Project Management

Learning Objectives
 Discuss the behavioral aspects of projects in
terms of project personnel and the project
manager.
 Discuss the nature and importance of a work
breakdown structure in project management.
 Give a general description of PERT/CPM
techniques.
 Construct simple network diagrams.

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 Learning Objectives
 List the kinds of information that a PERT or
CPM analysis can provide.
 Analyze networks with deterministic times.
 Analyze networks with probabilistic times.
 Describe activity “crashing” and solve typical
problems.

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 Project
 Unique, one-time operational activity or effort
 Examples
– constructing houses, factories, shopping malls, athletic
stadiums or arenas
– developing military weapons systems, aircrafts, new ships
– launching satellite systems
– constructing oil pipelines
– developing and implementing new computer systems
– planning concert, football games, or basketball
tournaments
– introducing new products into market

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 Project Management
 Project management is the application of
knowledge, skills and techniques to execute
projects effectively and efficiently.
 Project management processes fall into five
groups:
– Initiating
– Planning
– Executing
– Monitoring and Controlling
– Closing

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 Project Management
 How is it different?
– Limited time frame
– Narrow focus, specific objectives
– Less bureaucratic
 Why is it used?
– Special needs
– Pressures for new or improves products or
services

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 Project Management
 What are the Key Metrics
– Time
– Cost
– Performance objectives
 What are the Key Success Factors?
– Top-down commitment
– Having a capable project manager
– Having time to plan
– Careful tracking and control
– Good communications

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 Project Management
 What are the Major Administrative Issues?
– Executive responsibilities
• Project selection
• Project manager selection
• Organizational structure
– Organizational alternatives
• Manage within functional unit
• Assign a coordinator
• Use a matrix organization with a project leader

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 Project Management
 What are the tools?
– Work breakdown structure
– Network diagram
– Gantt charts
– Risk management

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 Key Decisions
 Deciding which projects to implement
 Selecting a project manager
 Selecting a project team
 Planning and designing the project
 Managing and controlling project resources
 Deciding if and when a project should be
terminated

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 Project Life Cycle
 Definition
 Planning
 Execution
 Termination

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 Work Breakdown Structure

Project X

Level 1

Level 2

Level 3

Level 4

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 Gantt Chart
Gantt Chart MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Locate new facilities

Interview staff

Hire and train staff

Select and order

furniture

Remodel and install

phones

Move in/startup

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 PERT and CPM
 PERT: Program Evaluation and
Review Technique
 CPM: Critical Path Method

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 PERT and CPM
 Graphically displays project activities
 Estimates how long the project will take
 Indicates most critical activities
 Show where delays will not affect project

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 The Network Diagram
 Network (precedence) diagram – diagram of
project activities that shows sequential
relationships by the use of arrows and nodes.
 Activity-on-arrow (AOA) – a network diagram
convention in which arrows designate activities.
 Activity-on-node (AON) – a network diagram
convention in which nodes designate activities.
 Activities – steps in the project that consume
resources and/or time.
 Events – the starting and finishing of activities,
designated by nodes in the AOA convention
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 The Network Diagram
 Path
– Sequence of activities that leads from the starting node to
the finishing node
 Critical path
– The longest path; determines expected project duration
 Critical activities
– Activities on the critical path
 Slack
– Allowable slippage for path; the difference the length of
path and the length of critical path

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 Project Network – Activity on Arrow

Order
furniture 4
Furniture
Locate 2 setup
facilities
Remodel
1 5 6
Move in

Interview
Hire and
train
3

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Project Network – Activity on Node
Order
furniture
Locate Furniture
2 setup
facilities

1 6
Move in
Remodel

S 5 7

Hire and
Interview
train

3 4

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 Network Conventions

a
b
c a

c
b

a c
a c

b Dummy
activity
b d

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 Time Estimates
 Deterministic
– Time estimates that are fairly certain
 Probabilistic
– Estimates of times that allow for variation

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 Example
6 weeks
4
3 weeks
8 weeks 2

11 weeks Move in
1 5 6
1 week

4 weeks
9 weeks

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 Example - Solution

Critical Path

Path Length Slack

(weeks)
1-2-3-4-5-6 18 2
1-2-5-6 20 0
1-3-5-6 14 6

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 Computing Algorithm
 Network activities
– ES: early start
– EF: early finish
– LS: late start
– LF: late finish
 Used to determine
– Expected project duration
– Slack time
– Critical path

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 Probabilistic Time Estimates
 Optimistic time
– Time required under optimal conditions
 Pessimistic time
– Time required under worst conditions
 Most likely time
– Most probable length of time that will be required

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 Probabilistic Estimates

to tm te tp

Activity Optimistic Most likely Pessimistic

start time time (mode) time

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 Expected Time

te = t o + 4t m +t p
6
te = expected time
to = optimistic time
tm = most likely time
tp = pessimistic time

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 Variance

2 (t
= p o– t ) 2

36

2 = variance
to = optimistic time
tp = pessimistic time

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 Example
Optimistic Most likely Pessimistic
time time time

2-4-6
b

3-4-5 3-5-7 5-7-9

d e f

4-6-8
h
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 Example – Time Estimates

Tabc = 10.0
Tdef = 16.0 4.00
Tghi = 13.50 b

4.00 5.0 7.0

d e f

6.0
h

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 Time-cost Trade-offs: Crashing
 Crash – shortening activity duration
 Procedure for crashing
– Crash the project one period at a time
– Only an activity on the critical path
– Crash the least expensive activity
– Multiple critical paths: find the sum of crashing
the least expensive activity on each critical path

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 Time-cost Trade-offs: Crashing

Total
cost

Expected indirect costs

Shorten

Cumulative CRASH
cost of crashing
Shorten

Optimum
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 Advantages of PERT
 Forces managers to organize
 Provides graphic display of activities
 Identifies
– Critical activities
– Slack activities

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 Limitations of PERT
 Important activities may be omitted
 Precedence relationships may not be correct
 Estimates may include a fudge factor
 May focus solely on critical path

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 Project Management Software
 Computer aided design (CAD)
 Groupware (Lotus Notes)
 CA Super Project
 Harvard Total Manager
 MS Project
 Sure Track Project Manager
 Time Line

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 Advantages of PM Software
 Imposes a methodology
 Provides logical planning structure
 Enhances team communication
 Flag constraint violations
 Automatic report formats
 Multiple levels of reports
 Enables what-if scenarios
 Generates various chart types

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 Project Risk Management
 Risk: occurrence of events that have
undesirable consequences
– Delays
– Increased costs
– Inability to meet specifications
– Project termination

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 Risk Management
 Identify potential risks
 Analyze and assess risks
 Work to minimize occurrence of risk
 Establish contingency plans

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