Outline
Operations
Management
 Global Company Profile: Bechtel
Group
 The Importance of Project
Management
Chapter 3 –
Project Management
 Project Planning
 The Project Manager
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
 Work Breakdown Structure
 Project Scheduling
Some additions and deletions have been made by Ömer Yağız to
this slide set.
(revised February 2012)
© 2008 Prentice Hall, Inc.
3– 1
© 2008 Prentice Hall, Inc.
Outline - Continued
Outline - Continued
 Determining the Project Schedule
 Project Controlling
 Forward Pass
 Project Management Techniques:
PERT and CPM
 Backward Pass
 Calculating Slack Time and Identifying
the Critical Path(s)
 The Framework of PERT and CPM
 Network Diagrams and Approaches
 Variability in Activity Times
 Activity-on-Node Example
 Three Time Estimates in PERT
 Activity-on-Arrow Example
 Probability of Project Completion
© 2008 Prentice Hall, Inc.
3– 3
© 2008 Prentice Hall, Inc.
Outline - Continued
3– 4
Learning Objectives
 Cost-Time Trade-Offs and Project
Crashing
When you complete this chapter you
should be able to:
 A Critique of PERT and CPM
1. Create a work breakdown
structure
 Using Microsoft Project to Manage
Projects
© 2008 Prentice Hall, Inc.
3– 2
2. Draw AOA and AON networks
 Creating a Project Schedule Using MS
Project
3. Complete both forward and
backward passes for a project
 Tracking Progress and Managing
Costs Using MS Project
4. Determine a critical path
3– 5
© 2008 Prentice Hall, Inc.
3– 6
1
Learning Objectives
Bechtel Projects
When you complete this chapter you
should be able to:
 Reconstruction projects in Iraq
 Building 26 massive distribution centers in just
two years for the internet company Webvan
Group ($1 billion)
 Constructing 30 high-security data centers
worldwide for Equinix, Inc. ($1.2 billion)
 Building and running a rail line between London
and the Channel Tunnel ($4.6 billion)
 Developing an oil pipeline from the Caspian Sea
region to Russia ($850 million)
 Expanding the Dubai Airport in the UAE ($600
million), and the Miami Airport in Florida ($2
billion)
5. Calculate the variance of activity
times
6. Crash a project
7. Use Microsoft Project software
to create a project
© 2008 Prentice Hall, Inc.
3– 7
© 2008 Prentice Hall, Inc.
3– 8
Tepe Akfen Vie (TAV)
Bechtel Projects
 Building liquid natural gas plants in Yemen $2
billion) and in Trinidad, West Indies ($1 billion)
 Building a new subway for Athens, Greece ($2.6
billion)
 Constructing a natural gas pipeline in Thailand
($700 million)
 Building 30 plants for iMotors.com, a company
that sells refurbished autos online ($300 million)
 Building a highway to link the north and south of
Croatia ($303 million)
 Jubail and Yabu industrial cities in Saudi Arabia
İstanbul Atatürk airport
Ankara Esenboğa airport
İzmir Adnan Menderes airport
Georgia Tbilisi & Batumi airports
Tunisia Habib Bourgiba airport
Macedonia (3 airports)
 Have visited Jubail several times - ÖY
© 2008 Prentice Hall, Inc.
3– 9
© 2008 Prentice Hall, Inc.
Strategic Importance of
Project Management
Organizations for PM
 Microsoft Windows Vista Project :
Project Management Institute
 hundreds of programmers
http://www.pmi.org
 millions of lines of code
Turkish chapter of PMI
 hundreds of millions of dollars cost
http://www.pmi-tr.org/cms2/
 Hard Rock Cafe Rockfest Annual
Concert Project:
PMBOK – Project Management Book of
Knowledge (excellent source)
 100,000 + fans
 planning began 9 months in advance
U2 Concert in İstanbul (Sept. 2010)
© 2008 Prentice Hall, Inc.
3 – 10
3 – 11
© 2008 Prentice Hall, Inc.
3 – 12
2
What is a project?
Management of Projects
Project
– series of related jobs usually directed
toward some major output and requiring
a significant period of time (and often
funds) to perform.
1. Planning - goal setting, defining the
project, team organization
2. Scheduling - relates people, money,
machines and supplies to specific
activities and activities to each
other according to time dimension
Project Management
– a series of activities (planning,
scheduling, and controlling) in using
resources (people, equipment, material)
to meet the technical, cost, and time
constraints of the project.
– Project or Program? Apollo moon
program; GAP program
© 2008 Prentice Hall, Inc.
3. Controlling - monitors resources,
costs, quality, and budgets; revises
plans and shifts resources to meet
time and cost demands
3 – 13
3 – 14
Project Planning,
Scheduling, and Controlling
Project Management
Activities
 Planning
© 2008 Prentice Hall, Inc.
 Scheduling
 Objectives
 Project activities
 Resources
 Start & end times
 Work break-down
schedule
 Network
 Organization
 Controlling
Figure 3.1
 Monitor, compare, revise, action
Before
project
© 2008 Prentice Hall, Inc.
3 – 15
Project Planning,
Scheduling, and Controlling
© 2008 Prentice Hall, Inc.
During
project
3 – 16
Project Planning,
Scheduling, and Controlling
Figure 3.1
Before
project
Start of project
Timeline
© 2008 Prentice Hall, Inc.
Figure 3.1
Start of project
Timeline
During
project
Before
project
3 – 17
© 2008 Prentice Hall, Inc.
