1. Chapter 14 Project Planning & Acquisition*
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Chapter 14 Project Planning & Acquisition *

2. *
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Advanced Organizer *

3. Chapter Objective Describe the main elements of a project*
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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*
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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*
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Essential Considerations
Time (project schedule)
Cost (dollar & other resources)
Performance (extent the objectives are achieved) *

6. Project Proposal Process Project Initiating Phase*
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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*
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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*
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Proposal Preparation
Identify
new business
opportunity
Prelim. bid
decision
Assess and plan the new business acquisition
Develop the new opportunity
Bid
decision
Develop proposal & pricing
Win
Negotiate contract
RFP *

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

10. Proposal Contents Management proposal Technical proposal Cost proposal*
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Proposal Contents
Management proposal
Technical proposal
Cost proposal *

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

12. Project Planning -- Scope*
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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*
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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*
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Project Planning -- Schedule
Minor Fan Rig
WBS
Functional Organization
Manufacturing
Engineering
Design
Mechanical
Analytical
Drafting
Testing
Cost Account *

15. Project Planning -- Schedule*
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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. Project Planning Tools – Milestone Schedule*
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Project Planning Tools – Milestone Schedule
Milestone Schedule
Key dates
May include entrance and exit criteria for each milestone *

17. Project Planning Tools – Milestone Schedule*
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Project Planning Tools – Milestone Schedule
2008
2009
Milestone J F M A M J J A S O N D J F M A M J
Project go-ahead 
Complete project plan 
Prelim. design review 
90% design release 
Prototype complete 
System test complete 
Final design review 
Production release  *

18. Project Planning Tools – Gantt Chart*
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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. Project Planning Tools – Gantt Chart*
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Project Planning Tools – Gantt Chart
Month 2 4 10 6 8 3 1 5 7 9 
Activity
Design house &
obtain financing
Lay foundation
Order & receive
materials
Build house
Select paint
Select carpet
Finish work *

20. Project Planning Tools – CPM/PERT*
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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 Node 1 2 3*
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The Project Network
Network consists of branches & nodes
Node 1 2 3
Branch *

22. *
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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*
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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*
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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*
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A House Project
Task
Follows
Task(s)
Duration
(Weeks)
Task Description
Manning Level A
Start
1.0
Clear site 3 B
0.6
Obtain lumber and other basic materials 1 C
2.0
Obtain other materials and components D
Prefabricate wall panels 4 E
0.9
Prefabricate roof trusses F
A, B
Form and pour footings and floor slab G
D, F
0.3
Erect wall panels H
E, G
0.2
Erect roof trusses J
C, H
0.5
Complete roof K
Finish interior L
Finish exterior 2 M
0.4
Clean up site N
K, M
Final inspection and approval *

26. Project Network for a House (AOA)*
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Project Network for a House (AOA) 2 F
1.0 A
1.0 K
2.0 N
0.2 3 B
0.6 J
0.5 1 4 D
2.0 G
0.3 H
0.2 5 6 7 9 10 8 L
1.0 M
0.4 E
0.9 C
2.0 *

27. Concurrent Activities*
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Concurrent Activities 2 2 A
Dummy A 1 1 3 B B
Incorrect
precedence
relationship
Correct
precedence
relationship *

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

29. *
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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) 1-3-4-5-6-7-9-10*
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Critical Path (AOA) 1 A
1.0 2 3 B
0.6 C
2.0 4 5 6 7 10 9 8 D E
0.9 F G
0.3 H
0.2 J
0.5 K L M
0.4 N
= 5.8 weeks *

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

32. Early Times (House building example)*
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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
ESij = maximum (EFi)
EFij = ESij + tij *

33. *
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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
LFij = minimum (LSj)
LSij = LFij - tij *

34. Example Determining ES, EF, LS, LF*
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Example Determining ES, EF, LS, LF 1 2 4 6 7 3 5 B A C
Dummy G F D E *

