Dawood College of Engineering And Technology, Karachi

Muhammad Ehsan
08-Dcet-314

WorkBook
Of

Management Of Engineering Projects

6
TH

Semester 3

RD

Year

Instructor: G. Sarwar Chandio

Management Of Engineering Projects

Dawood College of Engineering & Technology, Karachi

Department: Industrial Engineering & Management

MANAGEMENT OF ENGINEERING PROJECTS (6 Semester Batch 2008)

th

Sources for Reading: Project Management. A systems Approach to Planning, Scheduling, and Controlling by Harold Kerzner, John Wiley. Web material with references. Notes / Handouts delivered by teacher.

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Short History of Project Management:

Lecture # 1

17/08/2010

As a discipline, Project Management developed from several fields of application including construction, engineering, and defense activity. Two forefathers of project management are Henry Gantt, called the father of planning and control techniques, who is famous for his use of the Gantt chart as a project management tool; and Henri Fayol for his creation of the 5 management functions which form the foundation of the body of knowledge associated with project and program management. Both Gantt and Fayol were students of Frederick Winslow Taylor's theories of scientific management. His work is the forerunner to modern project management tools including work breakdown structure (WBS) and resource allocation.

Understanding Project Management:

PROJECT (Definition): A Project can be considered any series of activities & tasks that: Have a specific objective to be completed within certain specifications. Have defined start & end dates. Have funding limits (if applicable). Consume human & non human resources. Are multifunctional (i.e., cut across several functional lines).

Project Management Further carry 2 major areas, i.e Project Planning and Project Monitoring 1. Project Planning; which includes Definition of work requirements Definition of quantity & quality of work Definition of resources needed

2. Project Monitoring; which includes Tracking Progress Comparing actual outcome to predicted outcome Analyzing impact Making adjustments

Successful Project Management:

It can be defined as having achieved the Project Objectives: Within time Within cost At the desired performance/ technology level While utilizing the assigned resources effectively & efficiently Accepted by the customer

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Potential Benefits from Project Management: Minimizing the needs for continuous reporting Identification of time limits for scheduling Measurement of accomplishment against plans Early identification of problems so that corrective actions may follow Improved estimating capability for future planning Knowing when objective cannot be met or will be exceeded Possible Obstacles to Project Management: Project complexity Customer special requirement or scope changes Organizational restructuring Project risks Changes in technology Forward pricing & planning

Possible Areas of Application of Project Management: 40 years ago project mgt was confined to U.S. Department of Defense Contractors & Construction companies. But today, the concept behind Project Mgt is being applied in diverse industries & organizations as defense, construction, pharmaceuticals, chemicals, banking, hospitals, accounting, advertising, law, state and local governments. Concluding Definitions of Project Management: PM is the art of creating the illusion that any outcome is the result of a series of predetermined, deliberate acts when, in fact, it was dumb luck. PM is the Planning, Organizing, Directing & Controlling of Company resources for a relatively short-term objectives that have been established to complete specific goals & objectives. Further more, PM utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy).

Terminology concept:
Resources Managers: they are the line or functional managers which control the resources. Line Managers: Beaurocratic type manager, top-down structure or vertically integrated mgrs Functional Managers: Sectional/Departmental Managers. Short-term project: Definition Criteria vary industry to industry but generally most accepted definition:

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In engineering it is 6-24 months project. In construction it can be 3 5 years. For Nuclear components it can be of 10 yrs. Classical Management versus Project Management: Classical mgt is usually considered to have 5 functions i.e Planning Organizing Staffing Controlling Directing

You will notice that, from defn2 of PM Staffing functions has been omitted. It is intentionally b/c project manager does not staff the project. So staffing is the line responsibility. Defining Project Managers Role: A Project Manager is responsible for coordinating & integrating activities across multiple, functional lines. These activities include: Integrating the activities necessary to develop a project plan. Integrating the activities necessary to execute the plan. Integrating the activities necessary to make changes to the plan.

