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PROJECT MANAGEMENT By: Jonathan Daun Adriana Leon Adam Goplin

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W HAT IS P ROJECT M ANAGEMENT ? Project: Unique, one-time operation designed to accomplish a set of objectives in a limited time frame Examples: building a bridge, designing a new product, software development, implementing an ERP system

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H OW ARE PROJECTS DIFFERENT ? Projects differ from normal operations: One time operation Limited time horizon Limited budget Unique specifications May work across organizational boundaries Less bureaucratic

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L IFE C YCLE OF P ROJECTS Project Definition Planning Implementation (Execution of Major Activities) Project Phaseout

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R OLES – P ROJECT C HAMPION Task of promoting and supporting a project Usually a member of upper management with good communication skills Solicits buy-in from other managers, particularly those who must concede resources to the project

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R OLES – P ROJECT T EAM M EMBERS Posses required knowledge and skill to complete tasks Responsible for technical design, development, testing, and implementation of project Must work well in team setting Must have enthusiasm/buy-in to project

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R OLES – P ROJECT M ANAGER Bears ultimate responsibility for success/failure of project Leadership Organization Communication Finance Technical savvy Team building/HR management

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P ROJECT M ANAGEMENT T RIANGLE Quality Cost Schedule Performance Objectives

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W ORK B REAKDOWN S TRUCTURE (WBS) Hierarchical listing of tasks that must be accomplished for a project Identifies required activities and major elements Each major element is broken down into supporting activities and so on down

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WBS E XAMPLE (D WIGHT F ISCHER ) Canoe Trip to Boundary Waters Arrange Travel Schedule Flights to Mpls Rent Van Arrange Motel Schedule return flights Get Equipment Contact BW Outfitter Rent canoes Rent Tents Bring Sleeping Bags Bring Fishing Gear Bring lights and waterproof matches Plan Meals Bring cooking gear Freeze dry food Prepare 7 breakfasts Prepare 7 lunches Prepare 6 dinners Prepare Budget Assign Budget Person Get deposits Retain Receipts Pay for supplies Close-out trip Plan for Emergencies Obtain emerg. #s Arrange contact at BW Bring emerg. flares Bring two first aid kits Plan Activities Bring Cards Bring Joke book Bring scotch

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S ELECTING P ROJECTS Limited resources means not all projects can be undertaken Factors for selecting projects: Budgets Availability of expertise/skill Cost-benefit analysis Government mandates Safety concerns

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G ANTT C HARTS Used to schedule and monitor project activities Lists project activities, estimates of activity time length, and sequence of activities

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P ROS /C ONS OF W ORKING ON P ROJECTS Pros Rewards associated with being part of successful project Thrill of working on different/unusual tasks and solving new problems Opportunities to meet new contacts & increase future job opportunities Cons Managers dont want to lose good workers to projects Disruption of daily routine Risk of being replaced on current job Fear of association with unsuccessful project

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W HY P ROJECTS F AIL Unrealistic expectations Lack of executive sponsorship Lack of project management Failure to align project with organizational objectives Poor scope Politics/conflicts

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W HAT IS PERT ? Project Evaluation and Review Technique Developed in 1958 by Navy Used in the POLARIS missile program Helps forecast project completion date 1) How does the cost of work performed compare to the value of the work performed? 2) What is the value (in dollars) of work performed so far? 3) How does the amount of money spent so far on a project compare to what should have been spent?

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PERT PERT - a management tool for defining and integrating events; a process which must be accomplished in time to assure completing project objectives on schedule. 3 basic factors influence project progress: a) time b) resources c) technology

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PERT Objectives: To provide, through applying an integrated management information system (which contains a balanced combination of the basic elements of time, cost, and performance) coordinate planning and control information at the proper levels so that timely managerial judgments will meet all established project objectives.

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PERT NETWORK Events may be represented in a PERT network by any selected geometric figure (ovals, circles, squares). The events must follow logically. The arrows indicate the flow in the PERT network and the numbers identify the events. The arrows and not the #s indicate the order of events. Events that immediately follow one another are called successor events. Similarly, a predecessor event is one which immediately precedes another event.

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PERT NETWORK Key features of a PERT network are: 1) Events must take place in a logical order. 2) Activities represent the time and the work it takes to get from one event to another. 3) No event can be considered reached until ALL activities leading to the event are completed. 4) No activity may be begun until the event preceding it has been reached.