Start of project
Timeline
During
project
3 – 18
3
Project Planning,
Scheduling, and Controlling
estimates
Project Time/cost
Planning,
Budgets
Engineering
diagrams
Scheduling, and
Controlling
Cash flow charts
Material availability details
Budgets
Delayed activities report
Slack activities report
CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules
Figure 3.1
Figure 3.1
Before
project
Start of project
Timeline
During
project
© 2008 Prentice Hall, Inc.
Before
project
3 – 19
Start of project
Timeline
Project Planning
 Often temporary structure
 Uses specialists from entire company
 Headed by project manager
 Coordinates activities
 Monitors schedule
and costs
 Permanent
structure called
‗matrix organization‘
© 2008 Prentice Hall, Inc.
3 – 21
© 2008 Prentice Hall, Inc.
A Sample Project
Organization
Project 1
Project 2
Figure 3.2
© 2008 Prentice Hall, Inc.
Finance
3 – 22
Project Organization
Works Best When
President
Marketing
3 – 20
Project Organization
 Establishing objectives
 Defining project
 Creating work
breakdown structure
 Determining
resources
 Forming organization
Human
Resources
During
project
© 2008 Prentice Hall, Inc.
Design
Quality
Mgt
Production
Mechanical
Engineer
Test
Engineer
Technician
Electrical
Engineer
Computer
Engineer
Technician
1. Work can be defined with a specific
goal and deadline
2. The job is unique or somewhat
unfamiliar to the existing organization
3. The work contains complex
interrelated tasks requiring specialized
skills
4. The project is temporary but critical to
the organization
5. The project cuts across organizational
lines
Project
Manager
Project
Manager
3 – 23
© 2008 Prentice Hall, Inc.
3 – 24
4
The Role of
the Project Manager
Matrix Organization
Marketing
Operations
Engineering
Finance
Highly visible
Responsible for making sure that:
Project 1
 All necessary activities are finished in order
and on time
Project 2
 The project comes in (i.e. completed) within
budget
Project 3
 The project meets quality goals
Project 4
 The people assigned to the project receive
motivation, direction, and information
© 2008 Prentice Hall, Inc.
3 – 25
3 – 26
Ethical Issues in PM
The Role of
the Project Manager
 Bid rigging – divulging confidential information
to give some bidders an unfair advantage
 very common in Turkey (ihaleye fesat
karıştırmak)
Highly visible
Responsible for making
sure
that: should be:
Project
managers
 ―Low balling‖ contractors – try to ―buy‖ the
project by bidding low and hope to renegotiate
or cut corners
 Good coaches
 All necessary activities are finished in order
 Good communicators
and on time
to organize
 The project comesinAble
within
budget activities
from a variety of disciplines
 The project meets quality goals
 İlk defa duymuyorsunuz herhalde!
 Bribery – particularly on international projects
 Remember Lockheed scandal; it was
investigated in every country except guess
which? (hep bir ağızdan …. Türkiye…)
 The people assigned to the project receive
motivation, direction, and information
© 2008 Prentice Hall, Inc.
© 2008 Prentice Hall, Inc.
3 – 27
Ethical Issues
© 2008 Prentice Hall, Inc.
3 – 28
Statement of Work (SOW)
 Mercedes Benz bribery scandal in 22
countries.
(http://www.hurriyet.com.tr/ekonomi/14208149
.asp)
A project starts with a statement of work
(SOW). (Proje Tanımı)
– description of the objectives to be achieved
 Expense account padding
– brief statement of the work to be done
 Use of substandard materials
 Compromising health and safety standards
– proposed schedule with start and completion
dates
 Withholding needed information
– performance measures in terms of budget
 Failure to admit project failure at close
– completion steps (milestones) (önemli
aşamalar)
– written progress reports (gelişme raporları) to
be submitted
© 2008 Prentice Hall, Inc.
3 – 29
© 2008 Prentice Hall, Inc.
3 – 30
5
Work Breakdown Structure
MS Vista
Work Breakdown
Structure(WBS)
Level
1. Project
2.
3.
4.
Level ID
Number
Activity
1
1.0
Develop/launch Windows Vista OS
2
1.1
Development of GUIs
2
1.2
Ensure compatibility with earlier
Windows versions
3
1.21
Compatibility with Windows ME
3
1.22
Compatibility with Windows XP
3
1.23
Compatibility with Windows 2000
4
1.231
Ensure ability to import files
Level
Major tasks in the project
Subtasks in the major tasks
Activities (or work packages)
to be completed
Figure 3.3
© 2008 Prentice Hall, Inc.
3 – 31
© 2008 Prentice Hall, Inc.
Another way to look at WBS
Level
1
2
Project Scheduling
 Identifying precedence
(öncelik) relationships
 Sequencing activities
 Determining activity
times & costs
 Estimating material &
worker requirements
 Determining critical
activities
Program
Project
1
Project
Task 1.1
2
Task 1.2
3
Subtask 1.1.1
4
Work Package 1.1.1.1
Subtask 1.1.2
Work Package 1.1.1.2
© 2008 Prentice Hall, Inc.
3 – 33
© 2008 Prentice Hall, Inc.
