Project Management

Topics
Introduction
Project management activities
Structuring projects
Project management techniques
 Gantt Charts
 Network models (PERT & CPM)
 Deterministic & probabilistic activity times
 Time-cost models & project crashing
 Limitations
Project

Unique one-time operational activity

A series of related jobs usually directed
toward some major output & requiring
a significant period of time to perform
Project Management

Activities of planning, directing &

controlling resources (people,
equipment, material) to meet the
technical, cost, and time constraints of
a project
Project Management Activities
1. Planning
- goal setting, defining the project, team
organization
2. Scheduling
- relates people, money & supplies to specific
activities and activities to each other
3. Controlling
- monitors resources, costs, quality & budgets;
revises plans & shifts resources to meet time
& cost demands
Project Management Activities

 Planning
 Scheduling
 Objectives
 Project activities
 Resources
 Start & end times
 Work break-down
schedule  Network
 Organization

 Controlling
 Monitor, compare, revise, action
 Project Planning, Scheduling, &
Controlling

Before Start of project During

project Timeline project
Project Planning, Scheduling, &
Controlling

Before Start of project During

project Timeline project
Project Planning, Scheduling, &
Controlling

Before Start of project During

project Timeline project
Project Planning, Scheduling, &
Controlling

Before Start of project During

project Timeline project
Structuring Projects
Pure project
Functional project
Matrix project

Project Team
 One functional department
 Cross-functional
Pure Project
A self-contained team works full-time
on the project

Advantages
 Project manager has full authority
 Team members report to one boss
 Shortened communication lines
 Team pride, motivation, and commitment
high
Pure Project

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

Housed within a functional division

President

Research and
Engineering Manufacturing
Development

Project Project Project Project Project Project Project Project Project

A B C D E F G H I

Example, Project “B” is in the functional

area of Research and Development.
Functional Project
Advantages
 A team member can work on several
projects
 Technical expertise is maintained within
the functional area
 Functional area is a “home” after project is
completed
 Critical mass of specialized knowledge
Functional Project
Disadvantages
 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
Matrix Project

President

Research and
Engineering Manufacturing Marketing
Development

Manager
Project A

Manager
Project B

Manager
Project C
Matrix Project
Advantages
 Enhanced communications between
functional areas
 Pinpointed responsibility
 Duplication of resources minimized
 Functional “home” for team members
 Policies of the parent organization followed
Matrix Project
Disadvantages
 Too many bosses
 Depends on project manager’s negotiating
skills
 Potential for sub-optimization
Role of Project Manager
Highly visible
Responsible for making sure that:
 All necessary activities are finished in order
and on time
 Project comes in within budget
 Project meets quality goals
 People assigned to the project receive
motivation, direction, and information
Role of Project Manager

Project managers should be:

 Good coaches
 Good communicators
 Able to organize activities from a variety of
disciplines
Project Planning
 Establishing objectives
 Defining project
 Creating work breakdown structure
 Determining resources
 Forming organization
Work Breakdown Structure
Defines the hierarchy of project tasks, subtasks, and work
packages
Level
1. Project
2. Major tasks in the project
3. Subtasks in the major tasks
4. Activities (or work packages)
to be completed
Work Breakdown Structure
Level ID
Level Number Activity
1 1.0 Develop/launch Windows Vista OS
2 1.1 Develop of GUIs
2 1.2 Ensure compatibility with earlier
Windows versions
3 1.21 Compatibility with Windows ME
3 1.22 Compatibility with Windows XP
3 1.23 Compatibility with Windows 2000
4 1.231 Ensure ability to import files
Project Control
After planning,
project is physically initiated:

Control starts
Project Control Reports
Detailed cost breakdowns for each task
Total program labor curves
Cost distribution tables
Functional cost and hour summaries
Raw materials and expenditure forecasts
Variance reports
Time analysis reports
Work status reports
Project Scheduling
Identifying precedence relationships
Sequencing activities
Determining activity times & costs
Estimating material & worker requirements
Determining critical activities
Purposes of Project Scheduling
1. Shows the relationship of each activity to
others & to the whole project
2. Identifies the precedence relationships
among activities
3. Encourages the setting of realistic time and
cost estimates for each activity
4. Helps make better use of people, money,
and material resources by identifying critical
bottlenecks in the project
Scheduling Techniques
1. Ensure that all activities are planned for
2. Their order of performance is accounted
for
3. Activity time estimates are recorded
4. Overall project time is developed
Project Management Techniques
Gantt charts
 Bar chart with a bar for each project
activity that shows the passage of time
Network planning models
 Gantt Chart
Vertical Axis:
Always Activities Horizontal bars used to denote length
or Jobs of time for each activity or job.

