1. Project Management
Chapter 17

2. Learning Objectives Describe the project life cycle
Give a general description of the critical path method
Construct simple network diagrams
Describe activity “crashing” and solve typical problems

3. What is Project Management?
[YouTube] Introduction to Project Management

4. Projects Project Operations
Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame
Examples:
Tucson Streetcar
Producing a movie
Product development
Operations
work done to sustain the business

5. The Nature of Projects
Projects go through a series of stages – a life cycle
Initiating
Planning
Executing
Monitoring and Controlling
Closing
Projects bring together people with a diversity of knowledge and skills, most of whom remain associated with the project for less than its full life
From project to project
“on loan”
Consulting firms
Organizational structure affects how projects are managed
Matrix organization: functional and project managers share workers and facilities.

6. Matrix management (Wikipedia)

7. MIS 373: Basic Operations Management
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 is responsible for:
Work
Human resources
Communications
Quality
Time
Costs
Scope
MIS 373: Basic Operations Management

8. MIS 373: Basic Operations Management
Project Management
Project management is “the application of knowledge, skills, tools and techniques to project activities to meet project requirements” (PMBOK® Guide, Fourth Edition, 2008)
Involves continual trade-offs
Manager’s job - manage these trade-offs.
Project management knowledge draws on ten areas:
Integration
Scope
Time
Cost
Quality
Procurement
Human resources
Communications
Risk management
Stakeholder management
MIS 373: Basic Operations Management

9. MIS 373: Basic Operations Management
Source: PMBOK® Guide
Integration
Develop Project Charter
Develop Project Management Plan
Direct and Manage Project Work
Monitor and Control Project Work
Perform Integrated Change Control
Close Project or Phase
Scope
Plan Scope Management
Collect Requirements
Define Scope
Create Work Breakdown Structure
Verify Scope
Control Scope
Time
Plan Schedule Management
Define Activities
Sequence Activities
Estimate Activity Resources
Estimate Activity Durations
Develop Schedule
Control Schedule
Cost
Plan Cost Management
Estimate Costs
Determine Budget
Control Costs
Quality
Plan Quality
Perform Quality Assurance
Perform Quality Control
Human Resources
Plan Human Resource Management
Acquire Project Team
Develop Human Resource Plan
Manage Project Team
Communication
Plan Communications Management
Manage Communications
Control Communications
Risk Management
Plan Risk Management
Identify Risks
Perform Qualitative Risk Analysis
Perform Quantitative Risk Analysis
Plan Risk Responses
Control Risks
Procurement
Plan Procurement Management
Conduct Procurements
Administer Procurements
Close Procurements
Stakeholder Management
Identify Stakeholders
Plan Stakeholder Management
Manage Stakeholder Engagement
Control Stakeholder Engagement
MIS 373: Basic Operations Management

10. The Project Management Triangle
Project’s Triple Constraints (Key Metrics)
Quality
Performance Objectives (Scope)
Time
Cost
MIS 373: Basic Operations Management

11. MIS 373: Basic Operations Management
Behavioral Issues
Behavioral problems can be created or exacerbated by
Decentralized decision making
Stress of achieving project milestones on time and within budget
Surprises
The team must be able to function as a unit
Interpersonal and coping skills are very important
Conflict resolution and negotiation can be an important part of a project manager’s job
MIS 373: Basic Operations Management

12. Tools in Project Management
Key tools:
Work Breakdown Structure
Gantt charts
Network diagram
Critical path method
Crashing
MIS 373: Basic Operations Management

13. 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
Project
Level 1
Level 2
Level 3
Level 4
MIS 373: Basic Operations Management

14. Immediate Predecessor
Gantt Chart
start #
Task
Duration
(weeks)
Immediate Predecessor
Weeks after start 1
Locate facility 8 - 3
Interview 4
Hire & Train 9 2
Order furniture 6 5
Remodel 11
Furniture setup 7
Move in
4,5,6
MIS 373: Basic Operations Management

15. 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

16. Network Conventions (AON)b c e d
(dummy) Start
Node
MIS 373: Basic Operations Management

17. Network Conventions (AOA)b c a c b a c a c b
dummy
Activity b d
MIS 373: Basic Operations Management

18. 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
MIS 373: Basic Operations Management

19. Project Network – Activity on Node (AON)#
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 1 S 3 2 5 6
Locate facilities
Order furniture
Furniture setup
Interview
Remodel
Move in 4
Hire & train 7
MIS 373: Basic Operations Management

20. Project Network – Activity on Arrow (AOA)#
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
Order furniture
Furniture setup
Remodel
Locate facilities
Move in
Interview
Hire and train
MIS 373: Basic Operations Management

21. Critical Path Method (CPM)
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.

22. Critical Path Method (CPM)
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

23. 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

24. Project Network – Activity on Node (AON)#
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
Critical Path ? 1 S 3 2 5 6
Locate facilities
Order furniture
Furniture setup
Interview
Remodel
Move in 4
Hire & train 7
MIS 373: Basic Operations Management

25. Immediate Predecessor
Critical Path
Critical path: the longest path #
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 1 S 3 2 5 6
Locate facilities
Order furniture
Furniture setup
Interview
Remodel
Move in 4
Hire & train 7 8 11 9
Length of
Path (1, 2, 6, 7) = = 18
Path (1, 5, 7) = = 20
Path (3, 4, 7) = = 14
Critical path &
expected finish time
MIS 373: Basic Operations Management

