Project Management

What is a Project Management?

Project: a set of interrelated activities necessary to achieve

established goals using a specified amount of time, budget, and
resources
Project management: the application of the knowledge, skills,
tools, and techniques necessary to successfully complete a
project.
According to the Project Management Institute (www.pmi.org),
the body of knowledge of project management can be divided
into five categories:
1. initiation
2. planning
3. execution
4. control
5. closure

Characteristics of a Project
A unique, one-time effort
Requires the completion of a large number of
interrelated activities
Resources, such as time and/or money, are limited
Typically has its own management structure

Supplementary
Characteristics for Projects
Projects generally have or include:
Pre-specified deliverables after completion
Pre-established limits and exclusions
Specific intermediate goals or performance
milestones.
An element of risk
Teams made up of several individuals who come
from different departments or functional areas or
who have unique skills
Team members work on multiple projects at the
same time

Example Projects in Different Functional

Areas that Impact the Value Chain

Organization Structure
Matrix, Project Organization Structures
President
Research and
Engineering Manufacturing Marketing
Development
Manager
Project A
Manager
Project B
Manager
Project C

Three Interrelated
Constraints in Project Management

All project management decisions involve three

factors:
time, resources, and cost

Project Management
Tools and Techniques
The discipline of project management has a number of
tools and procedures that enable the project team to
organize its work to meet the objectives under the
constraints:

Work Breakdown Structure

Precedence Relationship and Time Estimates
Gantt Chart
Network Diagram
Critical Path Method (CPM)
Cost and Time Tradeoff Analysis
Program Evaluation and Review Technique (PERT)
Resource Management

Work Breakdown Structure

Work breakdown structure (WBS): an approach
that defines a project in terms of its subprojects,
tasks, and activities
Most fundamental technique for designing and organizing

Activity: the smallest work package that can be

assigned to a single worker or a team
It is essential that care is taken to develop a realistic
work breakdown structure.

Precedence Relationship
and Time Estimates
Precedence relationship analysis: identification of
the relationships and the sequence of activities within
a project
Great care is taken to estimate the approximate
completion time for each activity.
The project schedule, cost, and resource
requirements depend on the precedence relationships
and time estimates for individual tasks.

Gantt Chart
Gantt chart: a special type of horizontal bar chart used to
display the schedule for an entire project
Named after Henry Gantt, who originally developed the
chart in the 1910s.
A Gantt chart with different color codes can be used to
track performance while the project is in progress.

An Example of a Gantt Chart

Network Diagram
Network diagram: a diagram with arrows and nodes
(circles) created to display a sequence of activities within
a project
Activity on node (AON) approach: a network diagram
that shows each activity as a circle (or a node) and
connects the activities with arrows
Activity on arrow (AOA) convention: a network diagram
in which each activity is represented by an arrow, and the
nodes are used to show the beginning and end points

Activity on Node (AON)

and Activity on Arrow (AOA) Conventions
for Representing Network Diagrams

Types of Critical Path Methods

CPM
- 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
PERT 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

Critical Path Method

Critical path method: an algorithm for scheduling
activities within a project for the fastest and most efficient
execution
Critical path: the path within a project that takes the
longest time to complete
Dictates the project completion time, the bottleneck path or the
binding constraint

Critical activities: the project activities making up a

critical path
Slack: the amount of flexibility in scheduling an activity
within a project

Computing the Critical Path

Earliest start (ES) = 0 for all activities without
predecessors; = largest of earliest finish times for all
immediate predecessor activities.
Earliest finish (EF) = ES + task duration, working forward
in the project network
Latest finish (LF) = for all ending activities = minimum
project duration; = smallest of latest start times for all
successor activities.
Latest start (LS) = LF - task duration, working backwards
in the project network

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.

First draw the network

Act.

Imed. Pred. Time

A
B
C

None
A
B

2
1
1

D
E
F

C
C
D,E

2
5
5

A(2)

B(1)

D(2)

C(1)

F(5)

E(5)

G(1)

Determine early starts and early finish times

ES=4
EF=6
ES=0
EF=2

ES=2
EF=3

ES=3
EF=4

A(2)

B(1)

C(1)

Hint:
Hint:Start
Startwith
withES=0
ES=0
and
andgo
goforward
forwardininthe
the
network
networkfrom
fromAAtotoG.
G.

D(2)

ES=4
EF=9
E(5)

ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

Determine late starts and late

finish times

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

ES=4
EF=6
D(2)
LS=7
LF=9
ES=4
EF=9
E(5)
LS=4
LF=9

Hint:
Hint:Start
Startwith
withLF=15
LF=15
or
orthe
thetotal
totaltime
timeof
ofthe
the
project
project and
andgo
go
backward
backwardin
inthe
the
network
networkfrom
fromGGto
toA.
A.
ES=9
ES=14
EF=14 EF=15
F(5)

G(1)

LS=9
LF=14

LS=14
LF=15

Critical Path & Slack

ES=4
EF=6
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(2)
LS=7
LF=9
ES=4
EF=9
E(5)
LS=4
LF=9

Slack=(7-4)=(9-6)= 3 Wks

ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

LS=9
LF=14

LS=14
LF=15

Duration=15 weeks

Program Evaluation
and Review Technique (PERT)
The technique is based on the assumption that an
activitys duration follows a probability distribution instead
of being a single value.
The probabilistic information about the activities is
translated into probabilistic information about the project.

