Transcript PowerPoint

Projects
1.
2.
3.
4.
5.
6.
Explain what project management is and why it
is important.
Identify the different ways projects can be
structured in an organization.
Describe how project objectives are set.
Describe how projects are organized into
components using work breakdown structure
Determine the “critical path” for a project.
Demonstrate how to “crash,” or reduce the
length, of a project.



LO 1
Building: a ship, a satellite, an oil rig, and a
nuclear plant.
Developing: computer programs, an
advertising campaign, a new product, a
new process, and training materials.
Implementing: new technologies and work
procedures.


Project: 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
LO 1
LO 1
The 4th
dimension:
client
satisfaction
LO 1
Project Life Cycle: changing patterns of
resource usage and level of activity over
the course of the project
LO 1

Stages of a Conventional Project:
◦
◦
◦
◦
◦
LO 1
Slow beginning
Buildup of size
Peak
Begin a decline
Termination
LO 1
Time distribution of project effort is
characterized by slow-rapid-slow
LO 1

LO 1
Risk during project life cycle
◦ With most projects there is some
uncertainty about the ability to meet
project goals
◦ Uncertainty of outcome is greatest at the
start of a project
◦ Uncertainty decreases as the project
moves toward completion
Try to avoid the “90-90 rule of project
management”:
The first 90% of the project
takes 90% of the time, the last
10% takes the other 90%.
LO 1
What does this rule really
mean?
LO 1
 During the life cycle cycle, project
management is accomplished through
the use of processes such as:
 Initiating, planning, executing, controlling,
and closing
 Many of these processes are iterative in
nature because the project is being
progressively elaborated
LO 1
An Alternate View*
Stage 1: Excitement – Euphoria
Stage 2: Disenchantment
Stage 3: Search for the Guilty
Stage 4: Punishment of the Innocent
Stage 5: Distinction for the Uninvolved
*Author unknown but believed to have
perished in stage 4
LO 1
LO 2
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Pure project
Functional project
Matrix project
LO 2
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Advantages
◦
◦
◦
◦

The project manager has full authority
Team members report to one boss
Shortened communication lines
Team pride, motivation, and commitment are high
Disadvantages
◦
◦
◦
◦
LO 2
Duplication of resources
Organizational goals and policies are ignored
Lack of technology transfer
Team members have no functional area "home"
LO 2
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Advantages
◦
◦
◦
◦
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A team member can work on several projects
Technical expertise maintained in functional area
Functional area is “home” after project completed
Critical mass of specialized knowledge
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
LO 2
LO 2
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Advantages
◦
◦
◦
◦
◦

Better communications between functional areas
Project manager held responsible for success
Duplication of resources is minimized
Functional “home” for team members
Policies of the parent organization are followed
Disadvantages
◦ Too many bosses
◦ Depends on project manager’s negotiating skills
◦ Potential for sub-optimization
LO 2
Why Set Project Objectives
 To provide direction for project
activities
 To enable measuring results against
prior exceptions
 Resource usage (manpower, materials,
etc.)
◦
◦

LO 3
Schedule integrity
Quality of work
To determine specific goals which will
provide maximum effectiveness of
project activities
Requirements for Project Objectives
 Achievable (time, resources, staff)
 Understandable (vs. complex)
 Specific (vs. general, vague statements)
 Tangible (“deliverables”)
 Measurable (resources, schedule,
quality)
 Consistent (with strategy, programs,
policies, procedures)
 Assignable (department or individual)
LO 2
Example: D.U. Singer Project
Title: Permanent Antiseptic Production StartUp
 Objectives:
◦ Develop a comprehensive plan for the production of
a new, permanent antiseptic
◦ Complete development and testing of a
manufacturing process that:
 Meets all current FDA, EPA, and OSHA regulations as
well as internal specifications
 produces 95% yield of product (full packaged) at a level
of 80% of full production goal of 10 million liters per
year
LO 2
B e carefu l o f th e jarg on !
LO 2
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
Statement of work (SOW): a written
description of the objectives to be achieved
Task: a further subdivision of a project
◦ Usually shorter than several months
◦ Performed by one group or organization