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S TEPS : Step 1 : *Define tasks Step 2 : *Place tasks in a logical order, find the critical path Critical path- longest time path through the task network which dictate finish date Step 3 : Generate estimates Step 4 : Determine earliest and latest dates Step 5 : Determine probability of meeting expected date * Dont require calculations. Use logic.*

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E XAMPLE : PLANTING FLOWERS & TREES Helpful to create a diagram:

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C ALCULATING PERT : STEPS 1&2 Step 1 : *Define tasks Step 2 : *Place tasks in a logical order, find the critical path * Dont require calculations. Use logic.*

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S TEP 3: G ENERATE ESTIMATES Organize your estimates into a table Calculate: Most Optimistic (TO) – best case scenario Most Likely (TL) normal scenario Most Pessimistic (TP) Worst case scenario Use PERT formula to calculate each scenario (TO x 1 + TL x 4 + TP x 1) / 6 = TE sum of (optimistic x 1 + likely x 4 + pessimistic x 1) / by 6 = expected task duration Group tasks on critical path separately TE is earliest possible completion time

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S TEP 3 A : GET ORGANIZED

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S TEP 3 B : GENERATE ESTIMATES Calculate standard deviation Standard deviation- average deviation from the estimated time SD=(T P -T 0 )/6 higher the SD is the greater amount of uncertainty exists Calculate variance reflects the spread of a value over a normal distribution V=SD 2 a large variance indicates great uncertainty, a small variance indicates a more accurate estimate

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TE: E XPECTED TASK DURATION 1) For each TE cell: (TO*1+ TL*4+ TP*1)/6 Use sum formula to add TE column.

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SD : STANDARD DEVIATION Use excel formula: SD=(T P -T 0 )/6

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V : VARIANCE Use Excel formula V=SD 2 Use sum formula for V column

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Critical Path Tasks (longest duration) TaskToTLTPTESDV Mark Utilities135=SUM(B3*1+C3*4+D3*1)/6=(D3-B3)/6=F3*F3 Dig holes247=SUM(B4*1+C4*4+D4*1)/6=(D4-B4)/6=F4*F4 Plant trees136=SUM(B5*1+C5*4+D5*1)/6=(D5-B5)/6=F5*F5 Plant flowers135=SUM(B6*1+C6*4+D6*1)/6=(D6-B6)/6=F6*F6 Install edging124=SUM(B7*1+C7*4+D7*1)/6=(D7-B7)/6=F7*F7 TOTAL=SUM(E3:E7) =SUM(G3:G7) Enter desired time completion date:15Probability of completion:=NORMDIST(B10,E8,SQRT(G8),TRUE)

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Critical Path Tasks (longest duration) TaskToTLTPTEESEFLSLFSLACKSDV Mark Utilities1353.00030300.6670.444 Dig holes2474.17373700.8330.694 Plant trees1363.17710.177 00.8330.694 Plant flowers1353.001013101300.6670.444 Install edging1242.171315.171315.1700.5000.250 TOTAL 15.50 2.528 Enter desired time completion date:15Probability of completion:37.66% Critical Path Tasks (longest duration) TaskToTLTPTEESEFLSLFSLACKSDV Buy Trees0.5131.250 34.2530.1250.015625 Buy Flowers0.5131.250 34.2530.1250.015625 Buy Edging0.5131.25 2.54.255.530.1250.015625 TOTAL 3.75 0.047 ES=Earliest Start EF= Earliest Finish LS=Latest Start LF=Latest Finish STEP 4: DATES For each task, determine the latest allowable time for moving to the next task Slack- difference between latest time and expected time Tasks with zero slack time are on the critical path

