1. 5.8 Project Management
Chapter 37
HL - Only

2. Project Management Project Project Management
A specific and temporary activity with a start and end date, clear goals, defined responsibilities and a budget.
Project Management
Using modern management techniques to carry out and complete a project and meet quality, time, and cost targets.

3. Types of Business Projects
Setting up a new IT system
Relocating company operations
Installing machinery
Developing and launching a new product
Building a factory

4. What is project success?
A successful project is planned and managed, costs determined, time allocated, problems dealt with, and the project concluded.

5. Consequence of project failure
Financial penalties to be paid to customers
Bad publicity for your company
Loss of future business

6. Critical Path Analysis (CPA)
Critical Path Analysis is a planning technique that identifies all tasks in a project, puts them in sequence and identifies the critical path for completion.

7. The Network Diagram
The network diagram shows the logical sequence of activities and their dependencies – which identifies the critical path
Critical path
The sequence of activities that MUST be completed ON TIME for the whole project to be completed by the project end date.

8. The Process 1. Identify the project (build a factory)
2. Put the tasks in sequence and draw a network diagram
3. Add the time for each activity
4. Identify the critical path (those activities that must be finished on time for the project to be completed on time)
5. Use the network diagram as a tool to when problems occur

9. Constructing a CPA Install a new piece of equipment in 12 days
A. Strip out old machine (3 days) B. Order new machine & receive (1 day) C. Prepare site for new machine (2 days) D. Assemble new machine (2 days) E. Install new machine (7 days)
Critical Path Steps
1. Identify project 2. Put tasks in sequence 3. Add time 4. Identify critical path 5. Use a project guide
Circles (node) indicates the end of each activity
Arrows indicate activity
B Order
D Assemble
E Install
A Strip out
C Prepare

10. Constructing a CPA Install a new piece of equipment in 12 days
A. Strip out old machine (3 days) B. Order new machine & receive (1 day) C. Prepare site for new machine (2 days) D. Assemble new machine (2 days) E. Install new machine (7 days)
Critical Path Steps
1. Identify project 2. Put tasks in sequence 3. Add time 4. Identify critical path 5. Use a project guide
Circles (node) indicates the end of each activity
Arrows indicate activity
B Order
D Assemble
1 day
2 days
E Install
A Strip out
C Prepare
12 Days
3 days
2 days
7 days

11. Constructing a CPA Install a new piece of equipment in 12 days ||
A. Strip out old machine (3 days) B. Order new machine & receive (1 day) C. Prepare site for new machine (2 days) D. Assemble new machine (2 days) E. Install new machine (7 days)
Critical Path Steps
1. Identify project 2. Put tasks in sequence 3. Add time 4. Identify critical path 5. Use a project guide ||
Critical Path Activities – these tasks must be completed ON TIME in order for the project to be completed on time
B Order
D Assemble
1 day
2 days
These tasks can be completed simultaneously
E Install
A Strip out
C Prepare || || ||
12 Days
3 days
2 days
7 days

12. Constructing a CPA Install a new piece of equipment in 12 days
A. Strip out old machine (3 days) B. Order new machine & receive (1 day) C. Prepare site for new machine (2 days) D. Assemble new machine (2 days) E. Install new machine (7 days)
Critical Path Steps
1. Identify project 2. Put tasks in sequence 3. Add time 4. Identify critical path 5. Use a project guide
Non-critical activities may have spare time – FLOAT TIME
3 Days
B Order
D Assemble
Non-critical activities
1 day
2 days
E Install
A Strip out
C Prepare
Critical Path || || ||
12 Days
3 days
2 days
7 days
5 Days

13. Calculating Critical Path
Earliest Start Time (EST)
Latest Finish Time (LFT)
EST #
LFT
Earliest start time is the earliest time an activity can begin. It is calculated by adding the time in sequence taking into account the previous activity time. (Work from Left to Right) 1
B Order
D Assemble 2
1 day 3
2 days
12 Days 3 12 5
E Install 5 1 3
C Prepare 4
A Strip out || || || 3 5
7 days 12
3 days
2 days
Activity E cannot start before day 5 because C will not be finished.

14. Calculating Critical Path
Earliest Start Time (EST)
Latest Finish Time (LFT)
EST #
LFT
Latest Finish Time is the latest time an activity can finish without delaying the whole project. (Work from Right to Left)
The latest finish time for B is 3 days to allow 2 days for D and remain on time. 1
B Order 2
D Assemble
1 day 3
2 days
12 Days 3 12 5
E Install 5 1 3
C Prepare 4
A Strip out || || || 3 5
7 days 12
3 days
2 days
Activity C must be complete by day 5 or the whole project will be delayed.
NOTICE: EST & LFT are equal on critical path. Project duration is their total.

15. Calculating Float Time
Total Float – time an activity can be delayed without delaying the whole project.
Free Float – time an activity can be delayed without the delaying the start of the next activities.
Total Float = LFT – Duration – EST How long can task D be delayed without delaying the whole project?
LFT of D =5 Duration of D=2 EST of D = = 2 Total Float 1
B Order 2
D Assemble
1 day 3
2 days
12 Days 3 12 5
E Install 5 1 3
C Prepare 4
A Strip out || || || 3 5
7 days 12
3 days
2 days
Activity D can be delayed for 2 days without delaying the whole project.

16. Calculating Float Time
Total Float – time an activity can be delayed without delaying the whole project.
Free Float – time an activity can be delayed without the delaying the start of the next activities.
Free Float = EST (next activity) – Duration – EST (this activity)
How long can task D be delayed before delaying the task E?
EST of E =5 Duration of D=2 EST of D = = 2 Free Float 1
B Order 2
D Assemble
1 day 3
2 days
12 Days 3 12 5
E Install 5 1 3
C Prepare 4
A Strip out || || || 3 5
7 days 12
3 days
2 days
Activity D can be delayed for 2 days without delaying task E.

17. Advantages of using networks
Produces accurate delivery dates
Calculating EST allows for the ordering of equipment and supplies using JIT strategies, maximizing working capital, and cash flows
Calculating LFT allows the manager to monitor completion times to keep the project on-time
Critical path information is useful for making decisions to keep the project on-time
Critical path diagrams can be tracked using computer software
Putting activities in sequential order forces managers to plan the project carefully
Critical path planning can identify tasks in a project that can be done simultaneously – saving time and resources

18. Evaluation of CPA CPA cannot guarantee a successful project
Requires skilled and motivated staff to implement
Staff will feel committed if consulted during the CPA and planning
New projects may require a considerable amount of “guesswork” because there is little prior knowledge