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

36. Activity Slack Activities on critical path have ES=LS & EF=LF*
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Activity Slack
Activities on critical path have ES=LS & EF=LF
Activities not on critical path have slack
Sij = LSij - ESij
Sij = LFij - EFij *

37. Example: Activity Slack Data*
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Example: Activity Slack Data
Slack(S) EF LF ES LS
Activity
6-7
5-6
4-6
4-5
3-4
2-4
2-3
1-2 3 9 8 7 6 5 4 3 1 1 *

38. Example: Activity Slack Data*
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Example: Activity Slack Data 1 3
6-7
5-6
4-6
4-5
3-4
2-4
2-3
1-2 9 8 7 6 5 4
Slack(S) EF LF ES LS
Activity *

39. Probabilistic Time Estimates*
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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*
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Examples of Beta Distribution
P (time)
P (time) a b m a b m t t
P (time)
m = t b a *

41. PERT Example 1 2 4 6 7 3 5 9 8 Equipment testing and modification*
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PERT Example 1 2 4 6 7 3 5 9 8
Manual Testing
Dummy
System Training
System Testing
Orientation
Position recruiting
System development
Equipment testing and modification
Final debugging
System changeover
Job training
Equipment installation *

42. PERT Example Activity Information*
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PERT Example Activity Information
Time estimates (wks) Mean Time Variance
Activity a b c t 2 *

43. PERT Example Network with Times*
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PERT Example Network with Times 1 2 4 6 7 3 5 9 8
( )
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=9
ES=3, EF=7
LS=5, LF=9
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
ES=8, EF=13
LS=16 LF=21 *

44. PERT Example Network with Times*
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PERT Example Network with Times 1 2 4 6 7 3 5 9 8
( )
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=9
ES=3, EF=7
LS=5, LF=9
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
ES=8, EF=13
LS=16 LF=21 *

45. PERT Example Early And Late Times*
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PERT Example Early And Late Times
Activity t 2 ES EF LS LF S *

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

47. Probabilistic Network Analysis*
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Probabilistic Network Analysis
Determine probability that project is completed within specified time
 = tp = 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*
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Normal Distribution of Project Time
Probability
Time
f(x) Z
 = tp x *

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

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

51. Project Planning Tools*
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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*
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A House Project
Task
Follows
Task(s)
Duration
(Weeks)
Task Description
Manning Level A
Start
1.0
Clear site 3 B
0.6
Obtain lumber and other basic materials 1 C
2.0
Obtain other materials and components D
Prefabricate wall panels 4 E
0.9
Prefabricate roof trusses F
A, B
Form and pour footings and floor slab G
D, F
0.3
Erect wall panels H
E, G
0.2
Erect roof trusses J
C, H
0.5
Complete roof K
Finish interior L
Finish exterior 2 M
0.4
Clean up site N
K, M
Final inspection and approval *

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

54. A House Project Task Duration (Weeks) ES EF LS LF S Manning Level A*
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A House Project
Task
Duration
(Weeks) ES EF LS LF S
Manning Level A
1.0
0.6
1.6 3 B 1 C
2.0
1.1
3.1 D
2.6 4 E
0.9
1.5
2.9
1.4 F G
0.3 H
0.2 J
0.5
3.6 K
5.6
4.6 L
4.2
5.2 2 M
0.4
5.0 N
5.8 *

55. A House Project Worker-level Profile (ES)*
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A House Project Worker-level Profile (ES) 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 A B C D E F G H J K L M N 6 *

56. A House Project Worker-level Profile (ES)*
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A House Project Worker-level Profile (ES) *

57. A House Project Worker-level Profile (Adjusted)*
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A House Project Worker-level Profile (Adjusted) 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 A B C D E F G H J K L M N 7 6 *

58. A House Project Worker-level Profile (Adjusted)*
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A House Project Worker-level Profile (Adjusted) *

59. Types of Contracts Fixed-Price Contracts Cost Type Contracts*
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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 *