1. Chapter 17: Learning Objectives
You should be able to:
Discuss the behavioral aspects of projects in terms of project personnel and the project manager
Explain the nature and importance of a work breakdown structure in project management
Give a general description of PERT/CPM techniques
Construct simple network diagrams
List the kinds of information that a PERT or CPM analysis can provide
Analyze networks with deterministic times
Analyze networks with probabilistic times
Describe activity ‘crashing’ and solve typical problems
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2. Projects
Projects
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame
Examples:
The Olympic Games
Producing a movie
Software development
Product development
ERP implementation
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3. Project Life Cycle
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4. Work Breakdown Structure (WBS)
A hierarchical listing of what must be done during a project
Establishes a logical framework for identifying the required activities for the project
Identify the major elements of the project
Identify the major supporting activities for each of the major elements
Break down each major supporting activity into a list of the activities that will be needed to accomplish it
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5. WBS
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6. Gantt Chart
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7. PERT and CPM
PERT (program evaluation and review technique) and CPM (critical path method) are two techniques used to manage large-scale projects
By using PERT or CPM Managers can obtain:
A graphical display of project activities
An estimate of how long the project will take
An indication of which activities are most critical to timely project completion
An indication of how long any activity can be delayed without delaying the project
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8. Network Diagram Network diagram
Diagram of project activities that shows sequential relationships by use of arrows and nodes
Activity on arrow (AOA)
Network diagram convention in which arrows designate activities
Activity on node (AON)
Network convention in which nodes designate activities
Activities
Project steps that consume resources and/or time
Events
The starting and finishing of activities
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9. AON Convention Activity on Activity Meaning Node (AON) (a) A B C A (b)
A comes before B, which comes before C. A
(b)
A and B must both be completed before C can start. C B B
B and C cannot begin until A is completed.
(c) A C
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10. AON Convention Activity on Activity Meaning Node (AON) A B C D (d) A B
C and D cannot begin until both A and B are completed. A B C D
C cannot begin until both A and B are completed; D cannot begin until B is completed. A dummy activity is introduced in AOA.
(e)
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11. AON Convention Activity on Activity Meaning Node (AON) A C D B (f)
B and C cannot begin until A is completed. D cannot begin until both B and C are completed. A dummy activity is again introduced in AOA. A C D B
(f)
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12. Immediate Predecessors
AON Example
Project Activities and Predecessors
Activity
Description
Immediate Predecessors A
Build internal components — B
Modify roof and floor C
Construct collection stack D
Pour concrete and install frame
A, B E
Build high-temperature burner F
Install pollution control system G
Install air pollution device
D, E H
Inspect and test
F, G
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13. (Build Internal Components) (Modify Roof and Floor)
AON Network A
Start B
Activity A
(Build Internal Components)
Start Activity
Activity B
(Modify Roof and Floor)
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14. AON Network Activity A Precedes Activity C A B C D
Start B C D
Activities A and B Precede Activity D
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15. Arrows Show Precedence Relationships
AON Network G E F H C A
Start D B
Arrows Show Precedence Relationships
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16. Deterministic Time Estimates
Time estimates that are fairly certain
Probabilistic
Time estimates that allow for variation
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17. Determining Project Duration
Activity Description Time (weeks)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total Time (weeks) 25
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18. Determining the Project Duration
Critical Path
Path
Path duration
A-C-F-H
= 9
A-C-E-G-H
= 15
A-D-G-H
= 13
B-D-G-H
= 14
Critical path = Longest path A-C-E-G-H
Project duration = 15 weeks
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19. Early Start, Early Finish
Finding ES and EF involves a forward pass through the network diagram
Early start (ES)
The earliest time an activity can start
Assumes all preceding activities start as early as possible
For nodes with one entering arrow
ES = EF of the entering arrow
For activities leaving nodes with multiple entering arrows
ES = the largest of the largest entering EF
Early finish (EF)
The earliest time an activity can finish
EF = ES + t
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20. Late Start, Late Finish
Finding LS and LF involves a backward pass through the network diagram
Late Start (LS)
The latest time the activity can start and not delay the project
The latest starting time for each activity is equal to its latest finishing time minus its expected duration:
LS = LF - t
Late Finish (LF)
The latest time the activity can finish and not delay the project
For nodes with one leaving arrow, LF for nodes entering that node equals the LS of the leaving arrow
For nodes with multiple leaving arrows, LF for arrows entering node equals the smallest of the leaving arrows
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21. Slack and the Critical Path
Slack can be computed one of two ways:
Slack = LS – ES
Slack = LF – EF
Critical path
The critical path is indicated by the activities with zero slack
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22. Determining the Project Schedule
Perform a Critical Path Analysis A
Activity Name or Symbol
Earliest Start ES
Earliest Finish EF
Latest Start LS
Latest Finish LF
Activity Duration 2
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23. Forward Pass Begin at starting event and work forward
Earliest Start Time Rule:
If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor
If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors
ES = Max {EF of all immediate predecessors}
