1. Scheduling and Budgeting
Week 6
IBS 540

2. Scheduling
A schedule is the conversion of a project action plan into an operating timetable
It serves as the basis for monitoring and controlling project activity
Taken together with the plan and budget, it is probably the major tool for the management of projects

3. Scheduling
In a project environment, the scheduling function is more important than it would be in an ongoing operation
Projects lack the continuity of day-to-day operations and often present much more complex problems of coordination

4. Scheduling
The basic approach of all scheduling techniques is to form a network of activity and event relationships
This network should graphically portray the sequential relations between the tasks in a project
Tasks that must precede or follow other tasks are then clearly identified, in time as well as function

5. Scheduling
Such networks are a powerful tool for planning and controlling a project and have the following benefits:
It is a consistent framework for planning, scheduling, monitoring, and controlling the project
It illustrates the interdependence of all tasks, work packages, and work elements
It denotes the times when specific individuals must be available for work on a given task

6. Scheduling Network benefits (cont.):
It aids in ensuring that the proper communications take place between departments and functions
It determines an expected project completion date
It identifies so-called critical activities that, if delayed, will delay the project completion time
It identifies activities with slack that can be delayed for specific periods without penalty

7. Scheduling Network benefits (cont.):
It determines the dates on which tasks may be started - or must be started if the project is to stay on schedule
It illustrates which tasks must be coordinated to avoid resource timing conflicts
It illustrates which tasks may run, or must be run, in parallel to achieve the predetermined project completion date
It relieves some interpersonal conflict by clearly showing task dependencies

8. Network Techniques: PERT and CPM
With the exception of Gantt charts, the most common approach to scheduling is the use of network techniques such as CPM a.k.a PERT
The critical path method (CPM) was invented by project managers in the early 1950's.
The US Navy adapted and improved it to manage the Polaris missile project in the late 1950's. Naming the technique PERT (Program Evaluation and Review Technique) the Defense, Aerospace, and other industries adopted the tool as the major project tool to this day.

9. Network Techniques: PERT and CPM
PERT lists the specific activities that make up a project, their duration and the activities that must be completed before a specific activity can start.

10. Activity
This PERT chart shows the relationship between each activity, no activity can begin before its precedent activities are completed.
The precedents are the activities that the arrows come from.
The time (in days) for each activity is noted in its box (for example Patient Teaching has an expected time of T=2 days).
These relationships create pathways through the process. Summing the times along each pathway gives the pathways length or
duration.
The longest pathway is the critical pathway, the critical pathway is the longest pathway in the process.
The process cannot end before the critical pathway ends.
In the diagram the critical pathway consists of the bold faced boxes.

11. Terminology
Activity - A specific task or set of tasks that are required by the project, use up resources, and take time to complete
Event - The result of completing one or more activities.
Network - The combination of all activities and events define the project and the activity precedence relationships

12. Terminology
Path - The series of connected activities (or intermediate events) between any two events in a network

13. What is Critical Path (CPM)?
Critical Path - the path of longest duration as determined on a project network diagram. The critical path determines the total duration of the project. If a task on the critical path is delayed, the final completion of the project will likely be delayed.
The critical path is "critical" because tasks that follow a critical task cannot be started until all of the previous tasks on the critical path are completed.. The critical tasks will have starting and finishing times that are fixed relative to the start of the project.
Tasks not on the critical path will usually have some flexibility relative to when they can start and finish. This flexibility is called "float", or sometimes "slack". Float is the difference between the time available for performing a task and time required to complete a task.

14. Terminology An activity can be in any of these conditions:
It may have a successor(s) but no predecessor(s) - starts a network
It may have a predecessor(s) but no successor(s) - ends a network
It may have both predecessor(s) and successor(s) - in the middle of a network

15. Scheduling

16. Scheduling

17. Scheduling

18. Drawing Networks

19. Scheduling

20. Scheduling

21. Student Exercise: Tasks for Preparing Dinner
A, Wash and cut salad vegetables (15 minutes)
B, Toss the salad (2 minutes)
C, Set the table (8 minutes)
D, Start the rice cooking (2 minutes)
E, Cook rice (25 minutes)
F, Place the rice in a serving dish (1 minute)
G, Mix casserole ingredients (10 minutes)
H, Bake the casserole (25 minutes)
I, Bring the food to the table (2 minutes)
J, Call the family for dinner (1 minute)
Try to do this exercise, I will send the answers in two days. At the end of the exercise calculate how many hours does process take.

