Chapter 10 Project Management Ch10: What Is Project Management? After complete studying this chapter, You should be able to Define key terms like Project, Project Management, Discuss the main characteristics of a project, Describe project management objectives, Describe the project life cycle, Diagram networks of project activities, Estimate the completion time of a project, Apply Project-Planning and Control Techniques, Define the different stages of any project, Evaluate of CPM/PERT 1
Types of Projects SOLUTION Clear Not Clear Not Clear GOAL Clear TPM Types of Projects SOLUTION Clear Not Clear Not Clear GOAL Clear MPx TPM xpm APM 2
What Is a Project? A project is a temporary endeavor (effort) undertaken to create a unique product, service, or result. * Operations is work done to sustain the business. A project ends when its objectives have been reached, or the project has been terminated. Projects can be large or small and take a short or long time to complete. *PMI, A Guide to the Project Management Body of Knowledge (PMBOK Guide) (2004), p. 5. 5 Project Attributes A project: Has a unique purpose. Is temporary. Is developed using progressive elaboration. Requires resources, often from various areas. Should have a primary customer or sponsor. The project sponsor usually provides the direction and funding for the project. Involves uncertainty. 6 3
Project Management Applications What is a project? Any unique endeavor with specific objectives With multiple activities With defined precedent relationships With a specific time period for completion Examples? A major event like a wedding Any construction project Designing a political campaign Project Management Objective Achieve the project goal Do a great thesis on time Keep customers (e.g., Professors) happy Keep the team focus on the goal Make sure that team members work well Everyone shares the load Scope, Resources, Schedule & Customers 4
Project Management and Project Life Cycle What is Project Management? Project management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements. * Conception: identify the need (Start) Feasibility analysis or study: costs benefits, and risks Planning: who, how long, what to do? Execution: doing the project Termination: ending the project The five stages of a project A project management life cycle (PMLC) is a sequence of processes that includes: Scoping Planning Launching Monitoring and controlling Closing 5
Characteristics of a Project A unique, one-time effort Requires the completion of a large number of interrelated activities Resources, such as time and/or money, are limited Typically has its own management structure Project Management A project manager is appointed to head the project management team The team members are drawn from various departments and are temporarily assigned to the project The team is responsible for planning, scheduling and controlling the project to its completion Plan Schedule Control 6
Project Team Project Plan Management Information System Project Schedule Update and Revise Plan Project Manager Project Team Update and Revise Schedule Resources: Internal Exec. Mgt. Marketing Engineering Production Qual. Control Hum. Res. Purchasing External Suppliers Subcontract. Planning Projects Tasks: Develop internal and external resource requirements and time-phase them to the project activities Means of Task Accomplishment: Activity descriptions, milestone charts, cash flow charts, CPM/PERT, engineering designs, time and cost estimates, material delivery plans, and so on. Timing of Tasks: Before project is begun and modified as required during project 7
Scheduling Projects Tasks: Develop/revise detailed guides for each resource indicating quantity, quality, and timing Means of Task Accomplishment: Milestone charts for departments, subcontractors, and suppliers; cash flow schedule; CPM/PERT: begin-activity and complete-activity dates, and updated activity slack Timing of Tasks: Slightly before e project is begun and continued throughout out project Controlling Projects Tasks: Sense noncompliance of resources with schedules, standards, and budgets; take corrective actions, shift resources, develop alternatives Means of Task Accomplishment: Department budget reports, activity cost reports, quality compliance reports, time performance reports Timing of Tasks: During project 8
Planning and Scheduling Gantt Chart Locate new facilities MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Interview staff Hire and train staff Select and order furniture Remodel and install phones Move in/startup Scheduling and Control Charts Horizontal Bar Charts A version of the Gantt chart A version of the Gantt chart Used to plan and schedule activities As the project progresses, the status of activities is plotted on the chart, compared to the plan, and, if necessary, corrective action is taken more 9
Scheduling and Control Charts Horizontal Bar Charts (cont.) Advantages Easy to understand Easy to modify and update Low cost Disadvantages Cumbersome for large project Must be keep up to date Does not indicate the relationships among the activities Horizontal Bar Chart Project Activities Apr. May June July Aug. a. Prelim. Propulsion Design b. Prelim. Flight Sys. Design c. Static Tests A d. Propulsion Design Modif. a e. Static Tests B c f. Flight Tests A d g. Flight Sys. Design Modif. h. Flight Tests B b i. Mat l & Component Costs ef j. Labor & Overheads Costs g d d 10
