Project Management

Lecture Outline
• Project Planning – Slide 5
• Project Scheduling – Slide 18
• Project Control – Slide 21
• CPM/PERT – Slide 22
• Probabilistic Activity Times – Slide 34
• Microsoft Project – Slide 46
• Project Crashing and Time-Cost Trade-off – Slide 56

9-2
 Learning Objectives
• Discuss the project planning process, including planning
tools, evaluation methods, and key elements
• Discuss the benefits of and strategies for dealing with
diverse project groups
• Explain the basics of project scheduling and the use of
Gantt charts
• Define enterprise project management and discuss the
key elements in project control

9-3
 Learning Objectives
• Define enterprise project management and discuss the
key elements in project control
• Develop and analyze both deterministic probabilistic and
project networks
• Use Microsoft Project for network analysis
• Determine and explain project crashing and time-cost
tradeoffs

9-4
 Project Planning
• Project
• has unique purpose
• not repetitive
• relatively short period of time
• one-time operational activity or effort
• draws resources from multiple departments

9-5
Project Management Process

9-6
Project Management Process

9-7
Project Management Process

9-8
 Elements of a Project Plan
• Objective
• Scope
• Contract requirements
• Schedules
• Resources
• Personnel
• Control
• Risk and problem analysis

9-9
 Project Return

• Project requires positive gain or benefit

• ROI is one measure, but not always applicable
• “Soft” returns
• Projects for public good

(Gain from project – cost of project)

ROI =
Cost of project

9-10
 Project Team and Project Manager
• Project team
• made up of individuals from various areas and
departments within a company
• Matrix organization
• a team structure with members from functional
areas, depending on skills required
• Project manager
• most important member of project team

9-11
 Scope Statement

• Scope statement
• a document that provides an understanding,
justification, and expected result of a project
• Statement of work
• written description of objectives of a project

9-12
 Work Breakdown Structure
• Organizes the work in a project
• Breaks project into components,
subcomponents, activities, and tasks
• Start at the top and work down
• Brainstorm project activities

9-13
Work Breakdown Structure for Computer Order
Processing System Project

9-14
 Responsibility Assignment Matrix

• Organizational Breakdown Structure (OBS)

• a chart that shows which organizational units are
responsible for work items
• Responsibility Assignment Matrix (RAM)
• shows who is responsible for the work in a project

9-15
Responsibility Assignment Matrix

9-16
 Global Cultural and Diversity Issues in
Project Management
• Global project teams are formed from different
genders, cultures, ethnicities, etc.
• Diversity among team members can add an
extra dimension to project planning
• Cultural research and communication are
important elements in the planning process

9-17
 Project Scheduling
• Steps • Techniques
– Define activities – Gantt chart
– Sequence activities – CPM/PERT
– Estimate time • Software
– Develop schedule – Microsoft Project

9-18
 Gantt Chart
• Graph or bar chart
• Bars represent the time for each task
• Bars also indicate status of tasks
• Provides visual display of project schedule
• Shows precedence – sequence of tasks
• Slack
– amount of time an activity can be delayed without
delaying the project

9-19
A Gantt Chart

9-20
 Project Control
• Time management
• Cost management
• Quality management
• Performance management
• Communication
• Enterprise project management

9-21
 CPM/PERT
• Critical Path Method (CPM)
• DuPont & Remington-Rand
• Deterministic task times
• Activity-on-node network construction

• Project Evaluation and Review Technique (PERT)

• US Navy and Booz, Allen & Hamilton
• Probabilistic task time estimates
• Activity-on-arrow network construction

9-22
 Project Network
• Activity-on-node (AON)
– nodes represent activities
– arrows show precedence
relationships
• Activity-on-arrow (AOA)
– arrows represent activities
– nodes are events for
points in time
• Event
– completion or beginning
of an activity in a project

9-23
AOA Project Network for a House

9-24
 Concurrent Activities
• Dummy activity
• two or more activities cannot share same start and
end nodes
• add dummy activity to show correct precedence