Extra

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A project is a temporary endeavor, having a defined beginning and end (usually constrained
by date, but can be by funding or deliverables), undertaken to meet unique goals and objectives, usually to bring about beneficial change or added value. Project management is the discipline of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. It is sometimes conflated with program management, however technically a program is actually a higher level construct: a group of related and somehow interdependent projects.

The primary challenge of project management is to achieve all of the project goals and
objectives while honoring the preconceived project constraints. Typical constraints are scope, time, and budget. The secondaryand more ambitiouschallenge is to optimize the allocation and integration of inputs necessary to meet pre-defined objectives As a discipline, Project Management developed from several fields of application including construction, engineering, and defense activity. Two forefathers of project management are Henry Gantt, called the father of planning and control techniques, who is famous for his use of the Gantt chart as a project management tool; and Henri Fayol for his creation of the 5
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management functions which form the foundation of the body of knowledge associated with project and program management. Both Gantt and Fayol were students of Frederick Winslow Taylor's theories of scientific management. His work is the forerunner to modern project management tools including work breakdown structure (WBS) and resource allocation The 1950s marked the beginning of the modern Project Management era. Project management became recognized as a distinct discipline arising from the management discipline. In the United States, prior to the 1950s, projects were managed on an ad hoc basis using mostly Gantt Charts, and informal techniques and tools. At that time, two mathematical project-scheduling models were developed. The "Critical Path Method" (CPM) was developed as a joint venture between DuPont Corporation and Remington Rand Corporation for managing plant maintenance projects. And the "Program Evaluation and Review Technique" or PERT, was developed by Booz-Allen & Hamilton as part of the United States Navy's (in conjunction with the Lockheed Corporation) Polaris missile submarine program; These mathematical techniques quickly spread into many private enterprises. At the same time, as project-scheduling models were being developed, technology for project cost estimating, cost management, and engineering economics was evolving, with pioneering work by Hans Lang and others. In 1956, the American Association of Cost Engineers (now AACE International; the Association for the Advancement of Cost Engineering) was formed by early practitioners of project management and the associated specialties of planning and scheduling, cost estimating, and cost/schedule control (project control). AACE continued its pioneering work and in 2006 released the first integrated process for portfolio, program and project management (Total Cost Management Framework). The International Project Management Association (IPMA) was founded in Europe in 1967, as a federation of several national project management associations. IPMA maintains its federal structure today and now includes member associations on every continent except Antarctica. IPMA offers a Four Level Certification program based on the IPMA Competence Baseline (ICB). The ICB covers technical competences, contextual competences, and behavioral competences. In 1969, the Project Management Institute (PMI) was formed in the USA. PMI publishes A Guide to the Project Management Body of Knowledge (PMBOK Guide), which describes project management practices that are common to "most projects, most of the time." PMI also offers multiple certifications The AAPM American Academy of Project Management International Board of Standards 1996 was the first to institute post-graduate certifications such as the MPM Master Project Manager, PME Project Management E-Business, CEC Certified-Ecommerce Consultant, and CIPM Certified International project Manager. The AAPM also issues the post-graduate standards body of knowledge for executives.

APPROACHES:
There are a number of approaches to managing project activities including agile, interactive, incremental, and phased approaches. Regardless of the methodology employed, careful consideration must be given to the overall project objectives, timeline, and cost, as well as the roles and responsibilities of all participants and stakeholders.

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The traditional approach:

A traditional phased approach identifies a sequence of steps to be completed. In the "traditional approach", we can distinguish 5 components of a project (4 stages plus control) in the development of a project:

Typical development phases of a project:

Project initiation stage Project planning or design stage Project execution or production stage Project monitoring and controlling systems Project completion.

