Prepared by Gilberto Clavell Page 1 CHAPTER 3 PROJECT MANAGEMENT Chapter Abstract; The Project Manager is responsible for everything that is required to make the project a success - whether directly or indirectly. It is not like a typical hierarchical line management role. The Project Manager is at the centre of everything relating to the project. Controlling the contributions of seniors and peers is just as important as managing the work of the team. PERT, CPM and other scheduling techniques have proven to be valuable tools in controlling large and complex projects. As illustrated in this chapter projects are segmented into discrete activities, and specific resources are identified. This allow s project managers to respond aggressively to global competition. Chapter Objective 1- Use a Gantt chart for scheduling 2-Draw AOA and AON networks 3- Complete forward and backward passes for a project 4-Determine a critical path 5-Calculate the variance of activity times 6- Crash a project Project Characteristics ? Single unit ? Many related activities ? Difficult production planning and inventory control ? General purpose equipment ? High labor skills Prepared by Gilberto Clavell Page 2 A project is a unique endeavor to produce a set of deliverables within clearly specified time, cost and quality constraints. Projects are different from standard business operational activities as they: ? Are unique in nature. They do not involve repetitive processes. Every project undertaken is different from the last, whereas operational activities often involve undertaking repetitive (identical) processes ? Have a defined timescale. Projects have a clearly specified start and end date within which the deliverables must be produced to meet a specified customer requirement ? Have an approved budget. Projects are allocated a level of financial expenditure within which the deliverables must be produced to meet a specified customer requirement ? Have limited resources. At the start of a project an agreed amount of labor, equipment and materials is allocated to the project ? Involve an element of risk. Projects entail a level of uncertainty and therefore carry business risk. Examples of Projects Building Construction Engineer Painter Research Project Prepared by Gilberto Clavell Page 3 Management of Projects Project can be defined as a series of related task directed toward a major output. In some firms a project organization is developed to make sure existing programs continue to run smoothly on a da to day basis while new project are successfully completed. Project Organization Works Best When 1. Work can be defined with a specific goal and deadline 2. The job is unique or somewhat unfamiliar to the existing organization 3. The work contains complex interrelated tasks requiring specialized skills 4. The project is temporary but critical to the organization 5. The project cuts across organizational lines The management of project involves three phases: 1. Planning - goal setting, defining the project, team organization 2. Scheduling - relates people, money, and supplies to specific activities and activities to each other 3. Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands Prepared by Gilberto Clavell Page 4 By this stage, the benefits and costs of the project have been clearly documented, the objectives and scope have been defined, the project team has been appointed and a formal project office environment established. It is now time to undertake detailed planning to ensure that the activities performed in the execution phase of the project are properly sequenced, resourced, executed and controlled. Project scheduling involves sequencing time to all projects activities. At this stage managers decide how long each activity will take and compute how many people and material will be needed at each stage of production. Prepared by Gilberto Clavell Page 5 While the Project Team is physically producing each deliverable, the Project Manager implements a series of management processes to monitor and control the activities being undertaken. The control of projects, like the control of any management system. Involves close monitoring of resources, cost, quality, and budget. Control also means using a feedback loop to revise the project plan and having the ability to shift resource to where they are needed most. Prepared by Gilberto Clavell Page 6 Project Management Techniques ? Gantt chart ? Critical Path Method (CPM) ? Program Evaluation and Review Technique (PERT A Simple Gantt Chart Gantt Charts (Gant Charts) are useful tools for analyzing and planning more complex projects. They: ? Help you to plan out the tasks that need to be completed ? Give you a basis for scheduling when these tasks will be carried out ? Allow you to plan the allocation of resources needed to complete the project, and ? Help you to work out the critical path for a project where you must complete it by a particular date. When a project is under way, Gantt Charts help you to monitor whether the project is on schedule. If it is not, it allows you to pinpoint the remedial action necessary to put it back on schedule. Prepared by Gilberto Clavell Page 7 PERT and CPM ? Network techniques ? Developed in 1950s ? CPM by DuPont for chemical plants (1957) ? PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958) ? Consider precedence relationships and interdependencies ? Each uses a different estimate of activity times PERT and CPM both follow six basic step: 1. Define the project and prepare the 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 A Comparison of AON and AOA Network Conventions Prepared by Gilberto Clavell Page 8 Dummy activity - An activity having no time that is inserted into the network to maintain the logic of the network Determining the Project Schedule Perform a Critical Path Analysis ? The critical path is the longest path through the network ? The critical path is the shortest time in which the project can be completed ? Any delay in critical path activities delays the project ? Critical path activities have no slack time Prepared by Gilberto Clavell Page 9 The critical path is the longest time path through the network. To find the critical path, you should calculate two distinct starting and ending times for each activity. These are defined as follows: 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 be finished so as to not delay the completion time of the entire project Begin at starting event and work forward Earliest Start Time Rule: ? If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor ? 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} Earliest Finish Time Rule: ? 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 Prepared by Gilberto Clavell Page 10 Begin with the last event and work backwards Latest Finish Time Rule: ? If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it ? 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 activities} Latest Start Time Rule: ? 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 Example Prepared by Gilberto Clavell Page 11 The route 2, 4, 9, 12, 14, 17 are activities from critical path. Variability in Activity Times Three time estimates are required ? Optimistic time (a) if everything goes according to plan ? Pessimistic time (b) assuming very unfavorable conditions ? Most likely time (m) most realistic estimate Estimate follows beta distribution Expected time: t = (a + 4m + b)/6 Variance of times: v = [(b a)/6]2 Activity t? ES EF LS LF 1 8 0 8 4 12 2 12 0 12 0 12 3 3 0 3 9 12 4 9 12 21 12 21 5 3 3 6 18 21 6 2 3 5 19 21 7 12 21 33 38 50 8 7 21 28 44 51 9 30 21 51 21 51 10 21 21 42 21 52 11 20 33 53 50 70 12 5 51 56 51 56 13 16 42 58 52 68 14 17 56 73 56 73 15 5 58 63 68 73 16 6 53 59 70 76 17 3 73 76 73 76 Prepared by Gilberto Clavell Page 12 Computing Variance Project variance is computed by summing the variances of critical activities s 2 = Project variance = ?(variances of activities on critical path) Project variance is computed by Prepared by Gilberto Clavell Page 13 Probability of Project Completion What is the probability this project can be completed on or before the 16 week deadline? Where Z is the number of standard deviations the due date or target date lies from the mean or expected date. Steps in Project Crashing 1- Compute the crash cost per time period. If crash costs are linear over time: 2- Using current activity times, find the critical path and identify the critical activities 3- If there is only one critical path, then select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path. 4- Update all activity times. If the desired due date has been reached, stop. If not, return to Step 2. Prepared by Gilberto Clavell Page 14 Crashing The Project Prepared by Gilberto Clavell Page 15 Support Project management concepts with chapter 3 readings Task 1.1 1. Students will study a case (Shale Oil Company) 2. Case Access http://wps.prenhall.com/bp_heizer_opsmgmt_9/77/19791/5066593.cw/index.html 3. Select Internet Cases for Chapter 3: Project Management 4. Answer the discussion question shown in the case. 5. Prepare a written document with your answer and recommendation. 6. Post the assignment in discussion board section. The value of this task is 10 points. 1.2 1. The student will solve 4 problems related to the following techniques; Gantt chart, time estimates, project crashing, probability of project completion. 2. The student should work on problems 3.4, 3.14, 3.17 and 3.20. on chapter 3 3. The student should prepare a written document with the answer of each problem assigned. 4. The work will be evaluated by rubric B. The value of this task is 20 points

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