1. Chapter 3
Project Management

2. OBJECTIVES Definition of Project Management Work Breakdown Structure
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OBJECTIVES
Definition of Project Management
Work Breakdown Structure
Project Control Charts
Structuring Projects
Critical Path Scheduling 2

3. Building: a ship, a satellite, an oil rig, and a nuclear plant.
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Project Examples
Building: a ship, a satellite, an oil rig, and a nuclear plant.
Developing: computer programs, an advertising campaign, a new product, a new process, and training materials.
Implementing: new technologies and work procedures.

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Project Management Defined
A Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform
Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project 3

5. Objectives of a Project
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Objectives of a Project

6. Objectives of a Project
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Objectives of a Project
The 4th dimension: client satisfaction

7. 3-7
Project Life Cycle
Project Life Cycle: changing patterns of resource usage and level of activity over the course of the project

8. Stages of a Conventional Project:
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Project Life Cycle
Stages of a Conventional Project:
Slow beginning
Buildup of size
Peak
Begin a decline
Termination

9. 3-9
Project Life Cycle

10. 3-10
Project Life Cycle
Time distribution of project effort is characterized by slow-rapid-slow

11. 3-11
Project Life Cycle
Try to avoid the “90-90 rule of project management”:
The first 90% of the project takes 90% of the time, the last 10% takes the other 90%.

12. What does this rule really mean?
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Project Life Cycle
What does this rule really mean?

13. 3-13
Project Life Cycle
During the life cycle cycle, project management is accomplished through the use of processes such as:
Initiating, planning, executing, controlling, and closing
Many of these processes are iterative in nature because the project is being progressively elaborated

14. *Author unknown but believed to have perished in stage 4
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Project Life Cycle
An Alternate View*
Stage 1: Excitement – Euphoria
Stage 2: Disenchantment
Stage 3: Search for the Guilty
Stage 4: Punishment of the Innocent
Stage 5: Distinction for the Uninvolved
*Author unknown but believed to have perished in stage 4

15. Defining Project Objectives
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Defining Project Objectives
Defining Project Objectives
Why Set Project Objectives
To provide direction for project activities
To enable measuring results against prior exceptions
Resource usage (manpower, materials, etc.)
Schedule integrity
Quality of work
To determine specific goals which will provide maximum effectiveness of project activities

16. Requirements for Project Objectives
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Defining Project Objectives
Requirements for Project Objectives
Achievable (time, resources, staff)
Understandable (vs. complex)
Specific (vs. general, vague statements)
Tangible (“deliverables”)
Measurable (resources, schedule, quality)
Consistent (with strategy, programs, policies, procedures)
Assignable (department or individual)

17. Some Problems in Setting Objectives
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Defining Project Objectives
Some Problems in Setting Objectives
Stating activities rather than deliverables
Exceeding the scope of the defined project
Failing to be specific
Omitting important deliverables
Inconsistency with stated policies

18. Example: D.U. Singer Project
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Defining Project Objectives
Example: D.U. Singer Project
Title: Permanent Antiseptic Production Start-Up
Objectives:
Develop a comprehensive plan for the production of a new, permanent antiseptic
Complete development and testing of a manufacturing process that:
Meets all current FDA, EPA, and OSHA regulations as well as internal specifications
produces 95% yield of product (full packaged) at a level of 80% of full production goal of 10 million liters per year

19. 3-19

20. Another problem in objective setting …
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Another problem in objective setting …

21. Work Breakdown Structure
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Work Breakdown Structure
A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages
Program
Project 1
Project 2
Task 1.1
Subtask 1.1.1
Work Package
Level 1 2 3 4
Task 1.2
Subtask 1.1.2
Work Package 4

22. Program: New Product Introduction
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Work Breakdown Structure
Program: New Product Introduction
1.0 Project 1: Engineering Development
1.1 Task 1: Run pilot test
1.2 Task 2: Review process costs and efficiencies
1.3 Task 3: Prepare Capital Equipment List
2.0 Project 2: Market Survey
2.1 Task 1: Complete Market Survey
2.2 Task 2: Analyze Survey Results
2.3 Task 3: Prepare Marketing Plan

23. Work Breakdown Structure
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Work Breakdown Structure
3.0 Project 3: Manufacturing Start-up 3.1 Task 1: Install and Test New Equipment 3.2 Task 2: Establish Manufacturing Procedures 3.3 Task 3: Detailed Testing of Initial Output 4.0 Project 4: Sales Force Training 4.1 Task 1: Select Sales People 4.2 Task 2: Select Distributors 4.3 Task 3: Train Sales Force and Distributors

