Project Management

A project is any sort of planned undertaking

All of us have been involved in projects, whether they be our personal projects or in business and

industry. Examples of typical projects are for example:

 Personal projects:
  
obtain an MBA
  
write a report
  
plan a wedding
  
plant a garden
  
build a house extension
 Industrial projects:
  
construct a building
  
provide a gas supply to an industrial estate
  
build a motorway
  
design a new car
 Business projects:
  
develop a new course
  
develop a new course
  
develop a computer system
  
introduce a new product
  
prepare an annual report
 
set up a new office
Projects can be of any size and duration. They can be simple, like planning a party, or complex
like launching a space shuttle.

Generally projects are made up of:

 a defined beginning,
 multiple activities which are performed to a plan,
 a defined end.
Therefore a project may be defined as a means of moving from a problem to a solution via a
series of planned activities.
 A project is a means of moving from a problem to a solution via a series of planned
 activities.
 A project has a definite beginning and end.
 Projects consist of several activities.

Two essential features are present in every project no matter how simple or complicated they are.
In the first place, all projects must be planned out in advance if they are to be successfully
executed. Secondly, the execution of the project must be controlled to ensure that the desired
results are achieved.

On most projects it is possible to carry out multiple activities simultaneously. Usually it is

possible to perform several activities at the same time, however there will be activities which
cannot begin until a preceding activity has been completed. Such relationships are referred to as
dependencies or precedencies, and when planning a project it is important to establish the order
of precedence of dependent activities, and to establish those activities which can be performed in
parallel with other activities.

Regardless of the nature or size of your project a successful outcome can only be achieved by
using sound project management techniques. The most widely used and popular methods of
project management are Gantt Charts, Critical Path Method (CPM) and Programme Evaluation
and Review Technique (PERT). However, it is important to remember that projects are carried
out by people, and the human aspects of project management are critical for the project success.

Terminology and Definitions

A project is an interrelated set of activities that has a definite starting and ending point and results
in the accomplishment of a unique, often major outcome. "Project management" is, therefore, the
planning and control of events that, together, comprise the project. Project management aims to
ensure the effective use of resources and delivery of the project objectives on time and within cost
constraints.

An activity or task is the smallest unit of work effort within the project and consumes both time
and resources which are under the control of the project manager. A project is a sequence of
activities that has a definite start and finish, an identifiable goal and an integrated system of
complex but interdependent relationships.

A schedule allocates resources to accomplish the activities within a timeframe. The schedule sets
priorities, start times and finish times.
Project management is:
the adept use of techniques and skills (hard and soft) in planning and controlling tasks and
resources needed for the project, from both inside and outside of organisation, to achieve results.

The purpose of project management is to achieve successful project completion with the
resources available. A successful project is one which:

 has been finished on time

 is within its cost budget
 performs to a technical/performance standard which satisfies the end user.

Features of projects

 Projects are often carried out by a team of people who have been assembled for that specific
 purpose. The activities of this team may be co-ordinated by a project manager.
 Project teams may consist of people from different backgrounds and different parts of the
organisation. In some cases project teams may consist of people from different organisations.

 Project teams may be inter-disciplinary groups and are likely to lie outside the normal
 organisation hierarchies.
 The project team will be responsible for delivery of the project end product to some sponsor
within or outside the organisation. The full benefit of any project will not become available
until the project as been completed.

In recent years more and more activities have been tackled on a project basis. Project teams and a
project management approach have become common in most organisations. The basic
approaches to project management remain the same regardless of the type of project being
considered. You may find it useful to consider projects in relation to a number of major
classifications:

a) Engineering and construction

The projects are concerned with producing a clear physical output, such as roads, bridges or
buildings. The requirements of a project team are well defined in terms of skills and
background, as are the main procedures that have to be undergone. Most of the problems
which may confront the project team are likely to have occurred before and therefore their
solution may be based upon past experiences.

b) Introduction of new systems

 These projects would include computerisation projects and the introduction of new systems

and procedures including financial systems. The nature and constitution of a project team

may vary with the subject of the project, as different skills may be required and different end-

users may be involved. Major projects involving a systems analysis approach may

incorporate clearly defined procedures within an organisation.

c) Responding to deadlines and change

An example of responding to a deadline is the preparation of an annual report by a specified

date. An increasing number of projects are concerned with designing organisational or
environmental changes, involving developing new products and services.