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Critical Path Tasks (longest duration) TaskToTLTPTEESEFLSLFSLACKSDV Mark Utilities135=SUM(B3*1+C3*4+D3*1)/60303=I3-G3=(D3-B3)/6=K3*K3 Dig holes247=SUM(B4*1+C4*4+D4*1)/637.173 =I4-G4=(D4-B4)/6=K4*K4 Plant trees136=SUM(B5*1+C5*4+D5*1)/6710.177 =I5-G5=(D5-B5)/6=K5*K5 Plant flowers135=SUM(B6*1+C6*4+D6*1)/610131013=I6-G6=(D6-B6)/6=K6*K6 Install edging124=SUM(B7*1+C7*4+D7*1)/61315.171315.17=I7-G7=(D7-B7)/6=K7*K7 TOTAL =SUM(E3:E7) =SUM(L3:L7) Enter desired time completion date:15Probability of completion: =NORMDIST(B10,E8,SQRT(L8), TRUE) Critical Path Tasks (longest duration) TaskToTLTPTEESEFLSLFSLACKSDV Buy Trees0.513=SUM(B14*1,C14*4+D14*1)/601.2534.25=I14-G14=(E14-B14)/6=K14*K14 Buy Flowers0.513=SUM(B15*1,C15*4+D15*1)/601.2534.25=I15-G15=(E15-B15)/6=K15*K15 Buy Edging0.513=SUM(B16*1,C16*4+D16*1)/61.252.54.255.5=I16-G16=(E16-B16)/6=K16*K16 TOTAL =SUM(E14:E16) =SUM(L14:L16) ES=Earliest Start EF= Earliest Finish LS=Latest Start LF=Latest Finish

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STEP 5: PROBABILITIES Use Excel formula =NORMDIST(x, mean, standard_dev, cumulative) X is the value for which you want the distribution (desired date) Mean is the arithmetic mean of the distribution (summed PERT expected durations) Standard_dev is the standard deviation of the distribution (square root of the summed variances) Cumulative is a logical value that determines the form of the function. If cumulative is TRUE, NORMDIST returns the cumulative distribution function (probability of completion on the date entered)

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P ERT IN A NUTSHELL : 1) A management tool for defining and coordinating what must be done to accomplish a projects objectives on time. These tasks were affected by our constructing a diagram of the PERT network. 2) A technique that aids the manager but does not decide for him. He uses it to calculate variance, slack, probability, and time estimates. 3) A technique that presents statistical knowledge about the uncertainties faced in completing the many activities associated with a project -- with it we calculated the expected task duration, variance, and probability. 4) A method for attracting a managers attention to latent problems that require decisions and/or solutions. We used it to analyze the PERT network for critical paths and slacks. 5) A method of attracting a managers attention to procedures for adjusting time, resources, or performance to meet target dates. He does so by analyzing the PERT network for areas of possible resource reallocation.

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CPM (CRITICAL PATH METHOD) KEY PM ( PROJECT MANAGEMENT ) TERMS Critical Path: The longest path (time) through the task network. The series of tasks (or single task) that dictates the calculated finish date of the project (in other words, when the last task in the critical path is done the project is done). -If shortened, it will decrease overall project completion time. -Activities outside the CP would not effect overall PC time. Slack Time: The amount of time a task can be delayed before the project finish date is delayed. -TS (Total Slack) can be either positive (+) or negative (-). -If Positive: indicates amount of time that the task can be delayed w/out delaying project finish date. -If Negative: indicates amount of time that must be saved so that the project finish date is not delayed. - TS = Latest Start – Earliest Start - A task w/ a TS = 0 is a Critical Task ( Float Time)

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CPM (CRITICAL PATH METHOD) KEY PM TERMS (CONT.) Crashing: The shifting of resources to reduce slack time so the critical path is as short as possible. Always practice caution when crashing projects. - Results: Creates interference and increases project costs. Dummy Activity: An imaginary activity w/ 0 duration. It is used to show either an indirect relationship between 2 tasks or to clarify the identities of the tasks. - In CPM, each activity must be uniquely defined by its beginning and ending points. - When two activities begin and end at the same time a dummy activity is put in place to tell them both apart. Dependencies: Links between project tasks. 3 Types: 1- Casual: Where one task must be completed before another can begin. ( Critical Path Schedules) 2- Resource: Where a task is limited by availability of resources. 3- Discretionary: Optional task sequence preferences may reflect organizational preferences. (not required) - Milestone: A significant task which represents a significant accomplishment within the project. (Special Attention/Control)