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24. Forward Pass Begin at starting event and work forward
Earliest Finish Time Rule:
The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time
EF = ES + Activity time
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25. Forward Pass ES
EF = ES + Activity time
Start
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26. Forward Pass 2
EF of A = ES of A + 2
ES of A A 2
Start
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27. Forward Pass
Start A 2 3
EF of B = ES of B + 3
ES of B B 3
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28. Forward Pass
Start A 2 C 2 4 B 3
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29. Forward Pass
Start A 2 C 2 4 D 4 3
= Max (2, 3) 7 B 3
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30. Forward Pass
Start A 2 C 2 4 D 4 3 7 B 3
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31. Forward Pass A 2 C 2 4 E 4 F 3 G 5 H 2 8 13 15 7 D 4 3 7 B 3 17-31
Start A 2 C 2 4 E 4 F 3 G 5 H 2 8 13 15 7 D 4 3 7 B 3
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32. Backward Pass Latest Finish Time Rule:
Begin with the last event and work backwards
Latest Finish Time Rule:
If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it
If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it
LF = Min {LS of all immediate following activities}
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33. Backward Pass Latest Start Time Rule:
Begin with the last event and work backwards
Latest Start Time Rule:
The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time
LS = LF – Activity time
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34. Backward Pass LS = LF – Activity time LF = EF of Project E 4 F 3 G 5 H2 8 13 15 7 D C B
Start A 13
LS = LF – Activity time
LF = EF of Project 15
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35. LF = Min(LS of following activity)
Backward Pass E 4 F 3 G 5 H 2 8 13 15 7 D C B
Start A
LF = Min(LS of following activity) 10 13
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36. Backward Pass LF = Min(4, 10) 4 2 E 4 F 3 G 5 H 2 8 13 15 7 10 D C B A
Start A
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37. Backward Pass E 4 F 3 G 5 H 2 8 13 15 7 10 D C B
Start A 1
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38. Computing Slack Time
After computing the ES, EF, LS, and LF times for all activities, compute the slack or free time for each activity
Slack is the length of time an activity can be delayed without delaying the entire project
Slack = LS – ES or Slack = LF – EF
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39. Computing Slack Time A 0 2 0 2 0 Yes B 0 3 1 4 1 No C 2 4 2 4 0 Yes
Earliest Earliest Latest Latest On Start Finish Start Finish Slack Critical Activity ES EF LS LF LS – ES Path
A Yes
B No
C Yes
D No
E Yes
F No
G Yes
H Yes
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40. Using Slack Times
Knowledge of slack times provides managers with information for planning allocation of scarce resources
Control efforts will be directed toward those activities that might be most susceptible to delaying the project
Activity slack times are based on the assumption that all of the activities on the same path will be started as early as possible and not exceed their expected time
If two activities are on the same path and have the same slack, this will be the total slack available to both
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41. Probabilistic Time Estimates
The beta distribution is generally used to describe the inherent variability in time estimates
The probabilistic approach involves three time estimates:
Optimistic time, (to)
The length of time required under optimal conditions
Pessimistic time, (tp)
The length of time required under the worst conditions
Most likely time, (tm)
The most probable length of time required
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42. Probabilistic Time Estimates
The expected time, te ,for an activity is a weighted average of the three time estimates:
The expected duration of a path is equal to the sum of the expected times of the activities on that path:
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43. Determining Path Probabilities
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44. Project Completion Time
A project is not complete until all project activities are complete
It is risky to only consider the critical path when assessing the probability of completing a project within a specified time.
To determine the probability of completing the project within a particular time frame
Calculate the probability that each path in the project will be completed within the specified time
Multiply these probabilities
The result is the probability that the project will be completed within the specified time
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45. Probabilistic Time Estimates
The standard deviation of each activity’s time is estimated as one-sixth of the difference between the pessimistic and optimistic time estimates. The variance is the square of the standard deviation:
Standard deviation of the expected time for the path
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46. Computing Variance A 1 2 3 2 4/36 B 2 3 4 3 4/36 C 1 2 3 2 4/36
Most Expected Optimistic Likely Pessimistic Time Variance Activity to tm tp t = (to + 4 tm + tp)/6 [(tp – to)/6]2
A /36
B /36
C /36
D /36
E /36
F /36
G /36
H /36
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47. Knowledge of Path Statistics
Knowledge of expected path times and their standard deviations enables managers to compute probabilistic estimates about project completion such as:
The probability that the project will be completed by a certain time
The probability that the project will take longer than its expected completion time
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48. Computing Variance
Path variance is computed by summing the variances of activities on the path
s2 = Project variance
= (variances of activities on the path) p
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49. Computing Variance Variance of critical path
s2 = 4/36 + 4/ / /36 + 4/36
= 112/36 =
Standard deviation of critical path
sp = Variance of critical path
= = weeks p
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50. Probability of Project Completion
Note:
Total project completion times follow a normal probability distribution
Activity times are statistically independent
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51. Probability of Project Completion
Standard deviation = weeks
15 Weeks
(Expected Completion Time)
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52. Probability of Project Completion
What is the probability this project can be completed on or before the 16 week deadline?
