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OBJECTIVES ` ` ` `

Chapter 3 Project Management

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Definition of Project Management Work Breakdown Structure Project Control Charts Structuring Projects Critical Path Scheduling

October 1, 2008

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Project Management: Defined Project is a series of related jobs usually directed toward some major output and requiring i i a significant i ifi t period i d off time ti to t perform Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical technical, cost cost, and time constraints of a project

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Gantt Chart Vertical Axis: Always Activities or Jobs

Horizontal bars used to denote length y or job. j of time for each activity

Activity 1 Activity 2 Activity 3 Activity 4 A ti it 5 Activity Activity 6 Time

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Horizontal Axis: Always Time

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Organizational Structures `

Functional, Project, and Matrix Organizational Structures

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Three basic organization structures ` ` `

Functional: functional managers report to the CEO Project: program managers report to the CEO Matrix: middle ground between functional and project structures; personnel often report to two or more bosses; structure can be weak, balanced, or strong matrix

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Pure Project

Structuring Projects: Pure Project Advantages

A pure project is where a self-contained team works full-time full time on the project

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The project manager has full authority over p j the project Team members report to one boss Shortened communication lines Team pride, motivation, and commitment are high

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Structuring Projects: Pure Project Disadvantages ` ` ` `

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Functional Project A functional project is housed within a functional division

Duplication of resources Organizational goals and policies are ignored Lack of technology transfer Team members have no functional area "home"

President Research and Development Project Project Project A B C

Engineering

Project Project Project D E F

Manufacturing

Project Project Project G H I

Example, Project “B” is in the functional area of Research and Development. 9

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Structuring Projects Functional Project: Advantages ` ` ` `

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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

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Structuring Projects Functional Project: Disadvantages `

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Aspects of the project that are not directly related to the functional area g get shortchanged Motivation of team members is often weak Needs of the client are secondary and are responded to slowly

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Matrix Project Organization Structure President Research and Engineering Manufacturing Development

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Structuring Projects Matrix: Advantages

Marketing

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Enhanced communications between functional areas

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Pinpointed responsibility

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Duplication of resources is minimized

Manager Project A

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Functional “home” for team members

Manager Project B

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P li i off th Policies the parentt organization i ti are followed f ll d

Manager Project C

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Structuring Projects Matrix: Disadvantages `

Too many bosses

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Depends on project manager’s negotiating skills

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Potential for sub-optimization

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Work Breakdown Structure A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages cf. WBS/Alton bridge (PM2.avi) Level Program 1 2

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Project 1

Project 2

Task 1.1

Task 1.2

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Subtask 1.1.1

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Work Package 1.1.1.1

Subtask 1.1.2 Work Package 1.1.1.2

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Network-Planning Models

Prerequisites for Critical Path Methodology

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A project is made up of a sequence of activities that form a network representing a project

A project must have:

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The path taking longest time through this network of activities is called the “critical path”

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Well-defined jobs or tasks whose completion marks the end of the project;

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The critical path provides a wide range of scheduling information useful in managing a project

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Independent jobs or tasks;

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Tasks that follow a given sequence.

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Critical Path Method (CPM) helps to identify the critical path(s) in the project networks

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Types of Critical Path Methods (CPM) `

CPM with a Single Time Estimate ` `

Used when activity times are known with certainty Used to determine timing estimates for the project, project each activity in the project, and slack time for activities

Steps in the CPM with Single Time Estimate Activity Identification Activity Sequencing and Network Construction Determine the critical path

1. 2 2. 3.

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CPM with Three Activity Time Estimates ` `

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Used when activity times are uncertain Used to obtain the same information as the Single Time Estimate model and probability information

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Time-Cost Models `

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Used when cost trade-off information is a major consideration in planning Used to determine the least cost in reducing total project time

Cf: CPM/Alton bridge (PM5.avi) 20

From the critical path, all of the project and activity timing information can be obtained

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CPM with Single Time Estimate

First draw the network

Consider the following consulting project: Activity A Assess customer's t ' needs d Write and submit proposal Obtain approval Develop service vision and goals Train employees Quality improvement pilot groups Write assessment report

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Act.

Designation Immed. Pred. Time (Weeks) A N None 2 B A 1 C B 1 D C 2 E C 5 F D, E 5 G F 1

None

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B

A

1

C

B

1

D

C

2

E

C

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F G

D,E F

5 1

A(2)

Develop a critical path diagram and determine the duration of the critical path and slack times for all activities.

B(1)

D(2)

C(1)

G(1)

F(5)

E(5) 22

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Determine early starts (ES) and early finish (EF) times

ES=0 EF=2 A(2)

ES=2 EF=3 B(1)

ES=3 EF=4

D(2)

C(1) ES 4 ES=4 EF=9

Hint: Start with ES=0 and go forward in the network from A to G.