9-25
AON Network for House Building
Project

9-26
 Activity Start Times

A: 1-2-4-7
3 + 2 + 3 + 1 = 9 months
Critical path
B: 1-2-5-6-7 • Longest path through a
3 + 2 + 1 + 1 + 1 = 8 months network
C: 1-3-4-7
3 + 1 + 3 + 1 = 8 months • Minimum project completion
D: 1-3-5-6-7 time
3 + 1 + 1 + 1 + 1 = 7 months

9-27
 Activity Scheduling
• Earliest start time (ES)
• earliest time an activity can start
• ES = maximum EF of immediate predecessors
• Forward pass
• starts at beginning of CPM/PERT network to determine
earliest activity times
• Earliest finish time (EF)
• earliest time an activity can finish
• earliest start time plus activity time
• EF= ES + t

9-28
Node Configuration

9-29
Earliest Activity Start and Finish Times

9-30
 Activity Scheduling

• Latest start time (LS)

• Latest time an activity can start without delaying critical
path time
• LS= LF - t
• Latest finish time (LF)
• latest time an activity can be completed without delaying
critical path time
• LF = minimum LS of immediate predecessors
• Backward pass
• Determines latest activity times by starting at the end of
CPM/PERT network and working forward

9-31
Latest Activity Start and Finish Times

9-32
 Activity Slack

Activity LS ES LF EF Slack S
*1 0 0 3 3 0
*2 3 3 5 5 0
3 4 3 5 4 1
*4 5 5 8 8 0
5 6 5 7 6 1
6 7 6 8 7 1
*7 8 8 9 9 0
* Critical Path

9-33
 Probabilistic Activity Times
• Beta distribution
• probability distribution traditionally used in CPM/PERT

a + 4m + b
Mean (expected time): t=
6
2
b-a
Variance:  = 6
2

where
a = optimistic estimate
m = most likely time estimate
b = pessimistic time estimate

9-34
Examples of the Beta Distribution

9-35
Project with Probabilistic Time
Estimates

9-36
 Activity Time Estimates
TIME ESTIMATES (WKS) MEAN TIME VARIANCE
ACTIVITY a m b t б2
1 6 8 10 8 0.44
2 3 6 9 6 1.00
3 1 3 5 3 0.44
4 2 4 12 5 2.78
5 2 3 4 3 0.11
6 3 4 5 4 0.11
7 2 2 2 2 0.00
8 3 7 11 7 1.78
9 2 4 6 4 0.44
10 1 4 7 4 1.00
11 1 10 13 9 4.00

9-37
Activity Early, Late Times & Slack
ACTIVITY t б ES EF LS LF S
1 8 0.44 0 8 1 9 1
2 6 1.00 0 6 0 6 0
3 3 0.44 0 3 2 5 2
4 5 2.78 8 13 16 21 8
5 3 0.11 6 9 6 9 0
6 4 0.11 3 7 5 9 2
7 2 0.00 3 5 14 16 11
8 7 1.78 9 16 9 16 0
9 4 0.44 9 13 12 16 3
10 4 1.00 13 17 21 25 8
11 9 4.00 16 25 16 25 0

9-38
Earliest, Latest Times, and Slack

9-39
 Total Project Variance

2 = б22 + б52 + б82 + б112

 = 1.00 + 0.11 + 1.78 + 4.00
= 6.89 weeks

9-40
CPM/PERT With OM Tools

9-41
 Probabilistic Network Analysis

Determine probability that project is

completed within specified time
x-
Z= 
where
= tp = project mean time
= project standard deviation
x= proposed project time
Z= number of standard deviations that
x is from the mean

9-42
Normal Distribution of Project Time

9-43
Southern Textile – 30 weeks  2 = 6.89 weeks
 = 6.89
 = 2.62 weeks

x-
Z=

30 - 25
=
2.62
= 1.91

From Table A.1, (appendix A) a Z score of 1.91 corresponds

to a probability of 0.4719.
Thus P(30) = 0.4719 + 0.5000 = 0.9719
9-44
Southern Textile – 22 weeks  2 = 6.89 weeks
 = 6.89
 = 2.62 weeks

x-
Z=

22 - 25
=
2.62
= -1.14

From Table A.1, (appendix A) a Z score of 1.14

corresponds to a probability of 0.3729.
Thus P(22) = 0.5000 - 0.3729 = 0.1271

9-45