Where Z is the number of standard deviations the due date or target date lies from the mean or expected date
Z =
TM = Path mean completion time
T = Due date
Z = (16 – 15)/1.7638
= 0.57
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53. Probability of Project Completion
0.57 Standard deviations
Probability (T ≤ 16 weeks) is
Weeks Weeks
Probability (T > 16 weeks) is 1 – =
0.2843
Time
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54. Project Completion for given confidence
Determine a due date for the project completion time that will have a 99% probability of meeting.
Due date = TE + Z sp
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55. Determining Project Completion Time
Probability of 0.99 Z
Probability of 0.01
2.325 Standard deviations
2.325
From Appendix I
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56. Determining Project Completion Time
Due date (T) = TM + z sp
Probability of 0.99 Z
Probability of 0.01
2.325 Standard deviations
2.325
From Appendix I
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57. Determining Project Completion Time
Due date (T) = (1.7638)
Probability of 0.99 Z
Probability of 0.01
2.325 Standard deviations
2.325
From Appendix I
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58. Determining Project Completion Time
Due date (T) = 19.1 weeks
Probability of 0.99 Z
Probability of 0.01
2.325 Standard deviations
2.325
From Appendix I
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59. Variability of Completion Time for Noncritical Paths
Variability of times for activities on noncritical paths must be considered when finding the probability of finishing in a specified time
Variation in noncritical activity may cause change in critical path
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60. What Project Management Has Provided So Far
The project’s expected completion time is 15 weeks
There is a 71.57% chance the equipment will be in place by the 16 week deadline
Five activities (A, C, E, G, and H) are on the critical path
Three activities (B, D, F) are not on the critical path and have slack time
A detailed schedule is available
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61. Budget Control
Budget control is an important aspect of project management
Costs can exceed budget
Overly optimistic time estimates
Unforeseen events
Unless corrective action is taken, serious cost overruns can occur
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62. Time-Cost Trade-Offs
Activity time estimates are made for some given level of resources
It may be possible to reduce the duration of a project by injecting additional resources
Motivations:
To avoid late penalties
Monetary incentives
Free resources for use on other projects
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63. Time-Cost Trade-Offs: Crashing
Shortening activity durations
Typically, involves the use of additional funds to support additional personnel or more efficient equipment, and the relaxing of some work specifications
The project duration may be shortened by increasing direct expenses, thereby realizing savings in
indirect project costs
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64. Crashing Decisions
To make decisions concerning crashing requires information about:
Regular time and crash time estimates for each activity
Regular cost and crash cost estimates for each activity
A list of activities that are on the critical path
Critical path activities are potential candidates for crashing
Crashing non-critical path activities would not have an impact on overall project duration
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65. Crashing: Procedure General procedure:
Crash the project one period at a time
Crash the least expensive activity that is on the critical path
When there are multiple critical paths, find the sum of crashing the least expensive activity on each critical path
If two or more critical paths share common activities, compare the least expensive cost of crashing a common activity shared by critical paths with the sum for the separate critical paths
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66. Crashing Activities
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67. PERT: Advantages Among the most useful features of PERT:
It forces the manager to organize and quantify available information and to identify where additional information is needed
It provides the a graphic display of the project and its major activities
It identifies
Activities that should be closely watched
Activities that have slack time
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68. Sources of Error Potential sources of error:
The project network may be incomplete
Precedence relationships may not be correctly expressed
Time estimates may be inaccurate
There may be a tendency to focus on critical path activities to the exclusion of other important project activities
Major risk events may not be on the critical path
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69. Project Management Software
Technology has benefited project management
CAD
To produce updated prototypes on construction and product- development projects
Communication software
Helps to keep project members in close contact
Facilitates remote viewing of projects
Project management software
Specialized software used to help manage projects
Assign resources
Compare project plan versions
Evaluate changes
Track performance
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70. Project Management Software Advantages
Advantages include:
Imposes a methodology and common project management terminology
Provides a logical planning structure
May enhance communication among team members
Can flag the occurrence of constraint violations
Automatically formats reports
Can generate multiple levels of summary and detail reports
Enables “what if” scenarios
Can generate a variety of chart types
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71. Risk Management Risks are an inherent part of project management
Risks relate to occurrence of events that have undesirable consequences such as
Delays
Increased costs
Inability to meet technical specifications
Good risk management involves
Identifying as many risks as possible
Analyzing and assessing those risks
Working to minimize the probability of their occurrence
Establishing contingency plans and budgets for dealing with any that do occur
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72. Operations Strategy
Projects present both strategic opportunities and risks
It is critical to devote sufficient resources and attention to projects
Projects are often employed in situations that are characterized by significant uncertainties that demand
Careful planning
Wise selection of project manager and team
Monitoring of the project
Project software can facilitate successful project completion
Be careful to not focus on critical path activities
to the exclusion of other activities that may
become critical
It is not uncommon for projects to fail
When that happens, it can be beneficial to examine the probable reasons for failure
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