project segmentation

Pergamon International Journal of Project Management Vol. 15, No. 1, pp. 15-19, 1997

Copyright © 1996 Elsevier Science Ltd and IPMA Printed in Great Britain. All rights reserved

0263-7863/96 $17.00 + 0.00

S0263-7863(96)00017-8

Project segmentation--a tool for project management

Avraham Shtub Department of Industrial Engineering, Tel-Aviv University, Ramat Aviv 69978, Israel

Since the late 1950s network-based techniques are commonly used for project management. The critical path method (CPM) and programme evaluation and review technique (PERT) are standard tools for scheduling. Related techniques such as PERT-COST are used for budgeting and control. In this paper, a new tool for project management is suggested. This tool is designed for projects in which the work content (of the project) can be divided into several subprojects or segments so that the same set of activities is performed on each segment. The proposed tool is the basis of a project scheduling model and a project control model designed to support project management in cases where CPM and PERT are not suitable. Copyright © 1996 Elsevier Science Ltd and IPMA.

Keywords: Project planning, project control, project scheduling

Project planning and project control are key issues in project management. A variety of models are used for project planning and control, including the critical path method (CPM), program evaluation and review technique (PERT) and PERT-COST I-3.

Since its introduction in the late 1950s network-based project management techniques have been used for managing numerous projects of a very large variety, ranging from high tech projects (using GERT) to production and construction projects of different sizes.

Excellent books on network models for project management 4'5 were published and used by researchers, students and practitioners throughout the world.

The basic assumptions of CPM and PERT have been criticized in the past 6'7. For example Chase and Aquilano s present the following discussion on these assumptions:

• Assumption: Project activities can be identified as entities; that is, there is a clear beginning and ending point for each activity. Criticism: Projects, especially complex ones, change in content over time, and therefore a network constructed in the planning phase may be highly inaccurate later. Also, the very fact that activities are specified and a network formalized tends to limit the flexibility that is required to handle changing situations as the project progresses.

• Assumption: Project activity-sequence relationships can be specified and arranged in a directed network. Criticism: Sequence relationships cannot always be specified beforehand. In some projects, in fact, the ordering of certain activities is conditional on previous act ivi t ies . (PERT and CPM, in their basic form, have no

provision for dealing with this problem, although some other techniques have been proposed that present the project manager with several contingency paths, given different outcomes from each activity.)

• Assumption: Project control should focus on the critical path. Criticism: It is not necessarily true that the longest path obtained from summing activity expected duration values will ultimately determine the project completion time. What often happens as the project progresses is that some activity not on the critical path becomes delayed to such a degree that it extends the entire project. For this reason it has been suggested that a critical activity concept should replace the critical path concept as the focus of managerial control. Under this approach, attention would centre on those activities that have a high potential variation and lie on a near-critical path. A near-critical path is one that does not share any activities with the critical path and, though it has slack, it could become critical if one or a few activities along it become delayed. Obviously, the more parallelism in a network, the more likely that one or more near-critical paths will exist. Conversely, the more a network approximates a single series of activities, the less likely it is to have near-critical paths.

• Assumption: The activity times in PERT follow the beta distribution, with the variance of the project assumed to be equal to the sum of the variances along the critical path. Criticism: The beta distribution was selected for a variety of good reasons. Nevertheless, each component of the statistical treatment in PERT has been brought into question. First, the formulae are in reality a modification

15

Project segmentation: A Shtub

of the beta distribution mean and variance, which, when compared to the basic formulae, could be expected to lead to absolute errors of the order of 10% for the mean and 5 % for the individual variances. Second, given that the activity-time distributions have the properties of unimodality, continuity and finite positive endpoints, other distributions with the same properties would yield different means and variances. Third, obtaining three 'valid' time estimates to put into the PERX formulae presents operational problems, it is often difficult to arrive at one activity-time estimate, let alone three.

The popularity of network-based project management techniques and the large number of software packages which are based on these techniques indicates, however, that for many types of projects network models are useful and the above assumptions are valid. Furthermore, the volume of research in this area indicates that these assumptions are acceptable by many researches as well. 9-~

There are projects, however, in which some of these assumptions are questionable and the implementation of network-based techniques is either impossible, or it may lead to errors in the analysis. The example of road construction projects may serve to illustrate this point. In a road construction project certain activities are performed in a predetermined sequence. Each part of the road requires some or all of these activities. The cost and duration of each activity can be estimated only if a specific part of the road is considered. Although the technological order in which the activities should be performed is known a pr ior i , it is difficult or even impossible to represent it by the standard precedence relations commonly used in network analysis-- finish to start (FS), start to start (SS) and finish to finish (FF). This is due to the fact that most activities can start on parts of the road before their corresponding predecessors have been completed on all 'preceding parts' of the road.