24. Activity 1 Activity 2 Activity 3 Activity 4 Activity 5 Activity 6
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Gantt Chart
Vertical Axis: Always Activities or Jobs
Horizontal bars used to denote length of time for each activity or job.
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time
Horizontal Axis: Always Time 6

25. Service Activities for A Delta Jet During a 60 Minute Layover
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Service Activities for A Delta Jet During a 60 Minute Layover

26. Network-Planning Models
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Network-Planning Models
A project is made up of a sequence of activities that form a network representing a project
The path taking longest time through this network of activities is called the “critical path”
The critical path provides a wide range of scheduling information useful in managing a project
Critical Path Method (CPM) helps to identify the critical path(s) in the project networks 15

27. Prerequisites for Critical Path Methodology
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Prerequisites for Critical Path Methodology
A project must have: well-defined jobs or tasks whose completion marks the end of the project; independent jobs or tasks; and tasks that follow a given sequence. 16

28. Types of Critical Path Methods
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Types of Critical Path Methods
CPM with a Single Time Estimate
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
CPM 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

29. Steps in the CPM with Single Time Estimate
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Steps in the CPM with Single Time Estimate
Activity Identification
Activity Sequencing and Network Construction
Determine the critical path
From the critical path all of the project and activity timing information can be obtained 15

30. CPM with Single Time Estimate
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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.

31. D(2) E(5) F(5) A(2) B(1) C(1) G(1) First draw the network
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First draw the network
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

32. The longest path is critical – why?
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Find the Critical Path
Activities on the critical path cannot be delayed without delaying the completion of the project
There are two paths:
A – B – C – D – F – G: 12 weeks
A – B – C – E – F – G: 15 weeks
Activity D can be delayed by up to 3 weeks without delaying the project
The longest path is critical – why?

33. Determine early starts and early finish times
3-33
Determine early starts and early finish times
ES=4
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

34. Determine late starts and late finish times
3-34
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

35. ES=4 EF=6 D(2) ES=0 EF=2 ES=2 EF=3 ES=3 EF=4 ES=9 EF=14 ES=14 EF=15
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Critical Path & Slack
ES=4
EF=6
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

36. Example 2: Great Valley Hospital Project
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Example 2: Great Valley Hospital Project
Activity
Description
Immed. Preds. 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

37. Network for Great Valley Hospital Project
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Network for Great Valley Hospital Project 3
Start A B C D E F G H 2 2 2 4 3 5 4
Arrows show precedence relationships

38. Critical Path for Great Valley Hospital Project
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Critical Path for Great Valley Hospital Project F A C E
Start H B D G
Arrows show precedence relationships

39. Critical Path for Great Valley Hospital Project
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Critical Path for Great Valley Hospital Project
Four paths in the network:
Path 1: Start – A – C – F – H: 9 weeks
Path 2: Start – A – C – E – G – H: 15 weeks
Path 3: Start – A – D – G – H: 13 weeks
Path 4: Start – B – D – G – H: 14 weeks
Path 2 is critical
See GreatValley.mpp

40. Critical Path for Great Valley Hospital Project
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Critical Path for Great Valley Hospital Project
A, C, E, G, and H are on the critical path and so they have 0 slack
B is on path 4, so its slack is 15 – 14 = 1
D is on paths 3 and 4, so its slack is 15 – Max (13,14) = 1
F is on path 1, so its slack is 15 – 9 = 6
An activity can be delayed by its slack and not delay the project completion

41. Critical Path Analysis Setup
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Critical Path Analysis Setup ES LS EF LF
Earliest Finish
Latest Start
Earliest Start
Activity Name
Activity Duration
Latest Finish

42. Determine early starts and early finish times
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Critical Path Analysis for Great Valley Hospital Project
Determine early starts and early finish times
Start A B C D F G H 13 2 15 8 5 4 10 3 7 E 1
Slack=0
Slack=6
Slack=1
Slack=0

43. Great Valley Gantt Chart: Earliest Start and Finish
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Great Valley Gantt Chart: Earliest Start and Finish
Great Valley General Hospital
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install frame
E Build high-temperature burner
F Install pollution control system
G Install air pollution device
H Inspect and test
This and the following slide illustrate the translation of Early and Late Start and Finish time to Gantt charts.

