PROJECT MANAGEMENT Richard Mojena INTRODUCTION

Common terms: Project Scheduling, Project Management, PERT/CPM. What is it? Planning, scheduling, control of complex projects having many interdependent activities. Objectives: Estimate duration of project, schedule activities, allocate resources, control on-going project. Modeling approach: PERT (Program Evaluation and Review Technique) CPM (Critical Path Method) PERT/CPM

Commercial software: MS Project (Most used, http://www.msproject.com/) Primavera (Small to BIG projects, http://www.primavera.com/) Artemis (BIG projects, http://www.artemispm.com/).

SOLUTION STEPS AND TERMINOLOGY

1. 2. 3. Define individual activities (tasks) that make up the project. ...care with over- and under-refinement here Identify precedence relationships. Estimate necessary data, e.g., times for each activity, costs. Table 1. Software Development Project Duration Immediate Activity Code (Days) Predecessor(s) Design A 5 Code module 1 B 15 A Code module 2 C 10 A Code module 3 D 8 A Test E 12 B, C, D

4. Construct network of arcs and nodes

Activity-On-Arc (AOA) design: Activities as arcs (directed arrows); events, milestones, or points-in-time as nodes. Activity-On-Node (AON) design: Activities as nodes, arcs as precedence relationships. See PERT Graph (Figure 4) on p. 3. Figure 1. AOA Network Diagram Without Dummy Activities

A 1 2

B D 3 C

E 4
On phantom activities: May need to preserve unique (i,j) node labeling May need to preserve proper precedence relationships Have zero durations and don't take up resources.

Figure 2. AOA Network Diagram With Dummy or Phantom Activities

A 1 2

B 3 D C 4

Phantom 1 E 5 Phantom 2 6

5.

Determine/Calculate

PERT Richard Mojena

Page 1 of 8

Critical path... longest path through the network.

Class Exercise
Determine completion time along each path.

Whats the critical path? Time to complete project?

Need not be unique. Identifies critical activities and project completion time. Critical activities must be carefully monitored in ongoing project. If any take longer than anticipated, the project itself is delayed. Time estimates for each activity... Early start time, late start time, early finish time, late finish time, slack time. Table 2. Software Development Project Times
Earliest Latest Earliest Latest Critical Activity Start Start Finish Finish Slack Activity? -------------------------------------------------------------------------------A 0 0 5 5 0 Yes B 5 5 20 20 0 Yes C 5 10 15 20 5 D 5 12 13 20 7 E 20 20 32 32 0 Yes -------------------------------------------------------------------------------Critical Path: A-B-E Project Completion Time = 32

Critical path algorithms: CPM, LP. See text.

Class Exercise
Confirm time calculations in table.

PERT Richard Mojena

Page 2 of 8

COMPUTER IMPLEMENTATION
PERT software provided by Carl A. Dunham. To execute, open PERTPlus.exe. Usage notes: Insert for new task (activity); PERT Graph to dynamically set precedence relationships with mouse drags; double click task box to edit task. Figure 3. Insert Task (or double-click box in PERT Graph)

Figure 4. View PERT Graph

Figure 5. View Project Statistics

PERT Richard Mojena

Page 3 of 8

PERT Richard Mojena

Page 4 of 8

SCHEDULING Gantt Chart

Figure 6. View Gantt Chart

PERT Chart
Similar to our Pert Graph, showing hierarchical (organization) chart, with ending activities at the top and beginning activities at the bottom. Structure indicates precedence relationships and boxes are labeled with IDs, various times, and possibly resource usages.

On Reducing Project Completion time

Can we reduce the number of critical activities by reconsidering precedence relationships? If so, the network is reworked. Can we compress critical activities by applying more resources? Here we include cost (resource) considerations and estimate a "crash" time and cost for each activity, as well as the normal time and cost. The act of crashing the network uses time/direct cost function for activities. Algorithms are then used (including LP!) to compress critical activities in the network. See Text.

Resource Leveling
Idea and approaches. See project.

