Project Management
1
Intro
Agenda
Week II

Introduction to Project Management
Week II

Scope management

Coursework

Scheduling Techniques
 Critical Path Method (CPM)
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1
Intro
Agenda
Week III

Scheduling Techniques
 Program Evaluation & Review Technique (PERT)

OpenProj Software Tool
Week IVI

Earned Value Management

“Crashing” projects
3
Intro
Agenda
Weeks V - VIIII

MS Project

Presentation of courseworks (week VIII)
4
2
Resources

The Fast Forward MBA in Project Management, Fourth
Edition by Eric Verzuh (John Wiley & Sons, 2011)

A Guide to the Project Management Body of Knowledge,
Sixth Edition (Newton Square, PA: PMI Inc., 2017)
5
Contact details
Charisios Achillas: c.achillas@ihu.edu.gr
Dimitrios Folinas: dfolinas@gmail.com
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Introduction
to Project Management
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Introduction to Project Management
The history of Project Management
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Introduction to Project Management
What is a project?
A project is a temporary endeavor undertaken to create a
unique product, service, or result

The temporary nature of projects indicates that a project has a definite
beginning and end
 The end is reached when the project’s objectives have been achieved or when
the project is terminated because its objectives will not or cannot be met, or
when the need for the project no longer exists
 Temporary does not necessarily mean the duration of the project is short - It
refers to the project’s engagement and its longevity
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Introduction to Project Management
A project is a temporary endeavor undertaken to create a
unique product, service, or result
So, ……

Every project creates a unique product, service, or result

Although repetitive elements may be present in some project deliverables
and activities, this repetition does not change the fundamental, unique
characteristics of the project work
 Example: Office buildings can be constructed with the same or similar materials
and by the same or different teams
 However, each building project remains unique with a different location, different
design, different circumstances and situations, different stakeholders, etc.
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Introduction to Project Management
Examples of projects include, but are not limited to:

Developing a new product, service, or result

Effecting a change in the structure, processes, staffing of an organization

Developing or acquiring a new or modified information system (hardware
or software)

Conducting a research effort whose outcome will be recorded

Constructing a building, industrial plant, or infrastructure

Implementing, improving, or enhancing existing business processes and
procedures
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Introduction to Project Management

Much of project management was developed by the military
 Modern project management began with the Manhattan Project
(1st atomic bomb, 1942 - 1946)
 Navy’s Polaris program
(Solid-fuel rocket nuclear-armed submarine-launched ballistic missile built
during the Cold War, 1956 - 1960)
 NASA’s space program
We choose to go to the Moon! ......
We choose to go to the Moon in this decade
U.S. President John F. Kennedy | Houston, Texas | September 12, 1962

Project management has found wide acceptance in industry
and construction
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Introduction to Project Management

In the early days, project management was used mainly for very
complex projects

As the tools became better understood, they began to “trickle
down” to smaller projects

It has many applications outside of construction
 Managing legal cases
 Managing new product releases

It has also moved out of just manufacturing to services
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Introduction to Project Management

Driving forces towards project management:
 The exponential growth of human knowledge
 The growing demand for a broad range of complex goods & services
 Increased worldwide competition
 Innovation-to-market and shortened life cycles

All of these contribute to the need for organizations to do more and to
do it faster
Project management is one way to do more, faster!
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7
Introduction to Project Management
Projects tend to be large

The Channel Tunnel, or Chunnel
50.5 km rail tunnel linking UK with France
Began construction in 1988, opened in 1994
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Introduction to Project Management
Projects tend to be large

The Channel Tunnel, or Chunnel
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8
Introduction to Project Management
Projects tend to be large

Prelude is a staggering 488m long
(Four football pitches placed end-to-end)
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Introduction to Project Management
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Introduction to Project Management
Projects tend to be large

Panama Canal expansion project
Intended to double the capacity of the
Panama Canal by 2016
The expanded canal began commercial
operation on June 26th, 2016
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Introduction to Project Management
Projects tend to be large
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10
Introduction to Project Management
Projects tend to be large

Three Gorges Dam, China
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Introduction to Project Management
Projects tend to be large

Athens 2004 Olympic Games
August 13th, 2004
Olympic Stadium in Marousi, Greece
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Introduction to Project Management
Projects tend to be large

Thessaloniki Metro
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Introduction to Project Management
What is project management?
Project management is the application of knowledge, skills,
tools, and techniques to project activities to meet the
project requirements
Project management processes are categorized into five Process Groups:
1.
Initiating
4.
Monitoring and Controlling
2.
Planning
5.
Closing
3.
Executing
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Introduction to Project Management
What is project management?
Project management involves ten Knowledge Areas:
1.
Integration Management
6.
Human Resources Management
2.
Scope Management
7.
Communications Management
3.
Time Management
8.
Risk Management
4.
Cost Management
9.
Procurement Management
5.
Quality Management
10.
Stakeholder Management
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Introduction to Project Management
In a nutshell project management involves five Process Groups …
… and ten Knowledge Areas
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Introduction to Project Management
Project Management typically includes:

Identifying requirements

Addressing the various needs, concerns, and expectations of the stakeholders in
planning and executing the project

Setting up, maintaining, and carrying out communications among stakeholders

Managing stakeholders towards meeting project requirements and creating
project deliverables

Balancing the competing project constraints, such as:
 Scope
 Budget
 Quality
 Resources
 Schedule
 Risks
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Introduction to Project Management
Portfolios, Programs, and Projects

Portfolio refers to a collection of projects, programs, and operations
managed as a group to achieve strategic objectives

Programs are grouped within a portfolio and are comprised of subprograms, projects, or other work that are managed in a coordinated
fashion in support of the portfolio
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Introduction to Project Management
Portfolios, Programs, and Projects
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Introduction to Project Management
Portfolios, Programs, and Projects
Program Management:

A program is defined as a group of related projects managed in a
coordinated way to obtain benefits not available from managing
them individually

