project management@ ppt doms

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

9-3

Project Management ProcessCopyright 2011 John Wiley & Sons, Inc.

9-4

Project Management Process

9-5

Project Elements

Objective Scope Contract requirements Schedules Resources Personnel Control Risk and problem analysis

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

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

9-8

Work Breakdown Structure

• Work breakdown structure (WBS)• Breaks a project into components,

subcomponents, activities, and tasks

9-9

Copyright 2011 John Wiley & Sons, Inc. 9-10

Work Breakdown Structure for Computer Order Processing System Project

Work Breakdown Structure for Computer Order Processing System Project

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

9-11

9-12

Responsibility Assignment Matrix

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

9-13

Project Scheduling Steps

Define activities Sequence activities Estimate time Develop schedule

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

9-15

Example of Gantt Chart

9-16

| | | | |Activity

Design house and obtain financing

Lay foundation

Order and receive materials

Build house

Select paint

Select carpet

Finish work

0 2 4 6 8 10Month

Month1 3 5 7 9

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

9-17

Project Control

• Quality management• Communication

• Enterprise project management

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

9-19

Project Network

Activity-on-node (AON) nodes represent activities arrows show precedence

relationships

Activity-on-arrow (AOA) arrows represent activities nodes are events for points

in time

Event completion or beginning of

an activity in a project

9-20

1 32

Branch Node

AOA Project Network for a House

9-21

3

2 0

1

3

1 1

11 2 4 6 7

3

5

Lay foundation

Design house and obtain financing

Order and receive materials

Dummy

Finish work

Select carpet

Select paint

Build house

Concurrent Activities

• Dummy• two or more activities cannot share same start and end

nodes

9-22

2 3

Lay foundation

Order material

(a) Incorrect precedence relationship

(b) Correct precedence relationship

3

42

DummyLay foundation

Order material

1

2 0

AON Network for House Building Project

9-23

13

22

43

31

51

61

71

Start

Design house and obtain financing

Order &receive materials

Select paint

Select carpet

Lay foundation

Build house

Finish work

Activity Number

Activity Time

Critical Path

9-24

Critical path Longest path through a

network Minimum project

completion time

A: 1-2-4-73 + 2 + 3 + 1 = 9 months

B: 1-2-5-6-73 + 2 + 1 + 1 + 1 = 8 months

C: 1-3-4-73 + 1 + 3 + 1 = 8 months

D: 1-3-5-6-73 + 1 + 1 + 1 + 1 = 7 months

13

22

43

31

51

61

71

Start

Activity Start Times

9-25

13

22

43

31

51

61

71

Start

Start at 3 months Start at 6 months

Start at 5 months

Finish at 9 months

Finish

Node Configuration

9-26

1 0 3

3 0 3

Activityduration

Activitynumber

Earlieststart

Lateststart

Latest finish

Earliestfinish

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

9-27

Earliest Activity Start and Finish Times

9-28

1 0 3

1

2 3 5

2

3 3 4

1 5 5 6

1

4 5 8

3

6 6 7

1

7 8 9

1Start

Design house and obtain financing

Select paint

Lay foundation

Select carpet

Build house

Finish work

Order and receive materials

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

9-29

Latest Activity Start and Finish Times

9-30

0 3

1 0 3

1

3 5

2 3 5

2

4 5

3 3 4

1

6 7

5 5 6

1

5 8

4 5 8

3

6 7

6 6 7

1

8 9

7 8 9

1Start

Design house and obtain financing

Select paint

Lay foundation

Select carpet

Build house

Finish work

Order and receive materials

Activity Slack

9-31

* Critical Path

09988*7

178676

167565

08855*4

145343

05533*2

03300*1

Slack SEFLFESLSActivity

Probabilistic Time Estimates

• Beta distribution• probability distribution traditionally used in CPM/PERT

9-32

a = optimistic estimatem = most likely time estimateb = pessimistic time estimate

where

Mean (expected time): t =a + 4m + b

6

Variance: 2 =

2b - a

6

Examples of Beta Distributions

9-33

P(t

ime)

P(t

ime)

P(t

ime)

Timea mt ba m t b

m = t

Time

Timeba

Project with Probabilistic Time Estimates

9-34

Finish23,6,9

31,3,5

16,8,10

52,3,4

63,4,5

42,4,12

72,2,2

83,7,11

92,4,6

10

1,4,7

11

1,10,13

Equipment installation

System development

Position recruiting

Equipment testing and modification

Manual testing

Job Training

Orientation

System training

System testing

Final debugging

System changeover

Start

Activity Time Estimates

9-35

1 6 8 10 8 0.44 2 3 6 9 6 1.00 3 1 3 5 3 0.44 4 2 4 12 5 2.78 5 2 3 4 3 0.11 6 3 4 5 4 0.11 7 2 2 2 2 0.00 8 3 7 11 7 1.78 9 2 4 6 4 0.4410 1 4 7 4 1.0011 1 10 13 9 4.00

