17-1
Project Management
CHAPTER
17
Project
Management
17-2
Project Management
Projects
JAN
FEB
MAR
APR
MAY
JUN
Build A
A Done
Build B
B Done
Build C
C Done
Build D
On time!
Ship
Unique, one-time operations designed to accomplish
a specific set of objectives in a limited time frame.
17-3
Project Management
Project Management

How is it different?

Limited time frame
 Narrow focus, specific objectives
 Less bureaucratic

Why is it used?

Special needs
 Pressures for new or improves products or
services
17-4
Project Management
Project Management

What are the Key Metrics

Time
 Cost
 Performance objectives

What are the Key Success Factors?

Top-down commitment
 Having a capable project manager
 Having time to plan
 Careful tracking and control
 Good communications
17-5
Project Management
Project Management

What are the Major Administrative Issues?

Executive responsibilities




Project selection
Project manager selection
Organizational structure
Organizational alternatives



Manage within functional unit
Assign a coordinator
Use a matrix organization with a project leader
17-6
Project Management
Project Management

What are the tools?

Work breakdown structure
 Network diagram
 Gantt charts
 Risk management
17-7
Project Management
Planning and Scheduling
Gantt Chart
Locate new
facilities
Interview staff
Hire and train staff
Select and order
furniture
Remodel and install
phones
Move in/startup
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
17-8
Project Management
Key Decisions

Deciding which projects to implement

Selecting a project manager

Selecting a project team

Planning and designing the project

Managing and controlling project resources

Deciding if and when a project should be
terminated
17-9
Project Management
Project Manager
Responsible for:
Work
Human Resources
Communications
Quality
Time
Costs
17-10 Project Management
Ethical Issues

Temptation to understate costs

Withhold information

Misleading status reports

Falsifying records

Comprising workers’ safety

Approving substandard work
17-11 Project Management
Project Life Cycle
Concept
Planning
Execution
Termination
Management
Feasibility
17-12 Project Management
Work Breakdown Structure
Figure 17.2
Project X
Level 1
Level 2
Level 3
Level 4
17-13 Project Management
PERT:
CPM:




PERT and CPM
Program Evaluation and
Review Technique
Critical Path Method
Graphically displays project activities
Estimates how long the project will take
Indicates most critical activities
Show where delays will not affect project
17-14 Project Management
The Network Diagram

Network (precedence) diagram

Activity-on-arrow (AOA)

Activity-on-node (AON)

Activities

Events
17-15 Project Management
The Network Diagram (cont’d)

Path


Critical path


The longest path; determines expected project
duration
Critical activities


Sequence of activities that leads from the starting
node to the finishing node
Activities on the critical path
Slack

Allowable slippage for path; the difference the
length of path and the length of critical path
17-16 Project Management
Project Network – Activity on Arrow
Figure 17.4
AOA
Locate
facilities
Order
furniture
4
Furniture
setup
2
Remodel
1
5
6
Move
in
Interview
3
Hire and
train
17-17 Project Management
Project Network – Activity on Node
Figure 17.4
Order
furniture
AON
Locate
facilities
Furniture
setup
2
6
1
Move
in
Remodel
5
S
Interview
3
Hire and
train
4
7
17-18 Project Management
Network Conventions
a
c
a
c
b
a
a
c
c
b
b
b
d
Dummy
activity
17-19 Project Management

Deterministic


Time Estimates
Time estimates that are fairly certain
Probabilistic

Estimates of times that allow for variation
17-20 Project Management
Example 1
Figure 17.5
Deterministic
time estimates
8 weeks
6 weeks
4
3 weeks
2
11 weeks
1
5
Move
in
1 week
4 weeks
9 weeks
3
6
17-21 Project Management
Example 1 Solution
Critical Path
Path
Length
Slack
(weeks)
1-2-3-4-5-6
1-2-5-6
1-3-5-6
18
20
14
2
0
6
17-22 Project Management
Computing Algorithm

Network activities

ES: early start
 EF: early finish
 LS: late start
 LF: late finish

Used to determine

Expected project duration
 Slack time
 Critical path
17-23 Project Management
Probabilistic Time Estimates

Optimistic time


Pessimistic time


Time required under optimal conditions
Time required under worst conditions
Most likely time

Most probable length of time that will be
required
17-24 Project Management
Probabilistic Estimates
Figure 17.8
to
Activity
start
Optimistic
time
tm
te
Most likely
time (mode)
tp
Pessimistic
time
17-25 Project Management
te
Expected Time
t
+
4t
+t
o
m
p
=
6
te = expected time
to = optimistic time
tm = most likely time
tp = pessimistic time
17-26 Project Management
Variance
2
2
(t
–
t
)
= p o
36
2 = variance
to = optimistic time
tp = pessimistic time
17-27 Project Management
Example 5
Optimistic
time
Most likely
time
Pessimistic
time
2-4-6
b
3-4-5
d
3-5-7
e
4-6-8
h
5-7-9
f
17-28 Project Management
Z =
Path Probabilities
Specified time – Path mean
Path standard deviation
Z indicates how many standard deviations
of the path distribution the specified tine
is beyond the expected path duration.
17-29 Project Management
Example 6
17
Weeks
1.00
a-b-c
Weeks
10.0
d-e-f
16.0
Weeks
1.00
g-h-i
13.5
Weeks
17-30 Project Management
Time-cost Trade-offs: Crashing

Crash – shortening activity duration

Procedure for crashing

Crash the project one period at a time

Only an activity on the critical path

Crash the least expensive activity

Multiple critical paths: find the sum of
crashing the least expensive activity on each
critical path
17-31 Project Management
Time-Cost Trade-Offs: Crashing
Figure 17.11
Total
cost
Expected indirect costs
Shorten
CRASH
Cumulative
cost of
crashing
Shorten
Optimum
17-32 Project Management
Example 7
2
f
4
d
17-33 Project Management
Advantages of PERT

Forces managers to organize

Provides graphic display of activities

Identifies

4
Critical activities
2

Slack activities
1
5
3
6
17-34 Project Management
Limitations of PERT

Important activities may be omitted

Precedence relationships may not be correct

Estimates may include
a fudge factor

May focus solely
on critical path
4
2
1
5
142 weeks
3
6
17-35 Project Management
Technology for Managing Projects

Computer aided design (CAD)
 Groupware (Lotus Notes)
 Project management software

CA Super Project
 Harvard Total Manager
 MS Project
 Sure Track Project Manager
 Time Line
17-36 Project Management
Advantages of PM Software

Imposes a methodology

Provides logical planning structure

Enhances team communication

Flag constraint violations

Automatic report formats

Multiple levels of reports

Enables what-if scenarios

Generates various chart types
17-37 Project Management
Project Risk Management

Risk: occurrence of events that have
undesirable consequences

Delays

Increased costs

Inability to meet specifications

Project termination
17-38 Project Management
Risk Management

Identify potential risks

Analyze and assess risks

Work to minimize occurrence of risk

Establish contingency plans
17-39 Project Management
Summary

Projects are a unique set of activities

Projects go through life cycles

PERT and CPM are two common techniques

Network diagrams

Project management software available
17-40 Project Management
Projects — Concepts
PM1
Definition/Example Alton Bridge