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Chapter 14 Project Planning & Acquisition. Advanced Organizer.

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Presentation on theme: "Chapter 14 Project Planning & Acquisition. Advanced Organizer."— Presentation transcript:

1 Chapter 14 Project Planning & Acquisition

2 Advanced Organizer

3 Chapter Objective Describe the main elements of a project Describe the management tools used in project planning (scheduling techniques) Steps in a project life cycle Describe the different types of project contracts

4 Characteristics of a Project A collection of tasks aimed toward a single set of objectives with finite life span and budget A one-of-a-kind activity that has definite starting and ending points

5 Essential Considerations Time (project schedule) Cost (dollar & other resources) Performance (extent the objectives are achieved)

6 Project Proposal Process Project Initiating Phase Description of what is to be accomplished Proposal or estimate of time and cost

7 Keys of Successful Project Proposal Prepare in advance (pro-active) –Technical capabilities/skills/skill mix –Assessment of future technologies –Assessment of future markets Maintain new business groups –Preliminary bid decision Start early on developing a response

8 Proposal Preparation Identify new business opportunity Prelim. bid decision Assess and plan the new business acquisition Develop the new opportunity Bid decision RFP Develop proposal & pricing Negotiate contract Win

9 Proposal Preparation Proposal manager Proposal team (from functional dept.) Kickoff meeting Department Manager Sales Representative

10 Proposal Contents Management proposal Technical proposal Cost proposal

11 Project Planning Elements: Scope Schedule Budget Concerns: Quality of the deliverables Quality of the project process

12 Project Planning -- Scope Statement of work (SOW) –Problem or opportunity –Goal –Objectives Outcome, Time frame, Measure, Action –Success criteria –Assumptions –Risk –Obstacles

13 Project Planning -- Schedule Work Breakdown Structure (WBS) –Level-by-level subdivision of work to be performed in a contract –Common framework or outline –Complicated task is subdivided into several smaller tasks –Process continued until task can no longer be subdivided

14 Project Planning -- Schedule Major Fan Rig Minor Fan Rig WBS Functional Organization Manufacturing Engineering Design Mechanical Analytical Drafting Testing Cost Account

15 Project Planning -- Schedule Cost account consists of 1 or more work packages Work package incorporates: –Tasks to be performed –Schedule –Budget –Work package manager Work packages provide the framework of project reporting and control

16 Milestone Schedule –Key dates –May include entrance and exit criteria for each milestone Project Planning Tools – Milestone Schedule

17  Production release  Final design review  System test complete  Prototype complete  90% design release  Prelim. design review  Complete project plan  Project go-ahead JMAMFJDNOSAJJMAMFJ Milestone

18 Project Planning Tools – Gantt Chart Popular tool for project scheduling Graph with bar for representing the time for each task Provides visual display of project schedule Also shows slack for activities –(amount of time activity can be delayed without delaying project)

19 Month    Activity Design house & obtain financing Lay foundation Order & receive materials Build house Select paint Select carpet Finish work Project Planning Tools – Gantt Chart

20 Project Planning Tools – CPM/PERT Critical Path Method (CPM) –DuPont (1958) –deterministic task times –activity-on-node network construction Project Eval. & Review Technique (PERT) –US Navy, Booz, Allen & Hamilton (1958) –multiple task time estimates –activity-on-arrow network construction

21 The Project Network Network consists of branches & nodes 132 Branch Node

22 Network Construction In AON, nodes represent activities & arrows show precedence relationships In AOA, arrows represent activities & nodes are events for points in time An event is the completion or beginning of an activity A dummy shows precedence for two activities with same start & end nodes

23 Guidelines for dividing tasks into activities Length of each activity should be ~ % of the length of the project; Exception for critical activities; # of activities should be less than 250

24 Estimating Duration of Project Activities Stochastic Approach (past data available) Deterministic Approach (past data available, variability negligible) Modular Technique (decomposing activity into sub-activities) Benchmark Job Technique (repetitions of activities) Parametric Technique (cause-effect)

