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11. PROJECT MANAGEMENT

11.1 WHAT IS A PROJECT?

Project: activities performed to meet a specific goal or objective in a limited time frame

Consider:

- Sequence of events & activities

- Interdependencies

Project Life Cycle:

1. Initiating begins the process by outlining the expected costs, benefits and risks associated with a
project. It includes defining major project goals and choosing a project manager
2. Planning provides details on deliverables, the scope of the project, the budget, the schedule and
milestones, performance objectives, resources needed, a quality plan and a plan for handling risk.
3. Executing is the phase the actual work of the project is carried out. The project is managed as
activities are completed, resources are consumed and milestones are reached.
4. Monitoring and Controlling: occurs at the same time as project execution and involved comparing
actual progress with planned progress and undertaking corrective actions if needed
5. Closing the phase ends the project, and involves handing off the project deliverables, obtaining
customer acceptance, documenting lessons learned and releasing resources

11.2 PROJECT MANAGEMENT

Key Decisions in Project Management

- Deciding which projects to implement

- Selecting the project manager
- Selecting the project team
- Planning and designing the project
- Managing and controlling project resources
- Deciding if and when a project should be terminated

Steps of Project Management:

1. Initial Planning and Design

2. Project Management

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1. INITIAL PLANNING AND DESIGN

- Define the project and its significant activities

- Establish the relationships amongst activities.
o Decide which activities must precede/follow others.
- Distinguish between VA and NVA activities
o Look for ways to eliminate/reduce NVA

2. PROJECT MANAGEMENT

Process by which project is handled: planning, scheduling, monitoring and controlling of resources to meet
the technical, time and resource constraints of the project

Key Metrics – Why are they important?

- Time
- Cost
- Quality

ETHICAL AND BEHAVIORAL CONSIDERATIONS

Escalation of commitment may result in:

- Temptation to understate costs

- Withholding information
- Misleading status reports
- Falsifying records
- Compromising workers’ safety
- Approving substandard work

11.3 PROJECT MANAGEMENT TECHNIQUES

Three main project management techniques

1. Gantt Charts
2. Network Diagrams: CPM and PERT
3. Resource loading and levelling

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1. GANTT CHARTS

Gant Charts: bar charts for planning and scheduling activities

Focus on time:

- Timing (when)
- Duration (how long)

Show start & finish times of activities

- Advantages: easy visual way to

monitor individual activities
- Disadvantages: do not show
interrelationships between
activities

2. NETWORK DIAGRAMS – CPM AND PERT

- Graphically display project activities as a network

- Estimate how long the project will take
- Indicate most critical activities
- Show where delays will not affect project (not
critical activities)
- Two types of diagram:
1. Activity-on-arrow (AOA)
You need to know AOA diagrams!
2. Activity-on-node (AON)
You do not need to know AON diagrams

NETWORK DIAGRAM STEPS

1. Specify individual activities

2. Determine activity sequence
3. Draw a network diagram
4. Estimate completion time for each activity
5. Identify critical path
6. Use diagram to help plan, schedule, monitor and control the project.
7. Update diagram as project progresses

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DRAWING NETWORK DIAGRAMS

Explanation Denoted By
Activity Consumes resource and/or time
Event A state or point in time

Example Explanation
1
Activity ‘a’ and ‘b’ needs to be
completed in order to begin activity
‘c’

2
Activity ‘a’ and ‘b’ needs to be
completed in order to begin activity
‘c’ and ‘d’

3
Activity ‘a’ needs to be completed
in order to begin activity ‘b’ and ‘c’

4
Activity ‘a’ and ‘b’ have the same
starting point and need to be
completed simultaneously in order
to begin activity ‘c’

DRAWING NETWORK DIAGRAMS

Path: sequence of activities from start node to finishing node

There are likely to be many paths that need to be completed in order to finish a project

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Critical path: the longest path through the network

Determines expected project duration (i.e. the minimum time in which project can be completed)

Critical activities: activities on the critical path.

Any delay in these activities will delay the entire project

SLACK

Slack (for non-critical activities!)