A project may or may not be part of a program but a program will
always have projects
Exampleofofaaprogram:
program: A new communications satellite system with projects
Example
for design of the satellite and the ground stations, the construction of each,
the integration of the system, and the launch of the satellite
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Introduction to Project Management
Portfolios, Programs, and Projects
Portfolio Management:

A portfolio refers to projects, programs and operations managed as a
group to achieve strategic objectives

The projects or programs of the portfolio may not be interdependent or
directly related

Portfolio management refers to the centralized management of one or
more portfolios to achieve strategic objectives
Example:
Example: An infrastructure firm may put together a portfolio that includes a mix
of projects in oil and gas, power, water, roads, rail, and airports - From this mix,
the firm may choose to manage related projects as one program (e.g. all of the
power projects may be grouped together as a power program)
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Introduction to Project Management
Portfolios , Programs, and Projects
Why do we need Program or
Portfolio Management?
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Introduction to Project Management
Portfolios, Programs, and Projects
Operations Management:

Operations management is an area of management concerned with ongoing
production of goods and/or services

Operations management involves ensuring that business operations continue
efficiently by using the optimum resources needed and meeting customer demands

Operations management is a subject area that is outside the scope of formal project
management
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Introduction to Project Management
Projects versus Operations:
Common characteristics of projects and operations

Constrained by limited resources

Planned, executed and controlled
Differentiation between projects and operations

Operations are ongoing and repetitive, whereas projects are temporary and
unique
 temporary - definite beginning & end
 unique - different in some distinguishing characteristic

Operations have no end and produce similar, often identical, products
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Introduction to Project Management
The role of the Project Manager:

Project Manager is the key individual on a project

The project manager is the person assigned by the performing organization to
lead the team that is responsible for achieving the project objectives

As project management is a critical strategic discipline, the project manager
becomes the link between the strategy and the team
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Introduction to Project Management
The role of the Project Manager:

Project manager is like a mini-CEO, making major decision on all project
aspects

Effective project managers require a balance of ethical, interpersonal, and
conceptual skills that help them analyze situations and interact
appropriately

While the project manager always has the responsibility, may not have the
necessary authority
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Introduction to Project Management
Interpersonal skills of a Project Manager:

Leadership

Political and cultural awareness

Team building

Negotiation

Motivation

Trust building

Communication

Conflict management

Influencing

Coaching

Decision making
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Introduction to Project Management
Project Environment and PM Skills
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Introduction to Project Management
Why Project Management?
The reason for organizing an assignment as a project is to
FOCUS
the responsibility, authority, and scheduling of the project in
order to meet defined goals

Schedule

Cost

Performance (quality)
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Introduction to Project Management
The Cost – Schedule – Quality equilibrium
The challenge is to balance these
variables to create the optimal cost –
schedule – quality equilibrium
Good customer relations
Effectively/efficiently
assigned resources
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Introduction to Project Management
Recent Trends in Project Management

Consensual (vs. authorative) management

Systems (holistic) approach
 Sub-systems operation affects each other

Projects as preferred way to accomplish goals
 Project-driven organizations
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Introduction to Project Management
Bottom line

What project management will do is to provide a system for
planning, documenting, organizing, and communicating

It provides a basis for better (informed) decisions
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Environmental
Project Management
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Introduction to Project Management
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Introduction to Project Management
Cases of
environmental
disasters
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Introduction to Project Management
Deepwater Horizon oil spill
Gulf of Mexico | April 2010
`
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Introduction to Project Management

Green project vs Environmental-based project
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Introduction to Project Management
In Environmental Project Management,
Environmental Impact Assessment is a
necessary extra phase
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Introduction to Project Management
Environmental project management:
EnvPM = Environment + Project + Management
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Introduction to Project Management
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Introduction to Project Management
Main issues in the “Green” aspect of a project:

Are the environmental impacts of the project understandable?

What are the regulatory or legislative costs (e.g. non-compliance costs)?

How likely is it for the rules to change in the future?

Are there upcoming technological developments that are foreseen to change
the way we interact with the environment?

Where do raw materials source from?

How environmentally friendly are they?

What happens when the project / product has completed its useful life cycle?
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Introduction to Project Management
The Cost – Schedule – Quality equilibrium
The challenge is to balance these
variables to create the optimal cost –
schedule – quality equilibrium
Good customer relations
Effectively/efficiently assigned
resources
Environmental performance
Social responsibility
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Introduction to Project Management
Main questions
Main constraints
Dimensions of
Environmental Management
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Project scope
management
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Project scope management
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Project scope management
Project Scope Management includes the processes required to
ensure that the project includes all the work required, and only
the work required, to complete the project successfully
Managing the project scope is primarily concerned with defining
and controlling what is and what is not included in the project
Source: PMBOK, 5th ed.
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Project scope management
Project Scope Management
1.
Collect Requirements
2.
Define Scope
3.
Create WBS
4.
Verify Scope
5.
Control Scope
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Project scope management
Collect Requirements
Collect Requirements

The project’s success is directly influenced by active stakeholder
involvement in the discovery and decomposition of needs into
requirements

Collect Requirements is the process of determining, documenting,
and managing stakeholder needs and requirements to meet project
objectives

Requirements include the quantified and documented needs and
expectations of the sponsor, customers, and other stakeholders

Provides the basis for defining and managing the project scope
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Project scope management
Collect Requirements
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Project scope management
Collect Requirements
Requirements Traceability Matrix

A grid that links product requirements from their origin to the deliverables
that satisfy them

A means to track requirements throughout the project life

Helps to ensure that requirements approved in the initial phase are delivered
at the end of the project
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Project scope management
Define Scope
Define Scope

This is the process of developing a detailed description of the project
and product

The key benefit is that it describes the project, service, or result
boundaries by defining which of the requirements collected will be
included in and excluded from the project scope