Not all the projects will visit every stage as projects can be terminated before they reach completion. Some projects do not follow a structured planning and/or monitoring stages. Some projects will go through steps 2, 3 and 4 multiple times. Many industries use variations on these project stages. For example, when working on a brick and mortar design and construction, projects will typically progress through stages like PrePlanning, Conceptual Design, Schematic Design, Design Development, Construction Drawings (or Contract Documents), and Construction Administration. In software development, this approach is often known as the waterfall model, i.e., one series of tasks after another in linear sequence. In software development many organizations have adapted the Rational Unified Process (RUP) to fit this methodology, although RUP does not require or explicitly recommend this practice. Waterfall development works well for small, well defined projects, but often fails in larger projects of undefined and ambiguous nature. The Cone of Uncertainty explains some of this as the planning made on the initial phase of the project suffers from a high degree of uncertainty. This becomes especially true as software development is often the realization of a new or novel product. In projects where requirements have not been finalized and can change, requirements management is used to develop an accurate and complete definition of the behavior of software that can serve as the basis for software development. While the terms may differ from industry to industry, the actual stages typically follow common steps to problem solving "defining the problem, weighing options, choosing a path, implementation and evaluation."

Critical Chain Project Management:

Critical Chain Project Management (CCPM) is a method of planning and managing projects that puts more emphasis on the resources (physical and human) needed in order to execute project tasks. It is an application of the Theory of Constraints (TOC) to projects. The goal is to increase the rate of throughput (or completion rates) of projects in an organization. Applying the first three of the five focusing steps of TOC, the system constraint for all projects is identified as are the resources. To exploit the constraint, tasks on the critical chain

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are given priority over all other activities. Finally, projects are planned and managed to ensure that the resources are ready when the critical chain tasks must start, subordinating all other resources to the critical chain. Regardless of project type, the project plan should undergo Resource Leveling, and the longest sequence of resource-constrained tasks should be identified as the critical chain. In multi-project environments, resource leveling should be performed across projects. However, it is often enough to identify (or simply select) a single "drum" resourcea resource that acts as a constraint across projectsand stagger projects based on the availability of that single resource.

Extreme Project Management:

In critical studies of Project Management, it has been noted that several of these fundamentally PERT-based models are not well suited for the multi-project company environment of today. Most of them are aimed at very large-scale, one-time, non-routine projects, and nowadays all kinds of management are expressed in terms of projects. Using complex models for "projects" (or rather "tasks") spanning a few weeks has been proven to cause unnecessary costs and low maneuverability in several cases. Instead, project management experts try to identify different "lightweight" models, such as Agile Project Management methods including Extreme Programming for software development and Scrum techniques. The generalization of Extreme Programming to other kinds of projects is extreme project management, which may be used in combination with the process modeling and management principles of human interaction management.

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Work Breakdown Structure WBS: WBS (Definition):

Lecture # 2

24/08/2010

In planning a project, the project manager must structure the work into small elements that are: assigned. Independent, or with minimum interfacing with & dependence on other ongoing elements. Interchangeable so that the total package can be seen. Measureable in terms of progress. Manageable, in that specific authority & responsibility can be

WBS Concept: The 1st major step in the planning process after project requirements definition is the development of WBS. A WBS is a product-oriented family tree sub division of the hardware, services & data required to produce the end product. The WBS is structured in accordance with the way the work will be performed & reflects the way in which project costs & data will be summarized & eventually reported.

WBS provides a common frame work form which: elements. Planning can be performed. Costs & budgets can be established. Time, cost, & performance can be tracked. Objectives can be linked to company resources in a logical manner. Network construction & control planning can be initiated. The responsibility assignments for each element can be established. The total program can be described as a summation of subdivided

The WBS acts as vehicle for breaking the work down into smaller elements, thus providing a greater probability that every major & minor activity will be accounted for.