Responsibilities of the Project Manager

1. To plan thoroughly all aspects of the project, soliciting the active involvement of all functional
areas involved, in order to obtain and maintain a realistic plan that satisfies their commitment
for performance.
2. To control the organization of manpower needed by the project.
3. To control the basic technical definition of the project, ensuring that "technical" versus "cost"
trade-offs determine the specific areas where optimisation is necessary.
4. To lead the people and organizations assigned to the project at any given point in time. Strong
positive leadership must be exercised in order to keep the many disparate elements moving in
the same direction in a co-operative.
5. To monitor performance, costs and efficiency of all elements of the project and the project as a
whole, exercising judgement and leadership in determining the causes of problems and
facilitating solutions.
6. To complete the project on schedule and within costs, these being the overall standard by which
performance of the project manager is evaluated.

Gantt Charts
A Gantt Chart is a simple technique that can be used to attach a time scale and sequence to a
project.

A Gantt Chart is a form of horizontal bar chart and horizontal bars are drawn against a time scale
for each project activity, the length of which represents the time taken to complete. To construct
a Gantt Chart the following steps are necessary:

1) Use the horizontal axis to represent time

2) Use the vertical axis to represent activities
3) Represent each activity by a horizontal bar of appropriate length
4) Take activity procedures into account by starting each activity bar to an appropriate point
along the time axis after its preceding activities. Normally the start point for an activity is the
earliest time that it could start after its preceding activities had finished.
It is possible to enhance the Gantt Chart in several ways. For instance the number of staff
required to do a task can be entered into the bar on the diagram.

Gantt charts, also commonly known as milestone plans, are a low cost means of assisting the
project manager at the initial stages of scheduling. They ensure that:

1. all activities are planned for,

2. the sequence of activities is accounted for,
3. the activity time estimates are recorded; and
4. the overall project time is recorded.
They are therefore a simple, rough and ready means of planning a project and assessing progress
and are sufficient for most simple projects.

However, where projects become complex, it becomes difficult to see relationships between
activities by using a Gantt Chart. For more complex projects Network Analysis techniques are
used.

Gantt charts also provide a summary of the project as a whole and can be used as a rough and
ready means of assessing progress at the project control phase. At any date, the project manager
can draw a dateline through the Gantt chart and see which activities are on-time, which are behind
schedule and generally record project status against plan.

Gantt charts, named after Henry L. Gantt, one of the pioneers of scientific management, are a
useful means of representing a schedule of activities comprising a project and enable the
operations manager to know exactly what activities should be performed at a given time and, more
importantly, to monitor daily progress of a project so that corrective action may be taken when
necessary.

To construct a Gantt chart, the various activities are listed on a vertical axis and the horizontal
axis is used to represent time. Activity precedencies are taken into account by starting a
horizontal bar to represent the next activity at an appropriate point after its preceding activities,
i.e. those activities which must take place before the next activity can start, have taken place.
Normally this would be at the earliest time that it could start after its preceding activities had
finished.

Example:
Suppose a project comprises five activities: A,B,C,D, and E. A and B have no preceding activities,
but activity C requires that activity B must be completed before it can begin. Activity D cannot
start until both activities A and B are complete. Activity E requires activities A and C to be
completed before it can start. If the activity times are A: 9 days; B: 3 days; C: 9 days; D: 5 days;
and E: 4 days,

i) determine the shortest time necessary to complete this project.

ii) identify those activities which are critical in terms of completing the project in the shortest
possible time.

Solution:

The figure below indicates the form that a Gantt chart would take from the above information.

Activity A

Activity B

Activity C

Activity D

Activity E

Time

The above chart shows that activities A and B have no preceding activities and so can start right
away. Activity C requires Activity B to have been completed before it can begin. The chart is then
completed using such precedence relationships as listed in the question, with each horizontal bar
being proportional in length to the activity time that it represents.

Looking at the chart it is apparent that the project ends when activity E has been completed.

Working back in time from activity E the "steps" which are crucial or critical in order to ensure
that the project duration does not extend beyond the planned length are: E,C and B. The shortest
time in which the project could be completed from the given information is therefore 16 days. The
set of activities B,C and E which together determine the project duration are referred to as the
critical path through the chart.

Those activities forming the critical path can be highlighted on the Gantt chart to help the
operations manager to give priority to them if lack of resources mean that such decisions have to
be made.

It is important to realize though that activities not on the critical path can become so if they are
allowed to drift too far. How far could activities A and D drift before they affected the duration of
the project?

Provided the project is not too complex in its activity relationships or simply too big to be mapped
on reasonably sized graph paper, Gantt charts can be very useful tools for the project manager and
are graphically superior to the network analysis methods of CPM and PERT. They allow the
critical activities to be found, i.e. those activities which must be performed on time if the project
duration is not to increase, and any "slack" or "float" in the sequence of activities can easily be
shown.

