1. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-1 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Chapter 13 Project Management

2. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-2 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Learning Objectives Students will be able to Understand how to plan, monitor, and control projects with the use of PERT. Determine earliest start, earliest finish, latest start, latest finish, and slack times for each activity along with the total project completion time. Reduce total project time at the least total cost by crashing the network using manual or linear programming techniques. Understand the important role of software in project management.

3. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-3 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Chapter Outline 13.1 Introduction 13.2 PERT 13.3 PERT/COST 13.4 Critical Path Method 13.5 Other Topics in Project Management

4. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-4 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Project Management Models PERT PERT/Cost Critical Path Method

5. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-5 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Questions Addressed by PERT and CPM 1. When will the project be completed? 2. What are the critical activities or tasks in the project? 3. Which are the noncritical activities? 4. What is the probability that the project will be completed by a specific date? 5. Is the project on schedule, ahead of schedule, or behind schedule? 6. Is the project over or under the budgeted amount?

6. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-6 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Questions - continued 7. Are there enough resources available to finish the project on time? 8. If the project must be finished in less than the scheduled amount of time, what is the best way to accomplish this at least cost?

7. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-7 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Project Planning, Scheduling, and Controlling Project Planning 1. Setting goals 2. Defining the project 3. Tying needs into timed project activities 4. Organizing the team Project Scheduling 1. Tying resources to specific activities 2. Relating activities to each other 3. Updating and revising on regular basis Project Controlling 1. Monitoring resources, costs, quality and budgets 2. Revising and changing plans 3. Shifting resources to meet demands Before Project During Project

8. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-8 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Six Steps Common to PERT and CPM 1. Define the project and all significant activities/tasks. 2. Develop relationships among the activities. Identify precedence relationships. 3. Draw the network. 4. Assign time and/or cost estimates to each activity. 5. Compute the longest time path (critical path) through the network. 6. Use the network to help plan, schedule, monitor, and control the project.

9. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-9 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Advantages of PERT/CPM Useful at several stages of project management Straightforward in concept, not mathematically complex Uses graphical displays employing networks to help user perceive relationships among project activities Critical path and slack time analyses help pinpoint activities that need to be closely watched

10. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-10 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Advantages - continued Networks generated provide valuable project documentation and graphically point out who is responsible for various project activities Applicable to a wide variety of projects and industries Useful in monitoring not only schedules, but costs as well

11. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-11 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Limitations of PERT/CPM Project activities must be clearly defined, independent, and stable in their relationships Precedence relationships must be specified and networked together Time activities in PERT are assumed to follow the beta probability distribution -- must be verified Time estimates tend to be subjective, and are subject to fudging by managers There is inherent danger in too much emphasis being placed on the critical path

12. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-12 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry PERT ActivityDescriptionImmediate Predecessors ABuild internal components BModify roof and floor CConstruct collection stackA DPour concrete and install frame B EBuild high-temperature burner C FInstall control systemC GInstall air pollution deviceD,E HInspect and testF,G

13. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-13 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. PERT Network StartFinish A 2C 2F 3 B 3D 4G 5 E 4H 2

14. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-14 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Beta Probability Distribution with Three Time Estimates

15. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-15 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. Time Estimates ABCDEFGHABCDEFGH 1212113112121131 2324424223244242 3 4 3 6 7 9 11 3 2324435223244352 Total: 25 weeks Activity ambE(t) 22

16. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-16 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. PERT Network - with E(t) StartFinish A 2C 2 F 3 E 4 H 2 B 3D 3 G 5 ES LF LS LF

17. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-17 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. PERT Network ES/EF, LS/LF B 3 0 3 D 3 3 7 G 5 8 13 StartFinish A 2 0 2 C 2 2 4 F 3 4 7 E 4 4 8 H 2 13 15 ES LF LS LF

18. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-18 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. PERT Network ES/EF, LS/LF B 3 0 3 1 4 D 3 3 7 4 8 G 5 8 13 StartFinish A 2 0 2 C 2 2 4 F 3 4 7 10 13 E 4 4 8 H 2 13 15 ES LF LS LF

19. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-19 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. Critical Path B 3 0 3 1 4 D 3 3 7 4 8 G 5 8 13 StartFinish A 2 0 2 C 2 2 4 F 3 4 7 10 13 E 4 4 8 H 2 13 15 ES LF LS LF Total Time = 15

20. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-20 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry Schedule & Slacks Activity ESEFLSLFLS-ES On Critical Path? A02020 Yes B03141 No C24240 Yes D37481 No E48480 Yes G4710136 No G8138 0 Yes H131513150 Yes

21. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-21 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry Meeting a Deadline 0.57 Standard Deviations 1615 Time - weeks

22. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-22 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 PERT Provided Project expected completion date: 15 weeks Probability of finishing in 16 or fewer days: 71.6% Identity of activities on critical path: A, C, E, G, and H Identity of activities with slack: B, D, and F Detailed schedule of start/finish dates

23. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-23 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 PERT - Sensitivity Analysis Impact of Increase (Decrease) in Critical Path Activity time Activity Time Successor Activity Parallel Activity Predecessor Activity ES Increase (decrease) No change EF Increase (decrease) No change LS Increase (decrease) Increase (Decrease) No change LF Increase (decrease) Increase (Decrease) No change Slack No change Increase (Decrease) No change

24. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-24 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Gantt Chart for General Foundry Activity12345678910101 1212 1313 1414 1515 A B C D E F G H

25. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-25 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry, Inc. PERT & Budgeting ABCDEFGHABCDEFGH 0 2 3 4 8 13 0 1 2 4 10 8 13 $11,000 $10,000 $13,000 $12,000 $14,000 $10,000 $16,000 $ 8,000 2324435223244352 Activity ESLS) Budgeted Cost per Week E(t) Total Budgeted Cost $22,000 $30,000 $26,000 $48,000 $56,000 $30,000 $80,000 $16,000 Total $308,000

26. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-26 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry Budget Ranges

27. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-27 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry Monitoring & Controlling

28. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-28 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Critical Path Method Steps in Project Crashing 1. Find normal critical path and identify critical activities. 2. Compute crash cost per week for all activities. 3. Select critical activity with smallest crash cost per week. Crash this activity 4. Check to make sure critical path is still critical. If not, find the new one. Return to step 3.

29. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-29 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 General Foundry Normal/Crash Costs & Times Activity Normal Time Crash Time Normal Cost Crash Cost Per Week On the Critical Path? A2122,00023,0001,000 Yes B3130,00034,0002,000 No C2126,00027,0001,000 Yes D4348,00049,0001,000 No E4256,00058,0001,000 Yes G3230,00030,500500 No G5280,00086,0002,000 Yes H2116,00019,0003,000 Yes

30. To accompany Quantitative Analysis for Management, 8e by Render/Stair/Hanna 13-30 © 2003 by Prentice Hall, Inc. Upper Saddle River, NJ 07458 Crash & Normal Times and Costs $34,000 $33,000 $32,000 $31,000 $30,000 Activity Cost Crash Cost Normal Cost Crash Time Normal Time Time (Weeks) 123 Normal Crash