project management

1

PROJECT MANAGEMENT OVERVIEW

WHY PROJECTS

• Projects are a means to accomplish

– Individual or family objectives

–Organizational objectives

–National or global objectives

• Project Identification begins in response to the specific need or the objectives

WHAT IS A PROJECT? • Two defining features: - A unique output -A limited time frame • Formal definition: A project is a complex effort, made up of

interrelated tasks, to be completed within a limited time frame and budget, with a well-defined set of objectives

• Types of projects that could be considered : - Industrial projects - Infrastructure projects - Organizational and development projects

PROJECT CHARACTERISTICS COMPLEX:

• Many inter-related activities, • Involving many people • Crossing functional boundaries TEMPORARY BY NATURE • Have a finite life cycle with characteristic phases • UNIQUE: different objectives, tasks, people, schedules, problems etc. DYNAMIC: • Changes during different phase of the project life cycle • Changes requested by clients, management, technology

development etc. • Changes in working environment HIGH PRESSURES AND HIGH RISKS

Project versus Program What is a project?

• Temporary and unique • Definite beginning and end • Unique purpose • Require resources, often from various areas involve

uncertainty Note: temporary does not mean short in duration

What is a program? • A group of projects managed in a coordinated way to obtain

benefits not available to managing them individually • Long Term for: a collection of projects Same Techniques Work for Projects, Products, & Programs! • Use them where they work!

2

Triple Constraints Theory

Every project is constrained in different ways by its

• Scope goals: What is the project trying to accomplish?

• Time goals: How long should it take to complete?

• Cost goals: What should it cost?

It is the project manager’s duty to balance these three often competing goals

VARIETY OF PROJECTS

• Projects at personal level

• Projects in local neighbourhood

• Organizational projects

• National projects

• Global projects

PERSONAL PROJECTS

• Preparing for an examination

• Writing a book

• Getting dressed

• Wedding in the house

• A birthday function

• A family vacation

PROJECTS IN LOCAL NEIGHBOURHOOD

• A school function

• Cleanliness drive

• Construction of clubs

• Tree plantation exercise

• Establishment of a park

• Welcoming a dignitary to the colony

ORGANISATIONAL PROJECTS

• Construction of building, highway

• Planning & launching a new product

• A turnaround in a refinery

• A training for managers in the organization

• Conducting a marketing survey

• Completing a financial audit

• Disposal of dead stock

NATIONAL PROJECTS

• Launching a new satellite

• Literacy campaign

• Poverty removal drive

• Organizing general elections

• Preparation of annual budget

3

GLOBAL PROJECTS

• Organizing peace missions (UN)

• Space exploration

• Conducting World Trade

• Environment protection

Project Management Framework

Project Phases • Projects are divided up into phases, collectively project phases

are known as the project lifecycle – The Phases often overlap!!!

• Project phases are marked by completion of one or more deliverables – Deliverable is a tangible, verifiable work product

• Questions at the end of each phase (known as phase exits, kill points, or stage gates) – Determine if the project should continue – Detect and correct errors cost effectively

• Deliverables from the preceding phase are usually approved before work exceeds 20% of the next phase’s budget – i.e. Overlapping work is done at cost risk to meet schedule

• FAST TRACKING: projects that have overlapping phases

Definition Planning Execution Delivery

/Concept /Development /Implementation /Close-out

Level

of

Effort

1. Goals 1. Schedules 1. Status reports 1. Train Customer

2.Specifications 2. Budgets 2. Changes 2. Transfer Documents

3.Tasks 3. Resources 3. Quality 3. Release Resources

4.Responsibilities 4. Risks 4. Forecasts 4. Reassign Staff

5. Staffing 5. Lessons Learned

Project Lifecycle

Phases of the Project Life Cycle

Phase

Deliverables

Concept/

Definition

Development/

Planning

Implementation

/ Execution

Close-Out/

Delivery

Planning Management

Plan

Project Plan Work Package Completed

Work

Financial Preliminary

Cost Estimate

Budgetary Cost

Estimate

Costs and Over

Runs

Lessons

Learned

Reporting /

Decomposition

3-level WBS 6+ level WBS Performance

Reports

Customer

Acceptance

LIFE CYCLE OF A PROJECT

• Selection of the project

• Project Planning Scope of work & network development

Basic Scheduling

Time Cost tradeoffs

Resource Considerations in projects

• Project Implementation

• Project Completion and Audit

4

Project Stakeholders

• Stakeholders are the people involved in or affected by project activities

• Stakeholders include – the project sponsor and project team – support staff – customers – users – Suppliers and vendors – opponents to the project

Projectized:

– Team members are often co-located.

–Most of the organization's resources are involved in project work.

–Project managers have a great deal of independence and authority.

–Departments either report directly to the project manager or provide services to the various projects.