Purposes of Project
Scheduling
3 – 34
Scheduling Techniques
1. Ensure that all activities are
planned for
2. Their order of performance is
accounted for
3. The activity time estimates are
recorded
4. The overall project time is
developed
1. Shows the relationship of each activity to
others and to the whole project
2. Identifies the precedence relationships
among activities
3. Encourages the setting of realistic time
and cost estimates for each activity
4. Helps make better use of people, money,
and material resources by identifying
critical bottlenecks in the project
© 2008 Prentice Hall, Inc.
3 – 32
3 – 35
© 2008 Prentice Hall, Inc.
3 – 36
6
Project Management
Techniques
A Simple Gantt Chart
 Gantt chart
 Critical Path Method
(CPM)
 Program Evaluation
and Review
Technique (PERT)
J
F
M
A
Time
M J
J
A
S
Design
Prototype
Test
Revise
Production
© 2008 Prentice Hall, Inc.
3 – 37
© 2008 Prentice Hall, Inc.
Service For A Delta Jet
Passengers
Baggage
Fueling
Cargo and mail
Galley servicing
Lavatory servicing
Drinking water
Cabin cleaning
Cargo and mail
Flight services
Operating crew
Baggage
Passengers
Figure 3.4
Project Control Reports
Deplaning
Baggage claim
Container offload
Pumping
Engine injection water
Container offload
Main cabin door
Aft cabin door
Aft, center, forward
Loading
First-class section
Economy section
Container/bulk loading
Galley/cabin check
Receive passengers
Aircraft check
Loading
Boarding
 Detailed cost breakdowns for each task
 Total program labor curves
 Cost distribution tables
 Functional cost and hour summaries
 Raw materials and expenditure forecasts
 Variance reports
 Time analysis reports
0
10
20
30
Time, Minutes
© 2008 Prentice Hall, Inc.
40
3 – 39
 Work status reports
© 2008 Prentice Hall, Inc.
3 – 40
Six Steps PERT & CPM
PERT and CPM
 Network techniques
1. Define the project and prepare the
work breakdown structure
 Developed in 1950‘s
 CPM by Kelley and Walker for DuPont‘s
chemical plants (1957)
2. Develop relationships among the
activities - decide which activities
must precede and which must follow
others
 PERT by Booz, Allen & Hamilton with the
U.S. Navy, for Polaris missile (1958)
 Consider precedence relationships and
interdependencies
3. Draw the network connecting all of
the activities
 Each uses a different estimate of
activity times
© 2008 Prentice Hall, Inc.
3 – 38
3 – 41
© 2008 Prentice Hall, Inc.
3 – 42
7
Questions PERT & CPM
Can Answer
Six Steps PERT & CPM
4. Assign time and/or cost estimates
to each activity
1. When will the entire project be
completed?
5. Compute the longest time path
through the network – this is called
the critical path
2. What are the critical activities or tasks in
the project?
6. Use the network to help plan,
schedule, monitor, and control the
project
4. What is the probability the project will be
completed by a specific date?
© 2008 Prentice Hall, Inc.
3. Which are the noncritical activities?
3 – 43
© 2008 Prentice Hall, Inc.
3 – 44
A Comparison of AON and
AOA Network Conventions
Questions PERT & CPM
Can Answer
Activity on
Node (AON)
5. Is the project on schedule, behind
schedule, or ahead of schedule?
6. Is the money spent equal to, less than, or
greater than the budget?
(a) A
A
7. Are there enough resources available to
finish the project on time?
(b)
C
B
C
Figure 3.5
3 – 45
B and C cannot
begin until A is
completed
A
(c)
A comes before
B, which comes
before C
A and B must both
be completed
before C can start
B
8. If the project must be finished in a shorter
time, what is the way to accomplish this
at least cost?
© 2008 Prentice Hall, Inc.
C
B
Activity
Meaning
Activity on
Arrow (AOA)
A
B
C
A
B
C
B
A
C
© 2008 Prentice Hall, Inc.
3 – 46
A Comparison of AON and
AOA Network Conventions
A Comparison of AON and
AOA Network Conventions
Activity on
Node (AON)
Activity on
Node (AON)
A
C
B
D
(d)
Activity
Meaning
C and D cannot
begin until both
A and B are
completed
Activity on
Arrow (AOA)
A
C
B
D
A
B
(f)
A
C
B
D
(e)
C cannot begin
until both A and B
are completed; D
cannot begin until
B is completed. A
dummy activity is
introduced in AOA
C
A
C
Dummy activity
B
B and C cannot
begin until A is
completed. D
cannot begin
until both B and
C are completed.
A dummy
activity is again
introduced in
AOA.
Activity on
Arrow (AOA)
A
Dummy
activity
B
D
C
D
Figure 3.5
© 2008 Prentice Hall, Inc.
D
Activity
Meaning
Figure 3.5
3 – 47
© 2008 Prentice Hall, Inc.
3 – 48
8
AON Example
AON Network for
Milwaukee Paper
Milwaukee Paper Manufacturing's
Activities and Predecessors for installing air pollution
control equipment in its facility
Activity
Immediate
Predecessors
Description
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
C
F
Install pollution control system
C
G
Install air pollution device
D, E
H
Inspect and test
F, G
A
A
Activity A
(Build Internal Components)
B
Activity B
(Modify Roof and Floor)
Start
Start
Activity
Figure 3.6
Table 3.1
© 2008 Prentice Hall, Inc.
3 – 49
© 2008 Prentice Hall, Inc.
