1. Manajemen Industri Teknologi informasi
LESSON 7

2. PERT and Crash Program
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3. PERT: Program Evaluation Review Technique
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4. One way of incorporating Risk Planning: Program Evaluation Review Technique
Assumes each activity duration has a range that statistically follows a beta distribution
PERT incorporates three time estimates for each activity: an optimistic time, a pessimistic time, and a most likely time to represent activity durations
These estimates usually gathered from polling individuals or from looking at history for similar tasks
A weighted average and variance for each activity is computed
Knowing the weighted average and variances for each activity allows the project planner to compute the probability of meeting different project durations
History- Pert is similar to CPM except we now have element of uncertainty explicitly incorporated.
Developed in 1958 by Navy/Booz-Allen.
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5. Activity and Project Frequency Distributions
Why might activity distributions look so skewed?
Even with such skewed activity distributions, why is the overall
Project distribution symmetric?
Why Beta?
Works with broad range of data, can represent skew (which for us, is ALWAYS to right, as, short of a miracle, an activity is never very early but work can occasionally be very late)
Even with this skew, if we can assume independence between activities (was okay with navy as they were dealing with 3300 separate contractors), CLT means that the project duration, which is the sum of activities (along CP) essentially, follows a normal distribution
Yes, the assumption of independence between activities is a STRONG one. Overwhelming catastrophes that connect events would violate this assumption!
MS Project lets uncertainty be added in, but rarely used. In part because the variance is assumed symmetric. PERT analyses are usually done on spreadsheets,
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6. Activity Time Calculations
The weighted average activity time is computed by the following formula:
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7. Activity Time Calculations (cont’d)
The variability in the activity time estimates is approximated by the following equations:
The standard deviation for the activity:
The standard deviation for the project:
So for project variance we sum up all the activity variances on the critical path
If we suspect we may have an alternate critical path (because our network is sensitive) we should investigate that as well
Note the standard deviation of the activity is squared in this equation; this is also called variance. This sum includes only activities on the critical path(s) or path being reviewed.
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8. Example
Given the following activities, expected durations and predecessor information, construct the AoA project network and use the CPM.
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9. Activity Times and Variances
TABLE A7.1
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10. Probability of Completing the Project
The equation below is used to compute the “Z” value found in statistical tables (Z = number of standard deviations from the mean), which, in turn, tells the probability of completing the project in the time specified.
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11. Hypothetical Network
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12. Text Example Consider the following 6-activity project
Draw the AoN and use the CPM to compute the CP, slack
Use PERT to analyze the chance the delays on CP activities does not push the project duration beyond 67 days.
Anything else we should consider? (even though your text doesn’t?)
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13. Example: Network,CP,Slack
Use te when computing durations for CP.
Get 3 slack on -a3-a5 path (a5 would have the free slack).
Fill in the rest if you want practice finding slack
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14. PERT, Considering the CP
Use Excel
Can see that it is likely, but not overwhelmingly so
We can calculate the probability for any scheduled time very easily, by changing 1 #
What else should we consider?
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15. Example: Possible Project Duration
Again, only considering CP
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16. Some Sample Z Values
A Z-table listing such values will be provided to you on exams
Excel has these calculations built in =normsdist(z), =normsinv(%)
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17. What Might We Have Forgotten?
In the CPM, it is clear what the critical path is!
With PERT we can now consider network sensitivity in more detail.
Extension of the textbook example- what additional analysis might you do?
In Ch6 was just if we had more than one CP or near CP.
Can bring up excel and do 2nd sample example, too
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18. PERT: Caveats Abound
For checking project duration considering multiple paths, it’s not as simple as adding up the probabilities.
Different paths usually have some activities in common.
Once again, the whole assumption of independence of activity durations must be considered.
For complex or high-value projects, Monte Carlo simulation is often a more appropriate approach.
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19. Reducing Project Duration
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20. Rationale for Reducing Project Duration
Time Is Money: Cost-Time Tradeoffs
Reducing the time of a critical activity usually incurs additional direct costs.
Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project.
Reasons for imposed project duration dates:
Customer requirements and contract commitments
Time-to-market pressures
Incentive contracts (bonuses for early completion)
Unforeseen delays
Overhead and goodwill costs
Pressure to move resources to other projects
No Usually about it- It may save on indirect costs
Back to the old scope triangle from Ch4
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21. Options for Accelerating Project Completion
When Resources are NOT constrained
When Resources are constrained
Adding Resources
Outsourcing Project Work
Scheduling Overtime
Establishing a Core Project Team
Do It Twice—Fast and Correctly
Fast-Tracking
Critical-Chain
Reducing Project Scope
Compromise Quality
CCPM (Appendix 8)
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22. Explanation of Project Costs
Project Indirect Costs
Costs that cannot be associated with any particular work package or project activity.
