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Chapter 9 Project Management. Lecture Outline Project Planning Project Scheduling Project Control CPM/PERT Probabilistic Activity Times Microsoft Project.

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Presentation on theme: "Chapter 9 Project Management. Lecture Outline Project Planning Project Scheduling Project Control CPM/PERT Probabilistic Activity Times Microsoft Project."— Presentation transcript:

1 Chapter 9 Project Management

2 Lecture Outline Project Planning Project Scheduling Project Control CPM/PERT Probabilistic Activity Times Microsoft Project Project Crashing and Time-Cost Trade-off Copyright 2011 John Wiley & Sons, Inc. 9-2

3 Project Management Process Project unique, one-time operational activity or effort 9-3 Copyright 2011 John Wiley & Sons, Inc.

4 Project Management Process Copyright 2011 John Wiley & Sons, Inc. 9-4

5 Project Management Process Copyright 2011 John Wiley & Sons, Inc. 9-5

6 Project Elements Objective Scope Contract requirements Schedules Resources Personnel Control Risk and problem analysis Copyright 2011 John Wiley & Sons, Inc. 9-6

7 Project Team and Project Manager Project team made up of individuals from various areas and departments within a company Matrix organization a team structure with members from functional areas, depending on skills required Project manager most important member of project team Copyright 2011 John Wiley & Sons, Inc. 9-7

8 Scope Statement Scope statement a document that provides an understanding, justification, and expected result of a project Statement of work written description of objectives of a project Copyright 2011 John Wiley & Sons, Inc. 9-8

9 Work Breakdown Structure Work breakdown structure (WBS) Breaks a project into components, subcomponents, activities, and tasks Copyright 2011 John Wiley & Sons, Inc. 9-9

10 Copyright 2011 John Wiley & Sons, Inc Work Breakdown Structure for Computer Order Processing System Project

11 Responsibility Assignment Matrix Organizational Breakdown Structure (OBS) a chart that shows which organizational units are responsible for work items Responsibility Assignment Matrix (RAM) shows who is responsible for work in a project Copyright 2011 John Wiley & Sons, Inc. 9-11

12 Copyright 2011 John Wiley & Sons, Inc Responsibility Assignment Matrix

13 Global and Diversity Issues in Project Management Global project teams are formed from different genders, cultures, ethnicities, etc. Diversity among team members can add an extra dimension to project planning Cultural research and communication are important elements in the planning process Copyright 2011 John Wiley & Sons, Inc. 9-13

14 Project Scheduling Steps Define activities Sequence activities Estimate time Develop schedule Techniques Gantt chart CPM/PERT Software Microsoft Project Copyright 2011 John Wiley & Sons, Inc. 9-14

15 Gantt Chart Graph or bar chart Bars represent the time for each task Bars also indicate status of tasks Provides visual display of project schedule Slack amount of time an activity can be delayed without delaying the project Copyright 2011 John Wiley & Sons, Inc. 9-15

16 Example of Gantt Chart Copyright 2011 John Wiley & Sons, Inc |||||||||| Activity Design house and obtain financing Lay foundation Order and receive materials Build house Select paint Select carpet Finish work Month

17 Project Control Time management Cost management Performance management Earned Value Analysis – standard procedure to numerically measure a project’s progress forecast its completion date and cost measure schedule and budget variation Copyright 2011 John Wiley & Sons, Inc. 9-17

18 Project Control Quality management Communication Enterprise project management Copyright 2011 John Wiley & Sons, Inc. 9-18

19 CPM/PERT Critical Path Method (CPM) DuPont & Remington-Rand Deterministic task times Activity-on-node network construction Project Evaluation and Review Technique (PERT) US Navy and Booz, Allen & Hamilton Probabilistic task time estimates Activity-on-arrow network construction Copyright 2011 John Wiley & Sons, Inc. 9-19

20 Project Network Activity-on-node (AON) nodes represent activities arrows show precedence relationships Activity-on-arrow (AOA) arrows represent activities nodes are events for points in time Event completion or beginning of an activity in a project Copyright 2011 John Wiley & Sons, Inc BranchNode

21 AOA Project Network for a House Copyright 2011 John Wiley & Sons, Inc Lay foundation Design house and obtain financing Order and receive materials Dummy Finish work Select carpet Select paint Build house

