1. Class 27: Project Management Part II
OPSM 301 Spring 2012
Class 27:
Project Management
Part II

2. Announcements: Next Time
Review for the Final Exam
Study Questions will be in the F drive and KUAIS soon
Group Assignment 5 due on Thursday, 5 pm
Course Evaluation

3. Today Critical Path Method Review Project Crashing:
How to plan for reducing project duration ?
Managing uncertainty in projects
Human behavior under uncertainty

4. Trade-Offs And Project Crashing
It is not uncommon to face the following situations:
The project is behind schedule
The completion time has been moved forward
Shortening the duration of the project is called project crashing

5. Factors to Consider When Crashing A Project
The amount by which an activity is crashed is, in fact, permissible
Taken together, the shortened activity durations will enable us to finish the project by the due date
The total cost of crashing is as small as possible

6. Steps in Project Crashing
Compute the crash cost per time period. For crash costs assumed linear over time:
Using current activity times, find the critical path
If there is only one critical path, then select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path.
Update all activity times. If the desired due date has been reached, stop. If not, return to Step 2

7. Crashing The Project A 2 1 22,000 22,750 750 Yes
Time (Wks) Cost ($) Crash Cost Critical Activity Normal Crash Normal Crash Per Wk ($) Path?
A ,000 22, Yes
B ,000 34,000 2,000 No
C ,000 27,000 1,000 Yes
D ,000 49,000 1,000 No
E ,000 58,000 1,000 Yes
F ,000 30, No
G ,000 84,500 1,500 Yes
H ,000 19,000 3,000 Yes
Table 3.5

8. Crash and Normal Times and Costs for Activity B

9. Critical Path And Slack Times For Çorum Paper4 F 3 G 5 H 2 8 13 15 7 10 D C B
Start A 1
Slack = 1
Slack = 0
Slack = 6
Figure 3.17

10. AON Network for Çorum Paper Manufacturing with Incremental Crashing Costs4 7 H A C 10 13 2 2 4 H H 3 A 2 2 C 4
I=1000
I=3000 2 2 E H 4 8 13 15 H F H H
Start 4 8 13 15 4
I=2000
I=1000 2
I=1500 B D G
Start B D G 3 3 7 8 13 H H H 1 4 4 8 8 13 3 4 5

11. Crashing Çorum Paper Manufacturing Project
Minimum crashing plan:
Activity A by 1 week and Activity G by 1 week
Total Cost=$750 + $1500 = $2250
Why didn’t we crash Activity C??

12. Look at all paths-as you crash other paths may become critical!
A-C-E-G-H critical 15 days
A-D-G-H days
A-C-F-H days
B-D-G-H days

13. A has lowest crash cost on critical path-it can be crashed by 1 week
A-C-E-G-H critical 15 days - 14 days
A-D-G-H days  12 days
A-C-F-H days 8 days
B-D-G-H days

14. A can no longer be crashed Need to consider both critical paths
A-C-E-G-H critical 15 days - 14 days
A-D-G-H days  12 days
A-C-F-H days 8 days
B-D-G-H days
C is the next cheap activity to crash
BUT Crashing C will require crashing another activity on the B-D-G-H path
G is common to both paths-just crashing one activity will take care of both paths!

15. Managing Uncertainty in Projects
There is uncertainty in task times so we use estimates
How to estimate?
Ask experts, three time estimates:
minimum, most likely, maximum (beta distribution) (PERT method)
Use the mean as the time estimate for each task
Apply Critical Path Method with the mean as time estimates

16. Example: Project with Expected Times

17. Expected Completion Time = 54 Days
H, 4
A, 7
D, 5
F, 7
I, 18 B
5.33
G, 11

18. How do we behave under uncertainty?
How long will it take to finish your assignment?
We usually base our estimate on our worst experience..
Pessimistic estimate = Median + Safety time ≈ 2 X Median
Mean
50%
90%
Pessimistic
estimate
Median

19. How do we behave under uncertainty?
Engineering pessimism: %90 safety estimate
Engineering confidence: I’m good, I can achieve the %50
Student syndrome:
Parkinson’s Law: Work fills the time available
When task is assigned
Due date
Effort

20. Why are most projects late?
Safety gains are not reported while losses accumulate
Parkinson’s Law
No reward for finishing early
More pressure to cut times
Even if an activity finishes early the worker of the next one is not ready to start
Multitasking and loss of focus
Many tasks delayed in one department
New product introduced every 6 months – increasing safety for every project means more projects going on at the same time

21. Critical Chain Method: Guidelines for Managers
People inherently put safety in each task estimate
The total safety time for the critical path is longer than necessary
Let the staff focus on a single project at a time
Ask to finish in the minimum possible time (no deadline)
Try to add safety to the end of the project (instead of each individual task- put buffer time for the project)
Accept early deliveries

22. Advantages of PERT/CPM
Especially useful when scheduling and controlling large projects
Straightforward concept and not mathematically complex
Graphical networks help highlight relationships among project activities
Critical path and slack time analyses help pinpoint activities that need to be closely watched
Project documentation and graphics point out who is responsible for various activities
Applicable to a wide variety of projects
Useful in monitoring not only schedules but costs as well

23. Limitations of PERT/CPM
Project activities have to be clearly defined, independent, and stable in their relationships
Precedence relationships must be specified and networked together
Time estimates tend to be subjective and are subject to fudging by managers
There is an inherent danger of too much emphasis being placed on the longest, or critical, path