3 – 50
AON Network for
Milwaukee Paper
AON Network for
Milwaukee Paper
Activity A Precedes Activity C
F
A
A
C
E
Start
Start
B
3 – 51
C
3
D
(Pour
Concrete/
Install Frame)
Figure 3.8
3 – 52
Determining the Project
Schedule
Perform a Critical Path Analysis
4
 The critical path is the longest path
through the network
Dummy
Activity
1
G
© 2008 Prentice Hall, Inc.
AOA Network for
Milwaukee Paper
(Construct
Stack)
D
Arrows Show Precedence
Relationships
Figure 3.7
© 2008 Prentice Hall, Inc.
2
H
B
D
Activities A and B
Precede Activity D
© 2008 Prentice Hall, Inc.
C
6
H
(Inspect/
Test)
 The critical path is the shortest time in
which the project can be completed
7
 Any delay in critical path activities
delays the project
 Critical path activities have no slack
time
5
Figure 3.9
3 – 53
© 2008 Prentice Hall, Inc.
3 – 54
9
Determining the Project
Schedule
Determining the Project
Schedule
Perform a Critical Path Analysis
Activity
A
B
C
D
E
F
G
H
Description
Build internal components
Modify roof and floor
Construct collection stack
Pour concrete and install frame
Build high-temperature burner
Install pollution control system
Install air pollution device
Inspect and test
Total Time (weeks)
Perform a Critical Path Analysis
Time (weeks)
2
3
2
4
4
3
5
2
25
Earliest start (ES) = earliest time at which an activity can
Activity Description
Time (weeks)
start, assuming all predecessors
have
A
Build internal
components
2
been completed
B
Modify
roof
and
floor
3
Earliest finish (EF) = earliest time at which an activity can
be
finished
C
Construct collection stack
2
D start (LS)
Pour=concrete
and
Latest
latest time
at install
which frame
an activity can4
start
so
as
to
not
delay
the
completion
E
Build high-temperature burner
4
of thecontrol
entire project
F
Install time
pollution
system
3
LatestGfinish (LF)
=
latest
time
by
which
an
activity
has
Install air pollution device
5 to
be finished so as to not delay the
H
Inspect and test
2
completion time of the entire project
Table
Total Time (weeks)
25 3.2
Table 3.2
© 2008 Prentice Hall, Inc.
3 – 55
© 2008 Prentice Hall, Inc.
3 – 56
Determining the Project
Schedule
Forward Pass
Begin at starting event and work forward
Perform a Critical Path Analysis
Earliest Start Time Rule:
Activity Name
or Symbol
A
Earliest
Start
ES
Latest
Start
LS
EF
LF
2
 If an activity has only a single immediate
predecessor, its ES equals the EF of the
predecessor
Earliest
Finish
 If an activity has multiple immediate
predecessors, its ES is the maximum of
all the EF values of its predecessors
Latest
Finish
ES = Max {EF of all immediate predecessors}
Activity Duration
Figure 3.10
© 2008 Prentice Hall, Inc.
3 – 57
© 2008 Prentice Hall, Inc.
3 – 58
ES/EF Network for
Milwaukee Paper
Forward Pass
Begin at starting event and work forward
ES
Earliest Finish Time Rule:
0
0
0
EF = ES + Activity time
© 2008 Prentice Hall, Inc.
EF = ES + Activity time
Start
 The earliest finish time (EF) of an activity
is the sum of its earliest start time (ES)
and its activity time
3 – 59
© 2008 Prentice Hall, Inc.
3 – 60
10
ES/EF Network for
Milwaukee Paper
EF of A =
ES of A + 2
ES
of A
0
Start
0
A
0
0
ES/EF Network for
Milwaukee Paper
A
2
2
2
0
0
Start
EF of B =
ES of B + 3
ES
of B
0
B
0
0
3
2
3
© 2008 Prentice Hall, Inc.
3 – 61
© 2008 Prentice Hall, Inc.
3 – 62
ES/EF Network for
Milwaukee Paper
0
A
2
2
2
0
Start
C
ES/EF Network for
Milwaukee Paper
0
4
A
2
2
2
2
0
0
Start
C
A and B must both be
finished before D can be
started
4
2
0
= Max (2, 3)
0
0
B
3
3
0
3
3 – 63
A
2
2
2
0
C
4
3 – 64
ES/EF Network for
Milwaukee Paper
0
4
A
2
2
2
2
0
0
0
Start
C
0
3
3
3
D
7
2
F
7
3
0
4
E
8
13
4
0
4
4
4
0
B
7
3
© 2008 Prentice Hall, Inc.
ES/EF Network for
Milwaukee Paper
0
B
3
© 2008 Prentice Hall, Inc.
Start
D
0
B
3
3
3
D
4
7
H
15
2
G
8
13
5
Figure 3.11
© 2008 Prentice Hall, Inc.
3 – 65
© 2008 Prentice Hall, Inc.
3 – 66
11
Backward Pass
Backward Pass
Begin with the last event and work backwards
Begin with the last event and work backwards
Latest Finish Time Rule:
Latest Start Time Rule:
 If an activity is an immediate predecessor
for just a single activity, its LF equals the
LS of the activity that immediately follows it
 The latest start time (LS) of an activity is
the difference of its latest finish time (LF)
and its activity time
 If an activity is an immediate predecessor
to more than one activity, its LF is the
minimum of all LS values of all activities
that immediately follow it
LS = LF – Activity time
LF = Min {LS of all immediate following activities}
© 2008 Prentice Hall, Inc.
3 – 67
© 2008 Prentice Hall, Inc.