A Project as a Production System Mass production

Batch

Production

Job

Production

Q

Quantity to be Made

P (No. of Products or “VARIETY”)

Projects

1

PROJECT SUCCESS CRITERIA Project success is assessed by:

• Objective measures or performance: cost, time, meeting the stated objectives and targets, quality and specifications of the deliverables, etc.

• Perceived satisfaction of the key stakeholders that include client, top management and the project team

It is important for project manager to:

• Identify and document the project success criteria

• Getting the key stakeholders agree on the criteria

• Keeping a balanced mix of managerial attention to technical tasks and stakeholder management

It may be practical to define a range of project success (from

minimum required to realistically best case scenario)

Knowledge base for Project management

/ COMPETENCY

BASELINE

The Immutable Laws of project management (1)

1) No major project is installed on time, within budget, or with the same staff that started it. Yours will not be the first.

2) Projects progress quickly until they become 90% complete, then they remain at 90% complete forever.

3) One advantage of fuzzy project objectives is that they let you avoid the embarrassment of estimating the corresponding costs.

4) When things are going well, something will go wrong. When things just cannot get any worse, they will. When things appear to be going better, you have overlooked something.

5

The Immutable Laws of project management (2)

5) If project content is allowed to change freely, the rate of change will exceed the rate of progress.

6) No system is ever completely debugged. Attempts to debug a system inevitably introduce new bugs that are even harder to find.

7) A carelessly planned project will take three times longer than expected; A carefully planned project will take only twice as long.

8) Project teams detest progress reporting because it vividly manifest their lack of progress.

The new challenges of Project Management

• Heterogeneity of projects, ranging from engineering to social ones, calling for a wide range of knowledge and skills

• Shortened life cycle of projects, specially as result of advance of technology and increased competition

• Globalization and the growing need for international project managers

• Knowledge explosion in terms of volume, quality and speed of dissemination

• Increased customer expectation

PROJECT IDENTIFICATION,

SCREENING AND SELECTION

Screening

Project Appraisal

Project Selection

IDEA GENERATION

PROJECT IDENTIFICATION

OBJECTIVES

STRENGTHS WEAKNESSES

THREATS OPPORTUNITIES

ALTERNATIVE

PROJECT POSSIBILITIES

SEARCH NEW IDEAS

• What are the objectives?

• Brainstorm to generate alternative solutions.

– Emerging market trends.

– SWOT analysis.

– Other constraints

• Shortlist candidate ideas for detailed scrutiny.

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OBJECTIVES

• To increase profits

• To minimize threats of losses

• To become more competitive

• To provide help after a disaster

• To train people in a new area

• To reduce pollution in Raipur

• To become a successful entrepreneur

SWOT ANALYSIS

• Objectives

• Experience

• Resources

• Environment pressures

• Keeping these factors in mind an analysis of strengths, weaknesses , opportunities and threats is made to identify and select suitable projects.

STRENGTHS

• Experience and expertise

• Financial position

• Capital raising capability

• Industrial contacts

• Foreign collaborations

• Easy access to market

WEAKNESSES

• Newer unfamiliar technologies

• Inability to raise huge investments

• Lack of experience

• Lack of trained personnel

• Inability to forecast market trends

OPPORTUNITIES

• Emerging technologies

• New products with new markets

• New processes with better features

• Special financing schemes

• Government and other incentives

THREATS

• Competitors

• Poor state of the economy

• Outdated technology

• Unprofessional management skills

• New products and services

7

SOURCE OF NEW PRODUCT IDEAS

• Marketing and sales department

• Research &Development

• Top management

• Production department

• Consumers / Customers

• Competition

BRAINSTORMING

• A good means to generate new project ideas

• Focus on uninhibited participation by a group

• Listing of ideas without suppressing creativity at source

• List of ideas subjected to screening and evaluation subsequently

SCREENING OF IDEAS

• Poor Fair Good Vgood Excellent

• (1) (2) (3) (4) (5) Weight

• Cost * 20%

• Risk * 30%

• Return * 40%

• Hazard * 10%

• (score = 2x0.2+3x0.3+4x0.4+2x0.1= 3.1)

CRITERIA IN SCREENING PROJECTS

• Investment

• Rate of return

• Risk

• Likely profit

• Payback

• Similarity to existing business

• Expected life

• Flexibility

• Environment impact

• Competition

MORTALITY OF NEW PROJECT IDEAS

No. of

Ideas

Feasible Idea

One study indicated that out of 35 new ideas

only 1 made it to the final product

REDUCE VEHICULAR POLLUTION IN RAIPUR

1 Restrict registration of new vehicles

2 Enforce strict emission regulations for vehicles

3 Ban diesel run vehicles on road

4 Introduce MRTS for the city

5 Encourage use of car pools

6 Grow more trees/ green belts in the city

8

REDUCE VEHICULAR POLLUTION IN RAIPUR-II

7 Declaring no traffic zones in the city

8 Ban vehicles with an age of ten or more years from plying on the roads

• These and more ideas could be generated through a Brainstorming exercise

SCREENING OF IDEAS

• Criteria chosen for screening:

– Effectiveness to achieve objective

–Cost of the proposal

– Ease of implementation

– Time needed

• This is an illustrative list. Other criteria could be added, if needed.

