Ch.3 - Project Management

3 popular project management techniques

- Gannt chart - Critical Path Method (CPM) - Program evaluation and review technique (PERT)

problem of the PERT time estimation (Hua Luogeng)

- Hua Luogeng pointed out that only a special beta distribution could match the time estimation used in PERT. - He also gave the time estimation of other forms of beta distribution. - As a mathematician in OR, he contributed a lot to introduce project management to China.

ethical problems project managers face

- Offers of gifts from contractors - Pressure to alter status reports to mask delays - False reports for charges of time and expenses - Pressure to compromise quality to meet schedules - project management institute established ethical code to deal with these problems

3 things to ensure when deciding to crash a project

- The amount by which an activity is crashed is, in fact, permissible - Taken together, the shortened activity durations will enable us to finish the project by the due date - The total cost of crashing is as small as possible

two major assumptions of PERT

- Total project completion times follow a NORMAL PROBABILITY distribution (think bell curve) - Activity times are statistically independent

Variability of Completion Time for Noncritical Paths

- Variability of times for activities on noncritical paths must be considered when finding the probability of finishing in a specified time - Variation in noncritical activity may cause change in critical path

project organization is most helpful when:

- Work can be defined with a specific goal and deadline - The job is unique or somewhat unfamiliar to the existing organization - work contains complex interrelated tasks requiring specialized skills - project is temporary but critical to the organization - project cuts across organizational lines

when using PERT, we often assume that activity time estimates follow what distribution?

- beta probability distribution - This continuous distribution is often appropriate for determining the expected value and variance for activity completion times. - expected activity time formula: -> t = (a + 4m + b) / 6 - variance of activity completion times forumla: -> v = [(b-a)/6]^2

expected activity time formula (t)

- part of beta probability distribution -> t = (a + 4m + b)/6 - used for each activity in project network to compute all earliest and latest times

Variance of activity completion times formula (v)

- part of beta probability distribution -> v = [(b - a)/6]^2

most projects fall between what two types of approaches?

- waterfall approach (progress moves smoothly, in step-by-step manner, through each phase of completion) AND - agile approach (collaboration, constant transparent communication, and constant feedback to adjust for many unknowns of project speciications)

Slack time calculation

-> slack = LS - ES OR -> slack = LF - EF - Starts at the first activity in the project - Terminates at the last activity in the project - only critical activities are included - may be computed from either early/late starts or early/late finishes. - The key is to find which activities have zero slack (critical activities) - when two or more noncritical activities appear successively in a path, they share total slack (slack that is shared between two or more activities)

project managers should be:

-Good coaches -Good communicators -Able to organize activities from a variety of disciplines

Project control reports provide:

1) Detailed cost breakdowns for each task 2) Labor requirements 3) Cost and hour summaries 4) Raw materials and expenditure forecasts 5) Variance reports 6) Time analysis reports 7) Work status reports

Six Steps PERT & CPM

1. Define the project and prepare the work breakdown structure (divide entire project into significant activities in accordance with work breakdown structure) 2. Develop relationships among the activities - decide which activities must precede and which must follow others 3. Draw the network connecting all of the activities 4. Assign time and/or cost estimates to each activity 5. Compute the longest time path through the network - this is called the critical path 6. Use the network to help plan, schedule, monitor, and control the project

Gantt chart purpose (project scheduling technique)

1. Ensure that all activities are planned for 2. Their order of performance is accounted for 3. The activity time estimates are recorded 4. The overall project time is developed

Advantages of PERT/CPM

1. Especially useful when scheduling and controlling large projects 2. Straightforward concept and not mathematically complex 3. Graphical networks help highlight relationships among project activities 4. Critical path and slack time analyses help pinpoint activities that need to be closely watched 5. Project documentation and graphics point out who is responsible for various activities 6. Applicable to a wide variety of projects 7. Useful in monitoring not only schedules but costs as well

Work breakdown structure levels

1. Project 2.Major tasks in the project 3.Subtasks in the major tasks 4.Activities (or "work packages") to be completed

Limitations of PERT/CPM

1. Project activities have to be clearly defined, independent, and stable in their relationships 2. Precedence relationships must be specified and networked together 3. Time estimates tend to be subjective and are subject to fudging by managers 4. There is an inherent danger of too much emphasis being placed on the longest, or critical, path

purposes of project scheduling

1. Shows the relationship of each activity to others and to the whole project 2. Identifies the precedence relationships among activities 3. Encourages the setting of realistic time and cost estimates for each activity 4. Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project

