Download Ch17

Project Management
Chapter 17
Learning Objectives
 You should be able to:
1. Discuss the behavioral aspects of projects in terms of
project personnel and the project manager
2. Explain the nature and importance of a work breakdown
structure in project management
3. Give a general description of PERT/CPM techniques
4. Construct simple network diagrams
5. List the kinds of information that a PERT or CPM
analysis can provide
6. Analyze networks with deterministic times
7. Describe activity ‘crashing’ and solve typical problems
Instructor Slides
2
Projects
• Project:
– Unique, one-time operations designed to
accomplish a specific set of objectives in a limited
time frame
– Examples:
• The Olympic Games
• Producing a movie
• Product development
• Operations:
– work done to sustain the business
17-3
Project Life Cycle
17-4
The Triple Constraint
of Project Management
• Project’s Triple
Constraints (Key
Metrics)
– Time
– Cost
– Scope
(Performance
objectives)
• Quality
Information Technology Project Management, Sixth Edition
5
Project Success
• There are several ways to define project
success:
– The project met scope, time, and cost
goals
– The project satisfied the customer/sponsor
– The results of the project met its main
objective
e.g., making or saving a certain amount of money,
providing a good return on investment.
Information Technology Project Management, Sixth Edition
6
Project Manager
Project managers work with the project team and
other people involved in a project to meet project
goals
• The project manager is ultimately responsible for
the success or failure of the project
• The project manager skills and competencies:
•
–
–
–
–
–
–
–
–
–
–
People skills
Leadership
Listening
Integrity, ethical behavior, consistent
Strong at building trust
Verbal communication
Strong at building teams
Conflict resolution, conflict management
Critical thinking, problem solving
Understands, balances priorities
17-7
Project Management
• Key tools:
–Work Breakdown Structure
–Gantt charts
–Network diagram
17-8
Work Breakdown Structure (WBS)
• WBS
– A hierarchical listing of what must be done
during a project
• Establishes a logical framework for identifying
the required activities for the project
1. Identify the major elements of the project
2. Identify the major supporting activities for each of
the major elements
3. Break down each major supporting activity into a list
of the activities that will be needed to accomplish it
17-9
WBS
Open new department
New
facility
Finance
Location
Furniture
Remodel
Order
furniture
Furniture
setup
Staff
Relocating Hiring
Move in
Locate
facility
interview
Hire &
train
17-10
Critical Path Method (CPM)
• CPM can assist in:
1. estimating project length
2. Identifying which activities are most
critical to timely project completion
3. indicating of how long any activity can be
delayed without delaying the project
17-11
Network Diagram
 Network diagram
 (Precedence) Diagram of project activities
that shows sequential relationships by use
of arrows and nodes
 Activity on arrow (AOA)
 Network diagram convention in which arrows designate
activities
 Activity on node (AON)
 Network convention in which nodes designate activities
17-12
Network Conventions (AON)
b
a
a
c
b
c
a
c
a
c
b
dummy
Node
d
(dummy)
Start
Node
b
17-13
Network Conventions (AOA)
a
c
b
a
c
b
a
a
c
c
dummy
Activity
b
b
d
17-14
Precedence Diagram
#
Task
Duration
(weeks)
Immediate
Predecessor
1
Locate
facility
8
-
2
Order
furniture
6
1
3
Interview
4
-
9
3
4 Hire & Train
5
Remodel
11
1
6
Furniture
setup
3
2
7
Move in
1
4,5,6
15
Project Network – Activity on Node (AON)
#
Task
Immediate
Predecessor
1
Locate
facility
-
2
Order
furniture
1
3
Interview
-
4
Hire &
Train
3
5
Remodel
1
6
Furniture
setup
2
7
Move in
4,5,6
Order
furniture
Locate
facilities
Furniture
setup
2
6
1
Move
in
Remodel
S
5
Interview
3
Hire and
train
4
17-16
7
Project Network – Activity on Arrow (AOA)
#
Task
Immediate
Predecessor
1
Locate
facility
-
2
Order
furniture
1
3
Interview
-
4
Hire &
Train
3
5
Remodel
1
6
Furniture
setup
2
7
Move in
4,5,6
Order
furniture
Furniture
setup
Locate
facilities
Remodel
Move
in
Interview
Hire and
train
17-17
Gantt Chart
17-18
9-19
Critical Path Method (CPM)
• An analytical tool that provides a schedule
that completes the project in minimum
time subject to the precedence
constraints.