25 A House Project Task Follows Task(s) Duration (Weeks)Task Description Manning Level AStart 1.0 Clear site 3 BStart 0.6 Obtain lumber and other basic materials 1 CStart 2.0 Obtain other materials and components 1 DB 2.0 Prefabricate wall panels 4 EB 0.9 Prefabricate roof trusses 3 FA, B 1.0 Form and pour footings and floor slab 3 GD, F 0.3 Erect wall panels 4 HE, G 0.2 Erect roof trusses 4 JC, H 0.5 Complete roof 3 KJ 2.0 Finish interior 4 LJ 1.0 Finish exterior 2 ML 0.4 Clean up site 1 NK, M 0.2 Final inspection and approval 1

26 Project Network for a House (AOA) 1 A B 0.6 C D 2.0 E 0.9 F 1.0 G 0.3 H 0.2 J 0.5 K 2.0 L 1.0 M 0.4 N 0.2

27 Concurrent Activities 1 Dummy A 1 2 A B B Incorrect precedence relationship 32 Correct precedence relationship

28 Project Network for a House (AON) Start End A 1.0 A 1.0 B 0.6 C 2.0 D 2.0 E 0.9 F 1.0 G 0.3 H 0.2 J 0.5 K 2.0 L 1.0 M 0.4 N 0.2

29 Critical Path A path is a sequence of connected activities running from start to end node in network The critical path is the path with the longest duration in the network Project cannot be completed in less than the time of the critical path

30 Critical Path (AOA) 1 A B 0.6 C D 2.0 E 0.9 F 1.0 G 0.3 H 0.2 J 0.5 K 2.0 L 1.0 M 0.4 N = 5.8 weeks

31 Critical Path (AON) Start End A 1.0 A 1.0 B 0.6 C 2.0 D 2.0 E 0.9 F 1.0 G 0.3 H 0.2 J 0.5 K 2.0 L 1.0 M 0.4 N 0.2 B-D-G-H-J-K-N = 5.8 weeks

32 Early Times (House building example) ES - earliest time activity can start Forward pass starts at beginning of CPM/PERT network to determine ES times EF = ES + activity time  ES ij = maximum (EF i )  EF ij = ES ij + t ij

33 Late Times LF - latest time activity needs to finish & not delay project Backward pass starts at end of CPM/PERT network to determine LF times LS = LF - activity time  LF ij = minimum (LS j )  LS ij = LF ij - t ij

34 Example Determining ES, EF, LS, LF B A C Dummy G F D E

35 Example Determining ES, EF, LS, LF A, 3 B, 2 0 C, 1 E, 3 Dummy G, 1 F, 1 D, 1 ( ) ES=0, EF=3 ( ) ES=3, EF=5 ( ) ES=3, EF=4 ( ) ES=5, EF=5 ( ) ES=5, EF=8 ( ) ES=5, EF=6 ( ) ES=6, EF=7 ( ) ES=8, EF=9 LS=8, LF=9 LS=7, LF=8 LS=5, LF=8 LS=6, LF=7 LS=5, LF=5 LS=4, LF=5 LS=3, LF=5 LS=0, LF=3

36 Activity Slack Activities on critical path have ES=LS & EF=LF Activities not on critical path have slack  S ij = LS ij - ES ij  S ij = LF ij - EF ij

37 Example: Activity Slack Data Slack(S)EFLFESLSActivity

38 Example: Activity Slack Data

39 Probabilistic Time Estimates Reflect uncertainty of activity times Beta distribution is used in PERT a = optimistic estimate m = most likely time estimate b = pessimistic time estimate Mean (expected time): Standard Deviation:

40 Examples of Beta Distribution m = t b a P (time) t a b m t a b m

41 PERT Example Equipment installation Manual Testing Dummy System Training Dummy System Testing Orientation Position recruiting System development Equipment testing and modification Final debugging System changeover Job training