Work package: a group of activities combined
to be assignable to a single organizational
unit
LO 4
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
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Project milestones: specific events on the
project
Work breakdown structure (WBS): defines the
hierarchy of project tasks, subtasks, and work
packages
Activities: pieces of work that consume time
◦ Defined within the context of the WBS
LO 4
LO 4
LO 4
Work Breakdown Structure
Program: New Product Introduction
1.0 Project 1: Engineering Development
1.1 Task 1:
Run pilot test
1.2 Task 2:
Review process costs
and efficiencies
1.3 Task 3:
Prepare Capital
Equipment List
2.0 Project 2: Market Survey
2.1 Task 1:
Complete Market Survey
2.2 Task 2:
Analyze Survey Results
2.3 Task 3:
Prepare Marketing Plan
LO 4
Work Breakdown Structure
3.0 Project 3: Manufacturing Start-up
3.1 Task 1:
Install and Test New Equipment
3.2 Task 2:
Establish Manufacturing
Procedures
3.3 Task 3:
Detailed Testing of Initial
Output
4.0 Project 4: Sales Force Training
4.1 Task 1:
Select Sales People
4.2 Task 2:
Select Distributors
4.3 Task 3:
Train Sales Force and
Distributors
LO 4
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
Charts are useful because their visual
presentation is easily understood
Software is available to create the charts
Gantt chart: a bar chart showing both the
amount of time involved and the sequence in
which activities can be performed
LO 4
LO 4
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LO 5
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
A project must have:
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
LO 5
well-defined jobs or tasks whose
completion marks the end of the
project;
independent jobs or tasks;
and tasks that follow a given sequence.

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
LO 5

CPM with Three Activity Time Estimates

Time-Cost Models
◦ Used when activity times are uncertain
◦ Used to obtain the same information as the
Single Time Estimate model and probability
information
◦ Used when cost trade-off information is a major
consideration in planning
◦ Used to determine the least cost in reducing total
project time
1.
2.
3.
4.
Identify each activity to be done and
estimate how long it will take
Determine the requires sequence and
construct a network diagram
Determine the critical path
Determine the early start/finish and late
start/finish schedule
LO 5
Activity
Designation Immed. Pred. Time (Weeks)
Assess customer's needs
A
None
2
Write and submit proposal
B
A
1
C
B
1
Obtain approval
D
C
2
Develop service vision and goals
Train employees
E
C
5
Quality improvement pilot groups
F
D, E
5
Write assessment report
G
F
1
Develop a critical path diagram and determine
the duration of the critical path and slack times
for all activities.
LO 5
Act.
Imed. Pred.
Time
A
None
2
B
A
1
C
B
1
D
C
2
E
C
5
F
D,E
5
G
F
1
A(2)
B(1)
D(2)
C(1)
F(5)
E(5)
LO 5
G(1)
Activities on the critical path cannot be
delayed without delaying the
completion of the project
 There are two paths:
A – B – C – D – F – G: 12 weeks
A – B – C – E – F – G: 15 weeks
 Activity D can be delayed by up to 3
weeks without delaying the project
 The longest path is critical – why?