SCALE OF EVALUATION

• v poor poor fair average good excellent (0) (1) (2) (3) (4) (5)

• Low Effectiveness High

• High Cost Low

• Difficult Implementation Easy

• Maximum Time Minimum

SCORING OF ALTERNATIVE PROJECTS (Effectiveness/Cost /Implementation/Time)

• 1 Restrict registration of new vehicles

• 2 Enforce strict emission regulations on vehicles

• 3 Ban diesel run vehicles on the road

• 4 Introduce MRTS for the city

• 3 1 1 2 7

• 4 5 4 5 18

• 3 1 1 2 7

• 4 0 1 0 5

SCORING OF ALTERNATIVE PROJECTS (Effectiveness/Cost/Implementation/Time)

• 5 Encourage use of car pools

• 6 Grow more trees/green belts in the city

• 7 Declaring no traffic zones in the city

• 8 Ban 10 year and older vehicles

• 2 5 4 4 15

• 4 3 3 3 13

• 2 3 2 2 9

• 3 2 3 3 11

RESULTS OF SCREENING

Project No.2: Enforce strict emission regulations on vehicles (18 points)

Project No. 5: Encourage use of car pools

(15 points)

Project No. 6: Grow more trees/green belts in the city (13 points)

9

PROJECT IDENTIFICATION

Objectives

Internal

SWOT Brainstorming

External

Project possibilities

Criteria Screening

Candidate project proposals

PROJECT APPRAISAL

• Market appraisal

• Technical appraisal

• Socio economic appraisal

• Ecological appraisal

• Financial appraisal

MARKET APPRAISAL

• What would be the aggregate demand of the proposed product or service?

• What would be the market share of the project under appraisal?

MARKET APPRAISAL (ISSUES)

• Past and current demand trends

• Past and current supply position

• Elasticity of demand

• Production possibilities and constraints

• Imports and exports

• Nature of competition

• Cost structure

MARKET APPRAISAL (ISSUES contd.)

• Consumer behaviour

–motivations, attitudes, preferences,requirements

• Distribution channels

–marketing policies

• Administrative, technical and legal constraints

TECHNICAL APPRAISAL

• Whether prerequisites for the success of project considered?

• Good choices with regard to location, size, process, machines etc.

10

TECHNICAL APPRAISAL (ISSUES)

• Preliminary tests and studies

• Availability of raw materials, power and other inputs

• Optimal scale of operations

• Choice of suitable production process

• Choice of appropriate machines and equipment

TECHNICAL APPRAISAL (ISSUES Cont.)

• Effluents and waste disposal

• Proper layout of plant and buildings

• Realistic work schedules

• Socially acceptable technology

SOCIO-ECONOMIC APPRAISAL

• Social cost -benefit analysis

• Direct economic benefits and costs in terms of shadow prices

• Impact of project on distribution of income in society

• Impact on level of savings and investments in society

SOCIO-ECONOMIC APPRAISAL (Continued)

• Impact on fulfillment of national goals

– Self sufficiency

– Employment

– Social order

ECOLOGICAL APPRAISAL

• Impact of project on quality of

–Air

–Water

–Noise

–Vegetation

–Human life

ECOLOGICAL APPRAISAL (Continued)

• Major projects , such as given below, cause environmental damage

– Power plants

– Irrigation schemes

– Industries like bulk drugs, chemicals and leather processing etc.

• Likely damage & the cost of restoration

11

FINANCIAL APPRAISAL

• Whether the project is financially viable ?

• Servicing debt

• Meeting return expectations

FINANCIAL APPRAISAL (Continued)

• Investment and phasing of the total cost

• Means of financing

• Cost of capital

• Projected profitability

• Breakeven point

• Cash flows in the project

FINANCIAL APPRAISAL (Continued)

• Investment worthwhile?

– Net present value

– Internal rate of return

– Payback period

• Loan returning capability

– Debt service coverage ratio

• Level of risk

SUMMARY

• Project selection involves consideration of multiple, often conflicting criteria among alternatives.

• Project appraisal leads to evaluations which may be tangible, incommensurate or intangible.

• Intangibles are evaluated on a numerical subjective scale.

PROJECT PLANNING AND SCHEDULING

Why planning?

