Project Management101
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Project Management101

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Resource estimation and allocation happens to be one of the most crucial make/break points for most projects. However, this detail usually gets underestimated by project managers which consequently......

Resource estimation and allocation happens to be one of the most crucial make/break points for most projects. However, this detail usually gets underestimated by project managers which consequently become evident in their lack of efficiency and effectiveness in the tasks they oversee. This lecture brings out a few techniques (scientific) as to how PMs can easily navigate their way through this difficulty.

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  • 1. Sources •www.mindtools.com •Production and Operations Management (Chapter 12) by Chase & Aquilans 12/9/2009 Resource Estimation & Allocation 1
  • 2. Outline Introduction to Project Management Estimating Time Accurately Risk Impact /Probability Chart PERT Analysis Critical Path Analysis 12/9/2009 Resource Estimation & Allocation 2
  • 3. What is project management Definition: The planning, directing and controlling of resources to meet the technical cost and time constraints of a project. A project is a unique venture with a beginning and an end conducted by people to meet established goals within parameters of cost, schedule and quality 12/9/2009 Resource Estimation & Allocation 3
  • 4. Estimating time accurately Set project deadlines Determine the pricing and profitability of a project Steps: •Elliminate all unknowns (drill-down) •Guess how long each task will take •Don’t forget a safety factor – 2X 12/9/2009 Resource Estimation & Allocation 4
  • 5. Managing uncertainties Projects are often executed in uncertain and risky environments. Steps: •Be conscious of all risks •Prioritize •Employ risk management strategies •Risk impact/probability chart 12/9/2009 Resource Estimation & Allocation 5
  • 6. Risk impact/probability chart Based on the principle that a risk has two primary dimensions: Probability - A risk is an event that "may" occur. The probability may range between 0% and 100% Impact - A risk always has a negative impact. The size of an impact varies by •Cost •Health •Human life •Some other critical factor 12/9/2009 Resource Estimation & Allocation 6
  • 7. Risk impact/probability chart The extreme corners of the chart gives us: •Low impact/Low probability risk •Ignore •Low impact/High probability risk •Eliminate likelihood of occurrence or cope •High impact/Low probability risk •Try reducing impact •Have a contingency plan •High impact/High probability risk •These are your topmost priority so spend more time and resources to reduce their impact and Source: www.mindtools.com certainty 12/9/2009 Resource Estimation & Allocation 7
  • 8. Project Evaluation and Review Technique (PERT) analysis PERT biases time estimates away from the unrealistically short time-scales normally assumed. Estimated time is calculated as followed: shortest time + 4 x likely time + longest time ----------------------------------------------------------- 6 To use this technique… •List all activities required to complete the project in a WBS •Estimate the time and cost each activity will take to complete •Outline the dependencies between activities 12/9/2009 Resource Estimation & Allocation 8
  • 9. Project Evaluation and Review Technique (PERT) analysis Time estimates Expected Activity Predecessor Opt. (O) Normal (M) Pess. (P) time A — 2 4 6 _ B — 3 5 9 5.33 C A 4 5 7 5.17 D A 4 6 10 6.33 E B, C 4 5 7 5.17 F D 3 4 8 _ G E 3 5 8 5.17 Used more in projects where time, rather than cost, is the major factor. 12/9/2009 Resource Estimation & Allocation 9
  • 10. Critical Path Analysis (CPA) CPM calculates the longest path of planned activities to the end of a project, and the earliest and latest that each activity can start and finish without making the project longer. Two main objectives: •Critical path(i.e., activities with the longest path) •Sub-critical paths (i.e., activities that can be delayed without making the project longer) The critical path is the sequence of project network activities which add up to the longest overall duration. 12/9/2009 Resource Estimation & Allocation 10
  • 11. CPA continued To use this technique… •List all activities required to complete the project in a WBS •Estimate the time and cost each activity will take to complete •Outline the dependencies between activities •Draw your project network diagram 12/9/2009 Resource Estimation & Allocation 11
  • 12. Project network diagram 7, 12 4, 7 D 12, 16 5 B H 3 4 0, 4 7, 8 16, 22 A E I 4 1 6 4, 6 9, 13 C G 2 6, 9 4 F 3 12/9/2009 Resource Estimation & Allocation 12
  • 13. Focus on the critical path 7, 12 4, 7 D 12, 16 5 B H 3 4 0, 4 7, 8 16, 22 A E I 4 1 6 4, 6 9, 13 C G 2 6, 9 4 F 3 12/9/2009 Resource Estimation & Allocation 13
  • 14. Time cost trade-offs Direct cost: Costs directly associated with project activities. Example, salaries. Increases as project time shortens Indirect cost: Overhead costs not directly associated with a specific project. Example, office space. Decreases as project time shortens Crash cost: This refers to acceleration of a project in order to complete the project sooner Cost/unit time for crashing = Crash Cost – Normal Cost Normal Time – Crash Time 12/9/2009 Resource Estimation & Allocation 14
  • 15. CPA continued Determining the total crashing cost Activity A = 2 ($500) = $1,000 Activity D = 1 ($2000) = $2,000 Total Crashing Cost = $3,000 12/9/2009 Resource Estimation & Allocation 15
  • 16. Summary Introduction to Project Management Estimating Time Accurately Risk Impact /Probability Chart PERT Analysis Critical Path Analysis 12/9/2009 Resource Estimation & Allocation 16
  • 17. Thank you 12/9/2009 Resource Estimation & Allocation 17