1. Principle, Ariel Training Consultants
Project Management by
Miles M. Hamby, PhD
Principle, Ariel Training Consultants

2. Topics The Elements of Project Management
Elements of a Project Proposal Document
SOW, OBS, RAM, CPM/PERT Networks
Probabilistic Activity Times
Using Excel to create Gantt charts
Cost-Benefit and Earned Value Analysis

3. Unique (one-time effort) Fixed duration Specific goal
Nature of a Project
Unique (one-time effort)
Fixed duration
Specific goal

4. The Project Team
Includes engineers, line workers, HR personnel, budget experts, technical experts, outside consultants
Headed by the Project Manager
Must coordinate various skills of team members into single, focused effort
Great pressure due to uncertainty inherent in project schedule, budget, and quality.

5. If anything can go wrong – it will!
Nature of Project Management
Why manage a project?
Murphy’s Law
If anything can go wrong – it will!
Complete on-time
In budget
Meet expectations (quality)

6. Nature of Project Management
Controlling an activity for a relatively short period of time until project is completed, then operations begin.
Project manager not involved in operations.
3 components of PM:
Planning
Scheduling
Controlling individual activities.

7. The Project Management Process
PLANNING
SCHEDULING
CONTROLLING
GANTT
ON TIME
SOW
Scope
OBS
IN BUDGET
asdf 1 3 2 5 4 6
START
FINISH
PERT/CPM
CREDIT DEBIT
$24, $21,300
$34, $33,450
asdf
asdf
asdf
MEETS EXPECTATIONS
RAM
ACT
DESIGN
RESOUC
CPMSTR QA 1
O.P S 2 P O 3
RESOURCES $

8. Elements of Project Management
Project Control
Process of ensuring progress toward successful completion ~ on time, in budget, meet expectations.
Monitoring project to minimize deviations from project plan and schedule.
Corrective actions necessary if deviations occur.
Key elements of project control
Time management
Cost management
Performance management
Earned value analysis.

9. Project Planning Document
- a document for the customer, individuals, team members, groups, departments, subcontractors and suppliers, describing what is required for successful completion - on time, in budget, meet expectations.

10. The Project Planning Document
Cover page
TOC
SOW and Scope
OBS
RAM
Activity Schedule
PERT/CPM – AON diagram & Gantt Chart
Budgeting
Resources (Human and Materials)
Technology
Cost-Benefit and Earned Value Analysis (EVA)
Execution and Control Plan (Quality Assurance)
Protection of the Environment
Risk Assessment and Management

11. SOW and Scope
Statement of Work (SOW) – statement of work to be performed, justification describing the factors giving rise to need for project, expected duration (on time), total cost (budget), and performance standards (meeting expectations).
Scope – identification of boundaries and limitations on specific aspects of the project, including size, resources, work to be performed and performance standards

12. Organizational Breakdown Structure (OBS)
Wilson Bridge Renovation Project
Acme Construction Company
Organization Breakdown Structure (OBS)
Project Manager
Bob Smith
Design Manager
Jane Doe
Construction Mgr
Bill Jones
Electrical Mgr
Rene Flemming
Resources Mgr
John Henry
(Tasking)
(Tasking)
(Tasking)
(Tasking)

13. Responsibility Assignment Matrix
OBS leads to the responsibility assignment matrix (RAM)
RAM is a table or a chart showing which organizational units are responsible for work items.
Project Manager assigns work elements to organizational
units, departments, groups, individuals or subcontractors.
RAM shows who is responsible for oversight (O), performance (P), and support (S) of each task

14. Responsibility Assignment Matrix (RAM)
ACME Construction Company
Wilson Bridge Renovation
Responsibility Assignment Matrix (RAM)
Key: O = Oversight, P = Performance, S = Support
Activity
OBS Unit
Design
Construction
Electrical
Resources
1 – Design
O, P S
2 - Acquire materials
3 - Prepare foundation
4 - Set piles
5 - Construct piers P
6 - Construct roadway

15. Project Scheduling
Project Schedule evolves from planning documents, with focus on timely completion.
Scheduling is the source of most conflicts and problems.
Schedule development steps:
1. Define activities
2. Sequence activities,
3. Estimate activity times
4. Construct schedule.
Gantt chart and CPM/PERT techniques used.
Computer software packages available, e.g. Microsoft Project.

