1. Chapter 3
Project Management

2. OBJECTIVES Definition of Project Management Project Control Charts
Structuring Projects
Work Breakdown Structure
Critical Path Scheduling
CPM with a Single Time
CPM with Three Time Estimates 2

3. Project Management Defined
A series of related jobs usually directed toward some major output and requiring a significant period of time to perform
Project Management
The management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project 3

4. Project Management Project are usually: Infrequent
Exact duration is difficult to estimate
Control may be difficult because of:
Makeup of the project team
Expert among experts

5. Structuring Projects: Pure Project Defined
A pure project is where a self-contained team works full-time on the project 8

6. Structuring Projects Pure Project: Advantages
The project manager has full authority over the project
Team members report to one boss
Shortened communication lines
Team pride, motivation, and commitment are high

7. Structuring Projects: Pure Project Disadvantages
Duplication of resources
Equipment and people not shared across projects
Organizational goals and policies are ignored
Team members detached from headquarters
Lack of technology transfer
Due to weakened functional division
Team members have no functional area "home“
Project termination often delayed as members worry about life after the project 8

8. Structuring Projects: Functional Projects Defined
A functional project is housed within a functional division
President
Research and
Development
Engineering
Manufacturing
Project A B C D E F G H I
Example, Project “B” is in the functional area of Research and Development. 9

9. Structuring Projects: Functional Project Advantages
A team member can work on several projects
Technical expertise is maintained within the functional area
The functional area is a “home” after the project is completed
Critical mass of specialized knowledge 10

10. Structuring Projects: Functional Project Disadvantages
Aspects of the project that are not directly related to the functional area get short-changed
Motivation of team members is often weak
Needs of the client are secondary and are responded to slowly 11

11. Structuring Projects: Matrix Project Organization Structure
President
Research and
Development
Engineering
Manufacturing
Marketing
Manager
Project A
Project B
Project C 12

12. Structuring Projects: Matrix Project Advantages
Enhanced communications between functional areas
Pinpointed responsibility
Duplication of resources is minimized
Functional “home” for team members
Policies of the parent organization are followed 13

13. Structuring Projects: Matrix Projects Disadvantages
Too many bosses
Functional manager often listened to first because of direct influence on promotions and raises
Depends on project manager’s negotiating skills
Potential for sub-optimization
PM’s could hoard resources for own projects
Other projects could be harmed 14

14. Phases of Project Management
Planning
Work breakdown structure
Feasibility study
Precedence determination
Scheduling
Construct the chart and apply times
Identify priorities
Execution and control
Review and modify the project

15. Work Breakdown Structure Defined
A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages
Program
Project 1
Project 2
Task 1.1
Subtask 1.1.1
Work Package
Level 1 2 3 4
Task 1.2
Subtask 1.1.2
Work Package 4

16. Work Breakdown Structure
Allows the elements to be worked on independently
Make them manageable in size
Give authority to carry out the program
Monitor and measure the program
Provide the required resources

17. Project Control Charts: Gantt Chart
Vertical Axis: Always Activities or Jobs
Horizontal bars used to denote length of time for each activity or job.
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time
Horizontal Axis: Always Time 6

18. Network-Planning Models
A project is made up of a sequence of activities that form a network representing a project
The path taking longest time through this network of activities is called the “critical path”
The critical path provides a wide range of scheduling information useful in managing a project
Critical Path Method (CPM) helps to identify the critical path(s) in the project networks 15

19. Prerequisites for Critical Path Methodology
A project must have:
well-defined jobs or tasks whose completion marks the end of the project;
independent jobs or tasks;
and tasks that follow a given sequence. 16

20. Types of Critical Path Methods
CPM with a Single Time Estimate
Used when activity times are known with certainty
Used to determine timing estimates for the project, each activity in the project, and slack time for activities
CPM with Three Activity Time Estimates
Used when activity times are uncertain
Used to obtain the same information as the Single Time Estimate model and probability information
Time-Cost Models
Used when cost trade-off information is a major consideration in planning
Used to determine the least cost in reducing total project time 15

21. Steps in the CPM with Single Time Estimate
Activity Identification
Activity Sequencing and Network Construction
Determine the critical path
From the critical path all of the project and activity timing information can be obtained 15

22. Example 1. CPM with Single Time Estimate
Consider the following consulting project:
Activity
Designation
Immed. Pred.
Time (Weeks)
Assess customer's needs A
None 2
Write and submit proposal B 1
Obtain approval C
Develop service vision and goals D
Train employees E 5
Quality improvement pilot groups F
D, E
Write assessment report G
Develop a critical path diagram and determine the duration of the critical path and slack times for all activities.