3 – 68
LS/LF Times for
Milwaukee Paper
0
A
2
2
2
0
Start
C
4
4
2
F
LS/LF Times for
Milwaukee Paper
7
4
0
E
8
13
13
4
B
3
H
2
0
15
15
Start
3
7
8
4
2
2
2
0
Start
2
C
2
4
4
4
10
0
4
4
0
0
B
3
© 2008 Prentice Hall, Inc.
3
3
D
4
7
E
4
F
3
2
3
7
13
13
13
B
3
3
3
D
H
2
15
15
G
7
8
4
13
5
© 2008 Prentice Hall, Inc.
3 – 70
LS/LF Times for
Milwaukee Paper
7
0
13
0
8
13
8
13
H
2
15
0
15
0
Start
0
G
2
2
2
C
2
4
4
4
10
0
4
13
0
13
1
© 2008 Prentice Hall, Inc.
2
2
4
8
3 – 71
A
0
8
5
10
F
4
LS/LF Times for
LF = Min(4, 10)
Milwaukee
Paper
A
4
4
8 of
LF =4 Min(LS
following activity)
LF = EF
of Project
3 – 69
C
E
0
© 2008 Prentice Hall, Inc.
0
2
0
13
5
2
0
LS = LF
D – Activity time
G
3
A
2
3
0
0
0
B
3
3
3
4
4
D
4
E
4
F
3
7
13
8
13
8
13
H
2
15
15
G
7
8
8
8
13
5
13
3 – 72
12
Computing Slack Time
Computing Slack Time
After computing the ES, EF, LS, and LF times
for all activities, compute the slack or free
time for each activity
 Slack is the length of time an activity can
be delayed without delaying the entire
project
Slack = LS – ES
Slack = LF – EF
or
Activity
Earliest
Start
ES
Earliest
Finish
EF
Latest
Start
LS
A
B
C
D
E
F
G
H
0
0
2
3
4
4
8
13
2
3
4
7
8
7
13
15
0
1
2
4
4
10
8
13
Latest
Finish
LF
2
4
4
8
8
13
13
15
Slack
LS – ES
On
Critical
Path
0
1
0
1
0
6
0
0
Yes
No
Yes
No
Yes
No
Yes
Yes
Table 3.3
© 2008 Prentice Hall, Inc.
3 – 73
© 2008 Prentice Hall, Inc.
ES – EF Gantt Chart
for Milwaukee Paper
Critical Path for
Milwaukee Paper
0
0
0
0
Start
0
A
2
2
2
2
2
C
2
4
4
4
10
0
4
0
4
0
1
B
3
3
3
4
4
D
4
E
4
F
3
1
7
13
8
13
H
13
8
13
4
5
6
7
8
9
10 11 12 13 14 15 16
2
C Construct collection
stack
15
D Pour concrete and
install frame
E Build hightemperature burner
15
G
8
8
3
B Modify roof and floor
13
7
2
A Build internal
components
8
5
3 – 74
F Install pollution
control system
G Install air pollution
device
H Inspect and test
Critical path: A-C-E-G-H
15 wks
© 2008 Prentice Hall, Inc.
3 – 75
2
3
4
5
6
7
8
9
3 – 76
Another Example (AOA)
LS – LF Gantt Chart
for Milwaukee Paper
1
© 2008 Prentice Hall, Inc.
Consider the following consulting project:
10 11 12 13 14 15 16
Activity
Designation Immed. Pred. Time (Weeks)
Assess customer's needs
A
None
2
Write and submit proposal
B
A
1
Obtain approval
C
B
1
Develop service vision and goals
D
C
2
Train employees
E
C
5
Quality improvement pilot groups
F
D, E
5
Write assessment report
G
F
1
A Build internal
components
B Modify roof and floor
C Construct collection
stack
D Pour concrete and
install frame
E Build hightemperature burner
F Install pollution
control system
G Install air pollution
device
Develop an AOA network diagram diagram and determine the
duration of the critical path and slack times for all
activities
H Inspect and test
© 2008 Prentice Hall, Inc.
3 – 77
© 2008 Prentice Hall, Inc.
3 – 78
13
AOA project network
1
2
A
2
1
B
3
1
C
4
2
D
5
F
6
5
E
7
Forward pass
1
G
1
8
0
2
A
ES=0
EF=2
2
1
B
ES=2
EF=3
3
1
C
ES=3
EF=4
DUMMY
© 2008 Prentice Hall, Inc.
3 – 79
ES=0
EF=2
2
1
B
ES=2
EF=3
3
1
C
ES=3
EF=4
4
2
D
ES=4
EF=6
EF=9
5
F
6
5ES=9
ES=4 E EF=9
ES=9
EF=14
7
1
G
1
8
0
2
A
ES=0
EF=2
2
1
B
ES=2
EF=3
1
ES=0
EF=2
2
ES=2
EF=3
3
1
C
LS=7
LF=9
ES=3
EF=4
4
2
D
ES=4
EF=6
© 2008 Prentice Hall, Inc.
ES=3
EF=4
5
F
6
5
ES=9
EF=14
4
2
D
ES=4
EF=6
1
G
8
0
DUMMY
5
5
F
6
5ES=9
ES=4 E EF=9
EF=9
ES=9
EF=14
7
1
G
ES=14
EF=15
8
0
DUMMY
5
© 2008 Prentice Hall, Inc.