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Levels (Types) of WBS: A Variety of WB Structure exists, the most common is the six-level structure shown below: Class of WBS Managerial Levels Level 1 2 3 4 5 6 Description Total Program Project Task Subtask Work package Level of effort

Technical Levels

Level 1 is the total program & is composed of set of projects. The summation of activities & cost associated with each project must equal the total program. Each project, however, can be broken down into tasks, where the summation of all the tasks equals the summation of all projects, which, in turn, comprises the total program. Previous discussion can be summarized by this mathematical expression: Resources taken by total program = Resources taken by all projects in total program. Resources taken by total program = Resources taken by all task in all projects. The upper 3 levels of the WBS are normally specified by the customer as the summary levels for reporting purposes. The lower levels are generated by the contractor for in-house control. Each level serves a vital purpose:

Level 1 is generally used for the authorization & release of all work. Budgets are prepared at level 2. Schedules are prepared at level 3.

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Characteristics of Levels of WBS:

1. Top 3 levels of WBS reflect integrated efforts & should not be related to one specific department. Effort required by departments or sections should be defined in sub tasks & work packages. 2. The summation of all elements in one level must be the sum of all work in new lower level. 3. Each element of work should be assigned to one & only one level of effort. E.g; construction of the foundation of a house should be included in one project (or task), not extended over two or three. 4. The level at which the project is managed is generally called the work package level. Actually, the work package can exist at any level below level one. 5. Work packages describe the work to be accomplished by a specific performing organization, or a group of cost centers & services as a vehicle for monitoring & reporting progress of work. 6. Work package is a generic term used in the criteria to identify discrete tasks that have definable end results. Idea work packages are 80 hours & 2-4 weeks. However this may not be possible on large projects. 7. The preparation of WBS is not easy. The WBS is a communication tool, providing detailed information to different levels of mgt. 8. 8. WBS should follow specified criteria b/c although preparation of the WBS is performed by the program office; the actual work is performed by the doers, not the planners. Both the doers and the planners must be in agreement as to what is expected.

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A Specimen of WBS For new Plant Construction & Startup: Program Project 1 New Plant construction & startup Analytical Study 01-00-00 01-01-00 01-01-01 01-01-02 01-02-00 01-02-01 01-02-01 01-03-00 01-03-01 01-03-02 01-03-03 01-04-00 01-04-01 01-04-02

Task1 Marketing/Production Study Project 2 Task2 Cost Effectiveness Analysis Design & layout Task1 Product Processing Sketches Project3 Task2 Product Processing Blue Prints Installation Task 1 Fabrication Task2 Setup Project 4 Task3 Testing & Run Program Support Task1 Management Task2 Purchasing & Raw Material

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Time Management:
Process required for the timely completion of project: a) Activity Definition b) Activity sequencing c) Activity Duration Estimation d) Schedule Development e) Schedule Control

Lecture # 3

31/08/2010

a) Activity Definition:
INPUTs:
Work breakdown Scope statement Historical information Assumption/ constraints

OUTPUTs:
Activity list Supporting Detail

TOOLs:
Decomposition Templates

Work Breakdown Structures: A deliverable oriented grouping of project elements that organizes and define the total scope of the project.

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Decomposition: Subdividing project elements into smaller more manageable components in order to provide better management control. The final outputs are described as activities.

b) Activity Sequencing:
INPUTs:
Activity list Product description Mandatory / Discretionary dependencies

OUTPUTs:
Project network diagram Activity list update

TOOLs:
Precedence diagram Arrow diagramming method Network templates Mandatory / Discretionary dependencies: Mandatory dependencies: Inherent in the project; physical limitation, Also known as HARD LOGIC. Discretionary dependencies: Are defined by the project team. Lesson learned, best practices are used to outline them.