16. Work Breakdown Structure (WBS)
Basis for project development, management , schedule, resources and modifications.
WBS breaks down project into major modules.
Modules are further broken down into activities and, finally, into individual tasks.
Identifies activities, tasks, resource requirements and relationships between modules and activities.

17. Activity Schedule ACME Construction Company Wilson Bridge Renovation
ACTVITY
PREDESSOR
DURATION (months)
1 – Design -- 14
2 - Acquire materials 1
3 - Prepare foundation
4 - Set piles 3
5 - Construct piers 4 8
6 - Construct roadway 5

18. CPM – Critical Path Method
CPM/PERT
CPM – Critical Path Method
PERT – Project Evaluation and Review Technique
AON – Activity on Node

19. CPM/PERT Activity-on-Node (AON) Network
A branch reflects an activity of a project.
A node represents the beginning and end of activities, referred to as events.
Branches in the network indicate precedence relationships.
When an activity is completed at a node, it has been realized. 1 14 2 3 4 5 8 6
START
FINISH

20. AON Concurrent Activities
Network aids in planning and scheduling.
Time duration of activities shown on branches.
Activities can occur at the same time (concurrently).
A dummy activity shows a precedence relationship but reflects no passage of time.
Two or more activities cannot share the same start and end nodes. 1 12 2 3 4 5 8 6
START
FINISH

21. The Critical Path (CPM)
The critical path is the longest path through the network; the minimum time the network can be completed
Path A: 1  2  4  5  6
= 28 month
Path B: 1  3  4  5  6
= 29 months  Critical Path

22. Gantt Chart Bar chart developed by Henry Gantt (1914).
A visual display of project schedule showing activity start and finish times and where extra time is available.
Based on Activity Schedule – order, duration, predecessors
Drawback: precedence relationships are not always discernible.

23. Activity Early Start Schedule (for Gantt Chart)
ACME Construction Company
Wilson Bridge Renovation
Activity Schedule
ACTVITY
EARLY START
DURATION (months)
1 – Design 6
2 - Acquire materials 7
3 - Prepare foundation 12 1
4 - Set piles 13
5 - Construct piers 19 8
6 - Construct roadway 27

24. Gantt Chart

25. House Building Project Example
No. Activity Predecessor Duration (Months)
Design house and
obtain financing
2. Lay foundation
3. Order Materials
4. Build house ,
5. Select paint ,
6. Select carpet
7. Finish work ,

26. The Critical Path (CPM)
The critical path is the longest path through the network; the minimum time the network can be completed.
Path A: 1  2  4  7,
= 9 month CPM
Path B: 1  2  5  6  7,
= 8 months
Path C: 1  3  4  7,
= 8 months
Path D: 1  3  5  6  7,
= 7 months

27. Activity Early Start Times

28. AON Earliest/Latest Times Configuration
Earliest Start
Earliest Finish
Activity 1 3 12
Duration
Latest Start
Latest Finish

29. Activity Scheduling: Earliest/Latest Times
ES – Earliest Start time an activity can start: ES = Maximum (EF)
EF - Earliest Finish, start time plus the activity time: EF = ES + t 1 12 3 1 12 3 1 12 3 1 12 3 1 12 3

30. Computer Network Example
Computer Network Project
Activity
Optimistic
(a)
Most
Probable
(m)
Pessimistic
(b)
Weighted
Mean Time (t)
Variance
(v)
1 – Equipment Installation 6 8 10
2 – System Development 3 9
3 – Position Recruiting 1 5
4 – Equip testing & Mod 2 4 12
5 – Manual Testing
6 – Job Training
7 – Orientation
8 – System training 11
9 – System Testing
10 – Final Debugging 7
11 – System Changeover 13

31. AON Probabilistic Times Configuration1
2, 3, 5
Activity
Optimistic (a)
Most likely (m)
Pessimistic (b)

32. AON Probabilistic Times10
1,4,7 8
3,7,11 4
2,4,12 6
3,4,5 7
2,2,2 3
1,3,5 1
6,8,10 9
2,4,6 11
1,10,13 5
2,3,4 2
3,6,9
FINISH
START
Computer Network Project

