3Introduction to Project Management Projects can be simple (planning a company picnic) or complex (planning a space shuttle launch).Successfully completing a project requires:Knowledge of the tasks involvedAccurate estimates of time and resources requiredKnowledge of physical and logical relations between the various tasksProject management techniquesCritical Path Method (CPM)Program Evaluation and Review Technique (PERT)Spreadsheets can be used to manage projects, but dedicated project management software is often more effective.
4An Example: Lightner Construction Tom Lightner owns Lightner Construction, a general contracting company specializing in the construction of single-family residences and small office buildings.Tom frequently has numerous construction projects going on at the same time and needs a formal procedure for planning, monitoring, and controlling each project.He is aware of various project scheduling techniques but has never used them.He wants to see how he might apply such techniques to one of the home-building projects he will be undertaking in the near future.The following slide summarizes each of the major activities required for this project.
5Summary of Activities Time Immediate Required Predecessor Activity Description (in days) ActivitiesA Excavate 3 --B Lay foundation 4 AC Rough plumbing 3 BD Frame 10 BE Finish exterior 8 DF Install HVAC 4 DG Rough electric 6 DH Sheet rock 8 C, E, F, GI Install cabinets 5 HJ Paint 5 HK Final plumbing 4 IL Final electric 2 JM Install flooring 4 K, L
7A Comment of Project Networks Projects can also be depicted using Activity-On-Arc (AOA) networks.This book uses AON networks (which the author views as superior to AOA).Some software packages use AOA networks, so you should at least be aware that they exist.
9Start and Finish Points AON networks should have unique start and finish points.ABCDEstartfinish
10CPM: An OverviewA Forward Pass through the network determines the earliest times each activity can start and finish.A Backward Pass through the network determines the latest times each activity can start and finish without delaying completion of the project.The longest path through the network is the “critical path”.
11Information Recorded for Each Node ESTiEFTiitiLSTiLFTiti = time required to perform activity iESTi = earliest possible start time for activity iEFTi = earliest possible finish time for activity iLSTi = latest possible start time for activity iLFTi = latest possible finish time for activity i
12The Forward PassThe earliest start time (EST) for the initial activity in a project is “time zero”.The EST of an activity is equal to the latest (or maximum) early finish time of the activities directly preceding it.The EFT of an activity is equal to its EST plus the time required to perform the activity.
13Results of the Forward Pass 25338E17J385IK424L402M46A3F21G236D710CBNote:ESTH=MAX(EFTC,EFTE,EFTF,EFTG)=25
14The Backward PassThe latest finish time (LFT) for the final activity in a project is equal to its EFT as determined by the forward pass.The LFT for any other activity is equal to the earliest (or minimum) LST of the activities directly following (or succeeding) it.The LST of an activity is equal to its LFT minus the time required to perform the activity.
15Results of the Backward Pass 7103I33385K38424222533383842A3B374H2533M42464833725334246E17258J33385L384021725D7171035404042717F17214Note:LFTH=MIN(LSTI,LSTJ)=33LFTD=MIN(LSTE,LSTF ,LSTG)=17LFTB=MIN(LSTC,LSTD)=72125G172361925
16Slack = LSTi-ESTi or LFTi-EFTi The Critical PathC7103I33385K38424222533383842Slack=15Slack=0Slack=0A3B374H253342468M433725334246E17258Slack=0Slack=0Slack=0Slack=0J33385L384021725D717Slack=01035404042717Slack=2Slack=2Slack=0F172142125Slack=4Note:Slack = LSTi-ESTi or LFTi-EFTiG172361925Slack=2
17Determining The Critical Path Critical activities have zero slack and cannot be delayed without delaying the completion of the project.The slack for non-critical activities represents the amount of time by which the start of these activities can be delayed without delaying the completion of the entire project (assuming that all predecessor activities start at their earliest start times).
18Project Management Using Spreadsheets The early and late start and finish times for project activities can be done in a spreadsheet using array formulas and circular references.
19Array FormulasAn array formula can perform multiple calculations using a range of cells and then return either a single result or multiple results.You create array formulas in the same way that you create other formulas, except that you press [Ctrl]+[Shift]+[Enter] to enter the formula.
20Array Formula Examples-I Let’s compare several standard Excel functions with their equivalent array formulas…Excel Function=SUMPRODUCT(E5:E17,F5:F17)Array Formula=SUM(E5:E17*F5:F17)
21Array Formula Examples-II Let’s compare several standard Excel functions with their equivalent array formulas…Excel Function=SUMIF(E5:E17,">10",F5:F17)Array Formula=SUM(IF(E5:E17>10,F5:F17))
22Array Formula Examples-III Let’s compare several standard Excel functions with their equivalent array formulas…Excel Function=COUNTIF(E5:E17,">0")Array Formula=SUM(IF(E5:E17>0,1))
23Array Formula Examples-IV Let’s compare several standard Excel functions with their equivalent array formulas…Excel Function=SUMXMY2(E5:E17,F5:F17)Array Formula=SUM((E5:E17-F5:F17)^2)
24Array Formula Examples-IV Let’s compare several standard Excel functions with their equivalent array formulas…Excel Function=VARP(E5:E17)Array Formula=AVERAGE((E5:E17-AVERAGE(E5:E17))^2)
25Circular ReferencesThe array formulas used to implement the project management calculations create circular references.A circular reference occurs when the value in a cell depends on the value in another cell that, in turn, is dependent on the value in the original cell.Usually, a circular reference indicates a formula contains an error – and Excel displays a warning telling you so!Occasionally, a circular reference is needed to accomplish a particular task. This is such an occasion.To tell Excel you intend to use circular references:Click Tools, OptionsClick the Calculation tab.Select the Iteration option.Click OK.