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

Time Horizontal Axis: Always Time

Network Planning Models
A project is made up of a sequence of activities
that form a network
Critical Path Method (CPM)
 M.R. Walker & J.E.Kelly at DuPont for chemical plants
(1957)
Program Evaluation and Review Technique
(PERT)
 Polaris Missile Project by U.S. Navy and D.G. Malcolm
of Booz, Allen and Hamilton (1958)
Differences between PERT & CPM
Activity times:
 CPM: deterministic
 PERT: probabilistic

Mechanics of drawing network

 CPM: AON
 PERT: AOA
Prerequisites for network models

A project must have

 Well-defined jobs or tasks whose
completion marks the end of the project
 Independent jobs or tasks
 Tasks that follow a given sequence
Six Steps PERT & CPM
1. Define the project and prepare the work
breakdown structure
2. Develop relationships among the activities -
decide which activities must precede & which
must follow others
3. Draw the network connecting all of the
activities
Six Steps PERT & CPM
4. Assign time and/or cost estimates to each
activity
5. Compute the longest time path through the
network – called the critical path (gives
minimum project completion time)
6. Use the network to help plan, schedule,
monitor, and control the project
Questions PERT & CPM can answer
1. When will the entire project be completed?
2. What are the critical activities or tasks in the
project?
3. Which are the noncritical activities?
4. What is the probability the project will be
completed by a specific date?
Questions PERT & CPM can answer
5. Is the project on schedule, behind schedule,
or ahead of schedule?
6. Is the money spent equal to, less than, or
greater than the budget?
7. Are there enough resources available to
finish the project on time?
8. If the project must be finished in a shorter
time, what is the way to accomplish this at
least cost?
AON vs. AOA Networks
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)
A comes before
(a) A B C B, which comes
before C A B C
A A
A and B must both
(b) C be completed
before C can start C
B B
B
B and C cannot
(c) A begin until A is B
completed A
C C
AON vs. AOA Networks
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA))

C and D cannot
A C begin until both A C
(d) A and B are
completed
B D B D

C cannot begin until

both A and B are
A C completed; D A C
(e) cannot begin until B Dummy activity
is completed. A
B D dummy activity is
introduced in AOA B D
AON vs. AOA Networks
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)

B and C cannot
begin until A is
completed. D
A B D cannot begin until A B D
both B and C are
(f) completed. A Dummy
dummy activity is C
C activity
again introduced
in AOA.
A network for building a house

Lay 3 Dummy
Foundation
Build Finish
3 2 House work
1
1 2 4 6 7
Design Order & 3 1
1
house & receive 1
materials Select Select
obtain Paint Carpet
financing 5
Types of Critical Path Methods

CPM with a Single Time Estimate

 Activity times known with certainty
 To determine timing estimates for the
project, each activity in the project, and
slack time for activities
Types of Critical Path Methods
CPM with Three Activity Time
Estimates
 Activity times 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
Steps in CPM with Single Time
Estimate
Activity Identification
Activity Sequencing and Network
Construction
Determine the critical path
 From the critical path all of the
project and activity timing
information can be obtained
 CPM with Single Time Estimate
Consider the following consulting project:
Activity Designation Immed. Pred. Time (Weeks)
Assess customer's needs A None 2
Write and submit proposal B A 1
Obtain approval C B 1
Develop service vision and goals D C 2
Train employees E C 5
Quality improvement pilot groups F D, E 5
Write assessment report 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 None 2
B A 1
C B 1
D C 2
E C 5
F D,E 5
D(2)
G F 1

A(2) B(1) C(1) F(5) G(1)

E(5)
Activity Scheduling
Forward Pass
 Earliest start time (ES)
 Earliest finish time (EF)
Backward Pass
 Latest start time (ES)
 Latest finish time (EF)
Activity Slack
 the amount of time an activity can be
delayed without delaying the project
Determine early start and early finish
times
ES=4
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 EF=14 EF=15

A(2) B(1) C(1) F(5) G(1)

ES=4
EF=9
Hint: Start with ES=0
and go forward in the E(5)
network from A to G.
Determine late Hint: Start with LF=15
or the total time of the
start and late project and go

finish times ES=4 backward in the

EF=6 network from G to A.