PLANNING & SCHEDULING PROJECTS

OBJECTIVES:
a) Cost b) Schedule (budget, labor, material, etc.) (completion date, intermediate milestone, Problem Budget & Schedule) c) Performance (specifications, characteristics, measure, Require tradeoffs)

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Scheduling Methods:
Gantt Charts Network methods

Gantt Chart:
Utilize a bar or milestone chart. Similar to Gantt Charts Scheduling for intermittent process.
Week 4

No. 1 2 3 4 5 6 7 8 9 10

Activity Dig Basement Pour Footings Lay Block Foundation Finish Below-Grade Work Install Main Floor Erect Frame Secure Outside Sheathing Install Roof Boards Install Windows Finish Rough-In-Frame

Serial Activity Parallel Activity

Activity Milestone

(Gantt Chart Project example)

When and how long the activity takes place.

Disadvantages:
Complex projects Does not show interdependencies and relationships between activities.

Scheduling and rescheduling is difficult for complex projects .

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Network Method: Arrows represents activities. Milestones (events) shown in circles.

AOA = Activity On Arrow convention. Arrows leading to an activity are called predecessors. Arrows leading out of the circle are called successors. Predecessor activity must be completed before any succeeding activity can begin.

Constant Time Network:

Each activity is assumed to be a constant

Activity to be identified by its text and head number pair. Activity 1-2 identifies the activities or arrow going from event 1 & 2.

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Dummy Activities: Zero time To indicate a precedence relationship only.

A dummy activity is needed if two activities have identical predecessor and successor activities.

a) Activities F and G have the same predecessor (E) and the same successor (H).

b) Activities A and B have a common predecessor (E), but they have different predecessors (C and D).

c) Activities C and D have a common successor (K), but different successors (I and J).

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Event Calculation:
Event time: tij Ej = Time to complete activity from event 'i' to event 'j' = Earliest time event j can occur based on completion of all predecessor activities. (Calculated in a sequential fashion by starting at the beginning of the network to the end). = Latest times event j can occur without delaying the project.

Lj

Forward computational for Earliest time: Ei =0 Ej = maxi (E i + tij), where maximization occur over all event i which are immediate predecessors of event j.

Backward computational for Latest time: Define Where, Ln 'n' Li = En = Last event in the network. = minj(Lj - tij)

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L4 = E4 = 8 L3 = L4 - t34 = 8 - 2 = 6 L2 = min(8-5,6-2) = 3 L1 = min(3-3, 6-2) = 0 Slack of event = Si = Li - E i

Activity Calculation: Activity starts and finishes times. Scheduling the activity (arrows). Calculate activity start and finish times. ES(a) = Early start of activity 'a' EF(a) = Early finish of activity 'a' LS(a) = Late start of activity 'a' LF(a) = Late finish of activity 'a'

Four schedule time for an activity.

ES is the bigger of the preceding EF LS

LF is the smaller of the preceding

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Forward activity pass: ES(a) = EF(a) = ES(a) = Where, t(a) =

0 , starting activities ES(a) + t(a) max[EF(all predecessors of 'a' duration of activity 'a'

Backward activity pass: LF(a) = LS(a) =

min[LS(all successors of a)] LF(a) - t(a)

Slack: Total slack time Free Slack = LS(a) - ES(a) = LF(a) - EF(a) = min[ES(all successors of a)] - EF(a)

ACTIVITY TIMES Activity ES 1-2 0 1-3 0 2-3 3 2-4 3 3-4 5

EF 3 4 5 8 7

LS 0 2 4 3 6

LF 3 6 6 8 8

Total Slack Free Slack 0 0 2 1 1 0 0 0 1 1

Total Slack: Time an activity duration can be increased without delaying the project. Free Slack: Time an activity can be increased without delaying the very next activity.

