Chapter 9
Project Management
Lecture Outline
•
•
•
•
•
•
•
Project Planning
Project Scheduling
Project Control
CPM/PERT
Probabilistic Activity Times
Microsoft Project
Project Crashing and Time-Cost Trade-off
Copyright 2011 John Wiley & Sons, Inc.
9-2
Project Management Process
• Project
• unique, one-time operational activity or effort
Copyright 2011 John Wiley & Sons, Inc.
9-3
Project Management Process
Copyright 2011 John Wiley & Sons, Inc.
9-4
Project Management Process
Copyright 2011 John Wiley & Sons, Inc.
9-5
Project Elements
•
•
•
•
•
•
•
•
Objective
Scope
Contract requirements
Schedules
Resources
Personnel
Control
Risk and problem analysis
Copyright 2011 John Wiley & Sons, Inc.
9-6
Project Team and Project Manager
• Project team
• made up of individuals from various areas and
departments within a company
• Matrix organization
• a team structure with members from functional
areas, depending on skills required
• Project manager
• most important member of project team
Copyright 2011 John Wiley & Sons, Inc.
9-7
Scope Statement
• Scope statement
• a document that provides an understanding,
justification, and expected result of a project
• Statement of work
• written description of objectives of a project
Copyright 2011 John Wiley & Sons, Inc.
9-8
Work Breakdown Structure
• Work breakdown structure (WBS)
• Breaks a project into components,
subcomponents, activities, and tasks
Copyright 2011 John Wiley & Sons, Inc.
9-9
Work Breakdown Structure for Computer Order
Processing System Project
Copyright 2011 John Wiley & Sons, Inc.
9-10
Responsibility Assignment Matrix
• Organizational Breakdown Structure (OBS)
• a chart that shows which organizational units are
responsible for work items
• Responsibility Assignment Matrix (RAM)
• shows who is responsible for work in a project
Copyright 2011 John Wiley & Sons, Inc.
9-11
Responsibility Assignment Matrix
Copyright 2011 John Wiley & Sons, Inc.
9-12
Global and Diversity Issues in Project
Management
• Global project teams are formed from different
genders, cultures, ethnicities, etc.
• Diversity among team members can add an
extra dimension to project planning
• Cultural research and communication are
important elements in the planning process
Copyright 2011 John Wiley & Sons, Inc.
9-13
Project Scheduling
• Steps
•
•
•
•
Define activities
Sequence activities
Estimate time
Develop schedule
Copyright 2011 John Wiley & Sons, Inc.
• Techniques
• Gantt chart
• CPM/PERT
• Software
• Microsoft Project
9-14
Gantt Chart
•
•
•
•
Graph or bar chart
Bars represent the time for each task
Bars also indicate status of tasks
Provides visual display of project schedule
• Slack
• amount of time an activity can be delayed without
delaying the project
Copyright 2011 John Wiley & Sons, Inc.
9-15
Example of Gantt Chart
0
|
2
|
Month
4
|
6
|
8
|
10
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials
Build house
Select paint
Select carpet
Finish work
1
3
5
7
9
Month
Copyright 2011 John Wiley & Sons, Inc.
9-16
Project Control
• Time management
• Cost management
• Performance management
• Earned Value Analysis – standard procedure to
• numerically measure a project’s progress
• forecast its completion date and cost
• measure schedule and budget variation
Copyright 2011 John Wiley & Sons, Inc.
9-17
Project Control
• Quality management
• Communication
• Enterprise project management
Copyright 2011 John Wiley & Sons, Inc.
9-18
CPM/PERT
• Critical Path Method (CPM)
• DuPont & Remington-Rand
• Deterministic task times
• Activity-on-node network construction
• Project Evaluation and Review Technique (PERT)
• US Navy and Booz, Allen & Hamilton
• Probabilistic task time estimates
• Activity-on-arrow network construction
Copyright 2011 John Wiley & Sons, Inc.
9-19
Project Network
• Activity-on-node (AON)
• nodes represent activities
• arrows show precedence
relationships
Branch
1
Node
2
3
• Activity-on-arrow (AOA)
• arrows represent activities
• nodes are events for
points in time
• Event
• completion or beginning
of an activity in a project
Copyright 2011 John Wiley & Sons, Inc.
9-20
AOA Project Network for a House
3
Lay
foundation
2
1
3
Design house
and obtain
financing
Build
house
0
1
2
Dummy
Order and
receive
materials
4
Select
paint
Finish
work
6
3
1
1
1
7
Select
carpet
5
Copyright 2011 John Wiley & Sons, Inc.
