1. Project Management
Chapter 17

2. Learning Objectives You should be able to:
Discuss the behavioral aspects of projects in terms of project personnel and the project manager
Explain the nature and importance of a work breakdown structure in project management
Give a general description of PERT/CPM techniques
Construct simple network diagrams
List the kinds of information that a PERT or CPM analysis can provide
Analyze networks with deterministic times
Describe activity ‘crashing’ and solve typical problems
Instructor Slides

3. Projects
Project:
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame
Examples:
The Olympic Games
Producing a movie
Product development
Operations:
work done to sustain the business
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4. Project Life Cycle
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5. The Triple Constraint of Project Management
Project’s Triple Constraints (Key Metrics)
Time
Cost
Scope (Performance objectives)
Quality
Information Technology Project Management, Sixth Edition

6. Project Success There are several ways to define project success:
The project met scope, time, and cost goals
The project satisfied the customer/sponsor
The results of the project met its main objective
e.g., making or saving a certain amount of money, providing a good return on investment.
Information Technology Project Management, Sixth Edition

7. Project Manager
Project managers work with the project team and other people involved in a project to meet project goals
The project manager is ultimately responsible for the success or failure of the project
The project manager skills and competencies:
People skills
Leadership
Listening
Integrity, ethical behavior, consistent
Strong at building trust
Verbal communication
Strong at building teams
Conflict resolution, conflict management
Critical thinking, problem solving
Understands, balances priorities
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8. Project Management Key tools: Work Breakdown Structure Gantt charts
Network diagram

9. Work Breakdown Structure (WBS)
A hierarchical listing of what must be done during a project
Establishes a logical framework for identifying the required activities for the project
Identify the major elements of the project
Identify the major supporting activities for each of the major elements
Break down each major supporting activity into a list of the activities that will be needed to accomplish it
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10. WBS 17-10 Open new department New facility Finance Staff Furniture
Location
Relocating
Hiring
Remodel
Move in
Locate facility
Order furniture
Furniture setup
interview
Hire & train
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11. Critical Path Method (CPM)
CPM can assist in:
estimating project length
Identifying which activities are most critical to timely project completion
indicating of how long any activity can be delayed without delaying the project
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12. Network Diagram Network diagram
(Precedence) Diagram of project activities that shows sequential relationships by use of arrows and nodes
Activity on arrow (AOA)
Network diagram convention in which arrows designate activities
Activity on node (AON)
Network convention in which nodes designate activities
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13. Network Conventions (AON)b c d
dummy
Node
(dummy) Start
Node

14. Network Conventions (AOA)b c d
dummy
Activity

15. Immediate Predecessor
Precedence Diagram #
Task
Duration
(weeks)
Immediate Predecessor 1
Locate facility 8 - 2
Order furniture 6 3
Interview 4
Hire & Train 9 5
Remodel 11
Furniture setup 7
Move in
4,5,6

16. Project Network – Activity on Node (AON)#
Task
Immediate Predecessor 1
Locate facility - 2
Order furniture 3
Interview 4
Hire & Train 5
Remodel 6
Furniture setup 7
Move in
4,5,6
Order furniture 2
Furniture setup
Locate facilities 1 6
Move in
Remodel S 5 7
Hire and train
Interview 3 4

17. Project Network – Activity on Arrow (AOA)#
Task
Immediate Predecessor 1
Locate facility - 2
Order furniture 3
Interview 4
Hire & Train 5
Remodel 6
Furniture setup 7
Move in
4,5,6
Order furniture
Furniture setup
Locate facilities
Remodel
Move in
Interview
Hire and train

18. Gantt Chart
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19. Critical Path Method (CPM)
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An analytical tool that provides a schedule that completes the project in minimum time subject to the precedence constraints.
In addition, CPM provides:
Starting and ending times for each activity
Identification of the critical activities (i.e., the ones whose delay necessarily delay the project).
Identification of the non-critical activities, and the amount of slack time available when scheduling these activities.