26. Immediate Predecessor
Gantt Chart
Critical Path
start #
Task
Duration
(weeks)
Immediate Predecessor
Weeks after start 1
Locate facility 8 - 3
Interview 4
Hire & Train 9 2
Order furniture 6 5
Remodel 11
Furniture setup 7
Move in
4,5,6
MIS 373: Basic Operations Management

27. Forward Pass

28. Forward & Backward Pass

29. 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

30. 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

31. 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

32. 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

33. 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
17-33

34. 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

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

36. 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

37. 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
17-37

38. CPM Disadvantages/ Problems Advantages: Forces managers to organize
Important activities may be omitted
Precedence relationships may not be correct
Time estimates may be inaccurate
May focus solely on critical path
Advantages:
Forces managers to organize
Provides graphic display of activities
Identifies
Critical activities
Slack activities

39. 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 (e.g., additional personnel, more efficient equipment), thereby realizing savings in indirect project costs (e.g., facilities, supervision, incentives)

40. Crashing Activities
17-40

41. I-10 Widening: Prince Road to 29th Street
Started on January Originally expected to be complete in three years, but completed by August 2009, approximately eight months ahead of schedule.
The contractor (Kiewit/Sundt Joint Venture) got a $920,000 bonus for finishing early. The bonus was based on a $23,000-per-day incentive (for finishing up to 40 days early).

42. 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

43. 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

44. MIS 373: Basic Operations Management6 a 4 d 5 c 10 b 9 e 2 f
Indirect costs: $1,000 / day
(that is, the entire project saves
$1000 if it finishes one day earlier,
$2000 if it finishes two day earlier,
and so on.)
Activity
Normal time
[days]
Crash (min) time
Available time
(crash-normal)
Cost to Crash [$/day] a 6 - b 10 8 2
500 c 5 4 1
300 d 3
700 e 9 7
600 f
800
MIS 373: Basic Operations Management

45. MIS 373: Basic Operations Management6 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
MIS 373: Basic Operations Management

46. MIS 373: Basic Operations Management
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 4
MIS 373: Basic Operations Management

47. MIS 373: Basic Operations Management
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 e by 1 day: cost $600 < $1,000 (CP=18 days)
(may crash activity e by 1 more day) 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.
MIS 373: Basic Operations Management

48. MIS 373: Basic Operations Management6 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)
MIS 373: Basic Operations Management

49. MIS 373: Basic Operations Management
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) 6 a 4 d c 10 b 8 e 1 f 2
MIS 373: Basic Operations Management

50. MIS 373: Basic Operations Management6 a 4 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!
MIS 373: Basic Operations Management

51. MIS 373: Basic Operations Management
Length after crashing
Path\crash n=
a-b-f
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
MIS 373: Basic Operations Management

52. Exercise
Costs for a project are $12,000 per week for as long as the project lasts. The project manager has supplied the cost and time information shown. Use the information to
Determine an optimum crashing plan.
Summarize the total costs for the plan.

53. Solution Determine an optimum crashing plan.
Step 1: Compute path lengths and identify the critical path:
Step 2: Rank critical activities according to crash costs:
Activity b should be shortened one week since it has the lower crashing cost. This would reduce indirect costs by $12,000 at a cost of $3,000, for a net savings of $9,000. 13 2

54. Solution Determine an optimum crashing plan.
Step 3: Rank activities by crashing costs on the two critical paths:
At this point, paths a-b and e-f would both have a length of 23 weeks, so both would be critical.
Choose one activity (the least costly) on each path to crash: b on a-b and f on e-f, for a total cost of $4,000 + $2,000 = $6,000 and a net savings of $12,000 − $6,000 = $6,000. 13 12 2 1 7

55. Solution Determine an optimum crashing plan.
Step 4: Check to see which path(s) might be critical:
a-b and e-f would be 22 weeks in length, and c-d would still be 19 weeks.
Step 5: Rank activities on the critical paths:
Crash b on path a-b and e on e-f for a cost of $4,000 + $6,000 = $10,000, for a net savings of $12,000 − $10,000 = $2,000. 13 12 11 2 1 14 2 7

56. Solution Determine an optimum crashing plan.
Step 6: Check to see which path(s) might be critical:
Paths a-b and e-f would be 21 weeks in length, and c-d would still be 19 weeks.
Step 7: At this point, no further improvement is possible:
Paths a-b and e-f would be 21 weeks in length, and one activity from each path would have to be shortened. This would mean activity a at $11,000 and e at $6,000 for a total of $17,000, which exceeds the $12,000 potential savings in costs. 13 12 11 2 1 14 2 7

57. Solution Summarize the total costs for the plan.
The following table summarizes the results, showing the length of the project after crashing n weeks:
A summary of costs for the preceding schedule would look like this:
* Total Cost = Cumulative Crashing Cost + Indirect Cost
Crash: b
Crash: b, f
Crash: b, e
No crash

58. Project Management Software
Specialized software used to help manage projects
Assign resources
Evaluate changes
Track performance/schedule
Advantages
Imposes a methodology
Provides logical planning structure
Enhances team communication
Flag constraint violations
Generates reports
Enables what-if scenarios
Generates various chart types
MIS 373: Basic Operations Management

59. So far over 150 software are listed on Wikipedia “Comparison of project management software” page.

60. MIS 373: Basic Operations Management
Risk Management
Risks are an inherent part of project management
Risks relate to occurrence of events that have undesirable consequences such as
Delays
Increased costs
Inability to meet technical specifications
Good risk management involves
Identifying as many risks as possible
Analyzing and assessing those risks
Working to minimize the probability of their occurrence
Establishing contingency plans and budgets for dealing with any that do occur
MIS 373: Basic Operations Management

61. Recap