The preparation of a detailed project scope statement is critical to
project success and builds upon the major deliverables, assumptions,
and constraints that are documented during project initiation
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Project scope management
Define Scope
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Project scope management
Define Scope
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Project scope management
Create WBS
Work Breakdown Structure (WBS)

Create WBS is the process of subdividing project deliverables and
project work into smaller, more manageable components

Each descending level of the WBS represents an increasingly detailed
definition of the project work

The key benefit is that it provides a structured vision of what has to be
delivered

The WBS is a hierarchical decomposition of the total scope of work to
be carried out by the project team to accomplish the project
objectives and create the required deliverables
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Project scope management
Create WBS
Work Breakdown Structure (WBS)

The WBS represents a clear description of the project’s deliverables
and scope - the “what” of the project

It facilitates other project management processes such as estimating,
scheduling, resource allocation, risk analysis and control of the project

The planned work contained in the lowest level WBS components can
be scheduled, cost estimated, monitored, and controlled
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Project scope management
Create WBS
Work Breakdown Structure – Outline form
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Project scope management
Create WBS
The role of the WBS:

Defines the hierarchy of deliverables

Supports the definition of all work required to achieve an end
objective or deliverable

Provides a graphical representation of the project scope

Provides the framework for all deliverables across the project life cycle

Provides a vehicle for integrating and assessing schedule and cost
performance

Facilitates assignment of resources

Facilitates the reporting and analysis of progress and status data
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Project scope management
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Project scope management
WBS levels
Create WBS
Level 1:

This level comprises the full scope of work necessary to produce the bicycle

It includes all direct and indirect work

Level 1 is the overall product
Level 2:

This is the first level of decomposition

This level is the high-level breakdown of the major areas in the scope of work

It holds the basic components of the product, along with integration and
project management

This level is numbered as #.# (e.g. frame set is 1.1)
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Project scope management
WBS levels
Create WBS
Level 3:

This level decomposes each major area from Level 2 into its constituent parts

It is important to note that the 100% rule is always adhered to in the
development of a WBS

Level 3 starts targeting specific, tangible deliverables of the project effort

This level is numbered as #.#.# (e.g. rear wheel is 1.3.2)
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Project scope management
WBS levels
Create WBS
Level 4, …, n:

In the same manner, each exclusive area in Level 3 would be decomposed
further, if needed

The complexity of the work will drive the depth and the number of levels of
the WBS decomposition

This level is numbered as #.#.#.# (e.g. Product Test is 1.6.4.2)
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Project scope management
“100% rule”
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Project scope management
Deliverables
Deliverable is any unique and verifiable product, result,
or capability to perform a service that must be produced
to complete a process, phase, or project
Not only external deliverables that are subject to approval by the
project sponsor or customer
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Project scope management
Milestones
Milestones are measurable and observable and serve as
progress markers (flags)
By definition, milestones are independent of time
(have zero durations) therefore no work or consumption
of resources is associated with them
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Project scope management
Create WBS
Critical Points for Building a WBS

All deliverables must appear on the WBS

Top to bottom approach

Each summary task must be meaningful

Each task must add value to its summary task

Each task and summary task is determined by an active verb
and an object (product)
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Project scope management
Create WBS
Critical Points for Building a WBS

Size of a task
 8/80 rule

Continue analyzing if the new tasks are easier to:
 Estimate duration
 Assign resources
 Monitor their progress
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Project scope management
Usual mistakes of a WBS

WBS in not a task list - Need for decomposition

The WBS should be outcome oriented

The upper level package should sum up all the work and cost
of the lower levels

Too Many Tasks
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Project scope management
Usual mistakes of a WBS

Forgotten tasks:
 Planning the project
 Project Management
 Approval cycles
 Key project meetings
 Management - customer interfaces
 Quality inspections/fixing defects
 Test planning, development & execution
 Training
 Project reviews and project closing
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Critical Path Method
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Critical Path Method (CPM)

Management is continually seeking new and better control
techniques to cope with complexities, masses of data and
tight deadlines

Managers want better methods for presenting technical and
cost data to customers
Scheduling techniques help achieve such goals
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Critical Path Method (CPM)
The most widely known / used scheduling technique:
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Critical Path Method (CPM)
Most common techniques

Gantt or bar charts
 Shows planned and actual progress
 Easy-to-read method to show current status
[+]
[-]
Provide a picture of the current
state of a project
Difficult to follow with
complex projects
Easily understood

Network scheduling
 Critical Path Method
 Program Evaluation and Review Technique
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Critical Path Method (CPM)
Main advantages of network scheduling techniques

Assist management to decide how to use its resources to achieve time and
cost goals

Provide visibility and enable management to control unique projects

Help management evaluate alternatives by answering questions such as:
 How time delays will influence project completion
 Where slack * exists between tasks
 What elements are critical to meet the completion date
* Slack is the amount of time that a task can slip before
it affects another task or the project's finish date.
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Critical Path Method (CPM)
Main advantages of network scheduling techniques

Provide the basis for obtaining the facts for decision-making

Determine manpower, material and capital requirements

Provide a means for checking progress

Reveal interdependencies of activities
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Critical Path Method (CPM)

The Critical Path Method (CPM) is the most widely known
and used network scheduling technique

The Critical Path Method or Critical Path Analysis, is a
mathematically based algorithm for scheduling a set of
project activities
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Critical Path Method (CPM)

CPM was developed in the 1950’s by the US Navy

Commonly used with all forms of projects, including
construction, software development, research projects,
product development, engineering, and plant maintenance,
among others

Any project with interdependent activities can apply this
method of network scheduling
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Critical Path Method (CPM)

The essential technique for using CPM is to construct a
model of the project that includes the following:
 A list of all activities required to complete the project (also
known as Work Breakdown Structure)
 The time (duration) that each activity will take to
completion
 The dependencies between the activities
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Critical Path Method (CPM)

CPM calculates:
 The longest path of planned activities to the end of the project
 The duration of the project
 The earliest and latest that each activity can start and finish without
making the project longer