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4
LF=9
Critical Path & Slack
ES=4
Slack=(7-4)=(9-6)= 3 Wks
EF=6

ES=0 ES=2 ES=3 D(2)

ES=9 ES=14
EF=2 EF=3 EF=4 LS=7 EF=14 EF=15
LF=9
A(2) B(1) C(1) F(5) G(1)
ES=4
LS=0 LS=2 LS=3 EF=9 LS=9 LS=14
LF=2 LF=3 LF=4 LF=14 LF=15
E(5)

LS=4 Duration=15 weeks

LF=9
Probabilistic Activity Times

Use beta distribution

 Most likely time (m)
 Optimistic time (a)
 Pessimistic time (b)

a +4m + b
Mean (expected time): t =
6
b-a 2
Variance: 2 =
6
CPM with 3 Activity Time Estimates

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
Expected Time Calculations
ET(A)= 3+4(6)+15
6
Immediate Expected
Task Predecesors Time
A None 7 ET(A)=42/6=7
B None 5.333
C A 14 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
D A 5 A None 3 6 15
E C 11 B None 2 4 14
C A 6 12 30
F D 7 D A 2 5 8
E C 5 11 17
G B 11 F D 3 6 15
H E,F 4 G B 3 9 27
H E,F 1 4 7
I G,H 18 I G,H 4 19 28

Opt. Time + 4(Most Likely Time) + Pess. Time

Expected Time =
6
Expected Time Calculations
ET(B)= 2+4(4)+14
Immediate Expected
Task Predecesors Time 6
A None 7
B None 5.333 ET(B)=32/6=5.333
C A 14
D A 5 Immediate
E C 11 Task Predecesors Optimistic Most Likely Pessimistic
A None 3 6 15
F D 7 B None 2 4 14
G B 11 C A 6 12 30
D A 2 5 8
H E,F 4 E C 5 11 17
F D 3 6 15
I G,H 18 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

Expected Time =
6
Expected Time Calculations
Immediate Expected ET(C)= 6+4(12)+30
Task Predecesors Time 6
A None 7
B None 5.333
C A 14 ET(C)=84/6=14
D A 5
E C 11 Immediate
Task Predecesors Optimistic Most Likely Pessimistic
F D 7 A None 3 6 15
G B 11 B None 2 4 14
C A 6 12 30
H E,F 4 D A 2 5 8
E C 5 11 17
I G,H 18 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

Expected Time =
6
 Network

Duration = 54 Days
C(14) E(11)

A(7) H(4)
D(5) F(7)

I(18)

B G(11)
(5.333)
Probability Exercise 1
What is the probability of finishing this project in
less than 53 days?

p(t < D)
D=53
t
TE = 54
D - TE
Z =
 cp
 2
 P essim . - O ptim . 2
A ctivity v ariance,  2
= ( )
6

Task Optimistic Most Likely Pessimistic Variance

A 3 6 15 4
B 2 4 14
C 6 12 30 16
D 2 5 8
E 5 11 17 4
F 3 6 15
G 3 9 27
H 1 4 7 1
I 4 19 28 16

(Sum the variance along the critical  = 41

 2

path.)
 p(t < D)

t
D=53 TE = 54
D - TE 53 - 54
Z = = = -.156
 cp
 2 41

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

There is a 43.8% probability that this project

will be completed in less than 53 weeks.
Probability Exercise 2

What is the probability that the project

duration will exceed 56 weeks?
 p(t < D)

t
TE = 54
D=56
D - TE 56 - 54
Z = = = .312
 cp
 2 41

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

Time-Cost Models
Basic Assumption: Relationship
between activity completion time and
project cost

Time Cost Models: Determine the

optimum point in time-cost tradeoffs
Activity direct costs
Project indirect costs
Activity completion times
Project Crashing

Reducing project time

by expending additional resources
at minimum cost
Example of Project Crashing
5, 2
Rs.9, Rs.18

2, 1 3, 1
Rs.6, Rs.10 A D Rs.5, Rs.9

Assume indirect costs C

8/day for first 8 days,
beyond which it increases
@rate of 5/day 4, 3
Rs.6, Rs.8
Normal time & cost vs.
Crash time & cost

Crashed Activity
Cost
Crash Cost Slope= crash cost per week

Normal Activity
Normal Cost

Crash Time Normal Time

Weeks
Limitations of CPM
Project activities can be identified as
entities
 A clear beginning and ending point for
each activity
Project activity sequence
relationships can be specified and
networked
Limitations of CPM
Project control should focus on critical
path
Activity times follow the beta
distribution, with the variance of the
project assumed to equal the sum of
the variances along the critical path
Earned Value - What is it?
Simply, it is a project monitoring and
measurement system that:
1. establishes a clear relationship between planned
accomplishments and actual accomplishments
2. reinforces and rewards good planning practices