In the above example, the project consists of repetitive elements (road segments). The effort required to complete each element depends on the size of the element (length of the road segment in the example) which is a decision variable. Two questions associated with the example are not addressed by PERT/CPM analysis:

1. Into how many segments should the project be divided and

2. What is the 'right size' of each segment.

Similar questions are treated in the literature by the process of breaking down the work content of the project into man- ageable work packages and creating the work breakdown structure (WBS). The WBS is a 'product-oriented family tree composed of hardware, services, software and data which result from project engineering efforts '2.

Unlike most of the work packages of a typical WBS, in the proposed project segmentation approach, the project is divided into segments that are s imi lar to each other. All the segments require a similar set of activities and the number of segments, as well as the size of each segment are decision variables. Thus, by using segmentation, the project is divided into several repetitive subprojects.

The management of repetitive projects is supported by the line of balance (LOB) approach. This approach, developed by the US Navy z, is based on a comparison between the number of identical projects that have completed certain milestones at a given point of time and the number of projects scheduled to complete these milestones by that time.

Thus, the proposed project segmentation approach is a special adaptation of the WBS concept for the case where a project can be divided into several repetitive subprojects, and the number of such projects is a decision variable.

In the following section, the project segmentation idea is presented as a model, along with its assumptions and notation. Next, models for project planning and control are suggested and discussed and an example is used to demonstrate the proposed approach. A summary and conclusions are presented in the last section.

Although road construction projects triggered the development of the project segmentation model, other examples can be thought of, including the construction of apartment buildings, where each apartment or each floor is a project segment, and writing a book, where each chapter is a segment. In these examples, (as before) each segment of the project requires a similar set of activities.

The project segmentation approach can be used in conjunction with CPM or PERT analysis or as a stand-alone tool. By using the proposed models for project planning and control, management of such projects can be made easier and more efficient.

Project segmentation: assumptions and notation In the following section we present models for the planning and control of projects using project segmentation. All the models are based on the following assumptions:

1. The project can be divided into similar segments (e.g. road segments or chapters in a book).

2. Project activities are known a pr ior i , all segments require a similar set of activities.

3. The technological order in which the activities should be performed on each segment is predefined, and is the same for all segments.

4. The duration and cost of performing each activity on each segment of the project can be estimated a pr ior i , and it is a function of the segment size.

5. The actual duration and cost of performing each activity on each segment of the project can be measured.

Notat ion

i J i = 1 . . . . . . n index set of project segments. j e J j = 1 . . . . . . m index set of project activities. te O t = 1 . . . . . . T index set of time periods. PDij Planned duration of activity j on segment i. PCij Planned cost per period of activity j on segment i. ADij Actual duration of activity j on segment i. AC~ Actual cost per period of activity j on segment i. PSij Planned start time of activity j on segment i. ASi~ Actual start time of activity j on segment i. PF~j Planned finish time of activity j on segment i. AFij Actual finish time of activity j on segment i.

Using the above notation and assumptions, it is possible to plan the cost and schedule of a project divided into segments and to compare it to its actual cost and schedule. Furthermore, the size of each segment is a decision variable, controlled by management and it corresponds to the desired accuracy in planning and controlling the project.

16

Models for planning and control of projects using project segmentation

Project planning Project planning models can be categorized into two types: optimization models and evaluation models.

An optimization model is designed to produce a project plan which is optimal (or at least relatively good) with respect to a given objective function and satisfies a set of constraints. CPM, for example, tries to minimize the project duration subject to precedence relations among activities, and it can be represented in terms of a linear function and a set of linear constraints (a linear programme) 2.

An evaluation model is designed to analyse a given solution to the problem by calculating the value of an objective function and checking if any constraints are violated. Most spreadsheet applications, for example, are based on evaluation models as no optimum seeking mech- anism such as the simplex algorithm for linear programming is used.

The following model is an evaluation model. Its primary input parameters are the estimated values of PD u and PS u , for all ij combinations.

The model output includes:

1. Planned finish time of each activity on each segment.

PF u = PS u + PD u (1)

2. PD--project duration

PD = PFnm - PSl l (2)

Precedence relations are introduced into the model as follows: define PRuk as a control variable for precedence relations, PRuk = 1 if activity (,] + k) has a precedence relationship with activity j on project segment i. Thus

PSu+ k >~PF u if PRuk = 1 (3)

Because most spreadsheets can handle dates, the evaluation can be performed with respect to a predefined calendar. Furthermore, by using the graphical capabilities of the spreadsheet, a Gantt chart can be generated.

The project planner has the flexibility of determining the number of project segments and the length of the project segments. The shorter the segments the higher the scheduling flexibility and the complexity of planning. This flexibility, along with the model capability to evaluate the schedule associated with a given project plan, are key features of the proposed model.