44. Example 3. CPM with Three Activity Time Estimates
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Example 3. CPM with Three Activity Time Estimates

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

46. Ex. 3. Expected Time Calculations
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Ex. 3. Expected Time Calculations
ET(B)= 2+4(4)+14 6
ET(B)=32/6=5.333

47. Ex 3. Expected Time Calculations
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Ex 3. Expected Time Calculations
ET(C)= 6+4(12)+30 6
ET(C)=84/6=14

48. A(7) B C(14) D(5) E(11) F(7) H(4) G(11) I(18)
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Example 3. Network
A(7) B
(5.333)
C(14)
D(5)
E(11)
F(7)
H(4)
G(11)
I(18)
Duration = 54 Days

49. What is the probability of finishing this project in
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Example 3. Probability Exercise
What is the probability of finishing this project in
less than 53 days?
D=53
p(t < D) t
TE = 54

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

51. p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)
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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.

52. Ex 3. Additional Probability Exercise
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Ex 3. Additional Probability Exercise
What is the probability that the project duration will exceed 56 weeks? 30

53. Example 3. Additional Exercise Solution
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Example 3. Additional Exercise Solution t
TE = 54
p(t < D)
D=56
p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312)) 31

54. In construction, incentives for completing project early
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Time-Cost Models
In construction, incentives for completing project early
In new product development, revenue stream starts earlier if project is launched earlier
Time-Cost Models:
To accelerate the completion of a project, expedite or “crash” the critical path project activity that has the cheapest cost per unit time to shorten its duration 32

55. Steps in Time-Cost Analysis
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Steps in Time-Cost Analysis
Using normal activity times, find the critical path
Compute the crash cost per time period:
Crash cost/period = (Crash cost - Normal cost)/ (Normal time - Crash time)
If there is only one critical path, select the activity on the critical path that (a) can still be crashed, and (b) has the smallest crash cost per period
If there are multiple critical paths, select the cheapest crash cost combination of critical path activities that can still be crashed that will reduce ALL critical paths by one period
Update all activity times and repeat process if further reduction in critical path time is desired

56. 3-56
Example 4. Great Valley Hospital Project with Crashing
Act. NT CT NC CC CC/WK CP? A ,000 22, Y B ,000 34, N C ,000 27,000 1,000 Y D ,000 49,000 1,000 N E ,000 58,000 1,000 Y F ,000 30, N G ,000 84,500 1,500 Y H ,000 19,000 3,000 Y

57. Start – B – D – G – H is also critical (14 wks)
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Example 4. Great Valley Hospital Project Crashing Analysis
Select the activity with smallest crash cost per week that is on the critical path – activity A at a cost of $750
Start – B – D – G – H is also critical (14 wks)
Crash G by 1 week at a cost of $1,500 to reduce the project by an additional week (vs. crashing C and D at a combined cost of $2,000)

58. Answer: d. All of the above
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Question Bowl
Which of the following are examples of Graphic Project Charts?
Gantt
Bar
Milestone
All of the above
None of the above
Answer: d. All of the above 7

59. Answer: d. All of the above
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Question Bowl
Which of the following are one of the three organizational structures of projects?
Pure
Functional
Matrix
All of the above
None of the above
Answer: d. All of the above 7

60. Answer: a. SOW (or Statement of Work)
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Question Bowl
A project starts with a written description of the objectives to be achieved, with a brief statement of the work to be done and a proposed schedule all contained in which of the following?
SOW
WBS
Early Start Schedule
Late Start Schedule
None of the above
Answer: a. SOW (or Statement of Work) 7

61. 3-61
Question Bowl
For some activities in a project there may be some leeway from when an activity can start and when it must finish. What is this period of time called when using the Critical Path Method?
Early start time
Late start time
Slack time
All of the above
None of the above
Answer: c. Slack time 7

62. 3-62
Question Bowl
How much “slack time” is permitted in the “critical path” activity times?
Only one unit of time per activity
No slack time is permitted
As much as the maximum activity time in the network
As much as is necessary to add up to the total time of the project
None of the above
Answer: b. No slack time is permitted (All critical path activities must have zero slack time, otherwise they would not be critical to the project completion time.) 7

63. Subtracting slack time Adding project time None of the above
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Question Bowl
When looking at the Time-Cost Trade Offs in the Minimum-Cost Scheduling time-cost model, we seek to reduce the total time of a project by doing what to the least-cost activity choices?
Crashing them
Adding slack time
Subtracting slack time
Adding project time
None of the above
Answer: a. Crashing them (We “crash” the least-cost activity times to seek a reduced total time for the entire project and we do it step-wise as inexpensively as possible.) 7

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End of Chapter 3