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Project Management

3-1

Project Characteristics
Single unit
Many related activities

Difficult production planning and


inventory control
General purpose equipment
High labor skills

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3-2

Examples of Projects
Building Construction

Research Project
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3-3

Phases of Project Management


The Concept Phase
The Definition Phase
The Planning Phase
The Scheduling
Phase
The Control Phase
The Termination
Phase
Project Management and Appraisal by Sitangshu Khatua

3-4

Management of Projects
1. Planning - goal setting, defining the
project, team organization
2. Scheduling - relates people, money,
and supplies to specific activities
and activities to each other
3. Controlling - monitors resources,
costs, quality, and budgets; revises
plans and shifts resources to meet
time and cost demands
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3-5

Project Management
Activities

Planning

Objectives

Scheduling

Resources

Project activities

Work break-down
structure

Start & end times

Network

Organization

Controlling
Monitor, compare, revise, action
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3-6

Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
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Start of project
Timeline

During
project
3-7

Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
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Start of project
Timeline

During
project
3-8

Project Planning,
Scheduling, and Controlling

Figure 3.1
Before
project
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Start of project
Timeline

During
project
3-9

estimates
Project Time/cost
Planning,
Budgets
Scheduling, and
Controlling
Engineering
diagrams
Cash flow charts
Material availability details
Budgets
Delayed activities report
Slack activities report
CPM/PERT
Gantt charts
Milestone charts
Cash flow schedules
Figure 3.1
Before
project
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Start of project
Timeline

During
project
3 - 10

Project Planning
Establishing objectives
Defining project
Creating work
breakdown structure
Determining
resources
Forming organization

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3 - 11

Project Organization
Often temporary structure
Uses specialists from entire company

Headed by project manager


Coordinates activities
Monitors schedule
and costs

Permanent
structure called
matrix organization
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3 - 12

Project Organization
Works Best When
1. Work can be defined with a specific
goal and deadline
2. The job is unique or somewhat
unfamiliar to the existing organization
3. The work contains complex
interrelated tasks requiring specialized
skills
4. The project is temporary but critical to
the organization
5. The project cuts across organizational
lines
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3 - 13

A Sample Project
Organization
President
Human
Resources

Marketing

Project 1

Project 2

Finance

Design

Quality
Mgt

Production

Mechanical
Engineer

Test
Engineer

Technician

Electrical
Engineer

Computer
Engineer

Technician

Project
Manager

Project
Manager

Figure 3.2
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3 - 14

Matrix Organization
Marketing

Operations

Engineering

Finance

Project 1

Project 2

Project 3

Project 4

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3 - 15

The Role of
the Project Manager
Highly visible
Responsible for making sure that:
1. All necessary activities are finished in order
and on time
2. The project comes in within budget
3. The project meets quality goals

4. The people assigned to the project receive


motivation, direction, and information
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3 - 16

The Role of
the Project Manager
Highly visible
Responsible for making
sure that:
Project managers should be:
Goodare
coaches
1. All necessary activities
finished in order
and on time
Good communicators
2. The project comes
in within
budget activities
Able
to organize
a variety
3. The project meets from
quality
goals of disciplines

4. The people assigned to the project receive


motivation, direction, and information
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3 - 17

Ethical Issues
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:
1. Offers of gifts from contractors

2. Pressure to alter status reports to mask delays


3. False reports for charges of time and expenses
4. Pressure to compromise quality to meet
schedules
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3 - 18

Work Breakdown Structure


Level
1. Project
2.
3.
4.

Major tasks in the project


Subtasks in the major tasks
Activities (or work packages)
to be completed

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3 - 19

Project Scheduling
Identifying precedence
relationships
Sequencing activities

Determining activity
times & costs
Estimating material &
worker requirements
Determining critical
activities
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3 - 20

Purposes of Project
Scheduling
1. Shows the relationship of each activity to
others and to the whole project
2. Identifies the precedence relationships
among activities
3. Encourages the setting of realistic time
and cost estimates for each activity
4. Helps make better use of people, money,
and material resources by identifying
critical bottlenecks in the project

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3 - 21

Scheduling Techniques
1. Ensure that all activities are planned
for
2. Their order of performance is
accounted for
3. The activity time estimates are
recorded
4. The overall project time is developed

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3 - 22

Project Management
Techniques
Gantt chart
Critical Path Method
(CPM)
Program Evaluation
and Review
Technique (PERT)