9-21
Concurrent Activities
• Dummy
• two or more activities cannot share same start and
end nodes
3
Lay foundation
2
Lay
foundation
3
Order material
(a) Incorrect precedence
relationship
Copyright 2011 John Wiley & Sons, Inc.
2
Dummy
2
0
1
4
Order material
(b) Correct precedence
relationship
9-22
AON Network for House Building
Project
Start
Lay
foundation
Build
house
2
2
4
3
Activity Number
Activity Time
1
3
7
1
Design house
and obtain
financing
3
1
5
1
6
1
Order &receive
materials
Select
paint
Select
carpet
Copyright 2011 John Wiley & Sons, Inc.
Finish work
9-23
Critical Path
2
2
Start
1
3
7
1
3
1
A:
B:
C:
D:
4
3
1-2-4-7
3 + 2 + 3 + 1 = 9 months
1-2-5-6-7
3 + 2 + 1 + 1 + 1 = 8 months
1-3-4-7
3 + 1 + 3 + 1 = 8 months
1-3-5-6-7
3 + 1 + 1 + 1 + 1 = 7 months
Copyright 2011 John Wiley & Sons, Inc.
5
1
6
1
 Critical path


Longest path through a
network
Minimum project
completion time
9-24
Activity Start Times
Start at 5 months
2
2
Start
4
3
Finish at 9 months
1
3
7
1
3
1
Start at 3 months
Copyright 2011 John Wiley & Sons, Inc.
5
1
Finish
6
1
Start at 6 months
9-25
Node Configuration
Activity
number
Activity
duration
Copyright 2011 John Wiley & Sons, Inc.
Earliest
start
Earliest
finish
1
0
3
3
0
3
Latest
start
Latest
finish
9-26
Activity Scheduling
• Earliest start time (ES)
• earliest time an activity can start
• ES = maximum EF of immediate predecessors
• Forward pass
• starts at beginning of CPM/PERT network to determine
earliest activity times
• Earliest finish time (EF)
• earliest time an activity can finish
• earliest start time plus activity time
• EF= ES + t
Copyright 2011 John Wiley & Sons, Inc.
9-27
Earliest Activity Start and Finish Times
Lay foundation
Build house
2
3
5
4
2
5
8
3
1
Start
0
Finish work
3
7
1
Design house
and obtain
financing
8
9
1
6
3
3
4
1
Order and
receive materials
6
7
1
5
5
6
1
Select carpet
Select paint
Copyright 2011 John Wiley & Sons, Inc.
9-28
Activity Scheduling
• Latest start time (LS)
• Latest time an activity can start without delaying critical
path time
• LS= LF - t
• Latest finish time (LF)
• latest time an activity can be completed without delaying
critical path time
• LF = minimum LS of immediate predecessors
• Backward pass
• Determines latest activity times by starting at the end of
CPM/PERT network and working forward
Copyright 2011 John Wiley & Sons, Inc.
9-29
Latest Activity Start and Finish Times
Lay foundation
Build house
2
3
2
Start
3
5
5
4
5
8
3
5
8
Finish work
1
0
3
7
8
9
1
0
3
1
8
9
Design house
and obtain
financing
3
3
4
1
4
5
Order and
receive materials
5
1
5
6
6
6
7
1
6
7
6
7
Select carpet
Select paint
Copyright 2011 John Wiley & Sons, Inc.
9-30
Activity Slack
Activity
LS
ES
LF
EF
Slack S
*1
0
0
3
3
0
*2
3
3
5
5
0
3
4
3
5
4
1
*4
5
5
8
8
0
5
6
5
7
6
1
6
7
6
8
7
1
*7
8
8
9
9
0
* Critical Path
Copyright 2011 John Wiley & Sons, Inc.
9-31
Probabilistic Time Estimates
• Beta distribution
• probability distribution traditionally used in CPM/PERT
Mean (expected time):
Variance:
a + 4m + b
t=
6
b-a
 = 6
2
2
where
a = optimistic estimate
m = most likely time estimate
b = pessimistic time estimate
Copyright 2011 John Wiley & Sons, Inc.
9-32
P(time)
P(time)
Examples of Beta Distributions
a
m
t
b
a
t
Time
m
b
P(time)
Time
a
m=t
b
Time
Copyright 2011 John Wiley & Sons, Inc.