- Path slack: difference between the length of a path & length of the critical path
- Activity slack: difference between time needed for activity and time available for activity
- Shared slack: non-critical activities on the same path share the slack

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Note: ADG has no path slack as it is the critical path

Note: In path 1 and path 3 only activities C, F, B and E have slack as activities A and G are on the critical path

MORE DETAIL – EARLY/LATE STARTS/FINISHES

Network Activities:

- Earliest Start (ES): Earliest time activity can be started

Assume zero if at the beginning of a project (and not told otherwise)
- Earliest Finish (EF): Earliest time activity can be finished
- Latest Start (LS): Latest time activity can be started without delaying project
- Latest Finish (LF): Latest time activity can be finished without delaying project

Can be used to determine activity slack: i.e. the difference between time available and time needed for
activity

- Time available = latest finish - earliest start

= 18 – 12 = 6 hours
- Time needed = 4 hours
- Activity slack = time available – time needed
= 6 – 4 = 2 hours
- Short cut = LS – ES = LF - EF

ESTIMATING TASK DURATION

Two Techniques

1. Critical Path Method (CPM): is a deterministic technique

o Assumes a relative certainty
o Based on past experience and available information
2. Program Evaluation and Review Technique (PERT) is a probabilistic technique
o Assumes relative uncertainty
o Often used in novel projects

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PERT

Uses probabilities to estimate 3 values for time:

1. Optimistic (to)
2. Most likely (tm)
3. Pessimistic (tp)

Use these to estimate

- Expected activity duration te

- Activity variance

Determines probability of completing project on schedule

Expected activity Duration

Note: Expected path duration is the sum of te of activities on that path

Activity Variance

Note: Expected path variance = sum of activity variances on that path

Textbook notation:

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For the purposes of this course:
ADVANTAGES AND DISADVANTAGES OF USING PERT
Advantages
1. Use of these techniques forces the manager to
organize and quantify available information and
to recognize where additional information is
needed
2. The technique provides a graphic display of the
project and its major activities
3. They identify:
a) activities that should be closely watched
because of the potential of delaying the project
b) Other activities that have slack time and so can
be delayed without affecting project completion
time
This raises the possibility of reallocating
resources to shorten the project
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Disadvantages
1. When developing the project network, managers
may unwittingly omit one or more important activities
2. Precedence relationships may not all be correct as
shown
3. Time estimates may includes fudge factor, mangers
may feel uncomfortable about making time estimates
because they appear to commit themselves to
completion within a certain time period
4. There may be a tendency to focus solely on activities
that are on the critical path. As the project progresses,
other paths may become critical. Furthermore, major
risk events may not be on the critical path
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3.1 PROJECT CRASHING

MANAGING THE CRITICAL PATH

- Recall that the critical path determines the completion date of the project.
o Similarities to TOC?

- Sometimes the project can be accelerated by adding resources to decrease length of time of critical
activities
- This is called project crashing

PROJECT CRASHING

Estimates two sets of time and cost

- Normal time and normal cost

- Crash time and crash cost

Use normal time to determine the critical path and normal cost to determine project cost

Use crash time and cost to manage time and cost simultaneously (i.e. crashing projects)

6 STEPS TO PROJECT CRASHING

1. Find the normal critical path

2. Compute crash cost slope for all critical activities
3. Select critical activity with lowest cost slope “crash” it as needed

4. Check that critical pat is still critical: do not crash an activity beyond the time at which it is critical
5. If multiple critical paths, crash activities on all the critical paths. Consider crashing common activities
or a combination of activities
6. Do not crash activities not on the critical path

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3.2 RESOURCE LOADING AND LEVELLING

Resource loading is the process of soothing out the demand for resources committed to a project period by
period throughout the duration of the project.

- Lists the amount of resources required by activities as a function of time

- Resources are generally loaded based on the earliest start times (EST) of activities
- Load resources on activities on the critical path first
o Similarities to TOC?

WHY LEVEL RESOURCES?

- For non-critical activities

- Variability is not good
- Can improve resource management without adversely affecting other performance outcomes.
- Exploit slack in non-critical activities

o This is why knowledge of activity slack is important
- Shift activities on the non-critical paths around to smooth resource requirements, subject to available
slack

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11.4 CONTROL OF PROJECT TIME

Overrun: the excess of actual time over estimated time for an activity.

A number of corrective actions may be taken depending on the case:

1. If the overrun has occurred for an activity on an activity on the critical path, then it may be
necessary or desirable to expedite some subsequent activity lying on the path so as to achieve the
estimated project duration
2. If the overrun has occurred on a previously non-critical path it may cause that path to become
critical. If the new estimated project duration does not exceed the previous critical path then no
corrective actions need to be taken, however, if it does then corrective actions (case 1) need to be
taken
3. If the overrun has occurred on an activity on a non-critical path and is not sufficient to make that
path critical no corrective action is needed at this stage, however the activity should be monitored for
revaluation and improvement
4. If actual duration is less than estimated duration management might search for opportunities for
cost reduction and better use of resources.

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