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3 - 23

A Simple Gantt Chart

Time
A M J

Design
Prototype
Test
Revise

Production

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3 - 24

Service For a Delta Jet


Passengers
Baggage
Fueling
Cargo and mail

Galley servicing
Lavatory servicing
Drinking water
Cabin cleaning
Cargo and mail
Flight services
Operating crew
Baggage
Passengers

Deplaning
Baggage claim
Container offload
Pumping
Engine injection water
Container offload
Main cabin door
Aft cabin door
Aft, center, forward
Loading
First-class section
Economy section
Container/bulk loading
Galley/cabin check
Receive passengers
Aircraft check
Loading
Boarding

Figure 3.4
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10

20
30
Time, Minutes

40

3 - 25

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
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3 - 26

PERT and CPM


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
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3 - 27

Six Steps PERT & CPM


1. Define the project and prepare the
work breakdown structure
2. Develop relationships among the
activities - decide which activities
must precede and which must
follow others

3. Draw the network connecting all of


the activities
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3 - 28

Six Steps PERT & CPM


4. Assign time and/or cost estimates
to each activity
5. Compute the longest time path
through the network this is called
the critical path
6. Use the network to help plan,
schedule, monitor, and control the
project
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3 - 29

Questions PERT & CPM


Can Answer
1. When will the entire project be
completed?
2. What are the critical activities or tasks in
the project?
3. Which are the noncritical activities?

4. What is the probability the project will be


completed by a specific date?

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3 - 30

Questions PERT & CPM


Can Answer
5. Is the project on schedule, behind
schedule, or ahead of schedule?

6. Is the money spent equal to, less than, or


greater than the budget?
7. Are there enough resources available to
finish the project on time?
8. If the project must be finished in a shorter
time, what is the way to accomplish this
at least cost?
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3 - 31

Network Analysis
1.

Definition: Net work analysis is an analysis that helps


in planning, scheduling and controlling large project to
the broken into smaller parts

2.

Objective : To minimize the cost primarily by cutting


down the time or use of resources

3.

Application: It is practically applying on:i)

Construction Projects, erection


installation of new factory

of

new

ii)

Scientific experiments through


Development step by step

Research

plant,
and

iii) Computerization of existing set up

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3 - 32

Network Analysis
4.

Methods: Which methods are used:i)

Critical Path Method [CPM]

ii)

Project Evaluation and Renewal Technique [PERT] It is a


technique for planning and controlling job whose
beginning and ending clearly defined

It is same as CPM but it is usually associated with


uncertain situation

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Upper Saddle River, N.J. 07458

3 - 33

Activity
1. Each task within the job is called an
activity
2. What are the types of activity
i)

Actual activity

ii)

Dummy Activity [No actual work, it is role of


connector only
i) Logical dummy activity : It is to remove any confusion
ambiguity from logic

ii) Identity Dummy activity is used to provide clear


identity to each activity i.e. each activity having its
own unique number

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3 - 34

Project Scheduling Process


Project scheduling is the basic concept of project (activity) network, the
development of work breakdown and organizational breakdown structures
and the network representation of activities and events.

Activity Networks

Activity on Arc
(AOA) Network

Activity on Node
Representation (AON)

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3 - 35

Activity Networks
The Activity on Arrow or Activity on Arc (AOA) representation which uses the set
of arcs or arrows A to represent the activities and the set of nodes N to represent events

The Activity on Node (AON) representation which uses the set of nodes N to denote
the activities or events and the set of set arc or arrows A to represent the precedence
relations.

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3 - 36

Example AOA Network


Activity
P
Q
R
S
T
U
V
W
X

Immediate Predecessor

Following activities with their immediate predecessors are given, draw the
corresponding AOA network diagram.

P
P
P
Q,R
R, S, T
U
V

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Solution
Activities R, S, T all are having immediate predecessor of P. then the above
relationship can be depicted as follows.

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3 - 38

Activities U and V have the common activity R. Therefore, the common activity R would
be followed by two dummy activities approaching in opposite direction. The exact
relationship is shown in the figure

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3 - 39

Example AON Network


Draw the corresponding AON diagram for the following Relationship:
Activity
Immediate Predecessor
a
b
c

b,c

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3 - 40

AON Network Diagram

s start , f- finish

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3 - 41

AOA vs AON Network


The difference between AOA and AON network

AOA Network

AON Network

In an AOA network diagram the


activity is denoted by an arrow

In an AON network diagram each


activity is represented by a node

Nodes are denoted by circles.