• Insure goal achievement

• Improve effective utilization of resources

• Help control and monitor progress

• Promote communication /co-ordination

• Motivate people

• Get finance for project

12

Project Planning • Describe scope and activities, output and

specifications • Estimate time, costs and other resources • Schedule project activities • Identify critical activities • Determine personnel needs and recruit project staff • Organize the project team and assign

works/responsibilities/ authorities • Plan for project monitoring and control • Write (and get approved) project document. • Negotiate and sign contracts

• Deliverable output: List and schedule of activities

with description and estimates, organization structure and responsibility assignment

What is a Project Plan?

• Common misunderstanding: Project Schedule

• Introduction or overview of the project

• Description of how the project is organized

• Management and technical processes used on the project

• Work to be done, schedule, and budget information

Why do plans fail?

• Plans are based on insufficient data • Project goals, objectives and specifications

are not understood (or agreed upon) at all levels.

• Plans are done by one and executed by another.

• Plans have no provision for monitoring, controlling and adjustment.

• Plans lack specific progress indicators, or having them wrong.

IMPERCEPTION

DIFFERENT

PERSONS

PERCEIVE

DIFFERENTLY

THOUGH

THEY MAY

SEE THE

SAME

THING

The basic project scheduling • Purpose: To put the project’s activities in a

timeframe:

To ensure feasible implementation

To ensure fastest completion possible

To help in controlling the implementation

• Input:

The activity list (or WBS)

Activity duration estimate

Activity precedence relationship

13

WORK BREAKDOWN STRUCTURE

A breakdown of the total project task into components to establish

• How work will be done?

• How people will be organized?

• How resources would be allocated?

• How progress would be monitored?

ALTERNATIVE WAYS TO BREAKDOWN WORK

Task Task

System I System II System N

Subsystem Subsystem Subsystem

Project

Subtask Subtask Subtask

Work package Work package

WORK BREAKDOWN STRUCTURE WORK BREAKDOWN STRUCTURE

• Hardware orientation (Identification of basic work packages)

• Agency orientation (Based on assignment of responsibility to different agencies)

• Function oriented (e.g Design, Procurement, Construction and Commissioning)

WORK BREAKDOWN STRUCTURE (Continued)

• Generally a WBS includes 6-7 levels. More or less may be needed for a situation.

• All paths on a WBS do not go down to the same level.

• WBS does not show sequencing of work.

• A WBS should be developed before scheduling and resource allocation are done.

WORK BREAKDOWN STRUCTURE (Continued)

• A WBS should be developed by individuals knowledgeable about the work. This means that levels will be developed by various groups and the the separate parts combined.

• Break down a project only to a level sufficient to produce an estimate of the required accuracy.

14

ILLUSTRATIVE WORK BREAKDOWN STRUCTURE

Missile

Guidance Rocket Launching Warhead

control sys platform

Ballistic Propulsion Re entry

shell engine vehicle

I Stage Solid fuel II Stage

Housing project

Residential

Buildings

Educational

Buildings

Public

Buildings

External

Services

Modules High

School

Primary

School K.G Nursery

Res. Bld

Foundation

Res bldg

Finishes

Res. Bld

Super

Structure

Unfiltered

Water

Supply Sys

Sewerage

system

Electrical

System

Road/

Pavements

etc

Filtered

Water

Supply sys

Gas supply

system

Police

station

Post

office

Swimming

pool

Air raid

shelter

Shopping

complex

Youth

centre

Health

centre

Party

Office

Social

Centre Open theater

Rail/Air Ticket

Booking

Counter

Temple/

Mosque /

Church etc.

Service

buildings

Housing Units Project

Sub-project and Task Level Work Breakdown

Activity: A task or work package performed over a period of time.

Relationships/Precedence: Dependencies that exist between activities.

Duration: Length of the period of time to complete a task.

Early Start: The earliest an activity can start based on project logic.

Late Start: The latest an activity can start without delaying a project completion.

Early Finish: The earliest an activity can finish based on early start and duration.

Late Finish: Latest an activity can finish without delaying a project completion.

Float: The amount of time an activity can be delayed without delaying the project finish date.

Total Float: The amount of time that a pathway may be delayed from it's early start without delaying

the project finish date.

Critical Path: The longest time period from start to completion of a project; also the shortest total length

of the project.

The Work Breakdown Structure WBS Terminology:

The basic project scheduling • Tools:

Activity precedence diagram (PERT or CPM diagram)

CPM algorithm or scheduling software

• Output

Gantt chart of activities with slacks, critical activities and milestones

Other schedule-related plans (resource loading charts, personnel assignments, control schedule, etc.)

