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Chapter 3
Project Management
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? Definition of Project Management
? Work Breakdown Structure
? Project Control Charts
? Structuring Projects
? Critical Path Scheduling
OBJECTIVES
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Project Management
Defined
? Project is a series of related jobs usually
directed toward some major output and
requiring a significant period of time to
perform
? Project Management are the management
activities of planning,directing,and controlling
resources (people,equipment,material) to meet
the technical,cost,and time constraints of a
project
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Project Control Charts,Gantt Chart
Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time
Vertical Axis,
Always Activities
or Jobs
Horizontal Axis,Always Time
Horizontal bars used to denote length
of time for each activity or job.
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Structuring Projects Pure Project,
Advantages
Pure Project
Defined
A pure project is where a self-contained team
works full-time on the project
? The project manager has full authority
over the project
? Team members report to one boss
? Shortened communication lines
? Team pride,motivation,and
commitment are high
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Structuring Projects Pure Project,
Disadvantages
? Duplication of resources
? Organizational goals and policies are ignored
? Lack of technology transfer
? Team members have no functional area
"home"
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8Functional Project
Defined
President
Research and
Development Engineering Manufacturing
Project
A
Project
B
Project
C
Project
D
Project
E
Project
F
Project
G
Project
H
Project
I
A functional project is housed within a
functional division
Example,Project,B” is in the functional
area of Research and Development.
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Structuring Projects
Functional Project,Advantages
? A team member can work on several
projects
? Technical expertise is maintained within
the functional area
? The functional area is a,home” after the
project is completed
? Critical mass of specialized knowledge
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Structuring Projects
Functional Project,Disadvantages
? Aspects of the project that are not
directly related to the functional area get
short-changed
? Motivation of team members is often
weak
? Needs of the client are secondary and are
responded to slowly
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Structuring Projects:
Matrix Project Organization Structure
President
Research and
Development Engineering Manufacturing Marketing
Manager
Project A
Manager
Project B
Manager
Project C
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Structuring Projects
Matrix,Advantages
? Enhanced communications between functional
areas
? Pinpointed responsibility
? Duplication of resources is minimized
? Functional,home” for team members
? Policies of the parent organization are followed
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Structuring Projects
Matrix,Disadvantages
? Too many bosses
? Depends on project manager’s
negotiating skills
? Potential for sub-optimization
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Work Breakdown Structure
Defined
Program
Project 1 Project 2
Task 1.1
Subtask 1.1.1
Work Package 1.1.1.1
Level
1
2
3
4
Task 1.2
Subtask 1.1.2
Work Package 1.1.1.2
A work breakdown structure defines the hierarchy
of project tasks,subtasks,and work packages
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Network-Planning Models
? A project is made up of a sequence of
activities that form a network representing a
project
? The path taking longest time through this
network of activities is called the,critical
path”
? The critical path provides a wide range of
scheduling information useful in managing a
project
? Critical Path Method (CPM) helps to identify
the critical path(s) in the project networks
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Prerequisites for Critical Path Methodology
A project must have:
well-defined jobs or tasks whose
completion marks the end of the project;
independent jobs or tasks;
and tasks that follow a given sequence.
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Types of Critical Path Methods
? CPM with a Single Time Estimate
– Used when activity times are known with certainty
– Used to determine timing estimates for the project,each
activity in the project,and slack time for activities
? CPM with Three Activity Time Estimates
– Used when activity times are uncertain
– Used to obtain the same information as the Single Time
Estimate model and probability information
? Time-Cost Models
– Used when cost trade-off information is a major
consideration in planning
– Used to determine the least cost in reducing total project
time
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Steps in the CPM with Single Time
Estimate
? 1,Activity Identification
? 2,Activity Sequencing and Network
Construction
? 3,Determine the critical path
– From the critical path all of the project and
activity timing information can be obtained
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Example 1,CPM with Single Time
Estimate
Consider the following consulting project:
Develop a critical path diagram and determine
the duration of the critical path and slack times
for all activities,
Activity Designation Immed,Pred,Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D,E 5
Write assessment report G F 1
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Example 1,CPM with Single Time
Estimate
Consider the following consulting project:
Activity Designation Immed,Pred,Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D,E 5
Write assessment report G F 1
Develop a critical path diagram and determine
the duration of the critical path and slack times
for all activities,
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Example 1,First draw the network
A(2) B(1) C(1)
D(2)
E(5)
F(5) G(1)
A None 2
B A 1
C B 1
D C 2
E C 5
F D,E 5
G F 1
Act,Imed,Pred,Time
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Example 1,Determine early starts and
early finish times
ES=9
EF=14
ES=14
EF=15
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=4
EF=9
ES=4
EF=6
A(2) B(1) C(1)
D(2)
E(5)
F(5) G(1)
Hint,Start with ES=0
and go forward in the
network from A to G.
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Example 1,
Determine late
starts and late finish
times
ES=9
EF=14
ES=14
EF=15
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=4
EF=9
ES=4
EF=6
A(2) B(1) C(1)
D(2)
E(5)
F(5) G(1)
LS=14
LF=15
LS=9
LF=14
LS=4
LF=9
LS=7
LF=9
LS=3
LF=4
LS=2
LF=3
LS=0
LF=2
Hint,Start with LF=15 or
the total time of the project
and go backward in the
network from G to A.
