Learning Objectives

! Describe the nature of project management.

Managing Service Projects ! Illustratethe use of a Gantt chart.
! Construct a project network.
! Perform critical path analysis on a project network.
! Allocate limited resources to a project.
! Crash activities to reduce the project completion time.
! Analyze a project with uncertain activity times.
! Use the earned value chart to monitor a project.
! Discuss the reasons why projects fail to meet
performance, time, and cost objectives.
2006 - Shuguang Liu

2006 - Shuguang Liu

The Nature of Project Management Work Breakdown Structure

! Characteristics of projects: purpose, life cycle, ! 1.0 move the hospital (project)
interdependencies, uniqueness, and conflict. 1.1 move patients (task)
! Project management process: planning (work breakdown
1.1.1 arrange for ambulance (subtask)
structure), scheduling, and controlling.
! Selecting the project manager: credibility, sensitivity, ability to
! 1.1.1.1 prepare patients for move
handle stress, and leadership. 1.1.1.2 box patients personnel effects
! Building the project team: forming, storming, Norming, and 1.2 move furniture
performing. 1.2.1. Contract with moving company
! Principles of effective project management: direct people
individually and as a team, reinforce excitement, keep everyone
informed, manage healthy conflict, empower team, encourage
risk taking and creativity.
! Project metrics: cost, time, performance.

2006 - Shuguang Liu 2006 - Shuguang Liu

Project Management Questions Activity Relationships

Activity Relationship
! What activities are required to complete a project and
in what sequence? S precedes T, which precedes U.
! When should each activity be scheduled to begin and
end?
! Which activities are critical to completing the project
AOA AON
on time?
! What is the probability of meeting the project
completion due date? S T U
1 2 3 4 S T U
! How should resources be allocated to activities?

2006 - Shuguang Liu 2006 - Shuguang Liu

Activity Relationships Activity Relationships
Activity Relationship Activity Relationship

S and T must be completed before U can be started. T and U cannot begin until S has been completed.

AOA AON AOA AON

1 S S T 3 T
U S
T 3 4 U 1 2 U S

2 T 4 U

2006 - Shuguang Liu 2006 - Shuguang Liu

Activity Relationships Activity Relationships

Activity Relationship Activity Relationship

U and V cannot begin until both S and T have been U cannot begin until both S and T have been completed;
completed. V cannot begin until T has been completed.

AOA AON AOA AON

S U
1 S U 4 S U 1 3 5 S U

T 3 V Dummy
T V
2 5 T V 2 4 6 T V

2006 - Shuguang Liu 2006 - Shuguang Liu

An Easy Example
Activity Relationships
Activity Relationship

T and U cannot begin until S has been completed; V

cannot begin until both T and U have been completed.

AOA AON

S T V
1 2 4 5 S T V

Dummy
U
3 U

2006 - Shuguang Liu 2006 - Shuguang Liu

Tennis Tournament Activities Tennis Tournament Activity on Node
ID Activity Network Node Immediate Duration (days)
Diagram TS
Description Predecessor
ES EF
1 Negotiate for A - 2
Location
LS LF
2 Contact Seeded B - 8
Players

3 Plan Promotion C 1 3

4 Locate Officials D 3 2 A2 C3 D2 G4

5 Send RSVP E 3 10
Invitations
6 Sign Player F 2,3 4 START
E10 I3 J2
Contracts
7 Purchase Balls and G 4 4
Trophies

8 Negotiate Catering H 5,6 1 B8 F4 H1

9 Prepare Location I 5,7 3

10 Tournament J 8,9 2

2006 - Shuguang Liu 2006 - Shuguang Liu

Notation for Critical Path Analysis Scheduling Formulas

Item Symbol Definition

Activity duration t The expected duration of an activity

ES = EF (predecessor) (max) (1)
Early start ES The earliest time an activity can begin if all previous
activities are begun at their earliest times EF = ES + t (2)