To demonstrate the proposed evaluation model, consider a project that consists of five activities (j = 1,2,3,4,5). The project is divided into three segments (i = 1,2,3). Activity durations and the precedence relations among the activities are summarized in Table 1.

Applying Equations (1), (2) and (3) to the example's data, we get the results summarized in Table 2 (all units are weeks).

The results in Table 2 indicate that the project segmentation approach, dividing the project into three segments, results in a project duration of 10 days.

If segmentation is not used, the schedule for the project is as summarized in Table 3.

Thus, the length of the project is reduced due to segmentation from 28 days into 10 days.

A review of project planning practices in a major constructing company revealed that project segmentation is


Table 1 Data for example project

Activity Predecessors Activity duration Total activity in segment i [weeks] duration [weeks]

i = 1 i = 2 i = 3

1 None 3 3 4 10 2 None 2 3 2 7 3 1 4 4 3 11 4 2 2 2 2 6 5 3,4 3 1 3 7

Table 2 Results of the planning model for the example project using segmentation

Activity (j =) Segment 1 Segment 2 Segment 3

PS u PF~ PS2j PF2j PS3j PF3j

1 0 3 0 3 0 4 2 0 2 0 3 0 2 3 3 7 3 7 4 7 4 2 4 3 5 2 4 5 7 10 7 8 7 10

Table 3 Results of the planning model for the example project without segmentation

Activity Duration Planned start Planned finish

1 10 0 10 2 7 0 7 3 11 10 21 4 6 7 13 5 7 21 28

widely used in practice, although no formal model exists to support it. The proposed model is designed to support the evaluation of alternative segmentation decisions considered by the project manager and to present the schedule resulting from the segmentation decisions made.

Project control

The output of the planning phase is a feasible, acceptable project plan, along with the resulting schedule. This plan, once adopted for implementation is the baseline against which performances are measured to establish a project control system t2'13.

To monitor progress in repetitive projects, a technique called the line of balance (LOB) was developed by the US Navy 2. LOB is based on a set of milestones that are common to all the repetitive projects in a programme. A delivery schedule is constructed and the date by which each milestone on each project has to be finished according to the delivery schedule is calculated. A variance (or difference) between the number of projects that completed each milestone, and the number scheduled to complete that milestone is calculated and serves as a basis for control.

The deviation of actual progress from the original plan is the basis of the proposed control system for project segmentation. Unlike a statistical variance, this deviation (which is also called a variance) is a simple difference between the actual value of a parameter and its planned value for a particular time period. Three parameters are used in the analysis and the corresponding variances are calculated.

The three variances are defined as follows:

17


Start variance:

SVo, = 6 [ A S o - t] - 6 [ PS~j - t] for all ij and A S o <<, t or PSij <~ t

Finish variance:

FVo, = 6 [ A F o - t ] - 6 [ P F o - t l for a l l i j a n d A F o <~ t or P F o <<. t

w ere, x , : if x > 0

otherwise

(4)

(5)

Thus, SV, j, and FV0, can take three values: A positive value, if the activity started or finished by period t ahead of the plan. Zero, if the activity started or finished by period t according to the plan, or a negative value, if the activity which is scheduled to start or finish by period t did not start or finish respectively.

Cost variance:

C V o, = ACij - P C o for all ij and AFij <<. t (6)

The cost variance is calculated only for activities finished by period t.

The three variances are aggregated at the activity level as follows:

Activity start variance:

= ~ SV/j, (7) ASVj,

Activity finish variance:

= ~ FV~j, (8) AFVj,

Activity cost variance:

= ~ CV~i, (9) A CVj,

The activity level variances are used to detect activities that are consistently late or over budget.

To illustrate this control system, assume that 4 weeks after the start of the project, the status of the five activities on the three project segments is as summarized in Table 4. (Assume that there are three possible alternatives for each activity: not started--no progress reported on the activity; started--the activity started but not finished; finished--the activity is completed.)

The values of SV, j4 and FV04 are summarized in Table 5. Analysis of Table 5 reveals that segment 1 is late on

activity 4, segment 2 is late on activities 3 and 4 whereas segment 3 is late on activities 1, 3, and 4. Activity 4 is late on all segments as indicated by its activity level variance. The activity level variances are summarized in Table 6.

