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Chapter 17

Chapter 17. Project Management. Learning Objectives. You should be able to: Discuss the behavioral aspects of projects in terms of project personnel and the project manager Explain the nature and importance of a work breakdown structure in project management

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Chapter 17

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  1. Chapter 17 Project Management

  2. Learning Objectives • You should be able to: • Discuss the behavioral aspects of projects in terms of project personnel and the project manager • Explain the nature and importance of a work breakdown structure in project management • Give a general description of PERT/CPM techniques • Construct simple network diagrams • List the kinds of information that a PERT or CPM analysis can provide • Analyze networks with deterministic times • Describe activity ‘crashing’ and solve typical problems Instructor Slides

  3. Projects • Project: • Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame • Examples: • The Olympic Games • Producing a movie • Product development • Operations: • work done to sustain the business 17-3

  4. Project Life Cycle 17-4

  5. The Triple Constraint of Project Management • Project’s Triple Constraints (Key Metrics) • Time • Cost • Scope (Performance objectives) • Quality Information Technology Project Management, Sixth Edition

  6. Project Success • There are several ways to define project success: • The project met scope, time, and cost goals • The project satisfied the customer/sponsor • The results of the project met its main objective e.g., making or saving a certain amount of money, providing a good return on investment. Information Technology Project Management, Sixth Edition

  7. 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 skills and competencies: • People skills • Leadership • Listening • Integrity, ethical behavior, consistent • Strong at building trust • Verbal communication • Strong at building teams • Conflict resolution, conflict management • Critical thinking, problem solving • Understands, balances priorities 17-7

  8. Project Management • Key tools: • Work Breakdown Structure • Gantt charts • Network diagram

  9. Work Breakdown Structure (WBS) • 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 17-9

  10. WBS Open new department New facility Finance Staff Hiring Relocating Location Furniture Move in Remodel Locate facility Hire & train Order furniture Furniture setup interview 17-10

  11. 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 17-11

  12. 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 17-12

  13. b a a c b c a c a c d b dummy Node b Network Conventions (AON) (dummy) Start Node

  14. a b c a c b a c a c dummy Activity b b d Network Conventions (AOA)

  15. Precedence Diagram

  16. Project Network – Activity on Node (AON) Orderfurniture 2 Furnituresetup Locatefacilities 6 1 Move in Remodel S 5 7 Hire andtrain Interview 4 3

  17. Project Network – Activity on Arrow (AOA) Orderfurniture Furnituresetup Locatefacilities Remodel Move in Interview Hire andtrain

  18. Gantt Chart 17-18

  19. Critical Path Method (CPM) 9-19 • 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.

  20. Network Diagram (cont’d) • 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 a path; the difference the length of path and the length of critical path

  21. Project Network – Activity on Node (AON) Critical Path ? Orderfurniture 2 Furnituresetup Locatefacilities 6 1 Move in Remodel S 5 7 Hire andtrain Interview 4 3

  22. Gantt Chart Critical Path ? 17-22

  23. Example 6 3 B C 8 A 11 1 D S G 4 9 E F

  24. 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 17-24

  25. Example – Forward pass (ES, EF) 6 8 14 3 14 17 B C 8 8 0 A 11 8 19 0 1 0 0 19 D 20 S G 4 4 9 0 13 4 E F

  26. 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 17-26

  27. Example – Backward pass (LS, LF) 16 10 16 19 8 6 14 14 3 17 B 0 C 8 0 8 8 A 19 8 0 0 19 20 8 11 19 0 0 0 19 1 20 D S G 6 10 10 19 0 4 4 4 9 13 E F

  28. 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 17-28

  29. Example – Slack (LS-ES,LF-EF) 10 16 8 6 14 2 16 19 14 3 17 2 B 0 8 0 8 8 0 C 8 19 8 11 19 0 A 19 20 0 0 0 0 19 1 20 0 0 0 D S G 6 10 0 4 4 6 10 19 4 9 13 6 E F

