Project Management

1. 17 Project Management

2. Learning Objectives • Discuss the behavioral aspects of projects in terms of project personnel and the project manager. • Discuss the nature and importance of a work breakdown structure in project management. • Give a general description of PERT/CPM techniques. • Construct simple network diagrams.

3. Learning Objectives • List the kinds of information that a PERT or CPM analysis can provide. • Analyze networks with deterministic times. • Analyze networks with probabilistic times. • Describe activity “crashing” and solve typical problems.

4. Projects Build A A Done Build B B Done Build C C Done Build D Ship JAN FEB MAR APR MAY JUN On time! Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame.

5. Projects Examples: • Olympics Games • Movies • Constructing shopping complex • Merging 2 companies • Putting on a play • Political campaign • New products • Advertising campaigns • Software development • …

6. Project Management • How is it different? • Limited time frame • Narrow focus, specific objectives • Less bureaucratic • Why is it used? • Special needs • Pressures for new or improved products or services

7. Project Management • What are the Key Metrics • Time • Cost • Performance objectives • What are the Key Success Factors? • Top-down commitment • Having a capable project manager • Having time to plan • Careful tracking and control • Good communications

8. Project Management • What are the Major Administrative Issues? • Executive responsibilities • Project selection • Project manager selection • Organizational structure • Organizational alternatives • Manage within functional unit • Assign a coordinator • Use a matrix organization with a project leader

9. Project Management • What are the tools? • Work breakdown structure • Network diagram • Gantt charts • Risk management

10. Key Decisions • Deciding which projects to implement • Selecting a project manager • Selecting a project team • Planning and designing the project • Managing and controlling project resources • Deciding if and when a project should be terminated

11. Project Manager Responsible for: Work Quality Human Resources Time Communications Costs

12. Ethical Issues • Temptation to understate costs • Withhold information • Misleading status reports • Falsifying records • Compromising workers’ safety • Approving substandard work

13. Project Life Cycle Definition Planning Management Concept Execution Termination

14. Work Breakdown Structure Project X Level 1 Level 2 Level 3 Level 4 Figure 17.2

15. Planning and Scheduling Gantt Chart Locate new facilities Interview staff Hire and train staff Select and order furniture Remodel and install phones Move in/startup MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Figure 17.3

16. PERT and CPM PERT: Program Evaluation and Review Technique CPM: Critical Path Method • Graphically displays project activities • Estimates how long the project will take • Indicates most critical activities • Shows where delays will not affect project

17. The Network Diagram • Network (precedence) diagram: diagram of project activities that shows sequential relationships by the use of arrows and nodes. • Activity-on-arrow (AOA): a network diagram convention in which arrows designate activities. • Activity-on-node (AON): a network diagram convention in which nodes designate activities. • Activities: steps in the project that consume resources and/or time. • Events: the starting and finishing of activities, designated by nodes in the AOA convention.

18. The Network Diagram • Path • 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 • Slack • Allowable slippage for path; the difference between the length of path and the length of critical path

19. Project Network: Activity on Arrow Orderfurniture 4 Furnituresetup 2 Locatefacilities Remodel 1 5 6 Move in Interview Hire andtrain 3 Figure 17.4 AOA

20. Project Network: Activity on Node Orderfurniture Furnituresetup Locatefacilities 2 AON 6 1 Remodel 5 S 7 Hire andtrain Interview 4 3 Figure 17.4 Move in

21. Network Conventions a b c a c b a c a c Dummy activity b b d

22. Time Estimates • Deterministic • Time estimates that are fairly certain • Probabilistic • Estimates of times that allow for variation

23. Example 1 Deterministic time estimates 6 weeks 4 Orderfurniture 3 weeks Furnituresetup 2 8 weeks Remodel Locatefacilities Move in 11 weeks 1 5 6 1 week Interview Hire and train 4 weeks 9 weeks 3 Figure 17.5

24. Example 1 Solution Critical Path

25. Computing Algorithm • Network activities • ES: early start • EF: early finish • LS: late start • LF: late finish • Used to determine • Expected project duration • Slack time • Critical path

26. Probabilistic Time Estimates • Optimistic time • Time required under optimal conditions • Pessimistic time • Time required under worst conditions • Most likely time • Most probable length of time that will be required

27. Probabilistic Estimates to tm te tp Activity start Optimistictime Most likely time (mode) Pessimistic time Figure 17.8 Beta Distribution

28. Expected Time te = to + 4tm +tp6 te = expected time to = optimistic time tm = most likely time tp = pessimistic time

29. Variance (tp – to)2 36 2 = 2= variance to = optimistic time tp = pessimistic time

30. Optimistic time Most likely time Pessimistic time 2-4-6 b 2-3-5 c 1-3-4 a 3-4-5 d 3-5-7 e 5-7-9 f 2-3-6 g 3-4-6 i 4-6-8 h Example 5

31. Example 5: Time Estimates 4.00 b 3.17 c 2.83 a 4.00 d 5.0 e 7.0 f 3.33 g 4.17 i 6.0 h Tabc = 10.0Tdef = 16.0Tghi = 13.50

32. Path Probabilities Specified time – Path mean Path standard deviation Z = Z indicates how many standard deviations of the path distribution the specified time is beyond the expected path duration.

33. 17 Weeks 1.00 a-b-c Weeks 10.0 d-e-f Weeks 16.0 1.00 g-h-i Weeks 13.5 Example 6

34. Time-Cost Trade-Offs: Crashing • Crash: shortening activity duration • Procedure for crashing • Crash the project one period at a time • Only an activity on the critical path • Crash the least expensive activity • Multiple critical paths: find the sum of crashing the least expensive activity on each critical path

35. Time-Cost Trade-Offs: Crashing Total cost Expected indirect costs Shorten CRASH Cumulative cost of crashing Shorten Optimum Figure 17.11

36. 10 b 6 a 2 f 5 c 9 e 4 d Example 7

37. Advantages of PERT 4 2 1 5 6 3 • Forces managers to organize • Provides graphic display of activities • Identifies • Critical activities • Slack activities

38. Limitations of PERT Important activities may be omitted Precedence relationships may not be correct Estimates may include a fudge factor May focus solelyon critical path 4 2 1 5 6 142 weeks 3

39. Goldratt’s Critical Chain • Goldratt’s insight on project management • Time estimates are often pessimistic • Activities finished ahead of schedule often go unreported • With multiple projects, resources needed for one project may be in use for another

40. Project Management Software • Computer aided design (CAD) • Groupware (Lotus Notes) • CA Super Project • Harvard Total Manager • MS Project • Sure Track Project Manager • Time Line

41. Advantages of PM Software • Imposes a methodology • Provides logical planning structure • Enhances team communication • Flags constraint violations • Automatic report formats • Multiple levels of reports • Enables what-if scenarios • Generates various chart types

42. Project Risk Management • Risk: occurrence of events that have undesirable consequences • Delays • Increased costs • Inability to meet specifications • Project termination

43. Risk Management • Identify potential risks • Analyze and assess risks • Work to minimize occurrence of risk • Establish contingency plans

44. Summary • Projects are a unique set of activities • Projects go through life cycles • PERT and CPM are two common techniques • Network diagrams • Project management software available