Network Planning Techniques Program Evaluation & Review Technique (PERT): Developed to manage the Polaris missile project Many tasks pushed the boundaries of science & engineering (tasks duration = probabilistic) Critical Path Method (CPM): Developed to coordinate maintenance projects in the chemical industry A complex undertaking, but individual tasks are routine (tasks duration = deterministic) Both PERT and CPM Graphically display the precedence relationships & sequence of activities Estimate the project s duration Identify critical activities that cannot be delayed without delaying the project Estimate the amount of slack associated with non-critical activities 11
Critical Path Method (CPM) Designed to provide intense micro-control The system is dynamic; it continues to provide periodic reports as the project progresses Manager s View of CPM INPUTS List of project activities Precedence relationship among activities Estimate of each activity s duration CPM processing procedures OUTPUTS Estimated duration of project Identification of critical activities Amount of slack for each activity 12
CPM Terminology Activity A task or a certain amount of work required in the project Requires time to complete Represented by an arrow Dummy Activity Indicates only precedence relationships Does not require any time of effort Event Signals the beginning or ending of an activity Designates a point in time Represented by a circle (node) CPM Terminology (cont.) Network Shows the sequential relationships among activities using nodes and arrows Path A connected sequence of activities leading from the starting event to the ending event Critical Path The longest path (time); determines the project duration Critical Activities All of the activities that make up the critical path 13
CPM Terminology (cont.) Earliest Start (ES) The earliest that an activity can begin; assumes all preceding activities have been completed Earliest Finish (EF) ES + activity time Latest Finish (LF) The latest that an activity can finish and not change the project completion time Latest Start (LS) LF - activity time CPM Network Conventions I a b 1 IV a 1 c II III a a b 1 1 b c c VI V a a b b c 1 2 1 2 b c d d 3 d 14
Steps in CPM Analysis Draw the CPM network A graphic view of the relationships among the required activities Analyze the paths through the network Determine the length of each path (the time required to complete each path) Starting at the beginning of the network and working toward the end (from left to right), determine the ES and the EF for each activity Path analysis (continued) Identify the critical path(s) (the longest path[s] through the network) The critical path(s) determines how long the project will take... more Steps in CPM Analysis Determine the slack for each activity Working from the end of the project network (from right to left), find the LF and the LS for each activity Compute the activity s slack slack = LS - ES = LF EF Slack is the maximum amount of time that this activity can be delay in its completion before it becomes a critical activity, i.e., delays completion of the project 15
CPM Example and Network f, 15 a, 6 g, 17 h, 9 i, 6 b, 8 d, 13 j, 12 c, 5 e, 9 CPM Example Paths Enumerated Path Length of Path a-f-h 6 + 15 + 9 = 30 a-g-i 6 + 17 + 6 = 29 b-d-j 8 + 13 + 12 = 33* c-e-j 5 + 9 + 12 = 26 * Critical path 16
CPM Example ES and EF Times f, 15 a, 6 0 6 g, 17 h, 9 i, 6 b, 8 0 8 c, 5 0 5 d, 13 e, 9 j, 12 CPM Example ES and EF Times a, 6 0 6 f, 15 6 21 g, 17 h, 9 6 23 i, 6 b, 8 0 8 c, 5 0 5 d, 13 8 21 e, 9 5 14 j, 12 17
CPM Example ES and EF Times f, 15 6 21 g, 17 h, 9 a, 6 0 6 6 23 21 30 i, 6 b, 8 0 8 c, 5 0 5 d, 13 e, 9 5 14 23 29 j, 12 8 21 21 33 Project s EF = 33 CPM Example LS and LF Times a, 6 0 6 b, 8 0 8 0 5 c, 5 6 23 e, 9 f, 15 6 21 d, 13 g, 17 8 21 5 14 i, 6 23 29 27 33 j, 12 h, 9 21 30 24 33 21 33 21 33 18
CPM Example LS and LF Times a, 6 0 6 4 10 b, 8 0 8 0 8 c, 5 0 5 7 12 f, 15 6 21 18 24 g, 17 6 23 10 27 e, 9 d, 13 8 21 8 21 5 14 12 21 i, 6 23 29 27 33 j, 12 h, 9 21 30 24 33 21 33 21 33 CPM Example Slack a, 6 3 0 6 3 9 4 b, 8 0 7 0 8 0 8 c, 5 0 5 7 12 f, 15 3 6 21 9 24 g, 17 3 6 23 i, 6 10 27 4 23 29 27 33 0 h, 9 21 30 24 33 d, 13 j, 12 8 21 21 33 8 21 0 21 33 e, 9 7 5 14 12 21 19
CPM Example Critical Path f, 15 a, 6 g, 17 h, 9 i, 6 b, 8 d, 13 j, 12 c, 5 e, 9 Program Evaluation & Review Technique (PERT) The technique is based on the assumption that an activity s duration follows a probability distribution instead of being a single value. The probabilistic information about the activities is translated into probabilistic information about the project. 20
Single Point Estimate and Three Point Estimates Single Point Estimate We take a single estimate per task Three point Estimate We take three estimates per task Optimistic Estimate Best Case Scenario Pessimistic Estimate Worst Case Scenario Most Likely Estimate Average the three estimates to get a three point estimate 41 Three-Point Estimates Instead of providing activity estimates as a discrete number, such as four weeks, it s often helpful to create a three-point estimate: An estimate that includes an optimistic, most likely, and pessimistic estimate, such as three weeks for the optimistic, four weeks for the most likely, and five weeks for the pessimistic estimate. Three-point estimates are needed for PERT estimates. Six point Estimates (PERT: Project Evaluation & Review Techniques) 42 21