22. Gantt Charts Shows timing of tasks Shows sequence of tasks
The Gantt chart shows planned and actual progress for a number of tasks displayed against a horizontal time scale
It can be helpful in expediting, sequencing, and reallocating resources among tasks

23.
The solid black bars are summary tasks that represent project phases that are further decomposed into other tasks.
The red and blue bars represent detailed tasks. The length represents the duration of the task. The bar is positioned according to its planned start and finish dates. The color, in Microsoft Project is significant as follows.
Red bars indicate tasks have been determined to be ‘critical’ to the schedule meaning that any extension to the duration of those tasks will delay other tasks and the project as a whole.
Blue bars indicate tasks that are not ‘critical’ to the schedule meaning that they have some slack time during which delays will not impact other tasks and the project as a whole.
The red and blue arrows indicate prerequisites between detailed tasks. The red arrows define the project’s critical path — the sequence of tasks that determine the project’s final completion date.
Notice that Gantt charts clearly depict the overlap of scheduled tasks. Because systems development tasks frequently overlap, this is a major advantage.

24. GANTT Example

25. Gantt Charts There are several advantages to the use of Gantt charts:
Even though they may contain a great deal of information, they are easily understood
While they may require frequent updating, they are easy to maintain
Gantt charts provide a clear picture of the current state of a project
They are easy to construct

26. Summary
Scheduling is particularly important to projects because of the complex coordination problems
The network approach to scheduling offers a number of specific advantages of special value for projects
Critical project tasks typically constitute fewer than 10 percent of all the project tasks

27. Summary
Networks are usually constructed from left to right, indicating activity precedence and event times as the network is constructed
Gantt charts are closely related to network diagrams, but are more easily understood and provide a clearer picture of the current state of the project

28. Budgeting and Cost Estimation
The budget serves as a standard for comparison
It is a baseline from which to measure the difference between the actual and planned use of resources
Budgeting procedures must associate resource use with the achievement of organizational goals or the planning/control process becomes useless
The budget is simply the project plan in another form

29. Estimating Project Budgets
In order to develop a budget, we must:
Forecast what resources the project will require
Determine the required quantity of each
Decide when they will be needed
Understand how much they will cost - including the effects of potential price inflation
There are two fundamentally different strategies for data gathering:
Top-down
Bottom-up

30. Top-Down Budgeting
This strategy is based on collecting the judgment and experiences of top and middle managers
These cost estimates are then given to lower level managers, who are expected to continue the breakdown into budget estimates
This process continues to the lowest level

31. Top-Down Budgeting Advantages:
Aggregate budgets can often be developed quite accurately
Budgets are stable as a percent of total allocation
The statistical distribution is also stable, making for high predictability
Small yet costly tasks do not need to be individually identified
The experience and judgment of the executive accounts for small but important tasks to be factored into the overall estimate

32. Bottom-Up Budgeting
In this method, elemental tasks, their schedules, and their individual budgets are constructed following the WBS or project action plan
The people doing the work are consulted regarding times and budgets for the tasks to ensure the best level of accuracy
Initially, estimates are made in terms of resources, such as labor hours and materials
Bottom-up budgets should be and usually are, more accurate in the detailed tasks, but it is critical that all elements be included

33. Bottom-Up Budgeting Advantages:
Individuals closer to the work are apt to have a more accurate idea of resource requirements
The direct involvement of low-level managers in budget preparation increases the likelihood that they will accept the result with a minimum of aversion
Involvement is a good managerial training technique, giving junior managers valuable experience

34. Budgeting Top-down budgeting is very common
True bottom-up budgets are rare
Senior managers see the bottom-up process as risky
They tend not to be particularly trusting of ambitious subordinates who they fear may overstate resource requirements
They are reluctant to hand over control to subordinates whose experience and motives are questionable

35. Work Element Costing
The actual process of building a budget - either top-down or bottom-up - tends to be a straightforward but tedious process
Each work element in the action plan or WBS is evaluated for its resource requirements, and then the cost
Direct costs for resources and machinery are charged directly to the project. Labor is usually subject to overhead charges. Material resources and machinery may or may not be subject to overhead.

36. Budgeting Process
Usually the initial step toward reducing the difference between the superior’s and the subordinate’s estimates is made by the superior
The superior agrees to be “educated” by the subordinate in the realities of the job
This is a time consuming process, especially when the project manager is negotiating with several subordinates

37. Project Budget by Task and Month
Monthly Budget (£)
Task I J Estimate A B C D E F G H I J

38. Improving the Process of Cost Estimation
There are two fundamentally different ways to manage the risks associated with the chance events that occur on every project:
The most common is to make an allowance for contingencies - usually 5 or 10 percent

39. Learning Curves
Studies have shown that human performance usually improves when a task is repeated
In general, performance improves by a fixed percent each time production doubles
More specifically, each time the output doubles, the worker hours per unit decrease to a fixed percentage of their previous value
That percentage is called the learning rate
The project manager should take the learning curve into account for any task where labor is significant

40. Budgeting and Cost Estimation

41. Other Factors
Anywhere from about three-fifths to five-sixths of projects fail to meet their time, cost, and/or specification objectives
There are several common causes:
Arbitrary and impossible goals
Scope creep
Wildly optimistic estimates in order to influence the project selection process
Changes in resource prices
Failure to include an allowance for waste and spoilage
Bad luck