CPM and PERT: A quick historical look

• Critical Path Method (CPM): 1957

Plant maintenance projects for DuPont

Emphasis on cost/time trade-off

•Program Evaluation and Review Technique (PERT) 1958

US Navy’s Polaris Missile System Program

Emphasis on uncertain time estimates

Project scheduling: some basic concepts

• Activity precedence relationship: Finish-to-start Others: Finish-to-finish, Start-to-finish, Start-to-start Lags and leads in the relationship

• Activity precedence diagram: Activity and event Activity-on-node (AON) Activity-on-arc (AOA)

• Slacks (or floats) • Critical activities • Critical paths

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Task Dependency Relationships

• Finish-to-Start (FS) – B cannot start till A finishes

– A: Construct fence; B: Paint Fence

• Start-to-Start (SS) – B cannot start till A starts

– A: Pour foundation; B: Level concrete

• Finish-to-Finish (FF) – B cannot finish till A finishes

– A: Add wiring; B: Inspect electrical

• Start-to-Finish (SF) – B cannot finish till A starts (rare)

ALTERNATIVE PROJECT REPRESENTATIONS

• Activity on Arc

(A-O-A)

• Arrow diagrams

• Event oriented networks

• Activity on Node

(A-O-N)

• Precedence networks

• Activity oriented networks

i j a activity, a

Network Diagrams

• AOA consists of • Circles representing Events

– Such as ‘start’ or ‘end’ of a given task

• Lines representing Tasks – Thing being done

• Arrow Diagramming Method (ADM)

• AON • Tasks on Nodes

– Nodes can be circles or rectangles (usually latter)

– Task information written on node

• Arrows are dependencies between tasks

• Precedence Diagramming Method (PDM)

ACTIVITY DURATIONS

• Deterministic (as in CPM)

– when previous experience yields fairly accurate estimates of activity duration, eg construction activity, market surveys.

• Probabilistic (as in PERT)

– when there is uncertainty in times, as for instance in R&D activities, new activities being carried out for the first time.

TIME ESTIMATES

• Deterministic times

– A single time estimate is used for each activity. This is taken from experts who have prior knowledge and experience of the activity.

• Probabilistic times

– Three time estimates (optimistic, most likely and pessimistic) are commonly used for each activity based on the consensus of the group.

Critical Path

• “The specific set of sequential tasks upon which the project completion date depends”

– or “the longest full path”

-(The longest time period from start to completion of

a project; also the shortest total length of the

project.)

• All projects have a Critical Path

• Accelerating non-critical tasks do not directly shorten the schedule

16

CPM

• Critical Path Method – The process for determining and optimizing the

critical path

• Non-CP tasks can start earlier or later w/o impacting completion date

• Note: Critical Path may change to another as you shorten the current

• Should be done in conjunction with you & the functional manager

ABC Hospital Immediate

Activity Description Predecessor(s) Responsibility

A Select administrative and medical staff.

B Select site and do site survey.

C Select equipment.

D Prepare final construction plans and layout.

E Bring utilities to the site.

F Interview applicants and fill positions in

nursing, support staff, maintenance,

and security.

G Purchase and take delivery of equipment.

H Construct the hospital.

I Develop an information system.

J Install the equipment.

K Train nurses and support staff.

ABC Hospital Immediate


A Select administrative and medical staff. — Ramesh

B Select site and do site survey. — Rohit

C Select equipment. A Ashish

D Prepare final construction plans and layout. B Rohit

E Bring utilities to the site. B Nikhil

F Interview applicants and fill positions in A Ramesh


and security.

G Purchase and take delivery of equipment. C Ashish

H Construct the hospital. D Rohit

I Develop an information system. A Ram

J Install the equipment. E,G,H Ashish

K Train nurses and support staff. F,I,J Ramesh

Immediate


A Select administrative and medical staff. — Johnson

B Select site and do site survey. — Taylor

C Select equipment. A Adams

D Prepare final construction plans and layout. B Taylor

E Bring utilities to the site. B Burton

F Interview applicants and fill positions in A Johnson


and security.

G Purchase and take delivery of equipment. C Adams

H Construct the hospital. D Taylor

I Develop an information system. A Simmons

J Install the equipment. E,G,H Adams

K Train nurses and support staff. F,I,J Johnson

ABC Hospital

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Figure 1

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Figure 2

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Path Expected Time (wks)

A-F-K 28

A-I-K 33

A-C-G-J-K 67

B-D-H-J-K 69

B-E-J-K 43

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K

6

I

15

F

10

C

10

D

10

E

24

G

35

H

40

J

4

A

12

B

9

Path Expected Time (wks)

A-F-K 28

A-I-K 33

A-C-G-J-K 67

B-D-H-J-K 69

B-E-J-K 43

Immediate









and security.