23. Example 1: First draw the network
Act. Immed. Pred. Time
A None 2
B A 1
C B 1
D C 2
D(2)
E(5)
E C 5
F D,E 5
G F 1
F(5)
A(2)
B(1)
C(1)
G(1) 18

24. Example 1: Determine early starts and early finish times
EF=6
D(2)
E(5)
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=9
EF=14
ES=14
EF=15
F(5)
A(2)
B(1)
C(1)
G(1)
ES=4
EF=9
Hint: Start with ES=0 and go forward in the network from A to G. 21

25. Example 1: Determine late starts and late finish times
Hint: Start with LF=15 or the total time of the project and go backward in the network from G to A.
ES=4
EF=6
D(2)
E(5)
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=9
EF=14
ES=14
EF=15
LS=7
LF=9
F(5)
A(2)
B(1)
C(1)
G(1)
ES=4
EF=9
LS=3
LF=4
LS=2
LF=3
LS=0
LF=2
LS=9
LF=14
LS=14
LF=15
LS=4
LF=9 22

26. Determining the Critical Path & Slack
A path is a sequence of connected activities running from start to end node in a network
The critical path is the path with the longest duration in the network
It is also the minimum time, under normal conditions, to complete the project
Delaying activities on the critical path will delay completion time for the project
A slack is amount of scheduling flexibility
Critical activities have no slacks

27. Example 1: Critical Path & Slack
SLACK=LS-ES=LF-EF
ES=4
EF=6
Slack=(7-4)=(9-6)= 3 Wks
D(2)
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=9
EF=14
ES=14
EF=15
LS=7
LF=9
F(5)
A(2)
B(1)
C(1)
G(1)
ES=4
EF=9
LS=3
LF=4
LS=2
LF=3
LS=0
LF=2
LS=9
LF=14
LS=14
LF=15
E(5)
A PATH IS CRITICAL IF:
ES=LS,
EF=LF, and
EF-ES=LF-LS=D
LS=4
LF=9
Duration = 15 weeks 23

28. CPM with Three Activity Time Estimates
Task times assumed variable (probabilistic)
The variability is based on the beta distribution
Uses three time estimates
Optimistic
Most Likely
Pessimistic
Consolidates them into one expected time
Then calculates ES, EF, LS, LF, & CP as in before

29. Example 2. CPM with Three Activity Time Estimates

30. Example 2. Expected Time Calculations
ET(A)= 3+4(6)
ET(A)=42/6=7

31. Example 2. Network A(7) B C(14) D(5) E(11) F(7) H(4) G(11) I(18)
ES=7
EF=21
ES=21
EF=32
A(7) B
(5.333)
C(14)
D(5)
E(11)
F(7)
H(4)
G(11)
I(18)
Duration = 54 Days
ES=32
EF=36
ES=0
EF=7
LS=7
LF=21
LS=21
LF=32
ES=7
EF=12
ES=12
EF=21
LS=0
LF=7
LS=32
LF=36
ES=36
EF=54
LS=20
LF=25
LS=25
LF=32
ES=0
EF=5.3
ES=5.3
EF=16.3
LS=36
LF=54
LS=19.7
LF=25
LS=25
LF=36

32. Example 2. Probability Exercise
What is the probability of finishing this project in
less than 53 days?
p(t < D) t
D=53
TE = 54

33. (Sum the variance along the critical path.)

34. p(t < D) t
TE = 54
D=53
p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)
There is a 43.8% probability that this project will be completed in less than 53 weeks.