PERT Richard Mojena

Page 5 of 8

PROBABILISTIC DURATIONS
The Stats Estimate three durations: optimistic (o), modal (m), pessimistic (p). The mean and variance for each activity is estimated using a beta distribution assumption. Activity mean = (o + 4m + p)/6 Activity var = ((p - o)/6)^2 Probability distribution for project completion time (pct). If we assume: 1. mean, variance estimates are accurate 2. activities are statistically independent 3. many activities in project (for Central Limit Theorem to operate) 4. one and only one specific longest path into the terminal event then the random variable pct is normally distributed with Project mean = sum of activity means along critical path Project var = sum of variances along critical path

Example...

These are the times we used in the first example

Table 3. Activity Mean Times and Variances

Act. A B C D E o 5 12 8 7 10 m 5 15 10 8 12 p 8 18 15 10 17 Activity Expected Time Variance --------------------------------------------A 5.50 0.25 B 15.00 1.00 C 10.50 1.36 D 8.17 0.25 E 12.50 1.36 ---------------------------------------------

Table 4. Software Development Project Expected Times

Earliest Latest Earliest Latest Critical Activity Start Start Finish Finish Slack Activity? -------------------------------------------------------------------------------A 0.00 0.00 5.50 5.50 0.00 Yes B 5.50 5.50 20.50 20.50 0.00 Yes C 5.50 10.00 16.00 20.50 4.50 D 5.50 12.33 13.67 20.50 6.83 E 20.50 20.50 33.00 33.00 0.00 Yes -------------------------------------------------------------------------------Critical Path: A-B-E Expected Project Completion Time = 33.00 Variance of Project Completion Time = 2.61

PERT Richard Mojena

Page 6 of 8

PERTPlus Implementation Click Use extended estimates in Task Properties dialog box. Duration is modal time (m). Optimistic is optimistic time (o). Pessimistic is pessimistic time (p). Expected is calculated by program (according to mean formula) The Project Statistics dialog box now shows mean and variance for project completion. Use it to calculate cumulative probabilities.

Class Exercise
What's the probability that the project is completed in 30 days or less? How about more than 33 days? 35 days or less? More than 35 days? Between 30 and 35 days? Project completion time is 33 days with variance 2.61. Whats the 95% margin of error (confidence level) based on the normal curve? Based on the Students t?

Exercises for Next Class Use PertPlus to confirm probability example. Revise the example given that activity C has o, m, p times of 8, 15, 35. Now what's the critical path, expected project completion time, and variance? What's the probability that the project is completed in 30 days or less? More than 40 days? Between 30 and 40 days? Margin of error (95%) based on z and t?

Turn in these exercises as a printout from a single Word file. Show the Pert Graph, Gantt chart, and dialog boxes with probability calculations.

PERT Richard Mojena

Page 7 of 8

COST CONSIDERATIONS
The Cost Tradeoffs Three types of costs make up total project cost: direct, indirect, opportunity (penalty). Behavior of each function as project time increases? Project duration/total cost function for project is U-shaped. Figure 7. Cost Components Cost * Total Indirect Opportunity Direct * Project Completion Time

PERT/Cost

IMPLEMENTATION AND CONTROL ISSUES Real-Time Analysis

To-do lists, manual and automatic updates over time.

Reporting & Communicating

Colleagues, clients, boss. Report formats and visuals. Email integration, collaboration.

Administrative and Behavioral Considerations

Resistance to change... The "pain-in-the-neck" response. Education/training. Hard vs. soft activities... Underestimating the management/personnel resource. Politics

ADDITIONAL SOFTWARE
The Simulation Alternative The problem with PERT calculations and the actual critical path (CP) draw a diagram showing a CP w/ higher mean pct but smaller variance than an off-CP w/ lower mean pct but higher variance. Which path is the CP? Highest mean pct or smallest probability of completion by contractual deadline (i.e., highest probability of a penalty)? How might we simulate a network and what stats are useful? See text. OLE Integration with database software, spreadsheets, documents, drawings. Microsoft Project Demonstration

PERT Richard Mojena

Page 8 of 8