22 Concurrent Activities Dummy two or more activities cannot share same start and end nodes Copyright 2011 John Wiley & Sons, Inc Lay foundation Order material (a)Incorrect precedence relationship (b)Correct precedence relationship 3 42 Dummy Lay foundation Order material 1 20

23 AON Network for House Building Project Copyright 2011 John Wiley & Sons, Inc Start Design house and obtain financing Order &receive materials Select paint Select carpet Lay foundation Build house Finish work Activity Number Activity Time

24 Critical Path Copyright 2011 John Wiley & Sons, Inc  Critical path Longest path through a network Minimum project completion time A: = 9 months B: = 8 months C: = 8 months D: = 7 months Start

25 Activity Start Times Copyright 2011 John Wiley & Sons, Inc Start Start at 3 monthsStart at 6 months Start at 5 months Finish at 9 months Finish

26 Node Configuration Copyright 2011 John Wiley & Sons, Inc Activity duration Activity number Earliest start Latest start Latest finish Earliest finish

27 Activity Scheduling Earliest start time (ES) earliest time an activity can start ES = maximum EF of immediate predecessors Forward pass starts at beginning of CPM/PERT network to determine earliest activity times Earliest finish time (EF) earliest time an activity can finish earliest start time plus activity time EF= ES + t Copyright 2011 John Wiley & Sons, Inc. 9-27

28 Earliest Activity Start and Finish Times Copyright 2011 John Wiley & Sons, Inc Start Design house and obtain financing Select paint Lay foundation Select carpet Build house Finish work Order and receive materials

29 Activity Scheduling Latest start time (LS) Latest time an activity can start without delaying critical path time LS= LF - t Latest finish time (LF) latest time an activity can be completed without delaying critical path time LF = minimum LS of immediate predecessors Backward pass Determines latest activity times by starting at the end of CPM/PERT network and working forward Copyright 2011 John Wiley & Sons, Inc. 9-29

30 Latest Activity Start and Finish Times Copyright 2011 John Wiley & Sons, Inc Start Design house and obtain financing Select paint Lay foundation Select carpet Build house Finish work Order and receive materials

31 Activity Slack Copyright 2011 John Wiley & Sons, Inc * Critical Path 09988* * * *1 Slack SEFLFESLSActivity

32 Probabilistic Time Estimates Beta distribution probability distribution traditionally used in CPM/PERT Copyright 2011 John Wiley & Sons, Inc a = optimistic estimate m = most likely time estimate b = pessimistic time estimate where Mean (expected time): t = a + 4 m + b 6 Variance:  2 = 2 b - a 6

33 Examples of Beta Distributions Copyright 2011 John Wiley & Sons, Inc P(time) Time amtbamtb m = t Time ba

34 Project with Probabilistic Time Estimates Copyright 2011 John Wiley & Sons, Inc Finish 2 3,6,9 3 1,3,5 1 6,8,10 5 2,3,4 6 3,4,5 4 2,4,12 7 2,2,2 8 3,7,11 9 2,4,6 10 1,4,7 11 1,10,13 Equipment installation System development Position recruiting Equipment testing and modification Manual testing Job Training Orientation System training System testing Final debugging System changeover Start

35 Activity Time Estimates Copyright 2011 John Wiley & Sons, Inc TIME ESTIMATES (WKS)MEAN TIMEVARIANCE ACTIVITY ambt б 2

36 Activity Early, Late Times & Slack Copyright 2011 John Wiley & Sons, Inc ACTIVITY t б  ESEFLSLFS

37 Earliest, Latest, and Slack Copyright 2011 John Wiley & Sons, Inc. 9-37

38 Total Project Variance Copyright 2011 John Wiley & Sons, Inc  2 = б б б б 11 2  = = 6.89 weeks

39 CPM/PERT With OM Tools Copyright 2011 John Wiley & Sons, Inc. 9-39

40 Probabilistic Network Analysis Copyright 2011 John Wiley & Sons, Inc Determine probability that project is completed within specified time where  = t p = project mean time  =project standard deviation x =proposed project time Z =number of standard deviations that x is from the mean Z = x -  

