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Chapter 13 Project Management

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Characteristics of a project: n A project is unique (not routine), n A project is composed of interrelated sub-projects/activities, n It is associated woth a large investment.

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What is Project Management n To schedule and control the progress and cost of a project.

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PERT/CPM: n Input: – Activities in a project; – Precedence relationships among tasks; – Expected performance times of tasks. n Output: – The earliest finish time of the project; – The critical path of the project; – The required starting time and finish time of each task; – Probabilities of finishing project on a certain date; –...

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PERT/CPM is supposed to answer questions such as: n How long does the project take? n What are the bottle-neck tasks of the project? n What is the time for a task ready to start? n What is the probability that the project is finished by some date? n How additional resources are allocated among the tasks?

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PERT Network: It is a directed network. Each activity is represented by a node. An arc from task X to task Y if task Y follows task X. A start node and a finish node are added to show project start and project finish. Every node must have at least one out- going arc except the finish node.

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Example of Foundry Inc., p.523 Activity Immediate Predecessors A- B- CA DB EC FC GD, E HF, G

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PERT Network for Foundry Inc. Example

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Example of a Hospital Project: ActivityImmediate Predecessor(s) A B CA DB EB FA GC HD IA JE, G, H KF, I, G

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PERT Network for Hospital Project

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Performance Time t of an Activity t is calculated as follows: where a=optimistic time, b=pessimistic time, m=most likely time. Note: t is also called the expected performance time of an activity.

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Variance of Activity Time t If a, m, and b are given for the optimistic, most likely, and pessimistic estimations of activity k, variance k 2 is calculated by the formula

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Variance, a Measure of Variation n Variance is a measure of variation of possible values around the expected value. n The larger the variance, the more spread- out the random values. n The square root of variance is called standard deviation.

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Example, Foundry Inc., p.525 Activityambtvariance A123 B234 C123 D246 E147 F129 G3411 H123

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Critical Path It is the longest path in the PERT network from the start to the end. It determines the duration of the project. It is the bottle-neck of the project.

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Time and Timings of an Activity: t=estimated performance time; ES=Earliest starting time; LS=Latest starting time; EF=Earliest finish time; LF=Latest finish time; s=Slack time of a task.

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Uses of Time and Timings n Earliest times (ES and EF) and latest times (LS and LF) show the timings of an activitys in/out of project. n ES and LS of an activity tell the time when the preparations for that activity must be done. n For calculating the critical path.

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Computing Earliest Times Step 1. Mark start node: ES=EF=0. Step 2. Repeatedly do this until finishing all nodes: For a node whose immediate predecessors are all marked, mark it as below: ES = Latest EF of its immediate predecessors, EF = ES + t Note: EF=ES at the Finish node.

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Computing Latest Times: Step 1. Mark Finish node: LF = LS = EF of Finish node. Step 2. Repeatedly do this until finishing all nodes: For a node whose immediate childrens are all marked with LF and LS, mark it as below: LF = Earliest LS of its immediate children, LS = LF – t Note: LS=LF at Start node.

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Computing Slack Times For each activity: – slack = LS – ES = LF – EF

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Foundry Inc. Example Calculate ES, EF, LS, LF, and slack for each activity of the Foundry Inc. example on its PERT network, given the data about the project as in the next slide.

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Example, Foundry Inc. Activityambtvariance A B234 3 C123 2 D E F G H

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H2 ES= LS= EF= LF= A2 ES= LS= EF= LF= B3 ES= LS= EF= LF= F3 ES= LS= EF= LF= G5 ES= LS= EF= LF= ES=EF= LS=LF= ES=EF= LS=LF= StartFinish slack= Network for Foundry Inc. D4 ES= LS= EF= LF= slack= C2 ES= LS= EF= LF= slack= E4 ES= LS= EF= LF= slack=

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Example of Hospital Project: n Calculate ES, EF, LF, LS and slack of each activity in this project on its PERT network, given the data about the project as in the next slide.

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Example: A Hospital Project ActivityImmediate Predecessor(s) Performance time t (weeks) A12 B9 CA10 DB EB24 FA10 GC35 HD40 IA15 JE, G, H4 KF, I, G6

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J4 ES= LS= EF= LF= A12 ES= LS= EF= LF= B9 ES= LS= EF= LF= G35 ES= LS= EF= LF= H40 ES= LS= EF= LF= ES=EF= LS=LF= ES=EF= LS=LF= StartFinish slack= A Hospital Project E24 ES= LS= EF= LF= slack= F10 ES= LS= EF= LF= slack= D10 ES= LS= EF= LF= slack= I15 ES= LS= EF= LF= slack= C10 ES= LS= EF= LF= slack= K6 ES= LS= EF= LF= slack=

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Slack and the Critical Path The slack of any activity on the critical path is zero. If an activitys slack time is zero, then it is must be on the critical path.

