1. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-1 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Quantitative Analysis for Management Chapter 13 Project Management

2. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-2 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Chapter Outline 13.1 Introduction 13.2 PERT 13.3 PERT/COST 13.4 Critical Path Method

3. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-3 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Learning Objectives Students will be able to  Understand how to plan, monitor, and control projects with the use of PERT.  Determine earliest start, earliest finish, latest start, latest finish, and slack times for each activity along with the total project completion time.

4. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-4 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Learning Objectives - continued  Reduce total project time at the least total cost by crashing the network using manual or linear programming techniques.  Understand the important role of software in project management.

5. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-5 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Project Management Models  PERT  PERT/Cost  Critical Path Method

6. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-6 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Questions That May Be Addressed by PERT and CPM 1. When will the project be completed? 2. What are the critical activities or tasks in the project? 3. Which are the noncritical activities? 4. What is the probability that the project will be completed by a specific date? 5. Is the project on schedule, ahead of schedule, or behind schedule?

7. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-7 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Questions - continued 6. Is the project over or under the budgeted amount? 7. Are there enough resources available to finish the project on time? 8. If the project must be finished in less than the scheduled amount of time, what is the best way to accomplish this at least cost?

8. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-8 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Project Planning, Scheduling, and Controlling Project Planning 1. Setting goals 2. Defining the project 3. Tying needs into timed project activities 4. Organizing the team Project Scheduling 1. Tying resources to specific activities 2. Relating activities to each other 3. Updating and revising on regular basis Project Controlling 1. Monitoring resources, costs, quality and budgets 2. Revising and changing plans 3. Shifting resources to meet demands Before Project During Project

9. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-9 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Six Steps Common to PERT and CPM 1. Define the project and all significant activities/tasks. 2. Develop relationships among the activities. Identify precedence relationships. 3. Draw the network. 4. Assign time and/or cost estimates to each activity. 5. Compute the longest time path (critical path) through the network. 6. Use the network to help plan, schedule, monitor, and control the project.

10. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-10 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Advantages of PERT/CPM  Useful at several stages of project management  Straightforward in concept, not mathematically complex  Uses graphical displays employing networks to help user perceive relationships among project activities  Critical path and slack time analyses help pinpoint activities that need to be closely watched

11. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-11 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Advantages - continued  Networks generated provide valuable project documentation and graphically point out who is responsible for various project activities  Applicable to a wide variety of projects and industries  Useful in monitoring not only schedules, but costs as well

12. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-12 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Limitations of PERT/CPM  Project activities must be clearly defined, independent, and stable in their relationships  Precedence relationships must be specified and networked together  Time activities in PERT are assumed to follow the beta probability distribution -- must be verified  Time estimates tend to be subjective, and are subject to fudging by managers  There is inherent danger in too much emphasis being placed on the critical path

13. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-13 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry PERT

14. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-14 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT Network 1 2 4 53 6 (Build Internal Components) (Construct Collection Stack) (Modify Roof and Floor) (Pour Concrete and Install Frame) (Install Control System) (Install Pollution Device) 7 (Inspect and Test) (Build Burner) A B D C E F G H

15. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-15 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Beta Probability Distribution with Three Time Estimates

16. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-16 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. Time Estimates ABCDEFGHABCDEFGH 1212113112121131 2324424223244242 3 4 3 6 7 9 11 3 2324435223244352 Total: 25 weeks     Activity ambE(t) 22                                                                                                   

17. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-17 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT Network - with E(t) 1 2 4 53 6 7 A B D C E F G H t=2 t=3 t=4 t=5 t=3 t=2

18. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-18 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT Network ES/EF, LS/LF 1 2 4 53 6 7 A B D C E F G H t=2 t=3 t=4 t=5 t=3 t=2 8 13 3 7 4 8 0 1 1 4 4 8 0 2 2 4 4 7 10 13 13 15 ES EF LS LF

19. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-19 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT Network - Critical Path 1 2 4 53 6 7 A B D C E F G H Total time: 15

20. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-20 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry Schedule & Slacks

21. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-21 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry Meeting a Deadline Project Standard Deviation,  T =Project Variance Z= Due Date - Expected Completion Date TT = 16 - 15 1.76 = 0.57 0.57 Standard Deviations 1615 Time - weeks Probability (T  16 Weeks) is 71.6%

22. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-22 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 PERT Provided  Project expected completion date: 15 weeks  Probability of finishing in 16 or fewer days: 71.6%  Identity of activities on critical path: A, C, E, G, and H  Identity of activities with slack: B, D, and F  Detailed schedule of start/finish dates

23. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-23 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry PERT - Use of Dummy

24. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-24 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT Network - with Dummy 1 2 4 53 6 (Build Internal Components) (Construct Collection Stack) (Modify Roof and Floor) (Pour Concrete and Install Frame) (Install Control System) (Install Pollution Device) 7 (Inspect and Test) (Build Burner) A B D C E F G H Dummy

25. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-25 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT Network - with Dummy 1 2 4 53 6 7 A B D C E F G H t=2 t=3 t=4 t=5 t=3 t=2 Dummy t=0

26. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-26 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 PERT - Sensitivity Analysis

27. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-27 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry, Inc. PERT & Budgeting ABCDEFGHABCDEFGH 0 2 3 4 8 13 0 1 2 4 10 8 13 $11,000 $10,000 $13,000 $12,000 $14,000 $10,000 $16,000 $ 8,000 2324435223244352 Activity Earliest Start (ES) Latest Start (LS) Budgeted Cost per Week Expected Time, t Total Budgeted Cost $22,000 $30,000 $26,000 $48,000 $56,000 $30,000 $80,000 $16,000 Total $308,000

28. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-28 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry Budget Ranges

29. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-29 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry Monitoring & Controlling

30. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-30 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Critical Path Method Steps in Project Crashing 1. Find normal critical path and identify critical activities. 2. Compute crash cost per week for all activities. 3. Select critical activity with smallest crash cost per week. Crash this activity 4. Check to make sure critical path is still critical. If not, find the new one. Return to step 3.

31. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-31 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 General Foundry Normal/Crash Costs & Times

32. To accompany Quantitative Analysis for Management, 7e by Render/Stair 13-32 © 2000 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458 Crash & Normal Times and Costs $34,00 0 $33,00 0 $32,00 0 $31,00 0 $30,00 0 Activity Cost Crash Cost Normal Cost Crash TimeNormal Time Time (Weeks) 123 Normal Crash weekper          time Crashtime Normal Cost Normal -Cost Crash per Week Cost Crash  