In addition to the scheduling variances, cost variances are introduced by Equat ions (6) and (9). The cost variance is

Table 4 Activity status after 4 weeks

Activity Segment 1 Segment 2 Segment 3

1 Finished Finished Started 2 Finished Finished Finished 3 Started Not started Not started 4 Started Not started Not started 5 Not started Not started Not started

18

Table 5 Start and finish variances after 4 weeks

Activity (j =) Segment 1 Segment 2 Segment 3

SVq, FVo, SVo, FVot SVo, FVot 1 0 0 0 0 0 - 1 2 0 0 0 0 0 0 3 0 0 - 1 0 - 1 0 4 0 - 1 - 1 0 - 1 - 1 5 0 0 0 0 0 0

Table 6 Activity start variance and activity finish variance after 4 weeks

Activity Activity start variance Activity finish variance ASVj, AFV

1 0 - 1 2 0 0 3 - 2 0 4 - 2 - 2 5 0 0

the difference between the actual cost of activities finished by period t and the corresponding planned cost Equation (6). By summarizing the cost variances of the same activity over all the project segments, problematic activities can be identified and analysed.

Summary and conclusions

Network-based project management techniques are difficult to use when most project activities are very long compared to the length of the project, and precedence relations among activities are not simple FF, SS or FF connections. This is the case in some projects such as road construction projects where most activities are performed throughout the project. To overcome these problems we introduce a new concept-- the project segment. The duration of activities and precedence relations among activities are defined and analysed at the project segment level.

The proposed approach is based on the idea of project segmentation i.e. the division of the project work content into segments according to managerial considerations, as opposed to a division based on the type of work to be performed (activities in PERT/CPM). This new idea extends the traditional analysis of project cost and schedule by adding a new dimension and more flexibility both at the planning phase and at the execution phase.

The size of the project segment is a decision variable. Thus CPM is a special case of the proposed models in which a single project segment exists. By increasing the number of project segments, better project plans can be developed and tighter control can be exercised.

The proposed evaluation models are designed to support the selection of a project plan out of several alternative plans and the detection of cost and schedule variances. Thus integrated planning and control system for projects that can be managed using project segmentation is provided to assist project managers throughout the project life cycle.

An interesting topic for future research is the development of an optimization model to determine the appropriate number of segments in a project and the size of each segment. Such a model can extend the current paper by considering the effect of limited resources as well as the effects of learning and forgetting in repetitive projects.


References 1 Hartley, K O 'The Project Schedule' in Project Management: A

Reference for Professionals (Edited by Kimmon R L and Lowree J H) Marcel Dekker, New York (1989)

2 Shtub, A, Bard, J F and Globerson, S Project Management: Engineer- ing Technology and Implementation Prentice Hall, Englewoods Cliffs, NJ (1994)

3 Webster, F M Survey of CPM Scheduling Packages and Related Project Control Programs, Project Management Institute, Drexel Hill, PA (1991)

4 Elmaghraby, S E Activity Networks: Project Planning and Control by Network Models John Wiley and Sons, Network, NY (1977)

5 Wiest, J D and Levy, F K A Management Guide to PnRT/CPM 2nd Edn, Prentice Hall, Englewoods Cliffs, NJ (1977)

6 Littlefield, T K and Randolph, P H 'PERT duration times: mathematics or MBO' Interfaces 21 (1991) 92-95

7 Sasieni, M W 'A note on PERT times' Management Science 16 (1986) 1652-1653

8 Chase, R B and Aquilano, N J Production and Operations Manage- ment 3rd Edn, Richard D Irwin, Homewood, IL (1981)

9 Bowman, E H 'The schedule-sequencing problem' Operations Research 7 (1959) 621--624

10 Drexel, A 'Scheduling of project networks by job assignment' Management Science 37 (1991) 1590-1602

11 Khattab, M and Choobineh, F 'A new heuristic for project scheduling with a single resource constraint' Computers and Industrial Engineering 20 (1991) 381-387

12 Mueller, F W Integrated Cost and Schedule Control for Construction Projects Van Nostrand Reinhold, New York (1986)

13 Tiong, R L K 'Effective controls for large scale construction projects' Project Management Journal, 21, (1990) 32-42

Professor Avraham Shtub is the : : : chairman of the Department of Industrial Engineering, Tel Aviv University. He received his BSc from the Technion Israel Institute of Technology, his MBA from Tel Aviv University and his PhD from the University of Washington. He has written more than 40journal articles. His papers have appeared in Man- agement Science, liE Transaction, International Journal of Production Research, Journal of Operations Management, R&D Management, and The Project Management Journal. He is the recipient of the Institute of Industrial Engineering 1995 'Book of the Year Award' for his Book 'Project Management: Engineering, Technology and Implementation" (co-authored with John Bard and Shlomo Globerson), Prentice Hall, 1994. Prof Shtub has been a con- sultant to industry in the areas of project management, design of production lines and the design of inventory systems. He was invited to speak at special seminars on project management in Europe, the Far East, North America, South America, and was a visiting Professor at Vanderbilt University. Prof Shtub "s areas of interest are project management and control, production scheduling and facilities planning.

19

project segmentation

Documents