Nodes are denoted by arrow.

Each event is numbered

There is no need to number the


events.
AOA is more popular and widely It has a better visual aid because of
used.
its closer resemblance to the Bar
chart.

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3 - 42

Work Breakdown Structure


(WBS)
The WBS defines the various project sub-activities in
relation to the project result.
The WBS creates a framework for project control

and provides the basis for insight in the time and cost
status of a project through various management tools.

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3 - 43

A Comparison of AON and


AOA Network Conventions
Activity on
Node (AON)
(a) A

B
A

(b)

B
B
(c)

A
C

Activity
Meaning
A comes before
B, which comes
before C.
A and B must both
be completed
before C can start.

B and C cannot
begin until A is
completed.

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Activity on
Arrow (AOA)

A
B

B
A
Figure 3.5

C
3 - 44

A Comparison of AON and


AOA Network Conventions
Activity on
Node (AON)
A

(d)

(e)
B

Activity
Meaning
C and D cannot
begin until both
A and B are
completed.

C cannot begin
until both A and B
are completed; D
cannot begin until
B is completed. A
dummy activity is
introduced in AOA.

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Activity on
Arrow (AOA)
A

C
Dummy activity

B
Figure 3.5

D
3 - 45

A Comparison of AON and


AOA Network Conventions
Activity on
Node (AON)

(f)
C

Activity
Meaning
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.

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Activity on
Arrow (AOA)

A
Dummy
activity

Figure 3.5

D
C

3 - 46

AON Example
Milwaukee Paper Manufacturing's
Activities and Predecessors
Activity
A

Description
Build internal components

Immediate
Predecessors

Modify roof and floor

Construct collection stack

Pour concrete and install frame

A, B

Build high-temperature burner

Install pollution control system

Install air pollution device

D, E

Inspect and test

F, G
Table 3.1

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3 - 47

AON Network for


Milwaukee Paper
A

Activity A
(Build Internal Components)

Activity B
(Modify Roof and Floor)

Start

Start
Activity

Figure 3.6
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3 - 48

AON Network for


Milwaukee Paper
Activity A Precedes Activity C

Start

Activities A and B
Precede Activity D
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Figure 3.7
3 - 49

AON Network for


Milwaukee Paper
F
A

C
E

Start

H
B

Arrows Show Precedence


Relationships
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Figure 3.8
3 - 50

AOA Network for


Milwaukee Paper
2

C
4
(Construct
Stack)

Dummy
Activity

D
5
(Pour
Concrete/
Install Frame)

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H
(Inspect/
Test)

Figure 3.9
3 - 51

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
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Determining the Project


Schedule
Perform a Critical Path Analysis
Activity
A
B
C
D
E
F
G
H

Description
Time (weeks)
Build internal components
2 Modify roof and floor
3 Construct collection stack
2 A
Pour concrete and install frame
4 B, A
Build high-temperature burner
4 C
Install pollution control system
3 C
Install air pollution device
5 D,E
Inspect and test
2 F,G
Total Time (weeks)
25
Table 3.2

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Determining the Project


Schedule
Perform a Critical Path Analysis
Earliest start (ES) = earliest time at which an activity can
Activity Description
Time (weeks)
start, assuming all predecessors
have
A
Build internal
components
2
been completed
Modify
roof and
floor
3
EarliestBfinish (EF)
= earliest
time
at which an activity can
be finished
C
Construct
collection stack
2
D start (LS)
Pour=concrete
and
4
Latest
latest time
at install
which frame
an activity can
start so as to not delay
E
Build high-temperature
burnerthe completion
4
of thecontrol
entire project
F
Install time
pollution
system
3
LatestGfinish (LF)
= latest
time bydevice
which an activity has
Install
air pollution
5 to
be finished so as to not delay the
H
Inspect and test
2
completion time of the entire project
Total Time (weeks)
25
Table 3.2

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Determining the Project


Schedule
Perform a Critical Path Analysis
Activity Name
or Symbol
A

Earliest
Start

ES

EF

Latest
Start

LS

LF

Figure 3.10
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Earliest
Finish

Latest
Finish

Activity Duration
3 - 55

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}
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Forward Pass
Begin at starting event and work forward
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