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Example 1,Critical Path & Slack
ES=9
EF=14
ES=14
EF=15
ES=0
EF=2
ES=2
EF=3
ES=3
EF=4
ES=4
EF=9
ES=4
EF=6
A(2) B(1) C(1)
D(2)
E(5)
F(5) G(1)
LS=14
LF=15
LS=9
LF=14
LS=4
LF=9
LS=7
LF=9
LS=3
LF=4
LS=2
LF=3
LS=0
LF=2
Duration = 15 weeks
Slack=(7-4)=(9-6)= 3 Wks
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Example 2,CPM with Three Activity Time
Estimates
T a s k
I m m e d i a t e
Pre d e ce s o rs O p t i m i s t i c Mo s t L i ke l y Pe s s i m i s t i c
A N o n e 3 6 15
B N o n e 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28
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Example 2,Expected Time
Calculations
ET(A)= 3+4(6)+15
6
ET(A)=42/6=7
T a s k
I m m e d i a t e
Pre d e ce s o rs
Ex p e ct e d
T i m e
A N o n e 7
B N o n e 5, 3 3 3
C A 14
D A 5
E C 11
F D 7
G B 11
H E,F 4
I G,H 18
T a s k
I m m e d i a t e
P r e d e c e s o r s O p t i m i s t i c M o s t L i k e l y P e s s i m i s t i c
A N o n e 3 6 15
B N o n e 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28
E x p e c t e d T i m e = O p t, T i m e + 4 ( M o s t L i k e l y T i m e ) + P e s s, T i m e6
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Example 2,Expected Time
Calculations
T a s k
I m m e d i a t e
Pre d e ce s o rs
Ex p e ct e d
T i m e
A N o n e 7
B N o n e 5, 3 3 3
C A 14
D A 5
E C 11
F D 7
G B 11
H E,F 4
I G,H 18
ET(B)=32/6=5.333
ET(B)= 2+4(4)+14
6
T a s k
I m m e d i a t e
P r e d e c e s o r s O p t i m i s t i c M o s t L i k e l y P e s s i m i s t i c
A N o n e 3 6 15
B N o n e 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28
E x p e c t e d T i m e = O p t, T i m e + 4 ( M o s t L i k e l y T i m e ) + P e s s, T i m e6
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Example 2,Expected Time
Calculations
T a s k
I m m e d i a t e
Pre d e ce s o rs
Ex p e ct e d
T i m e
A N o n e 7
B N o n e 5, 3 3 3
C A 14
D A 5
E C 11
F D 7
G B 11
H E,F 4
I G,H 18
ET(C)= 6+4(12)+30
6
ET(C)=84/6=14
T a s k
I m m e d i a t e
P r e d e c e s o r s O p t i m i s t i c M o s t L i k e l y P e s s i m i s t i c
A N o n e 3 6 15
B N o n e 2 4 14
C A 6 12 30
D A 2 5 8
E C 5 11 17
F D 3 6 15
G B 3 9 27
H E,F 1 4 7
I G,H 4 19 28
E x p e c t e d T i m e = O p t, T i m e + 4 ( M o s t L i k e l y T i m e ) + P e s s, T i m e6
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Example 2,Network
A(7)
B
(5.333)
C(14)
D(5)
E(11)
F(7)
H(4)
G(11)
I(18)
Duration = 54 Days
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Example 2,Probability Exercise
What is the probability of finishing this project in
less than 53 days?
p(t < D)
TE = 54
Z = D - T E
cp
2??
t
D=53
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A c t i v i t y v a r i a n c e,= ( P e s s i m, - O p t i m,6 )2 2?
T a s k O p t i m i s t i c M o s t L i k e l y P e s s i m i s t i c V a ri a n c e
A 3 6 15 4
B 2 4 14
C 6 12 30 16
D 2 5 8
E 5 11 17 4
F 3 6 15
G 3 9 27
H 1 4 7 1
I 4 19 28 16
(Sum the variance along the critical path.) ? 2? = 41
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There is a 43.8% probability that this project will be
completed in less than 53 weeks.
p(Z < -.156) =,438,or 43.8 % (NORMSDIST(-.156)
Z =
D - T
=
53 - 54
41
= -, 1 5 6E
cp
2??
TE = 54
p(t < D)
t
D=53
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Example 2,Additional Probability Exercise
? What is the probability that the project
duration will exceed 56 weeks?
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Example 2,Additional Exercise Solution
tT
E = 54
p(t < D)
D=56
Z =
D - T
=
56 - 54
41
=, 3 1 2E
cp
2??
p(Z >,312) =,378,or 37.8 % (1-NORMSDIST(.312))
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Time-Cost Models
? Basic Assumption,Relationship between
activity completion time and project cost
? Time Cost Models,Determine the
optimum point in time-cost tradeoffs
– Activity direct costs
– Project indirect costs
– Activity completion times
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CPM Assumptions/Limitations
? Project activities can be identified as entities (There
is a clear beginning and ending point for each
activity.)
? Project activity sequence relationships can be
specified and networked
? Project control should focus on the critical path
? The activity times follow the beta distribution,with
the variance of the project assumed to equal the sum
of the variances along the critical path
? Project control should focus on the critical path
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End of Chapter 3