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- 1. McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 17 17 Project Management
- 2. 17-2 Learning Objectives 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. 17-3 Learning Objectives 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. 17-4 Unique, one-time operations designed to Unique, one-time operations designed to accomplish a specific set of objectives in a limited accomplish a specific set of objectives in a limited time frame. time frame. Build A A Done Build B B Done Build C C Done Build D Ship JAN FEB MAR APR MAY JUN On time! Projects Projects
- 5. 17-5 Project Management 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 improves products or services
- 6. 17-6 Project Management 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
- 7. 17-7 Project Management 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
- 8. 17-8 Project Management Project Management What are the tools? Work breakdown structure Network diagram Gantt charts Risk management
- 9. 17-9 Planning and Scheduling Planning and Scheduling MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Locate new facilities Interview staff Hire and train staff Select and order furniture Remodel and install phones Move in/startup Gantt Chart
- 10. 17-10 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 Key Decisions Key Decisions
- 11. 17-11 Project Manager Project Manager Responsible for: Work Quality Human Resources Time Communications Costs
- 12. 17-12 Temptation to understate costs Withhold information Misleading status reports Falsifying records Comprising workers’ safety Approving substandard work Ethical Issues Ethical Issues
- 13. 17-13 Project Life Cycle Project Life Cycle Concept Feasibility Planning Execution Termination Management
- 14. 17-14 Work Breakdown Structure Work Breakdown Structure Project X Level 1 Level 2 Level 3 Level 4 Figure 17.2
- 15. 17-15 PERT and CPM 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 Show where delays will not affect project
- 16. 17-16 The Network Diagram 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.
- 17. 17-17 The Network Diagram (cont’d) The 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 path; the difference the length of path and the length of critical path
- 18. 17-18 Project Network – Activity on Project Network – Activity on Arrow Arrow 1 2 3 4 5 6 Locate facilities Order furniture Furniture setup Interview Hire and train Remodel Move in Figure 17.4 AOA
- 19. 17-19 Project Network – Activity on Project Network – Activity on Node Node 1 2 3 5 6 Locate facilities Order furniture Furniture setup Interview Remodel Move in 4 Hire and train 7 S Figure 17.4 AON
- 20. 17-20 Network Conventions Network Conventions a b c a b c a b c d a b c Dummy activity
- 21. 17-21 Time Estimates Time Estimates Deterministic Time estimates that are fairly certain Probabilistic Estimates of times that allow for variation
- 22. 17-22 Example 1 Example 1 1 2 3 4 5 6 8 weeks 6 weeks 3 weeks 4 weeks 9 weeks 11 weeks 1 week Locate facilities Order furniture F u r n i t u r e s e t u p Interview Hire and train Remodel Move in Deterministic Deterministic time estimates time estimates Figure 17.5
- 23. 17-23 Example 1 Solution Example 1 Solution P a t h L e n g th ( w e e k s ) S la c k 1 - 2 - 3 - 4 - 5 - 6 1 - 2 - 5 - 6 1 - 3 - 5 - 6 1 8 2 0 1 4 2 0 6 Critical Path
- 24. 17-24 Network activities ES: early start EF: early finish LS: late start LF: late finish Used to determine Expected project duration Slack time Critical path Computing Algorithm Computing Algorithm
- 25. 17-25 Probabilistic Time Estimates 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
- 26. 17-26 Probabilistic Estimates Probabilistic Estimates Activity start Optimistic time Most likely time (mode) Pessimistic time to tp tm te Figure 17.8 Beta Distribution
- 27. 17-27 Expected Time Expected Time te = to + 4tm +tp 6 te = expected time to = optimistic time tm = most likely time tp = pessimistic time
- 28. 17-28 Variance Variance (tp – to)2 36 = variance to = optimistic time tp = pessimistic time
- 29. 17-29 Example 5 Example 5 1-3-4 a 3-4-5 d 3-5-7 e 5-7-9 f 2-4-6 b 4-6-8 h 2 - 3 - 6 g 3-4-6 i 2 - 3 - 5 c Optimistic time Most likely time Pessimistic time
- 30. 17-30 Example 5 Time Estimates Example 5 Time Estimates 2.83 a 4.00 d 5.0 e 7.0 f 4.00 b 6.0 h 3 . 3 3 g 4.17 i 3 . 1 7 c Tabc = 10.0 Tdef = 16.0 Tghi = 13.50
- 31. 17-31 Path Probabilities Path Probabilities Z = Specified time – Path mean Path standard deviation Z indicates how many standard deviations of the path distribution the specified tine is beyond the expected path duration.
- 33. 17-33 Time-cost Trade-offs: Crashing 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
- 34. 17-34 Time-Cost Trade-Offs: Crashing Time-Cost Trade-Offs: Crashing Total cost Shorten Shorten Cumulative cost of crashing Expected indirect costs Optimum CRASH Figure 17.11
- 36. 17-36 Advantages of PERT Advantages of PERT Forces managers to organize Provides graphic display of activities Identifies Critical activities Slack activities 1 2 3 4 5 6
- 37. 17-37 Limitations of PERT Limitations of PERT Important activities may be omitted Precedence relationships may not be correct Estimates may include a fudge factor May focus solely on critical path 1 2 3 4 5 6 142 weeks
- 38. 17-38 Goldratt’s Critical Chain 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 on another
- 39. 17-39 Computer aided design (CAD) Groupware (Lotus Notes) CA Super Project Harvard Total Manager MS Project Sure Track Project Manager Time Line Project Management Software Project Management Software
- 40. 17-40 Imposes a methodology Provides logical planning structure Enhances team communication Flag constraint violations Automatic report formats Multiple levels of reports Enables what-if scenarios Generates various chart types Advantages of PM Software Advantages of PM Software
- 41. 17-41 Risk: occurrence of events that have undesirable consequences Delays Increased costs Inability to meet specifications Project termination Project Risk Management Project Risk Management
- 42. 17-42 Identify potential risks Analyze and assess risks Work to minimize occurrence of risk Establish contingency plans Risk Management Risk Management
- 43. 17-43 Summary 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
- 44. 17-44 Video: Work Breakdown Video: Work Breakdown
- 45. 17-45 Video: Project Materials/Delays Video: Project Materials/Delays
- 46. 17-46 Video: Project Scheduling Video: Project Scheduling