3 – 82
Backward pass
LS=9
LF=14
5ES=9
ES=4 E EF=9
EF=9
LS=4
LF=9
3
1
C
DUMMY
Backward pass
?
7
3 – 80
5
3 – 81
1
B
5ES=9
ES=4 E EF=9
?
Forward pass
© 2008 Prentice Hall, Inc.
2
A
ES=4
EF=6
5
F
6
© 2008 Prentice Hall, Inc.
Forward pass
2
A
2
D
EF=9
5
1
4
LS=14
LF=15
7
1
G
ES=14
EF=15
LS=0
LF=2
1
8
0
2
A
ES=0
EF=2
DUMMY
LS=9
LF=9
2
LS=2
LF=3
LS=3
LF=4
LS=7
LF=9
1
B
1
C
2
D
ES=2
EF=3
3
ES=3
EF=4
4
ES=4
EF=6
© 2008 Prentice Hall, Inc.
5
F
6
5ES=9
ES=4 E EF=9
EF=9
LS=4
LF=9
3 – 83
LS=9
LF=14
5
ES=9
EF=14
LS=14
LF=15
7
1
G
ES=14
EF=15
8
0
DUMMY
LS=9
LF=9
3 – 84
14
Calculate slack and obtain the
critical path
1
LS=0
LF=2
LS=2
LF=3
LS=3
LF=4
LS=7
LF=9
2
A
1
B
1
C
2
D
2
ES=0
EF=2
ES=2
EF=3
Slack = LF - EF
or
3
ES=3
EF=4
4
ES=4
EF=6
LS=9
LF=14
EF=9
LS=4
LF=9
LS=14
LF=15
5
F
6
7
ES=9
EF=14
5ES=9
0
ES=4 E EF=9 DUMM
Y
5
Variability in Activity Times
1
G
ES=14
EF=15
 CPM assumes we know a fixed time
estimate for each activity and there
is no variability in activity times
8
 PERT uses a probability distribution
for activity times to allow for
variability
LS=9
LF=9
All activities have zero slack except
D, which has a slack of 3 wks.
The critical path consists of
activities with zero (0) slack times;
therefore the critical path is 1-2-34-5-6-7-8.
= LS - ES
© 2008 Prentice Hall, Inc.
3 – 85
Variability in Activity Times
© 2008 Prentice Hall, Inc.
3 – 86
Variability in Activity Times
Estimate follows beta distribution
Expected time:
t = (a + 4m + b)/6
Variance of times:
v = [(b – a)/6]2
 Three time estimates are required
 Optimistic time (a) – if everything goes
according to plan
 Pessimistic time (b) – assuming very
unfavorable conditions
 Most likely time (m) – most realistic
estimate
© 2008 Prentice Hall, Inc.
3 – 87
© 2008 Prentice Hall, Inc.
Variability in Activity Times
Computing Variance
Probability
Estimate follows beta distribution
Expected time:
Figure 3.12
t = (a + 4m + b)/6
Probability
Variance
ofoftimes:
1 in 100 of
Probability
< a occurring v = [(b − a)/6]2 of 1 in 100 of
> b occurring
Activity
Time
Optimistic
Time (a)
© 2008 Prentice Hall, Inc.
Most Likely
Time (m)
3 – 88
Optimistic
Most
Likely
Pessimistic
Expected
Time
Variance
Activity
a
m
b
t = (a + 4m + b)/6
[(b – a)/6]2
A
B
C
D
E
F
G
H
1
2
1
2
1
1
3
1
2
3
2
4
4
2
4
2
3
4
3
6
7
9
11
3
Pessimistic
Time (b)
2
3
2
4
4
3
5
2
.11
.11
.11
.44
1.00
1.78
1.78
.11
Table 3.4
3 – 89
© 2008 Prentice Hall, Inc.
3 – 90
15
Probability of Project
Completion
Probability of Project
Completion
Project variance is computed by
summing the variances of critical
activities
Project variance is computed by
summing the variances of critical
Project variance
activities
sp2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11
sp2 = Project variance
= (variances of activities
on critical path)
Project standard deviation
sp =
Project variance
=
© 2008 Prentice Hall, Inc.
3 – 91
3.11 = 1.76 weeks
© 2008 Prentice Hall, Inc.
Probability of Project
Completion
3 – 92
Probability of Project
Completion
PERT makes two more assumptions:
Standard deviation = 1.76 weeks
 Total project completion times follow a
normal probability distribution
 Activity times are statistically
independent
15 Weeks
(Expected Completion Time)
Figure 3.13
© 2008 Prentice Hall, Inc.
3 – 93
© 2008 Prentice Hall, Inc.
Probability of Project
Completion
3 – 94
Probability of Project
Completion
From Appendix I
What is the probability this project can
be completed on or before the 16 week
deadline?
What is the probability
this project
can
.00
.01
.07
.08
be completed
on or before the
16 week
.1 .50000 .50399
.52790 .53188
deadline?.2 .53983 .54380
.56749 .57142
Z = due – expected date /sp
date
.5
of completion
.6
= (16 wks – 15 wks)/1.76
= 0.57
© 2008 Prentice Hall, Inc.