26Project Management Example See file Fig14-11.xlsLearning Tip!Use theTools, Formula Auditing, Evaluate Formulacommand to step through the evaluation of the array formulas for the EST and LFT calculations.
27Important Implementation Issue It is important to use activity labels that are unique and do not appear as substrings within other activity labels.For example, the 26 letters of the English alphabet may be used to uniquely identify up to 26 activities in a project.Using the strings "A1" and "A11" as activity labels won’t workThe FIND( ) function would locate "A1" within "A11" (i.e., FIND("A1","A11")=1) -- erroneously identifying activity A11 as a predecessor or successor of activity A1.Using the strings "A01" and "A11" as activity labels easily remedies this situation.
28Important Implementation Issue If you use numbers rather than letters to identify activities, using the numbers 1, 2, 3, …, 9 as activity labels would create matching problems within activity labels 11, 12, 13, …, 19 (among others).This can be avoided easily by applying Excel's "Text" format to cells containing activity labels and immediate predecessors and using two-digit numbers for all activity labels (e.g., 01, 02, 03, …, 09, 10, 11, 12, 13, …, 99).If more than 100 numeric activity labels are needed, three-digit numbers (formatted as text) should be used.
29A Gantt Chart for the Example Problem 5101520253035404550ABCDEFGHIJKLMActivityTime PeriodActivity TimeSlack
30Project CrashingIt is often possible to complete activities more quickly than normal by applying more resources (better equipment, overtime, etc).This is referred to as “crashing” the project.We may want to determine the optimal way of crashing a project to:complete it more quickly than originally scheduledkeep it on schedule if critical activities were delayed
31Computing Crash Times and Costs See file Fig14-14.xls
32Determining the Earliest Crash Completion Time We can determine the earliest possible (crashed) completion time of a project by solving an LP problem…
33Defining The Decision Variables Ti = the time at which activity i beginsti = the normal activity time of activity iCi = the amount of time by which activity i is crashed
34Defining The Objective Minimize the completion time of the last activity (activity M):MIN: TM + tM - CM
35Defining The Constraints For each arc in the project network from activity i to activity j, we need a constraint of the form:Tj >= Ti + ti - Ci
36Summary of the Earliest Completion Time Model MIN: TM + tm - CMS.T.: TB - TA >= tA - CATC - TB >= tB - CBTD - TB >= tB - CBTE - TD >= tD - CDTF - TD >= tD - CDTG - TD >= tD - CDTH - TC >= tC - CCTH - TE >= tE – CETH - TF >= tF - CFTH - TG >= tG - CGTI - TH >= tH - CHTJ - TH >= tH - CHTK - TI >= tI - CITL - TJ >= tJ - CJTM - TK >= tK - CKTM - TL >= tK – CLTi, Ci >= 0, for all iNote: This model can easily be modified to minimize crash costs.Ci <= allowable crash days for activity i
38Cost/Time Trade-Off Curve $0$2,000$4,000$6,000$8,000$10,000$12,000$14,000$16,000$18,000$20,000272829303132333435363738394041424344454647Completion Time (in days)Crash Cost
39PERT: An OverviewCPM assumes all activity times are known with certainty or can be estimated accurately.PERT accounts for uncertainty in activity times by using three time estimates:ai = duration of activity i assuming the most favorable conditionsbi = duration of activity i assuming the least favorable conditionsmi = estimate of the most likely duration of activity iPERT then estimates expected duration ti and variance vi of each activity’s duration as:
40PERT Overview Continued The expected (or mean) time required to complete any path in the network is the sum of the expected times (the ti) of the activities on the path.Assuming the individual activity times in a project are independent of one another, we may also calculate the variance of the completion time for any path as the sum of the variances (the vi) of the activities on the path.PERT considers the path with the largest expected completion time to be the critical path.PERT’s reasoning may be flawed...
41PERT Example B A D C a=8 t =9 m=9 v=0.111 b=10 a=2 a=3 t =4 m=4 t =5 Path:Expected Time:Variance:A - B - D=181.000A - C - D= 174.889
42Distribution of Completion Times 101112131415161718192021222324Path Completion TimeProbability Density"Critical" PathA-B-D"Non-Critical" PathA-C-DIf we want to finish within 21 days, which path is most critical?
43Simulating a Project Network The solution to the “problem” with PERT is to use simulation.We can model activity times easily using a triangular distribution...123456Time RequiredProbability Densityamb
44Simulating The Project Network See file Fig14-25.xls
45Microsoft ProjectDedicated project management software such as MS Project can greatly simplify the process of organizing, planning, and controlling projects.A trial version of MS Project is included on the CD-ROM accompanying this book.