TIME ESTIMATES (WKS) MEAN TIME VARIANCE

ACTIVITY a m b t б2

Activity Early, Late Times & Slack

9-36

ACTIVITY t б ES EF LS LF S

1 8 0.44 0 8 1 9 1 2 6 1.00 0 6 0 6 0 3 3 0.44 0 3 2 5 2 4 5 2.78 8 13 16 21 8 5 3 0.11 6 9 6 9 0 6 4 0.11 3 7 5 9 2 7 2 0.00 3 5 14 16 11 8 7 1.78 9 16 9 16 0 9 4 0.44 9 13 12 16 310 4 1.00 13 17 21 25 811 9 4.00 16 25 16 25 0

Earliest, Latest, and Slack

9-37

1 0 8

8 1 9

3 0 3

3 2 5

4 8 13

5 16 21

6 3 7

4 5 9

7 3 5

2 14 16

9 9 13

4 12 16

10 13 17

1 0 3

2 0 6

6 0 6 5 6 9

3 6 9

8 9 16

7 9 16

11 16 25

9 16 25

Critical Path 2-5-8-11

FinishStart

Total Project Variance

9-38

2 = б22 + б5

2 + б82 + б11

2

= 1.00 + 0.11 + 1.78 + 4.00

= 6.89 weeks

CPM/PERT With OM Tools

9-39

Probabilistic Network Analysis

9-40

Determine probability that project is completed within specified time

where = tp = project mean time = project standard deviation

x = proposed project timeZ = number of standard deviations that

x is from the mean

Z =x -

Normal Distribution of Project Time

9-41

= tp Timex

Z

Probability

Southern Textile

9-42

What is probability that project is completed within 30 weeks?

2 = 6.89 weeks

= 6.89

= 2.62 weeks

Z =

=

= 1.91

x -

30 - 252.62

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

= 25 Time (weeks)x = 30

P(x 30 weeks)

Southern Textile

9-43

What is probability that project is completed within 22 weeks?

2 = 6.89 weeks

= 6.89

= 2.62 weeks

Z =

=

= -1.14

x -

22 - 252.62

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

= 25 Time (weeks)x = 22

P(x 22 weeks)= 0.1271

0.3729

Microsoft Project

• Popular software package for project management and CPM/PERT analysis

• Relatively easy to use

9-44

Microsoft Project

9-45

Click on “Tasks”

First step; Start Date

Microsoft Project

9-46

Precedencerelationships

Click on “Format” then ”Timescale”to scale Gantt chart.

Gantt chart; click on “View”

to activateCreate precedencerelationships;

click on predecessoractivity, then

holding “Ctrl” Key,click on successor

activity.

Microsoft Project

9-47

Click on “View” then Network Diagram

Critical pathin red

Microsoft Project – Zoom View

9-48

Microsoft Project – Task Information

9-49

Enter % completion

Microsoft Project – Degree of Completion

9-50

Activities 1, 2 and 3100% complete

Black bars showdegree of completion

PERT Analysis with Microsoft Project

9-51

Click on PERT EntrySheet to enter 3time estimates

Click on PERT calculator to compute

activity duration

PERT Analysis with Microsoft Project

9-52

PERT Analysis with Microsoft Project

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

9-54

Project Network – Building a House

9-55

112

28

412

34

54

64

74

Normal Time and Costvs. Crash Time and Cost

Copyright 2011 John Wiley & Sons, Inc. 9-56

$7,000 –

$6,000 –

$5,000 –

$4,000 –

$3,000 –

$2,000 –

$1,000 –

–| | | | | | |

0 2 4 6 8 10 12 14 Weeks

Normal activity

Normal time

Normal cost

Crash time

Crashed activity

Crash cost

Slope = crash cost per week

Project Crashing

9-57

TOTALNORMAL CRASH ALLOWABLE CRASH

TIME TIME NORMAL CRASH CRASH TIME COST PERACTIVITY (WEEKS) (WEEKS) COST COST (WEEKS) WEEK

1 12 7 $3,000 $5,000 5 $400

2 8 5 2,000 3,500 3 500

3 4 3 4,000 7,000 1 3,000

4 12 9 50,000 71,000 3 7,000

5 4 1 500 1,100 3 200

6 4 1 500 1,100 3 200

7 4 3 15,000 22,000 1 7,000

$75,000 $110,700

9-58

Project Duration:36 weeks

112

28

34 5

4

64

74

$400

$500

$3000

$7000

$200$200

$700012

4 FROM …

17

28

34 5

4

64

74

$400

$500

$3000

$7000

$200$200

$700012

4

Project Duration:31 weeks

Additional Cost:$2000

TO…

Time-Cost Relationship

9-59

• 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

Time-Cost Tradeoff

9-60

Cos

t ($)

Project duration

Crashing Time

Minimum cost = optimal project timeTotal project cost

Indirect cost

Direct cost