9-33
Project with Probabilistic Time
Estimates
Equipment
installation
Equipment testing
and modification
1
4
6,8,10
2,4,12
System
development
Start
2
8
Manual
testing
3,6,9
Position
recruiting
System
training
3,7,11
5
2,3,4
Job Training
3
6
1,3,5
3,4,5
Final
debugging
10
1,4,7
Finish
11
9
2,4,6
System
testing
1,10,13
System
changeover
Orientation
7
2,2,2
Copyright 2011 John Wiley & Sons, Inc.
9-34
Activity Time Estimates
TIME ESTIMATES (WKS)
ACTIVITY
1
2
3
4
5
6
7
8
9
10
11
MEAN TIME
VARIANCE
a
m
b
t
б2
6
3
1
2
2
3
2
3
2
1
1
8
6
3
4
3
4
2
7
4
4
10
10
9
5
12
4
5
2
11
6
7
13
8
6
3
5
3
4
2
7
4
4
9
0.44
1.00
0.44
2.78
0.11
0.11
0.00
1.78
0.44
1.00
4.00
Copyright 2011 John Wiley & Sons, Inc.
9-35
Activity Early, Late Times & Slack
ACTIVITY
1
2
3
4
5
6
7
8
9
10
11
t
б
ES
EF
LS
LF
S
8
6
3
5
3
4
2
7
4
4
9
0.44
1.00
0.44
2.78
0.11
0.11
0.00
1.78
0.44
1.00
4.00
0
0
0
8
6
3
3
9
9
13
16
8
6
3
13
9
7
5
16
13
17
25
1
0
2
16
6
5
14
9
12
21
16
9
6
5
21
9
9
16
16
16
25
25
1
0
2
8
0
2
11
0
3
8
0
Copyright 2011 John Wiley & Sons, Inc.
9-36
Earliest, Latest, and Slack
1 0
8 1
Start
2 0
6 0
3 0
3 2
8
9
3
5
10 13 17
8 9
7 9
6
6
Critical Path 2-5-8-11
4 8 13
5 16 21
5 6
3 6
6 3
4 5
16
7
3
Finish
16
9
9
1 0
9 9 13
4 12 16
11 16 25
9 16 25
9
7 3 5
2 14 16
Copyright 2011 John Wiley & Sons, Inc.
9-37
Total Project Variance
2 = б22 + б52 + б82 + б112
 = 1.00 + 0.11 + 1.78 + 4.00
= 6.89 weeks
Copyright 2011 John Wiley & Sons, Inc.
9-38
CPM/PERT With OM Tools
Copyright 2011 John Wiley & Sons, Inc.
9-39
Probabilistic Network Analysis
Determine probability that project is
completed within specified time
Z=
where
=
=
x=
Z=
x-

tp = project mean time
project standard deviation
proposed project time
number of standard deviations that
x is from the mean
Copyright 2011 John Wiley & Sons, Inc.
9-40
Normal Distribution of Project Time
Probability
Z
 = tp
Copyright 2011 John Wiley & Sons, Inc.
x
Time
9-41
Southern Textile
What is probability that project is completed within 30 weeks?
P(x  30 weeks)
 = 6.89 weeks
2
 =
6.89
 = 2.62 weeks
Z=
=
x-

30 - 25
2.62
= 1.91
 = 25 x = 30
Time (weeks)
From Table A.1, (appendix A) a Z score of 1.91 corresponds to a
probability of 0.4719. Thus P(30) = 0.4719 + 0.5000 = 0.9719
Copyright 2011 John Wiley & Sons, Inc.
9-42
Southern Textile
What is probability that project is completed within 22 weeks?
P(x  22 weeks)
= 0.1271
0.3729
 = 6.89 weeks
2
 =
6.89
 = 2.62 weeks
Z=
=
x-

22 - 25
2.62
= -1.14
x = 22  = 25
Time (weeks)
From Table A.1, (appendix A) a Z score of 1.14 corresponds to a
probability of 0.3729. Thus P(22) = 0.5000 - 0.3729 = 0.1271
Copyright 2011 John Wiley & Sons, Inc.
9-43
Microsoft Project
• Popular software package for project
management and CPM/PERT analysis
• Relatively easy to use
Copyright 2011 John Wiley & Sons, Inc.
9-44
Microsoft Project
Click on “Tasks”
First step;
Start Date
Copyright 2011 John Wiley & Sons, Inc.