Questions PERT and CPM Can Answer (project management techniques)

1. When will the entire 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 the project will be completed by a specific date? 5. Is the project on schedule, behind schedule, or ahead of schedule? 6. Is the money spent equal to, less than, or greater than the budget? 7. Are there enough resources available to finish the project on time? 8. If the project must be finished in a shorter time, what is the way to accomplish this at least cost?

2 approaches to drawing a project network diagram

1. activity on node (AON) 2. activity on arrow (AOA)

The project management phases

1. planning 2. scheduling 3. controlling

forward pass (calculating critical path)

A critical path method technique for calculating the early start and early finish dates by working forward through the schedule model from the project start date or a given point in time. - begin at starting event and work forward - process that identifies all early times - early start (ES) and early finish (EF) are determined here - although this allows us to determine the earliest project completion time, it does not identify the critical path.

backward pass

A critical path method technique for calculating the late start and late finish dates by working backward through the schedule model from the project end date. - begins with last activity in the project - first determine LF value, followed by its LS value - activity that finds all the late start and late finish times - late start (LS) and late finish (LF) are determined here - DOES ALLOW us to ID the critical path

Activity-on-arrow (AOA) network diagram

A network diagram in which arrows designate activities. - the nodes on this represent the starting and finishing times of an activity and are also called events. - nodes on this consume neither time or resources - To complete a network, all predecessor activities must be clearly defined. - dummy activities are utilized here

activity-on-node (AON) network diagram

A network diagram in which nodes designate activities. - activities consume time and resources - To complete a network, all predecessor activities must be clearly defined. - The lines, or arrows, represent the precedence relationships between the activities. - dummy activities sometimes utilized, especially in start and end nodes

Program evaluation and review technique (PERT) (project management technique)

A project management technique that employs three time estimates for each activity. - These time estimates are used to compute expected values and standard deviations for the activity. - help managers schedule, monitor, and control large and complex projects - is a network technique - addresses the variability of activity times - employs probability distribution based on 3 time estimates for each activity (optimistic, pessimistic, most likely times) - DOES have ability to consider precedence relationships and interdependency of activities

Critical Path Method (CPM) (project management technique)

A project management technique that uses only one time factor per activity. - makes the assumption that activity times are known with certainty and hence requires only one time factor for each activity. - does NOT address any variability in activity time - help managers schedule, monitor, and control large and complex projects - is a network technique - DOES have ability to consider precedence relationships and interdependency of activities

what activities are considered to be on the critical path?

Activities with zero slack (free time)

dummy activity

An activity having no time that is inserted into a network to maintain the logic of the network. - does not really exist and takes up zero time and resources.

project organization

An organization formed to ensure that programs (projects) receive the proper management and attention. - developed to make sure existing programs continue to run smoothly on day-to-day basis while new projects are completed - Often temporary structure - Uses specialists from entire company - Headed by project manager - coordinates - monitors schedule/costs

earliest start time (ES) rule (forward pass)

Before an activity can start, all its immediate predecessors must be finished: - If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor (ES = EF) - If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors - ES = Max (EF of all immediate predecessors)

slack time

Free time for an activity. Also referred to as free float or free slack. - the length of time an activity can be delayed without delaying the entire project. - done after computing the ES, EF, LS, and LF times for all activities

controlling (project management phase)

Here the firm monitors resources, costs, quality, and budgets. It also revises or changes plans and shifts resources to meet time and cost demands. - monitor - compare - revise - action - shift resources when needed - Close monitoring of resources, costs, quality, budgets - Feedback enables revising the project plan and shift resources - Computerized tools produce extensive reports (PERT/CERT reports)

role of the project manager

Highly visible Responsible for making sure that: 1. All necessary activities are finished in order and on time 2. The project comes in within budget 3. The project meets quality goals 4. The people assigned to the project receive motivation, direction, and information

most popular software for large scale project management

Microsoft Project - extremely useful in drawing project networks, identifying the project schedule, and managing project costs and other resources.