  30. Example – Critical Path Slack (LS-ES;LF-EF)=0 2 2 B C 0 A 0 0 0 D S G 6 6 E F

  31. Example Solution Critical Path

  32. 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 17-32

  33. The Critical Path Method (CPM) is not useful for (Multiple Choices Question): • Finding the project’s shortest completion time • Finding the project’s minimum cost • Calculating start and end times for all activities • Identifying critical activities • Identifying the slack for non-critical activities

  34. Time-Cost Trade-Offs • Activity time estimates are made for some given level of resources • It may be possible to reduce the duration of a project by injecting additional resources • Motivations: • To avoid late penalties • Monetary incentives • Free resources for use on other projects 17-34

  35. Time-Cost Trade-Offs: Crashing • 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, thereby realizing savings in indirectproject costs

  36. Crashing Activities 17-36

  37. 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 17-37

  38. 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 17-38

  39. 10 b 6 a 2 f 5 c 9 e 4 d Example 7

  40. Indirect costs: $1,000 / day

  41. 10 b 6 a 2 f 5 c 9 e 4 d 1. Determine Critical Path PathLength a-b-f 18 c-d-e-f 20 (critical path) 2. Rank activities on CP in order of lowest crashing cost ActivityCost per day to crashAvailable days c 300 1 e 600 2 d 700 3 f 800 1

  42. 10 b 6 a 2 f 5 c 9 e 4 d 2. Rank activities on CP in order of lowest crashing cost ActivityCost per day to crashAvailable days c 300 1 e 600 2 d 700 3 f 800 1 Crash activity c by 1 day: cost $300 < $1,000 (CP=19 days) (cannot crash c anymore) 5 4

  43. 10 b 6 a 2 f 5 c e 4 d Crash activity e by 1 day: cost $600 < $1,000 (CP=18 days) (may crash activity e by 1 more day) 2. Rank activities on CP in order of lowest crashing cost ActivityCost per day to crashAvailable days c 300 1 e 600 2 d 700 3 f 800 1 4 8 9 • Bothpaths are now critical. • Have to crash both in order to shorten project.

  44. 10 b 6 a 2 f 4 c 8 e 4 d Both paths are now critical. Have to crash both in order to shorten project. Remaining activities PathActivityCost per day to crashAvailable days a-b-f a - - b 500 2 f 800 1 c-d-e-f c - - e 600 1 d 700 3 f 800 1 Crash activity f (is on both paths) by 1 day: cost = $800 < $1,000 (CP=17 days)

  45. 10 b 6 a 1 f 4 c 8 e 4 d Crash activity f (is on both paths) by 1 day: cost $800 < $1,000 (CP=17 days) Remaining activities PathActivityCost per day to crashAvailable days a-b-f a - - b 500 2 f 800 1 c-d-e-f c - - e 600 1 d 700 3 f 800 1 2

  46. 10 b 6 a 1 f 4 c 8 e 4 d Both paths are still critical. Have to crash both in order to shorten project. Remaining activities PathActivityCost per day to crashAvailable days a-b-f a - - b 500 2 f-- c-d-e-f c - - e 600 1 d 700 3 f-- 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!

  47. Length after crashing Path\crashn=0 1 2 3 a-b-f 18 18 18 17 c-d-e-f 20 19 18 17 Activity Crashed c e f Cost 0($300)($600)($800) Savings 0 $1,000 $1,000 $1,000 Total 0 $700 +$400 +$200 = $1,300

  48. Operations Strategy* • Projects present both strategic opportunities and risks • It is critical to devote sufficient resources and attention to projects • Projects are often employed in situations that are characterized by significant uncertainties and risks that may result in: • Delays • Budget overruns • Failure • PM should use: • Careful planning • Wise selection of project manager and team • Monitoring of the project • It is not uncommon for projects to fail • it is beneficial to examine the reasons for failure – “lessons learned” 17-48

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