33. Probabilistic Activity Times
Activity time estimates usually cannot be made with certainty.
PERT used for probabilistic activity duration times.
In PERT, three time estimates are used: most likely time (m), the optimistic time (a) , and the pessimistic time (b).
These provide an estimate of the mean and variance of a beta distribution:
Weighted Mean (expected time):
Variance:

34. Computer Network Example
Computer Network Project
Activity
Optimistic
(a)
Most
Probable
(m)
Pessimistic
(b)
Weighted
Mean Time (t)
Variance
(v)
1 – Equipment Installation 6 8 10
.44 (4/9)
2 – System Development 3 9 1
3 – Position Recruiting 5
4 – Equip testing & Mod 2 4 12
2.78 (25/9)
5 – Manual Testing
.11 (1/9)
6 – Job Training
7 – Orientation
1.78 (0)
8 – System training 11 7
2.11 (16/9)
9 – System Testing
10 – Final Debugging
1 (9/9)
11 – System Changeover 13
4 (36/9) 34 34

35. Probabilistic Activity Times
Critical Path
Critical Path is the path with the longest mean time and is also the Expected Project Time (tp)
Path
Mean Times
1  4  10
= 17 weeks
2  5  8
= 16 weeks
2  5  9  11
= 22 weeks CPM
3  6  8
= 14 weeks
3  6  9  11
= 20 weeks
3  7  11
= 14 weeks

36. Expected Project Time and Variance
The Project Variance (vp) is the sum of the variances of the critical path activities.
Critical Path:  5  9  11
Project time: = 22 weeks
Variance: = 7.22 weeks
Standard Deviation: Sqrt of Variance = 2.69

37. Probability Analysis of a Project Network
Expected project time (tp) is assumed to be normally distributed (based on central limit theorem).
As such, the expected project time (tp) and variance (vp) are interpreted as the mean () and variance (2) of a normal distribution
Project time: = 22 weeks
Variance: = 7.22 weeks
Std Dev: Sqrt 7.22 = 2.69
-3 = weeks
Time (Duration)
3 = weeks
 = 22 weeks

38. Probability Analysis of a Project Network
Example 1
From Computer Network example:
Critical Path:  5  9  11
Project time: = 22 weeks
Variance: = 7.22 weeks
What is the probability that the new order processing system will be ready in 20 weeks?
µ = 22 weeks
2 = 7.22, therefore,  = weeks
Z = (x-)/  = ( )/2.69 = -.74

