McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 17 Project Management

17-2 Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame. Build A A Done Build B B Done Build C C Done Build D Ship JANFEBMARAPRMAYJUN On time! Projects

17-3 Project Management  How is it different?  Limited time frame  Narrow focus, specific objectives  Less bureaucratic  Why is it used?  Special needs  Pressures for new or improves products or services

17-4 Project Management  What are the Key Metrics  Time  Cost  Performance objectives  What are the Key Success Factors?  Top-down commitment  Having a capable project manager  Having time to plan  Careful tracking and control  Good communications

17-5 Project Management  What are the Major Administrative Issues?  Executive responsibilities  Project selection  Project manager selection  Organizational structure  Organizational alternatives  Manage within functional unit  Assign a coordinator  Use a matrix organization with a project leader

17-6 Project Management  What are the tools?  Work breakdown structure  Network diagram  Gantt charts  Risk management

17-7 Planning and Scheduling MARAPRMAYJUNJULAUGSEPOCTNOVDEC Locate new facilities Interview staff Hire and train staff Select and order furniture Remodel and install phones Move in/startup Gantt Chart

17-8  Deciding which projects to implement  Selecting a project manager  Selecting a project team  Planning and designing the project  Managing and controlling project resources  Deciding if and when a project should be terminated Key Decisions

17-9 Project Manager Responsible for: WorkQuality Human ResourcesTime CommunicationsCosts

17-10 Project Life Cycle Concept Feasibility Planning Execution Termination Management

17-11 Work Breakdown Structure Project X Level 1 Level 2 Level 3 Level 4 Figure 17.2

17-12 PERT and CPM PERT: Program Evaluation and Review Technique CPM: Critical Path Method  Graphically displays project activities  Estimates how long the project will take  Indicates most critical activities  Show where delays will not affect project

17-13 The Network Diagram  Network (precedence) diagram – diagram of project activities that shows sequential relationships by the use of arrows and nodes.  Activity-on-arrow (AOA) – a network diagram convention in which arrows designate activities.  Activity-on-node (AON) – a network diagram convention in which nodes designate activities.  Activities – steps in the project that consume resources and/or time.  Events – the starting and finishing of activities, designated by nodes in the AOA convention.

17-14 The 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 path; the difference the length of path and the length of critical path

17-15 Project Network – Activity on Arrow Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in Figure 17.4 AOA

17-16 Network Conventions a b ca b c a b c d a b c Dummy activity

17-17 Time Estimates  Deterministic  Time estimates that are fairly certain  Probabilistic  Estimates of times that allow for variation

17-18 Example weeks 6 weeks 3 weeks 4 weeks 9 weeks 11 weeks 1 week Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in Deterministic time estimates Figure 17.5

17-19 Example 1 Solution Critical Path

17-20  Network activities  ES: early start  EF: early finish  LS: late start  LF: late finish  Used to determine  Expected project duration  Slack time  Critical path Computing Algorithm

17-21 Time-cost Trade-offs: Crashing  Crash – shortening activity duration  Procedure for crashing  Crash the project one period at a time  Only an activity on the critical path  Crash the least expensive activity  Multiple critical paths: find the sum of crashing the least expensive activity on each critical path

17-22 Time-Cost Trade-Offs: Crashing Total cost Shorten Cumulative cost of crashing Expected indirect costs Optimum CRASH Figure 17.11

a6a 4d4d 5c5c 10 b 9e9e 2f2f Example 7

17-24 Advantages of PERT  Forces managers to organize  Provides graphic display of activities  Identifies  Critical activities  Slack activities

17-25 Limitations of PERT  Important activities may be omitted  Precedence relationships may not be correct  Estimates may include a fudge factor  May focus solely on critical path weeks

17-26 Goldratt’s Critical Chain  Goldratt’s insight on project management  Time estimates are often pessimistic  Activities finished ahead of schedule often go unreported  With multiple projects, resources needed for one project may be in use on another

17-27  Computer aided design (CAD)  Groupware (Lotus Notes)  CA Super Project  Harvard Total Manager  MS Project  Sure Track Project Manager  Time Line Project Management Software

17-28  Imposes a methodology  Provides logical planning structure  Enhances team communication  Flag constraint violations  Automatic report formats  Multiple levels of reports  Enables what-if scenarios  Generates various chart types Advantages of PM Software

17-29  Risk: occurrence of events that have undesirable consequences  Delays  Increased costs  Inability to meet specifications  Project termination Project Risk Management

17-30  Identify potential risks  Analyze and assess risks  Work to minimize occurrence of risk  Establish contingency plans Risk Management

17-31 Summary  Projects are a unique set of activities  Projects go through life cycles  PERT and CPM are two common techniques  Network diagrams  Project management software available