• In addition, CPM provides:
– Starting and ending times for each activity
– Identification of the critical activities (i.e., the
ones whose delay necessarily delay the
project).
– Identification of the non-critical activities, and
the amount of slack time available when
scheduling these activities.
Network Diagram (cont’d)
• 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 a path; the difference the
length of path and the length of critical path
17-20
Project Network – Activity on Node (AON)
Critical Path ?
#
Task
Immediate
Predecessor
1
Locate
facility
-
2
Order
furniture
1
3
Interview
-
4
Hire &
Train
3
5
Remodel
1
6
Furniture
setup
2
7
Move in
4,5,6
Order
furniture
Locate
facilities
Furniture
setup
2
6
1
Move
in
Remodel
S
5
Interview
3
Hire and
train
4
17-21
7
Gantt Chart
Critical Path ?
17-22
Example
8
A
6
3
B
C
11
1
D
S
G
4
9
E
F
Early Start, Early Finish
 Early start (ES)
 The earliest time an activity can start
 Assumes all preceding activities start as early as possible
• For nodes with one entering arrow
–
ES = EF of the entering arrow
–
ES = the largest of the entering EF
• For activities leaving nodes with multiple entering
arrows
 Early finish (EF)
 The earliest time an activity can finish
• EF = ES + t
 Finding ES (Early Start) and EF (Early Finish) involves a
forward pass through the network diagram
17-24
Example – Forward pass (ES, EF)
8 6 14
0 88
A
0 0
0
14 3 17
B
C
8
11
19
19
1
D
S
G
0
4 4
E
4 9 13
F
17-25
20
Late Start, Late Finish
 Late Finish (LF)
 The latest time the activity can finish and not delay the
project
• For nodes with one leaving arrow, LF for nodes entering that
node equals the LS of the leaving arrow
• For nodes with multiple leaving arrows, LF for arrows entering
node equals the smallest of the leaving arrows
 Late Start (LS)
 The latest time the activity can start and not delay the
project
• The latest starting time for each activity is equal to its latest
finishing time minus its expected duration:
– LS = LF - t
• Finding LS and LF involves a backward pass through
the network diagram
17-26
Example – Backward pass (LS, LF)
0 8
08 8
0 0
000
A
10 16
8 6 14
16 19
14 3 17
B
C
19
8
8 11 19
19 20
19 1 20
D
S
G
6 10
044
E
10 19
4 9 13
F
17-27
Slack and the Critical Path
• Slack can be computed one of two
ways:
•Slack = LS – ES
•Slack = LF – EF
• Critical path
•The critical path is indicated by the
activities with zero slack
17-28
Example – Slack (LS-ES,LF-EF)
10 2 16
8 6 14
00 8
08 8
00 0
000
A
16 2 19
14 3 17
B
C
8 0 19
8 11 19
19 0 20
19 1 20
D
S
G
6 6 10
0 4 4
E
10 6 19
4 9 13
F
17-29
Example – Critical Path
Slack (LS-ES;LF-EF)=0
0
A
2
2
B
C
0
0
0
D
S
G
6
E
6
F
17-30
Example Solution
Critical Path
Path
Length
(weeks)
18
Slack
S-A-D-G
20
0
S-E-F-G
14
6
S-A-B-C-G
2
17-31
Using Slack Times
 Knowledge of slack times provides managers with
information for planning allocation of scarce resources
 Control efforts can be directed toward those activities that
might be most susceptible to delaying the project
 Activity slack times are based on the assumption that
all of the activities on the same path will be started as
early as possible and not exceed their expected time
 If two activities are on the same path and have the
same slack, this will be the total slack available to
both
17-32
The Critical Path Method (CPM) is not
useful for (Multiple Choices Question):
1. Finding the project’s
shortest completion time
2. Finding the project’s
minimum cost
3. Calculating start and end
times for all activities
4. Identifying critical
activities
5. Identifying the slack for
non-critical activities
33
Time-Cost Trade-Offs
• Activity time estimates are made for some
given level of resources
• It may be possible to reduce the duration of
a project by injecting additional resources
– Motivations:
• To avoid late penalties
• Monetary incentives
• Free resources for use on other projects
17-34
Time-Cost Trade-Offs: Crashing
• Crashing
– Shortening activity durations
• Typically, involves the use of additional funds to
