Project Management

Selected Slides from Jacobs et al, 9th Edition

Operations and Supply Management
Chapter 3
Edited, Annotated and Supplemented by
Peter Jurkat

3-2

Project Management
Defined

A Project is a series of related jobs (activities)

usually directed toward some major output and
requiring a significant period of time to perform,
usually with a definite beginning and end
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

3-3

Project Management
Defined

A Project is a series of related jobs usually directe

toward some major output and requiring a
significant period of time to perform
Project Management are the management activit
of planning, directing, and controlling resources
(people, equipment, material) to meet the
technical, cost, and time constraints of a project

3-4

Gantt Chart

Vertical Axis:
Always Activities
or Jobs

Horizontal bars used to denote length of

time for each activity or job.

Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6

Time

Horizontal Axis: Always Time

3-5

Pure Project:
Self Contained with Full Time Staff
Advantages
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

Disadvantages
Duplication of resources
Organizational goals and
policies are ignored
Lack of technology transfer
Team members have no
functional area "home"

Functional Area Project:

Housed within a Functional Division
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

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

3-8

Matrix Project Organization Structure

President
Research and
Development
Manager
Project A
Manager
Project B
Manager
Project C

Engineering

Manufacturing

Marketing

Matrix Structure
Advantages
Enhanced communications
between functional areas

Disadvantages
Too many bosses

Pinpointed responsibility

Depends on project
managers negotiating skills

Duplication of resources is
minimized
Functional home for
team members
Policies of the parent
organization are followed

Potential for suboptimization

3-10

Network-Planning Models

A project is made up of a sequence of activities that

form a network
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

3-11

Work Breakdown Structure

A work breakdown structure defines the hierarchy of project tasks, subtasks, and
work packages

Level

1
2

Program
Project 1

Project 2

Task 1.1

Task 1.2

Subtask 1.1.1

Work Package 1.1.1.1

Subtask 1.1.2
Work Package 1.1.1.2

3-12

Gantt Chart

Vertical Axis:
Always Activities
or Jobs

Horizontal bars used to denote length of

time for each activity or job.

Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6

Time

Horizontal Axis: Always Time

3-13

3-14

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

3-15

CPM with Single Time Estimate

Consider the following consulting project

Activity
Assess customer's needs
Write and submit proposal
Obtain approval
Develop service vision and goals
Train employees
Quality improvement pilot groups
Write assessment report

Designation Immed. Pred. Time (Weeks)

A
None
2
B
A
1
C
B
1
D
C
2
E
C
5
F
D, E
5
G
F
1

Develop a critical path diagram and determine the duration of the critical path and slack times for all activities.

Network representation:

A(2)

B(1)

D(2)
C(1)

F(5)
E(5)

G(1)

3-16

Determine early starts and early finish times

Hint: Start with ES=0
and go forward in the
network from A to G.

ES = early start
EF = early finish

ES=4
EF=6

ES=0
EF=2

ES=2
EF=3

ES=3
EF=4

A(2)

B(1)

C(1)

D(2)

ES=4
EF=9

ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

F cannot start until E is finished

E(5)

3-17

Determine late starts and late finish

times

ES=4
EF=6

LS = late start
LF = late finish
Set LF = EF

ES=0
EF=2

ES=2
EF=3

ES=3
EF=4

A(2)

B(1)

C(1)

LS=0
LF=2

LS=2
LF=3

LS=3
LF=4

D does not have to start until 7

D has slack LS ES = 7 4 = 3

D(2)
LS=7
LF=9
ES=4
EF=9
E(5)
LS=4
LF=9

Hint: Start with LF=15

or the total time of the
project and go
backward in the
network from G to A.
ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

LS=9
LF=14

LS=14
LF=15

3-18

Example 2. CPM with Three Activity Time Estimates

Seek experts and ask three questions (can use equivalent phrasing):
If everything went right, how fast can this task be done? => Optimistic estimate
No matter what went wrong , how fast could this task be done? => Pessimistic
Given no unusual conditions, how fast could this task be done? = Most Likely

Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
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

3-19

Example 2. Expected Time Calculations

Experience has shown that the three estimates determine a known probability
distribution (Beta) form which the expected time (mean) given by:

Expected Time =

Opt. Time + 4(M ost Likely Time) + Pess. Time

6

ET(A)= 3+4(6)+15
Task
A
B
C
D
E
F
G
H
I

Immediate Expected
Predecesors
Time
None
7
None
5.333
A
14
A
5
C
11
D
7
B
11
E,F
4
G,H
18

6
ET(A)=42/6=7
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
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

3-20

Ex. 2. Expected Time Calculations

Task
A
B
C
D
E
F
G
H
I

Immediate Expected
Predecesors
Time
None
7
None
5.333
A
14
A
5
C
11
D
7
B
11
E,F
4
G,H
18

Expected Time =

ET(B)= 2+4(4)+14
6
ET(B)=32/6=5.333
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
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

Opt. Time + 4(M ost Likely Time) + Pess. Time

6

3-21

Ex 2. Expected Time Calculations

Task
A
B
C
D
E
F
G
H
I

Immediate Expected
Predecesors
Time
None
7
None
5.333
A
14
A
5
C
11
D
7
B
11
E,F
4
G,H
18

Expected Time =

ET(C)= 6+4(12)+30

6
ET(C)=84/6=14
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
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

Opt. Time + 4(M ost Likely Time) + Pess. Time

6

3-22

Example 2. Network
Use expected task times in network representation and calculate EF/LF times.

Duration = 54 Days

C(14)

E(11)
H(4)

A(7)

D(5)

F(7)
Duration = 41 Days

B
(5.333)

G(11)

Duration = 34.333 Days

I(18)

Variation in Project Completion Time

Beta distribution indicates :
A ctiv ity v arian ce,
Task
A
B
C
D
E
F
G
H
I

P essim . - O p tim . 2
= (
)
6

Optimistic Most Likely Pessimistic Variance

3
6
15
4
2
4
14
6
12
30
16
2
5
8
5
11
17
4
3
6
15
3
9
27
1
4
7
1
4
19
28
16

(Sum the variance along the critical path.)

= 41

3-23

3-24

Example 2. Probability Exercise

What is the probability of finishing this project in
less than 53 days?
Sum of random variables approximate the normal distribution no matter what
distribution the individual terms have so it can be used to estimate probability of
completion.
There is a 43.8% probability that
this project will be completed in
less than 53 weeks.

p(t < D)
D=53

TE = 54

Z =

D - TE

cp

53 - 54
=
= -.156
41

p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)

3-25

The best laid plans oft go

When tasks are late (or going late) it may be possible to add resources and
speed them up called crashing for Task A

When multiple tasks on the critical path can be crashed prefer then one
with the lowest cost per unit crashing time.

Good News/Bad News

The easy parts of project management are the
mechanical ones
WBS & CPM
Optimistic/normal/pessimistic estimates
Crashing

The hard parts are human/org behavior ones

Getting buy in and resources from upper management
for matrix organized projects
Managing/motivating personnel based in line
departments
Developing incentives/evaluations acceptable to both
management and personnel assigned to the project