PERT
Three time estimates are required to compute the
parameters of an activitys duration distribution:
pessimistic time (tp ) - the time the activity would take if things did not
go well
most likely time (tm ) - the consensus best estimate of the activitys
duration
optimistic time (to ) - the time the activity would take if things did go
well

PERT
From these three time estimates about an activity, two
probability distribution parameters are calculated: the
mean (te ) and the variance (Vt ).
te = ( to + 4tm + tp ) / 6
Vt = [ ( tp - to ) / 6 ] 2

Example: PERT

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

Example. Expected Time Calculations

ET(A)=
ET(A)=3+4(6)+15
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

66
ET(A)=42/6=7
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

Opt.
Time
++ 4(Most
Likely
Time)
++ Pess.
Time
Opt.
Time
4(Most
Likely
Time)
Pess.
Time
Expected
ExpectedTime
Time ==
66

Network Diagram
Duration = 54 Days
C(14)

E(11)
H(4)

A(7)
D(5)

F(7)
I(18)

B
(5.333)

G(11)

Exercise
What
What isis the
the probability
probability of
of finishing
finishing this
this project
project in
in
less
less than
than 53
53 days?
days?

p(t < D)
D=53
TE = 54

t
DD -- TTEE
ZZ ==
22

cpcp

Pessim.
-- Optim.
Pessim.
Optim.)22
Activity
variance,

=
(
Activity variance, = (
)
66
22

Task
A
B
C
D
E
F
G
H
I

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.)

22

41
== 41

p(t < D)
D=53

TE = 54

D
D -- TTEE 5353-54
54
ZZ ==
==
== -.156
-.156
22
41
41

cpcp
p(Z
p(Z <<-.156)
-.156) ==.438,
.438, or
or 43.8
43.8 %
% (NORMSDIST(-.156)
(NORMSDIST(-.156)
There
There isis aa 43.8%
43.8% probability
probability that
that this
this project
project will
will be
be
completed
completed in
in less
less than
than 53
53 weeks.
weeks.

Additional Probability Exercise

What
What is
isthe
theprobability
probabilitythat
that the
theproject
project
duration
durationwill
will exceed
exceed56
56weeks?
weeks?

Additional Exercise Solution

p(t < D)

TE = 54

t
D=56

D
-- TTEE 56
--54
D
56
54
ZZ ==
=
== .312
.312
22 =
41
41

cp
cp
p(Z
p(Z>>.312)
.312) == .378,
.378, or
or 37.8
37.8 %
%(1-NORMSDIST(.312))
(1-NORMSDIST(.312))

Activity Cost-Time Tradeoffs

Project managers may have the option or requirement to
crash the project, or accelerate the completion of the
project.
This is accomplished by reducing the length of the
critical path(s).
The length of the critical path is reduced by reducing the
duration of the activities on the critical path

Chapter 18 Project Management

Crashing a project refers to reducing the

total time to complete the project to meet
a revised due date.
Crash time is the shortest possible time
the activity can realistically be completed.
Crash cost is the total additional cost
associated with completing an activity in
its crash time rather than in normal time.
Crash cost per unit of time =
Crash Cost Normal Cost
Normal Time Crash Time

Activity crashing

Activity cost

Crash
cost

Crashing activity
Slope = crash cost per unit time

Normal Activity

Normal
cost

Normal
time
Crash
time

Activity time

Crashing - Considerations

Pick activities on the Critical Path

Determine Crash/Day costs
Start with lowest cost crash/day
Determine other effects of shortening critical path
activities
Continue to crash/analyze until optimum solution
reached.
Analyze Project Cost/Duration Graph

Project Crashing example

4

2
8

12

7
4

12

3
4

5
4

6
4

Time Cost data

Activity Normal Normal Crash Crash Allowable slope
time
cost Rs time cost Rs crash time
1
2
3
4
5
6
7

12
8
4
12
4
4
4

3000
2000
4000
50000
500
500
1500
75000

7
5
3
9
1
1
3

5000
3500
7000
71000
1100
1100
22000
110700

5
3
1
3
3
3
1

400
500
3000
7000
200
200
7000

R500

R7000

2
8

12

Project duration = 36

R700
7
4

12

R400

3
4

To..
Project
duration = 31
Additional cost =
R2000

6
4

5
4

R3000

From..

R200

R200

R500

R7000

2
8

12

R700
7
4

R400

3
4
R3000

5
4
R200

6
4
R200
40

Resource Management
Two commonly used techniques are:
1. Resource breakdown structure (RBS): a standardized list of

personnel required to complete various activities in a project

2. Resource leveling: an approach to reduce the amount of
fluctuations in day-to-day resource requirements within an
organization

Computer Software
for Project Management

Artemis Views (Artemis Management Systems)

FastTrack Schedule (AEC Software)
Microsoft Project (Microsoft Corp.)
Oracle Projects (Oracle Corp.)
PowerProject (ASTA Development)
Primavera Project Planner (Primavera Systems)
SuperProject (Computer Associates International)
TurboProject (IMSI)