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Critical Path, Examples What is the critical path in the Foundry Inc. example? What is the critical path in the Hospital project example?

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Calculate the Critical Path: Step 1. Mark earliest times (ES, EF) on all nodes, forward; Step 2. Mark latest times (LF, LS) on all nodes, backward; Step 3. Calculate slack of each activity; Step 4. Identify the critical path that contain the activities with zero slack.

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D3 ES= LS= EF= LF= A2 ES= LS= EF= LF= B7 ES= LS= EF= LF= C4 ES= LS= EF= LF= E2 ES= LS= EF= LF= ES=EF= LS=LF= ES=EF= LS=LF= Start Finish slack= Calculate the critical path

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Example: Draw diagram and find critical path ActivityPredecessort A-5 B-3 C-6 DB4 EA8 FC 12 G A,D7 H E,G6 IG5

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Example: Draw diagram and find critical path ActivityPredecessort A-3 B-4 CA6 DB5 E A,B8 FC2 G D,E,F4 H E,F5

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Solved Problem 13-1&2, p Calculate the Critical Path ActivityambImmediate predecessor A123- B234- C456A D8910B E258C, D F456B G123E

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Steps for Solving 13-1&2 1. Calculate activity performance time t for each activity; 2. Draw the PERT network; 3. Calculate ES, EF, LS, LF and slack of each activity on PERT network; 4. Identify the critical path.

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Probabilities in PERT Since the performance time t of an activity is from estimations, its actual performance time may deviate from t; And the actual project completion time may vary, therefore.

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Probabilistic Information for Management n The expected project finish time and the variance of project finish time; n Probability the project is finished by a certain date.

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Project Completion Time and its Variance The expected project completion time T: T = earliest completion time of the project. The variance of T, T 2 : T 2 = (variances of activities on the critical path)

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Example, Foundry Inc. Activityambtvariance A B234 3 C123 2 D E F G H Critical path: A-C-E-G-H Project completion time, T = Variance of T, T 2 =

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Solved Problem 13-1&2, p Project completion time and variance Activityambtvariance A B2343 C4565 D E25851 F4565 G1232 Critical path: B-D-E-G Project completion time, T = Variance of T, T 2 =

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Probability Analysis To find probability of completing project within a particular time x: 1. Find the critical path, expected project completion time T and its variance T Find probability from a normal distribution table (as on page 698).

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The Idea of the Approach The table on p.698 gives the probability P(z<=Z) where z is a random variable with standard normal distribution, i.e. z N(0,1); Z is a specific value. P(project finishes within x days)

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Notes (1) P(project is finished within x days) = P(z<=Z) P(project is not finished within x days) = 1 P(project finishes within x days) = 1 P(z<=Z)

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Notes (2) If x

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Example of Foundry Inc. p Project completion time T=15 weeks. Variance of project time, T 2 = We want to find the probability that project is finished within 16 weeks. Here, x=16, and So, P(project is finished within 16 weeks) = P(z<=Z) = P(z<=0.57) =

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Examples of probability analysis If a projects expected completing time is T=246 days with its variance T 2 =25, then what is the probability that the project – is actually completed within 246 days? – is actually completed within 240 days? – is actually completed within 256 days? – is not completed by the 256 th day?

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A Comprehensive Example n Given the data of a project as in the next slide, answer the following questions: – What is PERT network like for this project? – What is the critical path? – Activity E will be subcontracted out. What is earliest time it can be started? What is time it must start so that it will not delay the project? – What is probability that the project can be finished within 10 weeks? – What is the probability that the project is not yet finished after 12 weeks?

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Data of One-more-example: ActivityPredecessoramb A-123 B CA DA234 EB,D024

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Example (cont.) ActivityPredecessort v A B CA DA EB,D20.444

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D3 ES= LS= EF= LF= A2 ES= LS= EF= LF= B7 ES= LS= EF= LF= C4 ES= LS= EF= LF= E2 ES= LS= EF= LF= ES=EF= LS=LF= ES=EF= LS=LF= Start Finish slack= Calculate the critical path

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Solving on QM n Critical path, ES, LS, EF, LF, and slack can be calculated by QM for Windows. We need to enter activities times and immediate predecessors. n But QM does not provide the network.

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