1. Project Management

2. What is a Project Management?
Project: a set of interrelated activities necessary to achieve established goals using a specified amount of time, budget, and resources
Project management: the application of the knowledge, skills, tools, and techniques necessary to successfully complete a project.
According to the Project Management Institute ( the body of knowledge of project management can be divided into five categories:
initiation
planning
execution
control
closure

3. Characteristics of a Project
A unique, one-time effort
Requires the completion of a large number of interrelated activities
Resources, such as time and/or money, are limited
Typically has its own management structure

4. Supplementary Characteristics for Projects
Projects generally have or include:
Pre-specified deliverables after completion
Pre-established limits and exclusions
Specific intermediate goals or performance milestones.
An element of risk
Teams made up of several individuals who come from different departments or functional areas or who have unique skills
Team members work on multiple projects at the same time 4

5. Example Projects in Different Functional Areas that Impact the Value Chain

6. Matrix, Project Organization Structures
President
Research and
Development
Engineering
Manufacturing
Marketing
Manager
Project A
Project B
Project C 12

7. Three Interrelated Constraints in Project Management
All project management decisions involve three factors:
time, resources, and cost

8. Project Management Tools and Techniques
The discipline of project management has a number of tools and procedures that enable the project team to organize its work to meet the objectives under the constraints:
Work Breakdown Structure
Precedence Relationship and Time Estimates
Gantt Chart
Network Diagram
Critical Path Method (CPM)
Cost and Time Tradeoff Analysis
Program Evaluation and Review Technique (PERT)
Resource Management 8

9. Work Breakdown Structure
Work breakdown structure (WBS): an approach that defines a project in terms of its subprojects, tasks, and activities
Most fundamental technique for designing and organizing
Activity: the smallest work package that can be assigned to a single worker or a team
It is essential that care is taken to develop a realistic work breakdown structure. 9

10. Precedence Relationship and Time Estimates
Precedence relationship analysis: identification of the relationships and the sequence of activities within a project
Great care is taken to estimate the approximate completion time for each activity.
The project schedule, cost, and resource requirements depend on the precedence relationships and time estimates for individual tasks.

11. Gantt Chart
Gantt chart: a special type of horizontal bar chart used to display the schedule for an entire project
Named after Henry Gantt, who originally developed the chart in the 1910s.
A Gantt chart with different color codes can be used to track performance while the project is in progress.

12. An Example of a Gantt Chart

13. Network Diagram
Network diagram: a diagram with arrows and nodes (circles) created to display a sequence of activities within a project
Activity on node (AON) approach: a network diagram that shows each activity as a circle (or a node) and connects the activities with arrows
Activity on arrow (AOA) convention: a network diagram in which each activity is represented by an arrow, and the nodes are used to show the beginning and end points 13

14. Activity on Node (AON) and Activity on Arrow (AOA) Conventions for Representing Network Diagrams14

15. Types of Critical Path Methods
CPM
- Used when activity times are known with certainty
Used to determine timing estimates for the project, each activity in the project, and slack time for activities
PERT with Three Activity Time Estimates
Used when activity times are uncertain
Used to obtain the same information as the Single Time Estimate model and probability information
Time-Cost Models
Used when cost trade-off information is a major consideration in planning
Used to determine the least cost in reducing total project time 15

16. Critical Path Method
Critical path method: an algorithm for scheduling activities within a project for the fastest and most efficient execution
Critical path: the path within a project that takes the longest time to complete
Dictates the project completion time, the bottleneck path or the binding constraint
Critical activities: the project activities making up a critical path
Slack: the amount of flexibility in scheduling an activity within a project 16

17. Computing the Critical Path
Earliest start (ES) = 0 for all activities without predecessors; = largest of earliest finish times for all immediate predecessor activities.
Earliest finish (EF) = ES + task duration, working forward in the project network
Latest finish (LF) = for all ending activities = minimum project duration; = smallest of latest start times for all successor activities.
Latest start (LS) = LF - task duration, working backwards in the project network

18. CPM with Single Time Estimate
Consider the following consulting project:
Activity
Designation
Immed. Pred.
Time (Weeks)
Assess customer's needs A
None 2
Write and submit proposal B 1
Obtain approval C
Develop service vision and goals D
Train employees E 5
Quality improvement pilot groups F
D, E
Write assessment report G
Develop a critical path diagram and determine the duration of the critical path and slack times for all activities.

