OM_P7

6. O
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Project Management
Chapter 9

7. •Project Planning
•Project Scheduling
•Project Control
•CPM/PERT
•Probabilistic Activity Times
•Microsoft Project
• Project Crashing and Time-Cost
Trade-off
9-451
Lecture Outline

8. Project Management Process
9-453
Project Management Pr
(cont.)

9. • Objective
• Scope
• Contract requirements
• Schedules
• Resources
• Personnel
• Control
• Risk and problem analysis
9-455
Project Elements

10. Project Team and Project Manager
• Project team
• made up of individuals from various areas and
departments within a company
• Matrix organization
• a team structure with members from functional
areas, depending on skills required
• Project manager
• most important member of project team
9-456
Project Team and Proje

11. Scope Statement and Work
•Scope statement
• a document that provides an understanding,
justification, and expected result of a project
•Statement of work
• written description of objectives of a project
•Work breakdown structure (WBS)
• breaks down a project into components,
subcomponents, activities, and tasks
9-457
Scope Statement and
Breakdown Structure

12. •Steps
• Define activities
• Sequence
• Techniques
Gantt chart
CPM/PERT
•
•
activities
• Estimate
Microsoft Project
•
time
• Develop schedule
9-461
Project Scheduling

13. • Graph or bar chart with a bar for each
project activity that shows passage of
time
• Provides visual display of project
schedule
• Slack
• amount of time an activity can be delayed
without delaying the project
9-462
Gantt Chart

14. • Time management
• Cost management
• Quality management
• Performance management
• Earned Value Analysis
• a standard procedure for numerically measuring a
project’s progress, forecasting its completion date and
cost and measuring schedule and budget variation
• Communication
• Enterprise project management
9-464
Project Control

15. • Critical Path Method (CPM)
• DuPont & Remington-Rand (1956)
• Deterministic task times
• Activity-on-node network construction
• Project Evaluation and Review Technique
(PERT)
• US Navy, Booz, Allen & Hamilton
• Multiple task time estimates; probabilistic
• Activity-on-arrow network construction
9-465
CPM/PERT

16. • Activity-on-node (AON)
• nodes represent activities,
and arrows show
precedence relationships
Activity-on-arrow (AOA)
•
• arrows represent activities
and nodes are events for
points in time
Event
• completion or beginning
of an activity in a project
Dummy
• two or more activities
cannot share same start
and end nodes
•
•
9-466
Node
1 2 3
Branch
Project Network

17. AOA Project Network for
Lay Dummy
house work
3 1
Design house Order and
financing materials paint carpet
9-467
3
foundation
2 0 Build Finish
1 2 4 3
6 1
7
and obtain receive Select 1 1 Select
5
AOA Project Network
a House

18. Concurrent Activities
Lay
Dummy
2 0
2 3
2 4
Order material
9-468
Lay foundation 3
foundation
1
Order material
(a) Incorrect precedence (b) Correct precedence
relationship relationship
Concurrent Activiti

19. AON Network for House
Finish work
3
2
1 1
and obtain
5 1
Select carpet
1
1
Select paint
materials
9-469
Start
Lay foundations Build house
2 4
7
3
Design house
3 6
financing
Order and receive
AON Network for H
Building Project

20. 4
2
1 1
5 1
1
3 + 2 + 3 + 1 = 9 months
through a network
3 + 2 + 1 + 1 + 1 = 8 months
3 + 1 + 3 + 1 = 8 months
completion time
3 + 1 + 1 + 1 + 1 = 7 months
9-470
Start
Critical Path
2 3
7
3
3 6
1
A: 1-2-4-7 • Critical path
B: 1-2-5-6-7 • Longest path
C: 1-3-4-7 • Minimum project
D: 1-3-5-6-7

21. Finish at 9 months
3
2
1 1
5 1
1
Start at 3 months
9-471
Start
Start at 5 months
2 4
7 Finish
3
3 6
1 Start at 6 months
Activity Start Times

22. • Earliest start time (ES)
• earliest time an activity can start
• ES = maximum EF of immediate predecessors
Forward pass
•
• starts at beginning of CPM/PERT network
determine earliest activity times
Earliest finish time (EF)
• earliest time an activity can finish
• earliest start time plus activity time
• EF= ES + t
to
•
9-473
Activity Scheduling

23. Activity Scheduling (cont.)
• Latest start time (LS)
• Latest time an activity can start without delaying
critical path time
• LS= LF - t
• Latest finish time (LF)
• latest time an activity can be completed without
delaying critical path time
• LF = minimum LS of immediate predecessors
Backward pass
• Determines latest activity times by starting at the
of CPM/PERT network and working forward
•
end
9-475
Activity Scheduling (