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3 - 57

ES/EF Network for


Milwaukee Paper
ES

EF = ES + Activity time
Start

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3 - 58

ES/EF Network for


Milwaukee Paper
EF of A =
ES of A + 2

ES
of A
0

Start

A
0

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3 - 59

ES/EF Network for


Milwaukee Paper
0

2
0

Start

EF of B =
ES of B + 3

ES
of B

B
0

3
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3 - 60

ES/EF Network for


Milwaukee Paper
0

2
0

Start

13

4
0

15

2
G

13
5
Figure 3.11

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3 - 61

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}
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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

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3 - 63

LS/LF Times for


Milwaukee Paper
0

2
0

Start

13
13

4
0

15
15

LS = LF
D Activity time
G
3

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13
5

LF = EF
of Project
3 - 64

LS/LF Times for


Milwaukee Paper
0

2
0

Start

10

13

8 of
LF =4 Min(LS
following activity)

13
13

4
0

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15
15

13
5

3 - 65

LS/LF Times for


LF = Min(4, 10)
Milwaukee Paper
0

2
0

Start

10

4
4

0
0

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13

13

13

15
15

13

13

3 - 66

LS/LF Times for


Milwaukee Paper
0
0

0
0

Start

10

0
1

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13

13

13

15
15

13

13

3 - 67

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

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or

Slack = LF EF

3 - 68

Computing Slack Time


Earliest Earliest
Start
Finish
Activity
ES
EF

A
B
C
D
E
F
G
H

0
0
2
3
4
4
8
13

2
3
4
7
8
7
13
15

Latest
Start
LS

Latest
Finish
LF

Slack
LS ES

On
Critical
Path

0
1
2
4
4
10
8
13

2
4
4
8
8
13
13
15

0
1
0
1
0
6
0
0

Yes
No
Yes
No
Yes
No
Yes
Yes
Table 3.3

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ES EF Gantt Chart
for Milwaukee Paper
1

10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack

D Pour concrete and


install frame
E Build hightemperature burner
F Install pollution
control system
G Install air pollution
device
H Inspect and test
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3 - 70

LS LF Gantt Chart
for Milwaukee Paper
1

10 11 12 13 14 15 16

A Build internal
components
B Modify roof and floor
C Construct collection
stack

D Pour concrete and


install frame
E Build hightemperature burner
F Install pollution
control system
G Install air pollution
device
H Inspect and test
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Features of CPM or Other Network Analysis Project

7. Float or Slack = time available for completion of the activity


time necessary to complete the same.
Activity Float
Safety /Independent Float

Free Float
Total Float

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Features of CPM or Other Network Analysis Project

Safety /Independent Float [The time by which an activity


can be expanded without affecting the float in any other
activity (without disturbing the previous or next) [EET of
HE-LET of TE-Duration of activity]
Free Float[Time by which an activity can be expended
without affecting the float in subsequent/next
activity[EET of head event EET of tale event- duration
of activity]
Total Float [The time which an activity can be expanded
or increased before it become a critical activity If expand
/ move this activity the project will be expanded (LET of
head event EET of tale event duration of activity]
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Variability in Activity Times


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

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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

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Variability in Activity Times


Estimate follows beta distribution
Expected time:
t = (a + 4m + b)/6
Variance of times:
v = [(b a)/6]2

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Variability in Activity Times

Probability

Estimate follows beta distribution


Expected time:
Figure 3.12
t = (a + 4m + b)/6
Probability
oftimes:
Variance
of
1 in 100 of
Probability
< a occurring v = [(b a)/6]2 of 1 in 100 of
> b occurring
Activity
Time
Optimistic
Time (a)

Most Likely
Time (m)

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Pessimistic
Time (b)
3 - 77

Computing Variance
Optimistic

Most
Likely

Pessimistic

Expected
Time

Variance

Activity

t = (a + 4m + b)/6

[(b a)/6]2

A
B
C
D
E
F
G
H

1
2
1
2
1
1
3
1

2
3
2
4
4
2
4
2

3
4
3
6
7
9
11
3

2
3
2
4
4
3
5
2

.11
.11
.11
.44
1.00
1.78
1.78
.11
Table 3.4

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Probability of Project
Completion
Project variance is computed by
summing the variances of critical
activities
sp2 = Project variance
= (variances of activities
on critical path)

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Probability of Project
Completion
Project variance is computed by
summing the variances of critical
Project variance
activities

sp2 = .11 + .11 + 1.00 + 1.78 + .11 = 3.11


Project standard deviation
sp =

Project variance

3.11 = 1.76 weeks

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Probability of Project
Completion
PERT makes two more assumptions:
Total project completion times follow a
normal probability distribution

