1 Project Management Seminar Project Scheduling

2 Importance of Project Management Three Components of Project Management Project Evaluation and Review Technique (PERT) & Critical Path Method (CPM) Estimate the Probability of Project Completion Outline

Ford Redesign of Mustang Project: –450 member project team –Cost $700-million –25% faster, which leads to 30% cheaper than comparable projects at Ford 3 Strategic Importance of Project Management

4 Microsoft Windows Vista: –thousands of programmers –millions of lines of code – three months late, missed 2006 holiday season, estimated loss of revenue: $384 million ~ $1.92 billion – three months late, missed 2006 holiday season, estimated loss of revenue: $384 million ~ $1.92 billion (Business Software Alliance, 2007)

5 Why Learn ProjectManagement? Why Learn Project Management? Leadership opportunity –Understanding Project Management can improve your effectiveness when working on projects –Projects are a natural proving ground to help identify and develop leadership and managerial talent. Project Management is increasingly a key job skill.

6 Planning –Goal setting (time, cost, output) –Team organization Three Components of Project Management On timeOn budgetQuality output Scheduling –Schedule the sequence of activities and resources Controlling –Monitoring time, cost, and quality of output

7 Project Scheduling Questions When will the entire project be completed? What are the critical activities that will delay the entire project if they are late? What are the non-critical activities – The ones that can run late without delaying the whole project’s completion? What is the probability that the project will be completed by a specific date?

8 Critical Path Method (CPM) - developed by DuPont for chemical plants (1957) Program Evaluation & Review Technique (PERT) -developed by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958) Different terminology, similar objectives Project Scheduling Methods © 1995 Corel Corp. J F M A M J J Month Activity Design Build Test PERT

9 How to Draw PERT & CPM: the Steps ©Identify relationships among the activities. (Decide which activities must precede and which must follow others.) ©Draw the network connecting all of the activities ©Assign time estimates to each activity ©Compute the longest time path through the network. ( critical path)

10 Example Milwaukee General Hospital Project The environmental protection agency has recently given Milwaukee General Hospital 16 weeks to install a complex air filter system in its extensive laundry/cleaning operations facility. Milwaukee General has identified eight activities that need to be performed in order for the project to be completed.

11 Activities & Relationships Among the Activities ActivityDescription ABuild internal components BModify roof and floor CConstruct collection stack DPour concrete and install frame EBuild high-temperature burner FInstall pollution control system GInstall air pollution device HInspect and test Immediate Predecessors - - A A, B C C D, E F, G

12 Activities & Relationships Among the Activities Activity A B C D E F G H Immediate Predecessors - - A A, B C C D, E F, G

13 Activity Network B A D C G F H E Start Arrows show precedence relationships END ActivityImmediate Predecessors A- B- CA DA, B EC FC GD, E HF, G

14 Time Estimates ActivityDescription ABuild internal components BModify roof and floor CConstruct collection stack DPour concrete and install frame EBuild high-temperature burner FInstall pollution control system GInstall air pollution device HInspect and test Total (weeks) Time (Weeks)

15 Assign Time Estimates to Each Activity Arrows show precedence relationships 3 Start A B C D E F G H END

Paths from Start to End PathTime (Weeks) 1ACFH9 2ACEGH15 3ADGH13 4BDGH14 3 Start A B C D E F G H END Activity Network

17 Identify critical path –critical path is the path with the longest time –critical path is the Shortest time a project can be completed – Any delay on critical path activities delays project Critical Path Analysis PathTime (Weeks) 1ACFH9 2ACEGH15 3ADGH13 4BDGH14

18 The Critical Path Start A B C D E F G H Arrows show precedence relationships END

19 Three estimates for each activity –Earliest Possible Time ( a ) –Most-likely Time ( m ) –Latest Possible Time ( b )   Estimate Activity Times Assumption: Follow BETA distribution Expected time: t = ( a + 4 m + b )/6 Variance of time: v = [( b - a ) /6] 2

20 Milwaukee General Hospital Project ActivityEarliest Possible (a) Most Likely (m) Latest Possible (b) A123 B234 C123 D246 E147 F129 G3411 H123 [(3-1)/6] 2 = Expected Time t = ( a +4 m + b )/6 Variance [(b - a) /6] 2 (1+4*2+3)/6 = 2

21 Used to obtain probability of project completion! Project Times Expected project time ( T ) –Sum of critical path activity times, t Project variance ( V ) –Sum of critical path activity variances, v

22 Critical Path Activity Earliest Possible (a) Most Likely (m) Latest Possible (b) Expected Time t = ( a +4 m + b )/6 Variance [(b - a) /6] 2 A C1232 E G H Expected project time T = = 15 Project variance V = = 3.11 Project Standard Deviation S = square root of variance = 3.11**0.5 = 1.76 Expected Project Time and Variance

23 Application - 1 The deadline for Milwaukee General Hospital is 16 weeks. What is the chance that the project can be finished on or before the deadline? Formula: Z = (due date – expected completion date) / Std. Dev. Z is a normal score Apply the formula to Milwaukee hospital Project: Z = (16 weeks – 15 weeks) /1.76 = 0.57

24 Z 0.57 Z.00… … : ::: ….7157 Standardized Normal Probability Table (Portion) Probabilities in body Obtaining the Probability There is a 71.57% chance that the project can be put in place in 16 weeks.

25 Application - 2 What’s the date that Milwaukee Hospital Project can be finished with a 99% chance? Formula: date = expected completion date + Z (0.99) * Std. Dev. Z (0.99): normal score corresponding to probability 0.99 Z (0.99) = 2.33 Apply the formula to Milwaukee hospital project: date = 15 weeks * 1.76 = 19.1 weeks Conclusion: we are 99% sure that the project can be finished within 19.1 weeks

26 Advantages & Disadvantages of PERT/CPM Straightforward (visual) and easy to use; Unique strength in managing complex projects; Pinpoint activities that need to be closely watched; Provides quantitative results that facilitate planning, communication, and negotiation (for due date and additional resources) Need to clearly define activities and relationships among activities; Assume activity times follow a BETA distribution.

27 Thank you!