20. Network Diagram (cont’d)
Path
Sequence of activities that leads from the starting node to the finishing node
Critical path
The longest path; determines expected project duration
Critical activities
Activities on the critical path
Slack
Allowable slippage for a path; the difference the length of path and the length of critical path

21. Project Network – Activity on Node (AON)
Critical Path ? #
Task
Immediate Predecessor 1
Locate facility - 2
Order furniture 3
Interview 4
Hire & Train 5
Remodel 6
Furniture setup 7
Move in
4,5,6
Order furniture 2
Furniture setup
Locate facilities 1 6
Move in
Remodel S 5 7
Hire and train
Interview 3 4

22. Gantt Chart
Critical Path ?
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23. Example 6 3 B C 8 A 11 1 D S G 4 9 E F

24. Early Start, Early Finish
Early start (ES)
The earliest time an activity can start
Assumes all preceding activities start as early as possible
For nodes with one entering arrow
ES = EF of the entering arrow
For activities leaving nodes with multiple entering arrows
ES = the largest of the entering EF
Early finish (EF)
The earliest time an activity can finish
EF = ES + t
Finding ES (Early Start) and EF (Early Finish) involves a forward pass through the network diagram
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25. Example – Forward pass (ES, EF)6 8 14 3 14 17 B C 8 8 A 11 8 19 1 D 19 20 S G 4 4 9 4 13 E F

26. Late Start, Late Finish
Late Finish (LF)
The latest time the activity can finish and not delay the project
For nodes with one leaving arrow, LF for nodes entering that node equals the LS of the leaving arrow
For nodes with multiple leaving arrows, LF for arrows entering node equals the smallest of the leaving arrows
Late Start (LS)
The latest time the activity can start and not delay the project
The latest starting time for each activity is equal to its latest finishing time minus its expected duration:
LS = LF - t
Finding LS and LF involves a backward pass through the network diagram
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27. Example – Backward pass (LS, LF)10 16 16 19
8 6 14 B 8 C
0 8 8 A 8 19 19 20
0 0 0 D S G 6 10 10 19
0 4 4
4 9 13 E F

28. Slack and the Critical Path
Slack can be computed one of two ways:
Slack = LS – ES
Slack = LF – EF
Critical path
The critical path is indicated by the activities with zero slack
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29. Example – Slack (LS-ES,LF-EF) 2 2 B
0 8 8 C A
0 0
0 0 0 D S G 6 6 E F

30. Example – Critical Path Slack (LS-ES;LF-EF)=02 2 B C A D S G 6 6 E F

31. Example Solution Path Length (weeks) Slack S-A-B-C-G 18 2 S-A-D-G 20
Critical Path
Path
Length (weeks)
Slack
S-A-B-C-G 18 2
S-A-D-G 20
S-E-F-G 14 6

32. Using Slack Times
Knowledge of slack times provides managers with information for planning allocation of scarce resources
Control efforts can be directed toward those activities that might be most susceptible to delaying the project
Activity slack times are based on the assumption that all of the activities on the same path will be started as early as possible and not exceed their expected time
If two activities are on the same path and have the same slack, this will be the total slack available to both
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33. The Critical Path Method (CPM) is not useful for (Multiple Choices Question):
Finding the project’s shortest completion time
Finding the project’s minimum cost
Calculating start and end times for all activities
Identifying critical activities
Identifying the slack for non-critical activities

34. Time-Cost Trade-Offs
Activity time estimates are made for some given level of resources
It may be possible to reduce the duration of a project by injecting additional resources
Motivations:
To avoid late penalties
Monetary incentives
Free resources for use on other projects
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35. Time-Cost Trade-Offs: Crashing
Shortening activity durations
Typically, involves the use of additional funds to support additional personnel or more efficient equipment, and the relaxing of some work specifications
The project duration may be shortened by increasing direct expenses, thereby realizing savings in indirect project costs