Activity times are statistically


independent

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3 - 81

Probability of Project
Completion
Standard deviation = 1.76 weeks

15 Weeks
Figure 3.13

(Expected Completion Time)

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Probability of Project
Completion
What is the probability this project can
be completed on or before the 16 week
deadline?
Z = due expected date /sp
date

of completion

= (16 wks 15 wks)/1.76

= 0.57

2011 Pearson Education, Inc. publishing as Prentice Hall

Where Z is the number of


standard deviations the due
date or target date lies from
the mean or expected date
3 - 83

Probability of Project
Completion
From Appendix I
What is the probability
can
.00
.01 this project
.07
.08
be completed
on or before the
16 week
.1 .50000 .50399
.52790 .53188
deadline?
.2 .53983 .54380
.56749 .57142
.5
.6

date /s
Z.69146
= due .69497
expected.71566
.71904
p
date

.72575

of completion

.72907

.74857

.75175

= (16 wks 15 wks)/1.76

= 0.57

2011 Pearson Education, Inc. publishing as Prentice Hall

Where Z is the number of


standard deviations the due
date or target date lies from
the mean or expected date
3 - 84

Probability of Project
Completion
0.57 Standard deviations

Probability
(T 16 weeks)
is 71.57%

15
Weeks

16
Weeks

Time

Figure 3.14
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Determining Project
Completion Time
Probability
of 0.99
Probability
of 0.01

2.33 Standard
deviations

From Appendix I
Figure 3.15
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2.33
3 - 86

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
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What Project Management


Has Provided So Far
1. The projects expected completion time
is 15 weeks

2. There is a 71.57% chance the equipment


will be in place by the 16 week deadline
3. Five activities (A, C, E, G, and H) are on
the critical path
4. Three activities (B, D, F) are not on the
critical path and have slack time
5. A detailed schedule is available
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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
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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
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Steps in Project Crashing


1. Compute the crash cost per time period.
If crash costs are linear over time:

(Crash cost Normal cost)


Crash cost
per period = (Normal time Crash time)
2. Using current activity times, find the
critical path and identify the critical
activities

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Steps in Project Crashing


3. 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.
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Steps in Project Crashing


4. Update all activity times. If the desired
due date has been reached, stop. If not,
return to Step 2.

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Crashing The Project


Time (Wks)

Cost ($)

Activity Normal Crash

A
B
C
D
E
F
G
H

2
3
2
4
4
3
5
2

1
1
1
2
2
2
2
1

Normal

22,000
30,000
26,000
48,000
56,000
30,000
80,000
16,000

Crash Cost Critical


Crash Per Wk ($) Path?

22,750
34,000
27,000
49,000
58,000
30,500
84,500
19,000

750
2,000
1,000
1,000
1,000
500
1,500
3,000

Yes
No
Yes
No
Yes
No
Yes
Yes
Table 3.5

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3 - 94

Crash and Normal Times


and Costs for Activity B
Activity
Cost

Crash

$34,000

Crash Cost/Wk =

Crash $33,000
Cost

$34,000 $30,000
31
$4,000
=
= $2,000/Wk
2 Wks

$32,000
$31,000
$30,000

Normal
Cost
Figure 3.16

Crash Cost Normal Cost


Normal Time Crash Time

Normal

|
1
Crash Time

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|
2

|
3
Normal Time

Time (Weeks)
3 - 95

Advantages of PERT/CPM
1. Especially useful when scheduling and
controlling large projects
2. Straightforward concept and not
mathematically complex
3. Graphical networks help highlight
relationships among project activities
4. Critical path and slack time analyses help
pinpoint activities that need to be closely
watched

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Advantages of PERT/CPM
5. Project documentation and graphics
point out who is responsible for various
activities
6. Applicable to a wide variety of projects
7. Useful in monitoring not only schedules
but costs as well

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Limitations of PERT/CPM
1. Project activities have to be clearly
defined, independent, and stable in their
relationships
2. Precedence relationships must be
specified and networked together
3. Time estimates tend to be subjective and
are subject to fudging by managers
4. There is an inherent danger of too much
emphasis being placed on the longest, or
critical, path
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Project Management Software


There are several popular packages
for managing projects
Primavera
MacProject
Pertmaster

VisiSchedule
Time Line
Microsoft Project

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Using Microsoft Project

Program 3.1

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Using Microsoft Project

Program 3.2
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Using Microsoft Project

Program 3.3
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