LO 5
ES=4
EF=6
ES=0
EF=2
A(2)
ES=
2
EF=
B(1)
3
ES=3 D(2)
EF=4
ES=9 ES=14
EF=14 EF=15
C(1)
F(5)
Hint: Start with ES=0
and go forward in the
network from A to G.
LO 5
ES=4
EF=9
E(5)
G(1)
Hint: Start with LF=15
or the total time of the
project and go
ES=4 backward in the
EF=6 network from G to A.
ES=0
EF=2
A(2)
LS=0
LF=2
ES=2
EF=3
ES=3
EF=4
B(1)
C(1)
LS=2
LF=3
LS=3
LF=4
D(2)
LS=7
LF=9
ES=4
EF=9
E(5)
LS=4
LF=9
LO 5
ES=9
EF=14
ES=14
EF=15
F(5)
G(1)
LS=9
LF=14
LS=14
LF=15
ES=0 ES=2
EF=2 EF=3
A(2)
B(1)
LS=0 LS=2
LF=2 LF=3
ES=4
EF=6
D(2)
ES=3
EF=4 LS=7
LF=9
C(1)
ES=4
LS=3
EF=9
LF=4
E(5)
Slack=(7-4)=(9-6)= 3 Wks
ES=9 ES=14
EF=14 EF=15
G(1)
F(5)
LS=9 LS=14
LF=14 LF=15
LS=4 Duration=15 weeks
LF=9
LO 5
Activity
LO 5
Description
Immed. Preds.
A
Build internal components
-
B
Modify roof and floor
-
C
Construct collection stack
A
D
Pour concrete and install
frame
A, B
E
Build high-temperature
burner
C
F
Install pollution control
system
C
G
Install air pollution device
D, E
H
Inspect and test
F, G
2
A
2
4
E
Start
3
B
4
D
Start is a “Dummy”
activity with 0 duration
LO 5
F
2
C
3
H
5
G
LO 5
ES
LS
Activity
Duratio
n
Latest
Start
Activity
Name
Earliest
Start
EF
Earliest
Finish
LF
Latest
Finish
F
A
C
E
Start
B
LO 5
D
H
G

Four paths in the network:
Path
Path
Path
Path

LO 5
1:
2:
3:
4:
Start
Start
Start
Start
–
–
–
–
A – C – F – H: 9 weeks
A – C – E – G – H: 15 weeks
A – D – G – H: 13 weeks
B – D – G – H: 14 weeks
Path 2 is critical
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A, C, E, G, and H are on the critical path and
so they have 0 slack
B is on path 4, so its slack is 15 – 14 = 1
D is on paths 3 and 4, so its slack is 15 – Max
(13,14) = 1
F is on path 1, so its slack is 15 – 9 = 6
An activity can be delayed by its slack and not
delay the project completion
LO 5
A
0 H2
0 A 2
2
Slack=0
0 HStart
0
0
0
0
BB
Start
0 H3
4
1
3
Slack=1
LO 5
C
2 H4
2 C4
2
Slack=0
FF
4 H7
13
10
3
E
4 HF 8 Slack=6
8
4
4
Slack=0 G
DD
3 H7
8 GH 13
8
13
4
8
4
5
Slack=1
Slack=0
H
13 H 15
15
13
2
Slack=0
Great Valley General Hospital
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install
frame
E Build high-temperature
burner
F Install pollution control
system
G Install air pollution device
H Inspect and test
LO 5
1 2 3 4 5 6 7 8 9 10 1112 13
1415 16
LO 5
LO 5

A-C-F-G:
A-C-E-G:
A-B-D-F-G:
A-B-D-E-G:

Paths A-C-F-G and A-B-D-F-G are both

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
critical
38
35
38
35
LO 5

If a single time estimate is not reliable, then
use three time estimates
◦ a = Optimistic (Minimum)
◦ b = Pessimistic (Maximum)
◦ m = Most likely

Allows us to obtain a probability estimate for
completion time for the project
LO 5
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28
LO 5
ET(A)=
[3+4(6)+15]/6
T a sk
A
B
C
D
E
F
G
H
I
Im m e d ia te
P re d e c e so rs
N one
N one
A
A
C
D
B
E ,F
G ,H
E x p e c te d T im e =
LO 5
E x p e c te d
T im e
7
5 .3 3 3
14
5
11
7
11
4
18
ET(A)=42/6=7
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28
O p t. T im e + 4 (M o s t L i k e ly T im e ) + P e s s . T im e
6
T a sk
A
B
C
D
E
F
G
H
I
Im m e d ia te
P re d e c e so rs
N one
N one
A
A
C
D
B
E ,F
G ,H
E x p e c te d T im e =
LO 5
ET(B)=
[2+4(4)+14]/6
E x p e c te d
T im e
7
5 .3 3 3
14
5
11
7
11
4
18
ET(B)=32/6=5.333
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28
O p t. T im e + 4 (M o s t L i k e ly T im e ) + P e s s . T im e
6
T a sk
A
B
C
D
E
F
G
H
I
Im m e d ia te
P re d e c e so rs
N one
N one
A
A
C
D
B
E ,F
G ,H
E x p e c te d T im e =
LO 5
ET(C)=
[6+4(12)+30]/6
E x p e c te d
T im e
7
5 .3 3 3
14
5
11
7
11
4
18
ET(C)=84/6=14
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28
O p t. T im e + 4 (M o s t L i k e ly T im e ) + P e s s . T im e
6
Network
Duration = 54 Days
C(14)
E(11)
H(4)
A(7)
D(5)
F(7)
I(18)
B
(5.333)
LO 5
G(11)
Probability Exercise
What is the probability of finishing this project in
less than 53 days?
p(t < D)
t
D=53 TE = 54
Z =
LO 5
D - TE