19. First draw the network D(2) E(5) F(5) A(2) B(1) C(1) G(1)
Act. Imed. Pred. Time
A None 2
B A 1
C B 1
D C 2
D(2)
E(5)
E C 5
F D,E 5
G F 1
F(5)
A(2)
B(1)
C(1)
G(1) 18

20. Determine early starts and early finish times
EF=6
D(2)
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=9
EF=14
ES=14
EF=15
A(2)
B(1)
C(1)
F(5)
G(1)
ES=4
EF=9
Hint: Start with ES=0 and go forward in the network from A to G.
E(5) 21

21. Determine late starts and late finish times
Hint: Start with LF=15 or the total time of the project and go backward in the network from G to A.
ES=4
EF=6
D(2)
E(5)
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=9
EF=14
ES=14
EF=15
LS=7
LF=9
F(5)
A(2)
B(1)
C(1)
G(1)
ES=4
EF=9
LS=3
LF=4
LS=2
LF=3
LS=0
LF=2
LS=9
LF=14
LS=14
LF=15
LS=4
LF=9 22

22. Critical Path & Slack ES=4 EF=6 D(2) ES=0 EF=2 ES=2 EF=3 ES=3 EF=4
Slack=(7-4)=(9-6)= 3 Wks
D(2)
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=9
EF=14
ES=14
EF=15
LS=7
LF=9
F(5)
A(2)
B(1)
C(1)
G(1)
ES=4
EF=9
LS=3
LF=4
LS=2
LF=3
LS=0
LF=2
LS=9
LF=14
LS=14
LF=15
E(5)
LS=4
LF=9
Duration=15 weeks 23

23. Program Evaluation and Review Technique (PERT)
The technique is based on the assumption that an activity’s duration follows a probability distribution instead of being a single value.
The probabilistic information about the activities is translated into probabilistic information about the project.

24. PERT
Three time estimates are required to compute the parameters of an activity’s duration distribution:
pessimistic time (tp ) - the time the activity would take if things did not go well
most likely time (tm ) - the consensus best estimate of the activity’s duration
optimistic time (to ) - the time the activity would take if things did go well

25. PERT
From these three time estimates about an activity, two probability distribution parameters are calculated: the mean (te ) and the variance (Vt ).
te = ( to + 4tm + tp ) / 6
Vt = [ ( tp - to ) / 6 ] 2

26. Example: PERT

27. Example. Expected Time Calculations
ET(A)= 3+4(6)+15 6
ET(A)=42/6=7

28. Network Diagram A(7) B C(14) D(5) E(11) F(7) H(4) G(11) I(18)
(5.333)
C(14)
D(5)
E(11)
F(7)
H(4)
G(11)
I(18)
Duration = 54 Days

29. Exercise What is the probability of finishing this project in
less than 53 days?
D=53
p(t < D) t
TE = 54

30. (Sum the variance along the critical path.)

31. p(t < D) t
D=53
TE = 54
p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)
There is a 43.8% probability that this project will be completed in less than 53 weeks.

32. Additional Probability Exercise
What is the probability that the project duration will exceed 56 weeks? 30

33. Additional Exercise Solution
TE = 54
p(t < D)
D=56
p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312)) 31

34. Activity Cost-Time Tradeoffs
Project managers may have the option or requirement to crash the project, or accelerate the completion of the project.
This is accomplished by reducing the length of the critical path(s).
The length of the critical path is reduced by reducing the duration of the activities on the critical path

35. Crash cost per unit of time =
Chapter 18 Project Management
Crashing a project refers to reducing the total time to complete the project to meet a revised due date.
Crash time is the shortest possible time the activity can realistically be completed.
Crash cost is the total additional cost associated with completing an activity in its crash time rather than in normal time.
Crash cost per unit of time =
Crash Cost – Normal Cost
Normal Time – Crash Time

36. Activity crashing Crash cost Crashing activity
Activity cost
Activity time
Crashing activity
Crash time
Crash cost
Slope = crash cost per unit time
Normal Activity
Normal time
Normal cost

37. Crashing - Considerations
Pick activities on the Critical Path
Determine Crash/Day costs
Start with lowest cost crash/day
Determine other effects of shortening critical path activities
Continue to crash/analyze until optimum solution reached.
Analyze Project Cost/Duration Graph

38. Project Crashing example1 12 2 8 4 3 5 6 7

39. Time Cost data Activity Normal time Normal cost Rs Crash time
Crash cost Rs
Allowable crash time
slope 1 2 3 4 5 6 7 12 8
3000
2000
4000
50000
500
1500 9
5000
3500
7000
71000
1100
22000
400
200
75000
110700

40. Project duration = 36 From….. To….. Project duration = 3112 2 8 3 4 5 6 7
R400
R500
R3000
R7000
R200
R700
Project duration = 36
From….. 1 7 2 8 3 4 5 6
R400
R500
R3000
R7000
R200
R700 12
Project
duration = 31
Additional cost = R2000
To…..

41. Resource Management Two commonly used techniques are:
Resource breakdown structure (RBS): a standardized list of personnel required to complete various activities in a project
Resource leveling: an approach to reduce the amount of fluctuations in day-to-day resource requirements within an organization 41

42. Computer Software for Project Management
Artemis Views (Artemis Management Systems)
FastTrack Schedule (AEC Software)
Microsoft Project (Microsoft Corp.)
Oracle Projects (Oracle Corp.)
PowerProject (ASTA Development)
Primavera Project Planner (Primavera Systems)
SuperProject (Computer Associates International)
TurboProject (IMSI)