1. McGraw-Hill/Irwin Copyright © 2011 The McGraw-Hill Companies, All Rights Reserved Chapter 10 Projects

2. 10-2 Learning Objectives 1.Explain what project management is and why it is important. 2.Identify the different ways projects can be structured. 3.Describe how projects are organized into major subprojects. 4.Understand what a project milestone is. 5.Determine the “critical path” for a project. 6.Demonstrate how to “crash,” or reduce the length, of a project.

3. 10-3 What is Project Management? Project: a series of related jobs usually directed toward some major output and requiring a significant period of time to perform Project management: the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project LO 1

4. 10-4 Types of Development Projects LO 2

5. 10-5 Structuring Projects Pure project Functional project Matrix project LO 2

6. 10-6 Pure Project Advantages –The project manager has full authority –Team members report to one boss –Shortened communication lines –Team pride, motivation, and commitment are high Disadvantages –Duplication of resources –Organizational goals and policies are ignored –Lack of technology transfer –Team members have no functional area "home" LO 2

7. 10-7 Functional Project LO 2

8. 10-8 Functional Project Continued Advantages –A team member can work on several projects –Technical expertise maintained in functional area –Functional area is “home” after project completed –Critical mass of specialized knowledge Disadvantages –Aspects of the project that are not directly related to the functional area get short-changed –Motivation of team members is often weak –Needs of the client are secondary and are responded to slowly LO 2

9. 10-9 Matrix Project LO 2

10. 10-10 Matrix Project Continued Advantages –Better communications between functional areas –Project manager held responsible for success –Duplication of resources is minimized –Functional “home” for team members –Policies of the parent organization are followed Disadvantages –Too many bosses –Depends on project manager’s negotiating skills –Potential for sub-optimization LO 2

11. 10-11 Work Breakdown Structure Statement of work (SOW): a written description of the objectives to be achieved Task: a further subdivision of a project –Usually shorter than several months –Performed by one group or organization Work package: a group of activities combined to be assignable to a single organizational unit LO 3

12. 10-12 Work Breakdown Structure Continued Project milestones: specific events on the project Work breakdown structure (WBS): defines the hierarchy of project tasks, subtasks, and work packages Activities: pieces of work that consume time –Defined within the context of the WBS LO 4

13. 10-13 An Example of a Work Breakdown Structure LO 3

14. 10-14 Work Breakdown Structure, Large Optical Scanner Design LO 3

15. 10-15 Project Control Charts Charts are useful because their visual presentation is easily understood Software is available to create the charts Gantt chart: a bar chart showing both the amount of time involved and the sequence in which activities can be performed LO 3

16. 10-16 Sample of Graphic Project Reports LO 3

17. 10-17 Earned Value Management (EVM) A technique for measuring project progress in an objective manner Has the ability to combine measurements of scope, schedule, and cost in a project Provides a method for evaluating the relative success of a project at a point in time LO 3

18. 10-18 Essential Features of any EVM Implementation 1.A project plan that identifies the activities to be accomplished 2.A valuation of each activity work 3.Predefined earning or costing rules to quantify the accomplishment of work LO 3

19. 10-19 Earned Value Management Charts LO 3

20. 10-20 Project Tracking Without EVM Chart A shows the cumulative cost budget for the project as a function of time –Blue line, labeled BCWS Also shows the cumulative actual cost of the project –Red line Appears project was over budget through week 4 and then under budget What is missing is any understanding of how much work has been accomplished LO 3

21. 10-21 Project Tracking With EVM Chart B shows the BCWS curve along with the BCWP curve from chart A Technical performance started more rapidly than planned but then slowed significantly and feel behind at week 7 Chart illustrates the schedule performance aspect of EVM LO 3

22. 10-22 Project Tracking With EVM Continued Chart C shows the same BCWP curve with actual cost data Project is actually under budget, relative to the amount of work accomplished Chart D shows all three curves together –Typical for EVM line charts LO 3

23. 10-23 Example: Earned Value Management LO 3

24. 10-24 Example: Budgeted Cost of Work Scheduled (BCWS) A.100% of $18K = $18K B.100% of $10K = $10K C.80% of $20K = $16K D.15% of $40K = $6K BCWS = $18K+$10K+$16K+$6K = $50K LO 3

25. 10-25 Example: Budgeted Cost of Work Performed (BCWP) A.100% of $18K = $18K B.80% of $10K = $8K C.70% of $20K = $14K D.0% of $40K = $0 BCWP = $18K+$8K+$14K+$0 = $40K LO 3

26. 10-26 Example: Performance Measures LO 3

27. 10-27 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 LO 3

28. 10-28 Critical Path Method (CPM) 1.Identify each activity to be done and estimate how long it will take 2.Determine the requires sequence and construct a network diagram 3.Determine the critical path 4.Determine the early start/finish and late start/finish schedule LO 5

29. 10-29 Example: Critical Path Method LO 5

30. 10-30 Example: Activity Sequencing and Network Construction LO 5

31. 10-31 Example: Finished Schedule LO 5

32. 10-32 CPM with Three Activity Time Estimates If a single time estimate is not reliable, then use three time estimates –Minimum –Maximum –Most like Allows us to obtain a probability estimate for completion time for the project LO 5

33. 10-33 Finding Activity Time and Variance LO 5

34. 10-34 Example: Activity Expected Times and Variances LO 5

35. 10-35 Example: Network with Three Time Estimates LO 5

36. 10-36 Time-Cost Models and Project Crashing Basic assumption: Relationship between activity completion time and project cost Time cost models: Determine the optimum point in time-cost tradeoffs –Activity direct costs –Project indirect costs –Activity completion times LO 6

37. 10-37 Procedure for Project Crashing 1.Prepare a CPM-type network diagram 2.Determine the cost per unit of time to expedite each activity 3.Compute the critical path 4.Shorten the critical path at the least cost 5.Plot project direct, indirect, and total- cost curves and find the minimum-cost schedule LO 6

38. 10-38 Managing Resources In addition to scheduling each task, must assign resources Software can spot over-allocation –Allocations exceed resources Must either add resources or reschedule –Moving a task within slack can free up resources LO 1

39. 10-39 Tracking Progress Actual progress on a project will be different from the planned progress –Planned progress is called the baseline A tracking Gantt chart superimposes the current schedule onto a baseline so deviations are visible Project manager can then manage the deviations LO 1