41 Normal Distribution of Project Time Copyright 2011 John Wiley & Sons, Inc  = t p Time x ZZ Probability

42 Southern Textile Copyright 2011 John Wiley & Sons, Inc What is probability that project is completed within 30 weeks?  2 = 6.89 weeks  = 6.89  = 2.62 weeks Z = = = 1.91 x -   From Table A.1, (appendix A) a Z score of 1.91 corresponds to a probability of Thus P(30) = =  = 25 Time (weeks) x = 30 P( x  30 weeks)

43 Southern Textile Copyright 2011 John Wiley & Sons, Inc What is probability that project is completed within 22 weeks?  2 = 6.89 weeks  = 6.89  = 2.62 weeks Z = = = x -   From Table A.1, (appendix A) a Z score of 1.14 corresponds to a probability of Thus P(22) = =  = 25 Time (weeks) x = 22 P( x  22 weeks) =

44 Microsoft Project Popular software package for project management and CPM/PERT analysis Relatively easy to use Copyright 2011 John Wiley & Sons, Inc. 9-44

45 Microsoft Project Copyright 2011 John Wiley & Sons, Inc Click on “Tasks” First step; Start Date

46 Microsoft Project Copyright 2011 John Wiley & Sons, Inc Precedence relationships Click on “Format” then ”Timescale” to scale Gantt chart. Gantt chart; click on “View” to activate Create precedence relationships; click on predecessor activity, then holding “Ctrl” Key, click on successor activity.

47 Microsoft Project Copyright 2011 John Wiley & Sons, Inc Click on “View” then Network Diagram Critical path in red

48 Microsoft Project – Zoom View Copyright 2011 John Wiley & Sons, Inc. 9-48

49 Microsoft Project – Task Information Copyright 2011 John Wiley & Sons, Inc Enter % completion

50 Microsoft Project – Degree of Completion Copyright 2011 John Wiley & Sons, Inc Activities 1, 2 and 3 100% complete Black bars show degree of completion

51 PERT Analysis with Microsoft Project Copyright 2011 John Wiley & Sons, Inc Click on PERT Entry Sheet to enter 3 time estimates Click on PERT calculator to compute activity duration

52 PERT Analysis with Microsoft Project Copyright 2011 John Wiley & Sons, Inc. 9-52

53 PERT Analysis with Microsoft Project Copyright 2011 John Wiley & Sons, Inc. 9-53

54 Project Crashing Crashing reducing project time by expending additional resources Crash time an amount of time an activity is reduced Crash cost cost of reducing activity time Goal reduce project duration at minimum cost Copyright 2011 John Wiley & Sons, Inc. 9-54

55 Project Network – Building a House Copyright 2011 John Wiley & Sons, Inc

56 Normal Time and Cost vs. Crash Time and Cost Copyright 2011 John Wiley & Sons, Inc $7,000 – $6,000 – $5,000 – $4,000 – $3,000 – $2,000 – $1,000 – – ||||||| Weeks Normal activity Normal time Normal cost Crash time Crashed activity Crash cost Slope = crash cost per week

57 Project Crashing Copyright 2011 John Wiley & Sons, Inc TOTAL NORMALCRASHALLOWABLECRASH TIMETIMENORMALCRASHCRASH TIMECOST PER ACTIVITY(WEEKS)(WEEKS)COSTCOST(WEEKS)WEEK 1127$3,000$5,0005$ ,0003, ,0007,00013, ,00071,00037, , , ,00022,00017,000 $75,000$110,700

58 Copyright 2011 John Wiley & Sons, Inc Project Duration: 36 weeks $400 $500 $3000 $7000 $200 $ FROM … $400 $500 $3000 $7000 $200 $ Project Duration: 31 weeks Additional Cost: $2000 TO…

59 Time-Cost Relationship Copyright 2011 John Wiley & Sons, Inc Crashing costs increase as project duration decreases Indirect costs increase as project duration increases Reduce project length as long as crashing costs are less than indirect costs

60 Time-Cost Tradeoff Copyright 2011 John Wiley & Sons, Inc Cost ($) Project duration CrashingTime Minimum cost = optimal project time Total project cost Indirect cost Direct cost

61 Copyright 2011 John Wiley & Sons, Inc Copyright 2011 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein.


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