ABC Hospital

Completion Time

Finish Start

K

6

I

15

F

10

C

10

D

10

E

24

G

35

H

40

J

4

A

12

B

9

Figure 3

FORWARD PASS

• To determine early start (ES) and early finish (EF) times for each task

• Work from left to right

• Adding times in each path

• Rule: when several tasks converge, the ES for the next task is the largest of preceding EF times

ABC Hospital

Earliest Start

and

Earliest Finish Times

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

I

15

F

10

Finish Start

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0

I

15

F

10

Earliest start time

Finish Start

22

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

Earliest start time Earliest finish time

Finish Start

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

0 9

Finish Start

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

9 33

0 9 9 19

Finish Start

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22

9 33

0 9 9 19

12 22 Finish Start

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22

19 59

9 33

0 9 9 19

12 22 Finish Start

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22

22 57

19 59

9 33

0 9 9 19

12 22 Finish Start

23

ABC Hospital

Earliest Start

and


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22

22 57

59 63 19 59

9 33

0 9 9 19

12 22 Finish Start

ABC Hospital

Earliest Start

and


Finish


A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

Critical

path

Start

BACKWARD PASS

• To determine the last finish (LF) and last start (LS) times

• Start at the end node

• Compute the bottom pair of numbers

• Subtract duration from connecting node’s latest start time

• Rule: when several tasks converge, the LF for the preceding task is the smallest of succeeding LS times

ABC Hospital

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

Latest Start

and

Latest Finish Times

Finish Start

ABC Hospital

Latest Start

and

Latest Finish Times

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

63 69 Latest

finish

time

Finish Start

ABC Hospital

Latest Start

and

Latest Finish Times

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

63 69

Latest

start

time

Latest

finish

time

Finish Start

24

ABC Hospital

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

53 63 63 69

59 63

Latest Start

and

Latest Finish Times

Finish Start

ABC Hospital

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

53 63 63 69

24 59

19 59

35 59

59 63

Latest Start

and

Latest Finish Times

Finish Start

ABC Hospital

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

53 63 63 69

14 24 24 59

9 19 19 59

35 59

59 63

Latest Start

and

Latest Finish Times

Finish Start

ABC Hospital

Latest Start

and

Latest Finish Times

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63


Latest start time Latest finish time

Critical

path

Finish Start

ABC Hospital Gantt

Charts

Figure 4 (a)

ABC Hospital

Figure 4(b)

Gantt

Charts

25

ABC Hospital

Figure 5

Activity

Slack

ABC Hospital

Activity Slack

Analysis

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish Start

ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis

Activity Slack ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis

Activity Slack

Slack = LS – ES

or

Slack = LF – EF

ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis

Activity Slack

SlackK = 63 – 63

or

SlackK = 69 – 69

ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis

Activity Slack

SlackK = 0

or

SlackK = 0

26

ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis

ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis

Node Duration ES LS Slack

ABC Hospital

Start

A

12

K

6

C

10

G

35

J

4

H

40

B

9

D

10

E

24

0 12

I

15

F

10

12 27

12 22 63 69

22 57

59 63 19 59

9 33

0 9 9 19

12 22

48 63

2 14 53 63 63 69

14 24 24 59

0 9 9 19 19 59

35 59

59 63

Finish

Activity Slack

Analysis


A 12 0 2 2

B 9 0 0 0

C 10 12 14 2

D 10 9 9 0

E 24 9 35 26

F 10 12 53 41

G 35 22 24 2

H 40 19 19 0

I 15 12 48 36

J 4 59 59 0

K 6 63 63 0

ABC Hospital

C

10

G

35

E

24

I

15

F

10

12 27

12 22

22 57

9 33

12 22

48 63

53 63

14 24 24 59

35 59

B

9

0 9

0 9

D

10

9 19

9 19

H

40

19 59

19 59

J

4

59 63

59 63

K

6

63 69

63 69

Finish

Critical Path


A 12 0 2 2

B 9 0 0 0

C 10 12 14 2

D 10 9 9 0

E 24 9 35 26

F 10 12 53 41

G 35 22 24 2

H 40 19 19 0

I 15 12 48 36

J 4 59 59 0

K 6 63 63 0

ABC Hospital

C

10

G

35

E

24

I

15

F

10

12 27

12 22

22 57

9 33

12 22

48 63

53 63

14 24 24 59

35 59

B

9

0 9

0 9

D

10

9 19

9 19

H

40

19 59

19 59

J

4

59 63

59 63

K

6

63 69

63 69

A

12

0 12

2 14

Finish Start

Critical Path

Linear cost assumption

ABC Hospital

8000 —

7000 —

6000 —

5000 —

4000 —

3000 —

0 —

Dir

ect

co

st

(do

llars

)

| | | | | |

5 6 7 8 9 10 11

Time (weeks) Figure 6

Cost-Time Relationships in Cost Analysis

Crash cost (CC)

Normal cost (NC)