Examples of Gantt charts

1. A project comprises the following activities:

Activity Immediate Activity

Predecessors Time (days)
A - 12
B - 6
C A 13
D A, B 12
E C, D 11
F D 13
G E, F 11

a) Construct a Gantt chart which will provide an overview of the planned project.
b) How soon could the project be completed?
c) Which activities need to be completed on time in order to ensure that the project is completed
as soon as possible?
2. A project has the following activity details:

Activity Immediate Activity Time

Predecessors (weeks)
A - 3
B - 4
C - 3
D C 12
E B 5
F A 7
G E, F 3

Draw a Gannt chart to represent the project; determine those activities comprising the critical
path; and estimate the project duration

3. The following information is available on a management project:

Activity Immediate Duration Staff

Predecessors (Days) Required (per
day)

A - 3 6
B - 5 3
C B 2 4
D A 1 4
E A 6 5
F D 3 6
G D, E 3 3

At present you have nine staff available. Temporary staff can be hired at a rate of £100 per day.

1) Draw a Gantt Chart to show the shortest time it will take to complete the project.
2) If the project is to finish on time, how many temporary staff are required, and at what cost?

Network Analysis
Introduction to PERT and CPM

The two most common and widely used project management techniques that can be classified
under the title of Network Analysis are Programme Evaluation and review Technique (PERT) and
Critical Path Method (CPM). Both were developed in the 1950's to help managers schedule,
monitor and control large and complex projects. CPM was first used in 1957 to assist in the
development and building of chemical plants within the DuPont corporation. Independently
developed, PERT was introduced in 1958 following research within the Special Projects Office of
the US Navy. It was initially used to plan and control the Polaris missile programme which
involved the coordination of thousands of contractors. The use of PERT in this case was reported
to have cut eighteen months off the overall time to completion.

The PERT/CPM Procedure

There are six stages common to both PERT and CPM:

1. Define the project and specify all activities or tasks.

2. Develop the relationships amongst activities. Decide upon precedences.

3. Draw network to connect all activities.

4. Assign time and/or costs to each activity.

5. Calculate the longest time path through the network: this is the "critical path".

6. Use network to plan, monitor and control the project.

Finding the critical path (step 5) is a major in controlling a project. Activities on the critical path
represent tasks which, if performed behind schedule, will delay the whole project. Managers can
derive flexibility by identifying the non-critical activities and replanning, rescheduling and
reallocating resources such as manpower and finances within identified boundaries.

PERT and CPM differ slightly in their terminology and in network construction. However their
objectives are the same and, furthermore, their project analysis techniques are very similar. The
major difference is that PERT employs three time estimates for each activity. Probabilities are
attached to each of these times which, in turn, is used for computing expected values and potential
variations for activity times. CPM, on the other hand, assumes activity times are known and fixed,
so only one time estimate is given and used for each activity. Given the similarities between PERT
and CPM, their methods will be discussed together. The student will then be able to use either,
deciding whether to employ variable (PERT) or fixed (CPM) time estimates within the network.

PERT and CPM can help to answer the following questions for projects with thousands of
activities and events, both at the beginning of the project and once it is underway:

 When will the project be completed?

 What are the critical activities (i.e.: the tasks which, if delayed, will effect time for overall
 completion)?
 Which activities are non-critical and can run late without delaying project completion time?
 What is the probability of the project being completed by a specific date?
 At any particular time, is the project on schedule?
 At any particular time, is the money spent equal to, less than or greater than the budgeted
 amount?
 Are there enough resources left to complete the project on time?
 If the project is to be completed in a shorter time, what is the least cost means to accomplish
this and what are the cost consequences?

Critical Path Analysis

The objective of critical path analysis is to determine times for the following:

 ES = Earliest Start Time. This is the earliest time an activity can be started, allowing for the
 fact that all preceding activities have been completed.
 LS = Latest Start Time. This is the latest time an activity can be started without delaying the
 start of following activities which would put the entire project behind schedule.
 EF = Earliest Finish Time. The earliest time an activity can be finished.
 LF = Latest Finish Time. The latest time that an activity can finish for the project to remain
 on schedule.
 S = Activity Slack Time. The amount of slippage in activity start or duration time which can
be tolerated without delaying the project as a whole.
If ES and LS for any activity is known, then one can calculate values for the other three times as
follows:

EF = ES + t

LF = LS + t

S = LS - ES or S = LF - EF

Analysis of the project normally involves:

1. Determining the Critical Path. The critical path is the group of activities in the project that
have a slack time of zero. This path of activities is critical because a delay in any activity
along it would delay the project as a whole.
2. Calculating the total project completion time, T. This is done by adding the activity times of
those activities on the critical path.