CPM determines “critical activities” (on the longest path) and
“critical path”
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Critical Path Method (CPM)

CPM prioritizes activities so as to shorten the planned critical
path of a project by:
 “Fast tracking” (performing more activities in parallel)
 “Crashing the critical path” (shortening the durations of
critical path activities by adding resources)
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Critical Path Method (CPM)
The CPM Approach

Step One
Break project into activities necessary for completion (WBS)
Determine sequential relationship of activities

Every activity must have an event to mark commencement, i.e. completion of
preceding activity


A critical question: Can activities overlap?
Step Two
Create time estimates for each activity
Determine earliest possible start & finish date, latest possible start &
finish date
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Critical Path Method (CPM)
The CPM Approach
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Critical Path Method (CPM)

Setting up a seminar
Tasks required:
A. Find time and place
I. Disseminate poster
B. Book room
J. Check invitation
C. Order Snacks
K. Post invitation
D. Order coffee
L. Email invitation
E. Draft poster
M. Prepare teaching material
F. Draft invitation
N. Prepare Avs
G. Put on Website
O. Check Avs
H. Check poster
P. Run seminar
Construct the model
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Critical Path Method (CPM)
Activity-on-Arrow (AoA)
Activity-on-Node (AoN)

Uses nodes to represent the activity

Uses arrows to represent precedence relationships
Types of interdependencies:
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Critical Path Method (CPM)
Four types of dependencies or logical relationships

Finish-to-Start (FS): A logical relationship in which a successor activity
cannot start until a predecessor activity has finished

The awards ceremony (successor) cannot start until the race (predecessor)
has finished

A manual has to be written (predecessor) before printed (successor)

Finish-to-Finish (FF)

Start-to-Start (SS)

Start-to-Finish (SF)
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Critical Path Method (CPM)
Four types of logical relationships

Finish-to-Start (FS)

Finish-to-Finish (FF): A logical relationship in which a successor
activity cannot finish until a predecessor activity has finished

Connecting the house with the electricity grid cannot finish until the
electrical installation of the house is completed

Preparing and baking a cake (successor) cannot finish until the oven is
pre-heated (predecessor)

Start-to-Start (SS)

Start-to-Finish (SF)
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Critical Path Method (CPM)
Four types of dependencies or logical relationships

Finish-to-Start (FS)

Finish-to-Finish (FF)

Start-to-Start (SS): A logical relationship in which a successor activity
cannot start until a predecessor activity has started
 Editing a document (successor) can begin
after writing the document (predecessor)
has started

Start-to-Finish (SF)
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Critical Path Method (CPM)
Four types of dependencies or logical relationships

Finish-to-Start (FS)

Finish-to-Finish (FF)

Start-to-Start (SS)

Start-to-Finish (SF): A logical relationship in which a successor activity
cannot finish until a predecessor activity has started
 Launching a product (successor) cannot finish before the system has been
tested for an adequate period of time (predecessor)
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Critical Path Method (CPM)
Four types of dependencies or logical relationships

Lead: Refers to a relationship whereby the successor activity begins
before the predecessor activity has completed
In the construction of a two-floor building there are two sequential tasks;
electrical work & painting. Electrical work should finish before painting
starts. However, as electrical work is completed for 1st floor, painting of the
1st floor can start in parallel to electrical work in the 2nd floor.
electrical
work
painting
walls
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Critical Path Method (CPM)
Four types of dependencies or logical relationships

Lag: Refers to a relationship whereby the successor activity cannot
start right after the end of its predecessor
You have to paint a newly constructed room. This will be realized with the
painting of the primer coating, before the final painting. However, you will
need to wait for some time in order the primer coating to dry before
applying the final paint.
No resources are associated with Lag
primary coating
final paint
Software use only Lag
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Critical Path Method (CPM)
1.
Break project into activities
2.
Determine sequential relationship of activities
3.
Create time estimates for each activity
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50
Critical Path Method (CPM)
Start
Design the network
What is the project’s
minimum duration?
101
Critical Path Method (CPM)
The Forward Pass

The Forward Pass answers the question:
“What is the soonest that the project
could be finished?”

To begin the forward pass, the scheduler starts at the beginning of
the project
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Critical Path Method (CPM)
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Critical Path Method (CPM)
The Backward Pass

The Backward Pass answers the question:
"What is the latest time Activity X can
start without delaying the project?"

To begin the backward pass, the scheduler starts at the end of the
project and works backwards
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Critical Path Method (CPM)
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Critical Path Method (CPM)
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53
Critical Path Method (CPM)
Step 1-Define the Project
Cables Ltd is bringing a new product on line to be manufactured in
their current facility. The owners have identified 11 activities and
their precedence relationships. Develop an AoN for the project.
Activity
A
B
C
D
E
F
G
H
I
J
K
Description
Develop product specifications
Design manufacturing process
Source & purchase materials
Source & purchase tooling & equipment
Receive & install tooling & equipment
Receive materials
Pilot production run
Evaluate product design
Evaluate process performance
Write documentation report
Transition to manufacturing
Immediate Duration
Predecessor (weeks)
None
4
A
6
A
3
B
6
D
14
C
5
E&F
2
G
2
G
3
H&I
4
J
2
107
Critical Path Method (CPM)
Step 2 - Diagram the Network for Cables Ltd
108
54
Critical Path Method (CPM)
Step 3a - Add Deterministic Time Estimates and Connected Paths
109
Critical Path Method (CPM)
Step 3b - Calculate the Path Completion Times
Paths
ABDEGHJK
ABDEGIJK
ACFGHJK
ACFGIJK
Path duration
40
41
22
23
ABDEGIJK is the project’s
critical path
Project duration: 41 weeks
110
55
Critical Path Method (CPM)
Step 3c - Calculate the ES and EF
111
Critical Path Method (CPM)
Step 3d - Calculate the LS and LF
112
56
Critical Path Method (CPM)
Step 3e - Calculating Slack
A c t iv it y
A
B
C
D
E
F
G
H
I
J
K
L a te
F in is h
4
10
25
16
30
30
32
35
35
39
41
E a r ly
F in is h
4
10
7
16
30
12
32
34
35
39
41
S la c k
(w e e k s )
0
0
18
0
0
18
0
1
0
0
0
113
Critical Path Method (CPM)
Network definitions:

All activities on the critical path have zero slack

Slack defines how long non-critical activities can be delayed
without delaying the project
114
57
Critical Path Method (CPM)
Network definitions:

Slack is the activity’s late finish minus its early finish (or its late
start minus its early start)
115
Critical Path Method (CPM)
Network definitions:

Earliest Start (ES) is the Earliest Finish (EF) of the immediately
preceding activity
116
58
Critical Path Method (CPM)
Network definitions:

Earliest Finish (EF) is the Earliest Start (ES) plus the activity time
(duration)
117
Critical Path Method (CPM)
Network definitions:

Latest Start (LS) and Latest Finish (LF) is the latest an activity can
start (LS) or finish (LF) without delaying the project completion
118
59
Critical Path Method (CPM)

Setting up a seminar
Tasks required:
A. Find time and place (2 hrs)
I. Disseminate poster (4 hrs)
B. Book room (1 hr)
J. Check invitation (1 hr)
C. Order Snacks (2 hrs)
K. Post invitation (1 hr)
D. Order coffee (1 hr)
L. Email invitation (1 hr)
E. Draft poster (2 hrs)
M. Prepare teaching material (10 hrs)
F. Draft invitation (2 hrs)
N. Prepare Avs (3 hrs)
G. Put on Website (1 hr)
O. Check Avs (1hr)
H. Check poster (1 hr)
P. Run seminar (4 hrs)
What is the project’s duration and the critical path?
119
Critical Path Method (CPM)

Build a door
120
60
Critical Path Method (CPM)

Build a warehouse
121
Program Evaluation &
Review Technique (PERT)
122
61
Critical Path Method - Program Evaluation & Review Technique
Critical Path Method (CPM)
vs
Program Evaluation & Review Technique (PERT)
Both PERT and CPM:

Graphically display the precedence relationships & sequence of activities

Estimate the project’s duration

Identify critical activities that cannot be delayed without delaying the
project

Estimate the amount of slack associated with non-critical activities
123
Critical Path Method - Program Evaluation & Review Technique
Critical Path Method (CPM)
vs
Program Evaluation & Review Technique (PERT)
Critical Path Method (CPM):

Individual tasks are routine - Tasks’ duration is deterministic
Program Evaluation & Review Technique (PERT):

Tasks’ duration is probabilistic
124
62
Program Evaluation & Review Technique
Cables Ltd is bringing a new product on line to be manufactured in
their current facility. The owners have identified 11 activities and
their precedence relationships.
Activity
A
B
C
D
E
F
G
H
I
J
K
Description
Develop product specifications
Design manufacturing process
Source & purchase materials
Source & purchase tooling & equipment
Receive & install tooling & equipment
Receive materials
Pilot production run
Evaluate product design
Evaluate process performance
Write documentation report
Transition to manufacturing
Immediate Duration
Predecessor (weeks)
None
4
A
6
A
3
B
6
D
14
C
5
E&F
2
G
2
G
3
H&I
4
J
2
125
Program Evaluation & Review Technique
Network for Cables Ltd
126
63
Program Evaluation & Review Technique
Calculate the LS and LF
127
Program Evaluation & Review Technique
Revisiting Cables Ltd using probabilistic time estimates
Activity
A
B
C
D
E
F
G
H
I
J
K
Description
Develop product specifications
Design manufacturing process
Source &purchase materials
Source &purchase tooling &equipment
Receive &install tooling &equipment
Receive materials
Pilot production run
Evaluate product design
Evaluate process performance
Write documentation report
Transition to manufacturing
PERT
CPM
PERT
Optimistic
time
2
3
2
4
12
2
2
2
2
2
2
Most likely
time
4
7
3
7
16
5
2
3
3
4
2
Pessimistic
time
6
10
5
9
20
8
2
4
5
6
2
128
64
Program Evaluation & Review Technique
In order to calculate the expected time durations for each task we make use
of Beta Probability Distribution:

A typical beta distribution is shown below, note that it has definite end
points

The expected time for finishing each activity is a weighted average
Expected time =
𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐭𝐢𝐜
𝟒 × 𝐌𝐨𝐬𝐭 𝐥𝐢𝐤𝐞𝐥𝐲
𝐏𝐞𝐬𝐬𝐢𝐦𝐢𝐬𝐭𝐢𝐜
𝟔
129
Program Evaluation & Review Technique
Calculating expected task times:
Activity
A
B
C
D
E
F
G
H
I
J
K
Optimistic
time
2
3
2
4
12
2
2
2
2
2
2
Expected time =
Most likely
time
4
7
3
7
16
5
2
3
3
4
2
𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐭𝐢𝐜
Pessimistic
time
6
10
5
9
20
8
2
4
5
6
2
𝟒 × 𝐌𝐨𝐬𝐭 𝐥𝐢𝐤𝐞𝐥𝐲
Expected
time
4
6.83
3.17
6.83
16
5
2
3
3.17
4
2
𝐏𝐞𝐬𝐬𝐢𝐦𝐢𝐬𝐭𝐢𝐜
𝟔
130
65
Program Evaluation & Review Technique
Network diagram with expected activity times:
131
Program Evaluation & Review Technique
Estimated path durations through the network:
Activities on paths
ABDEGHJK
ABDEGIJK
ACFGHJK
ACFGIJK
Project duration with the use of CPM
Paths
ABDEGHJK
ABDEGIJK
ACFGHJK
ACFGIJK
Path duration
40
41
22
23
Expected duration
44.66
44.83
23.17
23.34
ABDEGIJK is the project’s
critical path
Project duration: 44.83 weeks
132
66
Program Evaluation & Review Technique
Calculate the ES and EF
133
Program Evaluation & Review Technique
Calculate the LS and LF
134
67
Program Evaluation & Review Technique
Estimating the probability of completion dates
Using probabilistic time estimates
offers the advantage of
predicting the probability of project completion date
135
Program Evaluation & Review Technique
Estimating the probability of completion dates