 cp
2
A c tiv ity v a ria n c e , 
a
T a sk
A
B
C
D
E
F
G
H
I
2
=
(
P e s s im . - O p tim .
m
2
b
O p tim istic M o st L ik e ly P e ssim istic
3
6
15
2
4
14
6
12
30
2
5
8
5
11
17
3
6
15
3
9
27
1
4
7
4
19
28
(Sum the variance along the
critical path.)
LO 5
6
)
V a ria n c e
4

16
4
1
16
2
= 41
p(t < D)
t
D=53
Z =
TE = 54
D - TE

 cp
2
=
53 - 54
41
= -.1 5 6
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.
LO 5

LO 5
What is the probability that the project
duration will exceed 56 weeks?
p(t < D)
TE = 54
Z =
D - TE

 cp
2
=
t
D=56
56 - 54
41
= .3 1 2
p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312))
LO 5
LO 5
LO 5
Two critical paths:
A-C-F-G: var. = 11 8/9 = 11.89
A-B-D-F-G var. = 10 2/9 = 10.33
Take larger var.
Probabilit
Z 
y of Finishing
D  TE
  cp

35  38
2
LO 5
So prob  0.1922
11 . 89
in 35 Weeks
  0 . 87

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
LO 6
1.
2.
3.
4.
5.
Prepare a CPM-type network diagram
Determine the cost per unit of time to
expedite each activity
Compute the critical path
Shorten the critical path at the least cost
Plot project direct, indirect, and total-cost
curves and find the minimum-cost schedule
LO 6
LO 6
LO 6
LO 6
Assumes indirect cost is a constant
$10 up to 8 days and increases
$5/day thereafter
8 days is lowest total cost
LO 6

Four paths in the network:
Path
Path
Path
Path



LO 6
1:
2:
3:
4:
Start
Start
Start
Start
–
–
–
–
A – C – F – H: 9 weeks
A – C – E – G – H: 15 weeks
A – D – G – H: 13 weeks
B – D – G – H: 14 weeks
Path 2 is critical
Assume $0 indirect costs
Desire to crash this project by two weeks
at the smallest direct cost
Act. NT CT NC
CC
CC/WK CP?
A
2
1 22,000 22,750
750
Y
B
3
1 30,000 34,000 2000
N
C
2
1 26,000 27,000 1,000
Y
D
4
3 48,000 49,000 1,000
N
E
4
2 56,000 58,000 1,000
Y
F
3
2 30,000 30,500
500
N
G
5
2 80,000 84,500 1,500
Y
H
2
1 16,000 19,000 3,000
Y
Total: 308,000 to complete the
project in 15 weeks – called the
normal cost
LO 6




LO 6
Select the activity with smallest crash cost
per week that is on the critical path –
activity A at a cost of $750
Start – B – D – G – H is also critical (14
wks)
Crash G by 1 week at a cost of $1,500 to
reduce the project by an additional week
(vs. crashing C and D at a combined cost
of $2,000)
Cost to complete project in 13 weeks =
$308,000 + 750 + 1,500 = $310,250


In addition to scheduling each task, must
assign resources
Software can spot over-allocation
◦ Allocations exceed resources

Must either add resources or reschedule
◦ Moving a task within slack can free up resources
LO 1

Actual progress on a project will be different
from the planned progress
◦ Planned progress is called the baseline


A tracking Gantt chart superimposes the
current schedule onto a baseline so
deviations are visible
Project manager can then manage the
deviations
LO 1