39. Table of Areas (p-values)
+/- Z
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3.0
0.0000
0.0398
0.0793
0.1179
0.1554
0.1915
0.2257
0.2580
0.2881
0.3159
0.3413
0.3643
0.3849
0.4032
0.4192
0.4332
0.4452
0.4554
0.4641
0.4713
0.4772
0.4821
0.4861
0.4893
0.4918
0.4938
0.4953
0.4965
0.4974
0.4981
0.4987
0.0040
0.0438
0.0832
0.1217
0.1591
0.1950
0.2291
0.2611
0.2910
0.3186
0.3483
0.3665
0.3869
0.4049
0.4207
0.4345
0.4463
0.4564
0.4649
0.4719
0.4778
0.4826
0.4864
0.4896
0.4920
0.4940
0.4955
0.4966
0.4975
0.4982
0.0080
0.0478
0.0871
0.1255
0.1628
0.1985
0.2324
0.2642
0.2939
0.3212
0.3461
0.3686
0.3888
0.4066
0.4222
0.4357
0.4474
0.4573
0.4656
0.4726
0.4783
0.4830
0.4868
0.4898
0.4922
0.4941
0.4956
0.4967
0.4976
0.0120
0.0517
0.0910
0.1293
0.1664
0.2090
0.2357
0.2673
0.2967
0.3238
0.3485
0.3708
0.3907
0.4082
0.4236
0.4370
0.4484
0.4582
0.4664
0.4732
0.4788
0.4834
0.4871
0.4901
0.4925
0.4943
0.4957
0.4968
0.4977
0.4983
0.4988
0.0160
0.0557
0.0948
0.1331
0.1700
0.2054
0.2389
0.2704
0.2995
0.3264
0.3508
0.3729
0.3925
0.4099
0.4251
0.4382
0.4495
0.4591
0.4671
0.4738
0.4793
0.4838
0.4875
0.4904
0.4927
04945
0.4959
0.4969
0.4984
0.0199
0.0596
0.0987
0.1368
0.1736
0.2088
0.2422
0.2734
0.3023
0.3289
0.3531
0.3749
0.3944
0.4115
0.4265
0.4394
0.4505
0.4599
0.4678
0.4744
0.4798
0.4842
0.4878
0.4906
0.4929
0.4946
0.4960
0.4970
0.4978
0.4989
0.0239
0.0636
0.1026
0.1406
0.1772
0.2123
0.2454
0.2764
0.3051
0.3315
0.3554
0.3770
0.3962
0.4131
0.4279
0.4406
0.4515
0.4608
0.4686
0.4750
0.4803
0.4846
0.4881
0.4909
0.4931
0.4948
0.4961
0.4971
0.4979
0.4985
0.0279
0.0675
0.1064
0.1413
0.1808
0.2157
0.2486
0.2794
0.3078
0.3340
0.3577
0.3790
0.3980
0.4147
0.4292
0.4418
0.4525
0.4616
0.4693
0.4756
0.4808
0.4850
0.4884
0.4911
0.4932
0.4949
0.4962
0.4972
0.0319
0.0714
0.1103
0.1480
0.1844
0.2190
0.2517
0.2823
0.3106
0.3365
0.3599
0.3810
0.3997
0.4162
0.4306
0.4429
0.4535
0.4625
0.4699
0.4761
0.4812
0.4854
0.4887
0.4913
0.4934
0.4951
0.4963
0.4973
0.4980
0.4986
0.4990
0.0359
0.0753
0.1141
0.1517
0.1879
0.2224
0.2549
0.2850
0.3133
0.3389
0.3621
0.3830
0.4015
0.4177
0.4319
0.4441
0.4545
0.4633
0.4706
0.4767
0.4817
0.4857
0.4890
0.4916
0.4936
0.4952
0.4964

40. Probability Analysis of a Project Network
Z value of -.74 corresponds to probability of (table of areas under the curve). Therefore, the probability of completing the project in 20 weeks is =
x - µ 
Z =
2.69 =
P = .2704
= .2296
Z= -.74 (20 weeks)
Time (Duration)
 = 22 weeks

41. Cost – Benefit Analysis
Given an amount of capital to invest, what is the cost and what is the benefit?
Project Owner’s perspective ~ is the project worth doing, or do we invest in something else, like another project or the market?
Project Manager’s perspective ~ what do I do with money waiting to be spent on the project – keep it in the bank, or invest it?

42. Cost - Benefit
Project – replace old computerized production control system for an auto assembly plant
The project will cost $3M over 3 years and save $7M over 10 years
However, if we invest $3M over ten years, we make $8M, but lose $5M in extra costs from the outdated system
ITEM
BENEFIT
($M)
COST
GAIN or (LOSS)
(Benefit-Cost)
New System
7 (in savings)
3 (install new system) 4
Old System
8 (from investment)
5 (using old system) 3

43. Earned Value Analysis (EVA)
Measures progress of a project in terms of:
Planned Value (PV) or Budgeted Cost Work Scheduled (BCWS) – what is supposed to be done
Earned Value (EV) or Budgeted Cost, Work Performed (BCWP) – what has actually been done
Actual Cost (AC) or Work Performed (ACWP) – actual labor and materials expended

44. Earned Value - Example Project: Build a deck
PV: 40 labor-hours x $20/hr = $800
+ $600 materials
$1,400 PV (BCWS)
Changes after work begun: Labor rate now $22/hr, materials price increase to $700, project only 95% completed after 40 hours
EV: 95% completed x $1,400 = $1,330 EV(BCWP)
AC: hrs x $22/hr = $880 labor
materials
$1,580 AC (ACWP)

45. Should be proportionate to project time
Earned Value
Should be proportionate to project time
Project Time
Monitoring Schedule
1 week
1 month
6 months
> 6 months
Daily
Twice weekly
Weekly
Monthly

46. End of Chapter