In this assignment, you will create a project of your choice to management. This is meant to be fun so I would like each of you to develop a project to bring a product or service from your native country. You will use the techniques of project management:
1) Planning
2) Scheduling
3) Controlling
This assignment is meant to be between 3 to 5 pages double-spaced. I want it to be entertaining and most importantly creative. You will need to discuss each function thoroughly as to make sure I fully understand how you intend to accomplish this task.
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Outline – Continued
Project Management Techniques: PERT and CPM
Determining the Project Schedule
Variability in Activity Times
Cost-Time Trade-offs and Project Crashing
When you complete this chapter you should be able to:
Learning Objectives
Use a Gantt chart for scheduling
Draw AOA and AON networks
Complete forward and backward passes for a project
Determine a critical path
Importance of
Project Management
Bechtel Project Management
International workforce, construction professionals, cooks, medical personnel, security
Strategic value of time-based competition
Quality mandate for continual improvement
Single unit
Many related activities
Difficult production planning and inventory control
General purpose equipment
High labor skills
Project Characteristics
Management of Projects
Planning – goal setting, defining the project, team organization
Scheduling – relate people, money, and supplies to specific activities and activities to each other
Controlling – monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands
Often temporary structure
Uses specialists from entire company
Headed by project manager
Coordinates activities
Monitors schedule
and costs
Permanent
structure called
‘matrix organization’
Project Organization
Project Organization
Works Best When
Work can be defined with a specific goal and deadline
The job is unique or somewhat unfamiliar to the existing organization
The work contains complex interrelated tasks requiring specialized skills
The project is temporary but critical to the organization
The project cuts across organizational lines
The Role of
the Project Manager
Highly visible
Responsible for making sure that:
All necessary activities are finished in order and on time
The project comes in within budget
The project meets quality goals
The people assigned to the project receive motivation, direction, and information
The Role of
the Project Manager
Highly visible
Responsible for making sure that:
All necessary activities are finished in order and on time
The project comes in within budget
The project meets quality goals
The people assigned to the project receive motivation, direction, and information
Project managers should be:
Good coaches
Good communicators
Able to organize activities from a variety of disciplines
Ethical Issues
Offers of gifts from contractors
Pressure to alter status reports to mask delays
False reports for charges of time and expenses
Pressure to compromise quality to meet schedules
Project managers face many ethical decisions on a daily basis
The Project Management Institute has established an ethical code to deal with problems such as:
Work Breakdown Structure
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
Figure 3.3
Level 4
Compatible with Windows 7
Compatible with Windows Vista
Compatible with Windows XP
1.1.2.3
1.1.2.2
1.1.2.1
(Work packages)
Project Scheduling Techniques
Ensure that all activities
are planned for
Their order of
performance is
accounted for
The activity time
estimates are recorded
The overall project time is developed
Purposes of Project Scheduling
Shows the relationship of each activity to others and to the whole project
Identifies the precedence relationships among activities
Encourages the setting of realistic time and cost estimates for each activity
Helps make better use of people, money, and material resources by identifying critical bottlenecks in the project
Project Controlling
Close monitoring of resources, costs, quality, budgets
Feedback enables revising the project plan and shift resources
Computerized tools produce extensive reports
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
Network techniques
Developed in 1950s
CPM by DuPont for chemical plants (1957)
PERT by Booz, Allen & Hamilton with the U.S. Navy, for Polaris missile (1958)
Consider precedence relationships and interdependencies
Each uses a different estimate of activity times
PERT and CPM
Six Steps PERT & CPM
Define the project and prepare the work breakdown structure
Develop relationships among the activities – decide which activities must precede and which must follow others
Draw the network connecting all of the activities
Six Steps PERT & CPM
Assign time and/or cost estimates to each activity
Compute the longest time path through the network – this is called the critical path
Use the network to help plan, schedule, monitor, and control the project
When will the entire project be completed?
What are the critical activities or tasks in the project?
Which are the noncritical activities?
What is the probability the project will be completed by a specific date?
Questions PERT & CPM
Can Answer
Is the project on schedule, behind schedule, or ahead of schedule?
Is the money spent equal to, less than, or greater than the budget?
Are there enough resources available to finish the project on time?
If the project must be finished in a shorter time, what is the way to accomplish this at least cost?