We have already calculated the expected time for each activity by
making three time estimates

Now we need to calculate the variance* for each activity

The variance of the beta probability distribution is:
σ
2
 p  o 
 

6


2
where:
 p = pessimistic activity time estimate
 o = optimistic activity time estimate
*
variance measures how far a
set of numbers is spread out
136
68
Program Evaluation & Review Technique
σ
Project Activity Variance
Activity
Pessimistic
2
 p  o 
 

6


Optimistic
Most Likely
A
2
4
6
0.44
B
3
7
10
1.36
C
2
3
5
0.25
D
4
7
9
0.69
E
12
16
20
1.78
F
2
5
8
1.00
G
2
2
2
0.00
H
2
3
4
0.11
I
2
3
5
0.25
J
2
4
6
0.44
K
2
2
2
0.00
2
Variance
137
Program Evaluation & Review Technique
Variances of each path through the network
138
69
Program Evaluation & Review Technique
Variances of each path through the network
Path
Number
Activities on Path
Expected duration
(weeks)
Path Variance
(weeks)
1
A,B,D,E,G,H,J,K
44.66
4.82
2
A,B,D,E,G,I,J,K
44.83
4.96
3
A,C,F,G,H,J,K
23.17
2.24
4
A,C,F,G,I,J,K
23.34
2.38
139
Program Evaluation & Review Technique
Calculating the probability of completing the project in less
than a specified time

When you know:
 the expected completion time
 its variance
you can calculate the probability of completing the project in “x” weeks
with the following formula
z
specified time  path expected time  DT  EFP 


path vari ance
σP 2 

where:
 DT = the specified completion date
 EFP = the expected completion time of the path
 σΡ2 = the variance of the path
140
70
Program Evaluation & Review Technique
141
Program Evaluation & Review Technique
Calculating the probability of finishing the project in 48 weeks

e.g. probability for Path 1 is:
z

specified time  path expected time  48 weeks  44.66 weeks 

  1.52
path vari ance
4.82


Using the z values for beta distribution, you can calculate the probability:
z = 1.52 means that Probability of completion is 0.9357 or 93.57%
Path Variance z-value
(weeks)
Probability of
Completion
Path
Number
Activities on
Path
Expected
duration
(weeks)
1
A,B,D,E,G,H,J,K
44.66
4.82
1.5216
0.9357
2
A,B,D,E,G,I,J,K
44.83
4.96
1.4215
0.9222
3
A,C,F,G,H,J,K
23.17
2.24
16.5898
1.000
4
A,C,F,G,I,J,K
23.34
2.38
15.9847
1.000
142
71
Program Evaluation & Review Technique
Which path is the critical path?
Activities not on PERT’s critical path might be more critical to the completion of
a project than the activities PERT identifies as critical.
Every activity has a probability of being critical (for some probability is ~0, for others ~1)
A Project Manager should
focus on the tasks with the
highest probability of being
critical
B
9 days
D
A
6 days
3 days
C
8 days
143
Program Evaluation & Review Technique

Setting up a seminar
Tasks required:
A. Find time and place (2 hrs, 0.8-3.0)
I. Disseminate poster (4 hrs, 3.0-4.8)
B. Book room (1 hr, 0.5-1.2)
J. Check invitation (1 hr, 0.5-1.4)
C. Order Snacks (2 hrs, 1.5-2.3)
K. Post invitation (1 hr, 0.6-1.8)
D. Order coffee (1 hr, 0.5-1.5)
L. Email invitation (1 hr, 0.3-1.5)
E. Draft poster (2 hrs, 0.5-3.0)
M. Prepare teaching material (10 hrs, 4.5-18.0)
F. Draft invitation (2 hrs, 0.5-3.0)
N. Prepare Avs (3 hrs, 1.2-5.0)
G. Put on Events Board (1 hr, 0.5-1.2)
O. Check Avs (1hr, 0.5-1.3)
H. Check poster (1 hr, 0.5-1.2)
P. Run seminar (4 hrs, 3.8-4.2)
What is the possibility of the seminar to be organized within 18 hrs?
144
72
Earned Value Management
145
Earned Value Management
146
73
Earned Value Management
Earned Value Management (EVM) is a project management
technique for measuring project performance and
progress in an objective manner
147
Earned Value Management
Measuring Progress: Project tracking without Earned Value Management
Planned duration: 12 weeks
Planned budget: $170,000
Task
Duration
Cost
A
1
10.000
B
1
10.000
C
1
10.000
D
1
10.000
E
1
20.000
F
1
20.000
G
1
30.000
H
1
20.000
I
1
10.000
J
1
10.000
K
1
10.000
L
1
10.000
148
74
Earned Value Management
Measuring Progress: Project tracking without Earned Value Management
Planned duration: 12 weeks
Actual duration: 8 weeks
Planned budget: $170,000
Actual budget: $70,000
Is this a successful project?
What if AC curve represents current status as of 20% of
the project?
149
Earned Value Management
Project tracking without Earned Value Management

What is missing from this chart is how much work has been
accomplished

A method is needed to measure technical performance objectively
and quantitatively

That is what Earned Value Management accomplishes
150
75
Earned Value Management

Earned Value Management has the ability to
measurements of
scope, schedule
and
cost
combine
in a single
integrated system

Earned Value Management is able to provide
forecasts
of project
performance problems,
accurate
which is an
important contribution for project management
151
Earned Value Management

A successful program manager says: “We completed the project we promised to
deliver in the time we promised and with the budget we asked for”

Standard source of information about the status of a project: Status of the budget,
which only tells how quickly and to what extent money are spent

