1 Chapter 3 Project Management 1-1 2 Project Management Defined A Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform Project Management is the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project 1-2 3 Gantt Chart Vertical Axis: Always Activities or Jobs Horizontal bars used to denote length of time for each activity or job. Activity 1 Activity 2 Activity 3 Activity 4 Activity 5 Activity 6 Time Horizontal Axis: Always Time 1-3 4 Pure Project A pure project is where a self-contained team works full-time on the project Structuring Projects Pure Project: Advantages • The project manager has full authority over the project • Team members report to one boss • Shortened communication lines • Team pride, motivation, and commitment are high 1-4 5 Structuring Projects Pure Project: Disadvantages • Duplication of resources • Organizational goals and policies are ignored • Lack of technology transfer • Team members have no functional area "home" 1-5 6 Functional Project A functional project is housed within a functional division President Research and Development Engineering Manufacturing Project Project Project A B C Project Project Project D E F Project Project Project G H I Example, Project “B” is in the functional area of Research and Development. 1-6 7 Structuring Projects Functional Project: Advantages • A team member can work on several projects • Technical expertise is maintained within the functional area • The functional area is a “home” after the project is completed • Critical mass of specialized knowledge 1-7 8 Structuring Projects Functional Project: Disadvantages • Aspects of the project that are not directly related to the functional area get short-changed • Motivation of team members is often weak • Needs of the client are secondary and are responded to slowly 1-8 9 Matrix Project Organization Structure President Research and Engineering Manufacturing Marketing Development Manager Project A Manager Project B Manager Project C 1-9 10 Structuring Projects Matrix: Advantages • Enhanced communications between functional areas • Pinpointed responsibility • Duplication of resources is minimized • Functional “home” for team members • Policies of the parent organization are followed 1-10 11 Structuring Projects Matrix: Disadvantages • Too many bosses • Depends on project manager’s negotiating skills • Potential for sub-optimization 1-11 12 Work Breakdown Structure A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages Level Program 1 2 Project 1 Project 2 Task 1.1 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 1-12 13 Network-Planning Models • A project is made up of a sequence of activities that form a network representing a project • The path taking longest time through this network of activities is called the “critical path” • The critical path provides a wide range of scheduling information useful in managing a project • Critical Path Method (CPM) helps to identify the critical path(s) in the project networks 1-13 14 Prerequisites for Critical Path Methodology A project must have: well-defined jobs or tasks whose completion marks the end of the project; independent jobs or tasks; and tasks that follow a given sequence. 1-14 15 Steps in the CPM with Single Time Estimate • 1. Activity Identification • 2. Activity Sequencing and Network Construction • 3. Determine the critical path – From the critical path all of the project and activity timing information can be obtained 1-15 16 CPM with Single Time Estimate Consider the following consulting project: Activity Assess customer's needs Write and submit proposal Obtain approval Develop service vision and goals Train employees Quality improvement pilot groups Write assessment report Designation Immed. Pred. Time (Weeks) A None 2 B A 1 C B 1 D C 2 E C 5 F D, E 5 G F 1 Develop a critical path diagram and determine the duration of the critical path and slack times for all activities. 1-16 17 First draw the network Act. Imed. Pred. Time A None 2 B A 1 C B 1 D C 2 E C 5 F D,E 5 G F 1 1-17 18 Sensitivity Analysis • What if something goes wrong? • Can you still be able to finish the project as planned? 1-18 19 Example 2. CPM with Three Activity Time Estimates Immediate Task Predecesors Optimistic Most Likely Pessimistic A None 3 6 15 B None 2 4 14 C A 6 12 30 D A 2 5 8 E C 5 11 17 F D 3 6 15 G B 3 9 27 H E,F 1 4 7 I G,H 4 19 28 1-19 20 Example 2. Expected Time Calculations ET(A)= 3+4(6)+15 Task A B C D E F G H I Immediate Expected Predecesors Time None 7 None 5.333 A 14 A 5 C 11 D 7 B 11 E,F 4 G,H 18 Expected Time = 6 ET(A)=42/6=7 Immediate Task Predecesors Optimistic Most Likely Pessimistic A None 3 6 15 B None 2 4 14 C A 6 12 30 D A 2 5 8 E C 5 11 17 F D 3 6 15 G B 3 9 27 H E,F 1 4 7 I G,H 4 19 28 Opt. Time + 4(Most Likely Time) + Pess. Time 6 1-20 21 Example 2. Network Duration = 54 Days C(14) E(11) H(4) A(7) D(5) F(7) I(18) B (5.333) G(11) 1-21 22 A ctivity variance, Task A B C D E F G H I 2 Pessim . - O ptim . 2 = ( ) 6 Optimistic Most Likely Pessimistic Variance 3 6 15 4 2 4 14 6 12 30 16 2 5 8 5 11 17 4 3 6 15 3 9 27 1 4 7 1 4 19 28 16 (Sum the variance along the critical path.) 2 = 41 1-22 23 Example 2. Probability Exercise What is the probability of finishing this project in less than 53 days? p(t < D) D=53 t TE = 54 Z = D - TE 2 cp 1-23 24 Example 2. Additional Exercise Solution p(t < D) TE = 54 t D=56 1-24 25 Time-Cost Trade-offs -Activity crashing: reduce activity times to complete a project earlier (at a cost, of course) -To reduce project completion time: • Focus on the critical activities!! • Be careful!! When you reduce the critical path, it may no longer be the critical path anymore. Check it again!! 1-25 26 Crashing Example B 6 A 7 D 8 E 10 C 4 1-26 27 Crashing example Activity Cost per day to # of days an expedite Avg. Time Crash time Normal cost Crash cost A 7 5 $70 100 (100-70)/2=15 2 B 6 3 60 80 (80-60)/3=6.67 3 C 4 2 40 60 (60-40)/2=10 2 D 8 6 80 120 (120-80)/2=20 2 E 10 7 10 40 (40-19)/3=10 3 activity may be shortene d • Q: By how many days can I expedite this project if I had a budget of $24? 1-27 28 Project completion time Critical path McGraw-Hill/Irwin Cost of Least expediting expensive activity ©2009 The McGraw-Hill Companies, All Rights Reserved Cost of LEA 1-28