Questions PERT & CPM
Can Answer
A Comparison of AON and AOA Network Conventions
Activity on Activity Activity on
Node (AON) Meaning Arrow (AOA)
A
C
D
B
A
B
C
D
Dummy activity
B and C cannot begin until A is completed
D cannot begin until both B and C are completed
A dummy activity is again introduced in AOA
(f)
AON Example
Table 3.1 Milwaukee Paper Manufacturing’s Activities and Predecessors
ACTIVITY DESCRIPTION IMMEDIATE PREDECESSORS
A Build internal components —
B Modify roof and floor —
C Construct collection stack A
D Pour concrete and install frame A, B
E Build high-temperature burner C
F Install pollution control system C
G Install air pollution device D, E
H Inspect and test F, G
Determining the Project Schedule
Perform a Critical Path Analysis
The critical path is the longest path through the network
The critical path is the shortest time in which the project can be completed
Any delay in critical path activities delays the project
Critical path activities have no slack time
Determining the Project Schedule
Table 3.2 Time Estimates for Milwaukee Paper Manufacturing
ACTIVITY DESCRIPTION TIME (WEEKS)
A Build internal components 2
B Modify roof and floor 3
C Construct collection stack 2
D Pour concrete and install frame 4
E Build high-temperature burner 4
F Install pollution control system 3
G Install air pollution device 5
H Inspect and test 2
Total time (weeks) 25
Determining the Project Schedule
Perform a Critical Path Analysis
Earliest start (ES) = earliest time at which an activity can start, assuming all predecessors have been completed
Earliest finish (EF) = earliest time at which an activity can be finished
Latest start (LS) = latest time at which an activity can start so as to not delay the completion time of the entire project
Latest finish (LF) = latest time by which an activity has to be finished so as to not delay the completion time of the entire project
Forward Pass
Begin at starting event and work forward
Earliest Start Time Rule:
If an activity has only a single immediate predecessor, its ES equals the EF of the predecessor
If an activity has multiple immediate predecessors, its ES is the maximum of all the EF values of its predecessors
ES = Max {EF of all immediate predecessors}
Forward Pass
Earliest Finish Time Rule:
The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) and its activity time
EF = ES + Activity time
Begin at starting event and work forward
Backward Pass
Begin with the last event and work backwards
Latest Finish Time Rule:
If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it
If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it
LF = Min {LS of all immediate following activities}
Backward Pass
Begin with the last event and work backwards
Latest Start Time Rule:
The latest start time (LS) of an activity is the difference of its latest finish time (LF) and its activity time
LS = LF – Activity time
Computing Slack Time
After computing the ES, EF, LS, and LF times for all activities, compute the slack or free time for each activity
Slack is the length of time an activity can be delayed without delaying the entire project
Slack = LS – ES or Slack = LF – EF
Computing Slack Time
TABLE 3.3 Milwaukee Paper’s Schedule and Slack Times
ACTIVITY EARLIEST START
ES EARLIEST FINISH
EF LATEST START LS LATEST FINISH LF SLACK LS – ES ON CRITICAL PATH
A 0 2 0 2 0 Yes
B 0 3 1 4 1 No
C 2 4 2 4 0 Yes
D 3 7 4 8 1 No
E 4 8 4 8 0 Yes
F 4 7 10 13 6 No
G 8 13 8 13 0 Yes
H 13 15 13 15 0 Yes
ES – EF Gantt Chart
for Milwaukee Paper
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install frame
E Build high-temperature burner
F Install pollution control system
G Install air pollution device
H Inspect and test
LS – LF Gantt Chart
for Milwaukee Paper
A Build internal components
B Modify roof and floor
C Construct collection stack
D Pour concrete and install frame
E Build high-temperature burner
F Install pollution control system
G Install air pollution device
H Inspect and test
CPM assumes we know a fixed time estimate for each activity and there is no variability in activity times
PERT uses a probability distribution for activity times to allow for variability
Variability in Activity Times
Three time estimates are required
Optimistic time (a) – if everything goes according to plan
Pessimistic time (b) – assuming very
unfavorable conditions
Most likely time (m) – most realistic estimate
Variability in Activity Times
Estimate follows beta distribution
Variability in Activity Times
Expected time:
Variance of times:
t = (a + 4m + b)/6
v = [(b − a)/6]2
Figure 3.11
Probability of 1 in 100 of
< a occurring
Probability of 1 in 100 of > b occurring
Probability
Optimistic Time (a)
Most Likely Time (m)
Pessimistic Time (b)
Activity Time
Computing Variance
TABLE 3.4 Time Estimates (in weeks) for Milwaukee Paper’s Project
ACTIVITY OPTIMISTIC
a MOST LIKELY
m PESSIMISTIC
b EXPECTED TIME
t = (a + 4m + b)/6 VARIANCE
[(b – a)/6]2
A 1 2 3 2 .11
B 2 3 4 3 .11
C 1 2 3 2 .11
D 2 4 6 4 .44
E 1 4 7 4 1.00
F 1 2 9 3 1.78
G 3 4 11 5 1.78
H 1 2 3 2 .11
Probability of Project Completion
Project variance is computed by summing the variances of critical activities
s2 = Project variance
= (variances of activities
on critical path)
p
Probability of Project Completion
PERT makes two more assumptions:
Total project completion times follow a normal probability distribution
Activity times are statistically independent
Probability of Project Completion
What is the probability this project can be completed on or before the 16 week deadline?