Precedence Diagramming Method:

Arrows represent precedence relationship between activities Activity on Node Representation Correspond to the Gantt Chart

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Representation of time delays and precedence:

Example: Problem 14 Page 686 Draw the network and identify the critical path. Also calculate the earliest-latest starting and finishing times for each activity:
Activity Preceding activity Time (Weeks)

A B C D E F G H I

A,B B B C D D,E F,G,H

4 6 7 8 5 5 7 8 4

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The AOA Network:

FORWARD PASS:

REVERSE PASS:

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Activity A B C D E F G H I

ES 0 0 6 6 6 13 14 14 22

EF 4 6 13 14 11 18 21 22 26

LS 6 0 10 6 9 17 15 14 22

LF 10 6 17 14 14 22 22 22 26

Total slack Free Slack 6(6-0) 6(10-4) 0(0-0) 0(6-6) 4(10-6) 4(17-13) 0(6-6) 0(14-14) 3(9-6) 3(14-11) 4(17-14) 4(22-18) 1(15-14) 1(22-21) 0(14-14) 0(22-22) 0(22-22) 0(26-26)

The Network Diagram:

The Critical Path is B-D-G-I Time consumed is 6+8+7+4=25 weeks.

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PERT (Program Evaluation and Review Techniques):

Statistical approach to activity and project durations, Unfamiliar or experimental projects Optimistic, most likely, pessimistic

Practice Vs Theory: Difficulty in defining end points of activities. New technologies used in R & D. Activities are not always completed successfully the first time. Time estimates are largely subjective evaluations. PERT Networks: R & D projects, Polaris submarine, Three time estimates for each activity: To: optimistic time estimate Tp: pessimistic time estimate Tm : most likely time estimate Time estimates often exceeds most likely time or best estimate Assumes actual activity times are Beta distribution Skewed to the right ---- most likely to exceed the average Te = (To + 4Tm + Tp)/6 Assumed to be the constant time Can be used to calculate critical path and Te to evaluate the project

Vari (activity i ) =[( Tp - T o)/6] 2 = 6 standard deviation Project complete time T E(T) = Te
critical path

Var [T] = Var(i)

critical path

PERT Activity Times:

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CPM (CRITICAL PATH METHOD):

A graphical version of the activity and restrictions lists. Products are complex. Start and delivery schedules are difficult to predict. Design and manufacturing groups work as teams. Material for each product is ordered individually. Manufacturing and tooling vary from one product to the next. Costs of workforce and rework are high.

Critical Path Method: Developed by E.I.du Pont to schedule startup and shutdown of major plants. Assumes time cost trade off total project cost versus total project time. Require time -cost function. Assume linearity.

Allocations can be evaluated by linear programming to find minimum cost Cost per day = (Crash cost - Normal cost) / (Normal time - Crash time) = (100 - 50 )/ (3-1) = $ 25/day

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Path Analysis: Calculate normal project time & cost?

1. Compute normal completion time using forward pass. 2. Normal project cost = sum of all activities cost = 330. 3. Project can be reduced to 6 days by crashing 1-2 & 2-4. It cost $20/day to crash 1-2 & $25/day for 2-4; choose 1-2.

Large Scale Operations With PERT/CPM and LOB:

Path Analysis:

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Path Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Paths 1-2-3-6-8-9-10-11-12-16-18 1-2-3-6-8-9-10-11-12-16-13-18 1-2-3-6-8-9-10-12-16-18 1-2-3-6-8-9-10-12-16-13-18 1-2-3-6-8-9-10-13-18 1-2-3-6-7-8-9-10-11-12-16-18 1-2-3-6-7-8-9-10-11-12-16-13-18 1-2-3-6-7-8-9-10-12-16-18 1-2-3-6-7-8-9-10-12-16-13-18 1-2-3-6-7-8-9-10-13-18 1-2-3-4-7-8-9-10-11-12-16-18 1-2-3-4-7-8-9-10-11-12-16-13-18 1-2-3-4-7-8-9-10-12-16-18 1-2-3-4-7-8-9-10-12-16-13-18 1-2-3-6-7-8-9-10-13-18 1-2-3-4-5-14-15-17-18 1-2-3-15-17-18

Path Time in days 29 30 28 29 28 32 33 31 Nearly critical 31 paths 31 33 34 Critical Path 32 33 Nearly critical 32 paths 26 14

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