Where Z is the number of
standard deviations the due
date or target date lies from
the mean or expected date
date /s
Z.69146
= due .69497
− expected.71566
.71904
p
date
.72575
= 0.57
3 – 95
© 2008 Prentice Hall, Inc.
of completion
.72907
.74857
.75175
= (16 wks − 15 wks)/1.76
Where Z is the number of
standard deviations the due
date or target date lies from
the mean or expected date
3 – 96
16
Probability of Project
Completion
Probability
(T ≤ 16 weeks)
is 71.57%
Determining Project
Completion Time
0.57 Standard deviations
Probability
of 0.99
Probability
of 0.01
15
Weeks
16
Weeks
Time
Figure 3.14
© 2008 Prentice Hall, Inc.
Figure 3.15
3 – 97
Determining Project
Completion Time
Z
2.33
© 2008 Prentice Hall, Inc.
3 – 98
 Variability of times for activities on
noncritical paths must be
considered when finding the
probability of finishing in a
specified time
 Variation in noncritical activity may
cause change in critical path
= 19.1 weeks
99% probability that the project
will be finished in 19.1 weeks
3 – 99
© 2008 Prentice Hall, Inc.
What Project Management
Has Provided So Far
3 – 100
Trade-Offs And Project
Crashing
 The project‘s expected completion time
is 15 weeks
 There is a 71.57% chance the equipment
will be in place by the 16 week deadline
It is not uncommon to face the
following situations:
 The project is behind schedule
 Five activities (A, C, E, G, and H) are on
the critical path
 Three activities (B, D, F) are not on the
critical path and have slack time
 A detailed schedule is available
© 2008 Prentice Hall, Inc.
0
Variability of Completion
Time for Noncritical Paths
= 15 + (2.33)(1.76)
© 2008 Prentice Hall, Inc.
2.33 Standard
deviations
From Appendix I
 The completion time has been
moved forward
Shortening the duration of the
project is called project crashing
3 – 101
© 2008 Prentice Hall, Inc.
3 – 102
17
Factors to Consider When
Crashing A Project
Steps in Project Crashing
1. Compute the crash cost per time period.
If crash costs are linear over time:
 The amount by which an activity is
crashed is, in fact, permissible
(Crash cost – Normal cost)
Crash cost
per period = (Normal time – Crash time)
 Taken together, the shortened
activity durations will enable us to
finish the project by the due date
2. Using current activity times, find the
critical path and identify the critical
activities
 The total cost of crashing is as small
as possible
© 2008 Prentice Hall, Inc.
3 – 103
© 2008 Prentice Hall, Inc.
Steps in Project Crashing
Steps in Project Crashing
3. If there is only one critical path, then
select the activity on this critical path
that (a) can still be crashed, and (b) has
the smallest crash cost per period. If
there is more than one critical path, then
select one activity from each critical path
such that (a) each selected activity can
still be crashed, and (b) the total crash
cost of all selected activities is the
smallest. Note that the same activity may
be common to more than one critical
path.
© 2008 Prentice Hall, Inc.
4. Update all activity times. If the desired
due date has been reached, stop. If not,
return to Step 2.
3 – 105
© 2008 Prentice Hall, Inc.
A
B
C
D
E
F
G
H
2
3
2
4
4
3
5
2
1
1
1
2
2
2
2
1
Cost ($)
Crash Cost Critical
Normal
Crash Per Wk ($) Path?
Activity
Cost
22,000
30,000
26,000
48,000
56,000
30,000
80,000
16,000
$34,000 —
22,750
34,000
27,000
49,000
58,000
30,500
84,500
19,000
750
2,000
1,000
500
1,000
500
1,500
3,000
Yes
No
Yes
No
Yes
No
Yes
Yes
Crash
Crash Cost/Wk =
Crash $33,000 —
Cost
$34,000 – $30,000
3– 1
$4,000
=
= $2,000/Wk
2 Wks
$31,000 —
$30,000 —
Normal
Cost
Figure 3.16
3 – 107
© 2008 Prentice Hall, Inc.
Crash Cost – Normal Cost
Normal Time – Crash Time
=
$32,000 —
Table 3.5
© 2008 Prentice Hall, Inc.
3 – 106
Crash and Normal Times
and Costs for Activity B
Crashing The Project
Time (Wks)
Activity Normal Crash
3 – 104
Normal
—
|
1
Crash Time
|
2
|
3
Normal Time
Time (Weeks)
3 – 108
18
TIME - COST TRADE-OFF PROCEDURE
(CRASHING) : Another Illustration
Critical Path And Slack
Times For Milwaukee Paper
0
0
0
0
Start
0
0
A
2
2
2
Slack = 0
2
2
C
2
4
10
Slack = 0
E
4
0
4
0
1
B
3
3
3
4
4
Slack = 1
D
4
4
TIME – COST TRADE-OFF
F
4
4
7
13
3
Slack = 6
8
13
8
13
Slack = 0
2
15
15
Slack = 0
G
7
8
13
8
8
13
Slack = 1
H
Activity
A
B
C
D
5
Normal
time
2
5
4
3
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
Cost/day = (Crash cost - Normal cost) / (Normal time Crash time)
for example; for activity B: (18 -9) / (5 - 2) = 3 TL/day
Slack = 0
Figure 3.17
© 2008 Prentice Hall, Inc.
3 – 109
TIME-COST TRADE-OFF ILLUSTRATION
Others can be obtained similarly.
© 2008 Prentice Hall, Inc.