Where Z is the number of standard deviations the due date or target date lies from the mean or expected date
Z = – /sp
= (16 weeks – 15 weeks)/1.76
= 0.57
Due Expected date
date of completion
Probability of Project Completion
What is the probability this project can be completed on or before the 16 week deadline?
Where Z is the number of standard deviations the due date or target date lies from the mean or expected date
Z = − /sp
= (16 wks − 15 wks)/1.76
= 0.57
due expected date
date of completion
Variability of Completion Time for Noncritical Paths
Variability of times for activities on noncritical paths must be considered when finding the probability of finishing in a specified time
Variation in noncritical activity may cause change in critical path
What Project Management Has Provided So Far
The project’s expected completion time is 15 weeks
There is a 71.57% chance the equipment will be in place by the 16 week deadline
Five activities (A, C, E, G, and H) are on the critical path
Three activities (B, D, F) are not on the critical path and have slack time
A detailed schedule is available
Cost–Time Trade-Offs and Project Crashing
It is not uncommon to face the following situations:
The project is behind schedule
The completion time has been moved forward
Shortening the duration of the project is called project crashing
Factors to Consider When Crashing a Project
The amount by which an activity is crashed is, in fact, permissible
Taken together, the shortened activity durations will enable us to finish the project by the due date
The total cost of crashing is as small as possible
Steps in Project Crashing
Using current activity times, find the critical path and identify the critical activities
(Crash cost – Normal cost)
(Normal time – Crash time)
Crash cost
per period
=
Compute the crash cost per time period. If crash costs are linear over time:
Steps in Project Crashing
If there is only one critical path, then select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path.
Crashing The Project
TABLE 3.5 Normal and Crash Data for Milwaukee Paper Manufacturing
ACTIVITY TIME (WEEKS) COST ($) CRASH COST PER WEEK ($) CRITICAL PATH ?
NORMAL CRASH NORMAL CRASH
A 2 1 22,000 22,750 750 Yes
B 3 1 30,000 34,000 2,000 No
C 2 1 26,000 27,000 1,000 Yes
D 4 2 48,000 49,000 1,000 No
E 4 2 56,000 58,000 1,000 Yes
F 3 2 30,000 30,500 500 No
G 5 2 80,000 84,500 1,500 Yes
H 2 1 16,000 19,000 3,000 Yes
Crash and Normal Times and Costs for Activity B
Figure 3.15
| | |
1 2 3 Time (Weeks)
$34,000 —
$33,000 —
$32,000 —
$31,000 —
$30,000 —
—
Activity Cost
Crash
Normal
Crash Cost
Normal Cost
Crash Time
Normal Time
Crash Cost/Wk =
Crash Cost – Normal Cost
Normal Time – Crash Time
=
$34,000 – $30,000
3 – 1
= = $2,000/Week
$4,000
2 Wks
Advantages of PERT/CPM
Especially useful when scheduling and controlling large projects
Straightforward concept and not mathematically complex
Graphical networks help highlight relationships among project activities
Critical path and slack time analyses help pinpoint activities that need to be closely watched
Advantages of PERT/CPM
Project documentation and graphics point out who is responsible for various activities
Applicable to a wide variety of projects
Useful in monitoring not only schedules but costs as well
Project activities have to be clearly defined, independent, and stable in their relationships
Precedence relationships must be specified and networked together
Time estimates tend to be subjective and are subject to fudging by managers
There is an inherent danger of too much emphasis being placed on the longest, or critical, path
Limitations of PERT/CPM
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