Need to track how quickly and to what extent work promised to be done is
accomplished

The coupling of money spent to work done
or schedule consumed is loose and
nonlinear
152
76
Earned Value Management

Project A: In good shape, under budget and ahead of schedule

Project B: Over budget, but if we realize it is ahead of schedule, we can
slow the effort to save money

Project C: Cost variance looks better than A’s, but if we realize it is behind
schedule, we can spend more to catch up

Project D: It looks just like B in terms of
cost variance, but we can’t slow down to
save money. Also, it looks like D in terms
C
A
of schedule, but we can’t spend more to
catch up. It’s time to re-scope!
D
B
153
Earned Value Management

Essential features of any EVM implementation include:
 A project plan that identifies work to be accomplished
 A valuation of planned work (Planned Value)
 Pre-defined metrics to quantify the accomplishment of work
(Earned Value)
154
77
Earned Value Management
Project tracking with Earned Value Management

The project plan includes pre-defined methods of quantifying
the accomplishment of work

At the end of each week, the project manager identifies every
detailed element of work that has been completed, and sums
the Planned Value for each of these completed elements

Earned Value may be accumulated monthly, weekly, or as
progress is made
155
Earned Value Management
Example of EVM indicators
Project Plan
PV = Budget assigned to scheduled work

Project: Renovation of ten (10) hotel rooms
EV =

Duration: Two (2) months
AC = Realized cost

Budget: 10.000 € per hotel room | Total budget: 100.000 €
Project Execution

Date: One (1) month after the initiation of the project

Current status: Six (6) hotel rooms have been renovated

Cost: 40.000 € (paid for staff costs, materials, equipment)
What are the: (i) Planned Value, (ii) Earned Value, (iii) Actual Cost, (iv) Budget at
Completion, for the current date?
156
78
Earned Value Management
Example of EVM indicators
Project Plan
PV = Budget assigned to scheduled work

Project: Renovation of ten (10) hotel rooms
EV =

Duration: Two (2) months
AC = Realized cost

Budget: 10.000 € per hotel room | Total budget: 100.000 €
Project Execution

Date: One (1) month after the initiation of the project

Current status: Six (6) hotel rooms have been renovated

Cost: 40.000 € (paid for staff costs, materials, equipment)
What are the: (i) Planned Value, (ii) Earned Value, (iii) Actual Cost, (iv) Budget at
Completion, for the current date?
157
Earned Value Management
Project tracking with Earned Value Management

Earned Value:
Task
Duration
Cost
A
1
10.000
B
1
10.000
C
1
10.000
D
1
10.000
E
1
20.000
F
1
20.000
G
1
30.000
H
1
20.000
I
1
10.000
J
1
10.000
K
1
10.000
L
1
10.000
158
79
Earned Value Management
Project tracking with Earned Value Management
The project was under
budget, relative to the
amount of work accomplished
159
Earned Value Management
Project tracking with Earned Value Management
The project was under
budget, relative to the
amount of work accomplished
160
80
Earned Value Management
Project tracking with Earned Value Management
typical EVM line chart
Planned value (PV): Budget assigned to scheduled work
Earned value (EV): Work performed (expressed in terms of the budget authorized for that work)
Actual cost (AC): Realized cost
161
Earned Value Management

Steps in EVM:
1.
Identify the EV curve
2.
Compare it to PV (for schedule performance)
3.
Compare it to AC (for cost performance)
162
81
Earned Value Management
Definitions
Schedule Variance (SV):

Measure of schedule performance on a project

Amount by which the project is ahead or behind the planned delivery date,
at a given point in time

Equals to the earned value (EV) minus the planned value (PV)
SV = EV - PV
Cost Variance (CV):

Measure of cost performance on a project

Amount of budget deficit or surplus at a given point in time

Equals to the earned value (EV) minus the actual cost (AC)

Indicates the relationship of physical performance to the costs spent
CV = EV - AC
163
Earned Value Management
CV = EV - AC
SV = EV – PV
164
82
Earned Value Management

Cost Performance Indicator (CPI): Index showing the efficiency of the
utilization of the resources on the project
CPI = Earned Value (EV) / Actual Cost (AC)

Schedule Performance Indicator (SPI): Index showing the efficiency of
the time utilized in the project
SPI = Earned Value (EV) / Planned Value (PV)

Cost – Schedule Index (CSI)
CSI = CPI × SPI = (EV)2 / (AC × PV)

Estimate at Completion (EAC): Index estimating the total expenditures
for completing a project based on the expenditure history to date
EAC = Actual Cost (AC) / Earned Value (EV) × Total budget (BAC)
165
Earned Value Management

Critical Ratio Control Chart
CPI = EV / AC
166
83
Earned Value Management

Cost Control Chart
CPI = EV / AC
167
Earned Value Management

The Earned Value Chart
168
84
Earned Value Management

The Earned Value Chart
169
Earned Value Management
Methods for estimating percent completion

The 50-50 estimate: 50% is assumed when task is begun, and remaining 50% when
work completed

0-100% rule: This rule allows no credit for work until task is complete - Highly
conservative rule, project always seem late until the very end of project when
everything appears to suddenly catch up

Proportional rule: This rule divides planned (or actual) time-to-date by total
scheduled time (or budgeted or actual cost-to-date) to calculate percent complete
 Lines of code (IT projects)
 Materials used
 Qualitatively
170
85
Earned Value Management
A simple example: Conduct a series of telephone interviews
Facts:
 The project will last 10 months
 You plan to conduct 100 interviews each month
 You plan to spend € 300 to conduct each interview
 The total project budget is € 300,000
During the first month:
 Conducted 75 interviews
 Spent a total of € 15,000
Since you planned to conduct 100 interviews in the first month and you only
conducted 75, you are behind schedule
Since you planned to spend € 300 per interview and you only spent € 200 (€ 15,000 ÷
75 interviews = € 200 per interview), you’re under budget
171
Earned Value Management
Exercise:
You are the project manager responsible for the development of a new
software platform. The project life cycle is made up of the phases in the WBS
below. Each Work Package (WP) is planned to be completed one after the other.
Hardware
Design
1
Requirements
2
Graphical
User
Interface
3
Business
Logic
Code
4
Software
Developer
Testing
5
User
Acceptance
Testing
172
86
Earned Value Management
Today is the end of Month 5.