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Determine late starts (LS) and late finish (LF) times ES=4 EF=6

ES=4 EF=6

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Imed. Pred. Time

A

ES=9 EF=14 F(5)

ES=14 EF=15 G(1)

ES=0 EF=2

ES=2 EF=3

ES=3 EF=4

A(2)

B(1)

C(1)

LS=0 LF 2 LF=2

LS=2 LF 3 LF=3

LS=3 LF=44 LF

D(2) LS=7 LF=9 ES=4 EF=9 E(5) LS=4 LF=9

E(5) 24

ES=9 EF=14

ES=14 EF=15

F(5)

G(1)

LS=9 LS=14 LF 14 LF=14 LF 15 LF=15 Hint: Start with LF=15 or the total time of the project and go backward in the network from G to A.

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Critical Path & Slack ES=4 EF=6 ES=0 EF=2

ES=2 EF=3

ES=3 EF=4

A(2)

B(1)

C(1)

LS=0 LF=2

LS=2 LF=3

LS=3 LF=4

D(2) LS=7 LF=9 ES=4 EF=9 E(5) LS=4 LF=9

Example 2. CPM with Three Activity Time Estimates

Slack=(7-4)=(9-6)= 3 Wks

ES=9 EF=14

ES=14 EF=15

F(5)

G(1)

LS=9 LF=14

LS=14 LF=15

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 3 6 15 5 F D G B 3 9 27 H E,F 1 4 7 I G,H 4 19 28

Duration=15 weeks

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Example 2. Expected Time Calculations

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Ex. 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 = 27

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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

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 = 28

ET(B)= 2+4(4)+14 6 ET(B)=32/6=5.333 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

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Example 2. Network

Ex 2. Expected Time Calculations 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 EF E,F 4 G,H 18

Expected Time = 29

Duration = 54 Days

ET(C)= 6+4(12)+30 C(14)

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D(5) 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

B

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A c tiv ity v a ria n c e , σ

Task A B C D E F G H I

p(t < D) t Z =

D - TE

∑σ

G(11)

(5.333)

What is the probability of finishing this project in less than 53 days? y

TE = 54

F(7) I(18)

Example 2. Probability Exercise

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H(4)

A(7)

ET(C)=84/6=14

D=53 D 53

E(11)

2

= (

P e ssim . - O p tim . 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 cp 32

∑σ

2

= 41

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Ex 2. Additional Probability Exercise p(t < D) `

t TE = 54

D=53

Z =

D - TE

∑σ

2

=

cp

What is the probability that the project duration will exceed 56 weeks?

53 - 54 = -.156 41

p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)) There is a 43.8% probability that this project will be completed in less than 53 weeks. 33

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Example 2. Additional Exercise Solution

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Time-Cost Models `

Basic Assumption: Relationship between activity completion time and project cost

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Time Cost Models: Determine the optimum point in time-cost tradeoffs

p(t < D)) p(

TE = 54

Z =

D - TE

∑σ

2 cp

=

t

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D=56

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56 - 54 = .312 312 41

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p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312)) 35

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Activity direct costs Project indirect costs Activity completion times

cf. f p. 89

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Question Bowl

CPM Assumptions/Limitations `

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Project activities can be identified as entities (There is a clear beginning and ending point for each activity.) Project activity sequence relationships can be specified and networked Project control should focus on the critical path The activity times follow the beta distribution, with the variance of the project assumed to equal the sum of the variances along the critical path Project control should focus on the critical path

a. b. c. d. e.

Which of the following are examples of Graphic p Project j Charts? Gantt Bar Milestone All of the above None of the above

Answer: d. All of the above 37

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Question Bowl

a. b. c. d. e.

Which of the following are one of the three organizational structures of projects? P Pure Functional Matrix All of the above None of the above

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Question Bowl

a. b. c. d d. e.

Answer: d. All of the above 39

A project starts with a written description of the objectives to be achieved, with a brief statement of the work to be done and a proposed schedule all contained in which of the following? SOW WBS Early Start Schedule Late Start Schedule None of the above

Answer: a. SOW (or Statement of Work) 40

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Question Bowl

a. b. c. d. e.

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Question Bowl

For some activities in a project there may be some leeway from when an activity can start and when it must finish. What is this period of time called when using the Critical Path Method? Early start time Late start time Slack time All of the above None of the above

a. b. c. d. e.

Answer: b. No slack time is permitted (All critical path activities must have zero slack time, otherwise they would not be critical to the project completion time.)

Answer: c. Slack time 41

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Question Bowl

a. b. c. d d. e.

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When looking at the Time-Cost Trade Offs in the Minimum-Cost Scheduling time-cost model, we seek to reduce the total time of a project by doing what to the least-cost activity choices? Answer: a. Crashing Crashing them them (We “crash” the Adding slack time least-cost activity times Subtracting slack time to seek a reduced total Adding project time ti time for f the th entire ti None of the above project and we do it step-wise as inexpensively as possible.)

How much “slack time” is permitted in the “critical path” activity times? Only one unit of time per activity No slack time is permitted As much as the maximum activity time in the network As much as is necessary to add up to the total time of the project None of the above