(Crash time) (Normal time)

Estimated costs for a 2-week reduction, from 10 weeks to 8 weeks

5200

27

ABC Hospital TABLE 1 DIRECT COST AND TIME DATA FOR

THE ABC HOSPITAL PROJECT

A 12 $ 12,000 11 $ 13,000 1 $ 1,000

B 9 50,000 7 64,000 2 7,000

C 10 4,000 5 7,000 5 600

D 10 16,000 8 20,000 2 2,000

E 24 120,000 14 200,000 10 8,000

F 10 10,000 6 16,000 4 1,500

G 35 500,000 25 530,000 10 3,000

H 40 1,200,000 35 1,260,000 5 12,000

I 15 40,000 10 52,500 5 2,500

J 4 10,000 1 13,000 3 1,000

K 6 30,000 5 34,000 1 4,000

Totals $1,992,000 $2,209,000

Maximum Normal Normal Crash Crash Time Cost of Time Cost Time Cost Reduction Crashing per Activity (NT) (NC) (CT) (CC) (wk) Week

ABC Hospital

A-I-K: 33 weeks B-D-H-J-K: 69 weeks

A-F-K: 28 weeks B-E-J-K: 43 weeks

A-C-G-J-K: 67 weeks

Indirect costs = $8,000/week

Penalty cost = $20,000/week after week 65

Total cost = $2,624,000

Critical Path B-D-H-J-K: 69 weeks

Crash Activity J by 3 weeks @ $1,000/week

Minimum-Cost Schedule

ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000






3($28,000) – 3($1,000) = $81,000

ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000





3($28,000) – 3($1,000) = $81,000

$2,624,000 – $81,000 = $2,543,000


ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,543,000





3($28,000) – 3($1,000) = $81,000

$2,624,000 – $81,000 = $2,543,000


ABC Hospital Minimum Cost Schedule



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,543,000





3($28,000) – 3($1,000) = $81,000

$2,624,000 – $81,000 = $2,543,000

Finish Start

A

12

B

9

C

10

D

10

E

24

F

10

G

35

H

40

I

15

J

1

K

6

28

ABC Hospital Minimum Cost Schedule



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,543,000





3($28,000) – 3($1,000) = $81,000

$2,624,000 – $81,000 = $2,543,000

Finish Start

A

12

B

9

C

10

D

10

E

24

F

10

G

35

H

40

I

15

J

1

K

6

ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,543,000




Crash Activity D by 2 weeks @ $2,000/week


ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,543,000





$28,000 + $8,000 – 2($2,000) = $32,000

$2,543,000 – $32,000 = $2,511,000


ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,511,000





$28,000 + $8,000 – 2($2,000) = $32,000

$2,543,000 – $32,000 = $2,511,000




A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,511,000





$28,000 + $8,000 – 2($2,000) = $32,000

$2,543,000 – $32,000 = $2,511,000


ABC Hospital

Finish Start

A

12

B

9

C

10

D

8

E

24

F

10

G

35

H

40

I

15

J

1

K

6



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,511,000





$28,000 + $8,000 – 2($2,000) = $32,000

$2,543,000 – $32,000 = $2,511,000


ABC Hospital

Start

A

12

B

9

D

8

E

24

F

10

Finish C

10

G

35

H

40

I

15

J

1

K

6

29

ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,511,000



Critical Paths B-D-H-J-K and A-C-G-J-K: 64 weeks

Crash Activity K by 1 week @ $4,000/week


ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,511,000





$8,000 – $4,000 = $4,000

$2,511,000 – $4,000 = $2,507,000


ABC Hospital



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,507,000





$8,000 – $4,000 = $4,000

$2,511,000 – $4,000 = $2,507,000




A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,507,000





$8,000 – $4,000 = $4,000

$2,511,000 – $4,000 = $2,507,000


ABC Hospital

Finish Start

A

12

B

9

C

10

D

8

E

24

F

10

G

35

H

40

I

15

J

1

K

6



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,507,000





$8,000 – $4,000 = $4,000

$2,511,000 – $4,000 = $2,507,000


ABC Hospital

Finish Start

A

12

B

9

C

10

D

8

E

24

F

10

G

35

H

40

I

15

J

1

K

5

ABC Hospital


Crash Activities B and C by 2 weeks

@ $7,000/week and $600/week



A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,507,000




30

ABC Hospital






A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,507,000



2($8,000) – 2($7,600) = $800

$2,507,000 – $800 = $2,506,200


ABC Hospital






A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,506,200



2($8,000) – 2($7,600) = $800

$2,507,000 – $800 = $2,506,200







A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,506,200



2($8,000) – 2($7,600) = $800

$2,507,000 – $800 = $2,506,200


ABC Hospital

Finish Start

A

12

B

9

C

10

D

8

E

24

F

10

G

35

H

40

I

15

J

1

K

5






A-C-G-J-K: 67 weeks

Total cost = $2,624,000 $2,506,200



2($8,000) – 2($7,600) = $800

$2,507,000 – $800 = $2,506,200


ABC Hospital

Finish Start

A

12

B

7

C

8

D

8

E

24

F

10

G

35

H

40

I

15

J

1

K

5

STANDARD PERT ASSUMPTIONS

1. The activities are independent

2 The critical path contains a large no. of activities so that we can invoke the Central Limit Theorem.

3 .All activities not on the critical path are ignored.

