIC TIME (to) The minimum time to complete an activity if everything goes better than expected. It has not more than one chance in 100 of being realized EXPECTED ACTIVITY TIME (te) The statistical average time to complete an activity. Defined as: te = 1/6 (to + 4tm + tp)

Time Duration of Activities Beta Distribution Probability Density Time Duration of Activities

SOME DEFINITIONS Continued ACTIVITY VARIANCE A measure of uncertainty of the three time estimates. 2te = (1/6 (tp - to))2

SOME DEFINITIONS Continued EVENT A milestone of progress or accomplishment in the program plan depicting the start or completion of an activity or activities which precede or succeed it Represented on a network by a circle Is not time consuming 1 2 A

DEFINITIONS Continued EXPECTED EVENT TIME (TE) The earliest or expected time in which an event will be completed; An accumulation of the expected activity time (te) along the longest path to that event LATEST ALLLOWABLE EVENT TIME (TL) The latest time an event can be completed without causing the expected time of the objective event to exceed the scheduled time assigned to it EVENT SLACK TIME (SE) The maximum time that an event may be delayed before it delays the over-all project completion date, defined as: (SE=TL-TE)

BASIC STEPS IN PERT/CPM Assemble the right team Define all activities required to complete the project, along with the precedence relationships Get estimates of the activity times (to tm tp) Calculate the activity and event times (Note: computers should do this).

BASIC STEPS IN PERT/CPM Analyze the network model, determining those activities with slack and the critical path of activities Develop a feasible project plan considering availability of resources Use the model to communicate and manage the project (team approach) Periodically assess the progress/status of the project and update the plan if necessary (steps 2-8) based upon team consensus

PERT DIAGRAMMING (DUMMY ACTIVITIES) Uses 1. Clarify Precedence A C A B Dummy B OK D C D OK, but different meaning

PERT DIAGRAMMING (DUMMY ACTIVITIES) Uses 2. Clarify Event Numbers A A C B B Dummy Not correct, OK in concept C

PERT DIAGRAMMING (DUMMY ACTIVITIES) Uses 3. Existence of Competing Resource, Equipment Rule 1. Each activity is represented by one and only one arrow in the network. A B Rule 2. No two activities can be identified by the same head and tail events. C C starts after A is done

EXAMPLE: ST. ADOLF’S HOSPITAL PROJECT _______________________________ Activity Description Immediate Preceding Activity A Select administrative & medical staff. -- B Select site and do site survey. -- C Select equipment. A D Prepare final construction plans and layout. B E Bring utilities to the site. B F Interview applicants and fill positions in nursing, A support staff, maintenance, and security. Source: L.J. Krajewski & L.P. Ritzman, Operations Management, Addison-Wesley, 1990, pp. 681-691

ST. ADOLF’S HOSPITAL PROJECT Continued _______________________________ Activity Description Immediate Preceding Activity G Purchase and take delivery of the equipment. C H Construct the hospital D I Develop an information system. A J Install the equipment. E,G,H K Train the nurses and staff. F,I,J

NETWORK DIAGRAM: ST. ADOLF’S 4 I F 2 A C K 10 9 5 G 11 J B H D 8 61 3 E 7

TIME ESTIMATES AND ACTIVITY STATISTICS FOR THE St TIME ESTIMATES AND ACTIVITY STATISTICS FOR THE St. ADOLF’S HOSPITAL PROJECT

ACTIVITY SLACKS FOR THE ST. ADOLPH’S HOSPITAL PROJECT Si = Lsi - Esi or Si = Lfi - Efi

Critical Path___ Near Critical Path - - - 4 I F 2 A C K 10 9 5 G 11 J B H D 8 61 3 E 7

Network Paths for the St. Adolf’s Hospital Project

PROBABILITY OF MEETING THE PROJECT DUE DATE The central limit theorem allows us to use the normal probability distribution to find the probability of achieving a particular due date for the project. We can use the z-transformation formula as follows: Where T’ = due date for the project TE = earliest expected completion date for the project 2cp = sum of the variances on the critical path T’ - TE Z = Ss2cp

Example: What is the probability that the hospital will become operational in 72 weeks? Normal Distribution: Length of Critical Path Probability of exceeding 72 weeks=0.20 5 5 6 5 6 9 7 2 7 5 8 5 Project Duration (Weeks)

EXAMPLE 4 6 2 8 5 1 3 7 F I C E A H D B J G 2 – 3 – 4 8 – 10 – 12 to tm tp 5 – 6 – 7 I C 2 5 – 6 – 7 E 4 – 5 – 6 8 A 5 1 7 – 7 – 7 6 – 8 – 10 H 4 – 5 – 6 D 7 – 9 – 11 B J 3 10 – 12 – 14 7 G

PERT Table

PERT Table 7

ALTERNATIVE NETWORK ANALYSIS F,3 4 6 C,10 I,6 11 E,6 2 A,5 8 5 1 H,9 B,8 D,7 11 J,5 3 G,12 7 Start Finish 10 6 Early Late For Activity “B”

ALTERNATIVE NETWORK ANALYSIS F,3 4 6 5 5 15 15 15 26 18 29 C,10 I,6 11 E,6 2 18 29 24 35 15 15 21 21 A,5 8 5 1 5 5 8 14 15 21 H,9 B,8 D,7 11 J,5 21 21 30 30 3 G,12 30 30 35 35 7 8 18 20 30 Start Finish 10 6 8 14 6 Early Late For Activity “B”

ADVANTAGES OF PERT/CPM Shows relationship of project activities Facilitates more effective planning Pinpoints problem areas early Improve communications and understanding of roles/responsibilities

ADVANTAGES OF PERT/CPM continued Determines best allocations of personnel, equipment, and other resources Identifies alternate courses of action Focuses attention on those activities that control the overall completion time

CRITICISMS OF PERT/CPM TIME ESTIMATES Task Times (t0,, tm, tp) are unknown (imperfect data). Not all activity times follow a Beta distribution (arbitrary choice). Pessimistic time estimates are often inflated.

CRITICISMS OF PERT/CPM NETWORK DIAGRAMS All precedences are not really hard requirements Some are “soft precedence relationships” or good ideas. (Like course prerequisites.) Some activities can be overlapped and worked on simultaneously. Some precedence relationships cannot be specified, but depend on the results of previous activities. Project content changes require updated input data & analysis.

REQUIREMENTS OF PERT/CPM PERT/CPM itself only furnishes information. It takes prompt, effective action by people to keep the project on schedule and to compensate for changes and delays. PERT/CPM is not a substitute for thinking or planning. To be successful, it requires precise planning, and demands that every step of the project be thought out most carefully.

REQUIREMENTS OF PERT/CPM PERT/CPM also requires the whole hearted support of management and the people who will direct the work. PERT/CPM also requires a focus of “near-critical” path activities to ensure on-time project completions.