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Introduction & The Environment in Which Projects Operate

Definition of Project
Project
• Temporary endeavor with a beginning and an end
• Creates a unique product, service or result

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Introduction & The Environment in Which Projects Operate

Why are Projects Initiated?

• Market Demand
• Strategic Opportunity/Business Need
• Social Need
• Environmental Consideration
• Customer Request
• Technological Advance
• Legal Requirement

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Introduction & The Environment in Which Projects Operate

Example of a Project
• Construction of Golden Gate Bridge.

• Beginning: Jan 5, 1933

• End: April 19, 1937
• Temporary
• Unique

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The Role of The Project Manager

Project Manager’s Sphere of Influence

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Integration Management

Develop Project Charter

Law of Diminishing Returns
• After a certain point, adding more input will not produce
proportional increase in productivity.
• This might be due to extra coordination for instance.

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Integration Management
Develop Project Charter
Law of Diminishing Returns
• E.g. home constructing project
Number of Constructed Average 60
Construction Area per Constructed

Area Constructed Per Day

50
Workers day (m2) Area per
day (m2) 40

4 20 5.00 30

8 36 4.50 20

12 44 3.67 10

16 48 0
3.00
4 8 12 16 20
20 50 2.50 Number of Workers

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Schedule Management
Develop Schedule
Critical Path Method (Exercise)
Activity Successors Duration (days)
A F 6
B --- 5
C --- 8
D E,F 4
E G 8
F B,G 7
G H 5
H C 7
Find critical path, and float of activities E and F.

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
Activity Successors Duration (days)
A F 6
B --- 5
C --- 8
D E,F 4
6d
A F
B 5d END
C 8d END
D
4d E
4d F

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
Activity Successors Duration (days)
E G 8
F B,G 7
G H 5
H C 7
8d
E G
F
7d B
7d G
5d
G H
H 7d C

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d

PATH 1 = 4+8+5+7+8 = 32d

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d

PATH 1 = 4+8+5+7+8 = 32d

PATH 2 = 4+7+5+7+8 = 31d

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d
PATH 1 = 4+8+5+7+8 = 32d
PATH 2 = 4+7+5+7+8 = 31d
PATH 3 = 6+7+5+7+8 = 33d

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d

PATH 1 = 4+8+5+7+8 = 32d

PATH 2 = 4+7+5+7+8 = 31d
PATH 3 = 6+7+5+7+8 = 33d
PATH 4 = 6+7+5 = 18d

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d

PATH 1 = 4+8+5+7+8 = 32d

PATH 2 = 4+7+5+7+8 = 31d PATH 3 is the
PATH 3 = 6+7+5+7+8 = 33d CRITICAL PATH for
PATH 4 = 6+7+5 = 18d this schedule.

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
• Activities A, F, G, H, and C are on critical path. Any delay on these tasks will
have impact on end date of the project. They have “zero” float.

• Calculation of Float

LATE ES EF EARLY Start/Finish is

Start/Finish is calculated when
calculated when moving from START
moving from LS LF
to END
END to START

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
• Float of E Activity
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d

EF= 4+8 = 12d

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
• Float of E Activity
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d

EF= 4+8 = 12d

LF= 33-8-7-5 = 13d

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Schedule Management
Develop Schedule
Critical Path Method (Exercise):
• Float of E Activity
4d E
D 4d
8d

START A 6d F 7d
G 5d H 7d C 8d END

7d B 5d
EF= 4+8 = 12d
Activity E can be delayed
LF= 33-8-7-5 = 13d only for 1 DAY without
FLOAT = LF – EF = 13 – 12 = 1d affecting the project duration.

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Cost Management
Determine Budget
• Process of aggregating the estimated costs of individual activities
or work packages to establish an authorized cost baseline.
• Determines the cost baseline
• Budget = Total cost of the project
• Budget defines how much money the company should have
available.

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Cost Management
Determine Budget
• Project estimate cannot be completed without risk management
activities and the inclusion of reserves.

Contingency Reserves: to address the cost impacts of remaining

risks.

Management Reserves: to address the cost of any unforeseen risks

or changes.

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Cost Management
Determine Budget
Management Reserves COST BUDGET
68K $ 1423K $

Contingency Reserves COST BASELINE

105K $ 1355K $

Project Estimates
1250K $

Control Account CA1 CA2

Estimates 850K $ 400K $

Work Package WP1 WP2 WP3

Estimates 100K $ 250K $ 500K $

Activity A1 A2 A3 A4
Estimates 25K $ 25K $ 50K $ 45K $

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