Project Planning and Budgeting Recall the four stages Project Definition and Conceptualization Project Planning and Budgeting Project Execution and Control

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<ul><li>Slide 1</li></ul> <p> Slide 2 Project Planning and Budgeting Slide 3 Recall the four stages Project Definition and Conceptualization Project Planning and Budgeting Project Execution and Control Project Termination and Closeout Slide 4 Ch 17 - 2 Elements Of Project Management Project team individuals from different departments within company Matrix organization team structure with members from different functional areas depending on skills needed Project manager leader of project team Slide 5 Ch 17 - 3 Project Planning Statement of work written description of goals, work &amp; time frame of project Activities require labor, resources &amp; time Precedence relationship shows sequential relationship of project activities Slide 6 WORK BREAKDOWN 1 Slide 7 WORK BREAKDOWN 2 Slide 8 GANTT CHART Slide 9 Ch 17 - 4 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Simplified Project Network 132 Construct formsPour concrete Slide 10 NETWORK CHART 1 Slide 11 NETWORK CHART 2 Slide 12 Ch 17 - 5 Elements Of Project Planning Define project objective(s) Identify activities Establish precedence relationships Make time estimates Determine project completion time Compare project schedule objectives Determine resource requirements to meet objective Slide 13 Ch 17 - 6 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Work breakdown structure (WBS) determine subcomponents, activities &amp; tasks Slide 14 Ch 17 - 7 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Gantt Chart Popular tool for project scheduling Graph with bar for representing the time for each task Provides visual display of project schedule Also shows slack for activities (amount of time activity can be delayed without delaying project) Slide 15 Ch 17 - 8 2 0 41068 31579 Month Activity Design house and obtain financing Lay foundation Order and receive materials Build house Select paint Select carpet Finish work A Gantt Chart Slide 16 Ch 17 - 9 CPM/PERT Critical Path Method (CPM) DuPont &amp; Remington-Rand (1956) deterministic task times activity-on-node network construction Project Eval. &amp; Review Technique (PERT) US Navy, Booz, Allen &amp; Hamilton multiple task time estimates activity-on-arrow network construction Slide 17 Ch 17 - 10 The Project Network Network consists of branches &amp; nodes 132 Branch Node Slide 18 Ch 17 - 11 Network Construction In AON, nodes represent activities &amp; arrows show precedence relationships In AOA, arrows represent activities &amp; nodes are events for points in time An event is the completion or beginning of an activity A dummy shows precedence for two activities with same start &amp; end nodes Slide 19 Ch 17 - 12 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Project Network For A House 124 6 7 3 5 3 2 0 1 3 1 1 1 Lay foundation Design house and obtain financing Order and receive materials Dummy Finish work Select carpet Select paint Build house Slide 20 Ch 17 - 13 Critical Path A path is a sequence of connected activities running from start to end node in network The critical path is the path with the longest duration in the network Project cannot be completed in less than the time of the critical path Slide 21 Ch 17 - 14 All Possible Paths A: 1-2-3-4-6-7 3 + 2 + 0 + 3 + 1 = 9 months; the critical path B: 1-2-3-4-5-6-7 3 + 2 + 0 + 1 + 1 + 1 = 8 months C: 1-2-4-6-7 3 + 1 + 3 + 1 = 8 months D: 1-2-4-5-6-7 3 + 1 + 1 + 1 + 1 = 7 months Slide 22 Ch 17 - 15 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Concurrent Activities 4 3 2 Dummy Lay foundation 2 3 Lay foundation Order material Incorrect precedence relationship Correct precedence relationship Slide 23 Ch 17 - 16 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Early Times (House-building example) ES - earliest time activity can start Forward pass starts at beginning of CPM/PERT network to determine ES times EF = ES + activity time ES ij = maximum (EF i ) EF ij = ES ij + t ij ES 12 = 0 EF 12 = ES 12 + t 12 = 0 + 3 = 3 months Slide 24 Ch 17 - 17 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Computing Early Times ES 23 = max (EF 2 ) = 3 months ES 46 = max (EF 4 ) = max (5,4) = 5 months EF 46 = ES 46 + t 46 = 5 + 3 = 8 months EF 67 =9 months, the project duration Slide 25 Ch 17 - 18 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Late Times LS - latest time activity can start &amp; not delay project Backward pass starts at end of CPM/PERT network to determine LS times LF = LS + activity time LS ij = LF ij - t ij LF ij = minimum (LS j ) Slide 26 Ch 17 - 19 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Computing Late Times LF 67 = 9 months LS 67 = LF 67 - t 67 = 9 - 1 = 8 months LF 56 = minimum (LS 6 ) = 8 months LS 56 = LF 56 - t 56 = 8 - 1 = 7 months LF 24 = minimum (LS 4 ) = min(5, 6) = 5 months LS 24 = LF 24 - t 24 = 5 - 1 = 4 months Slide 27 Ch 17 - 20 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Early And Late Times 124 6 7 3 5 3 2 0 1 3 1 1 1 ( ) ES=0, EF=3 LS=0, LF=3 ( ) ES=3, EF=5 LS=3, LF=5 ( ) ES=5, EF=5 LS=5, LF=5 ( ) ES=5, EF=8 LS=5, LF=8 ( ) ES=6, EF=7 LS=7, LF=8 ( ) ES=8, EF=9 LS=8, LF=9 ( ) ES=3, EF=4 LS=4, LF=5 ( ) ES=5, EF=6 LS=6, LF=7 Slide 28 Ch 17 - 21 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Activity Slack Activities on critical path have ES=LS &amp; EF=LF Activities not on critical path have slack S ij = LS ij - ES ij S ij = LF ij - EF ij S 24 = LS 24 - ES 24 = 4 - 3 = 1 month Slide 29 Ch 17 - 22 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Activity Slack Data ActivityLSESLFEFSlack (S) 1-2*00330 2-333550 2-443541 3-4*55550 4-565761 4-6*55880 5-676871 6-7*88990 * Critical path Slide 30 Ch 17 - 23 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Probabilistic Time Estimates Reflect uncertainty of activity times Beta distribution is used in PERT b - a 6 ( ) Variance: 2 = a = optimistic estimate m = most likely time estimate b = pessimistic time estimate Where, 2 Mean (expected time): a + 4m + b 6 t = Slide 31 Ch 17 - 24 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Example Beta Distributions m = t ba P (time) ba tm b mta Slide 32 Ch 17 - 25 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e PERT Example 1 2 4 6 7359 8 Manual Testing Dummy System Training Dummy System Testing Orientation Position recruiting System development Equipment installation Equipment testing and modification Final debugging System changeover Job training Slide 33 Ch 17 - 26 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Activity Information 1 - 268108.44 1 - 336961.00 1 - 41353.44 2 - 50000.00 2 - 6 241252.78 3 - 5 2343.11 4 - 53454.11 4 - 82222.00 5 - 7371171.78 5 - 82464.44 7 - 80000.00 6 - 914741.00 7 - 91101394.00 Time estimates (wks)Mean Time Variance Activityabct 2 Slide 34 Ch 17 - 27 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Early And Late Times 1 - 280.4408191 1 - 361.0006060 1 - 430.4403252 2 - 500.0088991 2 - 6 52.7881316218 3 - 5 30.1169690 4 - 540.1137592 4 - 820.0035141611 5 - 771.789169160 5 - 840.4491312163 7 - 800.00131316163 6 - 941.00131721258 7 - 994.00162516250 Activityt 2 ESEFLSLFS Slide 35 Ch 17 - 28 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Network With Times 1 2 4 6 7359 8 ( ) ES=8, EF=8 LS=9, LF=9 ( ) ES=6, EF=9 LS=6, LF=9 ( ) ES=3, EF=5 LS=14, LF=16 ( ) ES=0, EF=3 LS=2, LF=5 ( ) ES=0, EF=6 LS=0, LF=6 ( ) ES=0, EF=8 LS=1, LF=9 3 8 0 5 4 4 7 0 2 93 6 ( ) ES=3, EF=7 LS=5, LF=9 4 ( ) ES=9, EF=13 LS=12, LF=16 ( ) ES=9, EF=13 LS=9, LF=16 ( ) ES=13, EF=13 LS=16 LF=16 ( ) ES=13, EF=25 LS=16 LF=25 ( ) ES=13, EF=25 LS=16 LF=25 ( ) ES=8, EF=13 LS=16 LF=21 Slide 36 Ch 17 - 29 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Project Variance Project variance is the sum of variances on the critical path Slide 37 Ch 17 - 30 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Probabilistic Network Analysis Determine probability that project is completed within specified time where = t p = project mean time = project standard deviation x = proposed project time Z = number of standard deviations x is from mean Z = x - Slide 38 Ch 17 - 31 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Normal Distribution Of Project Time = t p Timex ZZ Probability Slide 39 Ch 17 - 32 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Probabilistic Analysis Example What is the probability that the project is completed within 30 weeks? Slide 40 Ch 17 - 33 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Determining Probability From Z Value Z0.000.01...0.09 1.90.47130.47190.4767............ = 25 Time (weeks) x = 30 P( x</p>