The steps in critical path analysis are as follows:

a) Determine ES and EF values for all activities in the project: the Forward Pass through the
network.
b) Calculate LS and LF values for all activities by conducting a Backward Pass through the
network.
c) Identify the critical path which will be those activities with zero slack (i.e.: ES=LS and
EF=LF).
d) Calculate total project completion time.

PERT and Activity Time Estimation

The major distinguishing difference between PERT and CPM is the use of three time estimates for
each activity in the PERT technique, with CPM using only one time for each activity using CPM.

The three time estimates specified for each activity in PERT are:
 i) the optimistic time;
ii) the most probable time; and
iii)the pessimistic time.

The optimistic, most likely and pessimistic time estimates are used to calculate an expected
activity completion time which, because of the skewed nature of the beta distribution, is
marginally grater than the most likely time estimate. In addition, the three time estimates can be
used to calculate the variance for each activity. The formulae used are as follows:

t  o4m p 6

po2
v   
 

 6 

Where:

o, m, p - optimistic, most likely, and pessimistic times

t - expected completion time for task

v - variance of task completion time

Knowing the details of a project, its network and values for its activity times (t) and their variances
(v) a complete PERT analysis can be carried out. This includes the determination of the ES, EF,
LS, LF and S for each activity as well as identifying the critical path, the project completion time
(T) and the variance (V) for the entire project.

Normally when using PERT, the expected times (t) are calculated first from the three values of
activity time estimates, and it is these values of t that are then used exactly as before in CPM. The
variance values are calculated for the various activity times and the variance of the total project
completion time (i.e. the sum of the activity expected times of those activities on the critical path)
is the sum of the variances of the activities lying on that critical path.

Probability Analysis

Once the expected completion time and variance (T and V) have been determined, the
probability that a project will be completed by a specific date can be assessed. The assumption is
usually made that the distribution of completion dates follows that of a normal distribution curve.

Consider the example where the expected completion time for a project (T) is 20 weeks and the
project variance (V) is 100. What is the probability that the project will be finished on or before
week 25?

Answer: 0.69

Worked Examples on Networks

1. A project has the following activities, precedence relationships, and activity durations:

Activity Immediate Activity

Predecessors Duration
(weeks)
A - 3
B - 4
C - 3
D C 12
E B 5
F A 7
G E, F 3
a) Draw a Gantt chart for the project.
b) Construct a CPM network for the project.
c) Identify those activities comprising the critical path.
d) What is the project's estimated duration?
e) Construct a table showing for each activity, its activity duration, earliest start time, latest start
time, earliest finish time, latest finish time, and the activity slack.

Answers:

c) C, D
d) 15 weeks

2. A project designed to refurbish a hospital operating theatre consists of the following activities,
with estimated times and precedence relationships shown. Using this information draw a
network diagram, determine the expected time and variance for each activity, and estimate the
probability of completing the project within sixty days.

Activity Immediate Optimistic Most Likely Optimistic

Predecessors Time Time Time
A - 5 6 7
B - 10 13 28
C A 1 2 15
D B 8 9 16
E B, C 25 36 41
F D 6 9 18

3. An activity has these time estimates: optimistic time o = 15 weeks, most likely time m = 20
weeks, and pessimistic time p = 22 weeks.

a) calculate the activity's expected time or duration t.

b) calculate the activity's variance v.
c) calculate the activity's standard deviation.

4. A project has the following activities, precedence relationships, and time estimates in weeks:
 Activity Immediate Optimistic Most Likely Optimistic
Predecessors Time Time Time
A - 15 20 25
B - 8 10 12
C A 25 30 40
D B 15 15 15
E B 22 25 27
F E 15 20 22
G D 20 20 22

a) Calculate the expected time or duration and the variance for each activity.
b) Construct the network diagram
c) Tabulate the values of ES,EF,LS,LF and slack for each activity
d) Identify the critical path, and the project duration.
e) What is the probability that the project will take longer than 57 weeks to complete?

5. The project detailed below has the both normal costs and "crash" costs shown. The crash time
is the shortest possible activity time given that extra resources are allocated to that activity.

Activity Immediate Normal Normal Crash Crash Time

Predecessors Time Time Cost Time Cost
(£) (£)
A - 5 2 000 4 6 000
B A 8 3 000 6 6 000
C B 2 1 000 2 1 000
D B 3 4 000 2 6 000
E C 9 5 000 6 8 000
F C, D 7 4 500 5 6 000
G E, F 4 2 000 2 5 000

Assuming that the cost per day for shortening each activity is the difference between crash costs
and normal costs, divided by the time saved, determine by how much each activity should be
shortened so as to complete the project within twenty-six days and at the minimum extra cost.