Supervision, administration, consultants, and interest
Costs that vary (increase) with time.
Reducing project time directly reduces indirect costs.
Direct Costs
Normal costs that can be assigned directly to a specific work package or project activity.
Labor, materials, equipment, and subcontractors
Crashing activities increases direct costs.
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23. Reducing Project Duration to Reduce Project Cost
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24. Project Cost—Duration Graph
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25. Constructing a Project Cost—Duration Graph
Find total direct costs for selected project durations.
Find total indirect costs for selected project durations.
Sum direct and indirect costs for these selected project durations.
Compare additional cost alternatives for benefits.
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26. Constructing a Project Cost—Duration Graph
Determining Activities to Shorten
Shorten the activities with the smallest increase in cost per unit of time.
Assumptions:
The cost relationship is linear.
Normal time assumes low-cost, efficient methods to complete the activity.
Crash time represents a limit—the greatest time reduction possible under realistic conditions.
Slope represents a constant cost per unit of time.
All accelerations must occur within the normal and crash times.
These assumptions may not always be applicable
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27. Activity Graph Manajemen Industri Teknologi Informasi - Ganjil 2012
cost slope = rise/run
= (crash cost – normal cost)/(normal time – crash time)
= (800 – 400)/(10 – 5)
= $80 per unit time
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28. Cost—Duration Trade-off Example
Step 1: look for lowest crash cost per unit activity that can be crashed (here, activity A)
NOTE: In general, start with activities on the critical path (why?)
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Assume we want to reduce project duration and have recourses to do so
– we value each day it is shorted at $50K
First, calculate Slope (in days) and max Crash time
Next build the AoN network, with normal times (we can also do this in excel)
Lastly, crash activities that are most cost effective to reduce overall project duration until cost of crashing exceeds benefits
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29. Cost—Duration Trade-off Example
Step 2: Reduce the time of the lowest crash cost per unit activity as much as you can -> recalculate time and cost
Step 3: repeat with the next lowest … (here, activity D)
Can do in excel
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30. Cost—Duration Trade-off Example
If we reduce D by 1, note that the critical path now includes C … if we want to reduce C or D further, we would need to reduce both to shorten the overall time … therefore, move on to F.
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31. Cost—Duration Trade-off Example
F can only reduce one day, increasing the cost by $30. Look what’s happened to the critical path now … checking the cost structure (go back), we must reduce E, C, and D simultaneously to get any more improvement in time.
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32. Cost—Duration Trade-off Example
Note: we have now exhausted all possible ways of crashing the project – A-C-F are all at their minimum time.
So, the minimum time to complete the project is 21 for a total cost of $610 (up from $450). Now we include indirect cost reductions and see what our optimal completion time is.
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33. Summary Costs by Duration
Note we assume a savings of $50/day in indirect cost, so our lowest cost project duration is 22 days at a cost of $775.
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Indirect costs must be calculated, perhaps from accounting or
client services department (ex. Contracts for late/early delivery)
May not be as easy to estimate as the book claims
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34. Project Cost—Duration Graph
Typically marginal benefits from crashing a project will start to get lower (assuming a linear indirect cost- all bets are off if it’s more than linear!)
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35. Practical Considerations
Using the Project Cost—Duration Graph
Crash Times
Linearity Assumption
Choice of Activities to Crash Revisited
Time Reduction Decisions and Sensitivity
Using the project cost - duration graph – valuable for evaluating proposed changes, keeps indirect costs visible, best if created during project planning without an imposed duration.
Crash times – requires some interpretation, level of trust to gather realistic crash times
Linearity assumption – ok for “quick and dirty” comparisons, but may not always apply
Choice of activities to crash revisited – be aware of inherent risks, effects of timing (early crashing may be wasted if later activities can’t be), effect on morale of asking some members of the team to work faster, etc.
Time reduction decisions and sensitivity – the more critical paths you create, the more sensitive the project will be
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36. What if Cost, Not Time is the Issue?
Commonly Used Options for Cutting Costs
Reduce project scope
Have owner take on more responsibility
Outsourcing project activities or even the entire project
Brainstorming cost savings options
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37. end of this chapter
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