35. Example 2. Additional Probability Exercise
What is the probability that the project duration will exceed 56 weeks? 30

36. Example 2. Additional Exercise Solution
TE = 54
p(t < D)
D=56
p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312)) 31

37. Time-Cost Models
Basic Assumption: Relationship between activity completion time and project cost
Time Cost Models: Determine the optimum point in time-cost tradeoffs
Activity direct costs
Project indirect costs
Activity completion times 32

38. Time-Cost Model Trade-Offs
Prepare a CPM-type network listing
Normal and crash times for each
Normal and crash costs for each
Determine incremental cost per unit of time each activity is expedited
Incremental cost =(CC-NC)/(NT-CT)
Calculate the critical path
Shorten the CP at the least cost

39. Time-Cost Model: Example
For the project with the following times, find the cost of reducing its duration to its lowest possible time. If the project is reduced by just 2 days, how much would it cost?
NORMAL
CRASH
Activity Time Cost Time Cost IN CL=NT-CT A B C D

40. B B A A D D C C B B A A D D C C ES= EF= ES= EF= 1 2 ES= EF= ES= EF=
LS=
LF=
LS=
LF= A A D D
LS=
LF=
LS=
LF=
LS=
LF=
LS=
LF=
ES=
EF=
ES=
EF= C C
LS=
LF=
LS=
LF=
ES=
EF=
ES=
EF= 3 4 B B
ES=
EF=
ES=
EF=
ES=
EF=
ES=
EF=
LS=
LF=
LS=
LF= A A D D
LS=
LF=
LS=
LF=
LS=
LF=
LS=
LF=
ES=
EF=
ES=
EF= C C
LS=
LF=
LS=
LF=

41. B B A A D D C C B B A A D D C C ES= EF= ES= EF= 1 2 ES= EF= ES= EF=
LS=
LF=
LS=
LF= A A D D
LS=
LF=
LS=
LF=
LS=
LF=
LS=
LF=
ES=
EF=
ES=
EF= C C
LS=
LF=
LS=
LF=
ES=
EF=
ES=
EF= 3 4 B B
ES=
EF=
ES=
EF=
ES=
EF=
ES=
EF=
LS=
LF=
LS=
LF= A A D D
LS=
LF=
LS=
LF=
LS=
LF=
LS=
LF=
ES=
EF=
ES=
EF= C C
LS=
LF=
LS=
LF=

42. CPM Assumptions/Limitations
Project activities can be identified as entities (There is a clear beginning and ending point for each activity.)
But this is seldom true
Project activity sequence relationships can be specified and networked
Sometime we do not know all project activities ahead of time 15

43. CPM Assumptions/Limitations
Project control should focus on the critical path
But there are near-critical activities
The activity times follow the beta distribution, with the variance of the project assumed to equal the sum of the variances along the critical path
But activities are infrequent. Can we assume normality?
Are we really sure that it is beta distributed?

44. Chapter3: Problem 7 #s: a, b, c B,2 E,3 H,4 A,3 C,6 F,2 I,5 K,6.8 D,5
ES=
EF=
ES=
EF=
B,2
E,3
ES=
EF=
H,4
ES=
EF=
ES=
EF=
ES=
EF=
ES=
EF=
A,3
C,6
F,2
I,5
ES=
EF=
K,6.8
ES=
EF=
ES=
EF=
ES=
EF=
D,5
G,7
J,4

45. Chapter3: Problem 7 #: d(1) B,2 E,1 H,4 A,3 C,6 F,2 I,5 K,6.8 D,5 G,7
ES=
EF=
ES=
EF=
B,2
E,1
ES=
EF=
H,4
ES=
EF=
ES=
EF=
ES=
EF=
ES=
EF=
A,3
C,6
F,2
I,5
ES=
EF=
K,6.8
ES=
EF=
ES=
EF=
ES=
EF=
D,5
G,7
J,4

46. Chapter3: Problem 7 #: d(2) B,2 E,3 H,4 A,3 C,4 F,2 I,5 K,6.8 D,5 G,7
ES=
EF=
ES=
EF=
B,2
E,3
ES=
EF=
H,4
ES=
EF=
ES=
EF=
ES=
EF=
ES=
EF=
A,3
C,4
F,2
I,5
ES=
EF=
K,6.8
ES=
EF=
ES=
EF=
ES=
EF=
D,5
G,7
J,4

47. Chapter3: Problem 7 #: d(3) B,2 E,3 H,4 A,3 C,6 F,2 I,5 K,6.8 D,5 G,5
ES=
EF=
ES=
EF=
B,2
E,3
ES=
EF=
H,4
ES=
EF=
ES=
EF=
ES=
EF=
ES=
EF=
A,3
C,6
F,2
I,5
ES=
EF=
K,6.8
ES=
EF=
ES=
EF=
ES=
EF=
D,5
G,5
J,4