Calculate PV, EV, AC, BAC, CV, CPI, SV, SPI, EAC, at the end of month 5.

Based on your results, what would you be most concerned with?
173
“Crashing” Projects
174
87
“Crashing” Projects
Reducing Project Completion Time

Project completion times may need to be shortened due to
several reasons:
 Different deadlines
 Penalty clauses
 Need to put resources on a new project
 Promised completion dates

Reduced project completion time is called “crashing”
175
“Crashing” Projects
Reducing Project Completion Time

Crashing a project needs to balance
 Shorten a project duration
 Cost resulting from shortening the project duration

Crashing a project requires knowing
 Crash time of each activity
 Crash cost of each activity
176
88
“Crashing” Projects
Reducing Project Completion Time
The indicator used for “crashing” project is the following:
Crash cost Crash cost − Normal cost
=
Duration Normal time − Crash time
increased cost
Normal Time: 10 days
Normal Cost: 1 000 €
Crash Time: 6 days
Crash Cost per day =
3 000 − 1 000 2 000
=
= 500 € / day
10 − 6
4
Crash Cost: 3 000 €
decreased time
177
“Crashing” Projects
Cables Ltd is bringing a new product on line to be manufactured in
their current facility. The owners have identified 11 activities and
their precedence relationships.
Activity
A
B
C
D
E
F
G
H
I
J
K
Description
Develop product specifications
Design manufacturing process
Source & purchase materials
Source & purchase tooling & equipment
Receive & install tooling & equipment
Receive materials
Pilot production run
Evaluate product design
Evaluate process performance
Write documentation report
Transition to manufacturing
Immediate Duration
Predecessor (weeks)
None
4
A
6
A
3
B
6
D
14
C
5
E&F
2
G
2
G
3
H&I
4
J
2
178
89
Critical Path Method (CPM)
Cables By Us
Paths
ABDEGHJK
ABDEGIJK
ACFGHJK
ACFGIJK
Path duration
40
41
22
23
ABDEGIJK is the project’s
critical path
Project duration: 41 weeks
179
“Crashing” Projects
Critical Path: ABDEGIJK
Duration: 41 weeks
Reducing Project Completion Time
Activity
Normal
Time (wk)
Normal
Cost ($)
Crash
Time
Crash
Cost ($)
Max. weeks Reduce cost
of reduction
per week
A
4
8,000
3
11,000
1
3,000
B
6
30,000
5
35,000
1
5,000
C
3
6,000
3
6,000
0
0
D
6
24,000
4
28,000
2
2,000
E
14
60,000
12
72,000
2
6,000
F
5
5,000
4
6,500
1
1,500
G
2
6,000
2
6,000
0
0
H
2
4,000
2
4,000
0
0
I
3
4,000
2
5,000
1
1,000
J
4
4,000
2
6,400
2
1,200
K
2
5,000
2
5,000
0
0
180
90
“Crashing” Projects
Assumption
Crashing costs are considered to be linear
181
“Crashing” Projects
“Crashing” example:
Suppose the Cables Ltd project manager wants to reduce the new
product project duration from 41 to 36 weeks
Two Tips

Crash the least expensive activities on the critical path first
(based on cost/week)

Crash activities on the critical path
182
91
“Crashing” Projects
“Crashing” example:
Suppose the Cables Ltd project manager wants to reduce the new
product project duration from 41 to 36 weeks
Assumption

Crashing costs are considered to be linear
Tips

Look to crash activities on the critical path

Crash the least expensive activities on the
critical path first
(based on cost/week)

Crash activity I from 3 weeks to 2 weeks

Crash activity J from 4 weeks to 2 weeks

Crash activity D from 6 weeks to 4 weeks
183
“Crashing” Projects
Crashed Network Diagram:
184
92
“Crashing” Projects
“Crashing” example:
Suppose the Cables Ltd project manager wants to reduce the new
product project duration from 41 to 36 weeks
Calculate the cost for Crash activities

Crash activity I from 3 weeks to 2 weeks: $1 000

Crash activity J from 4 weeks to 2 weeks: $2 400

Crash activity D from 6 weeks to 4 weeks: $4 000
Crash Cost: $7 400
Will crashing 5 weeks return more in benefits than it costs?
185
“Crashing” Projects
“Crashing” example:
Activity
Predecessor
A
-
B
C
Duration
Cost
normal/crash
normal/crash
3 days / 2 days
€40 / €80
A
2 days / 1 day
€20 / €80
A
2 days / 2 days
€20 / €20
D
A
4 days / 1 day
€30 / €120
E
B, C, D
3 days / 1 day
€10 / €80
What is the (normal) critical path?
What is the total (normal) duration of this project?
What would be the minimal cost to crash the project by one day?
What would be the minimal cost to crash the project by three days?
What would be the maximum number of days you could crash the project?
What would be the cost to crash to the maximum?
186
93
“Crashing” Projects
“Crashing” example:
Activity
Predecessor
Duration
A
-
3 days / 2 days
€20 / €60
B
-
3 days / 1 day
€20 / €80
C
A
2 days / 1 day
€40 / €100
normal/crash
Cost
normal/crash
D
B
5 days / 3 days
€70 / €170
E
A
3 days / 2 days
€50 / €60
F
C,D
4 days / 2 days
€35/ €85
G
F
3 days / 3 days
€80 / €80
H
E,G
2 days / 1 day
€40 / €100
What is the total (normal) duration of this project?
What would be the minimal cost to crash the project by six days?
What would be the maximum number of days you could crash the project?
What would be the cost to crash to the maximum?
187
94