gannt chart (project management technique)

Planning charts used to schedule resources and allocate time. - horizontal bars are drawn for each project activity along a time line - permit managers to observe progress of each activity and to spot and tackle problem areas - DOES NOT have ability to consider precedence relationships and interdependency of activities

project crashing

Shortening activity time in a network to reduce time on the critical path so total completion time is reduced. - usually done by adding resources (people, equipment) to project to finish it by desired date - cost of this often higher than normal cost of project

optimistic time estimate (a)

The "best" activity completion time that could be obtained in a PERT network. - time an activity will take if everything goes as planned. In estimating this value, there should be only a small probability (say, 1/100) that the activity time will be < a. - ratio of 1 - a

pessimistic time estimate (b)

The "worst" activity time that could be expected in a PERT network. - time an activity will take assuming very unfavorable conditions. In estimating this value, there should also be only a small probability (also 1/100) that the activity time will be > b. - ratio of 1 - b

earliest finish time (EF) rule (backward pass)

The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time -> EF = ES + activity time (activity duration)

latest start time (LS) rule (backward pass)

The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time -> LS = LF - activity time (activity duration)

most likely time estimate (m)

The most probable time to complete an activity in a PERT network. - most realistic estimate of the time required to complete an activity. - ratio of 4 - m

planning (project management phase)

This phase includes goal setting, defining the project, and team organization. - objectives - resources - work break-down structure - organization - ID team/resources

scheduling (project management phase)

This phase relates people, money, and supplies to specific activities and relates activities to each other. - project activities - start and end times - network - sequence activities - assign people - schedule deliverables - schedule resources

Project Network Diagram

a diagram of all the activities and the precedence relationships that exist between these activities in a project. - convenient to have it start and end with a unique node - We would like the lines to be straight and arrows to move to the right when possible. - AON - AOA

work breakdown structure (WBS)

a hierarchical description of a project into more and more detailed components - works to establish the projects objectives, then break the project down into manageable parts - defines the project by dividing it into its major subcomponents (or tasks), which are then subdivided into more detailed components, and finally into a set of activities and their related costs. - typically decreases in size from top to bottom - gross requirements for people, supplies, and equipment estimated in this planning phase task

Critical path analysis

a process that helps determine a project schedule - helps determine just how long a project will take

projects

a series of tasks directed toward a major output

latest finish time (LF) rule (backward pass)

before an activity can start, all its immediate predecessors must be finished: - If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it (LF = LS) - If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it -> LF = Min (LS of all immediate following activites)

Calculating the Critical Path

calculate two distinct starting and ending times for each activity: - earliest start (ES): earliest time at which an activity can start, assuming all predecessors have been completed - earliest finish (EF): earliest time at which an activity can be finished - latest start (LS): latest time at which an activity can start so as to not delay the completion time of the entire project - latest finish (LF): latest time by which an activity has to finish so as to not delay the completion time of the entire project - two-pass process is used which consists of forward pass (early times) and backwards pass (late times)

crash cost per period formula

crash cost per period = (crash cost - normal cost) / (normal time - crash time) - done for each activity in network - pg. 83 (includes steps as well)

what is a permanent project organization called?

matrix organization

critical path

the computed longest time path(s) through a network - path is the shortest time in which the project can be completed - major part of controlling a project - represents tasks that will delay entire project if they are not completed on time - these activities have no slack time - managers can gain flexibility needed to complete this tasks by IDing noncritical activities and replanning, rescheduling, and reallocating labor and financial resources. - used by CERT and PERT (step 5 in process)

crash cost

the cost of crashing a project - cost of things like additional labor and equipment

crash time

the shortest duration required to complete an activity.

PERT uses the variance of critical path activities to help determine the variance of what?

the variance of the overall project - project variance computed by summing variances of critical activities

probability of project completion formula

z = (due dates - expected date) / σp - σp is project standard deviation - z is the number of standard deviations the due date or target date lies from the mean or expected date - use z value to then look up probability value from appendix I

project variance formula

σ²p = project variance = ∑(variances of activities on critical path) - implies that: project standard deviation (σp) = √project variance - slide 81