3 – 110
TIME-COST TRADE-OFF ILLUSTRATION
Suppose the project network is as follows:
TIME – COST TRADE-OFF
TIME – COST TRADE-OFF
ES=2
EF=7
ES=0
EF=2
A,2
LS=0
LF=2
B;5
Activity
A
B
C
D
Normal
time
2
5
4
3
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
SHORTEN D BY 1 DAY
Maximum
1 day
3
1
2
Activity
A
B
C
D
Normal
time
2
5
4
3
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
Maximum
1 day
3
1
2
B;5
ES=7
EF=10
LS=2
LF=7
A,2
D,3
ES=2
EF=6
D,2
LS=7
LF=10
C,4
© 2008 Prentice Hall, Inc.
Maximum
1 day
3
1
2
C,4
Critical Path : A-B-D
Duration = 10 days
T. Cost = 26 TL
LS=3
LF=7
C.P : A-B-D
Duration = 9 days
T. Cost = 28 TL
3 – 111
TIME-COST TRADE-OFF ILLUSTRATION
© 2008 Prentice Hall, Inc.
3 – 112
TIME-COST TRADE-OFF ILLUSTRATION
TIME – COST TRADE-OFF
TIME – COST TRADE-OFF
SHORTEN D BY 1 MORE DAY
Activity
A
B
C
D
Normal
time
2
5
4
3
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
Maximum
1 day
3
1
2
SHORTEN B BY 1 DAY
B;5
A,2
B;4
A,2
D,1
C,4
© 2008 Prentice Hall, Inc.
3 – 113
© 2008 Prentice Hall, Inc.
Normal
time
2
5
4
3
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
Maximum
1 day
3
1
2
D,1
C,4
C.P : A-B-D
Duration = 8 days
T. Cost = 30 TL
Activity
A
B
C
D
C.P : A-B-D
A-C-D
Duration = 7 days
T. Cost = 33 TL
3 – 114
19
TIME-COST TRADE-OFF ILLUSTRATION
TIME-COST TRADE-OFF ILLUSTRATION
A OR (B & C) CAN BE SHORTENED. LESS COSTLY TO
TIME – COST TRADE-OFF
SHORTEN A BY 1 DAY
Normal
Crash
Normal
Crash
B;4
Activity
A
B
C
D
time
2
5
4
3
Time
1
2
3
1
A,1
Cost
6 TL
9
6
5
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
SHORTEN B & C TOGETHER BY 1 DAY.
Maximum
1 day
3
1
2
B;3
Normal
time
2
5
4
3
TIME – COST TRADE-OFF
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
A,1
D,1
C,3
© 2008 Prentice Hall, Inc.
3 – 115
TIME-COST TRADE-OFF ILLUSTRATION
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
Maximum
1 day
3
1
2
D,1
C.P. : A-B-D
A-C-D
Duration = 6 days
T. Cost = 37 TL
C,4
Activity
A
B
C
D
C.P. : A-B-D
A-C-D
Duration = 5 days
T. Cost = 42 TL
© 2008 Prentice Hall, Inc.
3 – 116
Advantages of PERT/CPM
WE CAN SHORTEN B BY 1 MORE DAY (MAX. 3 DAYS)
TIME – COST TRADE-OFF
B;2
A,1
Activity
A
B
C
D
Normal
time
2
5
4
3
Crash
Time
1
2
3
1
Normal
Cost
6 TL
9
6
5
Crash
Cost
TL/day
10 TL 4 TL
18
3
8
2
9
2
Maximum
1 day
3
1
2
C.P. : A-C-D
Duration = 5 days
T. Cost = 45 TL
TOTAL PROJECT COST IS NOW 45 TL; PROJECT DURATION
IS STILL 5 DAYS. CAN NOT DECREASE PROJECT DURATION
© 2008 Prentice Hall, Inc.
ANY
MORE..
2. Straightforward concept and not
mathematically complex
3. Graphical networks help highlight
relationships among project activities
D,1
C,3
1. Especially useful when scheduling and
controlling large projects
4. Critical path and slack time analyses help
pinpoint activities that need to be closely
watched
3 – 117
© 2008 Prentice Hall, Inc.
Advantages of PERT/CPM
Limitations of PERT/CPM
5. Project documentation and graphics
point out who is responsible for various
activities
1. Project activities have to be clearly
defined, independent, and stable in their
relationships
2. Precedence relationships must be
specified and networked together
3. Time estimates tend to be subjective and
are subject to fudging by managers
4. There is an inherent danger of too much
emphasis being placed on the longest, or
critical, path
6. Applicable to a wide variety of projects
7. Useful in monitoring not only schedules
but costs as well
© 2008 Prentice Hall, Inc.
3 – 119
© 2008 Prentice Hall, Inc.
3 – 118
3 – 120
20
Using Microsoft Project
Project Management Software
 There are several popular packages
for managing projects
 Primavera
 MacProject
 Pertmaster
 VisiSchedule
 Time Line
 Microsoft Project
Program 3.1
© 2008 Prentice Hall, Inc.
3 – 121
© 2008 Prentice Hall, Inc.
Using Microsoft Project
Using Microsoft Project
Program 3.2
© 2008 Prentice Hall, Inc.
Program 3.3
3 – 123
© 2008 Prentice Hall, Inc.
Using Microsoft Project
3 – 124
Using Microsoft Project
Program 3.4
© 2008 Prentice Hall, Inc.
3 – 122
Program 3.5
3 – 125
© 2008 Prentice Hall, Inc.
3 – 126
21
Using Microsoft Project
Using Microsoft Project
Program 3.7
Program 3.6
© 2008 Prentice Hall, Inc.
3 – 127
© 2008 Prentice Hall, Inc.
3 – 128
22