Early finish EF The earliest time an activity can be completed if it is started LF = LS (successor) (min) (3)
at its early start time
LS = LF - t (4)
Late start LS The latest time an activity can begin without delaying the
completion of the project
TS = LF - EF (5)
Late finish LF The latest time an activity can be completed if it is started at
its latest start time or TS = LS - ES (6)

Total slack TS The amount of time an activity can be delayed without

delaying the completion of the project

2006 - Shuguang Liu 2006 - Shuguang Liu

Early Start Gantt Chart for Tennis Resource Leveled Schedule for
Tournament Tennis Tournament
ID Activity Days Day of Project Schedule ID Activity Days Day of Project Schedule
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A Negotiate for 2 A Negotiate for 2
Location Location
B Contact Seeded 8 B Contact Seeded 8
Players Players
C Plan Promotion 3 C Plan Promotion 3
D Locate Officials 2 D Locate Officials 2
E Send RSVP 10 E Send RSVP 10
Invitations Invitations
F Sign Player 4 F Sign Player 4
Contracts Contracts
G Purchase Balls 4 G Purchase Balls 4
and Trophies and Trophies
H Negotiate 1 H Negotiate 1
Catering Catering
I Prepare Location 3 I Prepare Location 3
J Tournament 2 J Tournament 2
Personnel Required 2 2 2 2 2 3 3 3 3 3 3 2 1 1 1 2 1 1 1 1 Personnel Required 2 2 2 2 2 2 2 2 2 2 2 2 2 3 2 2 2 2 1 1
Critical Path Activities Critical Path Activities
Activities with Slack 2006 - Shuguang Liu Activities with Slack 2006 - Shuguang Liu
Incorporating Uncertainty in Activity Formulas for Beta Distribution of
Times Activity Duration
F(D) Expected Duration
P(D<A) = .01

_ A + 4M + B
D=
6
P(D>B) = .01

Variance
2
 B − A
V = 
 6 
TIME
A M D B

optimistic most pessimistic Note: (B - A )= Range or 6σ

likely

2006 - Shuguang Liu 2006 - Shuguang Liu

Activity Means and Variances for

Tennis Tournament Uncertainly Analysis
Assumptions
1. Use of Beta Distribution and Formulas For D and V
Activity A M B D V
2. Activities Statistically Independent
A 1 2 3
3. Central Limit Theorem Applies ( Use “student t” if less than
B 5 8 11
30 activities on CP)
C 2 3 4
4. Use of Critical Path Activities Leading Into Event Node
D 1 2 3
E 6 9 18
Result
F 2 4 6
Project Completion Time Distribution is Normal With:
G 1 3 11
_
H 1 1 1 µ = ∑D For Critical Path Activities
I 2 2 8
J 2 2 2 σ 2 = ∑V For Critical Path Activities

2006 - Shuguang Liu 2006 - Shuguang Liu

Completion Time Distribution for

Tennis Tournament Question
What is the probability of an overrun if a 24 day completion time
is promised?
Critical Path
Activities D V
X −µ
A 2 4/36 Z=
σ
C 3 4/36
E 10 144/36
σ =52
2
. Z=
24 − 20
5.2
I 3 36/36
Z = 1.75
J 2 0

µ = 20 188/36 = 5.2 = σ
2

24 Days

P (Time > 24) = .5 - .4599 = .04 or 4%

2006 - Shuguang Liu 2006 - Shuguang Liu

Costs for Hypothetical Project Activity Cost-time Tradeoff
Total Cost
Cost
Crash
C* Slope is cost to expedite per day

Indirect Cost
Cost

Opportunity Cost Normal

C

Direct Cost
D* D Activity Duration (Days)
(0,0)
Duration of Project

Schedule with Minimum Total Cost

2006 - Shuguang Liu 2006 - Shuguang Liu

Cost-time Estimates for Tennis Progressive Crashing

Tournament Project Duration Activity Crashed Direct Cost Indirect Cost Opportunity
Cost
Total Cost

