Project Management Managing the Transformation Process

What is a project ? A project is a series of tasks (jobs) performed sequentially or in parallel aiming to achieve an important goal, and requiring a significant amount of resources and time

Some examples of projects … The adoption of an ERP system by a manufacturer (new process) The construction of the new management building at Tech Square (new product) The group assignment that you have to write for this course (new product) The development of an Unmanned Aerial Vehicle - UAV (new product)

What is project management about ? Project management is about the administrative tasks that determine the planning, directing, and controlling of resources in order to meet the technical, cost, and time constraints of the project

Project Management Project-Based Functional-Based Matrix Organization A Project can be organized in different ways (based on who is managing the project) …

Project-Based Organization MarketingR&DOperations Project Manager Project Managers have more power “Heavy Weight” Project Manager Project 1 Project 2

Functional-Based Organization Marketing managerR&D manager Functional managers have more power Operations manager Project 1 Project 2 Project 3 Project 1 Project 2 Project 1 Project 2 Project 3 Project 4

Matrix Organization Marketing managerR&D manager Project 1 Project 2 Operations manager Project Manager

Project Control Tools 1.Gantt charts 2.Overall cost breakdown 3.Divisional cost breakdown 4.Stage-Gate (milestone chart) 5.Cost-Performance tracking schedule

Gantt Chart A Gantt chart shows each activity with time lengths and precedence relationships.

Overall Cost Breakdown Time Cost ($) Labor cost Material cost Overall cost Overall cost breakdown can be used to control which resources are being used effectively

Stage-Gate (Milestones) Phase 0 Planning Phase 1 Concept Development Phase 2 System-level Design Phase 3 Detail Design G1G2G3 … In every development process formal stage-gates (milestones) contribute to the timely completion of the project.

Project Management How can we plan the evolution of a project ? Activity-on-arrow diagrams (AOA) Activity-on-node diagrams (AON) We need to represent precedence relationships, showing the sequence and interdependence of activities!

Project Management EXAMPLE: Planning for a vacation… ActivityDescriptionDependence A1Determine continent- A2Check for possible spots within continentA1 A3Find out how many days can take offA1 A4Submit request for vacation permissionA1, A3 A5Approval of requestA2, A4 A6Comparison for tickets and lodgingA2, A4 A7Final choice of destinationA6 A8Final confirmation for all checksA5, A7

Project Management The activity-on-arrow diagram A1 A2 A3 A4 A5 A6 A7 A8

Project Management The activity-on-node diagram A1 A3 A2 A4 A5 A6 A8 A7

Project Management ActivityDescriptionDependence A1Ground studies- A2Do a geological analysis for a bridgeA1 A3Study the required traffic changesA1 A4Subcontractor conducts the bridge plansA1, A2 A5Auction for main constructing companyA1, A2 A6Construction company presents full planA1, A2, A5 A7Capital raising activityA1, A2, A4 A8Auction for subcontracting roads companyA1, A3 A9Presentation for new traffic arrangementsA1, A3, A8 A10Finalization of funding percentagesA1, A2, A4, A5, A6, A7 A11Construction approvalA9, A10 EXAMPLE: Bridge Construction…

Project Management The activity-on-arrow diagram A1 A2 A3 A4 A5 A8 A7 A6 A10 A9 A11

Project Management 1.They show precedence relationships among activities 2.They can be solved in order to identify the key steps for the completion of the project… Why are project networks useful? The Critical Path

Critical Path What is a critical path? The critical path of a project is a series of tasks that determine the amount of time it will take to complete the project. The critical path of activities forms the longest chain of tasks in order to complete the project.

Critical Path Example… What is the longest path to get from the starting node… … to the completion node?

Critical Path Let’s work it out… / 2 / 3/ 7 /8 / Forward completion (early start/finish) analysis: find out how long will it take to complete the project IF WE START TODAY

Critical Path … and … Backward completion (late start/finish) analysis: find out when to start given that the project must be done in 10 weeks! / 2 / 4 / 6 / 9 / 10

Critical Path / 2 2 / 4 3 / 6 7 / 98 / 10 The difference between the two values at each node is called a slack time! The critical path is the sequence of tasks with the SMALLEST slack time!!

Critical Path Another way to find it… / 0 2 / 2 3 / 4 7 / 78 / 8 Set the early completion time as the available time for the project!

Critical Path The critical path is… What does this actually mean? One day of delay on the critical path is one day of delay for the entire project!

Critical Path 1.The Critical Path Method (CPM) determines the set of activities that impact the project completion time. 2.CPM applies only in cases where times are deterministic. 3.Management should concentrate effort on monitoring activities on the critical path.

Back to the construction example… What is the critical path? Critical Path

/ / / / / / / ///

/0/ 7/7/ 3/3/ 6/6/ 13/ 11/ 10/ 17/19/20/ Critical Path

/00/0 7/10 3/33/3 6/66/6 13/16 11/11 10/12 17/1719/1920/20 Critical Path So, what is the critical path?…

The critical path is… Critical Path

Developing an Unmanned Aerial Vehicle (UAV) ActivityDescriptionDurationDependence A1Study aerodynamics of a small plane2- A2Identify the telecom guidance system1- A3Test on the reliability of Tele-guidance3A2 A4Conduct air-tunnel dynamics test4A1 A5Determine the base guidance installation2A2 A6Construct phase I flying prototype4A2, A3 A7Integrate guidance on phase I prototype2A1, A2, A3, A4, A6 A8Determine ranges and location of base2A2, A5 A9Phase II prototype flight5A1, A2, A3, A4, A6, A7 A10Final prototype in coordination with base2A8, A9 Critical Path

The project network is… Critical Path What is the critical path ?…

The critical path is… Critical Path

Time-Cost Trade-off Two concerns: –Time to complete the project –Cost to complete the project Costs: –Activity direct costs – costs directly associated with activities –Project indirect costs – costs associated with sustaining the project We can shorten tasks (“crash” them). This would –Increase activity direct costs –Decrease indirect costs if the project finishes earlier

Time/Cost Tradeoff Data Normal time: original time estimate for activity Normal cost: cost to complete activity in normal time Crash time: the shortest possible activity time Crash cost: the cost to complete activity in crash time Unit crash cost: cost to shorten activity time by one time unit Example: –normal time = 5 days, normal cost =10 –crash time = 2 days, crash cost = 16 –Unit crash cost = (16-10)/(5-2) = 2/day

1.Prepare the CPM network diagram 2.Determine the cost per unit time to “crash” activities. 3.Compute the critical path 4.If possible, shorten the critical path at the least cost (one day at a time). 5.Repeat steps 3 and 4. Resource Allocation & Cost/Time Trade-Off

Consider the following project… “Crashing” projects Assume that it takes $1000 per day to crash A3, and $500 per day to crash A2. Total available budget to spend on crashing activities is $4000. Resource Allocation & Cost/Time Trade-Off A1(2) A2(3) A3(5) A4(3) A5(1)

Which activities would you “crash” to minimize the project duration with the available budget? By how many days ? Resource Allocation & Cost/Time Trade-Off

Decision:Total $ Spent: Crash A3 by 1 day$1000 Crash A2 and A3 by 1 day$1000+$1500 = $2500 Crash A2 and A3 by 1 day$2500+$1500 = $4000 Summary of steps: Crash A3 by 3 days Crash A2 by 2 days Before: 8 days After: 5 days (at a cost of $4000)

Example A B C D Act.NTNCCTCCMax rednUnit crash cost A (10-6)/(2-1)=4 B (18-9)/(5-2)=3 C D Project indirect cost: $10 up to 8 days, $5 more per day beyond that