support additional personnel or more efficient
equipment, and the relaxing of some work
specifications
– The project duration may be shortened by
increasing direct expenses, thereby realizing
savings in indirect project costs
Crashing Activities
17-36
Crashing Decisions
 To make decisions concerning crashing requires
information about:
1. Time:
•
Regular time and crash time estimates for each activity
2. Cost:
•
Regular cost and crash cost estimates for each activity
3. A list of activities that are on the critical path
 Critical path activities are potential candidates
for crashing
 Crashing non-critical path activities would not
have an impact on overall project duration
17-37
Crashing: Procedure
• General procedure:
1. Crash the project one period at a time
2. Crash only activities on the critical path/s
3. Crash the least expensive activity (that is on the
critical path)
4. When there are multiple critical paths, find the
sum of crashing the least expensive activity on
each critical path
•
If two or more critical paths share common activities,
compare the least expensive cost of crashing a common
activity shared by critical paths with the sum for the
separate critical paths
17-38
Example 7
2
f
4
d
17-39
Indirect costs: $1,000 / day
Activity
Normal
time
[days]
Crash
(min)
time
[days]
Available
time
(crashnormal)
[days]
Cost to
Crash
[$/day]
a
6
6
-
-
b
10
8
2
500
c
5
4
1
300
d
4
1
3
700
e
9
7
2
600
f
2
1
1
800
1. Determine Critical Path
Path
a-b-f
c-d-e-f
Length
18
20 (critical path)
2. Rank activities on CP in
order of lowest crashing cost
Activity
c
e
d
f
2
f
Cost per day to crash Available days
300
1
600
2
700
3
800
1
4
d
Activity
Normal
time
[days]
Crash
(min)
time
[days]
Available
time
(crashnormal)
[days]
Cost to
Crash
[$/day]
a
6
6
-
-
b
10
8
2
500
c
5
4
1
300
d
4
1
3
700
e
9
7
2
600
f
2
1
1
800
Crash activity c by 1
day: cost $300 < $1,000
(CP=19 days)
(cannot crash c anymore)
2. Rank activities on CP in
order of lowest crashing cost
Activity
c
e
d
f
Cost per day to crash Available days
300
1
600
2
700
3
800
1
2
f
5
4
4
d
Crash activity e by 1
day: cost $600 < $1,000
(CP=18 days)
(may crash activity e by 1 more
day)
2. Rank activities on CP in
order of lowest crashing cost
Activity
c
e
d
f
Cost per day to crash Available days
300
1
600
2
700
3
800
1
2
f
4
4
d
• Both paths are now critical.
• Have to crash both in order to shorten project.
Both paths are now critical.
Have to crash both in order
to shorten project.
4
d
Remaining activities
Path
a-b-f
c-d-e-f
Activity
a
b
f
c
e
d
f
2
f
Cost per day to crash
500
800
600
700
800
Available days
2
1
1
3
1
Crash activity f (is on both paths) by 1 day:
cost = $800 < $1,000 (CP=17 days)
Crash activity f (is on
both paths) by 1
day:
cost $800 < $1,000
(CP=17 days)
Remaining activities
Path
a-b-f
Activity
a
b
f
c-d-e-f
c
e
d
f
600
700
800
2
4
d
Cost per day to crash Available days
500
2
800
1
1
f
1
3
1
Both paths are still critical.
Have to crash both in order to
shorten project.
4
d
Remaining activities
Path
a-b-f
c-d-e-f
Activity
a
b
f
c
e
d
f
1
f
Cost per day to crash
500
600
700
-
Available days
2
1
3
-
Crash activity b by 1 day: cost $500 AND
Crash activity e by 1 day: cost $600
Total cost: $1,100>$1,000 (indirect costs)
=>DONE!
Length after crashing
Path\crash
a-b-f
c-d-e-f
Activity Crashed
Cost
Savings
Total
n=0
18
20
1
18
19
2
18
18
3
17
17
0
0
0
c
e
f
($300) ($600) ($800)
$1,000 $1,000 $1,000
$700 +$400 +$200 = $1,300
Operations Strategy*
 Projects present both strategic opportunities and risks
 It is critical to devote sufficient resources and attention to
projects
 Projects are often employed in situations that are
characterized by significant uncertainties and risks that may
result in:
 Delays
 Budget overruns
 Failure
 PM should use:
 Careful planning
 Wise selection of project manager and team
 Monitoring of the project
 It is not uncommon for projects to fail
 it is beneficial to examine the reasons for failure – “lessons
learned”
17-48