9-45
Microsoft Project
Click on “Format” then ”Timescale”
to scale Gantt chart.
Create precedence
relationships;
click on predecessor
activity, then
holding “Ctrl” Key,
click on successor
activity.
Copyright 2011 John Wiley & Sons, Inc.
Precedence
relationships
Gantt chart;
click on “View”
to activate
9-46
Microsoft Project
Click on “View” then
Network Diagram
Critical path
in red
Copyright 2011 John Wiley & Sons, Inc.
9-47
Microsoft Project – Zoom View
Copyright 2011 John Wiley & Sons, Inc.
9-48
Microsoft Project – Task Information
Enter % completion
Copyright 2011 John Wiley & Sons, Inc.
9-49
Microsoft Project – Degree of Completion
Activities 1, 2 and 3
100% complete
Copyright 2011 John Wiley & Sons, Inc.
Black bars show
degree of completion
9-50
PERT Analysis with Microsoft Project
Click on PERT Entry
Sheet to enter 3
time estimates
Click on PERT
calculator to compute
activity duration
Copyright 2011 John Wiley & Sons, Inc.
9-51
PERT Analysis with Microsoft Project
Copyright 2011 John Wiley & Sons, Inc.
9-52
PERT Analysis with Microsoft Project
Copyright 2011 John Wiley & Sons, Inc.
9-53
Project Crashing
• Crashing
• reducing project time by expending additional
resources
• Crash time
• an amount of time an activity is reduced
• Crash cost
• cost of reducing activity time
• Goal
• reduce project duration at minimum cost
Copyright 2011 John Wiley & Sons, Inc.
9-54
Project Network – Building a House
4
2
8
12
7
4
1
12
3
4
Copyright 2011 John Wiley & Sons, Inc.
5
4
6
4
9-55
Normal Time and Cost
vs. Crash Time and Cost
$7,000 –
$6,000 –
Crash cost
$5,000 –
Crashed activity
Slope = crash cost per week
$4,000 –
$3,000 –
$2,000 –
Normal activity
Normal cost
$1,000 –
Normal time
Crash time
–
0
|
2
Copyright 2011 John Wiley & Sons, Inc.
|
4
|
6
|
8
|
10
|
12
|
14
Weeks
9-56
Project Crashing
ACTIVITY
1
2
3
4
5
6
7
NORMAL
TIME
(WEEKS)
CRASH
TIME
(WEEKS)
NORMAL
COST
12
8
4
12
4
4
4
7
5
3
9
1
1
3
$3,000
2,000
4,000
50,000
500
500
15,000
$5,000
3,500
7,000
71,000
1,100
1,100
22,000
$75,000
$110,700
Copyright 2011 John Wiley & Sons, Inc.
CRASH
COST
TOTAL
ALLOWABLE
CRASH TIME
(WEEKS)
5
3
1
3
3
3
1
CRASH
COST PER
WEEK
$400
500
3,000
7,000
200
200
7,000
9-57
$500
$7000
4
2
8
FROM …
$7000
12
7
4
1
Project Duration:
36 weeks
12
$400
3
4
$3000
6
4
5
4
$200
$200
$7000
$500
TO…
Project Duration:
31 weeks
Additional Cost:
$2000
$7000
12
7
4
1
7
$400
3
4
$3000
Copyright 2011 John Wiley & Sons, Inc.
4
2
8
5
4
6
4
$200
$200
9-58
Time-Cost Relationship
• Crashing costs increase as project duration
decreases
• Indirect costs increase as project duration
increases
• Reduce project length as long as crashing costs
are less than indirect costs
Copyright 2011 John Wiley & Sons, Inc.
9-59
Time-Cost Tradeoff
Minimum cost = optimal project time
Total project cost
Cost ($)
Indirect cost
Direct cost
Crashing
Time
Project duration
Copyright 2011 John Wiley & Sons, Inc.
9-60
Copyright 2011 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this
work beyond that permitted in section 117 of the 1976
United States Copyright Act without express permission
of the copyright owner is unlawful. Request for further
information should be addressed to the Permission
Department, John Wiley & Sons, Inc. The purchaser
may make back-up copies for his/her own use only and
not for distribution or resale. The Publisher assumes no
responsibility for errors, omissions, or damages caused
by the use of these programs or from the use of the
information herein.
Copyright 2011 John Wiley & Sons, Inc.
6-61