Three-Point Estimate: Example Three point Estimate Example: Optimistic = 6 hours Pessimistic = 10 hours Most Likely = 8 hours The three point estimate is (6+10+8)/3 = 8 hours Six-point Estimate (PERT) We take three estimates per task Optimistic Estimate Best Case Scenario Pessimistic Estimate Worst Case Scenario Most Likely Estimate Multiply the Most Likely estimate by 4, add to the Optimistic and Pessimistic estimates and divide by 6 (Pert Estimate: E = (o + 4m + p) / 6 ) 22
Six-Point Estimate (PERT): Example Example: Optimistic = 6 hours Pessimistic = 10 hours Most Likely = 8 hours The six point estimate is (6+10+4x8)/6 = 8 hours PERT Three time estimates are required to compute the parameters of an activity s duration distribution: pessimistic time (t p ) - the time the activity would take if things did not go well most likely time (t m ) - the consensus best estimate of the activity s duration optimistic time (t o ) - the time the activity would take if things did go well... More 23
PERT From these three time estimates about an activity, two probability distribution parameters are calculated: the mean (t e ) and the variance (V t ). t e = ( t o + 4t m + t p ) / 6 V t = [ ( t p -t o ) / 6 ] 2 Steps in PERT Analysis Draw the network. Draw the network. Analyze the paths through the network and find the critical path. The length of the critical path is the mean of the project duration probability distribution which is assumed to be normal.... more 24
Steps in PERT Analysis The standard deviation of the project duration probability distribution is computed by adding the variances of the critical activities (all of the activities that make up the critical path) and taking the square root of that sum Probability computations can now be made using the normal distribution table. PERT Example Optimistic Most Likely Pessimistic Activity Im.Precd. Time (Hr.) Time (Hr.) Time (Hr.) A -- 4 6 8 B -- 1 4.5 5 C A 3 3 3 D A 4 5 6 E A 0.5 1 1.5 F B,C 3 4 5 G B,C 1 1.5 5 H E,F 5 6 7 I E,F 2 5 8 J D,H 2.5 2.75 4.5 K G,I 3 5 7 25
PERT Example PERT Network D A E H J C B F I K G PERT Example Activity Expected Time and Variance Activity Expected Time Variance A 6 4/9 B 4 4/9 C 3 0 D 5 1/9 E 1 1/36 F 4 1/9 G 2 4/9 H 6 1/9 I 5 1 J 3 1/9 K 5 4/9 26
PERT Example PERT Probability Example the project will be completed within 24 hours V path = V A + V C + V F + V I + V K = 4/9 + 0 + 1/9 + 1 + 4/9 = 2 path = 1.414 z = (24-23)/ (24-23)/1.414 =.71 27
PERT Example Probability the project will be completed within 24 hours.2612.5000 From the Standard Normal Distribution table: P(z <.71) =.5 +.2612 =.7612 23 24 Activity Cost-Time Tradeoffs Project managers may have the option or requirement to crash the project, or accelerate the completion of the project. This is accomplished by reducing the length of the critical path(s). The length of the critical path is reduced by reducing the duration of the activities on the critical path.... more 28
Activity Cost-Time Tradeoffs If each activity requires the expenditure of an amount of money to reduce its duration by one unit of time, then the project manager selects the least cost critical activity, reduces it by one time unit, and traces that change through the remainder of the network. As a result of a reduction in an activity s time, a new critical path may be created. When there is more than one critical path, each of the critical paths must be reduced. If the length of the project needs to be reduced further, the process is repeated. Computer Software for Project Management Artemis Views (Artemis Management Systems) Fast Track Schedule (AEC Software) Fast Track Schedule (AEC Software) Microsoft Project (Microsoft Corp.) Oracle Projects (Oracle Corp.) Power Project (ASTA Development) Primavera Project Planner (Primavera Systems) Super Project (Computer Associates International) Turbo Project (IMSI) 29
Evaluation of CPM/PERT Activities are assumed to be independent. It is assumed that there is a precise breaking point where one activity ends and another begins. Initially-critical activities might not receive the attention they deserve until it is too late. Activity time estimates might be biased. The cost of CPM/PERT might not be justified by the value of the information it provides. Personnel might not understand the statistical underpinnings of PERT. Wrap-Up: World-Class Practice The project organizations are flexible enough to respond aggressively to business opportunities. Personnel are selected and trained to be flexible in moving from department to department and project to project as needed. Scheduling and control charts are frequently used because of their simplicity, flexibility, low cost, and effectiveness as communication devices. CPM, PERT, and PERT/Cost are also used to provide computerized activity-by-activity planning and control. 30