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CPM (CRITICAL PATH METHOD) KEY PM TERMS (CONT.) Constraints: Restrictions set on the start/finish date of a task. You can specify that a task must start on/finish no later than a particular date. 2 Types: 1- Flexible: As soon as possible (ASAP) / as late as possible (ALAP) do not have specific times allocated. Setting these times enables you to begin tasks ASAP/ALAP w/ the task ending before the project finish. -Must take into consideration all other factors.) 2- Inflexible: Must start on (MSO) / must finish on (MFO) require an allocated date, which controls the time completion of a task. -External factors: -Availability of Eq./Resources -Deadlines -Contract Milestones -Start/Finish Dates *Origin of CPM: introduced by US industry 1958 (DuPont Corporation/Remington-Rand)

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CPM (CRITICAL PATH METHOD) INTRODUCTION Valuable Management Tool Unlike PERT, analyzes only the longest likely chain of activities used to complete a project. - Earliest time a project can be completed when using the longest possible task durations. Deterministic, not probabilistic (PERT) - Events are determined by preceding events, not by probability. - Deterministic (Time estimates that are fairly certain.) - Probabilistic (Estimates of times that allow for variation.) Derives a normal completion time

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CPM (CRITICAL PATH METHOD) INTRODUCTION (CONT.) Unrealistic estimates = Unrealistic Plans. - All plans are estimates and are only as good as the task estimates. Adding tasks = Added Time & Cost. - If there are any additions/reductions in the overall project, the estimates must adapt to the change. Expectation Control (Benefits) - Time estimates (likely) - How long will it take? - How long will it take if it needs to be done sooner? - Cost estimates - How much will it cost? - How much will it cost if it needs to be done sooner. - Time and Cost if crashed

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CPM (CRITICAL PATH METHOD) ANALYSIS FACTORS Duration: The time it takes for an activity to be completed, given theplanned amount of material, labor and equipment. Effort: The amount (not time-oriented) of work required to finish the task. Duration may decrease by adding resources but the overall effort required will remain constant. Scope: A specific definition of what the project does and does not entail. This is critical to the ever- changing project environment as well as managing the expectations of not only customers, but workers. Resources: All available means utilized for the completion of the project. Such as equipment, employees, finances, etc.

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CPM (CRITICAL PATH METHOD) ASSUMPTIONS MADE BY CPM Key concept used by both CPM/PERT - small set of activities make up the longest path, controlling the entire project. -these critical activities could be identified and managed with the optimum level of efficiency (personnel, resources, etc.) -Non-critical activities -Pareto Phenomenon

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CPM (CRITICAL PATH METHOD) ASSUMPTIONS MADE BY CPM (CONT.) Other Assumptions: -Each task possesses a distinct start and finish point. -Each estimate can be mathematically calculated. -Tasks must be able to be arranged in a defined sequences that produces a pre-defined result. -Resources may be re-allocated as required per needs. -Cost & time have a direct relationship. -Time has 0 value.

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CPM (CRITICAL PATH METHOD) ASSUMPTIONS MADE BY CPM (CONT.) Crashing Project Assumption: - CPM assumes projects may be crashed: Finishing a task/project in a shorter amount of time using extra resources. -Impacts:-Shared Resources -Other Projects -Quality -Reliability

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CPM (CRITICAL PATH METHOD) COMPUTING ALGORITHMS (AOA) Activity-on-Arrow Diagram Circles = EventsTail Event = Initial Event Arrows = TasksHead Event = Final Event

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CPM (CRITICAL PATH METHOD) COMPUTING ALGORITHM (AOA) Necessary Information: -ES, the earliest time activity can start, assuming all preceding activities start as early as possible. -EF, the earliest time the activity can finish. -LS, the latest time the activity can start and not delay the project. -LF, the latest time the activity can finish and not delay the project. Used to Calculate: -Expected total project duration. -Slack time. (LS – ESorLF – EF) -The critical path.

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CPM (CRITICAL PATH METHOD) FORWARD AND BACKWARD PASS Forward Pass: -For each path, start at the left side of the diagram and work toward the right side. -For each beginning activity: ES = 0. -For each activity: ES + Activity Time = EF -For the following activity: ES = EF of preceding activity. Backward Pass: -For each path, start at the right side of the diagram and work toward the left side. -Use the largest EF as the LF for all ending activities. -For each activity: LS = LF – Activity Time. -For the preceding activity: LF = LS of following activity.

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S OURCES : http://krypton.mnsu.edu/~tony/courses/609/PERT /tech.html krypton.mnsu.edu/~tony/courses/609/ PERT / p ert 2.ppt

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PROJECT MANAGEMENT Approaches

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