Time Estimate Direct Cost Expedite Cost 20 Normal 115 45 8 168

Activity Normal Crash Normal Crash Slope 19 41 41 6

18 37 37 4
A 2 1 5 15
17 33 33 2
B 8 6 22 30 16 29 29 0

C 3 2 10 13 15 25 25 -2
14 21 21 -4
D 2 1 11 17
13 17 17 -6
E 10 6 20 40 12 13 13 -8

F 4 3 8 15
Project Paths Normal Duration After Crashing Activity
Duration
G 4 3 9 10
A-C-D-G-I-J 16
H 1 1 10 10 A-C-E-I-J 20

I 3 2 8 10 A-C-E-H-J 18
A-C-F-H-J 12
J 2 1 12 20 B-F-H-J 15
Total 115 2006 - Shuguang Liu 2006 - Shuguang Liu

Applying Theory of Constraints to Accounting for Resource Contention

Project Management Using Feeding Buffer
! Why does activity safety time exist and is subsequently lost?
1. The “student syndrome” procrastination phenomena.
NOTE: E and G cannot be performed simultaneously (same person)
2. Multi-tasking muddles priorities.
3. Dependencies between activities cause delays to accumulate. A2 C3 D2 FB=7 G4
! The “critical chain” is the longest sequence of dependent
activities and common (contended) resources.
START
! Measure project progress as % of critical chain completed. E10 I3 J2

! Replacing safety time with buffers

FB=5
- feeding buffer (FB) protects the critical chain from delays.
- Project buffer (PB) is a safety time added to the end of the B8 F4 H1

critical chain to protect the project completion date.

- Resource buffer (RB) ensures that resources (e.G. Rental Set feeding buffer (FB) to allow one day total slack
equipment) are available to perform critical chain activities.
Project duration based on Critical Chain = 24 days
2006 - Shuguang Liu 2006 - Shuguang Liu
Incorporating Project Buffer
Sources of Unexpected Problems
NOTE: Reduce by ½ all activity durations > 3 days to eliminate safety time
Cost Time Performance

• Difficulties require more • Delay owing to • Unexpected technical

resources technical difficulties problems arise
A2 C3 D2 FB=2 G2 • Scope of work • Initial time estimates • Insufficient resources
increases were optimistic are available
• Initial bids or estimates • Task sequencing was • Insurmountable
START
E5 I3 J2 PB=4 were too low incorrect technical difficulties
• Reporting was poor or • Required resources not • Quality or reliability
untimely available as needed problems occur
• Budgeting was • Necessary preceding • Client requires changes
B4 F2 H1 FB=3 inadequate tasks were incomplete in specifications
• Corrective control was • Client-generated • Complications with
not exercised in time changes functional areas
Redefine Critical Chain = 17 days • Price changes of inputs • Unforeseen • A technological
Reset feeding buffer (FB) values government regulations breakthrough occurs
Project buffer (PB) = ½ (Original Critical Chain-Redefined Critical Chain)
2006 - Shuguang Liu 2006 - Shuguang Liu

Earned Value Chart Topics for Discussion

Dollars Today
! Give an example that demonstrates trade-off inherent
ACWP in projects among cost, time, and performance.
Actual ! Illustrate the four stages of team building from your
Cost Variance

Cost
Budgeted Cost own experience.
BCWS (Baseline)
! Are Gantt charts still viable project management
Schedule
Variance

tools? Explain.
BCWP ! Explain why the PERT estimate of expected project
ATWP

duration is always optimistic.

STWP

Days
! What purpose does a project history report serve?
Value Time
Completed Variance ! Discuss the differences among time variance, cost

Figure 16.17 Earned Value Chart

variance, and schedule variance.
2006 - Shuguang Liu 2006 - Shuguang Liu

Interactive Exercise
! Preparea work breakdown structure (WBS) for a
homecoming dance.

2006 - Shuguang Liu