Project Management
Introduction
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What – Project Management
Where – Where the success or failure of
a project will have major consequences
for the company
Why – At some point every company
takes on large and complicated projects
– opening a new store, building a plant,
developing a product
Project Management
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What is at stake?
Large projects, outside of normal
production
Cost overruns
Late completion – penalties
Early completion – bonuses
Project Planning
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Project organization
Project manager
Project Planning
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Planning Task
Work Breakdown Structure
Determines gross requirements for
people, supplies and equipment
Work Breakdown Structure
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Level
1 Project
2
Major tasks
3
Subtasks
4
Activities
Example
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Level
1 Open a new Retail Outlet
2
Select Location
2
Refurbish Location
3
Signage
4
Install new sign
3
Displays
4
Install racks
4
Install Mannequins
Project Scheduling
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Sequence project activities
Allotting time
Gantt Chart
Project Controlling
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Monitor resources, costs, quality, and
budgets
Use feedback to revise project plan
PERT and CPM
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Program Evaluation and Review
Technique
Critical Path Method
Schedule, monitor and control large
projects
PERT and CPM Framework
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Define project
Develop relationships among activities
Draw network connecting activities
Assign time / cost estimates to each activity
Compute longest time path through network
– the critical path
Use network to plan, schedule, monitor,
control project
Difference Between PERT and
CPM
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CPM – one estimate of time
PERT three estimates with probabilities
PERT Symbols
Project: Obtain a college degree (B.S.)
Register
1
Event (Node)
Receive diploma
Attend class,
study etc.
4 Years
Activity (Arrow)
2
Event (Node)
PERT Symbols
2
A
1
B
A & B can occur
concurrently
3
PERT Symbols
A must be done before
C & D can begin
2
A
C
1
B
D
3
4
PERT Symbols
2
A
C
1
B
D
3
4
E
B & C must be done
before E can begin
Activity Time Estimates
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Optimistic Time (a)
Most Likely Time (m)
Pessimistic Time (b)
Beta distribution
Expected Time t = (a + 4m + b) / 6
Variance v = [(b – a)/6]2
Critical Path Analysis
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ES – Earliest Start Time
LS – Latest Start Time
EF – Earliest Finish
LF – Latest Finish
S – Slack Time – LS – ES
Critical Path – Group of activities in the
project that have a slack time of zero
T – total project completion time
V – total variance of activities on the critical
path
Project Crashing
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Crashing – shorten activity time by
adding resources
Can be expensive – may be less
expensive than cost penalties
PERT Advantages
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Useful at several stages, especially scheduling
and control
Not mathematically complex
Graphical display show relationships
Critical path pinpoints activities to closely
monitor
Documents who is responsible for each
activity
Applicable to a wide range of industries
Monitors schedules and costs
PERT Limitations
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Project activities clearly defined,
independent, stable in their
relationships
Precedence relationships must be
specified in advance
Time estimates are subjective
Danger of too much emphasis on
critical path