24. timates
• Beta distribution
• a probability distribution traditionally used in
CPM/PERT
Mean (expected time): t =
b - a
6
9-478
a + 4m + b
6
2
Variance: 2 =
where
a = optimistic estimate
m = most likely time estimate
b = pessimistic time estimate
Probabilistic Time Es

25. Equipment testing
installation
1 4
debugging
training
development
Manual 1,4,7
2 3,7,11
Start
System
changeover
3 6 System
9-480
Project Network with Probabilistic
Time Estimates: Example
Equipment
and modification
6,8,10 2,4,12 System Final
System
8 10
testing
3,6,9
5 11
Finish
Position 2,3,4 9 1,10,13
recruiting
Job Training 2,4,6
1,3,5 3,4,5 testing
Orientation
7
2,2,2

26. Activity Time Estimates
2 3 6 9 6 1.00
11 1 10 13 9 4.00
9-481
TIME ESTIMA
TES (WKS) MEAN TIME VARIANCE
ACTIVITY a m b t б2
1 6 8 10 8 0.44
3 1 3 5 3 0.44
4 2 4 12 5 2.78
5 2 3 4 3 0.11
6 3 4 5 4 0.11
7 2 2 2 2 0.00
8 3 7 11 7 1.78
9 2 4 6 4 0.44
10 1 4 7 4 1.00
Activity Time Estim

27. 11 9 4.00 16 25 16 25 0
9-482
Activity Early, Late Times,
and Slack
ACTIVITY t б ES EF LS LF S
1 8 0.44 0 8 1 9 1
2 6 1.00 0 6 0 6 0
3 3 0.44 0 3 2 5 2
4 5 2.78 8 13 16 21 8
5 3 0.11 6 9 6 9 0
6 4 0.11 3 7 5 9 2
7 2 0.00 3 5 14 16 11
8 7 1.78 9 16 9 16 0
9 4 0.44 9 13 12 16 3
10 4 1.00 13 17 21 25 8

28. 6
9-483
4 12 16
9 16 25
Earliest, Latest, and Slack
1 0 8 4 8 13
8 1 9 5 16 21
Critical Path
10 13 17
8 9 16
1 0 3
Start 2 0 6 Finish
7 9 16
0 6
5 6 9 11 16 25
3 0 3
3 2 5
3 6 9 9 9 13
6 3 7
4 5 9
7 3 5
2 14 16

29. 2 б2
2 + б5
2 б8
2 б11
2
= + +
9-484
Total project variance
= 1.00 + 0.11 + 1.78 + 4.00
= 6.89 weeks

30. Z =
9-486
Probabilistic Network Analysis
Determine probability that project is
completed within specified time
x -
where
= tp = project mean time
= project standard deviation
x = proposed project time
Z = number of standard deviations x
is from mean

31. • Crashing
• reducing project time by expending additional
resources
• Crash time
• an amount of time an activity is reduced
• Crash cost
• cost of reducing activity time
• Goal
• reduce project duration at minimum cost
9-500
Project Crashing

32. Project Network for Building
12
8
1 4
5 4
4
9-501
2 4
7
12
3 6
4
Project Network for
a House

33. Crash cost
Slope = crash cost per week
$3,000 –
–
9-502
Normal Time and Cost
vs. Crash Time and Cost
$7,000 –
$6,000 –
$5,000 – Crashed activity
$4,000 –
Normal activity
Normal cost
$2,000 –
$1,000 – Crash time Normal time
| | | | | | |
0 2 4 6 8 10 12 14 Weeks

34. ple
$75,000 $110,700
9-503
TOTAL
NORMAL CRASH ALLOWABLE CRASH
TIME TIME NORMAL CRASH CRASH TIME COST PER
ACTIVITY (WEEKS) (WEEKS) COST COST (WEEKS) WEEK
1 12 7 $3,000 $5,000 5 $400
2 8 5 2,000 3,500 3 500
3 4 3 4,000 7,000 1 3,000
4 12 9 50,000 71,000 3 7,000
5 4 1 500 1,100 3 200
6 4 1 500 1,100 3 200
7 4 3 15,000 22,000 1 7,000
Project Crashing: Exam

35. 36 weeks
$700
12
8
$3000
$200
$7000
$500
$700
12
8
7
31 weeks
$2000
9-504
$500 $7000
2 4
7
1 4
12
$400 3 6
4 5 4
4 $200
Project Duration:
FROM …
TO…
2 4
7
1 4
$400 3 6
4 5 4
4 $200
$3000
$200
Project Duration:
Additional Cost:

36. Time-Cost Relationship
• Crashing costs increase as project
duration decreases
• Indirect costs increase as project
duration increases
• Reduce project length as long as
crashing costs are less than indirect
costs
9-505
Time-Cost Relation

37. Total project cost
9-506
Cost
($)
Time-Cost Tradeoff
Minimum cost = optimal project time
Indirect cost
Direct cost
Crashing Time
Project duration