36. Crashing Activities
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37. Crashing Decisions
To make decisions concerning crashing requires information about:
Time:
Regular time and crash time estimates for each activity
Cost:
Regular cost and crash cost estimates for each activity
A list of activities that are on the critical path
Critical path activities are potential candidates for crashing
Crashing non-critical path activities would not have an impact on overall project duration
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38. Crashing: Procedure General procedure:
Crash the project one period at a time
Crash only activities on the critical path/s
Crash the least expensive activity (that is on the critical path)
When there are multiple critical paths, find the sum of crashing the least expensive activity on each critical path
If two or more critical paths share common activities, compare the least expensive cost of crashing a common activity shared by critical paths with the sum for the separate critical paths
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39. Example 7 6 a 4 d 5 c 10 b 9 e 2 f

40. Indirect costs: $1,000 / day Activity Normal time [days]
Crash (min) time
Available time
(crash-normal)
Cost to Crash [$/day] a 6 - b 10 8 2
500 c 5 4 1
300 d 3
700 e 9 7
600 f
800

41. 1. Determine Critical Path6 a 4 d 5 c 10 b 9 e 2 f
1. Determine Critical Path
Path Length
a-b-f 18
c-d-e-f 20 (critical path)
2. Rank activities on CP in order of lowest crashing cost
Activity Cost per day to crash Available days c e d f
Activity
Normal time
[days]
Crash (min) time
Available time
(crash-normal)
Cost to Crash [$/day] a 6 - b 10 8 2
500 c 5 4 1
300 d 3
700 e 9 7
600 f
800

42. 2. Rank activities on CP in order of lowest crashing cost
Activity Cost per day to crash Available days c e d f
Crash activity c by 1 day: cost $300 < $1,000 (CP=19 days)
(cannot crash c anymore) 6 a 4 d 5 c 10 b 9 e 2 f 5 4

43. 2. Rank activities on CP in order of lowest crashing cost
Crash activity e by 1 day: cost $600 < $1,000 (CP=18 days)
(may crash activity e by 1 more day)
2. Rank activities on CP in order of lowest crashing cost
Activity Cost per day to crash Available days c e d f 6 a 4 d 5 c 10 b e 2 f 4 8 9
Both paths are now critical.
Have to crash both in order to shorten project.

44. Both paths are now critical. 6 a 4 d c 10 b 8 e 2 f
Both paths are now critical.
Have to crash both in order to shorten project.
Remaining activities
Path Activity Cost per day to crash Available days
a-b-f a b f
c-d-e-f c e d
Crash activity f (is on both paths) by 1 day:
cost = $800 < $1,000 (CP=17 days)

45. Crash activity f (is on both paths) by 1 day:
cost $800 < $1,000 (CP=17 days)
Remaining activities
Path Activity Cost per day to crash Available days
a-b-f a - - b f
c-d-e-f c - - e d 6 a 4 d c 10 b 8 e 1 f 2

46. Remaining activities 10 6 b Both paths are still critical. a4 d c 10 b 8 e 1 f
Both paths are still critical.
Have to crash both in order to shorten project.
Remaining activities
Path Activity Cost per day to crash Available days
a-b-f a b f
c-d-e-f c e d
Crash activity b by 1 day: cost $500 AND
Crash activity e by 1 day: cost $600
Total cost: $1,100>$1,000 (indirect costs) =>DONE!

47. Length after crashing Path\crash n=0 1 2 3 a-b-f 18 18 18 17
c-d-e-f
Activity Crashed c e f
Cost 0 ($300) ($600) ($800)
Savings 0 $1,000 $1,000 $1,000
Total 0 $ $400 +$200 = $1,300

48. Operations Strategy*
Projects present both strategic opportunities and risks
It is critical to devote sufficient resources and attention to projects
Projects are often employed in situations that are characterized by significant uncertainties and risks that may result in:
Delays
Budget overruns
Failure
PM should use:
Careful planning
Wise selection of project manager and team
Monitoring of the project
It is not uncommon for projects to fail
it is beneficial to examine the reasons for failure – “lessons learned”
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