69
Earned Value - What is it?
Basic concepts of Earned Value Management
(EVM)
 Each task in a project earns value as planned
work is completed
 For example (perhaps), if you were paid on this basis,
you would earn $$ at key milestones based on the
value of what you have completed (earned value)
 Earned value can be compared to actual cost and
budgeted cost to determine variance and predict
future performance
70
Earned Value - What is it?
The budgeted cost (e.g., dollars, person-
hours, person-days, etc.) in terms of your
baseline plan/budget of the work performed
up to a specified point in time
 Also known as Budgeted Cost of Work Performed
(BCWP)
Each task in the Work Breakdown Structure
(WBS) is assigned a BCWP based on its
individual cost.
 Project BCWP is total of BCWP for all tasks
required to complete the project
71
Earned Value Components
Planned Value (a.k.a. BCWS)
 How much work (person-hours) you planned to have
accomplished at a given point in time (this is from the
WBS in your plan)
Actual Cost (a.k.a. ACWP)
 How much work (person-hours) you have actually spent
at a given point in time
Earned Value (a.k.a. BCWP)
 The value (person-hours) in terms of your base budget of
what you have accomplished at a given point in time (or,
% complete X Planned Value)
72
Earned Value: Example Today

18

14

On Day X:
PLANNED VALUE (Budgeted cost of the work scheduled, BCWS) =
18 + 10 + 16 + 6 = 50
EARNED VALUE (Budgeted cost of the work performed, BCWP) =
18 + 8 + 14 + 0 = 40
ACTUAL COST (of the work performed , ACWP) =
45 (from your project tracking - not evident in above chart)

73
Earned Value: Example
Actual Cost: what you Today
have actually spent to
Cost (Person-Hours)

this point in time.

Planned Value: what your

plan called for spending on
the tasks planned to be
completed by this date.

Earned Value: value

(cost) of what you have
accomplished to date, per
the base plan.

Time (Date)
74
Earned Value: Example
Today
Cost (Person-Hours)

Over
Budget

Behind
Schedule

Time (Date)
75
Variance
Any schedule or cost deviation from a
specific plan.
Used within an organization to verify
the budget and schedule for a project
Frequently used as a key component of
plan reviews and performance
measurement

76
Variance
Must compare scheduling and budget
variance at the same time
 Schedule variance: deviations from work
planned – not a measure of changes in cost
 Cost variance: deviations from the
budget – not a measure of work scheduled vs.
work completed
 Example: applying more $$/people to a task may
maintain the schedule, but it adds to cost… schedule
on track… over budget on expenses (cost)

77
Performance Indices
Cost Performance Index
 CPI = BCWP/ACWP
Schedule Performance Index
 SPI = BCWP/BCWS
Analysis
 CPI > 1.0  exceptional performance
 CPI < 1.0  poor performance
 Similar for SPI

78
Earned Value & Variance:
Example
18

14

On Day X:
PLANNED VALUE (BCWS) = 18 + 10 + 16 + 6 = 50
EARNED VALUE (BCWP) = 18 + 8 + 14 + 0 = 40
ACTUAL COST (ACWP) = 45 (from your project tracking)
Therefore:
Schedule Variance = BCWP – BCWS = 40 - 50 = -10 (behind schedule)
Schedule Performance Index = 40 / 50 = 0.8, or 80% of plan (a B-, at best)
Cost Variance = BCWP - ACWP = 40 - 45 = -5
Cost Performance Index = 40/45 = .89, or you’re getting an 89¢ return on every
$1.00 (or, person-hour) spent on this project
79
Quiz
The EV measurement of work you planned to
have accomplished at a given point in time :
a. BCWP
b. ACSP
c. BCWS
d. ACWS
True or False: At any point in time, the SPI
tells you exactly how far ahead or behind
schedule you are on your project.
a. TRUE
b. FALSE
80
Quiz
If BCWP is 20 pm and ACWP is 15 pm, CPI:
a. .75
b. 1.33
c. 1.0
d. 0
If BCWP is 27 pm BCWS is 25 pm, you are
probably:
a. On schedule
b. Ahead of schedule
c. Behind schedule
d. None of the above
81