4. Activity times follow a Beta distribution.

5. The mean and variance of the activities are given by (a+4m+b)/6 and [(b-a)/6]2.

Probabilistic Time Estimates

Time

Pro

bab

ilit

y

Figure 7 Normal Distribution

Mean a b m

3s 3s

Area under curve

between a and b

is 99.74%

31

ABC Hospital

Probabilistic

Time Estimates A F

I

C G Finish

D

E

H B J

K

Start

te = a + 4m + b

6

Mean

s2 = ( ) b – a

6

2

Variance

ABC Hospital

Activity B

Most

Optimistic Likely Pessimistic

(a) (m) (b)

7 8 15

Probabilistic

Time Estimates A F

I

C G Finish

D

E

H B J

K

Start

ABC Hospital

Activity B

Most

Optimistic Likely Pessimistic

(a) (m) (b)

7 8 15

Probabilistic

Time Estimates

te = = 9 weeks 7 + 4(8) + 15

6

s2 = = 1.78 ( ) 15 - 7

6

2

A F

I

C G Finish

D

E

H B J

K

Start

ABC Hospital

Optimistic Likely Pessimistic Expected Variance Activity (a) (m) (b) Time (te ) (s2 )

Time Estimates (wk) Activity Statistics

A 11 12 13 12 0.11

B 7 8 15 9 1.78

C 5 10 15 10 2.78

D 8 9 16 10 1.78

E 14 25 30 24 7.11

F 6 9 18 10 4.00

G 25 36 41 35 7.11

H 35 40 45 40 2.78

I 10 13 28 15 9.00

J 1 2 15 4 5.44

K 5 6 7 6 0.11

ABC Hospital

s2 = (variances of activities) z = T – TE

s2

s2 = 1.78 + 1.78 + 2.78 + 5.44 + 0.11 = 11.89

z = 72 – 69

11.89

Probabilities

Critical Path = B - D - H - J - K

T = 72 days TE = 69 days

ABC Hospital


s2

s2 = 1.78 + 1.78 + 2.78 + 5.44 + 0.11 = 11.89

z = = 0.87 72 – 69

11.89

Probabilities



From Appendix

Pz = .8078 .81

32

ABC Hospital


s2

s2 = 1.78 + 1.78 + 2.78 + 5.44 + 0.11 = 11.89

z = = 0.87 72 – 69

11.89

Probabilities



From Appendix 2

Pz = .8078 .81 Project duration (weeks)

69 72

Probability of

meeting the

schedule is

0.8078

Length of

critical path

Normal distribution:

Mean = 69 weeks;

s = 3.45 weeks

Probability of

exceeding 72

weeks is 0.1922

Figure

ABC Hospital


s2

s2 = 0.11 + 2.78 + 7.11 + 5.44 + 0.11 = 15.55

z = = 1.27 72 – 67

15.55

Probabilities

Path = A - C - G - J - K


From Appendix 2

Pz = .8980 .90

SUMMARY

• Basic scheduling computations can be done on both A-O-A or A-O-N networks.

• A-O-N networks are simpler to draw, though they lack intuitive work flow interpretation of A-O-A networks.

• There are no float anomalies in A-O-N networks.

• A-O-N networks are becoming more popular, in computer packages,

SUMMARY

• Basic PERT analysis

– Three time estimates for activities

– Mean and variance computation

– Forward and backward pass on the network

– Critical path identification

– Distribution of project completion time

– Probability statements about project completion.

SUMMARY

• An Evaluation of PERT

– Leads to optimistic results

– Basic PERT assumptions lead to errors at both activity level as well as at their aggregation.

• Alternatives approaches

– Simulation etc.

33

Some limitations of CPM/PERT techniques

• Major problems: Very strong (and sometimes unrealistic) assumptions are required, e.g.

Project is completely defined as a sequence of identifiable and independent activities with known relationships Outcomes of the project activities are known in advance Activity times are independent and can’t be accurately

estimated

• Possible solutions Graphical Evaluation and Review Technique (GERT)

technique Discrete event simulation

project management

Documents

collection of projects

group of projects

project lifecycle

personal level projects

family vacation projects

project management overview

high risks project

project managers duty