42 PERT Example Activity Information Time estimates (wks)Mean Time Variance Activityabct  2

43 PERT Example Network with Times ( ) ES=8, EF=8 LS=9, LF=9 ( ) ES=6, EF=9 LS=6, LF=9 ( ) ES=3, EF=5 LS=14, LF=16 ( ) ES=0, EF=3 LS=2, LF=5 ( ) ES=0, EF=6 LS=0, LF=6 ( ) ES=0, EF=8 LS=1, LF= ( ) ES=3, EF=7 LS=5, LF=9 4 ( ) ES=9, EF=13 LS=12, LF=16 ( ) ES=9, EF=16 LS=9, LF=16 ( ) ES=13, EF=13 LS=16 LF=16 ( ) ES=16, EF=25 LS=16 LF=25 ( ) ES=13, EF=25 LS=16 LF=25 ( ) ES=8, EF=13 LS=16 LF=

44 PERT Example Network with Times ( ) ES=8, EF=8 LS=9, LF=9 ( ) ES=6, EF=9 LS=6, LF=9 ( ) ES=3, EF=5 LS=14, LF=16 ( ) ES=0, EF=3 LS=2, LF=5 ( ) ES=0, EF=6 LS=0, LF=6 ( ) ES=0, EF=8 LS=1, LF= ( ) ES=3, EF=7 LS=5, LF=9 4 ( ) ES=9, EF=13 LS=12, LF=16 ( ) ES=9, EF=16 LS=9, LF=16 ( ) ES=13, EF=13 LS=16 LF=16 ( ) ES=16, EF=25 LS=16 LF=25 ( ) ES=13, EF=25 LS=16 LF=25 ( ) ES=8, EF=13 LS=16 LF=

45 PERT Example Early And Late Times Activityt  2 ESEFLSLFS

46 Project Variance Project variance is the sum of variances on the critical path

47 Probabilistic Network Analysis Determine probability that project is completed within specified time  = t p = project mean time  = project standard deviation x = proposed project time z = number of standard deviations x is from mean

48 Normal Distribution of Project Time  = t p x Probability Time f(x) ZZ

49 Probabilistic Analysis Example What is the probability that the project is completed within 30 weeks?  30

50 What is the probability that the project is completed within 22 weeks? Probabilistic Analysis Example  22

51 Project Planning Tools Resource Allocation –Managing the utilization of limited resources –Using slacks

52 A House Project Task Follows Task(s) Duration (Weeks)Task Description Manning Level AStart 1.0 Clear site 3 BStart 0.6 Obtain lumber and other basic materials 1 CStart 2.0 Obtain other materials and components 1 DB 2.0 Prefabricate wall panels 4 EB 0.9 Prefabricate roof trusses 3 FA, B 1.0 Form and pour footings and floor slab 3 GD, F 0.3 Erect wall panels 4 HE, G 0.2 Erect roof trusses 4 JC, H 0.5 Complete roof 3 KJ 2.0 Finish interior 4 LJ 1.0 Finish exterior 2 ML 0.4 Clean up site 1 NK, M 0.2 Final inspection and approval 1

53 Critical Path (AON) Start End A 1.0 A 1.0 B 0.6 C 2.0 D 2.0 E 0.9 F 1.0 G 0.3 H 0.2 J 0.5 K 2.0 L 1.0 M 0.4 N 0.2 B-D-G-H-J-K-N = 5.8 weeks

54 A House Project Task Duration (Weeks)ESEFLSLFS Manning Level A B C D E F G H J K L M N

55 A House Project Worker-level Profile (ES) A33333 B111 C D E3333 F33333 G4 H4 J333 K L22222 M11 N

56 A House Project Worker-level Profile (ES)

57 A House Project Worker-level Profile (Adjusted) A33333 B111 C D E3333 F33333 G4 H4 J333 K L22222 M11 N

58 A House Project Worker-level Profile (Adjusted)

59 Types of Contracts Fixed-Price Contracts –Fixed-price with escalation contracts –Fixed-price, re-determinable contracts –Fixed-price incentive contracts Cost Type Contracts –Cost plus incentive fee contracts –Cost plus fixed-fee contracts –Time & materials contracts –Letter contract


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